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Fuji Electric Co., Ltd. 12-1 Yurakucho 1-chome, Chyoda-ku Tokyo 100, Japan Telephone: Tokyo 211-7111 Telex: J22331 FUJIELEA or FUJIELEB Fax: (03) 215-8321 Dun's Number: 05-667-2785 Date Founded: 1923

CORPORATE STRATEGIC DIRECTION silicon diodes, thyristors, application-specific ICs (ASICs), LSIs, hybrid ICs, surge absorbers, semicon ductors, sensors, photoconductive drums for copiers, Since its founding in 1923, Fuji Electric Co., Ltd., has been supplying high-quality products to a wide printers, hard-disk drives, magnetic recording disks, variety of industries. Expanding outward while main and watt-hour meters. taining its base as a heavy electrical manufacturer, the Company has achieved leading market positions in Products in the Motors, Drives, and Controls Division products such as uninterruptible power supplies, include induction motors, variable-speed controlled inverters, high-voltage silicon diodes, and vending motors, brake and geared motors, pumps, fans and machines. blowers, inverters, servomotor systems, small preci sion motors, magnetic contractors, and molded case circuit breakers. This division accounted for Fuji Electric's business is organized into five divi 20.5 percent of total revenue, or ¥157.6 biUion sions: Heavy Electrical; Systems; Electronic Devices; (US$1.1 billion) for year ended March 1990. Motors, Drives, and Controls; and Vending Machines and Specialty Appliances. The Heavy Electrical Division manufactures ttieimal power plant equip The Vending Machines and Specialty Appliances ment, hydroelectric power plant equipment, nuclear Division accounted for 17.4 percent of revenue, total power plant equipment, electric motors, transformers, ing ¥133.7 billion (US$938.7 million) for fiscal year computer control equipment, and odier heavy electri ended March 1990. Products include vending cal equipment This division was responsible for machines, coin and currency mechanisms, bill vaUda- approximately 37.3 percent of total revenue, or tors, beverage dispensers, tea servers, open fieezer ¥286.7 billion (US$2.0 billion) for fiscal year ended and refrigerating showcases, and the Hotel Vendor March 1990. System.

The Systems Division was responsible for 11.0 per Consolidated revenue totaled ¥768.6 billion cent of total revenue, or ¥84.5 billion (US$593.4 mil (US$5.4 biUion) for fiscal year ended March 1990, lion) for year ended March 1990. Products in this which was a 13.0 percent increase over the previous division include industrial measuring instruments and year's figure of ¥680.2 biUion (US$5.3 biUion). (Per instrumentation, remote control equipment, analyzers, centage changes refer only to ¥ amounts; US$ per radiation monitoring equipment, microcomputers, centage changes wiU differ because of fluctuations in microcontrollers, video sensors, laser devices, indus Dataquest exchange rates.) This increase was fueled trial robots, automated transport systems, and clean by a 15.7 percent increase in revenue ftom the Etec- room systems. tronic Devices Division and a 13.7 percent increase in Systems Division revenue. The Electronic Devices Division accounted for 13.8 percent of total revenue, or ¥106.1 billion Net income increased 46.2 percent to ¥13.9 biUion (US$744.5 million) for year ended March 1990. (US$97.6 miUion) in year ended March 1990, firom Products include power transistors, high-voltage ¥9.5 bUlion (US$74.2 nullion). The increase is

partially due to the contuiued expansion of the Japa differential pressure transmitters, electromagnetic and nese economy, supported by stable personal con ultrasonic flowmeters, compact controllers, and sumption and brisk investment in plants and equip general-purpose temperature controllers. ment by the private sector. However, increased effectiveness on the part of the Company's sales organization, shorter lead times for new products, and Industrial equipment posted significant increases in unproved manufacturing capabilities aU contributed orders due to large capital investments by semicon to the increase in net income. ductor and precision equipment manufacturers. Unin terruptible power supply orders increased nearly R&D increased 17.6 percent to ¥28.7 billion 33 percent. Factory automation and control compo (US$201.4 million) during year ended March 1990 nents also posted increases. The Company offers a from ¥24.4 billion (US$190.3) in die previous year. complete lineup of equipment, systems, and personal These figures respectively represented 3.7 percent computers for both flexible manufacturing and CIM. and 3.6 percent of revenue. The R&D focus was on integrated circuits and fuel cells. Electronic Devices Capital expenditure totaled ¥25.3 billion (US$177.6 million), representing 3.3 percent of revenue for year ended March 1990. This is an The Company strategy for the integrated circuit (IC) increase of 14.5 percent over the previous year's total market stresses technology specialization and the of ¥22.1 biUion (US$172.3 million). Part of the development of niche markets. Recent successes investment went toward constructing computer- include such devices as autofocusing ICs for cameras integrated manufacturing (CIM) facilities that will and high-voltage driver ICs for flat-panel displays enable the Company to manufacture and ship mag and thermal printheads. During the past year, the netic switches within 24 hours after receiving an Company implemented a strategy of augmenting its order. Other product lines singled out for concen custom IC activities with the production of trated investment included the TWIN BREAKER, application-specific standard product ICs in order to magnetic recording disks, and vending machines. Fuji increase the Company's client base. Electric Co. employed 19,830 people at the close of March 1990. Dataquest estimates that Fuji Electric captured less More detailed information is available in Table 1, than 1 percent of the total worldwide semiconductor which appears after "Business Segment Strategic market for calendar year 1989. However, Dataquest Direction" and presents corporate highlights. Infor estimates tiiat Fuji Electric ranked ninfli and had mation on revenue by region and distribution channel 3.7 percent of the worldwide total discrete market is not available. Tables 2 and 3, comprehensive finan based on ¥41.0 billion (US$287.0 million) in revenue cial statements, are at the end of this backgrounder. for calendar year 1989.

The Company's computer peripherals products are 3.5-inch hard-disk drives and 3.5- and S.25-inch thin- BUSINESS SEGMENT STRATEGIC film sputtered magnetic recording disks. Bodi seg DIRECTION ments exhibited strong growdi in the past year.

Systems Li the Systems Division, information systems and Further Information instrumentation and control posted growth in all major product areas: distributed control systems, For farther information about the Company's business MICREX microcontrollers, die Ace and FASMIC G segments, please contact the appropriate Dataquest series of 32-bit superminicomputers, pressure and industry service.

Table 1 Corporate Highlights* (MiUions of Dollars) 1988 1989 1990 Three-Year Revenue 4,037.1 $5,303.6 $5,394.8 Percent Change 31.37 1.72

Capital Expenditure $109.4 $172.3 $177.6 Percent of Revenue 2.71 3.25 3.29

R&D Expenditure $163.7 $190.3 $201.4 Percent of Revenue 4.06 3.59 3.73

Number of Employees NA 19,248 19,830 Revenue ($K)/Employee $276 $272

Net Income $48.6 $74.2 $97.6 Percent Change 52.77 31.59

Exchange Rate (US$1^ ¥138.03 ¥128.25 ¥142.47

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue NA NA NA NA Quarterly Profit NA NA NA NA NA = Not available Sontce: Fuji Electric Co., Ltd. •No fiscal 1986 and 1987 infonnation is available because consolidated iqKKts were not Annual Reports and Foims 10-K generated dming tiiose yeais. Dataquest (1990)

Mie Factory (Japan) Vending maclidnes, automatic servers, freezing and 1990 SALES OFFICE LOCATIONS refrigerating showcases, hotel vending systems, solar equipment, small and precision motors, ring blowers, servo systems, medical treatment North America—4 equipment, etc. Europe—^3 Ohtawara Factory (Japan) Asia^acific—^34 Earth leakage circuit breakers, molded-case circuit ROW—3 breakers, timers, proximity switches, optical sensors, gas detectors, etc. Suzuka Factory (Japan) Medium-size motors and generators, induction furnaces, heating systems, compressors, and fans MANUFACTURING LOCATIONS Tokyo Factory (Japan) Measuring instruments and analyzing equipment

North America ROW Fuji Cone, Inc., United States Fuji Electric Nordeste, Brazil Paper cones for stereo speakers Instrument panels and industrial instruments Fuji Copian Corp., United States Printer ribbon cartridges Fuji Foods Inc., United States Soup mixes, flavors Fuji High-Tech, Inc., United States SUBSIDIARIES Power supplies for magnetic disk equipment Fuji Koki America Inc., United States North America Expansion valves for automotive air-conditioning Fuji Electric Corp. of America (United States) systems Fuji Hi-Tech, Inc. (United States) U.S. Fuji Electric, United States U.S. Fuji Electric Inc. (United States) Photoconductive drums for copiers Europe Asia/Pacific Fuji Electric GmbH (Germany) Chiba Factory (Japan) Transformers, cubicle-type gas-insulated Asia/Pacific switchgears, medium and anall power supply Fuji Electric Singapore Pte., Ltd. (Singiq)ore) equipment, fuel cells, and solar power generation Fuji/GE Private Ltd. (Singapore) systems Hong Kong Fuji Denki Co., Ltd. (Hong Kong) Fukiage Factory (Japan) Magnetic starters and contactors, circuit breakers, ROW control relays, programmable controllers, and data transmission instruments Fuji Electric do Brasil Industiia E Comercio Ltda. Kawasaki Factory (Japan) (BrazU) Hydraulic and thermal power generation equipment, large rotating electric machinery, and circuit breakers Kobe Factory (Japan) ALLIANCES, JOINT VENTURES, AND Controls and switchgears, power supplies, and LICENSING AGREEMENTS control equipment for motors Matsumoto Factory (Japan) Semiconductor elements and devices, 1990 photoconductive drums, solar cells, coin-handling Astro Technology and bill-validator mechanisms, external computer Astro Technology will maiket a powerful new chip memories, watt-hour meters, demand meters, etc. placer from Fuji in the United Kingdom.

Korean FA Systems Co., Ltd. (KFA) Fuji will invest in KFA. Fuji hopes that the move wUl allow it to cope with an increasing demand for KEY OFFICERS factory automation (FA) syston software. Hideo Abe 7959 Chairman and representative director nMAK Takeshi Nakao nMAK is licensed to sell and manufacture thermal President and representative director transfer products and ribbons in North America. Yoshiihiko Nakazato BASF Executive vice president and representative The companies have a joint partnership to build a director facility for 3.S-inch microfloppy disks for the Nordi American market

PRINCIPAL INVESTORS

MERGERS AND ACQUISITIONS Information is not available.

1989 Crosfield Electronics Fuji Photo Film and Du Pont agreed to acquire the FOUNDERS electronic prepress division of Crosfield Electronics. Information is not available.

'Hlble 2 Comprehensive Financial Statement* Fiscal Year Ending March (Millions of US Dollars, except Per Share Data)

Balance Sheet 1988 1989 1990 Total Current Assets $3,594.5 $4,361.0 K205.6 Cash 78L3 816.4 682.7 Receivables 1,14L1 1,522.9 1,512.2 Marketable Securities 430.1 538.2 511.3 Inventory 912.1 1,166.4 1,149.6 Other Current Assets 329.9 317.2 349.8 Net Property, Plants $750,7 $913.9 $937.4 Other Assets $313.5 $331.3 $329.9 Total Assets $4,658.8 $5,606.2 $5,472.9 Total Current Liabilities $3,101.4 $3,768.3 $3,793.8 Long-Term Debt $554.5 $560.6 $425.9 Other Liabilities $139.2 $216.9 $212.5 Total Liabilities $3,795.2 $4,545.8 K432.2 Total Shareholders' Equity $863.6 $1,060.4 $1,040.7 Common Stock 305.9 351.7 326.7 Other Equity 275.4 325.3 308.0 Retained Earnings 282.3 383.4 405.9 Total Liabilities and Shareholders' Equity $4,658.8 $5,606.2 $5,472.9 Income Statement 1988 1989 1990 Revenue $4,037.1 $5,303.6 $5,394.8 Cost of Sales $3,187.3 $4,159.4 $4,197.3 R&D Expense $163.7 $190.3 $201.4 SG&A Expense $736.7 $898.5 $928.7 Capital Expense $109.4 $172.3 $177.6 Pretax Income $144.4 $221.0 $232.1 Pretax Margin (%) 3.58 4.17 4.30 Effective Tax Rate (%) NA NA NA Net Income $48.6 $74.2 $97.6 Shares Outstanding, Millions 678.8 699.7 709.1 Per Share Data Earnings $0.07 $0.11 $0.14 Dividend $0.04 $0.05 $0.05 Book Value $1.27 $1.52 $1.47 Exchange Rate (US$1=¥) ¥138.03 ¥128.25 ¥142.47

NA s Not available Sonice: Fnji Etectiic Co., Lid. *No fiscal 1986 ami 1987 infoonation is availaUe became consolidated iqpocts were not Aonnal Seports and Ftems 1&-K geaociated during diose years. Dataquest (1990)

Table 3 Comprehensive Financial Statement* Fiscal Year Ending March (Millions of Yen, except Per Share Data)

Balance Sheet 1987 1988 1989 Total Qirrent Assets ¥496,150.0 ¥559,303.0 ¥599,168.0 Cash 107,838.0 104,697.0 97,259.0 Receivables 157,512.0 195,315.0 215,439.0 Marketable Securities 59,362.0 69,024.0 72,842.0 Inventoiy 125,898.0 149,587.0 163,787.0 Other Current Assets 45,540.0 40,680.0 49,841.0 Net Property, Plants ¥103,626.0 ¥117,211.0 ¥133,556.0 Other Assets ¥43,273.0 ¥42,487.0 ¥46,997.0 Total Assets ¥643.049.0 ¥719,001.0 ¥779,721.0 Total Current Liabilities ¥428,090.0 ¥483,286.0 ¥540,509.0 Long-Tenn Debt ¥76,538.0 ¥71,896.0 ¥60,673.0 Other Liabilities ¥19,218.0 ¥27,821.0 ¥30,274.0 Total Liabilities ¥523,846.0 ¥583,003.0 ¥631,456.0 Total Shareholders' Equity ¥119,203.0 ¥135,998.0 ¥148,265.0 Conunon Stock 42,225.0 45,102.0 46,551.0 Other Equity 38,013.0 41,725.0 43,884.0 Retained Earnings 38,965.0 49,171.0 57,830.0 Total Liabilities and Shareholders' Equity ¥643,049.0 ¥719,001.0 ¥779,721.0 Income Statement 1987 1988 1989 Revenue ¥557,244.0 ¥680,192.0 ¥768,602.0 Cost of Sales ¥439,937.0 ¥533,440.0 ¥597,989.0 R&D E:q>ense ¥22,600.0 ¥24,400.0 ¥28,700.0 SG&A Expense ¥101,685.0 ¥115,234.0 ¥132,312.0 Capital Expense ¥15.100.0 ¥22,100.0 ¥25,300.0 Pretax Income ¥19,937.0 ¥28,341.0 ¥33,072.0 Pretax Margin (%) 3.58 4.17 4.30 Effective Tax Rate NA NA NA Net Income ¥6,702.0 ¥9,513.0 ¥13,906.0 Shares Outstanding, Millions 678.8 699.7 709.1 Per Share Data Earnings ¥10.18 ¥13.73 ¥19.69 Dividend ¥6.00 ¥6.00 ¥7.00 Book Value ¥175.61 ¥194.37 ¥209.09

Table 3 (Continued) Comprehensive Financial Statement Fiscal Year Ending in Month (MiUions of Yen, except Per Share Data)

Key Financial Ratios 1987 1988 1989 Liquidity Cuirent (Tunes) 1.16 1.16 1.11 Quick (Tunes) 0.86 0.85 0.81 Fixed Assets/Equity (%) 86.93 86.19 90.08 Current Liabilities/Equity (%) 359.13 355.36 364.56 Total Liabilities/Equity (%) 439.46 428.68 425.90 Profitability (%) Return on Assets « 1.40 1.86 Return on Equity - 7.46 9.78 Profit Margin 1.20 1.40 1.81 Other Key Ratios R&D Spending % of Revenue 4.06 3.59 3.73 Capital Spending % of Revenue 2.71 3.25 3.29 Employees NA 19,248 19,830 Revenue (¥K)/Employee NA $35,338 $38,760 Capital Spending % of Assets 2.35 3.07 3.24 Exchange Rate (US$1=^ 138.03 128.25 142.47

NA = Not available Somce: Pnji Electric Co., Ltd. *No fiscal 1986 and 1987 infannatitm is available becanse consolidated lepotts were not Ammal Reports and Fonns 10-K generated dining iliose yeats. Dataquest (1990)

Fuji Electric Co., Ltd. 12-1 Yurakucho 1-chome, Chyoda-ku Tokyo 100, Japan Telephone: Tokyo 211-7111 Telex: J22331 FUJIELEA or FUJIELEB Fax: (03) 215-8321 Dun's Number: 05-667-2785 Date Founded: 1923

CORPORATE STRATEGIC DIRECTION silicon diodes, ihyristors, application-specific ICs (ASICs), LSIs, hybrid ICs, surge absorbers, semicon ductors, sensors, photoconductive drums for copiers, Since its founding in 1923, Fuji Electric Co., Ltd., printers, hard-disk drives, magnetic recording disks, has been supplying high-quality products to a wide and watt-hour meters. variety of industries. Expanding outward while main- taioing its base as a heavy electrical manufacturer, the Company has achieved leading market positions in Products in the Motors, Drives, and Controls Division products such as uninterruptible power supplies, include iaduction motors, variable-speed controlled inverters, high-voltage silicon diodes, and vending motors, brake and geared motors, pumps, fans and machines. blowers, inv^ters, servomotor systems, small preci sion motors, magnetic contractors, and molded case circuit breakers. This division accounted for Fuji Electric's business is organized into five divi 20.5 percent of total revenue, or ¥157.6 billion sions: Heavy Electrical; Systems; Electronic Devices; (US$1.1 bilUon) for year ended March 1990. Motors, Drives, and Controls; and Vending Machines and Specialty Appliances. The Heavy Electrical Division manxifactures thermal power plant equip The Vending Machines and Specialty Appliances ment, hydroelectric power plant equipment, nuclear Division accounted for 17.4 percent of revenue, total I>ower plant equipment, electric motors, transformers, ing ¥133.7 billion (US$938.7 million) for fiscal year computer control equipment, and other heavy electri ended March 1990. Products include vending cal equipment. This division was responsible for machines, coin and currency mechanisms, bUl vahda- approximately 37.3 percent of total revenue, or tors, beverage dispensers, tea servers, open fi-eezer ¥286.7 billion (US$2.0 billion) for fiscal year ended and Fefrigerating showcases, and the Hotel Vendor March 1990. System.

The Systems Division was responsible for 11.0 per Consolidated revenue totaled ¥768.6 billion cent of total revenue, or ¥84.5 billion (US$593.4 mil (US$5.4 billion) for fiscal year ended March 1990, lion) for year ended March 1990. Products in this which was a 13.0 percent increase over the previous division include industrial measuring instruments and year's figure of ¥680.2 biUion (US$5.3 billion). (Per instrumentation, remote control equipment, analyzers, centage changes refer only to ¥ amounts; US$ per radiation monitoring equipment, microcomputers, centage changes will differ because of fluctuations in microcontrollers, video sensors, laser devices, indus Dataquest exchange rates.) This increase was fueled trial robots, automated transport systems, and clean by a 15.7 percent increase in revenue from flie Elec room systems. tronic Devices Division and a 13.7 percent increase in Systems Division revenue. The Electronic Devices Division accounted for 13.8 percent of total revenue, or ¥106.1 billion Net income increased 46.2 percent to ¥13.9 billion (US$744.5 million) for year ended March 1990. (US$97.6 million) in year ended March 1990, fiom Products include power transistors, high-voltage ¥9.5 billion (US$74.2 million). The increase is

partially due to the continued expansion of the Japa differential pressure transmitters, electromagnetic and nese economy, supported by stable personal con ultrasonic flowmeters, compact controllers, and sumption and brisk investment in plants and equip general-purpose temperature controllers. ment by the private sector. However, increased effectiveness on the part of the Company's sales organization, shorter lead times for new products, and Industrial equipment posted significant increases in improved manufacturing capabilities all contributed orders due to large capital investments by semicon to the increase in net income. ductor and precision equipment manufacturers. Unin terruptible power supply orders increased nearly R&D increased 17.6 percent to ¥28.7 billion 33 percent Factory automation and control compo (US$201.4 naillion) during year ended March 1990 nents also posted increases. The Company offers a from ¥24.4 billion (US$190.3) in the previous year. complete lineup of equipment, systems, and personal These figures respectively represented 3.7 percent computers for both flexible manufacturing and CIM. and 3.6 percent of revenue. The R&D focus was on integrated circuits and fuel cells. Electronic Devices Capital expenditure totaled ¥25.3 billion (US$177.6 million), representing 3.3 percent of revenue for year ended March 1990. This is an The Company strategy for the integrated circuit QC) increase of 14.5 percent over the previous year's total market stresses technology specialization and the of ¥22.1 billion (US$172.3 milUon). Part of the development of niche markets. Recent successes investment went toward constructing computer- include such devices as autofocusing ICs for cameras integrated manufacturing (CIM) facilities that wiU and high-voltage driver ICs for flat-panel displays enable the Company to manufacture and ship mag and thermal printheads. During the past year, the netic switches within 24 hours after receiving an Company implemented a strategy of augmenting its order. Other product lines singled out for concen custom IC activities with the production of trated investment included the TWIN BREAKER, ^pUcation-specific standard product ICs in order to magnetic recording disks, and vending machines. Fuji increase the Company's client base. Electric Co. employed 19,830 people at the close of March 1990. Dataquest estimates that Fuji Electric captured less More detailed information is available in Table 1, than 1 percent of the total worldwide semiconductor which appears after "Business Segment Strategic market for calendar year 1989. However, Dataquest Direction" and presents corporate higjilights. Infor estimates that Fuji Electric raiiked ninth and had mation on revenue by region and distribution channel 3.7 percent of the worldwide total discrete market is not available. Tables 2 and 3, comprehensive finan based on ¥41.0 billion (US$287.0 million) in revenue cial statements, are at the end of this backgrotmder. for calendar year 1989.

The Company's computer peripherals products are BUSINESS SEGMENT STRATEGIC 3.5-inch hard-disk drives and 3.5- and 5.25-inch thin- DIRECTION film sputtered magnetic recording disks. Both seg ments exhibited strong growth in the past year.

Systems In the Systems Division, information systems and Further Information instrumentation and control posted growth in all major product areas: distributed control systems, For furtiier information about the Company's business MICREX microcontrollers, die Ace and FASMIC G segments, please contact the appropriate Dataquest series of 32-bit superminicomputers, pressure and industry service.

Table 1 Corporate Highlights* (Millions of Dollars) 1988 1989 1990 Three-Year Revenue $4,037.1 $5,303.6 $5,394.8 Percent Change 31.37 1.72

Capital Expenditure $109.4 $172.3 $177.6 Percent of Revenue 2.71 3.25 3.29

R&D Expenditure $163.7 $190.3 $201.4 Percent of Revenue 4.06 3.59 3.73

Number of Employees NA 19,248 19,830 Revenue ($K)/Employee $276 $272

Net Income $48.6 $74.2 $97.6 Percent Change 52.77 31.59

Exchange Rate (US$1=^ ¥138.03 ¥128.25 ¥142.47

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue NA NA NA NA Quarterly Profit NA NA NA NA NA = Not available Sonice: Fuji Electric Co., Ltd. *No fiscal 1986 and 1987 infoimation is available becanse consolidated reports were not Animal Reports and Foims 10-K generated dining those years. Dataquest (1990)

Mie Factory (Japan) Vending machines, automatic servers, freezing and 1990 SALES OFFICE LOCATIONS refidgerating showcases, hotel vending systems, solar equipment, small and precision motors, ring blowers, servo systems, medical treatment North America—4 equipmei]t, etc. Europe—3 Ohtawara Factory (Japan) Asia^acific—34 Earth leakage circuit breakers, molded-case circuit ROW—3 breakers, timers, proximity switches, optical sensors, gas detectors, etc. Suzuka Factory (Japan) Medium-size motors and generators, induction furnaces, heating systems, compressors, and fans MANUFACTURING LOCATIONS Tokyo Factory (Japan) Measuring instruments and analyzing equipment

North America ROW Fuji Cone, Inc., United States Fuji Electric Nordeste, Brazil Paper cones for stereo speakers Instrument panels and industrial instruments Fuji Copian Corp., United States Printer ribbon cartridges Fuji Foods Inc., United States Soup mixes, flavors Fuji High-Tech, Inc., United States SUBSIDIARIES Power supplies for magnetic disk equipment Fuji Koki America Inc., United States North America Expansion valves for automotive air-conditioning Fuji Electric Corp. of America (United States) systems Fuji Hi-Tech, Inc. (United States) U.S. Fuji Electric, United States U.S. Fuji Electric Inc. (United States) Photoconductive drums for copiers Europe Asia/Pacific Fuji Electric GmbH (Germany) Chiba Factory (Japan) Transformers, cubicle-type gas-insulated Asia/Pacific switchgears, medium and small power supply Fuji Electric Singapore Pte., Ltd. (Sing^)ore) equipment, fuel cells, and solar power generation Fuji/GE Private Ltd. (Singapore) systems Hong Kong Fuji Denki Co., Ltd. (Hong Kong) Fukiage Factory (Japan) Magnetic starters and contactors, circuit breakers, ROW control relays, programmable controllers, and data transmission instruments Fuji Electric do Brasil Industria E Comercio Ltda. Kawasaki Factory (Japan) (Brazil) Hydraulic and thermal power generation equipment, large rotating electric machinery, and circuit breakers Kobe Factory (Japan) ALLIANCES, JOINT VENTURES, AND Controls and switchgears, power supplies, and LICENSING AGREEMENTS control equipment for motors Matsumoto Factory (Japan) Semiconductor elements and devices, 1990 photoconductive drums, solar cells, coin-handling Astro Technology and biU-validator mechanisms, external computer Astro Technology will market a powerful new chip memories, watt-hour meters, demand meters, etc. placer from Fuji in the United Kingdom.

Korean FA Systems Co., Ltd. (KFA) Fuji wiU invest in KFA. Fuji hopes that the move will allow it to cope with an increasing demand for KEY OFFICERS factory automation (FA) system software. Hideo Abe 1989 Chairman and representative director HMAK Takeshi Nakao nMAK is licensed to seU and manufacture thermal President and representative director transfer products and ribbons in North America. Yoshiihiko Nakazato BASF Executive vice president and representative The companies have a joint partnership to build a director facility for 3.5-inch microfloppy disks for the Nordi American market

PRINCIPAL INVESTORS

MERGERS AND ACQUISITIONS Information is not available.

1989 Crosfield Electronics Fuji Photo Fihn and Du Pont agreed to acquire the FOUNDERS electronic prepress division of Crosfield Electronics. Information is not available.

Table 2 Comprehensive Financial Statement''' Fiscal Year Ending March (Millions of US Dollars, except Per Share Data) Balance Sheet 1988 1989 1990 Total Current Assets $3,594.5 $4,361.0 $4,205.6 Cash 781.3 816.4 682.7 Receivables 1,141.1 1,522.9 1,512.2 Marketable Securities 430.1 538.2 511.3 Inventoiy 912.1 1,166.4 1,149.6 Other Current Assets 329.9 317.2 349.8 Net Property, Plants $750.7 $913.9 $937.4 Other Assets $313.5 $331.3 $329.9 Total Assets K658.8 $5,606.2 $5,472.9 Total Current Liabilities $3,101.4 $3,768.3 $3,793.8 Long-Term Debt $554.5 $560.6 $425.9 Other Liabilities $139.2 $216.9 $212.5 Total Liabilities $3,795.2 $4,545.8 $4,432.2 Total Shareholders' Equity $863.6 $1,060.4 $1,040.7 Common Stock 305.9 351.7 326.7 Other Equity 275.4 325.3 308.0 Retained Earnings 282.3 383.4 405.9 Total Liabilities and Shareholders' Equity $4,658.8 $5,606.2 $5,472.9 Income Statement 1988 1989 1990 Revenue $4,037.1 $5,303.6 $5,394.8 Cost of Sales $3,187.3 $4,159.4 $4,197.3 R&D Expense $163.7 $190.3 $201.4 SG&A Expense $736.7 $898.5 $928.7 Capital Expense $109.4 $172.3 $177.6 Pretax Income $144.4 $221.0 $232.1 Pretax Margin (%) 3.58 4.17 4.30 Effective Tax Rate (%) NA NA NA Net Income $48.6 $74.2 $97.6 Shares Outstanding, Millions 678.8 699.7 709.1 Per Share Data Earnings $0.07 $0.11 $0.14 Dividend $0.04 $0.05 $0.05 Book Value $1.27 $1.52 $1.47 Exchange Rate (US$1=¥) ¥138.03 ¥128.25 ¥142.47

NA = Not available Source: Fuji Electric Co., Ltd. *No fiscal 1986 and 1987 iofonnation is available because consolidated leports weie not Ammal Roioits and Fonns 10-K generated dming diose years. Dataqoest (1990)

Table 3 Comprehensive Financial Statement* Fiscal Year Ending March (Millions of Yen, except Per Share Data) Balance Sheet 1987 1988 1989 Total Cuirent Assets ¥496,150.0 ¥559,303.0 ¥599,168.0 Cash 107,838.0 104,697.0 97,259.0 Receivables 157,512.0 195,315.0 215,439.0 Marketable Securities 59,362.0 69,024.0 72,842.0 Inventory 125,898.0 149,587.0 163,787.0 Odier Cunent Assets 45,540.0 40,680.0 49,841.0 Net Property, Plants ¥103,626.0 ¥117,211.0 ¥133,556.0 Other Assets ¥43,273.0 ¥42,487.0 ¥46,997.0 Total Assets ¥643,049.0 ¥719.001.0 ¥779,721.0 Total Current Liabilities ¥428,090.0 ¥483,286.0 ¥540,509.0 Long-Term Debt ¥76,538.0 ¥71,896.0 ¥60,673.0 Other Liabilities ¥19,218.0 ¥27,821.0 ¥30,274.0 Total Liabilities ¥523,846.0 ¥583,003.0 ¥631,456.0 Total Shareholders' Equity ¥119,203.0 ¥135,998.0 ¥148,265.0 Common Stock 42,225.0 45,102.0 46,551.0 Other Equity 38,013.0 41,725.0 43,884.0 Retained Earnings 38,965.0 49,171.0 57,830.0 Total Liabilities and Shareholders' Equity ¥643,049.0 ¥719,001.0 ¥779,721.0 Income Statement 1987 1988 1989 Revenue ¥557,244.0 ¥680,192.0 ¥768,602.0 Cost of Sales ¥439,937.0 ¥533,440.0 ¥597,989.0 R&D Expense ¥22,600.0 ¥24,400.0 ¥28,700.0 SG&A Expense ¥101,685.0 ¥115,234.0 ¥132,312.0 Capital Expense ¥15,100.0 ¥22,100.0 ¥25,300.0 Pretax Income ¥19,937.0 ¥28,341.0 ¥33,072.0 Pretax Margin (%) 3.58 4.17 4.30 Effective Tax Rate (%) NA NA NA Net Income ¥6,702.0 ¥9,513.0 ¥13,906.0 Shares Outstanding, MiUions 678.8 699.7 709.1 Per Share Data Earnings ¥10.18 ¥13.73 ¥19.69 Dividend ¥6.00 ¥6.00 ¥7.00 Book Value ¥175.61 ¥194.37 ¥209.09

Table 3 (Continued) Comprehensive Financial Statement Fiscal Year Ending in Month (Millions of Yen, except Per Share Data)

Key Financial Ratios 1987 1988 1989 Liquidity Current (Times) 1.16 1.16 1.11 Quick (Times) 0.86 0.85 0.81 Fixed Assets/Equity (%) 86.93 86.19 90.08 Current Liabilities/Equity (%) 359.13 355.36 364.56 Total Liabilities/Equity (%) 439.46 428.68 425.90 Profitability (%) Return on Assets 1.40 1.86 Return on Equity 7.46 9.78 Profit Margin 1.20 1.40 1.81 Other Key Ratios R&D Spending ', of Revenue 4.06 3.59 3.73 Capital Spending 0 of Revenue 2.71 3.25 3.29 Employees NA 19,248 19,830 Revenue (¥K)/Employee NA $35,338 $38,760 Capital Spending % of Assets 2.35 3.07 3.24 Exchange Rate (US$1=*) 138.03 128.25 142.47

NA = Not available Source: Fnji Electric Co., Ltd. *No fiscal 1986 and 1987 infocmation is available because consolidated iqK>its were not Annual Reports and Forms 10-K generated dining those years. Dataqnest (1990)

SCA ©1990 Dataquest Incorporated 0008944 Fuji Electric Co., Ltd. 12-1 Yurakucho-1-chome Chiyoda-ku, Tokyo 100 Japan Telephone: (03) 211-7111 Fax: (03) 215-8321 Dun's Number: 05-667-2785 Date Founded: 1923

CORPORATE STRATEGIC DIRECTION Research and development expenditures totaled $181 million in fiscal 1988, representing 6 percent of revenue. Fuji Electric does not report its capital The products of Fuji Electric Co., Ltd., encompass a expenditures. broad spectrum of markets in electrical machinery, electronic components, and appliances. Product areas extend from power plants to custom ICs, from com More detailed information is available in TaUes 1 puter hardware and software to vending machines. In through 3, which appear after "Business Segment addition to individual products, Fuji Electric creates Strategic Direction" and present corporate highlights integrated systems, notably those for process and and revenue by region and distribution channel. factory automation. Table 4, a comprehensive financial statement, is at the end of this profile.

Fuji Electric is divided into five product groups. The power plant and industrial machinery group generated the most revenue in fiscal 1988, 38 percent of the Company's total. Standard machinery was the next BUSINESS SEGMENT STRATEGIC most important group, generating 20 percent of total DIRECTION revenue. The third most important group, vending machines and specialty appliances, contributed 17 percent of the total revenue. Electronic devices Semiconductors ranked fourth, generating 14 percent of total revenue, followed by the systems group, with 11 percent. Sales were up 13.2 percent in the electronic devices sector in fiscal 1988; orders were up 9.1 percent. In Fuji Electric's total revenue increased 15 percent to fiscal 1988, semiconductor sales accounted for $3.2 billion* in fiscal 1988 from $2.8 billion in fiscal 14.0 percent of the total sales, or $450 million. 1987. Its net income increased 113 percent to Dataquest estimates that Fuji ranks twenty-seventh $40.2 million in fiscal 1988 from $18.9 million in among the worldwide semiconductor manufacturers fiscal 1987. Fuji Electric employs more than 12,000 and seventeenth among Japanese semiconductor people worldwide. manufacturers. The Company's main semiconductor product areas are discrete, analog, CMOS, and hybrid ICs. Fuji Electric does not report its domestic versus international revenue. However, its 1988 intemational sales were estimated to be approximately 14 percent In 1988, Fuji Electric's sales of discrete jHxxiucts of total corporate revenue. Eighty-two percent of grew 35.4 percent. Discrete products such as power Fuji's 49 sales offices are in Japan, and the Company transistors, silicon and zener diodes, high-current has manufacturing locations worldwide with a con rectifier diodes and thyristors, and power MOSFETs centration in Japan. made up 80.6 percent of Fuji Electric's total semicon ductor revenue. Accomplishments in the discrete sec *AI1 dollar amounts are in U.S. dollars. tor include increased wafer production for power

transistors for switching applications and the 30 percent-plus growth in sales. Its main products are introduction of MOS-gate bipolar transistors for high video sensors, laser marking and cutting eqtiipment, speed switching appUcations. and equipment for surface-mounting components on printed circuit boards. Analog products were the next largest seUing semi conductor products. These include power regulators The Industrial Equipment Division markets electric and custom ICs. In 1988, IC sales increased substations for buildings, uninterruptible power sup 25 percent; 90 percent of Fuji's ICs were custom. plies, semiconductor production equipment, and clean room systems. The electric substation and power In 1988, Fuji Electric introduced CMOS one-chip supply sales in fiscal 1988 were unchanged from autofocus units for single-lens reflex (SLR) cameras fiscal 1987, but large-scale systems sales were down and introduced flat-panel display custom ICs and sharply because of the continued weakness of semi custom driver ICs for thermal heads on facsimile conductor markets and the yen's strength, which led machines and office equipment. Japanese companies to hold down capital spending.

Only 18.5 percent of Fuji Electric's percentage of Power Plant and Industrial Machinery semiconductor revenue came from ICs. Hybrid ICs such as power suppUes, power converters, and solid- The power plant and industrial machinery group state relays experienced approximately a 25 percent accoimted for 38.0 percent of Fuji's total revenue, or sales decline in fiscal 1988. $1.2 billion, in fiscal 1988. Products in this group include power generating equipment, transformers, power receiving and distributiag equipment, power Systems network control, AC and DC motors, treatment and Process and factory automation constitute the main monitoring equipment, and power supplies for com activities within the systems sector, which consists of puters. A high level of investments in public works four divisions: the Information Systems Center and projects in Japan during fiscal 1988 was the major Instrumentation Control Division, the Factory Auto factor supporting sales and orders received in this mation and Control Components Division, the Indus sector. The strong domestic performance was insuffi trial Equipment Division, and the Large-Scale Sys cient to offset the weakness in business outside Japan. tems Division. The increase in 1988 sales in the first Overall, sales of the three divisions—Power Plant, three divisions could not compensate for the weak Governmental and Pubhc Authorities, and Industrial demand for Large-Scale Systems Division products. Machinery—that make up this group decreased Sales in the systems sector decreased 2.3 percent; 11.3 percent in fiscal 1988, whereas orders received orders received decreased 6.7 percent. Systems con remained unchanged. tributed 11.0 percent of the total revenue earned by Fuji Electric. Standard Machinery and Apparatus

The Information Systems Center and Instrumentation The standard machinery and apparatus sector com Control Division is responsible for three major prod prises two divisions: the Machinery and Apparatus uct categories: computers, controllers, and their appli Control Division and tiie Rotating Machinery Divi cation systems; instrumentation systems using meas sion. Standard machinery and apparatus sector sales uring instruments and sensors; and various industrial increased 17.4 percent to $644 million, or 20.0 per instruments that are marketed individually. These cent of the Company's total. The increase in sales three product categories account for about 60 percent was attributed to a stronger domestic demand in of the total sales of the systems sector. In fiscal 1988, Japan, as well as a 22.6 percent increase in export the sector benefited from a substantial domestic sales. The strongest sales gains were in electronics- increase in sales of equipment for the office automa related products, a sector that Fuji has targeted for tion and data processing markets. growth. Sales of inverters, servo systems, program mable controllers, and sensors were up sharply as The Factory Automation and Control Components manufacturers purchased the automation systems Division posted its second consecutive year of needed to reduce production costs. Other products

SCA ©1990 Dataquest Incorporated January 0005854 Fuji Electric Co., Ltd. included in this area are meters, motors, special demand for vending machines and coin and currency motors, fans, relays, switches, terminal blocks, circuit mechanisms. Together, these two categories breakers, transformers, labor saving systems, and accounted for about 90 percent of sales in this sector. compressors. Fiscal 1988 sales were basically unchanged in this sector's two other product categories: open freezing and refrigerating showcases and hotel vendor sys Vending Machines and Specialty Appliances tems.

The vending machines and specialty appUances sector accoimted for 17.0 percent of the Company's total Further Information revenue earned in fiscal 1988, or $547 ndlhon. Sales increased 18.5 percent; orders received were up For more information about the Ccnnpai^'s business 18.0 percent. The most important factor was the brisk segments, please contact the appropriate industry service.

Table 1 Five-Year Corporate HighUghts (Millions of U.S. Dollars) 1984 1985 1986 1987 1988 Five-Year Revenue $1,509.9 $1,556.0 $2,145.2 $2,807.1 $3,218.4 Percent Change 3.05 37.87 30.85 14.65

Capital Expenditure N/A N/A N/A N/A N/A Percent of Revenue N/A N/A N/A N/A N/A

R&D Expenditure N/A N/A $122.0 $157.0 $181.0 Percent of Revenue N/A N/A 5.69 5.59 5.62

Number of Employees 13,389 13,265 13,372 12,932 12,066 Revenue ($K)/Employee $112.77 $117.30 $160.42 $217.07 $266.73

Net Income $18.2 $27.3 $21.2 $18.9 $40.2 Percent Change 50.00 (22.34) (10.85) 112.70

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue N/A N/A N/A N/A Quarterly Profit N/A N/A N/A N/A

N/A = Not Available Source: Fuji Electric Aimual Reports Dataquest January 1990

Table 2 Revenue by Geographic Region (Percent) Region 1984 1985 1986 1987 1988 Japan N/A N/A N/A N/A N/A International N/A N/A N/A N/A N/A

N/A = Not Available Source; Dataquest January 1990 Table 3 Revenue by Distribution Channel (Percent) Channel 1987 1988 Direct Sales 20.00 20.00 Indirect Sales 80.00 80.00 Dealers 80.00 80.00

•For semiconductor products in Japan Source: Dataquest Januaiy 1990

Fuji Koki America Inc. Expansion valves for automotive air-coi»litioning 1988 SALES OFTICE LOCATIONS systems # U.S. Fuji Electric, United States Photoconductive drums for copiers Japan—40 Overseas—9 Asia/Pacific Chang Shing Electric, Taiwan Transformers, capacitors MANUFACTURING LOCATIONS Fuji Dhanna Electric, Indonesia Watt-hour meters Fuji-Haya Electric Corp. of the Philippines, Japan Philippines Magnetic switches, circuit breakers, switchboards Asihi Keiki GoldStar Instrument & Electric, South Korea Thermostats, measuring instruments Watt-hour meters, switchboards Fuji Denki Seiki GoldStar Vending Machines, South Korea Precision motors and related equipment Vending machines Fuji Denki Technica Hong Kong Fuji Denki Co. Ltd., Hong Kong Electronic control equipment Photoconductive drums for copiers Fuji Electric Corporate Mabajak International Electric, Thailand Research and development of new products Watt-hour meters Fuji Electric Reiki Seizo Vending machines Fuji Facom Control ROW Control systems Fuji Electric Nordeste, Brazil Fuji Kiki Instrument panels, industrial instruments Measuring instruments, automatic control systems Fuji Semiconductors Semiconductor applied equipment, electronic devices Hokurika Fuji Co., Ltd. SUBSIDIARIES Rectifiers, high-speed diodes, transistors liyama Fuji Co., Ltd. Diodes, rectifiers Japan Matsumoto Factory Hybrid bipolar and MOS ICs, hard disk drives, Asihi Keiki diodes, rectifiers Fuji Denki Seiki Ohmachi Fuji Co., Ltd. Fuji Denki Technica MOSFETs, transistors, hybrid ICs Fuji Electric Corporate Tottori Electric Co., Ltd. Fuji Electric Reiki Seizo Transistors Fuji Facom Control Fuji Kiki Fuji Semiconductors North America Fuji Cone, Inc., United States North America Paper cones for stereo speakers Fuji Copian Corp., United States Fuji High-Tech, United States Printer ribbon cartridges U.S. Fuji Electric, United States Fuji Foods Inc., United States Soup mixes, flavors Europe Fuji High-Tech, United States Power supply for magnetic disk equipment Fuji Electric GmbH, West Germany

Asia/Pacific Barvon CMOS Technology The companies agreed to jointiy develop software Chang Shing Electric, Taiwan for Fuji's multipurpose LSI for use in robotics. Fuji Dhanna Electric, Indonesia # Fuji-Haya Electric Corp. of the Philippines, Oki Electric Philippines The companies agreed to jointiy develop a new GoldStar Instrument & Electric, South Korea type of IC card. GoldStar Vending Machines, South Korea Hong Kong Fuji Denld Co., Ltd., Hong Kong MOSEL Mahajak International Electric, Thailand Fuji Electric agreed to produce 4K, 256K, and dual-port SRAMs for MOSEL.

ROW Fuji Electric do Brazil Industria e Comercio Ltda., Brazil Fuji Electric Nordeste, Brazil MERGERS AND ACQUISITIONS

1989 Crossfield Electronics ALLIANCES, JOINT VENTURES, AND Fuji Photo Film and Du Pont agreed to acquire LICENSING AGREEMENTS the electronic prepress division of Crossfield Electronics.

1989 IIMAK UMAK is licensed to seU and manufacture thermal KEY OFnCERS transfer products and ribbons in North America. BASF Hideo Abe The companies have a joint partnership to buUd a Chairman and representative director facility for 3.5-inch microfloppy disks for the North American market. Yoshihiko Nakazato Executive vice president and representative director 1988 Takeshi Nakao IBM President and representative director Fuji Chemical and IBM signed a cross-licensing agreement allowing each other to manufacture Kinetato Ono print ribbons for PCs, typewriters, and other infor Senior executive managing director mation terminals. Barvon BiCMOS Technology Barvon agreed to transfer its standard cell technol ogy for cash and a five-year foundry contract PRINCIPAL INVESTORS

1987 Fujitsu Ltd.—1.2 percent Siemens AG—^7.0 percent Siemens Asahi Life Insurance—^5.7 percent Under a cooperative agreement to promote an Furukawa Electric—^3.8 percent international division of labor, both companies DKB—3.6 percent have started a mutual supply of power MOSFETs Sumitomo Trust—^2.2 percent and share development and production. IBJ—^2.0 percent

Table 4 Comprehensive Financial Statement* Fiscal Year Ending March (Millions of U.S. Dollars, except Per Share Data) Balance Sheet 1984 1985 1986 1987 1988 Total Current Assets $1,188.1 $1,328.6 $1,764.5 $2,488.6 $3,149.1 Cash 160.6 185.6 $179.9 440.0 665.9 Receivables 605.6 637.4 679.1 826.3 921.4 Marketable Securities 104.6 106.8 201.0 , 307.4 360.6 Inventory 273.7 342.5 510.6 613.2 836.5 Other Current Assets 43.6 56.3 193.9 301.7 364.7 Net Property, Plants $230.3 $270.9 $410.8 $511.7 $563.4 Other Assets $148.3 $144.2 $195.5 $263.1 $315.0 Total Assets $1,566.7 $1,743.7 $2,370.8 $3,263.4 $4,027.5 Total Current Liabilities $971.8 $1,13L1 $1,514.2 $2,071.9 $2,690,2 Long-Term Debt $109.8 $82.5 $405.4 $549.0 $434.2 Other Liabilities $231.2 $253.8 $43.2 $58.8 $65.9 Total Liabilities $1,312.8 $1,467.4 $1,962.8 $2,679.7 $3,190.3 Total Shareholders' Equity $253.9 $276.3 $408.0 $583.7 $837.2 Common Stock 104.1 113.7 162.4 229.6 337.8 Other Equity 59.1 60.3 106.3 184.0 302.6 Retained Earnings 90.7 102.3 139.3 170.1 196.8 Total Liabilities and Shareholders' Equity $1,566.7 $1,743.7 $2,370.8 $3,263.4 $4,027.5

Income Statement 1984 1985 1986 1987 1988 Revenue $1,509.9 $1,556.0 $2,145.2 $2,807.1 $3,218.4 U.S. Revenue N/A N/A N/A N/A N/A Non-U.S. Revenue N/A N/A N/A N/A N/A Cost of Sales $1,238.6 $1,260.9 $1,766.9 $2,342.6 $2,620.4 R&D Expense N/A N/A $122.0 $157.0 $181.0 SG&A Expense $230.2 $252.1 $355.0 $455.3 $545.6 Capital Expense N/A N/A N/A N/A N/A Pretax Income $33.4 $46.3 $33.4 $28.7 $99.9 Pretax Margin (%) 2.21 2.98 1.56 1.02 3.10 Effective Tax Rate (%) N/A N/A N/A N/A N/A Net Income $18.2 $27.3 $21.2 $18.9 $40.2 Shares Outstanding, Millions 489.3 556.9 575.9 607.3 678.8 Per Share Data Earnings N/A N/A $0.04 $0.03 $0.06 Dividends N/A N/A $0.03 $0.04 $0.05 Book Value $0.52 $0.50 $0.71 $0.96 $1.23

Table 4 (Continued) Comprehensive Financial Statement* Fiscal Year Ending March (Millions of U.S. Dollars, except Per Share Data) Key Financial Ratios 1984 1985 1986 1987 1988 Liquidity Current (Times) 1.22 1.17 0.12 1.20 1.17 Quick (Times) 0.94 0.87 (0.22) 0.91 0.86 Fixed Assets/Equity (%) 90.71 98.05 100.69 87.66 67.30 Current Liabilities/Equity (%) 382.75 409.37 371.13 354.96 321.33 Total Liabilities/Equity (%) 517.05 531.09 481.08 459.09 381.07 Profitability (%) Return on Assets - 1.65 1.03 0.67 1.10 Return on Equity - 10.30 6.20 3.81 5.66 Profit Margin 1.21 1.75 0.99 0.67 1.25 Other Key Ratios R&D Spending % of Revenue N/A N/A 5.69 5.59 5.62 Capital Si)ending % of Revenue N/A N/A N/A N/A N/A Employees 13,389 13,265 13,372 12,932 12,066 Revenue ($K)/Employee $112.77 $117.30 $160.42 $217.07 $266.73 Capital Spending % of Assets N/A N/A N/A N/A N/A

*Numbers stated are nonconsolidated. Source: Fuji Electric N/A = Not Available Aimual Reports Dataquest Januaiy 1990

Fuji Electric Co., Ltd. Head Office: 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 Japan Telephone: (03) 211-7111 Telex: J22331 Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, Japan Telephone: (044) 333-7111 Telex: J223311 (Billions of Yen Except per Share Data)

Balance Sheet (March 31)*

1983 1984 J.985 1986 ^987

Working Capital * 32.9 V 50.8 V 48.4 X 45.1 V 58.3 Long-Term Debt ¥ 30.4 « 25.8 ¥ 74.5 « 73.0 ¥ 76.9 Shareholders' Equity ¥ 52.1 ¥ 59.7 ¥ 67.7 ¥ 73.4 ¥ 81.7 After-Tax Return on Average Equity {%) 8.6 7.2 9.9 5.4 3.4 Operating Performance (Fiscal Year Ending March 31)* 13£1 ISM laaS 1986 12S1 Sales ¥ 342.2 ¥ 354.8 ¥ 381.2 ¥ 386.2 ¥ 393.0 Cost of Sales ¥ 277.9 ¥ 291.1 ¥ 308.9 ¥ 318.0 ¥ 328.0 R&D Expense** ¥ 17.1 ¥ 17.7 ¥ 19.1 ¥ 22.0 ¥ 22.0

SGSA Expense ¥ 52.0 ¥ 54.1 ¥ 61.8 ¥ 63.9 ¥ 63.7 Pretax Income ¥ 9.3 ¥ 7.9 ¥ 11.3 ¥ 6.0 ¥ 4.0 Pretax Margin {%) 2.7 2.2 3.0 1.6 1.0 Effective Tax Rate (%) 51.6 45.6 41.6 36.7 34.1 Net Income ¥ 4.5 ¥ 4.3 ¥ 6.7 ¥ 3.8 ¥ 2.6 Average Shares Outstanding (Millions) 465 489 557 566 592 Per Share Earnings ¥ 9.68 ¥ 8.79 ¥ 12.03 ¥ 6.67 ¥ 4.50 Dividend ¥ 2.49 ¥ 2.45 ¥ 2.45 ¥ 6.00 ¥ 6.00 Book Value ¥112.04 ¥122.09 ¥121.54 ¥129.68 ¥138.13 Price Range ¥ 195- ¥ 229- ¥ 228- N/A N/A 253 232 353 Total Employees 13,610 13,389 13,265 13,372 12,932 Capital Expenditures H/A N/A H/A N/A N/A

Exchange Rate (Yen per $) 249 236 245 221 160

*Balance Sheet and Operating Performance are nonconsolidated. **Estimated from data provided in the Fuji Electric Annual Reports. N/A s Not Available

Source: Fuji Electric Co., Ltd., Annual Reports Dataquest January 1989

Fuji Electric Co., Ltd. Head Office: 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 Japan Telephone: (03)211-7111 Telex: J22331 Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, Japan Telephone: (044)333-7111 Telex: J223311 (Millions of Dollars Except per Share Data) Balance Sheet (March 31)* 2M1 1964 1965 liM 1987

Working Capital $ 132.1 215. $ 197.6 $ 204.1 $ 364.4 Long-Term Debt $ 122.1 109. $ 304.1 $ 330.3 $ 480.6 Shareholders' Equity $ 209.2 253. $ 276.3 $ 332.1 $ 510.6 After-Tax Return on Average Equity (%) 8.6 7.2 9.9 5.4 3.4 Operating Performance (Fiscal Year Ending March 31)*

1983 1984 19BS 1£££ 1987

Sales $1,374.3 $1,503.4 $1,555.9 $1,747.5 $2,456.3 Cost of Sales $1,116.1 $1,233.5 $1,260.8 $1,438.9 $2,050.0 RSJ) Expense** $ 68.7 $ 75.0 $ 78.0 $ 99.5 $ 137.5

SG&A Expense $ 208.8 $ 229.2 $ 252.2 289, $ 398.1 Pretax Income $ 37.3 $ 33.5 $ 46.1 27. $ 25.0 Pretax Margin (\) 2.7 2.2 3.0 1, 1.0 Effective Tax Rate (\) 51.6 45.6 41.6 36, 34.1 Ket Income $ 18.1 $ 18.2 $ 27.3 17, $ 16.3 Average Shares Outstanding (Millions) 465 489 557 566 592 Per Share Earnings $ 04 $ 0.04 $ 0.05 $ 0.03 $ 0.03 Dividend $ 01 $ 0.01 $ 0.01 $ 0.03 $ 0.04 0.86 Book Value $ 45 $ 0.52 $ 0.50 $ 0.59 $ $ 0.97- N/A H/A Price Range $ 78- $ 0.93- 02 1.41 1.44

Total Employees 13,610 13,389 13,265 12,372 12,932 Capital Expenditures M/A M/A N/A N/A N/A

Exchange Rate (Yen per $) 249 236 245 221 160

*Balance Sheet and Operating Performance are nonconsolidated. **Estimated from data provided in the Fuji Electric Annual Reports. N/A = Not Available

Source: Fuji Electric Co. Ltd., Annual Reports Dataquest January 1989

BACKGROUND Table la lists Fuji Electric's total company sales by line of business from 1982 through 1985. Beginning in 1986, lines of business were reported differently. Sales for 1986 and 1987 are shown in Table lb. Table 2 provides the Company's estimated semiconductor revenue from 1980 through 1987.

Table la Fuji Electric Co., Ltd. Sales by Line of Business (Billions of Yen)

Fiscal Year Ending March 31 1992 1993 1994 1985 Power and Industrial Electrical/Machinery ¥158.3 ¥156.8 ¥143.0 ¥133.3

Instrumentation 50.9 56.2 57.4 61.5

Standard Electrical Products* 87.8 89.3 104.0 126.2

Vending Machines and Specialty Appliances 33.2 39.9 50.4 60.2

Total ¥330.2 ¥342.2 ¥354.8 ¥381.2

*Includes Semiconductors

Source: Fuji Electric Co., Ltd., Annual Report Dataguest January 1989

Table lb

Fuji Electric Co., Ltd. Sales by Line of Business (Billions of Yen)

Fiscia l Year Endinq March 31 - 198^ 1987

Power Plant and Industrial Machinery ¥155.5 ¥171.2

Systems 52.7 42.9

Standard Machinery and Apparatus 71.7 70.3

Electronics Devices 51.1 51.0

Vending Machines and Specialty Appliancences 55.2 57.6

Total V386.2 ¥393.0

Source: Fuji Electric Co./ Ltd./ Annual Sepor't Dataquest January 1989

Table 2 Fuji Electric Co., Ltd. Estimated Calendar Year Semiconductor Revenue (Millions of Dollars) 1980 1981 1982 1983 1984 1985 1986 1987 Total Semiconductor 95 111 102 124 175 157 205 252 Total Integrated Circuit 11 13 15 25 31 20 35 42

Bipolar Digital (Technology) 1 1 2 1 2 m ECL 2 1 2 Other Bipolar Digital 1 1 2 1 2 Bipolar Digital (Function) Bipolar Digital Hemory 1 1 2 1 2 Bipolar Digital Logic MOS (Technology) 4 4 5 6 7 14 NHOS 4 3 PHOS CMOS 1 5 6 7 14 HOS (Function) 4 4 5 6 7 14 NOS NeMory MOS Micro Devices 4 4 5 6 7 14 MOS Logic Linear 8 10 20 24 13 26 28 Total Discrete 64 93 80 90 132 126 163 206 Transistor 11 14 13 17 31 29 40 57 Small Signal Transistor Power Transistor

Diode 30 45 33 39 60 57 79 97 Small Signal Diode Power Diode Zener Diode Thyrlstor 2 2 2 2 3 3 2 3

Other Discrete 21 32 32 32 38 38 42 49

Total Optoelectronic 20 5 7 9 12 10 7 4 LED Lamps LED Displays Optical Couplers Other Optoelectronics

Exchange Rate (Yen/US$) 227 221 248 235 237 238 167 144

The following tables are included in this section: Table 1—Estimated Worldwide Semiconductor Revenue by Calendar Year (Billions of Yen) Table 2—Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars) Table 3—1988 Percent Change in Worldwide Semiconductor Revenue (Millions of Dollars) Table 4—1988 Estimated Semiconductor Revenue Percent by Region (Billions of Yen) Table 1 Estimated Worldwide Semiconductor Revenue by Calendar Year (Billions of Yen)

1983 1984 1985 1986 1987 1988 Total Semiconductor 29 41 37 34 36 45 Total IC 6 7 5 6 6 8

Bipolar Digital (Technology) 0 0 0 0 0 0

MOS (Technology) 1 1 1 1 2 4 NMOS 1 0 0 0 0 0 PMOS 0 0 0 0 0 0 CMOS 0 1 1 1 2 4 BiCMOS 0 0 0 0 0 0 MOS (Function) 1 1 1 1 2 4 MOS Memory 0 0 0 0 0 0 MOS Microdevices 0 0 0 0 0 0 MOS Logic 1 1 1 1 2 0 Analog 5 6 3 4 4 4 Total Discrete 21 31 30 27 30 36 Transistor 4 7 7 7 8 13 Diode 9 14 14 13 14 15 Thyristor 0 1 1 0 0 0 other Discrete 8 9 9 7 7 8 Total Optoelectronics 2 3 2 1 1 0 Exchange Rate (Yen per US$1) 237 237 238 168 144 130

Source: Dataquest November 1989

Table 2 Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars)

1983 1984 1985 1986 1987 1988

Total Semiconductor . 124 175 157 205 252 346

Total IC 25 31 20 35 42 64

Bipolar Digital (Technology) 1 2 1 2 0 0

MOS (Technology) 4 5 6 7 14 31 NMOS 3 0 0 0 0 0 PMOS 0 0 0 0 0 0 CMOS 1 5 6 7 14 30 BiCMOS 0 0 0 0 0 1

MOS (Function) 4 5 6 7 14 31 MOS Memory 0 0 0 0 0 0 MOS Microdevices 0 0 0 0 0 0 MOS Logic 4 5 6 7 14 31

Analog 20 24 13 26 28 33

Total Discrete 90 132 127 163 206 279 Transistor 17 31 29 40 57 98 Diode 39 60 57 79 97 117 Thyristor 2 3 3 2 3 3 Other Discrete 32 38 38 42 49 61

Total Optoelectronics 9 12 10 7 4 3

Exchange Rate (Yen per US$1) 237 237 238 168 144 130

Source: Dataquest November 1989

Table 3

1988 Percent Change in Worldwide Semiconductor Revenue (Millions of Dollars)

World Market 1987 1988 % Change % Chanae

Semiconductor $252 $346 37.3% 33.0% IC $ 42 $ 64 52.4% 37.4% Bipolar Digital 0 0 0 9.2% MOS (Technology) 14 31 121.4% 54.5% MOS Memory 0 0 0 93.1% MOS Micro 0 0 0 39.9% MOS Logic 14 31 121.4% 29.2% Analog 28 33 17.9% 16.0% Discrete $206 $279 35.4% 14.4% Optoelectronics $ 4 $ 3 (25.0%) 27.5%

Exchange Rate (Yen per US$1) 144 130

Source: Dataquest November 1989

Table 4

1988 Estimated Semiconductor Revenue Percent by Region (Billions of Yen)

Product United States Japan Europe ROW

Semiconductor 4% 82% 3% 11% IC 1% 92% 3% 3% Bipolar Digital 0 0 0 0 MOS (Technology) 0 100 0 0 MOS Memory 0 0 0 0 MOS Micro 0 0 0 0 MOS Logic 0 100 0 0 Analog 2 85 6 6 Discrete 5% 80% 2% 13% Optoelectronics 0 100% 0 0 Source: Dataquest November 1989

Fuji Electric Co., Ltd. Head Office: 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 Japan Telephone: (03) 211-7111 Telex: J22331 or J26374 Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, Japan Telephone: (044)333-7111 Telex: J223311 (Billions of Yen except per Share Data) Balance Sheet (March 31)*

IMl 1983 1984 1985 1986 Working Capital V 32.7 V 32.9 V 50.8 ¥ 48.4 45.1 Long-Term Debt V 32.0 V 30.4 X 25.8 ¥ 74.5 73.0 Shareholders' Equity X 49.6 V 52.1 X 59.7 ¥ 67.7 73.4 After-Tax Return on Average Equity (%) 9.5 8.6 7.2 9.9 5.4

Operating Performance (Fiscal Year Ending March 31)*

1982 1983 1984 1985 1986

Sales V 330.2 V 342.2 ¥ 354.8 ¥ 381.2 ¥ 386.2 Cost of Sales * 267.7 ¥ 277.9 ¥ 291.1 ¥ 308.9 ¥ 318.0 R&O Expense** V 16.5 ¥ 17.1 ¥ 17.7 ¥ 19.1 ¥ 22.0

SGSA Expense V 50. ¥ 52.0 ¥ 54.1 ¥ 61.8 ¥ 63, Pretax Income V 8. ¥ 9.3 ¥ 7.9 ¥ 11.3 ¥ 6, Pretax Margin (%) 2. 2.7 2.2 3.0 1, Effective Tax Rate (%) 47, 51.6 45.6 41.6 36, Net Income V 4. 4.5 4.3 6.7 3, Average Shares Outstanding (Millions) 464 465 489 557 566 Per Share Earnings * 10.13 ¥ 9.68 ¥ 8.79 ¥ 12.03 ¥ 6.71 Dividend * 2.49 ¥ 2.49 ¥ 2.45 ¥ 2.45 ¥ 3.05 Book Value ¥106.90 ¥112.04 ¥122.09 ¥121.54 ¥129.68 ¥ 228- Price Range V 205- ¥ 195- ¥ 229- N/A 353 379 253 332 Total Employees 13,456 13,610 13,389 13,265 13,372 Capital Expenditures N/A N/A N/A N/A N/A

Exchange Rate (Yen per $) ¥ 229 ¥ 249 ¥ 236 ¥ 245 ¥ 221

•Balance Sheet and Operating Performance are nonconsolidated. **Estimated from data provided in the Fuji Electric Annual Reports. N/A = Not Available

Source: Fuji Electric Co. Ltd. Annual Reports Dataquest April 1988

Fuji Electric Co., Ltd. 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 Japan Telephone: (03) 211-7111 Telex: J22331 or J26374 Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, Japan Telephone: (044)333-7111 Telex: J223311 (Millions of Dollars except per Share Data) Balance Sheet (March 31)* 1992 lifil 1984 1985 1996

Working Capital $ 142.8 132. 215.3 $ 197.6 $ 204.1 Long-Term Debt $ 139.7 122. 109.3 $ 304.1 $ 330.3 Shareholders' Equity $ 216.6 209. 253.0 $ 276.3 $ 332.1 After-Tax Return on Average Equity (%) 9.5 8.6 7.2 9.9 5.4

Operating Performance (Fiscal Year Ending March 31)*

1982 1983 1984 1985 1986

Sales $1,441.9 $1,374.3 $1,503.4 $1,555.9 $1,747.5 Cost of Sales $1,169.0 $1,116.1 $1,233.5 $1,260.8 $1,438.9 R&D Expense** $ 72.1 $ 68.7 $ 75.0 $ 78.0 $ 99.5 SGS.A Expense $ 218.8 $ 208.8 $ 229.2 $ 252.2 $ 289.1 Pretax Income $ 38.9 37.3 $ 33.5 $ 46.1 $ 27.1 Pretax Margin (%) 2.7 2.7 2.2 3.0 1.6 Effective Tax Rate (%) 47.2 51.6 45.6 41.6 36.7 Net Income $ 20.5 18.1 $ 18.2 $ 27.3 $ 17.2 Average Shares Outstanding (Millions) 464 465 489 557 566 Per Share Earnings $ .04 $ 0.04 $ 0.04 $ 0.05 $ 0.03 Dividend $ ,01 $ 0.01 $ 0.01 $ 0.01 $ 0.01 Book Value $ ,47 $ 0.45 $ 0.52 $ 0.50 $ 0.59 Price Range $ ,90- $ 0.78- $ 0.97- $ 0.93- N/A 1.66 1.02 1.41 1.44 1.51 Total Employees 13,456 13,610 13,389 13,265 13,372 Capital Expenditures N/A N/A N/A N/A N/A

Exchange Rate (US$ per V) $ 229 $ 249 $ 236 $ 245 $ 221

*Balance Sheet and Operating Performance are nonconsolidated. **Estimated from data provided in the Fuji Electric Annual Reports. N/A = Not Available

Source: Fuji Electric Co., Ltd. Annual Reports DatagueSt April 1988

BACKGROUND Table la lists Fuji Electric's total company sales by line of business from 1982 through 1985. In 1986, lines of business were reported differently and are shown in Table lb. Table 2 provides the Company's estimated semiconductor revenue from 1979 through 1986.

Table la Fuji Electric Co. Ltd. Sales by Line of Business (Billions of Yen)

Fiscal Years Ending March 31 1982 1983 1984 1985

Power and Industrial Electrical/Machinery X158.3 ¥156.8 ¥143.0 ¥133.3

Instrumentation 50.9 56.2 57.4 61.5

Standard Electrical Products* 87.8 89.3 104.0 126.2

Vending Machines and Specialty Appliances 33.2 39.9 50.4 60.2

Total ¥330.2 ¥342.2 ¥354.8 ¥381.2

*Includes Semiconductors

Source: Fuji Electric Co., Ltd., Annual Report Dataquest April 1988

Table lb Fuji Electric Co. Ltd. Sales by Line of Business (Billions of Yen)

Fiscal Year Ending March 31 1986

Electrical/Machinery Group ¥155.5

Systems Group 52.7

Standard Machinery and Apparatus Group 71.7

Electronics Group 51.1

Vending Machines and

Specialty Appliances Group 55.2

Total ¥386.2

Source: Fuji Electric Co., Ltd., Annual Report Dataquest April 1988

Table 2 Fuji Electric Co. Ltd. Estimated Calendar Year Semiconductor Revenue (Millions of Dollars)

1979 1980 1981 1982 1983 1984 1985 1986

Total Semiconductor 79 95 111 102 124 175 157 213

Total Integrated Circuit 9 11 13 15 25 31 20 36

Bipolar Digital (Technology) e 1 1 1 1 2 1 2 TTL ECL Other Bl pedlar Digital 2 1 2 Bipolor Digital (Function) 1 1 1 1 2 1 2 Bipolar Digital Memory Bipolar Digital Logic 1 1 1 1 2 1 2

kOS (Technology) 2 3 4 4 4 5 6 7 KMOS 2 3 4 3 3 PMOS CMOS 1 1 5 6 7 MOS (Function) •m 4 4 4 5 6 7 MOS Memory a MOS Micro Devices MOS Logic 2 3 4 4 4 5 6 7

Li near 7 7 8 10 20 24 13 26

Total Discrete 55 64 93 80 90 132 126 170

Transi stor 9 11 14 13 17 31 29 46 Small Signal Transistor Power Transistor 31 29 46

Oiode 30 M 4S:' .ij; 39 60 57 80 SmalI Signal Oiode Power Diode - 39 54 77 Zener Diode 21 3 4 Thyr i stor 1 2 2 2 2 3 3 2

Other Discrete 15 21 32 32 32 38 38 42

Total Optoelectronic 15 20 5 7 9 12 10 8 LED Lamps 2 LED Displays 3 Opt leal Couplers 4 Other Optoelectronics 3 10 V-

Exchonge Rote (Yen/US$) Z19 :.2.27 JI21 'ZfO 'Z3S 237 23S. TS?

source : Dataquest April 198£

Fuji Electric Co., Ltd. Head Office: 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 JAPAN Telephone: (03) 211-7111 Telex: J22331 Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, JAPAN Telephone: (044)333-7111 Telex: J223311 (Billions of Yen Except per Share Data)

Balance Sheet (March 31)*

1983 iSM 1985 1986 12SI

Working Capital V 32.9 y 50.8 V 48.4 V 45.] ¥ 58.: Long-Term Debt V 30.4 V 25.8 Tt 74.5 V 73.C ¥ 76.S Shareholders' Equity V 52.1 V 59.7 « 67.7 ¥ 73.4 ¥ 81.•; After-Tax Return on Average Equity (S) 3.6 7.2 9.9 5.4 3.4 Operating Performance (Fiscal Year Ending March 31)*

1213 1984 1215 1986 1987

Sales ¥ 342.2 ¥ 354.8 ¥ 381.2 ¥ 386., 2 ¥ 393.0 Cost of Sales ¥ 277.9 ¥ 291.1 ¥ 308.9 ¥ 318,, 0 ¥ 328.0 R&D Expense** ¥ 17.1 ¥ 17.7 ¥ 19.1 ¥ 22,. 0 ¥ 22.0

SG&A Expense ¥ 52.0 ¥ 54.1 ¥ 61.8 ¥ 63,. 9 ¥ 63.7 Pretax Income ¥ 9.3 ¥ 7.9 ¥ 11.3 ¥ 5,. 0 ¥ 4.0 Pretax Margin (%) 2.7 2.2 3.0 1,. 5 1.0 Effective Tax Rate (%) 51.6 45.5 41.6 36,. 7 34.1 Net Income V 4.5 ¥ 4.3 'i 6.7 ¥ 3,. 8 ¥ 2.5 Average Shares Outstanding (Millions) 465 489 557 556 592 Per Share Earnings ¥ 9.68 ¥ 8.79 ¥ 12.03 ¥ 6.67 ¥ 4.50 Dividend ¥ 2.49 ¥ 2.45 ¥ 2.45 ¥ 6.00 ¥ 6.00 Book Value ¥112.04 ¥122.09 ¥121.54 ¥129.68 ¥138.13 Price Range ¥ 195- ¥ 229- ¥ 228- H/A N/A 253 232 353

Total Employees 13,610 13,389 13,265 13,372 12,932 Capital Expenditures N/A N/A N/A N/A N/A

Exchange Rate (Yen per $) 249 236 245 221 160

•Balance Sheet and Operating Performance are nonconsolidated. ••Estimated from data provided in the Fuji Electric Annual Reports. N/A = Not Available

Source: Fuji Electric Co. Ltd. Annual Reports Dataquest October 1988

Fuji Electric Co., Ltd. Head Office: 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 JAPAN Telephone: (03)211-7111 Telex: J22331 Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, JAPAN Telephone: (044)333-7111 Telex: J223311 (Millions of Dollars Except per Share Data)

Balance Sheet (March 31)*

1983 1984 198? 1986 1987

Working Capital $ 132.1 $ 215.3 $ 197.6 $ 204.1 $ 364.4 Long-Term Debt $ 122.1 $ 109.3 $ 304.1 $ 330.3 $ 480.6 Shareholders' Equity $ 209.2 $ 253.0 $ 276.3 $ 332.1 $ 510.6 After-Tax Return on Average Equity (%) 8.6 7.2 9.9 5.4 3.4

Operating Performance (Fiscal Year Ending March 31)*

1983 1984 1985 1986 1987

Sales $1,374.3 $1,503.4 $1,555.9 $1,747.5 $2,456.3 Cost of Sales $1,116.1 $1,233.5 $1,260.8 $1,438.9 $2,050.0 R&D Expense** $ 58.7 $ 75.0 $ 78.0 $ 99.5 $ 137.5

SGSiA Expense $ 208.8 $ 229.2 252. 289. $ 398.1 Pretax Income $ 37.3 $ 33.5 46. 27. $ 25.0 Pretax Margin {\) 2.7 2.2 3, 1. 1.0 Effective Tax Rate (%) 51.6 45.6 41, 36. 34.1 Net Income $ 18.1 $ 18.2 27, 17, $ 16.3 Average Shares Outstanding (Millions) 465 489 557 566 592 Per Share Earnings $ 0.04 $ 0.04 $ 0.05 $ 0.03 $ 0.03 Dividend $ 0.01 $ 0.01 $ 0.01 $ 0.03 $ 0.04 0.59 0.86 Book Value $ 0.45 $ 0.52 $ 0.50 $ $ 0.97- 0.93- H/A N/A Price Range $ 0.73- $ $ 1.02 1.41 1.44

Total Employees 13,610 13,389 13,265 12,372 12,932 Capital Expenditures H/A N/A N/A N/A N/A

Exchange Rate (Yen per $) 249 236 245 221 160

•Balance Sheet and Operating Performance are nonconsolidated. ••Estimated from data provided in the Fuji Electric Annual Reports. N/A = Not Available

Source: Fuji Electric Co. Ltd. Annual Reports Dataquest October 1988

BACKGROUND Fuji Electric Company, Ltd., jointly founded by Siemens AG of West Germany and Furukawa Electric in 1923, is a major producer of heavy electrical equipment, power semiconductors, and silicon solar cells. The Company began production of turbine generators and heavy electrical equipment at its Kawasaki plant in 1925. In 1935, Fujitsu was created from the Company's telephone division as a separate entity. After World War II, Fuji renewed its technical ties with Siemens and licensed Western Electric's transistor and RCA's diode in 1958. The Company's Central Research laboratory in Yokosuka was completed in 1964.

In February 1980, Fuji Electric and Siemens established Fuji Electronic Components Co., Ltd., to produce discretes and assemble Siemens' bipolar linear ICs for consumer products. The Company was capitalized at ¥200 million and acquired 100 percent ownership of Omachi Fuji Co. for IC assembly beginning in late 1981.

Table la lists Fuji Electric's total company sales by line of business from 1982 through 1985. Beginning in 1986, lines of business were reported differently. Sales for 1986 and 1987 are shown in Table lb.

Table la Fuji Electric Co., Ltd. Sales by Line of Business (Billions of Yen) Fiscal Year Ending March 31 1982 1983 1984 1985 Power and Industrial Electrical/Machinery ¥158.3 • ¥156.8 ¥143.0 ¥133.3 Instrumentation 50.9 56.2 57.4 61.5 Standard Electrical Products* 87.8 89.3 104.0 126.2 Vending Machines and Specialty Appliances 33.2 39.9 50.4 60.2

Total ¥330.2 ¥342.2 ¥3 54.8 ¥381.2

*Includes Semiconductors

Source: Fuji Electric Co. Ltd. Annual Report Dataquest October 1988

Table lb Fuji Electric Co., Ltd. Sales by Line of Business (Billions of Yen) Fiscia l Year Endina March 31 1986 1987

Power Plant and Industrial Machinery ¥155.5 ¥171.2 Systems 52.7 42.9 Standard Machinery and Apparatus 71.7 70.3 Electronics Devices 51.1 51.0 Vending Machines and Specialty Appliances 55.2 57.6 Total ¥386.2 ¥3 93.0

Source: Fuji Electric Co., Ltd., Annual Report Dataquest October 1988

ORGANIZATION Fuji Electric is part of the Group, which consists of 28 firms and is affiliated with 44 companies of the Furukawa Group. The Fuji' Group has nine factories in Japan. Semiconductor devices are produced at Fuji Electronic Components' Matsumoto plant and three associated factories, all located in Nagano Prefecture. U.S. Fuji Electric manufactures optoelectronic devices in Piscataway, New Jersey. The plants and the devices that they produce include: Matsumoto Plant Fab: Hybrid thick-film ICs, bipolar ICs, MOS ICs, hard disk drives; Assembly: High-voltage rectifiers liyama Fuji Co., Ltd. Assembly: Zener diodes, Schottky barrier diodes, rectifiers Omachi Fuji Co., Ltd. Assembly: Power transistor modules Hokuriku Fuji Co., Ltd. Assembly: Rectifiers and high-speed diodes U.S. Fuji Electric Assembly: Optoelectronics

CUSTOMER BASE Fuji Electronic Components primarily sells discrete devices, such as power transistors, diodes, and thyristors, to consumer product OEMs, automobile makers, and government agencies such as Japan Railways. About 50 percent are sold through direct sales and 50 percent through dealers and representatives. Sales to Southeast Asia are growing, but only a small amount is sold in Europe, to Siemens and Thomson.

In March 1984, Fuji received a ¥1.1 billion order ($4.8 million) from the People's Republic of China for a complete line of semiconductor manufacturing equipment and production technology to produce 10 million units of silicon diodes annually. In April 1984, Fuji signed a one- to three-year contract worth $13.3 million to supply power transistors to 80 U.S. electric makers including Allen Bradley, Emerson, and Reliance. Fuji recently signed a contract to export a 10,000V and 20,000V silicon diode plant to Ru Gao Factory in Giang Su, the People's Republic of China. All of Fuji's IC sales are in Japan. All of its overseas sales are discrete and optoelectronic devices.

AGREEMENTS Fuji Electric has a number of agreements and alliances with other companies, as follows: • In September 1985, Fuji Electric and Mosel signed an agreement whereby Fuji agreed to supply 4- and 6-inch wafers to Mosel, using Mosel's 1.5- and 2.0-micron process technology. The companies agreed to jointly develop CMOS 16K and 64K SRAMs for Mosel under an OEM contract. • In May 1986, Fuji Electric began a joint venture with Cambridge Instruments to make production equipment for GaAs processing. Cambridge provided Fuji with technology for producing MOCVD equipment.

• In July 1988, Fuji Electric agreed to provide wafers and an undisclosed amount of cash to Barvon BiCMOS Technology, Inc., in exchange for Barvon's cell library and algorithm and CAD software. The Fuji wafers will use several different processes including 1.5-micron dual-metal HCMOS, 2-micron dual-metal silicon gate BiCMOS, and a high-voltage CMOS-DMOS process.

SEMICONDUCTOR PRODUCT LINE

Fuji specializes in discrete devices, such as power rectifiers, silicon and zener diodes, high-current thyristors, power MOSFETs, Darlington power transistors, solid-state relays, and linear ICs. The Company brought up a MOS power transistor production line in 1984. Due to the rapid growth in the IC market, Fuji is moving into IC production. Since 1984, Fuji has imported IC chips (power switching controllers) from Siemens for assembly in its Matsumoto plant under a joint venture. Monthly production is about 40,000 to 50,000 units. These chips are sold under the Siemens label. Fuji has recently begun making semiconductor manufacturing equipment under license from Cambridge Instrument Co. pic. This equipment includes III-V compound semiconductor crystal pulling units and MOCVD machines.

SEMICONDUCTOR REVENUE As shown in Table 2, discrete and optoelectronic devices accounted for $210 million or 83 percent of Fuji's total semiconductor sales in 1987, which were up 23 percent in dollars from 1986. Rectifiers, transistors, and thyristors account for the majority of total sales.

RESEARCH AND DEVELOPMENT Research at Fuji's R&D laboratories is focused on custom ICs for industrial and consumer use, power transistors, thyristors, amorphous silicon photosensitive materials, and amorphous silicon sensors for industrial robots using artificial intelligence. Fuji is especially interested in optical sensors, videa sensors, bioelectrical sensors, and semiconductor sensors for use in automated manufacturing and consumer products. The Company invests approximately 5.6 percent of its total company sales in R&D (this amounted to $138 million in fiscal 1987). Semiconductor R&D is carried out at Fuji's Matsumoto Electron Device Laboratory.

Table 2 Fuji Electric Co,, Ltd. Estimated Calendar Year Semiconductor Revenue (Millions of Dollars)

1980 1981 1982 1983 1984 1985 1986 1987 BsaMa sasasx aSSSBB sKMatmm ammmsss assass ssassas assaa: Total Semiconductor 95 111 102- 124 175 157 205 252

Total Integrated Circuit 11 13 15 25 31 20 35 42

Bipolar Digital (Technology) 1 1 1 1 2 1 2 TTL ECL Other Bipolar Digital 2 1 2 Bipolar Digital (Function) 1 1 1 1 2 1 2 Bipolar Digital Memory Bipolar Digital Logic 1 1 1 1 2 1 2

MOS (Technology) 3 4 4 4 5 & 7 14 NMOS 3 4 3 3 PMOS CMOS 1 1 5 6 7 14 MOS (Function) 3 4 4 4 5 6 7 14 MOS Memory MOS Micro Devices 3 4 4 4 5 6 7 14 MOS Logic Linear 7 8 10 20 24 13 26 28

Total Discrete 64 93 80 90 132 126 163 206

Transistor 11 14 •13 17 31 29 40 57 Small Signal Transistor Power Transistor

Diode 30 45 33 39 60 57 79 97 Small Signal Diode Power Diode Zener Diode

Thyristor 2 2 2 2 3 3 2 3

Other Discrete 21 32 32 32 38 38 42 49

Total Optoelectronic 20 5 7 9 12 10 7 4 LED Lamps LED Displays Optical Couplers Other Optoelectronics

Exchange Rate (Yen/US$) 227 221 248 235 237 238 167 144

Source: Dacaquest October 1988

Fuji Electric Co., Ltd. Head Office: 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 JAPAN Telephone: (03) 211-7111 Telex: J22331 or J26374

Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, JAPAN Telephone: (044) 333-7111 Telex: J223311 (Billions of Yen Except per Share Data)

Balance Sheet (March 31)*

1982 1983 1984 1985 1986

Working Capital ¥ 32.7 ¥ 32.9 ¥ 50.8 ¥ 48.4 ¥ 45.] Long-Term Debt ¥ 32.0 ¥ 30.4 ¥ 25.8 ¥ 74.5 ¥ 73.C Shareholders' Equity ¥ 49.6 ¥ 52.1 ¥ 59.7 ¥ 67.7 ¥ 73.'! After-Tax Return on Average Equity (%) 9.5 8.6 7.2 9.9 5.4

Operating Performance (Fiscal Year Ending March 31)*

1982 1983 1984 1985 1986

Sales ¥ 330.2 ¥ 342.2 ¥ 354.8 ¥ 381.2 ¥ 386.2 Cost of Sales ¥ 267.7 ¥ 277.9 ¥ 291.1 ¥ 308.9 ¥ 318.0 R&D Expense** ¥ 16.5 ¥ 17.1 ¥ 17.7 ¥ 19.1 ¥ 22.0

SG&A Expense ¥ 50.1 ¥ 52.0 ¥ 54.1 ¥ 61.8 ¥ 63.9 Pretax Income ¥ 8.9 ¥ 9.3 ¥ 7.9 ¥ 11.3 ¥ 6.0 Pretax Margin C^) 2.7 2.7 2.2 3.0 1.6 Effective Tax Rate (%) 47.2 51.6 45.6 41.6 36.7 Net Income ¥ 4.7 ¥ 4.5 V 4.3 ¥ 6.7 ¥ 3.8 Average Shares Outstanding (Millions) 464 465 489 557 566 Per Share Earnings ¥ 10.13 ¥ 9.68 ¥ 8.79 ¥ 12.03 ¥ 6.71 Dividend ¥ 2.49 ¥ 2.49 ¥ 2.45 ¥ 2.45 ¥ 3.05 Book Value ¥106.90 ¥112.04 ¥122.09 ¥121.54 ¥129.68 Price Range ¥ 205- ¥ 195- ¥ 229- ¥ 223- N/A 379 253 332 353

Total Employees 13,456 13,610 13,389 13,265 13,372 Capital Expenditures N/A N/A N/A N/A N/A

Exchange Rate (Yen per $) ¥ 229 249 236 245 221

*Balance Sheet and Operating Performance are nonconsolidated. **Estimated from data provided in the Fuji Electric Annual Reports. N/A = Not Available

Source: Fuji Electric Co., Ltd., Annual Reports Dataguest June 1987

JSIS Volume III 1987 Dataquest Incorporated June Fuji Electric Co., Ltd.

Fuji Electric Co., Ltd. 12-1 Yurakucho 1-chome Chiyoda-ku, Tokyo 100 JAPAN Telephone: (03) 211-7111 Telex: J22331 or J26374

Main Plant: 1-1, Tanabe-Shinden Kawasaki-ku 210, JAPAN Telephone: (044) 333-7111 Telex: J223311 (Millions of Dollars Except per Share Data)

Balance Sheet (March 31)* 1982 1983 1984 1985 1986

Working Capital $ 142.8 132.1 215.3 197.6 $ 204.1 Long-Term Debt $ 139.7 122.1 109.3 304.1 $ 330.3 Shareholders' Equity $ 216.6 209.2 253.0 276.3 $ 332.1 After-Tax Return on Average Equity (%) 9.5 8.6 7.2 9.9 5.4

Operating Performance (Fiscal Year Ending March 31)*

1982 1983 1984 198? 1986

Sales $1,441.9 $1,374.3 $1,503.4 $1,555.9 $1,747.5 Cost of Sales $1,169.0 $1,116.1 $1,233.5 $1,260.8 $1,438.9 R&D Expense** $ 72.1 $ 68.7 $ 75.0 $ 78.0 $ 99.5 SG&A Expense $ 218.8 $ 208.8 $ 229.2 $ 252.2 $ 289.1 Pretaix Income 38. 37, 33. 46. 27. Pretax Margin {%) 2. 2, 2. 3. 1. Effective Tax Rate (%) 47. 51. 45. 41. 36, Net Income 20. 18. 18. 27. 17. Average Shares Outstanding (Millions) 464 465 489 557 566 Per Share 0.04 0.04 0.04 Earnings $ $ $ $ 0.05 $ 0.03 0.01 $ 0.01 $ 0.01 $ 0.01 $ 0.01 Dividend $ $ 0.47 $ 0.45 $ 0.52 $ 0.50 $ 0.59 Book Value $ 0.90- $ 0.78- $ 0.97- $ 0.93- N/A Price Range 1.66 1.02 1.41 1.44 1.51

Total Employees 13,456 13,610 13,389 13,265 13,372 Capital Expenditures N/A N/A N/A N/A N/A

Exchange Rate (US$ per V) $ 229 249 236 245 $ 221

*Balance Sheet and Operating Performance are nonconsolidated. **Estimated from data provided in the Fuji Electric Annual Reports. N/A a Not Available

Source: Fuji Electric Co. Ltd. Annual Reports Oataguest June 1987

1987 Dataquest Incorporated June JSIS Volume III Fuji Electric Co., Ltd.

BACKGROUMD

Fuji Electric Company, Ltd., jointly founded by Siemens AG of West Germany and Furukawa Electric in 1923, is a major producer of heavy electrical equipment, power semiconductors, and silicon solar cells. The Company began production of turbine generators and heavy electrical equipment at its Kawasaki plant in 1925. In 1935, Fujitsu was created from the Company's telephone division as a separate entity. After World War II, Fuji renewed its technical ties with Siemens and licensed Western Electric's transistor and RCA's diode in 1958. The Company's Central Research laboratory in Yokosuka was completed in 1964.

Table la lists Fuji Electric's total company sales by line of business from 1982 through 1985. In 1986, lines of business were reported differently. 1986 sales are shown in Table lb.

Table la

Fuji Electric Co. Ltd. SALES BY LINE OF BUSINESS (Billions of Yen)

Fiscal Years Ending March 31 1982 1983 1984 1985 Power and Industrial Electrical/Machinery ¥158.3 ¥156.8 ¥143.0 ¥133.3

Instrumentation 50.9 56.2 57.4 61.5

Standard Electrical Products* 87.8 89.3 104.0 126.2

Vending Machines and Specialty Appliances 33.2 39.9 50.4 60.2

Total ¥330.2 ¥342.2 ¥3 54.8 ¥381.2

*Includes Semiconductors

Source: Fuji Electric Co., Ltd., Annual Report Dataguest June 1987

JSIS Volume III 1987 Dataquest Incorporated June Fuji Electric Co,, Ltd.

Table lb

Fuji Electric Co. Ltd. SALES BY LINE OF BUSINESS (Billions of Yen)

Fiscal Year Ending March 31 1985

Electrical/Machinery Group ¥155.5

Systems Group 52.7

Standard Machinery and Apparatus Group 71.7

Electronics Group 51.1

Vending Machines and Specialty Appliances Group 55.2

Total ¥386.2

Source: Fuji Electric Co., Ltd., Annual Report Dataquest June 1987

ORGANIZATION

Fuji Electric is part of the Fuji Group, which consists of 26 firms and is affiliated with 44 companies of the Furukawa Group. The Fuji Group has nine factories in Japan. Semiconductor devices are produced at Fuji Electronic Components' Matsumoto plant and three associated factories, all located in Nagano Prefecture. U.S. Fuji Electric manufactures optoelectronic devices in Piscataway, New Jersey.

1987 Dataquest Incorporated June JSIS Volume III Fuji Electric Co., Ltd.

The plants and the devices that they produce include

Matsumoto Plant Fab: Hybrid thick-film ICs, bipolar ICs, MOS ICs, hard disk drives; Assembly: High-voltage rectifiers liyama Fuji Co., Ltd. Assembly: Zener diodes, Schottky barrier diodes, rectifiers

Omachi Fuji Co., Ltd. Assembly: Power transistor modules

Hokuriku Fuji Co., Ltd. Assembly: Rectifiers and high-speed diodes

U.S. Fuji Electric Assembly: Optoelectronics

CUSTOMER BASE

Fuji Electronic Components primarily sells discrete devices, such as power transistors, diodes, and thyristors, to consvimer product OEMs, automobile makers, and government agencies such as the Japan National Railway. About 50 percent are sold through direct sales and 50 percent through dealers and representatives. Sales to Southeast Asia are growing, but only a small amount is sold in Europe, to Siemens and Thomson.

SEMICONDUCTOR PRODUCT LINE

The Company also produces MOS memory for the U.S. startup, MOSEL, on an OEM basis.

SEMICOMDUCTOR REVENUE

As shown in Table 2, discrete and optoelectronic devices accounted for $178 million or 84 percent of Fuji's total semiconductor sales in 1986, which were up 36 percent in dollars from 1985. Rectifiers, transistors, and thyristors account for the majority of total sales.

Table 2

Fuji Electric Co. Ltd. ESTIMATED CALENDAR YEAR SEMICONDUCTOR REVENUE (Millions of Dollars)

1979 1980 1981 1982 1983 1984 1985 1986

Total Semiconductor 79 95 111 102 124 175 157 213

Total Integrated Circuit 9 11 13 15 25 31 20 36

Bipolar Digital (Technology) 0 1 1 1 1 2 1 2 TTL ECL Other Biptflar Digital 2 1 2 Bipolar Digital (Function) 1 1 1 1 2 1 2 Bipolar Digital Memory 1 1 1 1 2 1 2 Bipolar Digital Logic MOS (Technology) 2 3 A 4 4 5 6 7 hMOS 2 3 4 3 3 PMOS 1 1 5 6 7 CMOS 7 MOS (Function) 2 3 4 4 4 5 6 MOS Memory MOS Micro Devices 2 3 4 4 4 5 6 7 MOS Log i c Linear 7 7 8 10 20 24 13 26

Total Discrete 55 64 93 80 90 132 126 170

Transistor 9 11 14 13 17 31 29 46 Small Signal Transistor Power Transistor 31 29 46

Diode 38 30 45 33 39 60 57 80 SmalI Signal Diode Power Diode 39 54 77 Zener Diode 21 3 4

Thyristor 1 2 2 2 2 3 3 2

Other Discrete 15 21 32 32 32 38 38 42

Total Optoelectronic 15 20 5 7 9 12 10 8 LED Lamps 2 LED Displays 3 Optical Couplers 4 Other Optoelectronics 3 10

Exchange Rote (Yen/LIS$) 219 227 221 24S 23S 237 238 167

Source: Dataquest June 1987

JSIS Volume III 1987 Dataguest Incorporated June Fuji Electric Co., Ltd.

RESEARCH AMD DEVELOPMENT

Research at Fuji's R&D laboratories is focused on custom ICs for industrial and consumer use, power transistors, thyristors, amorphous silicon photosensitive materials, and amorphous silicon sensors for industrial robots using artificial intelligence. Fuji is especially interested in optical sensors, video sensors, bioelectrical sensors, and semiconductor sensors for use in automated manufacturing and consumer products. The Company invests approximately 5.7 percent of its total company sales in R&D (this amounted to $100 million in fiscal 1986). Semiconductor R&D is carried out at Fuji's Matsumoto Electron Device Laboratory.

1987 Dataquest Incorporated June JSIS Voliime III

Fujitsu Limited 6-1, Maninouchi 2-chome Chiyoda-du, Tokyo 100, Japan Telephone: 03-216-3211 Fax: 03-216-9365 Dun's Number: 08-292-1644 Date Founded: 1935

CORPORATE STRATEGIC DIRECTION In 1990, Fujitsu took a major step toward increasing its global presence by acquiring an 80 percent share Fujitsu Limited, founded in 1935 as a spin-off of the in ICL, Ltd., a computer unit of STC Pic. The merger Communications Division of Fuji Electric Company, makes Fujitsu the second largest computer vendor in Ltd., is a multinational Japanese firm with 73 whoUy the world. The merger also gives Fujitsu a 43 percent owned, consolidated subsidiaries. Fujitsu designs, share of the mainframe market in Great Britain. manufactures, and markets computer and data processing systems, telecommunications equipment, Along with global expansion and unification issues, electronic devices, and other electronic products such the Company is confronted with an adverse exchange as car stereos and digital audiotape (D.AT) players. To rate. Since 1985, the value of die yen has risen organize and unify such a diverse product offering, approximately 70 percent against the US dollar, Fujitsu has segmented its coiporate structure into four thereby decreasing profit margins on exported goods. main divisions by each of the four aforementioned In response, Fujitsu is streamlining its organization, product types. Approximately 60 percent of Fujitsu's reducing costs, and de-emphasizing cross-border revenue is derived from ^ Computer and Data transactions. The Coir^any implemented a "Fresh Processing Systems Division. Fujitsu '88" campaign focused toward redefining management roles for consohdating certain duties and Fujitsu currently is one of the largest companies in centralizing responsibility, thereby increasing Japan with over ¥2.39 trillion (US$18.6 billion) in managerial efficioicy. Also, the Company has begun revenue and over ¥2.62 trillion (US$19.0 billion) in to increase raw material sourcing and product total assets. However, because it is a large, diverse, development from within local maricets in which it multinational company, Fujitsu is confronted with has manufacturing plants, thereby reducing cross- some very complex issues. Two main issues are the border transactions and effectively reducing the Com geographical expansion of the world's markets and pany's exposure to adverse movement in the the unification the European Community (EC), '^th exchange rate. the opening to trade of certain Eastern European countries and the economic development of several third-world countries, as well as the unification of the The results of these strategies are reflected in the EC, new markets and subsequendy new opportunities Company's financial performance. Net sales are emei]ging rapidly. increased 6.8 percent to ¥2.6 trilUon (US$17.9 bil lion) in the fiscal year ending March 31, 1990, icom. Fujitsu is responding to these issues by increasing its ¥2.4 trillion (US$18.6 billion) in fiscal 1989. (Percen global presence at a local level. The Company is tage changes refer only to ¥ amounts; US$ percentage pursuing this strategy by increasing its foreign invest changes will differ because of fluctuations in ment and by globally establishing local subsidiaries. Dataquest exchange rates.) International sales As a consequence of this strategy, Fujitsu hopes to increased 15.4 percent to ¥609.4 billion obtain an early foothold in the new maikets and (US$4.2 billion) in fiscal 1990 from ¥528.3 billion thereby position itself to take full advantage of (US$4.1 billion) in fiscal 1989. latemational sales emerging opportunities as the new maricets evolve. accounted for 23.9 percent and 22.1 percent of the Furthermore, Fujitsu will be in closer contact with the Company's total revalue in fiscal 1990 and 1989, individual consumer so that it can respond in an respectively. Net income increased 24.0 percent to appropriate and timely manner to local market ¥86.6 billion (US$607.0 million) m fiscal 1990 from demands. ¥69.9 billion (US$545.0 million) in fiscal 1989. The

preceding 1990 financial figureswer e published prior Office Automation to Fujitsu's Annual Report Specific financial figures have not yet been made available. Consequently, '^thin the office automation product line, Fujitsu 1990 figures are not included in the financial tables, offers small business computers, workstations, word which are located at the end of this profile. processors, and personal computers, including busi ness, hypermedia, desktop, portable, and laptop. The following occurred for Fujitsu during fiscal 1989: More detailed information is available in Tables 1 and 2, which appear after "Business Segment Strategic • It released die K-600 Series and K-100 Series of Direction" and present corporate highlights and reve small business computers as office processors for nue by region. Information on revenue by distribution strategic information systems. channels is not available. Tables 3 and 4, comprehen • It released the Fujitsu S Family of engineering sive financial statements, are at the end of this profile. workstations in response to the growing need for UNIX. • It introduced the OASYS Series of Japanese- language word processors with improved docu ment production generation and graphics functions. BUSINESS SEGMENT STRATEGIC • It released new machines in the FM R Series of DIRECTION business computers, completing the lineup of desk top, portable, and laptop models. • It introduced the FM TOWNS hypermedia per Computers and Data Processing sonal computer, an Intel 80386-based multimedia computer system with a CD-ROM drive, featuring Dataquest estimates that Fujitsu was one of the five a bit-mapped graphical user interface (GUI) with largest information systems manufacturers in the pull-down menus and icons. world and the largest in Japan in the calendar year 1989. The Computer and Data Processing Division's net sales increased approximately 7 percent to VAN Services ¥1.69 trilUon (US$11.86 biUion) in fiscal 1990, Within the VAN services product line, Fujitsu offers accounting for 66.1 percent of the Company's total industry VANs, local VANs, corporate VANs, and net sales. The division's product offerings include personal communication services. The following computer systems, office automation equipment, occurred for Fujitsu during fiscal 1989: VAN services, coiiq>uter storage, electronic printers, CAD/CAM/CAE, and software. Fujitsu's main com • It expanded die FEMCS VAN service by offering petitors, in order of their degree of competitiveness an industry VAN for application-specific services widi Fujitsu, are IBM, Digital, Hewlett-Packard, such as sliding and receiving orders, a local VAN Groupe Bull, NEC, Unisys, and Hitachi. to increase the efficiency of local distribution in a common network, and a corporate VAN to expand corporate data services and telecommunications Computer Systems networks. • It offered new personal computer communications '^thin the computer systenqs product line, Fujitsu services, including CompuServe, which provides offers supercomputers, retail automation systems, and an easy way to communicate with Has United g^ieral-purpose computers. The following occurred States through international telecommunication for Fujitsu during fiscal 1989: lines, and NIFTY-Serve, which offers various serv • It introduced eight new models of die VP-2000 ices using the FENICS network. Series supercomputers, which offer one of the world's highest vector processing powers at Computer Storage 4 Gflops (floating-point operations per second). • It made strong gains in the point-of-sale (POS) Dataquest estimates that Fujitsu acquired a 10 percent market with the FAST Series of retail automation share of the worldwide rigiddis k maricet (by revenue) sjrstems. and a 6 percent share of the worldwide tape drive • It released die FACT m Series, an automated teller market in calendar year 1989. Fujitsu produces and cash-dispensing machine. 1/2-inch reel-to-reel, start-stop, and streaming tape • It enjoyed increased demand for its M Series drives. In die rigid disk drive market, the Company general-purpose computers, widi substantial orders produces 3.5-inch fixed drives ranging in size iq> to firom the Tokyo and Osaka stock exchanges. 100MB.

Electronic Printers This device functions as a facsimile machine, as a printer with laser printer-quality output, and as a data The Company manufactures and markets line- entry terminal with support for handwritten optical impacted, fuUy formed printers, serial impact dot character recognition (OCR). It is designed for use on matrix printers, baud printers, and laser printers. a Fujitsu Network Architecture around an M Series mainframe. CAD/CAM/CAE Corporate Information Network System Fujitsu strengthened its position in the CAD/CAM/ (COINS) CAE market in 1989, with revenue growing by 13.7 percent to a US dollar equivalent of $269 mil COINS is a corporate informations network system lion. The Company continues to be among the major that is receiving significant interest from companies OEMs of Sun Microsystems workstations. The key as a multimedia network with excellent economy and strategic issue to be resolved concerns the recent IBM extensibility. acquisition of Cadam, which develops Fujitsu's pri mary CAD/CAM product IBM has honored all con- Switching Systems tractural commitments to date. However, a continued long-tenn relationship is unlikely. ^thin the switching systems product line, Fujitsu offers central ofGce switching systems and digital FBX switching systems. The following occurred for Software Fujitsu during calendar year 1989: '^tfain the software product line, Fujitsu offers oper • It introduced five new models of the ating system software, application software, transla FETEX-5000A Series, which is compatible with tion support systems, and architectures. The following ISDN and supports l.SMB per second transmis occurred for Fujitsu during fiscal 1989: sion between packet-switching systems and long • It introduced the MSP-EX operating syston, which packets (up to 4,096 octets). is targeted toward the heavy-use demands of host • It introduced the Starlog Business Management coirq>uters. Package, which expands the cost management and • It developed application programs targeted for user analysis capabilities of the Starlog PBX sys computer use in individual companies. tem, enabling telecommunications managers to • It released the ATLAS-G Japanese-English transla better supervise use of telephone and related facili tion support system, which runs on the M Series ties within their companies. general-purpose computers. • It announced expansion of its F9600 PBX product • It experienced increased sales of the knowledge into a strategic ISDN PBX platform supporting as system architecture and applications, released in many as 10,000 lines or as few as 100 lines. the prior year. • It introduced the 300A Series digital PBX informa tion switching system.

Telecommunication Transmission Systems The Telecommunications Division's product line is 'Mthin the transmission systems product line, Fujitsu ISDN systems, corporate information network sys offers digital conomunications equipment and earth tems (COINS), switching systems, and transmission station systems for satellite communication. During systems. In fiscal 1990, the division recorded net fiscal 1989, Fujitsu supplied some of the equipment sales of $394.3 billion, an increase of approximately for flie the Transpacific Cable No. 3 (TPC-3), and 5.0 percent over fiscal 1989. Net sales of the division supplied mobile and portable earth stations to Tele accounted for IS.S percent of total net sales. com SAT and VIDEO SAT.

Integrated Services Digital Network (ISDN) Electronic Devices Services Dataquest estimates that Fujitsu was the fifth largest Wittdn. tiieISD N services, Fujitsu offers various fac (by revenue) semiconductor vendor in the worldwide simile equipment, ISDN terminals, moving image market in calendar year 1989, with a US dollar television phones, handwriting communication termi equivalent of $2.96 billion in net sales. Net sales nals, and key telephones. During fiscal 1989, Fujitsu increased 6.7 percent over the previous year. The introduced the F1865A Facsimile Coimection Unit division accounted for 14.0 percent of total net sales

with ¥356.8 billion, (US$2.8 billion). The semicon LSIs ductor product line can be broken down into IC memories (MOS and bipolar technology), ASICs During fiscal 1989, Fujitsu announced the develop (MOS and bipolar technology), LSIs, and electronic ment of 54,000-gate ultralarge-scale integration ECL components. gate arrays that use a substrate power supply struc ture, and the development of a 64MB DRAM memory celL IC Memories

In fiscal 1989, IC memory sales grew dramatically, Electronic Components reflecting the growth of computers, office automation equipment, and telecommunications equipment. The Company offers a range of products from plasma Domestic and international demand for the 1MB display panels and membrane keyboards to connec DRAM and the 4MB DRAM increased. Fujitsu also tors and relays. Hybrid ICs and other new products began production of BiCMOS memories. that use advances in thin-film technology are devel oped in this division. ASICs In fiscal 1989, the Company increased its product Others offering by introducing die following: Other operations range from products such as car • ASIC Design Kits, which are developed specifi stereos to automatic vehicle monitors. This division cally for the Daisy/Cadnetix Inc. (DAZIX) design accounted for only 4.3 percent of total net sales. environment on the Sun-4 family of workstations However, sales did increase 10.1 percent to running UNIX (SunOS 4.0.3) ¥109 billion (US$765 million) in fiscal 1990. • Two new ECL gate arrays, E10040VHM and E10160VHR, which offer on-chip memory and are the newest additions to the Company's VH series Further Information of ECL arrays • A new series of BiCMOS gate arrays, the BC-H For further infomiation pertaining to die Company's series, which provides bipolar performance and business segments, please contact the appropriate high-current drive with low power dissipation Dataquest industry service.

Table 1 Five-Year Corporate Highlights (Millions of US Dollars)

1985 1986 1987 1988 1989 Rve-Year Revenue $6,415 $7,646 $11,218 $14,829 $18,616 Percent Change - 19.19 46.70 32.19 25.54

Capital Expenditure $1,998 $1,559 $1,964 $3,161 K167 Percent of Revenue 31.14 20.39 17.51 21.32 22.39

R&D Expenditure $545 $710 $1,043 $1,377 $1,925 Percent of Revenue 8.49 9.28 9.30 9.29 10.34

Number of Employees 74,187 84,277 89,293 94,825 104,503 Revenue ($K)/Employee $86 $91 $126 $156 $178

Net Income $366 $176 $135 $305 $545 Percent Change - (51.88) (23.00) 125.24 78.75

Exchange Rate (US$=¥) ¥243.53 ¥221.26 ¥159.51 ¥138.02 ¥128.25

1989 Calendar Year Qi Q2 Q3 Q4 Quarterly Revenue NA NA NA NA Quarterly Profit NA NA NA NA

NA = Not availatde Source: Fnjitsn Limited Ammal Reports and Forms 10-K Dataquest (1990) Ikble 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 Asia/Pacific 73.06 76.29 78.06 77.89 77.87 Japan 73.06 76.29 78.06 77.89 77.87 International 26.94 23.71 21.94 22.11 22.13

Sovce: Fujitsu Limited Ammal Reports and Forms 10-K Dataqnest (1990)

Fuji Facom (Japan) Development of computer systems for control 1989 SALES OFFICE LOCATIONS Fujitsu (Singapore) Electronic parts (digital switching systems) North America—^3 Fujitsu Australia (Austraha) Europe—4 Digital key telephones, digital PBXs Asia^acific—90 Fujitsu Automation (Japan) Japan—82 Automation equipment ROW—3 Fujitsu Buhin (Japan) Electronic parts Fujitsu Component (Malaysia) Electronic parts (relays, keyboards, connectors) Fujitsu Computer Technology (Japan) MANUFACTURING LOCATIONS Development of LSIs, software for information processing equipment North America Fujitsu Denso (Japan) Communications/electronic equipment Amdahl Corporation Fujitsu General (Japan) Communications and information processing Home electric appliances, communications equipment equipment, data processing equipment Fujitsu America Fujitsu Isotec (Japan) Communications and information processing Peripherals equipment, development of software Fujitsu Kasei (Japan) Fujitsu Business Communications of America Plastic products for communications equipment Communications equipment Fujitsu Kiden (Japan) Fujitsu-GTE Business Systems Data processing equipment, indicators, molds Development of large PBXs Fujitsu Microelectronics Asia (Singapore) Fujitsu Microelectronics Semiconductor devices (plans 1MB DRAM Semiconductor devices (256K DRAMs, 1MB production) DRAMs, ASICs) Fujitsu Microelectronics (Malaysia) Intellistor, Inc. MOS memories, linear ICs, standard logic Development of information processing equipment Fujitsu Miyagi Electronics (Japan) Semiconductor devices Europe Fujitsu Peripherals (Japan) Peripherals Anamartic Ltd. (United Kingdom) Fujitsu TEN (Japan) Semiconductor memories Car radios, stereos Fujitsu Espana (Spain) Fujitsu Thailand (Thailand) Communications and information processing Magnetic disk drive heads, magnetic heads for equipment printers Fujitsu Microdectronics (Ireland) Fujitsu Tohoku Electronics (Japan) Semiconductor devices (2S6K DRAMs, 1MB Semiconductor devices DRAMs) Fujitsu VLSI (Japan) Fujitsu Microelectronics (United Kingdom) Development of semiconductor devices Development of ASICs Fujitsu Yamanashi Electronics (Japan) Semiconductor devices AsialPacific Hasegawa Electric (Japan) Conmiunications equipment Advantest Corporation (Japan) Kjrushu Fujitsu Electronics (Japan) Measuring instruments, IC testers Semiconductor devices FKL-Dongwa (SouA Korea) Nihon Dengyon (Japan) Magnetic floppy disk drive heads Radio and digital communications equipment Fanuc Ltd. (Japan) PFU Ltd. (Japan) CNC equipment, applied niachines Microcomputers, praipherals Fuji Electrochemical (Japan) Shinano Fujitsu (Japan) Fenites, electronic equipment, dry batteries Electronic parts

Shinko Electric Industries (Japan) Fujitsu Aichi Engineering Limited (Japan) Semiconductor parts Fujitsu Australia Ltd. (Australia) Takamisawa Electric (Japan) Fujitsu Australia Software Technology Pty. Ltd. Switching systems, parts (Australia) Towa Electron (Japan) Fujitsu Australia Wholesale Pty. Ltd. (Australia) Capacitors, hybrid ICs Fujitsu Automation Limited (Japan) Yamagata Fujitsu (Japan) Fujitsu Basic Software Corporation (Japan) Peripherals Fujitsu Buhin Limited (Japan) Fujitsu Business Systems Limited (Japan) Fujitsu Component (Malaysia) Sdn. Bhd. (Malaysia) Fujitsu Dai-ichi Communication Software Limited (Japan) SUBSIDIARIES Fujitsu Dai-ichi System Engineering Limited (Japan) Fujitsu Denso Ltd. (Japan) North America Fujitsu Digital Technology Limited (Japan) Fujitsu Distribution Systems Engineering Limited Fujitsu America, Inc. (United States) (Japan) Fujitsu Business Communication Systems Inc. Fujitsu Documents Service Limited (Japan) (United States) Fujitsu Electronics (Singapore) Pte. Ltd. (Singapore) Fujitsu Canada, Inc. (Canada) Fujitsu FACOM Information Processing Corporation Fujitsu Component of America, Inc. (United States) (Japan) Fujitsu Customer Service of America, Inc. (United Fujitsu Financial Information Systems Limited States) (Japan) Fujitsu Imaging Systems of America, Inc. (United Fujitsu Financial Systems Engineering Limited States) (Japan) Fujitsu Microelectronics, Inc. (United States) Fujitsu Fudosan Ltd. (Japan) Fujitsu Microsystems of America, Inc. (United States) Fujitsu Hong Kong Ltd. (Hong Kong) Fujitsu Network Switching of America, Inc. (United Fujitsu Isotec Limited (Japan) States) Fujitsu Kansai Communication Systems Limited Fujitsu Systems of America, Inc. (United States) (Japan) Fujitsu Systems Engineering of America, Inc. (United Fujitsu Kansai System Engineering Limited (Japan) States) Fujitsu Kasei Ltd. (Japan) Intelligensor, Inc. (United States) Fujitsu Keihin Systems Engineering Limited (Japan) Intellistor, Inc. (Canada) Fujitsu Kiden Ltd. (Japan) Fujitsu Korea Ltd. (Korea) Europe Fujitsu Kosan Limited (Japan) Fujitsu Kyushu Communication Systems Limited Fujitsu Deutschland GmbH (Germany) (Japan) Fujitsu Espana S.A. (Spain) Fujitsu Kyushu Systems Engineering Ltd. (Japan) Fujitsu Europe Ltd. (England) Fujitsu Laboratories Ltd. (Japan) Fujitsu Finance (U.K.) Pic (United Kingdom) Fujitsu Logistics Limited (Japan) Fujitsu International Finance B.V. (Netherlands) Fujitsu Microconq>uter Systems Limited (Js^an) Fujitsu Italia S.p.A. (Italy) Fujitsu Microdevices Ltd. (Japan) Fujitsu Microelectronics Ireland Ltd. (Ireland) Fujitsu Microelectronics Asia Pte. Ltd. (Singapore) Fujitsu Microelectronics Italia SsL (Italy) Fujitsu Microelectronics (Malaysia) Sdn. Bhd. Fujitsu Microelectronics Ltd. (England) (Malaysia) Fujitsu Mikroelektronik GmbH (Germany) Fujitsu Microelectronics Pacific Asia Ltd. (Hong Kong) Fujitsu Nordic AB (Sweden) Fujitsu Minami-Kyushu Systems Engineering Limited AsialPacific (Japan) Fujitsu Nfiyagi Electronics Ltd. (Japan) Fuji Electrochemical Co. Ltd. (Japan) Fujitsu Nagano Systems Engineering Limited (Japan) Fujitsu (Singapore) Pte. Ltd. (Singapore) Fujitsu Networic Eagineeiing Limited (Japan) Fujitsu (Thailand) Co. Ltd (Thailand) Fujitsu New Zealand Holdings Ltd. (New Zealand) Fujitsu Advanced Printing aiid Publishing Co. Ltd. Pojitsu New Zealand Ltd. (New Zealand) (Japan) Fujitsu OA Limited (Japan)

Fujitsu Office Machines Limited (Japan) Matsushita Fujitsu Oita Software Laboratories Limited (Japan) The companies have set up an OEM agreement Fujitsu Peripherals Limited (Japan) whereby Fujitsu will receive the M550 and M600 Fujitsu Program Laboratories Limited (Japan) series of 32-bit desktop personal computers from Fujitsu Shikoku Infortec Limited (Japan) Matsushita and will give Matsushita its high-end Fujitsu Shizuoka Engineering Limited (Japan) laptop and desktop 32-bit PCs. Fujitsu Sinter Limited (Japan) Poquet Computer Fujitsu Social Science Laboratory Limited (Japan) Fujitsu will produce and market Poquet Com Fujitsu Social Systems Engineering Limited (Japan) puter's pocket-sized computer under license. The Fujitsu Supplies Limited (Japan) companies will build a joint plant in Japan and Fujitsu System Integration Laboratories Ltd. (Japan) Fujitsu will seU the computer worldwide. Fujitsu TEN Limited (Japan) Nokia Data Systems Oy Fujitsu Technosystems Limited (Japan) An agreement has been made whereby Nokia will Fujitsu Tohoku Electronics Ltd. (Japan) OEM digital PBX systems (the F-620 and F-640) Fujitsu Tohoku Systems Engineering Limited (Japan) for Fujitsu. Fujitsu Tokia Systems Engineering Limited (Japan) Fujitsu Trading Ltd. (Japan) Matsushita Electric Industrial Fujitsu VLSI Limited (Japan) The two companies plan to strengthen their busi Fujitsu Yamanashi Electronics Limited (Japan) ness relationship by mutually supplying their com Gunma Fujitsu Limited (Japan) puters on an OEM basis. Hasegawa Electric Co. Ltd. (Japan) UNIX International Ishikawa Fujitsu Software Limited (Japan) Fujitsu has joined a new marketing group compris Iwaka Densi Ltd. (Japan) ing 21 odier high-tech companies. The group will Kyushu Fujitsu Electronics Ltd. (Japan) promote UNIX's System V release 4 and further Nihon Dengyo Limited (Japan) standard developments. Okinawa Fujitsu Systems Engineering Ltd. (Japan) Molecular Design Ltd. and IBM PFU Limited (Japan) Fujitsu has formed a relationship with the two Shinano Fujitsu Ltd. (Japan) companies to ensure that Molecular Design soft Shinko Electric Industries Co. Ltd. (Japan) ware for managing and communicating scientific Ten Onkyo Ltd. (Japan) information will run on their computers. Totalizator Engineering Limited (Japan) Yamagata Fujitsu Limited (Japan) Mitsui Bank Research Institute ROW The two con^anies have agreed to establish a system consulting service. Fujitsu de Brasil Limitada (Brazil) Fujitsu Vitonia Computadores e Services Ltda MEDIAGENIC frazil) MEDIAGENIC has agreed to develop entertain ment software for the Fujitsu FM TOWNS. Daisy/Cadnetix Inc. The companies jointly produced an ASIC design kit developed for the DAZIX design environment ALLIANCES, JOINT VENTURES, AND on the Sun-4 family of workstations running on LICENSING AGREEMENTS UNIX. Vitesse Semiconductor Corporation 1990 The companies have entered into an alternated NoveU K.K. source agreement with regard to \^tesse's Fury A joint marketing venture to sell Netware products gallium arsenide (GaAs) VLSI gate-array family. in Japan was formed with Novell and six partners, Fujitsu being one of them. 1989 Isuzu Japan Tobacco Inc. The two companies have formed an automotive Fujitsu formed a tie-up agreement with Japan electronics venture and currently are attempting to Tobacco whereby Fujitsu wiU market two of Japan get General Motors to join. Tobacco's software modules.

The Australian National University in Canberra 1987 The two organizations signed an R&D agreement for two three-year projects. One project is to Texas Instruments develop a small image processing system; the other The two companies signed a semiconductor device is to develop software for parallel processors. cross-licensing agreement Vitesse Semiconductor Motorola The two agreed to jointly develop GaAs gate The two companies signed a semiconductor device arrays. cross-licensing agreement Southern New England Telecommunications Hyundai Electronics Industries Systems The two companies signed a facsimile licensing Southern New England Telecommunications agreement agreed to maiket Fujitsu's ISDN telecommuni Fujian Province, PRC cations equipment in the United States on an Software for digital switching systems will be exclusive basis. The list of products includes digi developed under a joint venture. tal telephones and terminal adapters. NTT Data Communications Systems The two companies will jointly market their respective logic chip design software products as a MERGERS AND ACQUISITIONS total CAE design system. Sony Tlie two companies jointly developed a trial com mon rule to develop CD-ROM XA software for ICL, Ltd. their personal computers. Fujitsu purchased 80 percent of ICL, a subsidiary of STC Pic. The merger increases Fujitsu's globd BeU Atlantic Optical Network (SONET) presence and makes it the second largest computer Fujitsu agreed to sell Bell Athmtic's transmission manufacturer in the world. products under a two-year, $2 million contract Fujitsu will provide its FLM 50/150 Fiber LOOP Multiplexer for deployment in BeU Atlantic areas. Poquet Computer Corporate KEY OFFICERS An agreement provides Poquet with funding and credit guarantees; the companies made a coopera tive technology agreement allowing for mumal Takuma Yamamoto adaptation of technologies and joint development President of new technology. Matami Yasufuku Sun Microsystems Executive vice president Sun and Fujitsu will jointly develop a high-speed Kazuo Watanabe RISC chip. Executive director

1988 Mamoru Mitsugi Executive director Telecom Australia Telecom Australia agreed to sell Fujitsu's digital Yusaku Onaga PBXs in Australia; the companies established a Executive director sales joint-venture, Information Switching Akira Ohguro Technology. Executive director Daisy Systems Mikio Ohtsuki Fujitsu's FAME was made available on Daisy's Executive director Advansys Series of CAD/CAE systems. Tadashi Sekizawa Hitachi Executive director The two companies agreed to cooperate on the devdopment of a 32-bit MPU and peripheral LSI Mutujiro Shiromizup family based on TRON architecture. Executive director

PRINCIPAL INVESTORS FOUNDERS

Fuji Electric—14.3 percent Infonnation is not available. Asahi Mutual Life Insurance—6.9 percent

Table 3 Comprehensive Financial Statement Fiscsd Year Ending March (Millions of US Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $3,877 $4,555 $7,035 $9,818 $11,369 Cash 654 660 1,125 1,764 2,379 Receivables 1,515 1,888 2,903 3,644 4,615 Maiketable Securities 149 65 137 648 189 Inventory 1,451 1,763 2,562 3,353 3,734 Other Current Assets 108 179 307 408 452 Net Property, Plants $2,043 $2,504 $3,424 $4,288 $5,481 Other Assets $1,146 $1,400 $2,067 $2,677 $3,617 Total Assets $7,066 $8,459 $12,526 $16,783 $20,467 Total Current Liabilities $2,922 $3,211 $4,991 $7,058 $8,581 Long-Term Debt $1,037 $1,609 $2,117 $2,185 $2,467 Other Liabilities $609 $763 $1,153 $1,548 $1,924 Total Liabilities $4,567 $5,583 $8,261 $10,792 $12,973 Total Shareholders' Equity $2,499 $2,876 $4,265 $5,992 $7,495 Common Stock 1,182 1,348 2,115 3,364 4,252 Other Equity 37 46 71 92 110 Retained Earnings 1,280 1,482 2,080 2,536 3,133 Total Liabilities and Shareholders' Equity $7,066 $8,459 $12,526 $16,783 $20,467 Income Statement 1985 1986 1987 1988 1989 Revenue $6,415 $7,646 $11,218 $14,829 $18,616 Japanese Revenue 4,687 5,833 8,756 11,550 14,496 Non-Japanese Revenue 1,728 1,813 2,461 3,279 4,120 Cost of Sales $3,939 $5,156 $7,728 $9,702 $11,914 R&D Expense $545 $710 $1,043 $1,377 $1,925 SG&A Expense $1,133 $14,010 $2,057 $2,883 $3,328 Capital Expense $1,998 $1,559 $1,964 $3,161 K167 Pretax Income $734 $230 $301 $768 $1,210 Pretax Margin (%) 11.43 3.01 2.68 5.18 6.50 Net Income $366 $176 $135 $305 $545 Shares Outstanding, Millions 1,299.5 1,438.6 1,593.3 1,710.0 1.760.1 Per Share Data Earnings $64.70 $25.40 $13.40 $23.50 $36.80 Dividend $9.00 $8.00 $8.00 $8.00 $9.00 Book Value $1.92 $2.00 $2.68 $3.50 $4.26 Exchange Rate (US$1=*) ¥243.53 ¥221.26 ¥159.51 ¥138.02 ¥128.25

Somce: Fajitsa Limited Amnial Repents and Fonns 10-K Dataquest (1990)

Table 4 Comprehensive Financial Statement Fiscal Year Ending March (Millions of Yen, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets ¥944,189 ¥1,007,841 ¥1,122,175 ¥1,355,124 ¥1,458,057 Cash 159,225 146,000 179,409 243,492 305,166 Receivables 368,821 417,806 463,150 503,035 591,815 Marketable Securities 36,374 14,399 21,863 89,402 24,219 Inventory 353,394 390,103 408,718 462,869 478,840 Other Current Assets 26,375 39,533 49,035 56,326 58,017 Net Property, Plants ¥497,449 ¥554,082 ¥546,233 ¥591,921 ¥702,988 Other Assets ¥279,007 ¥309,808 ¥329,779 ¥369,549 ¥463,882 Total Assets ¥1,720,645 ¥1,871,731 ¥1,998,187 ¥2,316,594 ¥2,624,927 Total Current Liabilities ¥711,485 ¥710,479 ¥796,143 ¥974,268 ¥1,100,577 Long-Term Debt ¥252,484 ¥356,051 ¥337,660 ¥301,618 ¥316,395 Other Liabilities ¥148,209 ¥168,862 ¥183,980 ¥213,685 ¥246,778 Total Liabilities ¥1,112,178 ¥1,235,392 ¥1,317,783 ¥1,489,571 ¥1,663,750 Total Shareholders' Equity ¥608,467 ¥636,339 ¥680,404 ¥827,023 ¥961,177 Common Stock 287,824 298,187 337,308 464,365 545,369 Odier Equity 8,929 10,153 11,359 12,659 14,050 Retained Earnings 311,714 327,999 331,737 349,999 401,758 Total Liabilities and Shareholders' Equity ¥1,720,645 ¥1,871,731 ¥1,998,187 ¥2,316,594 ¥2,624,927 Income Statement 1985 1986 1987 1988 1989 Revenue ¥1,562,260 ¥1,691,826 ¥1,789,417 ¥2,046,802 ¥2,387,442 Japanese Revenue 1,141,387 1,290,694 1,396,819 1,594,254 1,859,101 Non-Japanese Revenue 420,872.8 401,131.9 392,598.1 452,547.9 528,340.9 Cost of Sales ¥959,282 ¥1,140,728 ¥1,232,722 ¥1,339,183 ¥1,527,908 R&D Expense ¥132,708 ¥157,028 ¥166,342 ¥190,130 ¥246,906 SG&A Expense ¥275,791 ¥3,099,940 ¥328,184 ¥397,968 ¥426,779 Capital Expense ¥486,471 ¥344,903 ¥313,330 ¥436,354 ¥534,447 Pretax Income ¥178,635 ¥50,920 ¥48,012 ¥106,048 ¥155,152 Pretax Margin (%) 11.43 3.01 2.68 5.18 6.50 Net Income ¥89.028 ¥38,926 ¥21,609 ¥42,115 ¥69,948 Shares Outstanding, Millions 1,299.5 1,438.6 1,593.3 1,710.0 1,760.1 Per Share Data Earnings ¥64.70 ¥25.40 ¥13.40 ¥23.50 ¥36.80 Dividend ¥9.00 ¥8.00 ¥8.00 ¥8.00 ¥9.00 Book Value ¥468.23 ¥442.33 ¥427.04 ¥483.64 ¥546.09

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending March (Millions of Yen, except Per Share Data)

Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (Times) 1.33 1.42 1.41 1.39 1.32 Quick (Tunes) 0.83 0.87 0.90 0.92 0.89 Fixed Assets/Equity (%) 81.75 87.07 80.28 71.57 73.14 Cuirent Liabilities/Equity (%) 116.93 111.65 117.01 117.80 114.50 Total Liabilities/Equity (%) 182.78 194.14 193.68 180.11 173.10 Profitability (%) Return on Assets 5.63 2.17 1.12 1.95 2.83 Return on Equity 16.22 6.25 3.28 5.59 7.82 Profit Margin 5.70 2.30 1.21 2.06 2.93 Other Key Ratios R&D Spending % of Revenue 8.49 9.28 9.30 9.29 10.34 Capital Spending % of Revenue 31.14 20.39 17.51 21.32 22.39 Employees 74,187 84,277 89,293 94,825 104,503 Revenue (¥)/Employee ¥21,058 ¥20,075 ¥20,040 ¥21,585 ¥22,846 Capital Spending % of Assets 28.27 18.43 15.68 18.84 20.36 Exchange Rate (US$l=¥) ¥243.53 ¥221.26 ¥159.51 ¥138.02 ¥128.25

Sonrce: Fajitsa T,iinit

1987 1988 1989

rotal Semiconductor 1,801 2,607 2,963 Total Integrated Circuit 1,660 2,420 2,738

Bipolar Digital (Technology) 495 653 617 TTL/Other 233 317 294 ECL 262 336 323

Bipolar Digital (Function) 495 653 617 Bipolar Digital Memory 178 254 190 Bipolar Digital Logic 317 399 427

MOS (Technology) 1.014 1,616 1,958 N/PHOS 735 535 606 CMOS 279 1,081 1,241 4 sicms 0 0 111 «0S tf^6J!«tSi!M> 1,014 1,616 1,958 MOS Memory 634 1,067 1,265

MOS Micro Devices 146 202 211

MOS Logic 234 347 482

Analog 151 151 163

Total Discrete 70 82 109 Total Optoelectronic 71 105 116

4 Fujitsu Limited

Fujitsu Limited 6-1, Marunouchi 1-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Billions of Yen except Per Share Data) Balance Sheet (March 31) 1963 1984 1985 1986 1987

Total Current Assets 579 ¥ 766 ¥ 944 ¥ 1,008 ¥ 1,449 Cash 151 210 196 160 201 Receivables 221 279 369 418 463 Inventory 194 255 353 390 409 Other Current Assets 13 22 26 40 376 Ket Property, Plant, and Equipment V 248 ¥ 328 ¥ 497 ¥ 554 ¥ 546 Depreciation ¥ 257 ¥ 325 ¥ 425 ¥ 538 ¥ 650 Other Assets ¥ 176 ¥ 183 ¥ 280 ¥ 310 ¥ 3 Total Assets ¥ 1,003 ¥ 1,277 ¥ 1,,72 1 ¥ 1,,87 2 ¥ 1,998

¥ 796 Total Current Liabilities ?•• 431 ¥ 527 ¥ 711 ¥ 710 Long-Term Debt 126 205 252 356 338 Other Liabilities 95 112 150 170 183 Total Liabilities it 652 ¥ 844 ¥ 1 ,113 ¥ 1,,23 6 ¥ 1,317

Total Shareholders' Equity V 351 ¥ 433 ¥ 608 ¥ 636 ¥ 681 Convertible Preferred Stock Common Stock 52 64 100 102 117 Other Equity 121 135 196 206 232 Retained Earnings 178 234 312 328 332

Income Statement (March 31) 1983 1984 1985 1986 1987

Revenue « 957 ¥ 1,210 ¥ 1 ,562 ¥ 1 ,692 ¥ 1,789 Domestic Sales 735 927 1 ,141 1 ,291 1,396 Overseas Sales 222 283 421 401 393 Cost of Sales ¥ 601 ¥ 750 ¥ 959 ¥ 1 ,141 ¥ 1,233 Gross Margin (%) 37 38 39 33 31 RS.D Expense ¥ 86 ¥ 103 ¥ 133 ¥ 157 ¥ 166 SGSiA Expense ¥ 173 ¥ 223 ¥ 276 ¥ 310 ¥ 328 Other Operating Expenses Total Operating Expenses ¥ 860 ¥ 1,076 ¥ 1 ,368 ¥ 1 ,608 ¥ 1,727 Operating Income (Loss) ¥ 97 ¥ 134 ¥ 194 ¥ 84 ¥ 62 Interest, Dividends, Net 13 17 15 33 14 Pretax Income 84 117 179 51 48 Provision for Taxes (Credit) ¥ 45 ¥ 60 ¥ 101 ¥ 22 ¥ 31 Effective Tax Rate ¥ 54 ¥ 51 ¥ 56 ¥ 43 ¥ 65 Extraordinary Items, Net ¥ 9 ¥ 10 ¥ 11 ¥ 10 ¥ 5 Net Income ¥ 48 ¥ 67 ¥ 89 ¥ 39 ¥ 22

Average Shares Outstanding (Millions) 1,069 1,084 1,211 1,370 1,516 Employees 52,593 62,071 74,187 84,277 89,293 Capital Expenditures ¥ 111 ¥ 167 ¥ 298 ¥ 216 ¥ 141

Exchange Rate (Yen per US$) 249 236 245 221 160

Source: Fujitsu Limited Annual Reports Dataquest February 1989

Fujitsu Limited 6-1, Marunouchi 1-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Millions of Dollars except Per Share Data)

Balance Sheet (March 31) IMl 1994 198S 1986 1987 Total Current Assets $ 2,325 $ 3,246 $ 3,853 $ 4,561 $ 9,056 Cash 606 890 800 724 256 Receivables 888 1,182 506 891 894 Inventory 779 1,081 ,441 ,765 556 Other Current Assets 52 93 106 181 350 Net Property, Plant, and Equipment 996 1,390 .029 507 $ 413 Depreciation 1,032 1,377 ,735 434 $ 063 Other Assets 707 775 ,143 403 $ 19 Total Assets 4,028 5,411 ,024 8,471 $12,488 Total Current Liabilities $ 1,731 $ 2,233 S 2,902 $ 3,213 $ 4,975 Long-Term Debt 506 869 1,029 1,611 2,113 Other Liabilities 382 475 612 769 1,144 Total Liabilities $ 2,618 $ 3,576 $ 4,543 $ 5,593 $ 8,231

Total Shareholders' Equity S 1,410 $ 1,835 $ 2,482 $ 2,878 $ 4,256 Convertible Preferred Stock 0 0 0 0 0 Common Stock 209 271 408 462 731 Other Equity 486 572 800 932 1,450 Retained Earnings 715 992 1,273 1,484 2,075

Income Statement (March 31) 1983 1984 1985 1986 1987

Revenue $ 3, 843 5,127 376 656 $11,181 Domestic Sales 2. 952 3,928 657 842 8,725 Overseas Sales 892 1,199 718 814 456 Cost o£ Sales $ 2, 414 3,178 914 163 706 Gross Margin (\) 37 38 39 33 31 R&O Expense $ 345 436 543 710 038 127 SG&A Expense $ 695 945 403 050 0 0 0 Other Operating Expenses 0 0 $ 3 454 584 $10,794 Total Operating Expenses 4,559 276 $ 390 792 $ 388 Operating Income (Loss) 568 380 Interest, Dividends, Net 52 61 88 337 72 731 149 300 Pretax Income 496 231 Provision for Taxes (Credit) 181 412 194 54 254 56 100 65 Effective Tax Rate 51 43 Extraordinary Items, Net 36 45 31 Net Income 193 42 363 45 138 284 176 Average Shares Outstanding (Millions) 1,069 1,084 1,211 1,370 1,,51 6 Employees 52,593 62,071 74,187 84,277 89,.29 3 Capital Expenditures $ 446 $ 708 $ 1,216 $ 977 $ 881 Exchange Rate (Yen per US$) 249 236 245 221 160

Source: Fujitsu Limited Annual Reports Dataquest February 1989

This service section contains the following tables: Table 1—Fujitsu Limited Revenue by Line of Business (Billions of Yen) Table 2—Fujitsu Limited Estimated Worldwide Semiconductor Revenue (Millions of Dollars) Table 3—Fujitsu Limited Worldwide Ranking by Semiconductor Markets (Sales in Millions of Dollars) Table 4—Fujitsu Limited 1987 Estimated Semiconductor Revenue by Geographic Region (Millions of Dollars)

Table 1 Fujitsu Limited Revenue by Line of Business (Billions of Yen)

Fiscal Year Ending March 31 1983 1994 1985 1986 1987 Computers and Data Processing Systems « 567 ¥ 727 V 957 ¥1,125 ¥1,211

Commtinications Systems 170 186 211 254 270

Semiconductors and Electronic Components 152 218 307 226 222

Automotive Audio Equipment and 49 54 59 58 57 Electronics

Other 19 25 28 30 29

Total Revenue ¥ 957 ¥1,210 ¥1,,56 2 ¥1,,69 2 ¥1,789

Exchange Rate (Yen per US$) 249 236 245 221 160

Source: Fujitsu Limited Annual Reports Dataquest February 1989

Table 2 Fujitsu Limited Estimated Worldwide Semiconductor Revenue (Millions of Dollars)

1993 X984 1985 1986 1987

Total Semiconductor $673 $1,,19 0 $1 ,019 $1,,36 2 $1,801

Total Integrated Circuit $606 $1 ,098 $ 940 $1 ,247 $1,660

Bipolar Digital (Technology) $174 $ 305 $ 267 $ 397 $ 495 TTL - 237 111 162 200 ECL - 52 140 205 262 Other Bipolar Digital - 16 16 30 33 Bipolar Digital (Function) $174 $ 305 $ 267 $ 397 $ 495 Bipolar Digital Memory 90 136 95 145 178 Bipolar Digital Logic 84 169 172 252 317

MOS (Technology) $406 $ 753 $ 631 $ 775 $1,014 NMOS 331 615 500 602 752 PMOS 7 7 4 - - CMOS 68 131 126 173 262 MOS (Function) $406 $ 753 $ 631 $ 775 $1,014 MOS Memory 278 527 412 485 634 MOS Microdevices 85 121 106 120 146 MOS Logic 43 105 113 170 234

Linear $ 26 40 42 $ 75 $ 151

Total Discrete $ 32 $ 40 $ 37 $ 53 $ 70 Transistor $ 32 $ 40 $ 37 $ 53 $ 70 Small Signal Transistor - 30 27 - - Power Transistor - 10 10 - -

Total Optoelectronic $ -35 $ 52 $ 43 $ 62 $ 71 Optical Couplers - 28 20 - - Other Optoelectronics — 24 23 - -

Exchange Rate (Yen per US$) 235 237 238 167 144

Source: Dataquest February 1989

Table 3 Fujitsu Limited Worldwide Ranking by Semi<»iKltK:tor Markets (Sales in Millions of Dollars)

Sales Industry 1986 1987 1987 % Change % Change Rank R&nH Sales 1985-1986 1985-1986

Total Semiconductor 7 6 $1,801 32% ,23% Total IC 7 6 $1,660 33% 26% Bipolar Digital 4 4 495 25% 8% MOS Digital 5 5 1,014 31% 35% Analog 24 17 151 101% 19% Total Discrete 26 24 $ 70 32% 13%

Total Optoelectronics 7 9 $ 71 15% 16%

Source: Dataquest February 1989

Table 4 Fujitsu Limited Estimated 1987 Semiconductor Revenue by Geographic Region (Millions of Dollars)

u.$. Japan Europe ROW Worldwide :al Semiconductor $282 $1,,35 6 $110 $53 $1,801

Total Integrated Circuit $257 • $1,,24 6 $110 $47 $1,660 Bipolar Digital 106 357 26 6 495 MOS 151 743 84 36 1,014 Linear 0 146 0 5 151

Total Discrete $ 12 $ 55 $ 0 $ 3 $ 70

Total Optoelectronic $ 13 $ 55 $ 0 $ 3 $ 71

Source: Dataquest February 1989

Fujitsu LiiDited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan (03) 216-3211 (03) 216-9365 1984 ISftS 1986 1987 1988

Total Current Assets V 766 ¥ 944 ¥1,008 ¥1,122 ¥1,355 Cash ¥ 79 ¥ 83 « 84 ¥ 116 ¥ 119 Receivables ¥ 279 ¥ 369 ¥ 418 ¥ 463 ¥ 503 Inventory ¥ 255 ¥ 353 ¥ 390 ¥ 409 ¥ 463 Other Current Assets ¥ 153 ¥ 139 ¥ 116 ¥ 134 ¥ 270 Net Property, Plant, and Equipment ¥ 328 ¥ 497 ¥ 554 ¥ 546 ¥ 592 Depreciation ¥ 325 ¥ 425 ¥ 538 ¥ 650 ¥ 751 Other Assets ¥ 183 ¥ 280 ¥ 310 ¥ 330 ¥ 370

Total Assets ¥1,,27 7 ¥1.,72 1 ¥1,872 ¥1,998 ¥2,317

Total Current Liabilities ¥ 527 ¥ 711 ¥ 710 ¥ 796 ¥ 974 Long-Term Debt ¥ 205 ¥ 252 ¥ 356 ¥ 338 ¥ 302 Other Liabilities ¥ 111 ¥ 150 ¥ 169 ¥ 184 ¥ 214

Total Liabilities ¥ 843 ¥1,,11 3 ¥1,235 ¥1,318 ¥1,490

Total Shareholders' Equity ¥ 434 ¥ 608 ¥ 637 ¥ 680 ¥ 827 Comnon Stock ¥ 64 ¥ 100 ¥ 102 ¥ 117 ¥ 169 Other Equity ¥ 136 ¥ 196 ¥ 207 ¥ 232 ¥ 308 Retained Earnings ¥ 234 ¥ 312 ¥ 328 ¥ 331 ¥ 350

Total Liability and Total Equity ¥1 .277 ¥1 ,721 ¥1,872 ¥1,998 ¥2,317

Income Statement (March 31) 1984 isss 1986 1987 1988

Revenue ¥1 ,210 ¥1 ,562 ¥1,692 ¥1,789 ¥2.047 Domestic Sales ¥ 927 ¥1 .141 • ¥1,291 ¥1,397 ¥1,594 Overseas Sales ¥ 283 ¥ 421 ¥ 401 ¥ 392 ¥ 453 Other income 0 0 0 0 0 Cost of Sales ¥ 750 ¥ 959 ¥1,141 ¥1,233 ¥1,339 Gross Margin (\> 38 39 33 31 35

R&D Expense ¥ 103 ¥ 133 ¥ 157 ¥ 166 ¥ 190 SG&A Expense ¥ 326 ¥ 408 ¥ 467 ¥ 495 ¥ 588 Other Operating Expenses 0 0 0 0 0 Total Operating Expenses ¥1 ,075 ¥1 ,368 ¥1,608 ¥1,727 ¥1,927 Operating Income (Loss) ¥ 135 X 195 ¥ 84 X 62 ¥ 120 Interest, Net (X 18) (¥ 16) (« 33) (¥ 14) (X 14) Pretax Income ¥ 117 Y 179 V 51 ¥ 48 ¥ 106 Provision for Taxes (Credit) ¥ 60 ¥ 101 ¥ 22 ¥ 31 X 73 Effective Tax Rate (X) 51 57 43 65 69 Extraordinary Items ¥ 10 ¥ 11 ¥ 10 X 5 X 9 Het Income ¥ 67 ¥ 89 ¥ 39 X 22 X 42

Avg. Shares Outstanding (Millions) 1 ,084 1 ,211 1,370 1,516 1,652 Employees 62 ,071 74 .187 84,277 89,293 94,825 Capital Spending ¥ 168 S 298 ¥ 216 ¥ 142 X 191

Exchange Rate 236 245 221 160 138 (Ten per nS$l)

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan (03)216-3211 (03) 216-9365 1984 1985 JM& 1987 1S£S

Total Current Assets $3,246 $3,853 $ 4,561 $ 7,013 $ 9.819 Cash $ 335 $ 339 $ 380 $ 725 $ 862 Seceivables $1,182 $1,506 $ 1,891 $ 2.894 $ 3.645 Inventory $1,081 $1,441 $ 1.765 $ 2.556 $ 3.355 Other Current Assets $ 648 $ 567 $ 525 $ 838 $ 1,957 Net Property, Plant, and Equipment $1,390 $2,029 $ 2,507 $ 3,413 $ 4.290 Depreciation $1,377 $1,735 $ 2,434 $ 4,063 $ 5.442 Other Assets $ 775 $1,143 $ 1,403 $ 2,063 $ 2.681

Total Assets $5,411 $7,024 $ 8,471 $12,488 $16,790

Total Current Liabilities $7,123 $9,098 $11,285 $17,275 $23,094 Long-Term Debt $ 869 $1,029 $ 1,611 $ 2,113 $ 2,188 Other Liabilities $ 470 $ 612 $ 765 $ 1,150 $ 1,551

Total Liabilities $3,572 $4,543 $ 5,588 $ 8,238 $10,797

Total Shareholders' Equity $1,839 $2,482 $ 2.882 $ 4,250 $ 5,993 Common Stock $ 271 $ 408 $ 462 $ 731 $ 1,225 Other Equity $ 576 $ 800 $ 937 $ 1.450 $ 2,232 Ketained Earnings $ 992 $1,273 $ 1,484 $ 2.069 $ 2.536 Total Liability and Total Equity $5,411 $7,024 $ 8.471 $12,488 $16,790

Income Statement (March 31) 1984 1335 1986 1987 1988

Revenue $5,127 $6,376 $ 7.656 $11,181 $14,833 Domestic Sales $3,928 $4,657 $ 5,842 $ 8.731 $11,551 Overseas Sales $1,199 $1,718 $ 1.814 $ 2.450 $ 3,283 Other income 0 0 0 0 0 Cost of Sales $3,177 $3,915 $ 5.163 $ 7.704 $ 9,703 Gross Margin (\) 38 39 33 31 35 S&D Expense $ 436 $ 543 $ 710 $ 1.038 $ 1,377 SG&A Expense $1,379 $1,667 $ 2.113 $ 3.091 $ 4.261 Other Operating Expenses 0 0 0 0 0 Total Operating Expenses $4,556 $5,582 $ 7.276 $10,795 $13,964 Operating Income (Loss) $ 571 $ 794 $ 380 $ 386 $ 870 Interest. Het ($ 76) ($ 65) ($ 149) ($ 88) ($ 101) Pretax Income $ 495 $ 729 $ 231 $ 299 $ 768 Provision for Taxes (Credit) $ 254 $ 412 $ 100 $ 194 $ 529 Effective Tax Bate (\) 51 57 43 65 69 Extraordinary Items $ 42 $ 45 $ 45 $ 31 $ 65 Het Income $ 283 $ 361 $ 176 $ 136 $ 304

Avg. Shares Outstanding (Millions) 1.084 1.211 1.370 1,516 1,652 Employees 62.071 74.187 84.277 89.293 94,825 Capital Spending $ 712 $1,216 $ 977 $ 888 $ 1,384

Exchange Sate 236 245 221 160 138 (Yen per ITS$1)

Source: Dataquest Hovember 1989

This service section contains the following tables: Table 1—Sales by Product Segment (Billions of Yen) Table 2—Estimated 1988 Worldwide Semiconductor Revenue (Billions of Yen) Table 3—Fujitsu Limited Estimated 1988 Worldwide Semiconductor Revenue (Millions of Dollars) Table 4—1988 Percent Change in Worldwide Semiconductor Revenue (Sales in Millions of Dollars) Table 5—1988 Estimated Semiconductor Revenue Percent by Region (Millions of Dollars)

Table 1

Sales by Product Segment (Billions of Yen)

1983 1984 1985 1986 1987 1988

Car Audio ¥ 49.4 y 54.0 ¥ 58.5 ¥ 65.9 ¥ 56.6 ¥ 62.1

Data Processing 566.5 727.4 957.6 1,116.5 1,210.6 1,372.0

Semiconductors and Electronic Components 151.8 217.9 307.4 225.6 222.0 256.0

Communications System 170.2 186.1 210.8 254.2 270.3 324.8

Other 18.9 24.5 28.0 29.6 29.9 31.8

Total ¥956.8 ¥1 ,209.9 ¥1,,562. 3 ¥1,691.8 ¥1,789.4 ¥2,046.7

Exchange Rate 249 236 245 221 160 138 (Yen per US$1)

Note: Columns may not add to totals shown because of rounding.

Source: Fujitsu Corporation Annual Report Dataquest November 1989

Table 2 Fujitsu Limited Estimate Worldwide Semiconductor Revenue (Billions of Yen)

1981 1982 1983 1984 1985 1986 1987 1988

Total Semiconductor 83 115 158 282 243 227 259 339

Total IC 74 106 142 260 224 208 239 314 Bipolar Digital 22 32 41 72 64 66 71 85 (Technology) -

MOS (Technology) 48 69 95 179 150 130 146 210 NMOS 41 58 78 146 119 101 106 60 PMOS 2 2 2 2 1 0 0 11 CMOS 6 10 16 31 30 29 40 140 BiCMOS

MOS (Function) 48 69 95 179 150 130 146 210 MOS Memory 32 47 65 125 98 81 91 138 MOS Microdevices 11 15 20 29 25 20 21 26 MOS Logic . 6 7 10 25 27 28 34 45

Analog 10 10 13 22 20

Total Discrete 6 6 8 10 9 9 10 11 Transistor 6 6 8 10 9 9 10 11

Total Optoelectronic 12 10 10 10 14

Exchange Rate (Yen per US$1) 221 249 237 237 238 168 144 130

Source: Dataquest November 1989

Table 3 Fujitsu Limited Estimated Worldwide Semiconductor Revenue (Millions of Dollars)

1981 1982 1983 1984 1985 1986 1987 1988

Total Semiconductor 375 465 672 1,190 1,020 1,361 1,801 2,607

Total IC 335 427 606 1,098 939 1,247 1,660 2,420 Bipolar Digital 99 129 174 305 267 397 495 653 (Technology)

MOS (Technology) 218 280 406 753 631 775 1,014 1,616 NMOS 185 232 331 615 500 602 734 454 PMOS 8 6 7 7 4 0 1 81 CMOS 25 42 68 131 126 173 279 1,081 BiCMOS 0 0. 0 0 0 0 0 0

MOS (Function) 218 280 406 753 631 775 1,014 1,616 MOS Memory 145 190 278 527 412 485 634 1,067 MOS Microdevices 48 60 85 121 106 120 146 202 MOS Logic 25 30 43 105 113 170 234 347

Analog 18 18 26 40 42 75 151 151

Total Discrete 25 23 32 40 37 53 70 82 Transistor 25 23 32 40 37 53 70 82

Total Optoelectronic 15 15 35 52 43 62 71 105

Exchange Rate 21 249 237 237 238 168 144 130 (Yen per US$1)

Source: Dataquest November 1989

Table 4 1988 Percent Change in Worldwide Semiconductor Revenue (Millions of Dollars)

World Market 1987 1988 % Chanae % Chanae

Semiconductor $1,801 $2,607 44.8% 33.0% IC $1,660 $2,420 45.8% 37.4% Bipolar Digital 495 653 31.9% 9.2% MOS (Technology) 1,014 1,616 59.4% 54.5% MOS Memory 634 1,067 68.3% 93.1% MOS Micro 146 202 38.4% 39.9% MOS Logic 234 347 48.3% 29.2% Analog 151 151 0 16.0% Discrete $ 70 $ 82 17.1% 14.4% Optoelectronics $ 71 $ 105 47.9% 27.5%

Exchange Rate (Yen per US$1) 144 130

Table 5 1988 Estimated Semiconductor Revenue Percent by Region (Millions of Dollars)

Product United States Japan Europe SO!

Semiconductor 16% 76% 5% 3% IC 16% 76% 6% 3% Bipolar Digital 24% 73% 2% 1% MOS (Technology) 14% 75% 8% 4% MOS Memory 16% 71% 10% 4% MOS Micro 7% 84% 5% 5% MOS Logic 12% 83% 4% 1% Analog 0 95% 0 5% Discrete 16% 79% 0 5% Optoelectronics 13% 84% 0 3%

Exchange Rate (Yen per US$1) 130

Source; Dataquest November 1989

Fujitsu, Ltd. Established 1935 6-1, Marunouchi 2-chome, No. of Employees: Approximately 96,000 Chiyoda-ku Tokyo 100, Japan (03)216-3211

BACKGROUND Fujitsu, Ltd., was founded in 1935 as a spinoff of the parent company, Fuji Electric Co., Ltd. Fujitsu began as a manufacturer of automatic telephone exchanges and related equipment, later adding carrier transmission and radio communications equipment to its line. The Company is considered a world leader in telecommunications; it is also involved in the manufacture and sale of computers and EDP systems, electronic components including semiconductors, and audio products. Fujitsu is one of the top four suppliers to NTT (Nippon Telegraph and Telephone Corp.), along with Hitachi, NEC, and Oki.

The three largest shareholders in Fujitsu are Fuji Electric (14.3 percent), Asahi Mutual Life Insurance (6.8 percent), and Dai-Ichi Kangyo Bank (4.7 percent). Fujitsu established its GaAs FET activity in 1979. The Company has focused its compound semiconductor R&D in several areas, including HEMTs, compact GaAs FET amplifiers, IK and 4K RAMs using E/D MESFET structures and a 10ns, 16x16 multiplier. Fujitsu's VLSI GaAs work is paralleling that of NTT, which has also developed IK and 4K SRAMs. Fujitsu has developed a self-aligned double heterostructure laser operating at 0.9u to 1.7u wave length (compatible with fiber-optic cables). In 1985, Fujitsu announced the development of an APD for 1.55u communication applications; the InGaAsP device uses an InP-implanted avalanche effect multiply area to improve the current multiplication ratio by 15 to 20 times that of conventional devices. The Company is equipping a plant in Dallas, Texas, for producing communications equipment.

COMPANY EXECUTIVES (GaAs ACTIVITIES) • President—Takuma Yamamoto • Head of Marketing—Masatomi Yasufuku • Managing Director/General Manager, Components Group—Hiroyuki Ino

• Executive Vice President/COO, Microelectronics—Taro Okabe

COMPANY ORGANIZATION

Figure 1 shows Fujitsu's company organization, and Figure 2 shows its Semiconductor Group organization.

Figure 1 Fujitsu, Ltd. Company Organization

<: Corporate Administration ^5 Board c z> -C;^^^ Marketing and Sales Group (Systems) ^~^ -<[^2lnternatlonal Operations Group (Systems) J^ Executive Committee > c <: Telecommunications Group Z^ Data Processing Group J^ Semiconductor Operations Group r> -(II^^^^EIectronlc Components Operations Group^~^ International Operations Group ^ (Electronic Devices) --^

OO0S361-1 Source: Fujiitu Limiied

Figure 2 Fujitsu, Ltd. Semiconductor Group Organization

International Operations Group Semiconductor Operations Group Electronic Devices (Semiconductor & Components)

Advanced Planning Administration vC :> K: ::> Dome Stic Marketing N Bipolar iC International Operations Group ASIC Marketing Semiconductor <: Operations Electronic Devices MOS IC (Semiconductor Group Microcomputer < & Components) Marketing •c z^ —(^ M:icrocompute r Semiconductor Sales Support Quality & Reliability < Electronic • Engineering N

FINANCIAL BACKING AND STRATEGIC ALLIANCES Fujitsu is part of the DKB Group (Dai-Ichi Kangyo Bank), formed in 1971 through the merger of Dai-Ichi Bank and Nippon Kangyo Bank. DKB is the largest bank in Japan. The DKB Group consists of two subgroups—the Furukawa Group and the Kawasaki Group—that are successors to the former zaibatsu of the same name. Figure 3 is a diagram of the DKB Group. The top five shareholders of Fujitsu are Fuji Electric (15.8 percent), Asahi Mutual Life Insurance (7.3 percent), Dai-Ichi Kangyo Bank (5.7 percent), Industrial Bank of Japan (2.6 percent), and Sega Zurich (2.0 percent). Fujitsu's major financing is via DKB and Mitsubishi Group financial institutions.

Figure 3 DKB Groiq)

Sankln-Kal Jugosha Shacho-Kai Kawasaki Mutsumi-Kai Trading Fukoku Mutual Life Insur. Kawasaki Steel Kanematsu-Qosho Shiseido Company C. Itoh & Company NIgata Engineering Yaskawa Electric Nippon Express Nippon Kangyo Kakumaru •- Kawasho Corporation Securities Korakuen Company Kawasaki Heavy Indus. (Nissan F. & M. Insur.) (Denki Kagaku Kogyo) Kawasaki Kisen (Sankyo Company) (Nippon Columbia) (Selbu Department Stores) (Honshu Paper) Furukawa Sansui-Kai Asahl Mutual Life Insur. Talsel F. & M. Insur. Others Asahl Denka Kogyo Shimlzu Isekl & Company Nippon Zeon Construction Asahl Optical Yokohama Rubber (Orient Finance) Isuzu Motors Furukawa Company (Kyowa Hakko) (Showa Shell Seklyu) Nippon Light Metal (I.H.I.) (NIssho-lwal Corporation) • (Kobe Steel) (Lion Corporation) Furukawa Electric (Asahl Chemical) (Japan Metals & Chemicals) Fuji Electric (Hitachi, Ltd.) (Ebara Corporation) Fujitsu Ltd. (Chichibu Cement) Shibusawa Warehouse

Intragroup Joint Ventures Meiji Group

World Energy Development MelJI Selka Century Leasing System Meiji Milk Products Century Research Center Meljl Machine

Affiliate

0005361-3 Source: Indualrial Groupin|5 in Japan 1986/87 Dodwell Marketing Consultants Dataquest November 1989

PROCESS TECHNOLOGY Fujitsu uses E/D MESFET technology.

PRODUCTS The Company produces GaAs low-noise and power FETs, HEMTs, APDs, PINs, laser diodes, LEDs, MMICs, detectors, and diglCs.

Applications • Supercomputers

• Fiber-optic communications • High-speed instrumentation • Military/aerospace • UHF and microwave communications

FACILITIES • Aizu plant—includes some GaAs discrete production • Kawasaki plant—67,000 square feet • Yamanashi plant—125,000 square feet; includes 3-inch GaAs wafer fab; produces FETs, other discretes, and optoelectronics

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Millions of Dollars except Per Share Data) Balance Sheet (March 31)

1982 1983 ISM 1985 1986 Working Capital $ 545 $ 594 $1,013 $ 950 $1,345 Long-Term Debt $ 365 $ 507 $ 868 $1,031 $1,611 Shareholders' Equity $1,278 $1,412 $1,836 $2,484 $2,879 Xfter-Taz Return on Average Equity {%) 12.8 15.0 17.0 17.1 6,3

Operating Performance (Fiscal Year Ending March 31)

ISM 1983 1994 1995 1M& Revenue $3,495 $3,843 $5,127 $6,377 $7,655 Japanese Revenue $2,880 $2,950 $3,929 $4,658 $5,840 Non-Japanese Revenue $ 614 $ 893 $1,197 $1,718 $1,815 Cost of Revenue $2,248 $2,412 $3,177 $3,916 $5,162 RSiD Expense $ 299 $ 343 $ 436 $ 542 $ 710 SG&A Expense $ 628 $ 697 $ 943 $1,126 $1,403 Pretax Income $ 260 $ 339 $ 497 $ 729 $ 230 Pretax Margin (%) 7.4 8.8 9.7 11.4 3.0 Effective Tax Rate (%) 59.2 52.8 51.4 56.4 43.0 Ket Income $ 139 i 194 $ 283 $ 363 $ 176 Average Shares Outstanding (Millions) 938 1,069 1,084 1,211 1,370 Per Share Earnings $ 0.15 $ 3.18 $0.24 $ 0.26 $ 0.11 Dividends* $ 0.03 $ 3.03 $ 0.03 $ 0.04 $ 0.04 Book Value $ 1.36 $ L.32 $ 1.69 $ 2.05 $2.10 Price Range K/A N/A N/A N/A N/A

Total Employees 48,864 52,593 62,071 74,187 84,277

Capital Expenditures $ 379 $ 445 $ 710 $1,215 $ 979 Exchange Rate (Yen per US$) 229 249 236 245 221 *Restated from 1981 through 1984 N/A = Not Available

Source: Fujitsu Limited Annual Reports Dataquest March 1988

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Billions of Yen except Per Share Data)

Balance Sheet (March 31) 1982 1983 12M 19B5 1986 Working Capital V124.7 V147.8 V 239.1 V 232.7 V 297.3 Long-Term Debt ¥ 83.6 ¥126.3 ¥ 204.9 ¥ 252.5 ¥ 356.1 Shareholders' Equity ¥292.6 ¥351.5 ¥ 433.4 ¥ 608.5 ¥ 636.3 After-Tax Return on Average Equity (%) 12.8 15.0 17.0 17.1 6.3

Operating Performance (Fiscal Year Ending March 31)

1982 1983 1984 1985 1986

Revenue ¥800.3 ¥956.8 ¥1,209.9 ¥1,562.3 ¥1,691.8 Japanese Revenue ¥659.6 ¥734.5 ¥ 927.3 ¥1,141.3 ¥1,290.6 Non-Japanese Revenue ¥140 ¥222 282 421 .0 ¥ 401 Cost of Revenue ¥514 ¥600 749 959 .3 ¥1,140 RSD Expense ¥ 68 ¥ 85 102 132 .7 ¥ 157 275.8 SG&A Expense ¥143 ¥173 222 ¥ 310 178.6 ¥ 50 Pretax Income ¥ 59 ¥ 84 117 Pretax Margin (%) 7 8.8 9 11.4 3 Effective Tax Rate {%) 59 52.8 51 56.4 43 Net Income ¥ 31.8 ¥ 48.3 ¥ 66.7 ¥ 89.0 ¥ 38.9 Average Shares Outstanding (Millions) 938 1,069 1,084 1,211 1,370 Per Share Earnings ¥ 33.7 ¥ 45.2 ¥ 57.4 ¥ 64.7 ¥ 25.4 Dividends* ¥ 6.5 ¥ 7.0 ¥ 7.8 ¥ 9.0 ¥ 8.0 Book Value ¥311.9 ¥328.8 ¥ 399.8 ¥ 502.5 ¥ 464.5 Price Range N/A N/A N/A N/A N/A Total Employees 48,864 52,593 62,071 74,187 84,277

Capital Expenditures ¥ 86.7 ¥110.9 ¥ 167.5 ¥ 297.6 ¥ 216.4 Exchange Rate (Yen per US$) 229 249 236 245 221

*Restated from 1982 through 1984 N/A = Not Available Source; Fujitsu Limited Annual Reports DatagueSt March 1988

Table 1 Fujitsu Limited Revenue by Line of Business (Billions of Yen)

Fiscal Year Ending March 31 19g2 ISM ISM 1995 198^ Computers and Data Processing Systems ¥477.9 ¥566.5 ¥ 727.4 ¥ 957.6 ¥1,116.5

Communications Systems 137.5 170.2 186.1 210.8 254.2

Semiconductors and Electronic Components 122.6 151.8 217.9 307.4 225.6

Car Audio and Car 46.8 49.4 54.0 58.5 65.9

Other 15.5 I?,9 24.5 27.9 29.7

Total Revenue ¥800.3 ¥956.8 ¥1,209.9 ¥1,562.3 ¥1,691.8

Exchange Rate (Yen per US$) 229 249 236 245 221

Source: Fujitsu Limited Annual Reports Dataquest March 1988

Table 2 Fujitsu Limited Estimated Worldwide Semiconductcn' Revenue (Millions of Dollars)

1982 1983 1994 J985 19?^

Total Semiconductor 465 673 1,190 1,019 1,309

Total Integrated Circuit 427 606 1,098 940 1,197 Bipolar Digital (Technology) 129 174 305 267 347 TTL 237 111 145 ECL 52 140 184 Other Bipolar Digital 16 16 18 Bipolar Digital (Function) 129 174 305 267 347 Bipolar Digital Memory 63 90 136 95 116 Bipolar Digital Logic 66 84 169 172 231 MOS (Technology) 280 406 753 631 791 MMOS 232 331 615 500 617 PMOS 6 7 7 4 - CMOS 42 68 131 126 174 MOS (Function) 280 406 753 631 791 MOS Memory 190 278 527 412 462 MOS Micro Devices 60 85 121 106 162 MOS Logic 30 43 105 113 167 Linear 18 26 40 42 60 Total Discrete 23 32 40 37 48 Transistor 23 32 40 37 48 Small Signal Transistor 30 27 36 Power Transistor 10 10 12 Total Optoelectronic 15 35 52 43 64 Optical Couplers 28 20 29 Other Optoelectronics 24 23 35 Exchange Rate (Yen/US$) 248 235 237 238 167

Source: Dataquest March 1988

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Millions of Dollars except Per Share Data)

Balance Sheet (March 31) 1982 1983 1984 1985 1986

Working Capital $ 545 $ 594 $1,,01 3 $ 950 $1,,34 5 Long-Term Debt $ 365 $ 507 $ 868 $1-,031 $1,.61 1 Shareholders' Equity $1 ,278 $1,,41 2 $1,,83 6 $2,,48 4 $2.,87 9 After-Tax Return on Average Equity (%) 12.8 15.0 17.0 17.1 6.3

Operating Performance (Fiscal Year Ending March 31)

1982 1983 1984 1985 1986

Revenue $3,495 $3,843 $5,127 $6,377 $7,655 Japanese Revenue $2,880 $2,950 $3,929 $4,658 $5,840 Non-Japanese Revenue $ 614 $ 893 $1,197 $1,718 $1,815 Cost of Revenue $2,248 $2,412 $3,177 $3,916 $5,162 RSJ3 Expense $ 299 $ 343 $ 436 $ 542 $ 710 SGSiA Expense $ 628 $ 697 $ 943 $1,126 $1,403 Pretax Income $ 260 $ 339 $ 497 $ 729 $ 230 Pretax Margin (%) 7.4 8.8 9.7 11.4 3.0 Effective Tax Rate (%) 59.2 52.8 51.4 56.4 43.0 Net Income $ 139 $ 194 $ 283 $ 363 $ 176 Average Shares Outstanding (Millions) 938 1,069 1,084 1,211 1,370 Per Share Earnings $ 0.15 $ 0.18 $ 0.24 $ 0.26 $ 0.11 Dividends* $ 0.03 $ 0.03 $ 0.03 $ 0.04 $ 0.04 Book Value $ 1.36 $ 1.32 $ 1.69 $ 2.05 $ 2.10 Price Range N/A N/A N/A N/A N/A

Total Employees 48,864 52,593 62,071 74,187 84,277

Capital Expenditures $ 379 $ 445 $ 710 $1,215 $ 979 Exchange Rate (Yen per US$) 229 249 236 245 221

•Restated from 1981 through 1984 N/A = Not Available

Source: Fujitsu Limited Annual Reports Dataquest August 1987

SUIS Companies 1987 Dataquest Incorporated August Fujitsu Limited

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Billions of Yen except Per Share Data)

Balance Sheet (March 31) 1982 1983 1984 1985 1986

Working Capital ¥124.7 ¥147.8 ¥ 239.1 ¥ 232.7 ¥ 297.3 Long-Term Debt ¥83.6 ¥126.3 ¥ 204.9 ¥ 252.5 ¥ 356.1 Shareholders' Equity ¥292.6 ¥351.5 ¥ 433.4 ¥ 608.5 ¥ 636.3 After-Tax Return on Average Equity (%) 12.8 15.0 17.0 17.1 6.3

Operating Performance (Fiscal Year Ending March 31)

1982 1983 1984 1985 1986

Revenue ¥800.3 ¥956.8 ¥1 ,209.9 ¥1,,562. 3 ¥1,,691. 8 Japanese Revenue ¥659.6 ¥734.5 ¥ 927.3 ¥1,,141. 3 ¥1,,290. 6 Non-Japanese Revenue ¥140.7 ¥222.3 ¥ 282.6 ¥ 421.0 ¥ 401.2 Cost of Revenue ¥514.7 ¥600.6 ¥ 749.7 ¥ 959.3 ¥1,,140. 7 R&D Expense ¥ 68.4 ¥ 85.5 ¥ 102.9 ¥ 132.7 ¥ 157.0 SG&A Expense ¥143.7 ¥173.5 ¥ 222.6 ¥ 275.8 ¥ 310.0 Pretax Income ¥ 59.6 ¥ 84.5 ¥ 117.2 ¥ 178.6 ¥ 50.9 Pretax Margin (%) 7.4 8.8 9.7 11.4 3.0 Effective Tax Rate (%) 59.2 52.8 51.4 56.4 43.0 Net Income ¥ 31.8 ¥ 48.3 ¥ 66.7 ¥ 89.0 ¥ 38.9 Average Shares Outstanding (Millions) 938 1,069 1,084 1,211 1,370 Per Share Earnings ¥ 33.7 ¥ 45.2 ¥ 57.4 ¥ 64.7 ¥ 25.4 Dividends* ¥ 6.5 ¥ 7.0 ¥ 7.8 ¥ 9.0 ¥ 8.0 Book Value ¥311.9 ¥328.8 ¥ 399.8 ¥ 502.5 ¥ 464.5 Price Range N/A N/A N/A N/A N/A

Total Employees 48,864 52,593 62,071 74,187 84,277

Capital Expenditures ¥ 86.7 ¥110.9 ¥ 167.5 ¥ 297.6 216.4 Exchange Rate (Yen per US$) 229 249 236 245 221

•Restated from 1982 through 1984 N/A = Not Available

Source: Fujitsu Limited Annual Reports Dataquest August 1987

THE COMPANY

Overview

Fujitsu Limited was established in 1935 as a spin-off of the Communications Division of Fuji Electric Co., Ltd. Fujitsu manufactured telephone switching systems and related telephone equipment. The Company added a growing complement of carrier transmission and radio communications equipment to its product line, and became a world leader in telecommuni cations. The Company is also involved in the manufacture and sale of computers and data processing systems, semiconductors and electronic components, and audio products. In 1954, Fujitsu pioneered the development of the first Japanese computer, the FACOM 100, a relay-type product.

Fujitsu is part of the Dai-Ichi Kangyo Bank (DKB) Group, the largest bank in Japan. Fujitsu's major financing comes from DKB and Mitsubishi Group financial institutions.

Fuji Electric is Fujitsu's largest shareholder (15.7 percent) and has a parent-like affiliation with Fujitsu and a strong influence on the Company, although it does not have majority control.

The Company employs 74,187 people worldwide, under the leadership of Chairman Taiyu Kobayashi, President Takuma Yamamoto, and Executive Vice Presidents Bun-ichi Oguchi and Matami Yasufuku.

Highlights

The following are Fujitsu's fiscal 1986 highlights:

• Fujitsu reported consolidated revenue of ¥1,692 in fiscal 1986, an increase of 8 percent from fiscal 1985.

• The Company's semiconductor revenue in 1986 was $1,309, an increase of 28 percent.

• The Company was the largest worldwide supplier of emitter-coupled logic (ECL) products in 1986.

• The Company was the largest worldwide supplier of bipolar digital memory products, with revenue of $116 million.

The top shareholders of Fujitsu and their percentage of ownership are listed in Table 1.

Table 1

Fujitsu Limited MAJOR SHAREHOLDERS

Shareholders Percentage of Shares

Fuji Electric Co., Ltd. 15.7% Asahi Mutual Life Insurance 7.5% Dai-Ichi Kangyo Bank, Limited 5. 5% Industrial Bank of Japan, Limited 2. 7% Chase Manhattan Bank, N.A., London 1, 9% Sega Zurich* 1. 9% Nippon Life Insurance Company 1. 7% Taiyo Kobe Bank, Limited 1, 6% Kyowa Bank, Ltd. 1. 5% Dai-Ichi Mutual Life Insurance Company 1. 5%

*SEGA Zurich, a securities clearance system in Switzerland, is the Depository for the Company's Swiss Bearer Depository Receipts.

Source: Fujitsu Limited Annual Reports

Fujitsu stock is 22.7 percent foreign-owned. The Comapny is listed on the Basel, Frankfurt, Geneva, London, Nagoya, Osaka, Tokyo, and Zurich exchanges.

Operations

Fujitsu's major lines of business are computers and data processing systems, communications systems, semiconductors and electronic components, and car audio and car electronics. Revenue by line of business is shown in Table 2.

1987 Dataquest Incorporated August SUIS Companies Fujitsu Limited

Table 2

Fujitsu Limited REVENUE BY LINE OF BUSINESS (Billions of Yen)

Fiscal Year Ending March 31 1982 1983 1984 1985 1986

Computers and Data Processing Systems V477.9 ¥566.5 ¥ 727.4 ¥ 957.6 ¥1,116.5

Communications Systems 137.5 170.2 186.1 210.8 254.2

Semiconductors and Electronic Components 122.6 151.8 217.9 307.4 225.6

Car Audio and Car 46.8 49.4 54.0 58.5 65.9

Other 15.5 18.9 24.5 27.9 29.7

Total Revenue ¥800.3 ¥956.8 ¥1,209.9 ¥1,562.3 ¥1,691.8

Exchange Rate (Yen per US$) 229 249 236 245 221

Source: Fujitsu Limited Annual Reports Dataquest August 1987

Revenue rose in all lines except semiconductors and electronic components, where it showed a decrease of 27 percent in fiscal 1986 compared with fiscal 1985. The slximp in semiconductors and unfavorable export conditions caused by the appreciation of the yen are the reasons cited for the decrease in revenue.

Fujitsu's consolidated sales in fiscal 1986 reached ¥1,691.8 billion, an 8.3 percent increase from fiscal 1985. However, although sales grew, company profits dropped significantly. Operating income was down 57 percent to ¥84.1 billion, and net income was down 56 percent to ¥38.9 billion.

SUIS Companies 1987 Dataquest Incorporated August Fujitsu Limited

International Activities

Fujitsu reported a decrease in 1986 overseas revenue, which at ¥401 billion was 5 percent below the preceding year's level. Fujitsu again cited the slump in semiconductors and the sharp yen appreciation as the causes of the decline.

In fiscal 1986, non-Japanese sales accounted for 24 percent of Fujitsu's total revenue, or ¥401.2 billion, compared with 18 percent, or ¥140.7 billion, in fiscal 1982. The Americas are by far the largest non-Japanese consvimers of Fujitsu products, consuming 58 percent of total overseas sales in fiscal 1986.

Fujitsu has taken the following actions to improve its position as an international corporation:

Began magnetic disk drive production in a Hillsboro, Oregon, facility in 1986

Established Fujitsu Microsystems America, Inc., to market personal and business computers

Established Fujitsu Canada, Inc., to market magnetic disk drives, printers, and other information processing products

Established Fujitsu Imaging Systems of America, which purchased the Imaging Systems Division of Burroughs Corporation

Established Fujitsu Component of America, which concentrates on integrated electronic components, as a subsidiary of Fujitsu Microelectronics, Inc.

1987 Dataquest Incorporated August SUIS Companies Fujitsu Limited

Fujitsu's Semiconductor Group is organized as shown in Table 3,

Table 3

Fujitsu Limited SEMICONDUCTOR GROUP ORGANIZATION

International Operations Group Electronic Devices (Semiconductors & Components) Semiconductor Operations Group

Advanced Planning Administration Administration Domestic Marketing Sales Semiconductor Marketing Compound Semiconductor ASIC Marketing Bipolar IC Microcomputer Marketing MOS IC Semiconductor Sales Support Microcomputer IC Electronic Components Marketing Quality and Reliability Overseas Production Facilities Production Facilities Overseas Sales Companies Domestic Subsidiaries Engineering Development and Support

Source: Fujitsu Limited

Semiconductor Facilities

Fujitsu has 19 semiconductor facilities throughout the world that cover all steps of semiconductor production. Fujitsu Microelectronics is planning to break ground on a new wafer fabrication facility in Portland, Oregon, that will be equipped to produce 6-inch 2uid possibly larger-diameter wafers. In addition, Fujitsu plans to begin construction on a semicustom IC production facility in Gresham, Oregon, that will combine fabrication, assembly, and test in a small-scale production line for sales in the U.S. market.

SUIS Companies 1987 Dataquest Incorporated August Fujitsu Limited

Table 4 lists the semiconductor facilities locations in Japan and other parts of the world.

Table 4

Fujitsu Limited SEMICONDUCTOR MANUFACTURING FACILITIES

Floor Space Factory im^) Function/Products

Aizu Factory, Japan 57,308 Fab, test—ICs, discretes Aizu Factory #2, Japan 30,000 Fab Fujitsu Miyagi Electronics, Japan 6,000 Assembly—MOS memory Fujitsu Tohoku Electronics, Japan 6,000 Assembly—ICs Fujitsu VLSI Design, Japan 17,000 Design Ikawa Factory, Japan N/A Assembly, test Iwate Factory, Japan -34,675 Fab, test—MOS memory Kawasaki Factory, Japan 7,000 Fab, test—ICs, discretes, optoelectronics Kyushu Fujitsu Electronics, Japan 8,400 Assembly Mie Factory, Japan (Planned) N/A Fab—MOS memory Mino-Kamo Factory, Japan (Planned) N/A N/A Miyazaki Factory, Japan N/A Assembly, test Wakamatsu Factory, Japan 30,000 MOS microdevices and logic Yamanashi Electronics, Japan 16,000 Fab, assembly, test—MOS logic Fujitsu Component Malaysia Sdn. Bhd. N/A N/A Fujitsu Europe, Ltd. N/A Fab, assembly, test—CMOS prototypes Fujitsu Microelectronics, Inc. 20,122 Assembly, test—MOS memory Fujitsu Microelectronics Ireland, Ltd. 11,150 Assembly, test—MOS memory Fujitsu Microelectronics, Inc., Gresham Factory 14,000 Fab~M0S ICs

N/A = Not Available

Source; Dataquest August 1987

1987 Dataquest Incorporated August SUIS Companies Fujitsu Limited

Semiconductor Marketing and Sales

Fujitsu showed increases in all product areas in which it participates. Dataquest estimates Fujitsu's 1986 semiconductor revenue, shown in Table 5, at $1,309 million, an increase of 28 percent over 1985. The largest increases were in MOS microdevices (53 percent), optoelectronic devices (49 percent), and MOS logic (48 percent).

Table 5

Fujitsu Limited WORLDWIDE SEMICONDUCTOR REVENUE (Millions of Dollars)

1982 1983 1984 1985 1986

Total Semiconductor 465 673 1,190 1,019 1,309

Total Integrated Circuit 427 606 1,098 940 1 ,197 Bipolar Digital (Technology) 129 174 305 267 347 TTL 237 111 145 ECL 52 140 184 Other Bipolar Digital 16 16 18 Bipolar Digital (Function) 129 174 305 267 347 Bipolar Digital Memory 63 90 136 95 116 Bipolar Digital Logic 66 84 169 172 231 MOS (Technology) 2^0 406 753 631 791 NMOS 232 331 615 500 617 PMOS 6 7 7 4 - CMOS 42 68 131 126 174 MOS (Function) 280 406 753 631 791 MOS Memory 190 278 527 412 462 MOS Micro Devices 60 85 121 106 162 MOS Logic 30 43 105 113 167 Linear 18 26 40 42 60 Total Discrete 23 32 40 37 48 Transistor 23 32 40 37 48 Small Signal Transistor 30 27 36 Power Transistor 10 10 12 Total Optoelectronic 15 35 52 43 64 Optical Couplers 28 20 29 Other Optoelectronics 24 23 35 Exchange Rate (Yen/US$) 248 235 237 238 167

Source! Dataquest August 1987

SUIS Companies 1987 Dataquest Incorporated August Fujitsu Limited

Fujitsu's growth in most product areas over the past year has been equal to or better than the worldwide industry average growth, as shown in Table 6. Fujitsu retained its position as the seventh largest worldwide semiconductor supplier and the twenty-ninth largest supplier of linear and discrete devices. It increased its market share in the bipolar and MOS digital and optoelectronic markets.

Table 6

Fujitsu Limited WORLDWIDE RANKING BY SEMICONDUCTOR MARKETS (Sales in Millions of Dollars)

Sales Industry 1985 1986 1986 % Change % Change Rank Rank Sales 1985-1986 1985-1986

Total Semiconductor $1,310 28% 25%

Total IC 7 6 $1,,19 8 27% 24% Bipolar Digi tal 6 4 347 30% 14% MOS Digital 6 5 791 25% 25% Linear 29 29 60 43% 30%

Total Discrete 29 29 $ 48 25% 25% Total Optoelectronics 8 7 $ 64 49% 36%

Source: Dataquest August 1987

Fujitsu is one of the top four suppliers to Nippon Telegraph and Telephone Corporation (NTT), the former Japanese domestic telecommunications monopoly. The other three major suppliers are NEC Corporation; Hitachi, Ltd.; and Oki Electric Industry Company, Ltd. Fujitsu has installed telecommunications networks for NTT covering all of Japan.

Dataquest believes that approximately 20 percent of Fujitsu's semiconductors are consumed internally and approximately 20 percent are sold through distributors. Fujitsu's major domestic distributors are Fujitsu Buhin Shoji, Hoei Electric, and Kantoh Denshi. Fujitsu's U.S. distributors include Bell, Cetec, Marshall, Milgray, and Sterling.

10 1987 Dataquest Incorporated August SUIS Companies Fujitsu Limited

Table 7 shows Fujitsu's estimated 1986 semiconductor revenue by geographic region.

Table 7

Fujitsu Limited ESTIMATED 1986 SEMICOMDnCTOS REVENUE BY GEOGRAPHIC REGIOH (Millions of Dollars)

United Rest of States Japan Europe World Total

Total Semiconductor $234 $976 $70 $30 $1,309

Total Integrated Circuit $217 $885 $70 $26 $1,197 Bipolar Digital 72 259 9 7 347 MOS 145 569 61 16 791 Linear - 57 - 3 60

Total Discrete $ 5 $ 41 - $ 2 $ 48

Total Optoelectronic $ 12 $ 50 - $ 2 $ 64

Source : Hitachi, Ltd. Annual Reports Dataquest August 1987

Capital Spending and Research and Development (R&D) Spending

Although overall capital spending declined in fiscal 1986 by 27 percent, Fujitsu maintained a relatively high capital spending level of 13 percent of revenue, as shown in Table 8. Capital expenditures were used for new buildings and production facilities for large-scale computers and optical communication systems, and for trial production of next-generation VLSIs.

Table 9 shows Fujitsu's capital and R&D spending in dollars. The Company spent about $96 million in semiconductor capital investments in 1986, as shown in Table 10, a decline of 68 percent from 1985. This is after a decline of 38 percent from 1984 to 1985. The decline in semiconductor capital spending is due to the tremendous overcapacity problem.

SUIS Companies 1987 Dataquest Incorporated August 11 Fujitsu Limited

Table 8

Fujitsu Limited CAPITAL SPENDING AND R&D SPENDING AS A PERCENT OF SALES (Billions of Yen)

1982 1983 1984 1985 1986

Revenue ¥800.3 ¥956.8 ¥1 ,209.9 ¥1 ,562.3 ¥1 ,691.8

Capital Spending ¥ 86.7 ¥110.9 ¥ 167.5 ¥ 297.6 ¥ 216.4 Percentage of Revenue ll-^ 12% 14% 19% 13%

R&D Expense ¥ 68.4 ¥ 85.5 ¥ 102.9 ¥ 132.7 ¥ 157.0 Percentage of Revenue 9% 9% 9% 8% 9%

Combined Capital and R&D Spending ¥155.1 ¥196.4 ¥ 270.4 ¥ 430.3 ¥ 373.4 Percentage of Revenue 20% 21% 23% 27% 22%

Percentage of Increase (Decrease) 20% 27% 38% 59% (13%)

Exchange Rate 229 249 236 246 221 (Yen per US$)

Table 9

Fujitsu Limited CAPITAL SPENDING AND R&D SPENDING IN DOLLARS (Millions of Dollars)

1982 1983 1984 1985 1986

Revenue $3 ,495 $3,,84 3 $5,,12 7 $6,.37 7 $7 ,655 Capital Spending $ 379 $ 445 $ 710 $1..21 5 $ 979 R&D Spending $ 299 $ 343 $ 436 $ 542 $ 710

Source: Fujitsu Limited Annual Reports Dataquest August 1987

12 1987 Dataquest Incorporated August SUIS Companies Fujitsu Limited

Table 10

Fujitsu Limited SEMICONDUCTOR CAPITAL SPENDING BY CALENDAR YEAR (Millions of Dollars)

1982 1983 1984 1985 1986

Semiconductor Revenue $465 $673 $1,190 $1,019 $1,309

Semiconductor Capital Spending $141 $226 $ 485 $ 303 $ 96

Percentage of Semiconductor Revenue 30% 34% 41% 30% 7%

Source: Dataquest August 1987

Research and Development

In fiscal 1986, Fujitsu spent ¥157 billion, or 9 percent of sales, on RSiD. R&D divisions have been created at the Kawasaki and Mie plants, where procedures for developing and designing new products are automated and controlled by computerized programs. In January 1983, Fujitsu completed a new RSD center in Atsugi City dedicated to semiconductor and other microelectronics research.

The following are a few of Fujitsu's fiscal 1985 R&D achievements:

* Kabu-wake, a parallel inference method that allows many processors to operate in cooperation with very little interprocessor communication.

• ESHELL (Expert Shell) software for expert systems (put into practical use in fiscal 1986)

• ATLAS II, a Japanese-English automatic translation system that analyzes source language using semantic information

* An expert system for synthesizing logic circuits, focusing on gate arrays

SUIS Companies 1987 Dataquest Incorporated August 13 Fujitsu Limited

IDATEN, an image processing system for real-time processing of time-varying images at a video rate of 30 frames per second

Prototype of a 16 highway x 96-bit multiplexer/demultiplexer LSI

CAP, a cellular array processor bus controller using a 30,000-gate channelless gate array that features a basic cell configuration suitable not only for logic but also for memory circuits

Achieving 4.1 nanoseconds of multiplication time at room temperature (experimentally manufactured a 16-bit multiplier that is a high electron mobility transistor (HEMT) 4,000-gate gate array)

RHET, a resonant tunnel hot electron transistor using a superlattice crystal

DFB, a laser diode with low threshold current and high quantum efficiency for 1.6-gigabit very large capacity optical fiber transmission systems

Research on sintered alloys, a multilayer ceramic circuit board with copper conductors, color toner for laser printers, double-layer electron beam resist, and a highly sensitive holographic recording material

SEMICOMDUCTOR PRODUCTS AND TECHNOLOGIES

Fujitsu is a broad-line semiconductor supplier, focusing on integrated circuits. The Company sold about $112 million in discrete and optoelectronic products in 1986 and $1,197 million in ICs.

Fujitsu's product line includes:

• Discrete semiconductors that include both power and low-noise GaAs FETs ranging from 2 GHz to 20 GHz, as well as a wide range of optical semiconductor devices, such as LEDs, PINs, APDs, and laser diodes for optical fiber communications (Products also include high-speed switching power transistors (RET) and Darlington transistor arrays.)

• Standard logic ICs that include a range of TTL, LS TTL, ALS TTL, ECL, and CMOS families that cover simple gates to complex arithmetic logic circuits

• Analog ICs that include general-purpose ICs, such as operational amplifiers and comparators, to semicustom and custom ICs for audio equipment and regulators (Recent introductions include specialized ICs such as A/D and D/A converters and ICs for floppy disks, hard disks, and telephones.)

• Memory ICs that include DRAMs, SRAMs, EPROMs, bipolar ROMs, mask ROMs, and ECL RAMS

•' Microdevice family that includes general-purpose microprocessors (MPUs) for 4-bit controllers, 8-bit controllers, 16-bit MPUs, and low-power CMOS devices as well as specialized ICs for peripheral control

* Custom hybrid ICs

* Bubble memories

Some highlights of Fujitsu's semiconductor product line are:

• Fujitsu was the first Japanese company to manufacture gate arrays, and the first company to produce a 64K bipolar PROM with an access time of 40ns.

• Fujitsu is the number one supplier of gate arrays in the world, and also sells standard-cell products.

* Fujitsu is one of the few remaining producers in the bubble memory arena, with 1Mb and 4Mb products on the market.

• In the MOS memory market, Fujitsu shipped 78 million DRAMs, and 180,000 1Mb DRAMs in 1986.

* Fujitsu is a leader in high-speed bipolar memory as well as MOS memory.

Some of Fujitsu's recent product announcements include:

• 2Mb and 4Mb ROMs featuring byte-wide and word-wide access configura tions (The 2Mb ROM has a maximum access time of 200ns, and the 4Mb has a maximum access time of 250ns.)

• The BC series of BICMOS gate arrays that offers densities ranging from 430 to 2,160 3-input gates

• The HG62E series of CMOS gate arrays that includes 4,000 to 24,000 gates and offers 0.7ns gate delay time

• A single-chip DRAM controller for video signals designed to store one field of composite video signal in a general-purpose DRAM

• The ETM series of ECL gate arrays that have a built-in, high-speed (5 nanoseconds maximum) ECL RAM, 2,000 to 3,000 gates

* The MB210000 BICMOS gate array series that features 3-input NAND ports so that exchanges with TTL gate arrays can be done easily

• The UHB series that includes 11 models of ultrahigh-speed CMOS gate arrays and 6 models of a low voltage operation type (It is manufactured with a 1.5-micron process that achieves 0.9ns of delay time.)

• A CMOS 8-bit single-chip microcontroller that is the first standard version of its CMOS 8-bit flexible microcontroller (FMC)

• Two models of TV display controllers that are RGB output types and have eight color display functions

* A serial communication control LSI that has two communication channels in a single chip and is capable of controlling two lines simultaneously

• Four GaAs prescaler ICs—two for microwave communications and two for portable mobile radio communication systems

• Four models of CMOS 4-bit single-chip controllers that feature large-capacity built-in ROM and RAM

« Two models of high-speed SRAMs with maximum access times of 35ns

* Two models of 16K ECL RAMs structured 4Kx4 and featuring maximum address access of 10ns

• A silicon compiler that can be used for the design of multiplier/ adder ICs, RAMs, and ROMs

* A 4Mb DRAM using a three-dimensional stacked capacitor cell technology

Semiconductor Agreements

Table 11 lists Fujitsu's semiconductor licensing and second-sourcing agreements.

Table 11

Fujitsu Limited SEMICONDUCTOR LICENSING AND SECOND-SOUSCING AGREEMENTS

Cpmpginy Agreement

Fairchild Joint R&D and marketing

Hitachi Multicompany formation of The Real-Time Operating Nucleus Matsushita to accelerate the development of proprietary 32-bit MPU Mitsubishi technology and operating systems for the next-generation NEC microcomputers, which covers three operating systems— NTT B-TRON for office automation equipment, I-TRON for Oki real-time industrial systems, and M-TRON for networking Toshiba with distributed multiprocessors

Hitachi Development of a 32-bit MPU and peripheral LSI family based on the TRON architecture

Intel A five-year, second-source agreement (begun in 1981) for the Intel 8086 and 8088 microprocessors

A second-source agreement begun in November 1984 for the Intel 80186, 80286, and 8051 microprocessors and microcontrollers; also the 80188, 82284, and 82288

Toshiba/ C&T subcontracting with Fujitsu and Toshiba for CMOS and Chips & bipolar arrays Technologies

TI An alternate-sourcing agreement whereby Texas Instruments (TI) may manufacture and market Fujitsu's bipolar and CMOS gate arrays (In return, TI will provide Fujitsu with its Transportable Design Utility computer-aided design system.)

MMI A five-year agreement whereby Monolithic Memories, Inc., (MMI) second-sources Fujitsu's TTL gate arrays

SMC A cross-licensing agreement for Standard Microsystems' (SMC's) coplamos process for NMOS structure

Unge rmann-Bas s A joint venture to develop Ethernet chips

Source: Dataguest August 1987

SUIS Companies 1987 Dataguest Incorporated August 17 Fujitsu Limited

NONSEMICOMDUCTOR PRODUCTS SUMMARY

Computers and Data Processing Systems

In fiscal 1986, revenue in the data processing area was 17 percent more than for fiscal 1985. With 66 percent of Fujitsu's sales coming from computers and data processing equipment, this group is the Company's largest. Fujitsu is the largest supplier of computers to the Japanese market.

Products of this group include FACOM VP supercomputers, FACOM M very-large-scale to small-scale systems, JEF Japanese Information Processing systems, FACOM K office computers, banking and point-of-sale terminals, facsimile machines, Japanese-language word processors, and CAD/CAM systems. Recent announcements include ESHELL, a software tool for developing expert systems, and the formation of a value added network (VAN) service, FENICS, which began operation in October 1985. FENICS is a multimedia network that operates over high-speed digital lines.

Communications Systems

Fujitsu has long been a leader in the communications field. In 1965, it developed the first large-scale data communications network in Japan for the Ministry of Labor's nationwide on-line labor employment exchange system. In 1970, the Company developed a nationwide on-line banking network combining 300 bank branches and main offices for Dai-Ichi Kangyo Bank; it also developed a similar system for Japan's Federation of Bankers' Association, tying together 87 member banks and their 7,400 branches.

Revenue in the communications systems area was 21 percent more in fiscal 1986 than in fiscal 1985. In fiscal 1986, the communications group was the Company's second largest group, accounting for 15 percent of Fujitsu's total revenue.

Products of this group include COINS, a Corporate Information Network System; microcomputer-controlled telephones for home and office; integrated digital PBX systems; mobile radio equipment for the transport industry; optical local area networks; and information network systems.

A large portion of Fujitsu's teleconununications sales are to NTT. Many of these sales consist of digital equipment for use in NTT's Information Network System (INS).

Communications systems 1986 highlights include the following:

* COINS II, which offers small-scale multimedia multiplexers and a 384-kbit digital image transmission system (FEDIS) that achieves economical TV conferencing

* Three new FETEX-2000 Series systems, which are hybrid PBXs ranging from 120 to 400 lines

• Four models of the FETEX-3000 Series integrated digital switching systems ranging from 1,200 to 16,000 lines (The series form the nucleus of high-level information and communications networks.)

Gar Au«^T" awi^ Car Electronics

In the car audio and car electronics area, revenue in fiscal 1986 was up 13 percent over fiscal 1985. Fujitsu's car products include car radios, electronic emission controls, electronically controlled transmission equipment, and electronic fuel injection equipment. This is the Company's smallest product group, accounting for 4 percent of its total revenue.

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Billions of Yen except Per Share Data)

Balance Sheet (March 31) 2M1 X993 1984 19^5 1986

Working Capital V124.7 V147.8 V 239.1 V 232.7 297.3 Long-Term Debt V 83.6 ¥126.3 V 204.9 ¥ 252.5 ¥ 356.1 Shareholders' Equity V292.6 V351.5 V 433.4 ¥ 608.5 ¥ 636.3 After-Tax Return on Average Equity (%) 12.8 15.0 17.0 17.1 6.3

Operating Performance (Fiscal Year Ending March 31)

1982 1983 ISM 1985 1986

Revenue ¥800.3 ¥956.8 ¥1,209. ¥1,562. ¥1,691.8 Japanese Revenue ¥659.6 ¥734.5 ¥ 927. ¥1,141. ¥1,290.6 Non-Japanese Revenue ¥140.7 ¥222 ¥ 282 ¥ 421 ¥ 401 Cost of Revenue ¥514.7 ¥600 ¥ 749 ¥ 959 ¥1,140. RStD Expense ¥ 68.4 ¥ 85 ¥ 102 ¥ 132 ¥ 157, SG&A Expense ¥143.7 ¥173 ¥ 222 ¥ 275.8 ¥ 310, ¥ 84 Pretax Income ¥ 59.6 ¥ 117 ¥ 178.6 ¥ 50, 8.8 3, Pretax Margin (%) 7.4 9 11.4 52.8 51 56.4 43, Effective Tax Rate i%) 59.2 ¥ 48.3 66 89.0 ¥ 38, Net Income ¥ 31.8 Average Shares Outstanding 1,069 1,084 1,211 1,370 (Millions) 938 Per Share ¥ 33.7 ¥ 45.2 ¥ 57.4 ¥ 64.7 ¥ 25.4 Earnings ¥ 6.5 ¥ 7.0 ¥ 7.8 ¥ 9.0 ¥ 8.0 Dividends* ¥311.9 ¥328.8 ¥ 399.8 ¥ 502.5 ¥ 464.5 Book Value N/A N/A N/A N/A N/A Price Range Total Employees 48,864 52,593 62,071 74,187 84,277

Capital Expenditures ¥ 86.7 ¥110.9 ¥ 167.5 ¥ 297.6 ¥ 216.4 Exchange Rate (Yen per US$) 229 249 236 245 221

•Restated from 1981 through 1984 N/A = Not Available

Source: Fujitsu Limited Annual Reports Dataquest August 1987

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Millions of Dollars Except Per Share Data)

Balance Sheet (March 31) 1982 1983 1984 1M5 1986

Working Capital $ 545 $ 594 $1,013 $ 950 $1,345 Long-Term Debt $ 365 $ 507 $ 868 $1,031 $1,611 Shareholders' Equity $1,278 $1,412 $1,836 $2,484 $2,879 After-Tax Return on Average Equity (%) 12.8 15.0 17.0 17.1 6.3

Operating Performance (Fiscal Year Ending March 31)

1982 1983 1984 1985 1986

Revenue $3,495 $3,843 $5,127 $6,377 $7,655 Japanese Revenue $2,880 $2,950 $3,929 $4,658 $5,840 Hon-Japanese Revenue $ 614 $ 893 $1,197 $1,718 $1,815 Cost of Revenue $2,248 $2,412 $3,177 $3,916 $5,162 RSD Expense $ 299 $ 343 $ 436 $ 542 $ 710 SG&A Expense $ 628 $ 697 $ 943 $1,126 $1,403 Pretax Income $ 260 $ 339 $ 497 $ 729 $ 230 Pretax Margin (%) 7.4 8.8 9.7 11.4 3.0 Effective Tax Rate (%) 59.2 52.8 51.4 56.4 43.0 Net Income 139 i 194 > 283 $ 363 $ 176 Average Shares Outstanding (Millions) 938 1,069 1,084 1,211 1,370 Per Share Earnings $ 0.15 $ 0.18 $ 0.24 $ 0.26 $ 0.11 Dividends* $ 0.03 $ 0.03 $ 0.03 $ 0.04 $ 0.04 Book Value $ 1.36 $ 1.32 $ 1.69 $ 2.05 $ 2.10 Price Range N/A N/A N/A N/A N/A

Total Employees 48,864 52,593 62,071 74,187 84,277

Capital Expenditures $ 379 $ 445 $ 710 $1,215 $ 979 Exchange Rate (Yen per US$) 229 249 236 245 221

*Restated from 1981 through 1984 N/A = Not Available

Source: Fujitsu Limited Annual Reports Dataquest August 1987

THE COMPANY

Background

Fujitsu Limited was founded in 1935 as a spinoff of the parent company, Fuji Electric Co., Ltd. Fujitsu began as a manufacturer of automatic telephone exchanges and related telephone equipment. With a growing complement of carrier transmission and radio communications equipment later added to its product line, Fujitsu has become a world leader in telecommunications and is also involved in the manufacture and sale of computers and data processing systems, semiconductors and electronic components, and audio products. In 1954, Fujitsu pioneered the development of the first Japanese computer, the FACOM 100, a relay-type product.

Fujitsu is one of the top four suppliers to Nippon Telegraph and Telephone Corporation (NTT), the former Japanese domestic telecommuni cations monopoly. The other three major suppliers are NEC Corporation, Hitachi, Ltd., and Oki Electric Industry Company, Limited. Fujitsu has installed telecommunications networks for NTT covering all of Japan.

Employees and Company Structure

The total number of Fujitsu employees in 1986 was 84,277, an increase of almost 14 percent over the 1985 figure of 74,187. The Company is headed by chairman Taiyu Kobayashi, president Takuma Yamamoto, and executive vice presidents Bun-ichi Oguchi and Matami Yasufuku. The Company's organizational structure is shown in Figure 1.

Fujitsu is part of the DKB Group (Dai-Ichi Kangyo Bank), formed in 1971 through the merger of Dai-Ichi Bank and Nippon Kangyo Bank. Dai-Ichi Kangyo Bank is the largest bank in Japan. The DKB Group is subdivided into two groups—the Furukawa Group and the Kawasaki Group. These two subgroups are successors to the former zaibatsu of the same names.

In 1977, the Sankin-Kai Council (Third Friday Conference) was established to unite the Furukawa Group and the Kawasaki Group, and other companies with close financial relations, to Dai-Ichi Kangyo Bank; at that time, the DKB Group was considered to be weak in terms of unity. Fujitsu is a member of two councils—the Sankin-Kai and the Furukawa Sansui-Kai. Figure 2 diagrams the DKB Group.

Figure 1

Fujitsu Limited COMPANY OBGANIZATION

• Fujitsu Limited

Corporate Administration 3 Marketing & Sales Group (systems) 3 International Operations ^ Group (Systems) )

TelecommLtnications Group Board J 3—0 Executive Committee c Data Processing Group 3 Semiconductor Operations Group 3 Electronic Components ^ C Operations Group J international Operations ^ cGrou p (Electronic Devices) J Source: Fujitsu Limited

1987 Dataguest Incorporated August JSIS Volume III Fujitsu Limited

Figure 2

DKB GROUP

Jugosha Shacho-Kai Sankin-Kai Kawasaki Muisumi-Kai Trading Fukoku Mutual Life Insur. Kawasaki Steel Kanematsu-Gosho Shiseldo Company C. Itoh & Company Nlgata Engineering Yaskawa Electric Nippon Express Nippon Kangyo Kakumaru •• Kawasho Corporation Securities Korakuen Company Kawasaki Heavy Indus. (Nissan F. & M. Insur.) (Denki Kagaku Kogyo) Kawasaki Kisen Sankyo Company) (Nippon Columbia) (Seibu Department Stores) (Honshu Paper) Furukawa Sansui-Kai Asahi Mutual Life Insur. Taisel F. & M. Insur. Others Asahl Denka Kogyo Shimlzu Isekl & Company Nippon Zeon Construction Asahl Optical Yokohama Rubber Isuzu Motors (Orient Finance) Furukawa Company (Kyowa IHakko) (Showa Shell Sekiyu) Nippon Light Metal (I.H.I.) (Nissho-lwai Corporation) Furukawa Electric (Kobe Steel) (Lion Corporation) (Asahi Chemical) (Japan Metals & Chemicals) Fuji Electric (Hitachi, Ltd.) (Ebara Corporation) Fujitsu Ltd. (Chichibu Cement) Shibusawa Warehouse

Intragroup Joint Ventures IVIeiji Group

World Energy Development Me\\\ Seika Century Leasing System Meljl Milk Products Century Research Center MeijI Machine

Affiliate Source: Industrial Groupings in Japan 1986/87 Dodwcll Marketing Consultants Tokyo 1986 Dataquest August 1987

JSIS Volume III 1987 Dataquest Incorporated August Fujitsu Limited

HIGHLIGHTS

Recent Fujitsu performance highlights are:

• Fujitsu reported consolidated revenue of ¥1,692 in fiscal 1986, an increase of 8 percent from fiscal 1985.

• The Company's semiconductor revenue in 1986 was $1,309, an increase of 28 percent.

• The Company was the largest worldwide supplier of ECL products in 1986.

• In 1986, the Company was the largest worldwide supplier of bipolar digital memory products, with revenue of $116 million.

Table 1 lists Fujitsu's top shareholders and the percentage of shares they own.

Table 1

Fujitsu Limited TOP SHAREHOLDERS

Shareholders Percentage of Shares

Fuji Electric Co., Ltd. IB.T-^b Asahi Mutual Life Insurance 7.5% Dai-Ichi Kangyo Bank, Limited 5.5% Industrial Bank of Japan, Limited 2.7% Sega Zurich* 1.9% The Chase Manhattan Bank, N.A., London 1.9% Nippon Life Insurance Company 1.7% The Taiyo Kobe Bank, Limited 1.6% The Kyowa Bank, Ltd. 1.5% The Dai-Ichi Mutual Life Insurance Company 1.5%

*SEGA Zurich, a securities clearance system in Switzerland, is the depository in respect to the Company's Swiss Bearer Depository Receipts.

Source: Japan Company Handbook Spring 1987

Foreign ovmership of stock is 22.7 percent. Fujitsu is listed on the Basel, Frankfurt, Geneva, London, Nagoya, Osaka, Tokyo, and Zurich exchanges.

Fujitsu's major financing comes from DKB and Mitsubishi Group financial institutions.

OPERATIONS

Table 2

Fujitsu Limited REVENUE BY LINE OF BUSINESS (Billions of Yen)

Fiscal Year Ending March 31 1982 1983 1984 1285 1986

Computers and Data Processing Systems ¥477.9 X 566.5 ¥ 727.4 ¥ 957.6 ¥1,116.5

Communications Systems 137.5 170.2 186.1 210.8 254.2

Semiconductors and Electronic Components 122.6 151.8 217.9 307.4 225.6

Car Audio and Car 46.8 49.4 54.0 58.5 65.9 Electronics

Other 15.5 18.9 24.5 28.0 29.6

Total Revenue ¥800.3 ¥ 956.8 ¥1,209.9 ¥1,562.3 ¥1,691.8

Exchange Rate (Yen per US$) 229 249 236 245 221

Source: Fujitsu Limited Annual Reports Dataguest August 1987

Figure 3

Fujitsu Limited REVENUE B7 PRODUCT LINE (Percent of Yen)

5.8% Computer Communication Car Semiconductors and Components Other

1.8%

1986

Source: Dataquest August 1987

1987 Dataguest Incorporated August JSIS Volume III Fujitsu Limited

Revenue rose in all lines except semiconductors and electronic components, where it showed a decrease of 27 percent in fiscal 1986 compared with fiscal 1985. The slump in semiconductors and unfavorable export conditions caused by the appreciation of the yen are the reasons cited for the decrease in revenue.

Fujitsu's consolidated sales in fiscal 1986 reached VI,691.8 billion, an 8.3 percent increase from fiscal 1985. However, although sales grew, company profits dropped significantly. Operating income was down 57 percent to ¥84.1 billion, and net income was down 56 percent to ¥38.9 billion.

IHTERNATIONAL ACTIVITIES

In fiscal 1986, non-Japanese sales accounted for 24 percent of Fujitsu's total revenue, or ¥401.2 billion, compared with 18 percent, or ¥140.7 billion, in fiscal 1982. The Americas are by far the largest non-Japanese consumers of Fujitsu products—consuming 58 percent of total overseas sales in fiscal 1986.

Figure 4 illustrates the generally high growth of overseas sales compared with sales in Japan.

Fujitsu has taken the following actions to improve its position as an international corporation:

Began magnetic disk drive production in a Hillsborough, Oregon, facility in 1986

Established Fujitsu Microsystems America, Inc., to market personal and business computers

Established Fujitsu Canada, Inc., to market magnetic disk drives, printers, and other information-processing products

Established Fujitsu Imaging Systems of America, which purchased the Imaging Systems Division of Burroughs Corporation

Established Fujitsu Components of America as a subsidiary of Fujitsu Microelectronics, Inc., concentrating on integrated electronic components

Figure 4

Fujitsu Limited GROWTH OF NON-JAPANESE VERSUS JAPANESE REVENUES

Percent of Yen 70- Non-Japanese Japanese 60- 58.0%

50.

40 33.9%

30- 27.1% 2S.2%

20- 17.2% 17.7% fv^ 13.1% 11.9% 11.4% 10 I X- 6.8% 6.6% S I

{4.7%) -ID 1979-80 1980-61 1981-82 1982-83 1983-84 1984-85 1985-86 Source: Dataquest August 1987

10 1987 Dataguest Incorporated August JSIS Volume III Fujitsu Limited

SEMICOMDUCTORS

OrqaTiization

Fujitsu's Semiconductor Group is organized as shown in Figure 5.

Figure 5

Fujitsu Limited SEMICONDUCTOR GROUP ORGANIZATION • International Operations Group • Semiconductor Operations Group Electronic Devices (Semiconductor & Components) K Advanced Planning K Administration 0 Domestic Marketing ^ -C Administration J -c Sales J Compound Semiconductor Semiconductor -C Marketing J Bipolar IC ASIC Marketing " ^ -C 3 ^ 3 International * MOS IC Operations Group Microcomputer Semiconductor Operations Group 3 Electronic Devices Marketing (Semiconductor c Microcomputer & Components) Semiconductor Sales Support J D < Ouatity & Reliabiiity -< Electronic Components Marketing Engineering ^ evelopment & Support! Overseas Production Facilities Production Facilities ) ) Overseas Sales Domestic k Companies 3 K Sifbsldiarles 3 Source: Fujitsu Limited Semiconductor Facilities

Fujitsu has 18 semiconductor facilities throughout the world that cover all steps of semiconductor production. Fujitsu Microelectronics, Inc., is planning to begin construction on a semicustom IC production facility in Gresham, Oregon, which will combine fabrication, assembly, and test in a small-scale production line for sales in the U.S. market.

Table 3 lists semiconductor factory locations in Japan and other parts of the world. Figure 6 shows the locations of the Japanese facilities.

JSIS Volume III 1987 Dataquest Incorporated August 11 Fujitsu Limited

Table 3

Fujitsu Limited JAPANESE SEMICONDUCTOS MAMUFACTDSING FACILITIES

Floor Hap Year Space Code Factory Estab. Bnployees (m^) Function/Products

Aizu Factory 1967 3,000 68,400 Fab, assembly, test—ICs, discretes B Fujitsu Niyagi Electronics 1982 764 12,000 Assembly, test—MOS ICs C Fujitsu Tohoku Electronics 1981 720 6,000 Assembly, test—ICs D Fujitsu VLSI Design 1985 500 25,077 Fab, assembly, test~MOS ICs E Iwate Factory 1980 2,415 84,549 Fab, assembly, test—MOS memory F Kyushu Fujitsu Electronics 1978 400 24,333 Assembly, test—MOS ICs G Kawasaki Factory 1938 9,256 7,000 MD—ICs, discretes, optoelectronics H Mie Factory (Planned) 1984 200 15,000 Fab, R&D—MOS memory I Aizu Factory #2 1984 300 30,000 Fab J Miyazaki Factory 1985 400 24,333 Assembly, test—MOS ICs K Wakamatsu Factory 1984 500 16,000 Fab, assembly, test—MOS microdevices and logic L yamanashi Electronics 1984 400 13,000 Fab, assembly, test—MOS logic M Mino-Kamo Factory 1985 500 25,027 Fab, assembly, test—MOS ICs Fujitsu Component Malaysia Sdn. Bhd. N/A N/A N/A N/A Fujitsu Europe Limited 1983 60 N/A Fab, assembly, test—CMOS prototypes Fujitsu Microelectronics, Inc. 1979 650 20,122 Assembly, test—MOS memory Fujitsu Microelectronics Ireland, Ltd. 1981 175 11,150 Assembly, test—MOS memory Fujitsu Microelectronics, Inc. Gresham Factory 1986 N/A 14,000 Fab—MOS ICs

N/A < Not Available

Source: Dataquest August 1987

Figure 6

Fujitsu Limited JAPANESE FACILITIES

Source: Bataquest August 19S7

JSIS Volume III ® 1987 Dataguest Incorporated August 13 Fujitsu Limited

Semiconductor Market ^^^q aT»i Sales

Fujitsu showed increases in all product areas in which it participates. Dataguest estimates Fujitsu's 1986 semiconductor revenue, shown in Table 4, at $1,309 million, an increase of 28 percent over 1985. The largest increases were in MOS microdevices (53 percent), optoelectronic devices (49 percent), and MOS logic (48 percent).

Table 4

Fujitsu Limited WORLDWIDE SEKECONDUCTOR REVENUE (Millions of Dollars)

1979 1980 1981 1982 1983 1984 1985 1986

Total Semiconductor 204 275 375 465 673 1 ,190 1 .019 1.369

Total Integroted Circuit 169 236 335 427 806 1.098 940 1,197

Bipolar Digital (Technology) 54 81 99 129 174 305 267 347 TTL 237 111 145 ECL 52 146 184 Other Bi pal or Digital 16 16 18 Bipolor Digital (Function) 54 81 99 129 174 305 267 347 Bipolar Digital Memory 17 36 46 63 90 136 95 116 Bipolar Digital Logic 37 45 53 66 84 169 172 231

MOS (Technology) 167 143 218 286 406 753 631 791 NMOS 87 113 185 232 331 615 500 617 PMOS 9 12 8 6 7 7 4 CMOS 11 18 25 42 68 131 126 174 MOS (Funct ion) 107 143 218 280 406 753 631 791 MOS Memory 85 105 145 190 278 527 412 462 MOS Mi cro Devices 6 18 48 60 85 121 106 162 MOS Logic 16 26 25 30 43 105 113 167

Li near B 12 18 18 26 40 42 66

Total Discrete 25 26 25 23 32 46 37 48

Tronsistor 25 26 25 23 32 40 37 48 Snail Signol Transistor 30 27 36 Power Transistor 10 16 12

Diode Snail Signal Diode Power Diode Zener Diode

Thyristor

Other Discrete

Totol Optoelectronic 13 15 15 35 52 43 64 LED Lonps LED Disploys Opt I CO I Couplers 28 20 29 Other Optoelectronics 24 23 35

Exchonge Rote (Yen/US$) 219 227 221 248 235 237 238 167

Source: Dataguest August 1987

14 1987 Dataguest Incorporated August JSIS Volume III Fujitsu Limited

Fujitsu's growth in most product areas over the past year has been equal to or better than the worldwide industry average growth, as shown in TeUsle 5. Fujitsu retained its position as the seventh largest worldwide semiconductor supplier and twenty-ninth largest supplier of linear and discrete devices. The Company increased its market share in the bipolar and MOS digital and optoelectronic markets.

Table 5

Fujitsu Limited WORLDWIDE RANKING BY SEMICONDUCTOR MARKETS (Sales in Millions of Dollars)

Sales Industry 1986 1985 1986 % Change % Change Rank Rank Sales 1985-1986 1985-1986

Total Semiconductor $1,310 2S% 25%

Total IC 6 7 $1,,19 8 27% 24% Bipolar Digital 4 6 347 30% 14% MOS Digital 5 6 791 25% 25% Linear 29 29 60 43% 30% Total Discrete 29 29 $ 48 25% 25% Total Optoelectronics 7 8 $ 64 49% 36%

Source: Dataquest Augus t 1987

Semiconductor Product Portfolio Analysis - Figure 7 is a graphic analysis of Fujitsu's 1986 product portfolio compared with worldwide competition. Figure 8 presents the same analysis applied only to the Company's Japanese competition. These figures show which product areas the Company has chosen to focus on.

The y axis is the historical product compound annual growth rate (CAGR) from 1982 to 1986. Fujitsu's CAGR for each product is marked by a dot. In Figure 7, the worldwide product CAGR is marked by a dot surrounded by a circle that represents the total world market for the product. In Figure 8, the total Japanese company CAGR for each product is marked by a dot surrounded by a circle that represents total Japanese company sales for the product.

JSIS Volume III 1987 Dataquest Incorporated August 15 Fujitsu Limited

The locations of graph points may be interpreted in the following way:

• Upper Right Quadrant—These are the "developing products." The Company is not the leading supplier of these products, but the products exhibit positive growth.

• Upper Left Quadrant—These are the "stars." The Company is the leading supplier of these products, and the products exhibit positive growth.

• Lower Left Quadrant—These are the "cash cows." The Company is the leading supplier in a declining product segment, but there is generally a high profit margin on these products.

• Lower Right Quadrant—These are the "dogs." The TAM for this product area is declining and the Company is not the leading supplier.

Figure 7

Fujitsu Limited PRODUCT PORTFOLIO COMPARED WITH WORLDWIDE COMPETITION

CAGR 1982-1986

55 --

50--

45 --"

40 -- MOS Logic >'hS.$4,705M B 35 r \ World i' Linear I I * I Market S6,O06M 30 -- Bipolar Digital World Market $4.428M 25-- World MOS Market 20-- Memory $4,540M --t-s. Discrete World f \ MOS $5,689M 15-- Micro Market { ^ 1 World $3,475M Market 10-- World Optoelectronic Market $1.629M 5 -- World Market

1,1 1.0 -^M-0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 _5_- Fujitsu Relative Worldwide Market Share -10 --

Note: Up arrow indicates growth higher than the industry average; down arrow indicates the opposite.

Source: Dat«queil Augult 19S7

Figure 8

Fujitsu Limited PRODUCT PORTFOLIO COMPARED WITH JAPANESE COMPETITION

CAGR 1982-1986

55 n- MOS Logic 50 • $2,102M Japanese Bipolar 45 • Companies Digital $1.284M .- MOS Japanese Micro Linear Companies $1,608M $2.720M \ 35 Japanese Japanese Companies [Companies po^ MOS Marnory 25 $2.S65M Optoelectronic Japanese $947M Discrete $2,858M 20 Companies Japanese Companies Japanese 0 Companies 15'

10--

-4M \ \- + + 1,1 1.0 O.D -5 + 0.7 0.6 0.5 0.4 0.3 0.2 0.1 • Fujitsu Relative Japanese Company Marl^et Share -10 --

Note: Up arrow indicates growth higher than the Japanese company average; down arrow indicates the opposite. * Fujitsu growth rate is equivalent to Japanese company average. Source: DaiaquesI Aufuit 19E7

It is obvious from looking at Fujitsu's worldwide product portfolio analysis that the Company's greatest product emphasis is MOS memory. In all products, the Company's growth rate has been higher than the industry average. Fujitsu is also quite strong in bipolar digital memory. Discrete products are the Company's least-emphasized products.

When comparing the Company with its Japanese competition, it can be seen that Fujitsu's strongest product area is bipolar digital. This is due to the company's leadership position in bipolar memory, including high-speed ECL SAMs. Fujitsu is also strong in MOS memory. However, in several product areas—bipolar digital, MOS memory, and optoelectronic—Fujitsu's growth rates are below the Japanese company average.

Fujitsu is one of the top four suppliers to Nippon Telegraph and Telephone Corporation (NTT), the former Japanese domestic telecommunications monopoly. The other three major suppliers are Hitachi, Ltd.; NEC Corporation; and Oki Electric Industry Company, Limited. Fujitsu has installed telecommunications networks for NTT covering all of Japan.

Table 6 shows Fujitsu's estimated 1986 semiconductor revenue by geographic region.

Table 6

Fujitsu Limited ESTIMATED 1986 SEMICONDUCTOR REVENUE BY GEOGRAPHIC REGION (Millions of Dollars)

Unj.te d States Japan Europe ROW Total

Total Semiconductor $234 $976 $70 $30 $1,309

Total Integrated Circuit $217 $885 $70 26 $1,197

Bipolar Digital 72 259 9 7 347

MOS 145 569 61 16 791

Linear 0 57 0 3 60

Discrete $ 5 $ 41 0 $ 2 $ 48

Optoelectronic $ 12 $ 50 0 $ 2 $ 64

Source: Dataquest August 1987

CAPITAL SPEHDING AND RESEARCH AMD DEVELOPMEHT (RSD) SPENDING

Although overall capital spending declined in fiscal 1986 by 27 percent, Fujitsu maintained a relatively high level of 13 percent of revenue as shown in Table 7. Capital expenditures were used for new buildings and production facilities for large scale computers and optical communication systems, and for trial production of next generation VLSIs. See Table 8 for revenue, capital spending, and R&D spending figures in dollars.

The Company made semiconductor capital investments of about $96 million in 1986, as shown in Table 9, a decline of 68 percent from 1985. This is after a decline of 38 percent from 1984 to 1985. The decline in semiconductor capital spending is due to the tremendous overcapacity problem.

Table 7

Fujitsu Limited CAPITAL SPENDING AND R&D SPENDING AS A PERCENTAGE OF SALES (Billions of Yen)

1982 1983 1984 1995 1986

Revenue V800.3 ¥956.8 VI,209.9 ¥1,562.3 ¥1,691.8

Capital Spending ¥ 86.7 ¥110.9 ¥ 167.5 ¥ 297.6 ¥ 216.4 Percentage of Revenue 11% 12"^ 14% 19% 13%

R&D Expense ¥ 68.4 ¥ 85.5 ¥ 102.9 ¥ 132.7 ¥ 157.0 Percentage of Revenue 9% 9% 9% 8% 9%

Combined Capital and R&D Spending ¥155.1 ¥196.4 ¥ 270.4 ¥ 430.3 ¥ 373.4 Percentage of Revenue 20% 21% 23% 27% 22%

Percentage Increase (Decrease) 20% 27% 38% 59% (13%)

Exchange Rate 229 249 236 246 221 (Yen per US$)

Source: Fujitsu Limited Annual Reports August 1987

JSIS Volume III 1987 Dataguest Incorporated August 19 Fujitsu Limited

Table 8

Fujitsu Limited CAPITAL SPENDING AND R&D SPENDING IN DOLLARS (Millions of Dollars)

1982 1983 1984 1985 1986

Revenue $3,495 $3,843 $5,127 $6,377 $7,655 Capital Spending $ 379 $ 445 $ 710 $1,215 $ 979 R&D Spending $ 299 $ 343 $ 436 $ 542 $ 710

Source: Fujitsu Limited Annual Reports August 1987

Table 9

Fujitsu Limited SEMICONDUCTOR CAPITAL SPENDING BY CALENDAR YEAR (Millions of Dollars)

1M2 1983 1984 12i5 1986

Semiconductor Revenue $465 $673 $1,190 $1,019 $1,309

Semiconductor Capital Spending $141 $226 $ 485 $ 303 $ 96

Percentage of Semiconductor Revenue 30% 34% 41% 30% 7%

Source; Dataquest August 1987

20 1987 Dataquest Incorporated August JSIS Volume III Fujitsu Limited

Research and Development

In fiscal 1986, Fujitsu spent ¥157 billion, or 9 percent of sales, on R&D.

R&D divisions have been created at the Kawasaki and Mie plants, where procedures for developing and designing new products are automated and controlled by computerized programs. In January 1983, Fujitsu completed a new R&D center in Atsugi City dedicated to semiconductor and other microelectronics research.

The following are a few of Fujitsu's fiscal 1986 R&D achievements:

• Kabu-wake, a parallel inference method that allows many processors to operate in cooperation with very little interprocessor communication (Expert Shell (ESHELL) software for expert systems was put into practical use in fiscal 1986)

• ATLAS II, a Japanese-English automatic translation system that analyzes source language using semantic information

• An expert system for synthesizing logic circuits, focusing on gate arrays

• IDATEN, an image processing system for real-time processing of time-varying images at a video rate of 30 frames per second

• Prototype multiplexer/demultiplexer LSI

• CAP, a cellular array processor bus controller using a 30,000-gate channelless gate array that features a basic cell configuration suitable not only for logic but also for memory circuits

• Achieved 4.1 nanoseconds of multiplication time at room temperature in a 16-bit multiplier that is a high electron mobility transistor (HEMT) 4,000-gate array manufactured on an experimental basis

• RHET, a resonant tunnel hot-electron transistor using a superlattice crystal

• A DFB laser diode with low threshold current and high quantum efficiency for 1.6 Gbit/s very large capacity optical fiber transmission systems

• Research on sintered alloys, used in multilayer ceramic circuit boards with copper conductors, color toner for laser printers, double-layer electron beam resist, and a highly sensitive holographic recording material

SEMICONDUCTOR PRODUCTS AMD TECHNOLOGIES

Fujitsu is a broad-line semiconductor supplier, focusing on ICs. The Company sold about $112 million in discrete and optoelectronic products and $1,197 million in ICs in 1986.

Fujitsu's product line includes:

• Discrete semiconductors that include both power and low-noise GaAs FETs ranging from 2 GHz to 20 GHz, as well as a wide range of optical semiconductor devices such as LEDs, PINs, APDs, and laser diodes for optical fiber communications; also high-speed switching power transistors and Darlington transistor arrays

• Standard logic ICs that include a range of TTL, LS TTL, ALS TTL, ECL, and CMOS families that range from simple gates to complex arithmetic logic circuits

• Analog ICs including general-purpose ICs such as operational amplifiers and comparators, as well as semicustom and custom ICs for audio equipment and regulators; also recently introduced specialized ICs such as A/D and D/A converters and ICs for floppy disks, hard disks, and telephones

• Memory ICs including DRAMs, SRAMs, EPROMs, bipolar ROMs, mask ROMs, and ECL RAMS

• Microdevice family including microprocessors (MPUs), for 4-bit microcontrollers (MCUs), and microperipherals (MPRs)

• Custom hybrid ICs

• Bubble memories

Highlights of Fujitsu's semiconductor operations include:

• Fujitsu was the first Japanese company to manufacture gate arrays and the first company to produce a 64K bipolar PROM with an access time of 40ns.

• Fujitsu is the number one supplier of gate arrays in the world, and it also sells standard cells.

• Fujitsu is one of the few remaining producers in the bubble memory arena, with 1Mb and 4Mb products on the market.

• In the MOS memory market, Fujitsu shipped 78 million 256K DRAMs in 1986, and 180,000 1Mb DRAMs in 1986.

• Fujitsu is a leader in high-speed bipolar memory as well as MOS memory.

Some of Fujitsu's recent product announcements include:

• 2Mb and 4Mb ROMs featuring byte-wide and word-wide access configurations (The 2Mb ROMs have maximum access times of 200ns; the 4Mb has a maximiim access time of 250ns.)

• The BC series of BICMOS gate arrays that offer densities ranging from 430 to 2,160 3-input gates

• HG62E series of CMOS gate arrays that include 4,000 to 24,000 gates and offer 0.7ns gate delay time

• A single-chip DRAM controller for video signals designed to store one field of composite video signal in a general-purpose DRAM

• The ETM series of ECL gate arrays that have a built-in high-speed (5ns maximum) ECL RAM, and 2,000 to 3,000 gates

• The MB210000 BICMOS gate array series that features three-input NAND ports so that exchanges with TTL gate arrays can be done easily

• The UHB series that includes 11 models of ultra-high speed CMOS gate arrays and 6 models of a low-voltage operation type gate array (It is manufactured with a 1.5-micron process that achieves 0.9ns of delay time.)

• A CMOS 8-bit single-chip microcontroller that is the first standard version of its CMOS 8-bit flexible microcontroller (FMC)

• Two models of TV display controllers that are RGB output types and have eight color display functions

• A serial communication control LSI that has two communication channels in a single chip and is capable of controlling two lines simultaneously

• Four GaAs prescaler ICs—two for microwave communications and two for portable mobile radio communication systems

• Four models of CMOS 4-bit single-chip microcontrollers that feature large capacities of built-in ROM and RAM

Two models of high-speed SRAMs with maximum access times of 35ns

Two models of 16K ECL RAMs structured 4Kx4, featuring maximum access time of 10ns

A silicon compiler that can be used for the design of multiplier/ adder ICs, RAMs, and ROMs

A 4Mb DRAM using a three-dimensional stacked capacitor cell technology

Semiconductor Agreements

Fujitsu has the semiconductor licensing and second-sourcing agreements shown in Table 10.

Table 10

Fujitsu Limited SEMICONDUCTOB LICENSIHG AND SECOND-SOURCING AGREEMENTS

Company Agreement

Fairchild Joint R&D and marketing

Hitachi Formation of The Real Time Operating Nucleus (TRON) program Matsushita to accelerate the development of proprietary 32-bit MPU Mitsubishi technology and operating systems for the next-generation NEC microcomputers, which covers three major operating NTT systems—B-TRON for office automation equipment, I-TRON Oki for real-time industrial systems, and M-TRON for networking Toshiba with distributed multiprocessors Cooperation on the development of a 32-bit MPU and Hitachi peripheral LSI family based on the TRON architecture

A five-year, second-source agreement (begun in 1981) for Intel the Intel 8086 and 8088 microprocessors

A second-source agreement begun in November 1984 for the Intel 80186, 80286, and 8051 microprocessors and microcontrollers; also the 80188, 82284, and 82288

(Continued)

24 1987 Dataguest Incorporated August JSIS Volume III Fujitsu Limited

Table 10 (Continued)

Fujitsu Limited SEMICONDUCTOR LICENSING AND SECOND-SOURCING AGREEhfENTS

Company Agreement

Toshiba/ C&T sxibcontracts with Fujitsu and Toshiba for CMOS and Chips & bipolar arrays Technologies

TI An alternate-sourcing agreement with Texas Instruments (TI), whereby TI may manufacture and market Fujitsu's bipolar and CMOS gate arrays (In return, TI will provide Fujitsu with its Transportable Design Utility computer-aided design system.)

MMI A five-year agreement whereby Monolithic Memories Inc. (MMI) second-sources Fujitsu's TTL gate arrays

SMC A cross-licensing agreement for Standard Microsystems' (SMC's) coplamos process for NMOS structure

Ungermann-Bass A joint venture to develop Ethernet chips

Source: Dataguest August 1987

NONSEMICONDUCTOR PRODUCTS SUMMARY

Computers and Data Processing Systems

In fiscal 1986, revenue in the data processing area was 17 percent more than in fiscal 1985. With 66 percent of Fujitsu's sales coming from computers and data processing eguipment, this group is the Company's largest. Fujitsu is the largest supplier of computers to the Japanese market.

Products of this group include FACOM VP supercomputers, FACOM M very-large-scale to small-scale systems, JEF Japanese Information Processing systems, FACOM K office computers, banking and point-of-sale terminals, facsimile machines, Japanese-language word processors, and CAD/CAM systems. Recent announcements include Expert Shell (ESHELL), a software tool for developing expert systems, and the formation of a value-added network (VAN) service, FENICS, which began operation in October 1985. FENICS is a multimedia network that operates over high-speed digital lines.

JSIS Volume III 1987 Dataquest Incorporated August 25 Fujitsu Limited

Communications Systems

Revenue in the communications systems area increased 21 percent in fiscal 1986 over fiscal 1985. In fiscal 1986, the communications group was the Company's second largest group. It accounted for 15 percent of total revenue.

Products of this group include COINS (Corporate Information Network System), microcomputer-controlled telephones for home and office, integrated digital PBX systems, mobile radio equipment for the transport industry, optical local area networks, and information network systems.

A large portion of Fujitsu's telecommunications sales are to NTT. Many of these sales consist of digital equipment for use in NTT's Information Network System (INS).

Fiscal 1986 highlights include the following:

• COINS II, which offers small-scale multimedia multiplexers and a 384-Kbit digital image transmission system (FEDIS) that achieves economical TV conferencing

• Three systems of its new FETEX-2000 Series of hybrid PBXs, ranging from 120 to 400 lines

• Four models of the FETEX-3000 Series of integrated digital switching systems that range from 1,200 to 16,000 lines and form the nucleus of high-level information and communications networks

Car Au<»T" ^rtA Car Electronics

Fujitsu Limited 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Millions of Dollars Except Per Share Data)

Balance Sheet (March 31) 1981 1982 1983 1984 1985

Working Capital $ 349 $ 545 $ 593 $1-,014 $ 949 Long-Term Debt $ 334 $ 366 $ 507 $ 869 $1-,029 Shareholders' Equity $ 940 $1,,27 9 $1,,41 1 $1-,839 $2,,48 1 After-Tax Return on Average Equity (%) 15.9 12.8 15.0 17.0 17.1

Operating Performance (Fiscal Year Ending March 31)

1981 1982 1983 1984 1985

Revenue $3,223 $3,499 $3,841 $5,133 $6,369 Japanese Revenue $2,735 $2,884 $2,949 $3,934 $4,653 Non-Japanese Revenue $ 488 $ 615 $ 892 $1,199 $1,716 Cost of Revenue $2,118 $2,251 $2,411 $3,181 $3,911 R&D Expense $ 261 $ 299 $ 343 $ 437 $ 541 SG&A Expense $ 563 $ 628 $ 697 $ 944 $1,124 Pretax Income $ 198 $ 261 $ 339 $ 497 $ 728 Pretax Margin (%) 6.1 7.4 8.8 9.7 11.4 Effective Tax Rate (%) 53.4 59.2 52.8 51.4 56.4 Net Income $ 125 $ 139 $ 194 $ 283 $ 363 Average Shares Outstanding (Millions) 851 938 1,069 1,084 1,211 Per Share Earnings $ 0.15 $ 0.15 $ 0.18 $ 0.24 $ 0.26 Dividends* $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.04 Book Value $ 1.10 $ 1.36 $ 1.32 $ 1.70 $ 2.05 Price Range N/A N/A N/A N/A N/A

Total Employees 46,603 48,864 52,593 62,071 74,187

Capital Expenditures i 337 $ 379 $ 445 $ 711 $1,213 Exchange Rate (Yen per US$) 216 229 249 236 245

*Restated from 1981 through 1984 N/A = Not Available

Source: Fujitsu Limited Annual Reports Dataguest August 1986

Table 1

Fujitsu Limited REVKNUES BY LINE OF BUSINESS (Billions of Yen)

Fiscal Year Ending March 31 1981 1982 1983 1984 1985

Computers and Data Processing Systems ¥405.8 ¥477.9 ¥566.5 ¥ 727.4 ¥ 939.0

Communications Systems 131.9 137.5 170.2 186.1 210.8

Semiconductors and Electronic Components 101.0 122.6 151.8 217.9 326.0

Car Audio and Car Electronics 40.7 46.8 49.4 54.0 58.5

Other 15.2 15.5 18.9 24.5 28.0

Total Revenues ¥694.6 ¥800.3 ¥956.8 ¥1,209.9 ¥1,562.3

Exchange Rate (Yen Per US$) ¥215.5 ¥228.7 ¥249.1 ¥ 235.7 ¥ 245.3

Source: Fujitsu Limited Annual Reports Dataquest August 1986

® 1986 Dataquest Incorporated August SIS Companies Fujitsu Limited

Table 2

Fujitsu Limited ESTIMATED SEMICONDUCTOR REVENUES (Millions of Dollars)

1978 1979 1980 1981 1982 1983 1984 1985 Total Semiconductor 124 204 275 375 465 673 1,190 1.020 Total Integrated Circuit 91 169 236 335 427 606 1,098 940 Bipolar Digital (Technology) 47 54 81 99 129 174 305 267 TTL 0 0 0 0 0 237 200 ECL e 0 0 0 0 0 Other Bipolar Digital 0 0 0 0 0 0 52 51 16 16 Bipolar Digital (Function) e 54 81 99 129 174 305 267 Bipolar Digital Memory 47 17 36 46 63 90 136 125 Bipolar Digital Logic 0 37 45 53 66 84 169 142 0 MOS (Technology) 38 107 143 218 280 406 753 631 NMOS 0 87 113 185 232 331 615 501 PMOS 0 7 7 CMOS 0 9 12 8 6 68 131 4 11 18 25 42 126 MOS (Function) 38 107 143 218 280 406 753 631 MOS Memory 0 85 105 145 190 278 527 412 MOS Micro Devices 0 121 106 MOS Logic 0 6 18 48 60 85 105 113 16 20 25 30 43 Linear 8 12 18 18 26 40 42 Total Discrete 24 25 26 25 23 32 40 37 Transi stor 24 25 26 25 23 32 40 37 Small Signal Transistor 0 0 0 0 0 0 30 27 Power Transistor 0 0 0 0 0 0 10 10 Diode 0 0 0 0 0 0 0 0 SmalI Signal Diode 0 0 0 0 0 0 0 0 Power Diode 0 0 0 0 0 0 0 0 Zener Diode 0 0 0 0 0 0 0 0 Thyristor 0 0 Other Discrete 0 0 Total Optoelectronic 9 10 13 15 15 35 52 43 LED Lamps 0 0 0 0 0 0 0 0 LED Displays 0 0 0 0 0 0 Optical Couplers 0 0 0 0 0 0 0 0 Other Optoelectronics 0 0 0 0 0 0 28 20 24 23

Source: Dataquest August 1986

SIS Companies 1986 Dataquest Incorporated August Fujitsu, Ltd.

Fujitsu, Ltd. 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Billions of Yen Except Per Share Data)

Balance Sheet (March 31)

1979 1980 1981 1982 1983

Working Capital ¥ 68.4 ¥ 61.8 * 75.3 ¥124.7 ¥147.8 Long-Terra Debt* ¥ 63.0 ¥ 70.9 ¥ 71.9 ¥ 83.6 ¥126.3 Shareholders' Equity ¥124.7 ¥136.0 ¥202.6 ¥292.6 ¥351.5 After-Tax Return on Average Equity (%) 12.8 13.6 15.9 12.8 15.0

Operating Performance (Fiscal Year Ending March 31)

1979 1980 1981 1982 1983

Revenue ¥553.2 ¥599.4 ¥694.6 ¥800.3 ¥956.8 Japanese Revenue ¥469.1 ¥500.8 ¥589.5 ¥659.6 ¥734.5 Non-Japanese Revenue ¥ 84.1 ¥ 98.6 ¥105.1 ¥140.7 ¥222.3 Cost of Revenue ¥362.9 ¥386.5 ¥456.4 ¥514.7 ¥600.6 R&D Expense ¥ 46.2 ¥ 49.4 ¥ 56.3 ¥ 68.4 ¥ 85.5 SG&A Expense ¥ 99.5 ¥108.0 ¥121.3 ¥143.7 ¥173.5 Pretax Income ¥ 36.2 ¥ 48.5 ¥ 42.7 ¥ 59.6 ¥ 84.5 Pretax Margin (%) 6.5 8.1 6.1 7.4 8.8 Effective Tax Rate (%) 51.0 60.6 53.4 59.2 52.8 Net Income ¥ 14.6 ¥ 17.7 ¥ 27.0 ¥ 31.8 ¥ 48.3 Average Shares Outstanding (Millions) 743 771 851 938 1,069 Per Share Earnings Y 19.7 ¥ 22.9 Y 31.7 ¥33.9 ¥ 45.2 Dividends ¥ 6.0 ¥ 6.0 ¥ 7.75 ¥ 6.5 ¥ 7.0 Book Value ¥167.8 ¥176.4 ¥238.1 ¥311.9 ¥328.8 Price Range N/A N/A N/A N/A N/A

Total Employees* 32,200 33,500 46,603 48,864 52,593

Capital Expenditures ¥ 38.4 ¥52.4 ¥ 72.7 ¥ 86.7 ¥110.9 Exchange Rate (Yen per US$) ¥200.0 ¥232.0 ¥215.5 ¥228.7 ¥249.1

*Data for the years 1979 amd 1980 are for unconsolidated operations; remainder are for consolidated operations.

Table 1 Fujitsu, Ltd. REVENUES BY PRODUCT LINE* (Billions of Yen)

Fiscal Year Ending March 31 1979 1980 1981 1982 1983

Computers & Data Processing Systems ¥320.3 ¥345.9 ¥405.8 ¥477.9 ¥566.5

Communications Systems 113.6 128.5 131.9 137.5 170.2

Semiconductors and Electronic Components 42.1 75.4 101.0 122.6 151.8

Audio Products 33.0 40.0 40.7 46.8 49.4

Other 44.2 9.6 15.2 15.5 18.9

Total Revenues ¥553.2 ¥599.4 ¥694.6 ¥800.3 ¥956.8

Exchange Rate (Yen Per US$) ¥200.0 ¥232.0 ¥215.5 ¥228.7 ¥249.1

*Data is converted from bar graphs in the Fujitsu Annual Report.

Source: Fujitsu, Ltd. Annual Reports DATAQUEST

Table 2

Fujitsu, Ltd. ESTIMATED SEMICONDUCTOR REVOniES (Millions of Dollars)

1977 1978 1979 1930 1931 1982 .*,*^.k V • m • • a B a • £; ^ . i> ^ IT = = C I E = T ; y • MM ma = "•tal Semiconduetor B9 124 204 275 375 463

Total In^earated Circuit 60 91 169 236 335 427

BiDoiar Digital 34 47 54 81 99 129 TTL DTL ECL Other BiDoiar Digital Bioolar Dioital (Function) 3f •47 54 SI 99 129 Bioolar Digital nemory 17 36 46 63 Bipolar Digital Logic 37 45 S3 66

HOS (Technology) :»: 3B 107 143 218 280 Nnos 87 113 1B5 232 9 12 S 6 POOS 11 18 25 42 cnos nOS (Function) 21 38 107 143 218 280 flOS Memory 8S 105 145 190 nOS nicroorocessor 6 18 48 60 nOS Logic 16 20 25 30 Linear 5 6 8 12 18 IB

Total Discrete 21 24 25 26 25 23

Transistor 21 24 25 26 tK 23 Small Signal Transistor Poucr Transistor

Diode 0 0 0 0 0 0 Small Signal Diode 0 0 0 0 0 0 Power Diode 0 0 0 0 0 0 Zcner Diode 0 0 0 0 0 0 ThyrisLor 0 0 0 0 0 0

Other Discrete 0 0 0 0 0 0

Total Ootoelcctronic 8 9 10 13 15 13 LED Lan)ps LED Disolays Ootical Couolers Other ODtoclectronics

Source: MTAQUESrr

Fujitsu, Ltd.

Fujitsu, Ltd. 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J22833 (Billions of Yen Except Per Share Data)

Balance Sheet (March 31)'

1978 1979 1980 1981 1982

Working Capital Y 54,. 4 Y 68.. 4 Y 61,. 8 Y 75,. 3 ¥124.. 7 Long-Term Debt* Y 73,. 6 Y 63,. 0 Y 70.. 9 Y 71,. 9 Y 83.. 6 Shareholders' Equity Y103 .9 Y124,. 7 . Y136, .0 Y202,. 6 Y292.. 6 After-Tax Return on Average.Equity (%) N/A 12.8 13.6 15.9 12.8

Operating Performance (Fiscal Year Ending March 31)

1978 1979 1980 1981 1982

Revenue ¥473.5 ¥553.2 ¥599.4 ¥694.6 ¥800.3 Japanese Revenue ¥407.6 ¥469.1 ¥500.8 Y589.5 Y659.6 Non-Japanese Revenue ¥ 65.9 ¥ 84.1 ¥ 98.6 ¥105.1 ¥140.7 Cost of Revenue Y305.3 Y362.9 ¥386.5 ¥456.4 ¥514.7 R&D Expense ¥ 44.3 ¥ 46.2 ¥ 49.4 ¥ 56.3 ¥ 68.4 SG&A Expense ¥ 85.7 ¥ 99.5 ¥108.0 ¥121.3 ¥143.7 Pretax Income ¥ 24.6 ¥ 36.2 ¥ 48.5 ¥ 42.7 ¥ 59.6 Pretax Margin (%) 5.2 6.5 8.1 6.1 7.4 Effective Tax Rate (Z) 48.4 51.0 60.6 53.4 59.2 Net Income ¥ 10.8 ¥ 14.6 ¥ 17.7 ¥ 27.0 ¥ 31.8 Average Shares Outstanding (Millions) 721 743 771 851 937 Per Share Earnings ¥ 15.0 ¥ 19.7 ¥ 22.9 ¥ 31.7 ¥ 33.9 Dividends ¥ 6.0 ¥ 6.0 ¥ 6.0 ¥ 7.75 ¥ 6.5 Book Value ¥144.1 ¥167.8 ¥176.4 ¥238.1 ¥312.2 Price Range N/A N/A N/A N/A N/A

Total Employees* 32,100 32,200 33,500 46,603 48,864 Capital Expenditures ¥ 32.7 ¥ 38.4 ¥ 52.4 ¥ 72.7 ¥ 86.7 Exchange Rate (Yen per US$) ¥253.2 ¥200.0 ¥232.0 ¥215.5 ¥228.3

*Data for the years 1978, 1979, and 1980 are for unconsolidated operations; remainder are for consolidated operations.

Source: Fujitsu, Ltd. Annual Reports DATAQUEST

SIS Volume ni Copyright ® 30 September 1982 Dataquest Incorporated 1 A ,

Fujitsu, Ltd.

Table 1

Fujitsu, Ltd. REVENUES BY PRODUCT LINE* (Billions of Yen)

Fiscal Year Ending March 31 1978 1979 1980 1981 1982

Computers & Data Processing Systems ¥279.3 ¥320.3 ¥345.9 ¥405.8 ¥477.9

Communications Systems 98.7 113.6 128.5 131.9 137.5

Semiconductors and Electronic Components 29.8 42.1 75.4 101.0 122.6

Audio Products 29.6 33.0 40.0 40.7 46.8

Others 36.1 44.2 9.6 15.2 15.5

Total Revenues ¥ 473.5 ¥ 553.2 ¥ 599.4 ¥ 694.6 ¥ 800.3

Exchange Rate (Yen Per US$) 253.2 200.0 232.0 215.5 228.3

Total Revenues (Millions of US$) $1,870.1 $2,766.0 $2,583.6 $3,223.2 $3,505.5

*Data for 1978, 1979, and 1980 is converted from bar graphs in the Fujitsu Annual Report by DATAQUEST.

Source: Fujitsu, Ltd. Annual Report DATAQUEST

Table 2

Fujitsu Ltd. ESTIMATED SEMICONDUCTOR REVENUES (Millions of Dollars)

1977 1978 1979 1980 1981 TOTAL SEKtOONDUCTGR 89 124 210 419 465 Total Integrated Circuit 60 91 175 380 425 Bipolar Digital 34 47 54 81 94 TTL mil ECL Other Bipolar Digital (Recap) 54 81 94 Memory 17 26 43 liOgic 37 55 51

MOB 21 38 113 287 305 NMOS 92 257 274 PIGS 10 12 8 acs 11 18 23 NX (Recap) 113 287 305 Memory 85 231 203 Micrc^ocessor 3 10 48 Logic 25 46 54 Unear 5 6 8 12 26

Total Discrete 29 33 35 39 40 Transistor 21 24 25 26 25 Small Signal Power Transistor

Diode 8 9 10 13 15 Small Signal 4 4 5 5 6 Power 4 5 5 8 9 Zoier 0 0 0 0 0

n^istor

Other

Total Optoelectronic 0 0 0 0 LH> Lanps 0 0 0 0 LED Displays 0 0 0 0 Optical Couplers 0 0 0 0 Other 0 0 0 0

Source: DATAQUEST

Fujitsu Ltd. 6-1, Marunouchi 2-chome Chiyoda-ku, Tokyo 100, Japan Telephone: 03-216-3211 Telex: J 22833 (Billions of Yen Except Per Share Data) Balance Sheet (March 31)*

1978 1979 1980 1981 Working Capital X 44.0 X 54.9 * 53.9 ¥ 66.7 Long-Term Debt » 73.6 Y 63.0 * 70.9 ¥ 66.6 Shareholders' Equity X 97.4 ¥113.7 ¥128.5 ¥173.2 After-Tax Return on Average Equity (%) 8.6 10.1 12.9 12.3

Operating Performance (Fiscal Year Ending March 31)

1978 1979 1980 1981 Revenue ¥387.4 ¥440.9 ¥501.0 ¥581.7 Japanese Revenue ¥337.9 ¥376.4 ¥421.6 ¥500.1 Non-Japanese Revenue ¥ 47.5 ¥ 64.5 ¥- 79.4 ¥ 91.6 Cost of Sales ¥247.5 ¥288.8 ¥319.0 ¥375.5 R&D Expenditures ¥- 42.2 ¥ 44.5 ¥ 42.3 ¥ 53.8 SG&A Expense ¥114.4 ¥127.8 ¥•138.8 ¥156.7 Pretax Income ¥• 14.5 ¥ 18.8 ¥• 38.5 ¥• 35.5 Pretax Margin (%) 3.7 4.3 7.7 6.1 Effective Tax Rate (%) 43.3 42.8 59.4 48.0 Net Income ¥ 8.2 ¥ 10.7 ¥ 15.6 * 18.5 Average Shares Outstanding (Millions) 713 733 765 849 Per Share Data Earnings ¥ 11.5 ¥ 14.6 ¥ 20.4 ¥ 21.8 Dividends ¥ 6.0 ¥ 6.0 ¥ 6.0 ¥ 7.75 Book Value *139.1 ¥155.8 *173.5 ¥204.0 Price Range N/A N/A N/A N/A

Total Employees 32,062 32,257 32,982 31,019 Exchange Rate (US$ per Yen) 0.00395 0.00500 0.00431 0.00464 Capital Expenditures ¥26.8 ¥29.8 ¥-44.7 ¥59,7

•Unconsolidated N/A = Not Available

Source: Fujitsu Ltd. Annual Reports DATAQUEST, Inc.

Table 1

Fujitsu Ltd. REVENUES BY PRODUCT LINE (Billions of Yen)

Fiscal Years Ending March 31 1978 1979 1980 1981

Telecommunications Equipnent * 39.8 -X 43.1 * 46.7 •£ 48.9

Data Processing Equipment 274.5 303.0 326.8 382.1

Radio & Carrier Transmission Equipment 52.7 . 66.2 70.6 72.9

Electronic Conponents \ 16.5 19.5 20.4 28.6 Semiconductors 1 40.4 58.3

*387.4 ^40.9 ¥501.0 ¥581.7

Source: Fujitsu Ltd. Annual Reports DATAQUEST, Inc.

Table 2 Fujitsu Ltd. ESTIMATED SEMICONDUCTOR REVENUES (Millions of Dollars)

1977 1978 1979 1980

TOTAL SEMICCMXJCTOR 89 124 210 419

Total Integrated Circuit 60 91 175 380

Bipolar Digital 34 47 54 81 TTL DTL ECL Other Bipolar Digital (Recap) 54 81 Manory 17 26 Logic 37 55 MOS 21 38 113 287 NM06 92 257 PMOS 10 12 CMOS 11 18

MOS (Recap) 113 287 Memory 85 231 Microprocessor 3 8 Logic 25 48

Linear 5 6 8 12

Total Discrete 29 33 35 39

Transistor 21 24 25 26 Small Signal Power Transistor

Diode 8 9 10 13 Small Signal 4 4 5 5 Power 4 5 5 8 Zener 0 0 0 0 Thyr is tor 0 0 0 0

Other 0 0 0 0

Total Optoelectronic 0 0 0 0 LED Lanps LED Displays Optical Couplers Other

Source: DATAQDEST, Inc.

Table 10.01-1 Fujitsu ESTIMATED SEMICONDUCTOR REVENUES (Dollars in Millions)

1977 1978

TOTAL SEMICOSDUCTOR 89 12t

TOTAL I C 50 91

BIPOLAR DIGITAL 31 47 TTL DTL ECL OTHER

MOS 21 38 PMOS NMOS CMOS

LINEAR •5- 6 INTERFACE CONTROL ENTERTAINMENT OTHER

H IB RID

TOTAL DISCRETE 29 33

TRANSISTOR 21 24 SMALL SIGNAL POWER

DIODE 8 9 SHALL SIGNAL POWER ZENER

THYRISTOR d 0

OTHER O'- 0

OPTOELECTRONIC 0 0 LED LAMPS 9- 0 LED DISPLAYS 0 COUPLERS s 0 OTHER 6 0

Note: The following exchange rates were used to convert yen to dollars: 1977: 266 yen = $1.00; 1978: 207 yen = $1.00

Source: DATAQUEST, Inc.

Table 10.12.2-1 Fujitsu ESTIMATED SEMICONDUCTOR REVENUES (Dollars in Millions)

1975 1976 1977

TOTAL SEMICONWCTOR 47 77 98

TOTAL I C 36 58 72

BIPOLAR DIGITAL 24 37 1*3 TTL DTL ECL OTBER

MOS 9 16 21 FMOS mos CMOS LINEAR 3 t t INTERFACE CONTROL ENTERTAINMENT OTHER

BIBRID

TOTAL DISCRETE 11 19 26

TRANSISTOR 19 SMALL SIGNAL POWER > DIODE •^ SMALL SIGNAL POWER ZENER

THIRISTOR 0

OTBER 0

OPTOELECTRONIC 0 0 0 LED LAMPS LED DISPLAYS COUPLERS OTHER

Source: DATAQUEST, Inc.

Table 10.12.2-1 Fujitsu ESTIMATED SEMICONDUCTOR REVENUES (Dollars in Millions)

1975 1976

TOTAL SEMICONDUCTOR 47

TOTAL I C 36

BIPOLAR DIGITAL /Q\ TTL DTL ECL OTHER

MOS PMOS NMOS CMOS

LINEAR INTERFACE CONTROL ENTERTAINMENT OTHER

TOTAL DISCRETE 11

TRANSISTOR SMALL SIGNAL POWER

DIODE SMALL SIGNAL POWER ZENER

THYRISTOR

OTHER

OPTOELECTRONIC LED LAMPS LED DISPLAYS COUPLERS OTHER

Source: DATAQUEST, Inc.

GAIN Electronics Corporation

GAIN Electronics (formerly Pivot III-V) Corporation Established 1985 22 Chubb Way, P.O. Box 921 No. of Employees: 45 Somerville, NJ, 08876 (201)526-7111

BACKGROUND GAIN Electronics is a privately held start-up corporation with a dedicated interest in ni-V electronics. Its major thrust is GaAs circuits based upon conventional MESFET and advanced SDHT approaches. Hybrid circuits and subsystems built around these ni-V integrated circuits is an important business component. Dr. Raymond Dingle, president, formerly of AT&T Bell Labs, is considered the inventor of the SDHT device and the multiquantum well laser (MQW). The other principals are acknowledged experts in III-V technology and hold numerous patents in this field. Mitsui & Co., a Tokyo-based trading company, owns 30 percent of GAIN and will distribute the GaAs chips in the Far East.

COMPANY EXECUTIVES Chairman/CEO—Dr. Raymond Dingle (formerly of Bell Laboratories) President/coo—Warren Wheeler Vice President, Manufacturing—Dr. R. Russ Buckley (formerly of Bell Laboratories) Vice President, Engineering—Charles Lee (formerly of Bellcore) Vice President, Finance—Richard Brunhofer Director of Process Development—Dr. Rudi Hendel (formerly of Bell Laboratories) Director of Marketing—Michael D. Logan (formerly of AT&T)

FINANCIAL BACKING • 1985—Seed of $23 million from Mitsui & Company, Japan; Edelson Technology Partners, Saddlebrook, New Jersey; and United Capital Ventures of Houston, Texas. • 1987—Follow-on funding of $7 million, including leases, from McDonnell-Douglas and others.

STRATEGIC ALLIANCES • 1985—Mitsui made investments amounting to 30 percent of GAIN'S worth. • 1986—Gain allied with NTT in SRAM technology. • 1987—McDonnell Douglas invested $10 million

SERVICES • Design • Foundry • Epitaxy

PROCESS TECHNOLOGY • GaAs E/D MESFET • GaAs SDHT

PRODUCTS • 3456 gate array - GFL3500 • 6000 gate array - GFL 6000

Applications • High-speed computers • Communications satellites • Fiber-optic link DSP • Instrumentation • Defense electronics

FACILITIES GAIN'S facilities, which are located in Somerville, New Jersey, include a 55,000-square-foot design and manufacturing area and 6,600 square feet of class 10 clean rooms. In house, GAIN has MBE, DSW, RIE, SEM, and CAD/CAM equipment. t © 1988 Dataquest Incorporated January SIS GATA Gazelle Microcircuits, Inc.

Gazelle Microcircuits, Inc. Established 1986 2300 Owen Street No. of Employees: Approximately 60 Santa Clara, CA 95054 (408)982-0900

BACKGROUND Gazelle Microcircuits, Inc. was founded in 1986 by Andrew C. Graham and David MacMillan. Its mission is to design and market high-performance, easy-to-use digital LSI and VLSI GaAs ICs for high-volume segments within the computer, communications, and military/aerospace markets. Gazelle introduced its first product, a laser-programmable PLD, in June 1988. The company uses outside foundries for wafer fabrication.

COMPANY EXECUTIVES Chairman, President and CEO—Jerry Crowley (formerly founder of Oki Semiconductor) V.P. Marketing—David MacMillan (formerly of GigaBit Logic) V.P. Engineering—Andrew C. Graham (formerly of GigaBit Logic) V.P. Technology—Dr. Thomas Andrade (formerly of Pacific Monolithics) V.P. Sales—John Randall (formerly of Infocorp) V.P. Operations—George Schneer (formerly of Sematech)

BOARD OF DIRECTORS • Jerry R. Crowley (see above) • David MacMillan (see above) • E. Floyd Kvamme, General Partner, Kleiner Perkins Caufield & Byers • Philip Young, Managing Director, Dillon Read & Co.—Concord Partners

• David Hathaway, General Partner, Venrock Associates

• Steve Sharp, President, Power Integrations

FINANCIAL BACKING • August 1986 Seed round of $900,000 provided by Kleiner Perkins Caufield & Byers and Hambrecht & Quist • April 1987 First round of $5.5 million provided by Kleiner Perkins Caufield & Byers; Hambrecht & Quist; Dillon Read & Co.—Concord Partners; Merrill, Pickard, Anderson & Eyre; and Venrock Associates.

• August 1987 $1.5 million lease line provided by Comdisco, Inc. • April 1988 $2.5 million lease line provided by Comdisco, Inc. September 1988 Second round of $6.8 million provided by first round investors plus Harvard Management Co., Inc., JAFCO, Ltd., and Hook Partners

STRATEGIC ALLIANCES Gazelle's first foundry contract is with TriQuint of Beaverton, Oregon.

SERVICES Factory programming of Gazelle's PLDs (five-day maximum turnaround for one programmed, tested prototype sample) Military screening

PROCESS TECHNOLOGY Gazelle's products use E/D GaAs MESFET processing; the Company is dependent upon available foundry processes and capacity.

•

PRODUCTS • GA22V10 PLD, a high-performance version of the silicon 22V10 • GA23SV8/GA23V8 PLD, a 20-pin superset of 32 silicon PLDs • GA9011 and GA9012 Transmitter and Receiver for 40-bit data bus

General DataComm Industries, Inc. 1579 Straits Turnpike Middlebury, Connecticut 06762 Teleplione: (203) 574-ni8 Fax: (203) 755-0896 Dun's Number: 05-447-0896 Date Founded: 1969

CORPORATE STRATEGIC DIRECTION R&D expenditure totaled $21.6 million in fiscal 1989, representing 10.8 percent of revenue. Capital spend ing totaled $8.3 million in fiscal 1989, representing General DataComm Industries, Inc., designs, 4.1 percent of revenue. produces, markets, installs, and services advanced network systems and network products ^t allow organizations to buUd and manage networks that More detailed information is available in Tables 1 transmit data, voice, and video over public and through 3, which appear after "Business Segment private telecommunications facilities. General Strategic Direction" and present corporate highlights DataComm's products include time division and and revenue by region and distribution channel. statistical multiplexers, packet switches, a wide range Table 4, a conqvehensive financial statement, is at the of analog and digital data sets, and network control end of tiiis profile. and diagnostic equipment to monitor and maintain communications systems.

General DataComm's sales and maiketing force is organized into departments to address three market BUSINESS SEGMENT STRATEGIC segments: domestic business systems, domestic com DIRECTION mon carriers, and intonational. Domestically, General DataComm sells, leases, and maintains its equipment primarily through its own sales and service groups, Network Systems which include separate regional sales and technical support organizations for the business systems and During fiscal 1989, General DataComm introduced common carrier markets. Internationally, General several of its most advanced networking and standa DataComm ntaintaing full subsidiary operations in the lone products. MEGAMUX TMS is General United Kingdom (sales and service operations) and DataComm's high-end private networking multiplexer Canada (sales and service), and sales and technical that offers better than a 100 percent increase in support offices in Japan, Hong Kong, Belgium, capacity over the Coi]:q>aiiy's predecessor product, France, Gomany, and Austria. These sales offices while accessing the public networi^ in both the manage a worldwide distribution network with US and world markets. In addition, MEGAMUX representatives in over 40 countries. TMS is the first industry multiplexer to function with Fractional Tl service and the first to interface with Total revenue increased by 2.6 percent to Integrated Services Digital Networit (ISDN). $201.2 million"' in fiscal 1989 firom $196.2 million in fiscal 1988. Net income increased 51.1 percent to a loss of $9.0 million in fiscal 1989 fixnn a loss of General DataComm offers a complete, integrated $18.4 million in fiscal 1988 due to significant cost family of equipment that allows its customers, on a restructuring. General DataComm employed building-block basis, to construct data voice and 2,269 people worldwide in 1989. video communications networks designed 4D fit their individual needs. This integrated equipment provides # *A11 dollar amonnts are in US dollare. customers with the ability to manage and control an

SCA 0007305 ©1990 Dataquest Incorporated General DataComm Industries, Inc. / entire network from a central site. Network products is custom engineered to meet individual requirements include multiplexers, packet switches, network for the intended appUcation transmission speed, num control and diagnostic systems, and analog and digital ber of points to be connected, distance between data sets. points, and overall network concept. General DataComm produces substantially aU the equipment used in such networks and supplies some equipment In addition to offering its products on a standalone produced by others. basis, the Company designs and engineers complete communications networks for data, voice, and video. This entails total responsibihty for installation, serv Further Information ice, and operation, except for telephone lines and other telecommunications facihties that are leased by For more information about the Company's business the customer from telephone companies or other com segments, please contact Dataquest's Telecommunica munications carriers. Each communications network tions Industiy Service (TCIS).

Table 1 Five-Year Corporate Highlights (Thousands of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue $190,976.0 $182,703.0 $206,889.0 $196,215.0 $201,218.0 Percent Change (4.33) 13.24 (5.16) 2.55

Capital Expenditure $22,311.0 $16,200.0 $15,658.0 $8,773.0 $8,297.0 Percent of Revenue 11.68 8.87 7.57 4.47 4.12

R&D Expenditure $16,903.0 $19,561.0 $25,275.0 $23,252.0 $21,631.0 Percent of Revenue 8.85 10.71 12.22 11.85 10.75

Number of Employees 2,597 2,519 2,598 2,451 2,269 Revenue ($K)/Employee $73.54 $72.53 $79.63 $80.06 $88.68

Net Income $10,800.0 $3,926.0 $783.0 ($18,406.0) ($8,999.0) Percent Change (63.65) (80.06) (450.70) 51.11

1989 Calendar Year Qi Q2 Q3 Q4 Quarterly Revenue $51,244.00 $53,422.00 $47,206.00 $49,346.00 Quarterly Profit ($490.00) ($313.00) ($2,037.00) ($6,159.00)

SoDcce: General DataComin Industries, Inc. Annual Reports and Forms 10-K Dataqnest (1990) Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 Nordi America 80.96 77.36 78.75 76.56 74.33 International 19.04 22.64 21.25 23.44 25.67

Source: Genoal DataComm Industries, Inc. Ammal Reports and Forms 10-K Dataqnest (1990)

Table 3 Revenue by Distribution Channel (Percent) Channel 1988 1989 Direct Sales 70.00 70.00 Indirect Sales 30.00 30.00 Source: Dataqnest (1990)

North Supply Company General DataComm and North Supply Company, a 1989 SALES OFFICE LOCATIONS subsidiary of United Telecommimications, signed a multimillion dollar distribution contract Under the North America—19 terms of the agreement. North Supply will sell Europe—1 General DataComm's complete line of communi Asia/Pacific—3 cations products including analog modems, digital Japan—1 data sets, statistical and time division multiplexers, and network management and control devices.

Pacific BeU MANUFACTURING LOCATIONS General DataComm signed an agreement with Pacific Bell to develop products compatible with Horth America Pacific Bell's services, allowing General DataComm to produce equipment to complement Naugatuck, Connecticut the functionality available in Pacific Bell's Principal assembly and systems integration Advanced Digital Network (ADN). operations Middlebury, Connecticut Illinois Bell Assembly operations General DataComm and Illinois Bell entered into an agreement calling for General DataComm to Europe market Illinois Bell's digital services. Services Wokingham, England covered by the agreement include packet switch Assembly operations ing, 1.544 high-capacity transmission, and digital data service.

Hitachi Ltd. General DataComm and Hitachi entered into a SUBSIDIARIES multiyear agreement to jointiy develop an ISDN capability based on General DataComm's MEGA- l

Robert S. Smith Vice president. Corporate Planning MERGERS AND ACQUISITIONS James R. Arcara Vice president, Corporate Operations Information is not available. August J. Hof Vice president. Manufacturing Operations Daniel E. Gottleib KEY OFFICERS Vice president, US Sales

Charles P. Johnson Chairman of the board and chief executive officer PRINCIPAL INVESTORS Ross A. Belson President and chief operating officer Charles P. Johnson—12.7 percent Frederick R. Cronin Vice president. Technology Rick L. Mantz \^ce president. Engineering FOUNDERS Daniel L. Young 'V^ce president. Marketing Information is not available.

Ikble 4 Comprehensive Financial Statement Fiscal Year Ending September (Thousands of US Dollars, except Per Share Data) Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $115,552.0 $109,390.0 $109,330.0 $104,470.0 $98,786.0 Cash 1,093.0 2,277.0 1,671.0 3,355.0 2,193.0 Receivables 38,789.0 39,756.0 46,407.0 44,187.0 39,660.0 Marketable Securities 0 0 0 0 0 Inventory 68,190.0 55,543.0 56,140.0 50,762.0 50,177.0 Other Current Assets 7,480.0 11,814.0 5,112.0 6,166.0 6,756.0 Net Property, Plants $51,956.0 $59,137.0 $49,028.0 $45,137.0 $39,480.0 Other Assets $20,297.0 $17,405.0 $4,327.0 $4,793.0 $10,040.0 Total Assets $187,805.0 $185,932.0 $162,685.0 $154,400.0 $148,306.0 Total Current Liabilities $25,845.0 $29,996.0 $29,708.0 $37,161.0 $34,006.0 Long-Term Debt $72,259.0 $69,703.0 $48,792.0 $52,073.0 $58,343.0 Other Liabilities $7,976.0 $1,494.0 $1,446.0 $1,262.0 $666.0 Total Liabilities $106,080.0 $101,193.0 $79,946.0 $90,496.0 $93,015.0 Total Shareholders' Equity $81,725.0 $84,739.0 $82,739.0 $63,904.0 $55,291.0 Common Stock 1,522.0 1,538.0 1,538.0 1,557.0 1,590.0 Other Equity 43,218.0 42,290.0 39,507.0 39,059.0 39,412.0 Retained Earnings 36,985.0 40,911.0 41,694.0 23,288.0 14,289.0 Total Liabilities and Shareholders' Equity $187,805.0 $185,932.0 $162,685.0 $154,400.0 $148,306.0 Income Statement 1985 1986 1987 1988 1989 Revenue $190,976.0 $182,703.0 $206,889.0 $196,215.0 $201,218.0 US Revenue 154,619.0 141,346.0 162,915.0 150,213.0 149,566.0 Non-US Revenue 36,357.0 41,357.0 43,974.0 46,002.0 51,652.0 Cost of Sales $104,071.0 $107,827.0 $112,000.0 $112,797.0 $109,232.0 R&D Expense $16,903.0 $19,561.0 $25,275.0 $23,252.0 $21,631.0 SG&A Expense $49,223.0 $54,133.0 $63,839.0 $67,981.0 $71,758.0 Capital Expense $22,311.0 $16,200.0 $15,658.0 $8,773.0 $8,297.0 Pretax Income $14,808.0 $1,478.0 $2,086.0 ($18,406.0) ($10,065.0) Pretax Margin (%) 7.75 0.81 1.01 (9.38) (5.00) Effective Tax Rate (%) 27.10 (165.60) 62.50 - (10.60) Net Income $10,800.0 $3,926.0 $783.0 ($18,406.0) ($8,999.0) Shares Outstanding, Millions 15.3 15.3 15.0 14.4 14.7 Per Share Data Earnings $0.71 $0.26 $0.05 ($1.27) ($0.61) Dividend - - - - - Book Value $5.34 $5.54 $5.52 $4.44 $3.76

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending September (Thousands of US Dollars, except Per Share Data)

Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (Times) 4.47 3.65 3.68 2.81 2.90 Quick (Tunes) 1.83 1.80 1.79 1.45 1.43 Fixed Assets/Equity (%) 63.57 69.79 59.26 70.63 71,40 Current Liabilities/Equity (%) 31.62 35.40 35.91 58.15 61.50 Total Liabilities/Equity (%) 129.80 119.42 96.62 141.61 168.23 Profitability (%) Return on Assets . 2.10 0.45 (11.61) (5.95) Return on Equity - 4.72 0.94 (25.10) (15.10) Profit Margin 5.66 2.15 0.38 (9.38 (4.47) Other Key Ratios R&D Spending % of Revenue 8.85 10.71 12.22 11.85 10.75 Capital Spending % of Revenue 11.68 8.87 7.57 4.47 4.12 Employees 2,597 2,519 2,598 2,451 2,269 Revenue ($K)/Employee $73.54 $72.53 $79.63 $80.06 $88.68 Capital Spending % of Assets 11.88 8.71 9.62 5.68 5.59 Sonice: General DataComm Industries, Inc. Aimnal Rqwits and Forms 10-K Dataquest (1990)

General Dynamics Pair Laclede Center St. Louis, Missouri 63105 Telephone: (314) 889-8200 Fax: (314) 889-8839 Dun's Number: 00-138-1284 Date Founded: 1952

CORPORATE STRATEGIC DIRECTION Research and development expenditure totaled $465.1 million in fiscal 1988, representing about General Dynamics, dirough its divisions and subsid 4.6 percent of revenue. Capital spending expenditure iaries, is engaged in the engineering, development, totaled $419.0 miUion in fiscal 1989, representing and manufacture of various products for the US about 4 percent of revenue. Research and develop government and foreign governments. These products ment activities in the Govenmient Aerospace and include military aircraft, missiles, gun systems, space Submarine operations are conducted principally under systems, tanks, submarines, electronics, and other government contracts. These research efforts gener miscellaneous goods and services. In addition, ally are either concerned with developing products for General Dynamics is engaged in a number of large systems development programs or with per commercial businesses, among which are the design, engineering, and manufacture of general aviation forming work under research and development aircraft; the mining of coal; the production and technology contracts. In addition, the Government distribution of lime, limestone, sand, gravel, ready- Aerospace, Submarine, and Land systems segments mix concrete, concrete pipe, and other building engage in independent research and development. products; the production of commercial aircraft subassemblies; and the design, engineering, and manufacture of commercial space launch vehicles and More detailed information is available in Tables 1 services. Electric Boat Company, which was through 3, which appear after "Business Segment organized in 1899, is the foxmding division of General Strategic Direction" and present corporate highlights Dynamics. After World War n. Electric Boat expand and revenue by region and distribution channel. ed, prompting the Company to incorporate and later Table 4, a comprehensive financial statement, is at the change its name to General Dynamics. Later, Electric end of this profile. Boat was designated as a division of the Company.

During 1989, General Dynamics continued to concen trate its efforts to maintain and improve its position in military and government-related business. The principal business in which General Dynamics BUSINESS SEGMENT STRATEGIC currently is involved are government aerospace, DIRECTION submarines, land systems, general aviation, and mate rial service and resources. General Dynamics was the top US company in exporting military equipment Government Aerospace under hcense in fiscal 1988, with hcenses totaling $2.2 billion. Military Aircraft Total revenue increased approximately 5.2 percent to about $10.0 billion* in fiscal 1989 from about General Dynamics' Fort Worth Division designs, $9.5 billion in fiscal 1988. Net income decreased develops, and manufactures military aircraft (includ approximately 22.6 percent to $293.1 million in fiscal ing components and spare parts) and assbciated 1989 from $379 million in fiscal 1988. General Djmamics employs 102,200 worldwide. electronic systems and equipment The Fort Worth Division primarily is engaged in die production of the *AU dollar amounts are in US dollars. F-16 fighter aircraft. The US Air Force (USAF) has

ordered 2,459 aircraft through 1989, of which 1,583 Phalanx, an automatic, radar-controlled gun system have been delivered, and the US Navy has ordered for defense of ships ftom incoming missiles and 26 aircraft, aU of which have been delivered. In aircraft, and the Sparrow, an air-to-air, medium-range addition, 15 nations—^Belgium, Denmark, the Nether intercept missile. Pomona delivered 62 Phalanx gun lands, Norway, Israel, Egypt, Pakistan, Venezuela, systems and 1,141 Sparrows in 1989 and has firm Korea, Turkey, Greece, Thailand, Singapore, Indone orders for an additional 79 and 1,014, respectively. sia, and Bahrain—^have ordered 1,274 aircraft, of which 907 have been delivered. According to General General Dynamics' Valley Systems is engaged in the Dynamics, F-16 sales are expected to extend into the production and development of the Stinger weapon 1990s and exceed 5,000 aircraft. Dataquest estimates system, an antiaircraft weapon designed to engage that General Dynamics possesses 45 percent of the low-level aircraft, and the RAM Guided Missile North American Fixed Wing Aircraft market. weapon system. Valley Systems delivered 2,767 Stinger missiles in 1989, and has firm orders for an The Fort Worth Division continues to perform additional 25,647. development work on the Advanced Tactical Fighter (ATF) under a contract of the USAF awarded in 1986 to the team of Latched Corporation, the Boeing Space Systems Company, and General Dynamics. General Dynamics' space-oriented programs are conducted at the Space Systems Divisioa Space Also, the Fort Worth Division provides spare parts, Systems designs, develops, and produces space support, restoration, and modification work for F-IU launch vehicles for the Department of Defense, aircraft used in the air forces of the United States and NASA, and commercial enterprises. Several versions Australia. of the Atlas launch vehicle and the Centaur high-energy upper-stage vehicle, used for launching sateUites and spacecraft, are among the products Missiles, Space, and Electronics currendy under production.

In 1988, Space Systems was one of three competitors Missile Systems awarded the Advanced Launch System-Phase n con tract, along with Boeing Company, Martin Marietta General Dynamics' Convair Division is engaged in Corporation, and McDonnell Douglas Corporation. the development and production of the Tomahawk Space Systems also has contracts for development of cruise missUe for the US Navy. In 1989, Convair several advanced space projects, and contracts for delivered 273 Sea-Launched Cruise Missiles energy subsystems, including large superconducting (SLCMs) to the US Navy, bringing total deUveries to magnets utilized in advanced isotope separation and 861 SLCMs. Under the Tomahawk dual source particle accelerator systems. production program, anticipated by General Dynamics to continue into the 1990s, Convair and McDonnell Douglas Corporation compete for the Electronics Systems annual Tomahawk production award. Convair won General Dynamics' electronics operations are 70 percent of fiscal year 1990 production, receiving engaged in the design and assembly of various an order for 280 SLCMs. defense electronic systems and products. Thrae are a variety of programs concentrated is two principal General Dynamics' Pomona Division is engaged in product line areas: automatic test equipment and com- ibs production and development of several tactical mand/control/communication systems. Dataquest missiles and gun systems, including the Standard estimates General Dynamics to be in the top 25 of the MissUe-l (SM-1), which is the primary surface-to-air Military/Aerospace Electronics market missile system for the United States and many foreign navies, and the Standard Missile-2, a more advanced Specific programs and products include the Avionics and longer-range version of the SM-1. In 1989, Intermediate Shop to test tiie avionics systems for the Pomona delivered 1,099 Standard Missiles, bringing F-16 aircraft, the Intermediate Automatic Test Equip total deliveries to 19,195; there are firm orders for an ment Shop for testing of the B-IB bomber and C-17 additional 1,384 missiles. Pomona also produces the cargo planes. Automatic Test Systems for Nortimip

Corporation and the US Army's Single Channel improved armor, was initiated in 1985. In 1988, the Ground and Airbome Radio System (SINCGARS). division was awarded a Full Scale Development con General Dynamics, teamed with Tadiran Ltd. of tract to design and field test the M1A2 version of the Israel, was selected during 1988 as the second-source Ml tank. producer of SINCGARS. Land Systems is the sole source primary contractor of Submarines main batde tanks for the US govermnent Major components of the main batde tank are produced by General Dynamics' Electric Boat Division is a other firms. The Land Systems Division has and is designer and builder of submarines for the US Navy. currently bidding on various contracts for pro Electric Boat overhauls and repairs submarines as duction of tracked and wheeled vehicles for the weU as performing a broad range of engineering work US government. that includes advanced research and technology development, systems and component design evalua tion, prototype development, and logistics support to General Aviation the operating fleet. In 1988, Electric Boat delivered 23 SSN 688-class attack submarines and 9 Trident General Dynamics' Cessna Division numufactures balhstic missUe submarines. and sells general aviation aircraft globally. Cessna had about 50 percent of the worldwide general In 1989, Electric Boat was awarded the construction aviation small and medium-size business fanjet contract for the first SSN 21-class attack submarine, market in 1989, according to General Dynamics. the Seawolf. Electric Boat currently is designing the propulsion system for the Seawolf under a contract Cessna manxifactures a line of business fanjets under with the Navy. The Seawolf class is projected to the Citation name and utility turboprops under the reach a force level of 30 ships and is the planned Caravan name. In 1989, Cessna delivered replacement for the SSN 688-class attack submarine. 82 Citations and 102 turboprop aircraft. The produc tion of piston engine aircraft was suspended in 1986 Land Systems because of the continuing depressed state of the general aviation aircraft market. General Dynamics' Land System Division is the designer and builder of the Ml Main Batde Tank for the US Army and US Marine Corps. Land Systems Further Information delivered 720 Ml tanks in 1989 and has firm commit ments for an additional 914. Production of the MlAl, For more information about die Company's business a new version of the Ml that incorporates increased segments, please contact the appropriate industry firepower, additional crew protection features, and service.

Table 1 Five-Year Corporate Highlights (Millions of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue i;7,952.0 $8,959.3 $9,412.1 $9,550.2 $10,042.9 Percent Change 12.67 5.05 1.47 5.16

Capital Expenditure $410.0 $421.0 $350.0 $496.0 $419.0 Percent of Revenue 5.16 4.70 3.72 5.19 4.17

R&D Expenditure $218.6 $307.6 $338.9 $412.5 $465.1 Percent of Revenue 2.75 3.43 3.60 4.32 4.63

Number of Employees 101,000 105,400 105,300 102,800 102,200 Revenue ($K)/Employee $79.00 $85.00 $89.00 $93.00 $98.00

Net Income $361.0 ($52.5) $437.3 $379.0 $293.1 Percent Change (114.54) 932.95 (13.33) (22.66)

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $2,360.90 $2,529.70 $2,517.30 $2,635.00 Quarterly Profit $75.40 $58.40 $76.50 $82.80

Source: General Dynamics Animal Rqpoits and Fbnns 10-K Dataqaest (1990) Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 85.45 85.46 83.15 83.28 84.00 International 14.55 14.54 16.85 16.72 16.00 Japan Europe Asia/Pacific ROW Sooice: General Dynamics Annual Rqxirts and Foims 1&-K Dataqoest (1990) Table 3 Revenue by Distribution Channel (Percent)

Channel 1988 1989 Direct Sales 84.00 84.00 Indirect Sales 16.00 16.00 VARs Distributors Dealers Mass Merchandisers Maniifacturers' Representatives Source: Dataqnest (1990)

Westinghouse in the competition for the demonstration/validation phase for the Navy's 1989 SALES OFFICE LOCATIONS next-generation Advanced Air-to-Air Missile (AAAM). North America—8 Rancho Cucamonga, California Japan—1 The Valley Systems Division's activities include Europe—4 production of the Stinger portable missile, the Asia^acific—4 Stinger-RMP (Reprogrammable Microprocessor), ROW—4 and the Air-to-Air Stinger (ATAS); and production, in a cooperative agreement with Germany, of General Dynamics also uses many sales/marketing RAM (Rolling Airframe MissUe) (YIM-116A), a representatives, consultants, and distributors/service missile that provides ship defense by destroying centers. Exact numbers for these groups are not antiship missiles. currendy available. Groton, Connecticut The Electric Boat Division's activities include production of Trident submarines, at a rate of one per year; SSN 688 attack submarines under MANUFACTURING LOCATIONS construction; and design work on the SSN 21 Seawolf class submarine. North America Lima, Ohio; Troy, Michigan; Sterling Heights, Warren, Minnesota Fort Worth, Texas The Land Systems Division's activities include The Fort Worth Division's activities include production of the MlAl Abrams Tank for the US production of the F-16 C/D Falcons for the US Air Army and Marine Corps and possession of Force; upgrading of F-16A aircraft to be deUvered research and development contracts for Abrams to the National Guard as the country's Air Defense derivatives such as robotic vehicles and the Fighter (ADF); production of F-16s for sale to Armored Family of Vehicles (AFV). foreign governments; joint work with Lockheed San Diego, California and Boeing on a prototype for the Advanced The Space Systems Division's activities include Tactical Fighter (ATF) program, under the production of the Adas and Centaur launch designation YF-22A; vehicle technology for the vehicles for commercial and military payloads; National Aerospace Plane; the avionics production of the Centaur upper stage for tiie Utan modification program for the FB-IU bomber, rV program; and participation in advanced space operation of the Air Force Electronic Warfare studies for the Advanced Launch System, Evaluation Simulator; proposed production of the Adaptable Space Propulsion System, and Liquid F-16 Agile Falcon; and development in Rocket Boosters. conjunction with McDonnell Douglas of the San Diego, Cahfomia Advanced Tactical Fighter (ATF) for the Navy. The Electronics Division's activities include San Diego, Cahfomia development and production of automatic test The Convair Division's activities include equipment to check out avionics systems on production, shared with McDonnell Douglas, of military aircraft, including the F-16 and Bl-B; Tomahawk land-attack and antiship, sea-launched production of microcircuits and electronic cruise missUes for die Navy; development of the subassemblies; and development of neural Advanced Cruise Missile for the US Air Force; networks based on artificial intelligence for ASW. development of Cruise Missile Advanced St Louis, Missouri Guidance; and development of Theater Mission The Data Systems Division's activities include Planning Systems for the US Navy. computer-based information systems and software East Camden, Arizona; Pomona, Rancho Cucamonga, programming services for General Dynamic California operations. The Pomona Division's activities include St. Louis, Missouri production, shared with Raytheon Corporation, of The General Dynamics Services Company's the Standard Missile for the Navy; production of activities include defense-related operations and Phalanx close-in weapon gun systems for the maintenance services. Navy; a reliability upgrade program for I^ialanx; Quincy, Massachusetts production of Sparrow Missiles for the US Air The American Overseas Marine Corporation's Force and Navy; research into high-power activities include engineering, financial, and microwave technology; and joint work with administrative support for Navy ships.

Helava Associates (United States) Launch Services Inc. (United States) SUBSIDIARIES Lexington I Maritime Corporation (United States) Lexington II Maritime Corporation (United States) Lexington IH Maritime Corporation (United States) North America Lexington FV Maritime Corporation (United States) American Overseas Marine Corporation (United Lexington V Maritime Corporation (United States) States) Marblehead Lime Company (United States) Applied Remote Technology Inc. (United States) Material Service Corporation (United States) Braintree I Equity Corporation (United States) Pawnee Industrial District (United States) Braintrec H Equity Corporation (United States) (Juincy Corporation (United States) Braintree III Equity Corporation (United States) Reims Air Maintenance (R.A.M.) (United States) Braintree IV Equity Corporation (United States) Remote Inc. (United States) Braintree V Equity Corporation (United States) United Hydraulics Corporation (United States) Braintrec I Maritime Corporation (United States) US Communications Corporation (United States) Braintree n Maritime Corporation (United States) US Instrument Corporation (United States) Braintree HI Maritime Corporation (United States) Wallace Indusbial District (LFnited States) Braintree IV Maritime Corporation (United States) Braintree V Maritime Corporation (United States) Japan Cessna Aircraft Company (United States) General Dynamics Kabushiki Kaisha (Japan) Cessna Disc Corporation (United States) Cessna Hnance Corporation (United States) Cessna Foundation (United States) Europe Concord I Maritime Corporation (United States) Concord n Maritime Corporation (United States) A.T. Sales Ltd. (United Kingdom) Concord m Maritime Corporation (United States) General Dynamics-Hellas S.A. (France) Concord FV Maritime Corporation (United States) General Dynamics Manufacturing Ltd. (United Concord V Maritime Corporation (United States) Kingdom) Convair Aircraft Company (United States) Societ} Financiere pour TAviation d'Affaires et de Convair Corporation (United States) Tourisme S.A. (France) Elco Company (United States) Electric Boat Company- (United States) AsialPacific Electrocom Inc. (United States) Foreign Sales Corporation (United States) General Dynamics Pty. Ltd. (Australia) Freeman Coal Mining Company (United States) GD Financial Corporation (United States) GDAT Corporation (United States) ROW General Dynamics Base Corporation (United States) General Dynamics Vmezuela, Inc. (Venezuela) General Dynamics Commercial (United States) General Dynamics Commimication Company (United States) General Dynamics Export Sales Corporation (United States) ALLIANCES, JOINT VENTURES, AND General Dynamics Foreign Sales Corporation (United LICENSING AGREEMENTS States) General Dynamics International Corporation (United 1990 States) General Dynamics International Services Inc. (United McDonnell Douglas, North American Aircraft, States) Rocketdyne of Rockwell International, and the General Dynamics Land Systems (United States) Pratt and Whitney Division of United Technol(^ies General I>ynainics Nevada Company (United States) General Dynamics ^id these four other companies General Dynamics of Turkey Inc. (Tiirkey) entered into a consortium to build the X-30, a General Dynamics Services Company (United States) hypersonic plane that would take off from earth General Dynamics Tclequipment (United States) and enter space orbit Some executives in the

project see commercial aviation value in the plane, technology to Mitsubishi, which will share its new while others see it as a staffed space flight that technology on lightweight composites for the FSX woiild be less expensive than the space shuttle. It wings. The FSX is not expected to be ready for is also beUeved that the plane would be useful in deployment until the mid- to late 1990s. miUtary programs. Once the plane is completed, the technology would be owned by all five firms, but whether production cooperation would follow 1988 is unknown. The five companies have been work Quantum Diagnostics ing independenfly on the National AeroSpace General Dynamics and Quantum Diagnostics Plane (NASP) since 1985. entered into a licensing agreement Under the agreement. Quantum Diagnostics licensed its Pulsatron electrical switch to General Dynamics 1989 for possible use in defense-related technologies such as radar, microwave systems, and electromag Odesta Corporation netic guns. General Dynamics and Odesta Corporation entered into a hcensing agreement Under the agreement, Egyptian Government Odesta will hcense its Odesta Document Manage General Dynamics and Egypt entered into a licens ing agreement. Under the agreement. General ment System (ODMS) to General Dynamics* Con- Dynamics licensed Egypt to help produce vair Division. ODMS wiU be used to increase the 555 MlAl Abrams tanks. Egyptian assembly and efficiency with which proposals are managed and production wiU gradually increase to 20 percent of developed. Convair's ODMS-based proposal Com the work and will focus on high-usage items such munication System will be used to produce and as treads, bogey wheels, and spare parts. Electron manage new business acquisition proposals for ics, targeting equipment, and other advanced com stand-off weapon systems, strike support systems, ponents will be made in the United States. and aircraft subcontracts. Domier Israel Aircraft Industries General Dynamics and Domier entered into a General Dynamics and Israel Aircraft Industries licensing agreement Under the agreement, Domier entered into a licensing agreement Under the wiU produce Stinger shoulder-fired antiaircraft agreement, General Dynamics will market the missiles in West Germany under license to General Israel Aircraft Industries' Harpy antiradar drone in Dynamics. Peak production rate will be 200 mis the United States. The propeller-driven Haipy can siles per month, and production will total loiter over a target area for up to three hours. 12,500 missiles. When radar is detected, the Harpy homes in and destroys it 1987 Lockheed and Boeing IPTN (Indonesia) General Dynamics contracted with these compa General Dynamics and IPTN (Indonesia) entered nies to develop manufacturing technologies into a licensing agreement Under the agreement, for advanced thermoplastic materials under a IPTN will produce components for F-16 fighters. $13.27 million Air Force contract During the two- State-owned IPTN will produce 3,467 components year effort the three companies will construct in all, including 675 weapons pylons, 450 fuel three generic fighter center fuselage sections using pylons, 5(X) epoxy vertical fin skins, and 526 main thermoplastic materials. landing gear doors. US Air Force Mitsubishi Heavy Industries (Japan) General I>ynamics and the US Air Force entered General Dynamics and Mitsubishi Heavy Indus into an agreement Under the agreement General tries (Japan) entered into an agreement Under the Dynamics will be allowed to launch eight Atlas agreement, both companies will joindy develop the Centauis per year from the Eastern Space and Japanese FSX fighter. Entire cost for development Missile Center, Cape Canaveral AFS, Florida. is estimated at $1.2 billioiL The agreement is said General Dynamics now has agreements with both to call for free exchange of technical information, the USAF and NASA to use government-owned with General Dynamics providing existing F-16 range facilities.

General Electric and Westinghouse General Dynamics and these two companies fonned a joint business development finn. The KEY OFFICERS new finn will implement investment, trade, and technology transfer programs in Greece as part of an offset program for flie Greek Air Force's pur Stanley P. Pace chase of 40 F-16 fighter aircraft. Chairman and chief executive officer

Herbert F. Rogers President and chief operating officer

MERGERS AND ACQUISITIONS Lester Crown Executive vice president, chairman, Material Service Corporation 1989 Ralph E. Hawes GT Devices Executive vice president. Missiles and Electronics General Dynamics acqiiired GT Devices (Alexan dria, \%ginia) for its Land Systems Division and James R. Mellor gained GT Device's expertise in electrothermal Executive vice president. Marine, Land Systems, propulsion. GT Devices invented a cannon that uses electrical power instead of gunpowder \o and International propel shells, thus providing higher speeds that Russell W. Meyer, Jr. enable the shells to travel longer distances and hit Executive vice president, chairman, Cessna with more force. Aircraft Company Applied Remote Technology General Dynamics acquired Applied Remote Tech nology (San Diego, California). Applied Remote produces unmanned underwater vehicle (UUVs) used in 1988 to help remove sea mines from the PRINCIPAL INVESTORS Persian Gulf. The US Navy also used the UUVs to locate downed parts of the Challenger space shuttle. Crown, James S. and Crown, Lester—^22.14 percent

Table 4 Comprehensive Financial Statement Fiscal Year Ending December (MiUions of US Dollars, except Per Share Data) Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $2,117.6 $2,646.3 $3,131.5 $3,635.8 $3,990.1 Cash 12.8 195.3 181.1 227.8 14.4 Receivables 358.4 407.2 393.1 444.9 416.8 Marketable Securities - - - - - Inventory 487.1 379.9 370.4 446.0 515.3 Other Current Assets 1,259.3 1,663.9 2,186.9 2,517.1 3,043.6 Net Property, Plants $1,163.2 $1,364.3 $1,496.9 $1,700.0 $1,812.5 Other Assets $831.0 $541.9 $925.6 $782.3 $746.0 Total Assets $4,111.8 $4,552.5 $5,554.0 $6,118.1 $6,548.6 Total Current Liabilities $1,790.7 $2,239.0 $2,058.3 $2,045.7 $2,077.7 Long-Term Debt $1,236.1 $1,049.1 $1,894.7 $2,150.4 $623.8 Other Liabilities - - - - $1,721.5 Total Liabilities $3,026.8 $3,288.1 $3,953.0 $4,196.1 $4,423.0 Total Shareholders' Equity $1,335.8 $1,264.4 $1,601.0 $1,922.0 $2,125.6 Converted Preferred Stock - - - - - Common Stock 55.4 55.4 55.4 55.4 55.4 Other Equity 24.7 24.7 24.7 24.7 24.7 Retained Earnings 1,255.7 1,184.3 1,520.9 1,841.9 2,045.5 Total Liabilities and Shareholders' Equity $4,362.6 $4,552.5 $5,554.0 $6,118.1 $6,548.6

Income Statement 1985 1986 1987 1988 1989 Revenue $7,952.0 $8,959.3 $9,412.1 $9,550.2 $10,042.9 US Revenue 6,795.0 7,656.5 7,825.9 7,953.1 8,436.1 Non-US Revenue 1,157.0 1,302.8 1,586.2 1,597.1 1,606.8 Cost of Sales $6,167.3 $6,906.1 $7,382.9 $7,398.3 $7,821.7 R&D Expense $218.6 $307.6 $338.9 $412.5 $465.1 SG&A Expense $503.0 $660.8 $690.3 $722.1 $753.2 Capital Expense $410.0 $421.0 $350.0 $496.0 $419.0 Pretax Income $635.6 $206.2 $598.9 $455.0 $448.2 Pretax Margin (%) 7.99 2.30 6.36 4.76 ' 4.46 Effective Tax Rate (%) 43.20 42.90 27.00 16.70 34.60 Net Income $361.0 ($52.5) $437.3 $379.0 $293.1 Shares Outstanding, Millions 42.5 42.9 41.9 41.7 41.6 Per Share Data Earnings $8.53 ($1.46) $10.26 $9.03 $7.01 Dividend - - - - - Book Value $31.43 $29.47 $38.21 $46.09 $303.22

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending December (Millions of US Dollars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liqxiidity Current (Times) 1.18 1.18 1.52 1.78 1.92 Quick (Times) 0.91 1.01 1.34 1.56 1.67 Fixed Assets/Equity (%) 87.08 107.90 93.50 88.45 85.27 Current Liabilities/Equity (%) 134.05 177.08 128.56 106.44 97.75 Total Liabilities/Equity (%) 226.59 260.05 246.91 218.32 208.08 Profitability (%) Return on Assets _ (1.21) 8.65 6.49 4.63 Return on Equity - (4.04) 30.52 21.52 14.48 Profit Margin 4.54 (0.59) 4,65 3.97 2.92 Other Key Ratios R&D Spending % of Revenue 2,75 3.43 3.60 4.32 4.63 Capital Spending % of Revenue 5.16 4.70 3.72 5.19 4.17 Employees 101,000 105,400 105,300 102,800 102,200 Revenue ($K)/Empioycc $79.00 $85.00 $89.00 $93.00 $98.00 Capital Spending % of Assets 9.97 9.25 6.30 8.11 6.40 Somcc: General Dyoamics Animal Rq)oits and Foims 10-K Dataquest (1990)

The General Electric Company pic 1 Stanhope Gate London WIA lEH United Kingdom Telephone: 44 (71) 493-8484 Fax: 44 (71) 493-1974 Dun's Number: 21-011-6406 Date Founded: 1886

CORPORATE STRATEGIC DIRECTION In 1988, GEC and Siemens AG of Germany formed a jointly owned company, GEC Si^nens, for the pur pose of acquiring the share capital of Plessey; a Incorporated m 1886, The General Electric Company formal offo* was made in December 1988. Both GEC pic (GEC) is Britain's largest manufacturing compa and Siemens won control of Plessey in October 1989 ny. The Company and its subsidiaries are engaged after acquiring 50.4 percent of the company. The deal principally in the manufacture of electronic, electri creates Europe's largest defense and electronics busi cal, and power gen^ation apparatus and systems. For ness. It includes interests in radar, avionics, telecom fiscal year 1989, GEC reported revenue of £6.4 bil munications, semiconductors, and nuclear power lion (US$11.3 billion), an increase of 16 percent over plants. fiscal 1988 revenue of £5.6 billion (US$10.0 bilUon). (Percentage changes refer only to £ amounts; US$ percentage changes will differ because of fluctuations More detailed information is available in Tables 1 and in Dataquest exchange rates.) Net income increased 2, which appear after "Business Segment Strategic 17 percent firom£444. 9 million (US$794.5 million) in Direction" aad present corporate highlights and reve nue by region. Information on revenue by distribution fiscal 1988 to £522.4 million (US$916.5 million) m channel is not available. Tables 3 and 4, comprehen fiscal 1989. R&D expenditure for 1989 amounted to sive financial statements, are at the end of this £295.0 million (US$517.5 million), or 4.6 percent backgroimder. of revenue. Total R&D was £670 million (US$1,175.4 million), of which £295.0 miUion (US$517.5 million) was funded by the Company. International sales accounted for approximately 50 percent of revenue. The Company employs BUSINESS SEGMENT STRATEGIC 145,000 people. DIRECTION

Throughout 1986, Plessey was locked in a battle to Sales of electronic systems represented 30 percent of resist takeov^ by GEC, \(diich is the only UK com sales, power systems 22 percent, teleconmnmications pany with lai;ger electronics sales than Ilessey. The 8 percent, and consumer goods 9 percent Sales of issue was whether such a merger would consolidate electronic metrology, office equipment, medical the fragmented UK industry. The UK government equipment, electronic components, industrial finally ruled against GEC's bid for Plessey on the products, and other activities comprised the remaining groimds that the takeover would not serve the 31 percent of revenue. national interest

Electronic Systems At the end of 1988, Plessey and GEC agreed on a joint venture. The new company, GEC Plessey Following the joint acquisition by GEC Siemens of Telecommunications (GPT), supplies telecommunica Plessey and conditions set by the British government, tions equipment in the United Kingdom, with access Plessey Semiconductors became a wholly owned sub to world markets. sidiary of GEC. Marconi Electronic Devices Ltd.

(MEDL), which was the former semiconductor divi The Network Systems Group supplies transmission sion of GEC, has now been merged with Plessey equipment for telecommunications networks. The Semiconductor to form a new company called GEC- Group increased its production 40 percent to meet Flessey Semiconductors (GPS). The combined com additional demand firom British Telecom for its cop pany is expected to have revenue in excess of per cable uplift program. The Group also e^anded £597 million (US$340 million), making it the fouhh overseas, and its Automatic Cross Connect Equip largest European-owned semiconductor vendor after ment (ACE), designed for data networks, was sold to I%ilips, SGS-Thomson, and Siemens. several European countries.

GEC's electronic systems business serves both nuli- The Business Systems Group had a strong year with taiy and civil markets. Militaiy operations include its PBX and key systems sales. Orders for the ISDX toipedo production, upholder class vessels, radar sys private switching system now approach 2 million tems, radar and radar warning receivers, and active lines and those for tiie ISLX exceed 1 million lines. missile seekers. In the civil field, the Company's Overseas, a joint venture, the Shanghai International Speech and Information Division won a major order Digital Telephone Equipment Company, was estab for a resource management system from the Jordanian lished to supply ISDX in China. Public Securi^ Directorate. Speech recognition tech niques developed for military use were applied to GPT Data Systems strengthened its position as a Bankcall, a new system enabling telephone transac supplier of data networks. Government laboratories tions to be made. Trials with banking institutions are approved a new secure communications processor in progress. The Company also commenced the Aat offers a much higher degree of computer security manufacture of direct broadcast satellite receivers. than previously available. Sales of videotex systems, which provide a base for many of the world's value- added services, continued to grow. Power Systems GPT Data Products expanded during the year. Sales During fiscal 1989, National Nuclear Corporation Ltd. (NNC) became a wholly owned subsidiary of of access products, especially statistical multiplexers GEC through the acquisition of the government's and and data concentrators, increased. A range of X.25 British Nuclear Associates' shareholdings. NNC and packet switches and ISDN basic access modems was Westinghouse have established a joint company for launched, and GPT's video conferencing business execution of major contracts. Products manufactured continued to e}q>and internationally. by this group include engines and systems, gas tur bines, energy systems, large machines, electromotors, GPT's UK distribution companies. Communications and marine and industrial gears and contributed Systems and Reliance, experienced a strong year. The 22 percent of GEC's total sales in fiscal 1989. two companies will be combined with GPT Con sumer Products to form GPT Sales and S^vice, which win be the largest sales and distribution com Telecommunications pany for telecommunications systems in the United Kingdom after British Telecom. GPT, which commenced operations at the beginning of fiscal year 1989, achieved sales of £1.1 billion GPT's Telecom Products business supplies pay (US$2.0 billion), or represented 8 percent of GEC's phones, cashless calling, and value-added systems. sales. GPT includes seven business units: Telecoms Deliveiy of the new Diamond range of indoor pay Systems Group, Network Systems Group, Business phones began and a voice-prompted guidance system Systems Group, GPT Data Systems, GPT Data for use with phone credit cards was supplied to I^oducts, Communications Systems and Reliance, British Telecom. Substantial sales growth was and GPT Telecom Products.. achieved in UK terminals sales and in international sales of telephones and key systems. Sales of public switching equipment by the Telecoms Systems Group increased, and orders of over £500 Consumer Goods niillion (US$877 million) for System X were received during the year. The upgrading of British Telecom's GEC's Hotpoint subsidiary enhanced its position as network with digital switches continued, and deliver the United Kingdom's leading appliance supplier. The ies of an advanced System X switching module Company improved its maricet position across its began. product range during 1989. In particular, dishwasher

SCA ©1990 Dataquest Incorporated 0009027 The General Electric Company pic sales increased, giving the Company a 25 percent The Company also introduced the Premier 20, an A3 share of the growing UK maiket Other products press capable of very close register, high-quality, include washers, dryers, storage heaters, and cooking four-color ou^ut Mdeojet maintained a leading posi appliances. Sales of consumer goods represented tion in the markets for industrial ink jet printing 9 percent of GEC's revenue. equipment and supplies.

Other Activities GEC's electronic components subsidiaries GEC's of&ce equipment and printing subsidiaries, experienced a strong year. Sales for Marconi Elec A.B. Dick and \ldeojet, e^anded operations in fiscal tronic Devices returned to profitable levels as a result 1989. According to Dataquest, A.B. Dick had less of an expanded customer base and greater penetration than 1 po-cent market share in the US plain paper of e^qport markets. Export activities included the copier market in 1989. During the year, two acquisi transfer of GTO thyristor technology to China and the tions of US companies were made and sales increased supply of radiation hard integrated circuits to at both A.B. Dick and \^deojet A.B. Dick acquired US satellite manufacturers. The acquisition of the IGX Corporation (Itek Graphix), a leading manufac turer of cameras and platemakers for the graphic arts SGS Thomson high-power semiconductor business in industry, with subsidiaries in Australia, Japan, France, France further strengthened Marconi Electronic Canada, and the United Kingdom. 'N^deojet acquired Devices' presence in Europe. The establishment of a Cheshire, which produces high-volume labeling combined sales and marketing activity with Circuit equipment for addressing apphcadons, with subsid Technology Inc. may result in sales growth in the iaries in Germany, France, and the United Kingdom. United States. Circuit Technology continued to improve its delivery performance, but the softening market for military hybrids affected its sales 'Vy^th the acquisition of Itek, A.B. Dick has become a performance. leading supplier to the short-run printing industry. Its product range now includes typesetting equipment, cameras, platemakers, color scanners, offset presses, and finishing equipment A.B. Dick also provides a Further Information fuU range of copiers, stencil duplicators, and supplies for the printing industry. A.B. Dick made its first For further information about the Company's business deliveries of Scanitek, a color scanner fiiat enables segments, please contact the appropriate Dataquest commercial printers and in-house printing depart ments to offer economic and rapid four-color printing. industry service.

Table 1 Five-Year Corporate Highlights (MiUions of US DoUars)

1985 1986 1987 1988 1989 Five-Year Revenue ,781.8 $7,725.0 $8,601.6 $9,916.1 $11,310.5 Percent Change 13.91 11.35 15.28 14.06

Capital Expenditure $95.2 $79.9 $97.7 $123.9 $127.5 Percent of Revenue 1.40 1.03 1.14 1.25 1.13

R&D Expenditure NA NA NA $526.8 $517.5 Percent of Revenue NA NA NA 5.31 4.58

Number of Employees NA NA 159,580 157,260 145,000 Revenue ($K)/Employee NA NA $54 $63 $78

Net Income 538.7 $666.0 $713.1 $794.5 $916.5 Percent Change 23.64 7.07 11.41 15.36

Exchange Rate (US$1=£) £0.77 £0.68 £0.61 £0.56 £0.57

1989 Calendar Year Qi Q2 Q3 Q4 Quarterly Revenue NA NA NA NA Quarterly Profit NA NA NA NA

NA = Not available Source: The General Electric Coinpany pic Anmial Reports Dataquest (1990)

Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 United Kingdom 54.00 57.00 56.00 59.00 52.00 Intemational 46.00 43.00 44.00 41.00 48.00

Source: The General Electric Compaiqr pic Annual Reports Dataquest (1990)

1988 1989 SALES OFFICE LOCATIONS Long & Crawford Ltd. The Company acquired Long & Crawford Ltd., a switchgear company. Monnation is not available. IGX Corporation A.B. Dick Company acquired IGX Corporation, which produces prepress printing and graphics equipment MANUFACTURING LOCATIONS National Nuclear Corporation Ltd. (NNC) The Company acquired the 70 percent of the Infonnation is not available. shares of NNC that it did not already own from the Atomic Energy Aulbority and British Nuclear Associates. Adret Instruments Division of Schlumberger PRINCIPAL SUBSIDIARIES Industries SA Marconi Instruments Ltd. acquired the assets of the Adret French company Schlumberger Lidustries Europe Instruments Division, France. GEC Electronic Devices Ltd. (United Kingdom) GEC Electrical Projects Ltd. (United Kingdom) GEC-Marconi Ltd. (United Kingdom) GEC Telecommunications Ltd. (United Kingdom) KEY OFFICERS

Lord Weinstock Chairman ALLIANCES, JOINT VENTURES, AND ^, R. Bates LICENSING AGREEMENTS Deputy chairman D. B. Newlands 1989 Finance Compagnie Generate d'EIectricite (CGE) and k. J. Williams General Electric Company (G£) Business Development The Company signed an agreement with CGE of France and GE of the United States to establish joint ventures in power generation, electrical distri bution, and transmission and consumer products. PRINCIPAL INVESTORS

Infonnation is not available. MERGERS AND ACQUISITIONS

1990 FOUNDERS Ferranti International pic Ferranti sold its Defense Systems Group to GEC. biformation is not available.

Table 3 Comprehensive Financial Statement Fiscal Year Ending March (Millions of US DoUars)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $5,166.2 $6,251.5 $7,518.9 $7,348.6 $7,300.9 Stocks and Contracts 1,643.0 1,874.7 2,188.9 2,235.2 2,444.9 Debtors 1,633.8 1,989.6 2,350.2 2,407.9 2,716.3 Investments 695.2 641.3 661.1 700.5 495.3 Cash 1,194.3 1,745.9 2,318.7 2,005.0 1,644.4 Fixed Assets Tangible Assets $992.7 $1,189.9 $1,357.5 $1,472.5 $1,626.8 Investments $135.8 $133.8 $178.9 $741.4 $925.6 Total Assets $6,294.8 $7,575.1 $9,055.2 $9,562.5 $9,853.3 Total Cuirent Liabilities $2,185.1 $2,574.9 $3,009.5 $3,489.1 $3,528.6 Net Current Assets $2,981.2 $3,676.6 $4,509.3 $3,859.5 $3,772.3 Assets Less Current Liabilities $4,109.7 $5,000.3 $6,045.7 $6,073.4 $6,324.7 Long-Term Debt $903.9 $1,037.9 $1,156.6 $1,080.2 $924.4 Capital and Reserves $3,205.8 $3,962.4 $4,889.2 $4,993.2 $5,400.4 Called Up Share Capital 173.5 196.0 218.5 238.2 234.2 Capital Redemption Reserve 4.8 5.9 6.6 7.1 7.0 Share Premium Account 11.4 12.9 15.2 22.0 29.3 Profit and Loss Account 2,913.4 3,628.8 4,504.9 4,581.3 4,969.6 Shareholdeis' Interest $3,103.1 $3,843.7 $4,745.2 $4,848.6 $5,240.2 Minority Interests $102.7 $118.7 $143.9 $144.6 $160.2 Income Statement 1985 1986 1987 1988 1989 Revenue $6,781.8 $7,725.0 $8,601.6 $9,916.1 $11,310.5 United Kingdom 3,632.5 4,383.8 4,809.8 5,841.1 5,880.7 Non-United Kingdom 3,149.4 3,341.2 3,791.8 4,075.0 5,429.8 R&D Expense NA NA NA $526.8 $517.5 Capital Expense $95.2 $79.9 $97.7 $123.9 $127.5 Pretax Income $941.0 $1,030.3 $1,095.7 $1,264.3 $1,397.7 Pretax Margin (%) 13.88 13.34 12.74 12.75 12.36 Effective Tax Rate (%) NA NA NA NA NA Net Income $538.7 $666.0 $713.1 $794.5 $916.5 Exchange Rate (US$1=£) £0.77 £0.68 £0.61 £0.56 £0.57 NA = Not available Somce: The Geneial Electric Coiiq>ai!7 pic Ammal Reports Dataqoest (1990)

Table 4 Comprehensive Financial Statement Fiscal Year Ending March (Millions of Pounds)

Balance Sheet 1985 1986 1987 1988 1989 Total Cuxrent Assets £3,978.0 £4,251.0 £4,586.5 £4,115.2 £4,161.5 Stocks and Contracts 1,265.1 1,274.8 1,335.2 1,251.7 1,393.6 Debtors 1,258.0 1,352.9 1,433.6 1,348.4 1,548.3 Investments 535.3 436.1 403.3 392.3 282.3 Cash 919.6 1,187.2 1,414.4 1,122.8 937.3 Fixed Assets Tangible Assets £764.4 £809.1 £828.1 £824.6 £927.3 Investments £104.6 £91.0 £109.1 £415.2 £527.6 Total Assets £4,847.0 £5,151.1 £5,523.7 £5,355.0 £5,616.4 Total Cuirent Liabilities £1,682.5 £1,750.9 £1.835.8 £1,953.9 £2.011.3 Net Current Assets £2,295.5 £2,500.1 £2,750.7 £2,161.3 £2.150.2 Assets Less Current Liabilities £3,164.5 £3,400.2 £3,687.9 £3,401.1 £3.605.1 Long-Term Debt £696.0 £705.8 £705.5 £604.9 £526.9 Capital and Reserves £2,468.5 £2.694.4 £2,982.4 £2,796.2 £3,078.2 Called Up Share Capital 133.6 133.3 133.3 133.4 133.5 Capital Redemption Reserve 3.7 4.0 4.0 4.0 4.0 Share Premium Account 8.8 8.8 9.3 12.3 16.7 Profit and Loss Account 2,243.3 2,467.6 2,748.0 2,565.5 2,832.7 Shareholders' Interest £2,389.4 £2,613.7 £2,894.6 £2,715.2 £2,986.9 Minority Interests £79.1 £80.7 £87.8 £81.0 £91.3 Income Statement 1985 1986 1987 1988 1989 Revenue £5,222.0 £5,253.0 £5,247.0 £5,553.0 £6,447.0 United Kingdom 2,797.0 2,981.0 2,934.0 3,271.0 3.352.0 Non-United Kingdom 2,425.0 2,272.0 2,313.0 2,282.0 3,095.0 R&D Expense NA NA NA £295.0 £295.0 Capital Expense £73.3 £54.3 £59.6 £69.4 £72.7 Pretax Income £724.6 £700.6 £668.4 £708.0 £796.7 Pretax Margin (%) 13.88 13.34 12.74 12.75 12.36 Effective Tax Rate (%) NA NA NA NA NA Net Income £414.8 £452.9 £435.0 £444.9 £522.4 Exchange Rate (US$1=£) £0.77 £0.68 £0.61 £0.56 £0.57 NA = Not available Source: The General Electiic Compaiiy pic Ammal Reports Datagaest (1990)

SCA 0009027 ©1990 Dataquest Incorporated General Electric Company 3135 Easton Turnpike Fairfield, Connecticut 06431 Telephone: (203) 373-2431 Fax: (203) 373-2658 Dun's Number: 00-136-7960 Date Founded: 1892

CORPORATE STRATEGIC DIRECTION Total revenue increased 9 percent to $54.6 billion in fiscal 1989 firom $50.1 billion in fiscal 1988. Net earnings increased 16 percent to $3.9 billion in fiscal General Electric Company (GE) is one of the world's 1989 firom $3.4 billion in fiscal 1988. General Elec largest diversified manufacturers of technological tric employs 275,000 people worldwide. products and services. The Company's operations are highly decentralized. Its management units are grouped according to the principal industries in which R&D expenditure totaled $1.3 billion in fiscal 1989, representing 2.4 percent of revenue. the Company participates. General Electric operates in thirteen business areas: Aerospace, Communica tions and Services, Electrical Distribution and Con More detailed information is available in Tables 1 trol, Industrial and Power Systems, Medical Systems, and 2, which appear after "Business Segment Plastics, Aircraft Engines, Transportation Systems, Strategic Direction" and present corporate highlights Motors, Broadcasting, Lighting, Appliances, and and revenue by region. Information about revenue by Financial Services. distribution channel is not available. Table 3, a com prehensive financial statement, is at the end of this profile. , Approximately one-fifth of GE's external sales are to agencies of the US government, which is the Compa ny's largest single customer. Most of those sales are of aerospace products and services, aircraft engines, and related products and services. BUSINESS SEGMENT STRATEGIC DIRECTION

International sales were $6.8 billion,* representing 12.4 percent of total revenue in 1989. GE has majori Aerospace ty, minority, or other joint venture interests in a GE Aerospace has begun to counter the expected number of foreign companies engaged primarily in declines in US defense procurement levels and manufacturing and distributing products and provid increasing global competition by reducing costs, ing services outside the United States similar GE's enhancing efficiency and productivity, and strategi domestic activities. These include cooperation with cally positioning itself for the 1990s. Key among the Czechoslavakian Aviation Industry on a turboprop those actions was the establishment of the Aerospace aircraft to be powered by GE's C17-9B turboprop Operations Division, which is responsible for all engines; a mobile communications joint venture with manufacturing, purchasing, sourcing, and quality con Ericsson of Sweden; establishment of joint ventures trol throughout GE's aerospace business. Also, GE is in appliances, power generation, and electrical equip- restructuring its aerospace unit in Syracuse, New msat with GEC of the United Kingdom; initiation of York, into two new divisions to concentrate on the joint ventures in motors with Robert Bosch of Germa sonar and radar markets. The sonar unit will be ny; and an agreement to acquire a majority interest in named tibe Ocean Systems Division, headquartered in the THingsram Company of Hungary. Syracuse; the radar unit will be called Government Electronic Systems Division, headquartered in *A]1 dollar amounts aic in US dollais. Morristown, New Jersey.

GE Aerospace expanded its business base in 1989 by Spectra Series line of panelboards, switchboards, winning several important competitive bids. The new busways, and Spectra RMS circuit breakers in 1989. programs include the US Army's Tactical Command and Control System (ATCCS) and the US Air Force's next generation of 20 Navstar global positioning Internationally, GE established a joint business satellites and flight controls for the C-17 transport interest with GEC .of the United Kingdom. Under the aircraft 50-50 joint venture, GE's Italian-based affiliate (COGEMEC) was combined with GEC's Belgian- Orders from international customers and technology based 'Nicker N.V. and French-based Unelec to licensing to foreign parmers amounted to nearly create a European business that manufactures and $1 billion, more than double those of the year before. markets distribution and control equipment in the Major contracts from overseas were received for European market communications satellites, surveillance radars, and flight simulators. Industrial and Power Systems GE's diverse line of aerospace programs ranges from satellites and radar air defense systems to undersea GE Industrial and Power Systems serves worldwide combat systems and sonars. Products also include utility, industrial, and governmental customers with military data systems, visual simulation systems, products for the generation, transmission, and distri armament systems, transmissions and turret stabiliza bution of electricity, and related installation, engineer tion systems for tracked vehicles, fire control and ing, and repair devices. guidance systems, automated test systems, and air craft electronics and communications systems. Medical Systems

Communications and Services GE Medical Systems serves the global market The six operating components of the Communications through three regional organizations: General Electric and Services business segment provide computers, CGR serving the European market, GE Medical satellites, and other advanced technologies for Systems-Asia serving the Asia/Pacific maricet, and communications applications. GE Infomiation Serv GE Medical Systems-Americas serving the US mar ices supplies network-based services that integrate ket These organizations provide magnetic resonance computes, software, and communications systems to (MR) scanners, computed tomography (CT) scanners, a variety of industries, including worldwide financial, and X-ray, nuclear imaging, ultrasound, and other energy, and transportation businesses. GE American diagnostic equipment and supporting services sold to Communications provides satellite communications. domestic and international hospitals and medical facilities. GE Mobile Communications formed a joint venture with Ericsson of Sweden that will produce mobile In 1989, General Electric CGR made a number of key radio systems and cellular telephones for the interna product introductions, including the Stenoscope II tional market and will serve the US and Canadian markets for cellular telephone systems. mobile surgical system and ibs compact Satume 41 linear accelerator for radiation oncology. Also in 1989, GE acquired GEC's medical equipment sales GE Governmental Services provides technical, scien and services activities in die United Kingdom. tific, and management services for federal, state, and local governments. GE Consulting Services provides consulting and software services, and GE Conq>uter GE Medical Systems-Asia continued to strengthen its Services provides service, rental, leasing, and repair Asian market presence through GE's 75 percent- of computers and other related equipment owned Japanese joint venture, Yokogawa Medical Systems, which opened a new headquarters and manufacturing facility near Tokyo. New products Electrical Distribution and Control introduced in 1989 include new computed tomogra GE Electrical Distribution and Control provides phy products such as Sytec 3000 and CT Pace Plus products that protect and control electrical power and systems and the RT 6800 color-flow ultraflow equipment This group introduced its new integrated scanner.

GE Medical Systems-Americas' major product Other Businesses introductions in 1989 included the Signa Advantage MR system and the CT HiLight Advantage system. GE's other businesses comprise Plastics, Aircraft During the year, GE positioned itself with intentions Engines, Transportation Systems, Motors, Broadcast of becoming a world leader in the emerging area of ing, Lighting, Appliances, and Financial Services. positron emission tomography (PET). It formed an alliance with Scanditroiux AB of Sweden in which Further Information GE acquired Scanditronix's PET scanner business. GE also entered into a joint development agreement For more information about the Company's business with Hamamatsu Photonics of Japan involving Ught segments, please contact Dataquest's Components detection devices for use in PET scanners. Group.

Table 1 Five-Year Corporate Highlights (Millions of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue $29,252.0 $36,725.0 $48,158.0 $50,089.0 $54,574.0 Percent Change 25.55 31.13 4.01 8.95

Capital Expenditure Percent of Revenue 0 0 0 0 0

R&D Expenditure $1,069.0 $1,300.0 $1,194.0 $1,155.0 $1,334.0 Percent of Revenue 3.65 3.54 2.48 2.31 2.44

Number of Employees 304,000 359,000 257,000 298,000 275,000 Revenue ($K)/Employee $96 $102 $187 $168 $198

Net Income $2,277.0 $2,492.0 $2,915.0 $3,386.0 $3,939.0 Percent Change 9.44 16.97 16.16 16.33

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $11,898.00 $13,431.00 $13,000.00 $16,200.00 Quarterly Profit $849.00 $972.00 $945.00 $1,173.00

Source: General Electric Compaiiy Amnul Reports and Forms 10-K Dataqnest (1990)

Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 Nordi America 88.55 89.90 92.11 90.82 87.60 International 11.45 10.10 7.89 9.18 12.40 Europe 4.00 4.00 3.00 4.00 5.00 Asia/Pacific 3.00 3.00 2.00 3.00 4.00 ROW 4.00 3.00 3.00 3.00 2.00

Sonice: General Electric Company Annnal Reports and Forms 10-K Dataqnest (1990)

Ishikawajima-Harima Heavy Industries Company, Ltd. am) 1989 SALES OFFICE LOCATIONS General Electric has invited IHI to participate in the development of die GE90 jet engine, designed Information is not available. for use with large cargo planes. GE will invest 60 percent, IHI up to 10 percent, and other compa nies, including two European manufacturers, will provide the remainder. MANUFACTURING LOCATIONS Samsung Aerospace Industries Samsung Aerospace Industries (South Korea) will manufacture F404-GE-402 enhanced performance Worldwide engine (EPE) parts under a normal licensed coproduction agreement with General Electric Air General Electric's operations are carried on at craft Engines. GE has a three-phase, five-year 209 manufacturing plants located in 35 states in the contract to supply 252 of the engines to South United States and Puerto Rico and 82 manufacturing Korea for use in 120 F/A-18 fighter aircraft from plants located in 22 other countries. McDonnell Douglas. The license deal calls for all but the sensitive technology to be transferred to Samsung.

SUBSIDIARIES 7959 General Electric Pic (GEC) North America General Electric and GEC, an unrelated corpora Caribe General Electric Products Inc. (United States) tion in the United Kingdom, formed a joint venture Employers Reinsurance Corp. (United States) to combine their interests in i^pUances and electri General Electric Canadian Holdings Ltd. (Canada) cal controls. General Electric Capital Corp. (United States) General Electric Financial Services Inc. (United Fanue States) General Electric and Fanue (Luxembourg), a pro Kidder, Peabody Group Inc. (United States) ducer of numerical and freely programmable National Broadcasting Company Inc. (United States) machine tools, formed a 50-50 joint venture. The new company, GE Fanue, will build numerical and fipeely programmable machine tools. Europe EniChem Synthesis General Electric Plastics B.V. (Sweden) General Electric and EniChem Synthesis, a fine chemicals aim of the Enimont Group in Italy, entered into a licensing agreement Under die agreement, EniChem Synthesis will license its ALLIANCES, JOINT VENTURES, AND technology for making dimetfaylcarbonate and LICENSING AGREEMENTS diphenylcarbonate to GE. T\ingsram 1990 General Electric and Tungsram (Hungary) formed a joint venture to offer a range of domestic and Czechoslovakian Aviation Industry energy-saving lighting, as well as halogen lamps. General Electric Aircraft Engines will cooperate with die Czechoslovakian Aviation Industiy on a Ericsson turboprop aircraft to be powered by GE's Cr7-9B General Electric and Ericsson (Sweden) formed a turboprop engines. The deal has been approved by joint venture, Ericsson-GE Mobile Communica both governments. GE expects more than tions, to manufacture mobile radio equipment, cel $300 million in business from the deal, not count lular telephones, and Mobitex mobile data commu ing spare parts. nications gear that will be sold worldwide.

Thomson-CSF and Eurodisplay General Electric, Thomson-CSF, and Eurodisplay jointly formed Thomson-LCD (France) to KEY OFFICERS manufacture liquid-crystal displays (LCDs) for Sextant Avionique systems. Production of the John F. Welch, Jr. LCDs, which will initially be used in military Chairman of the board and chief executive officer aircraft and warships, will begin in the latter half of 1990. Lawrence A. Bossidy \^ce chairman of die board and executive officer Asahi Diamond Industrial General Electric and Asahi Diamond Industrial Edward E. Hood, Jr. will form a joint venture, SP Pacific, to develop a Vice chairman of the board and executive officer process to produce technical-use diamonds inex pensively in various forms and quantities. Wear- Paul W. Van Orden resistant diamond coatings are expected to be the Executive vice president joint venture's first pursuit Dennis D. Dammerman Mitac Senior vice president, Hnance General Electric and Mitac's defense business divi Frank P. Doyle sion formed a joint venture, Getac, to offer work Senior vice president. Relations stations and information equipment in Taiwan. General Electric will provide the financial and Benjamin W. Heineman, Jr. technical support, and Mitac will handle supervi Senior vice president, general counsel and sion. Eventually, the new venture wiU esqrart its secretary products outside Taiwan, using Mitac's distribution channel Jack O. Peiffer Senior vice president. Executive Management Scanditronix AB General Electric and Scanditronix AB (Sweden) Walter L. Robb entered into a strategic alliance in which GE Senior vice president. Research and Development acquired Scanditronix's PET scanner business. Hamamatsu Photonics General Electric and Hamamatsu Photonics (Japan) entered into a joint development agreement PRINCIPAL INVESTORS involving light detection devices for use in PET scanners. Information is not available.

MERGERS AND ACQUISITIONS FOUNDERS

Information is not available. Information is not available.

Table 3 Comprehensive Financial Statement • Fiscal Year Ending December (Millions of US Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Cunent Assets $12,546.0 $14,288.0 $15,739.0 $80,663.0 $94,451.0 Cash 1,606.0 1,698.0 1,834.0 2,456.0 2,258.0 Receivables 6,040.0 7,208.0 6,782.0 47,311.0 54,231.0 Maiketable Securities 951.0 221.0 858.0 24,410.0 31,307.0 Inventory 3,949.0 5,161.0 6,265.0 6,486.0 6,655.0 Other Current Assets - - - - - Net Property, Plants $7,900.0 $9,841.0 $9,255.0 $13,611.0 $15,646.0 Other Assets $5,716.0 $10,462.0 $13,926.0 $16,591.0 $18,247.0 Total Assets $26,162.0 $34,591.0 $38,920.0 $110,856.0 $128,344.0 Total Current Liabilities $8,919.0 $11,461.0 $12,671.0 $61,800.0 $73,902.0 Long-Term Debt $753.0 $4,351.0 $4,491.0 $15,082.0 $16,110.0 Other Liabilities $2,819.0 $3,670.0 $5,278.0 $15,517.0 $17,442.0 Total Liabilities $12,491.0 $19,482.0 $22,440.0 $92,399.0 $107,454.0 Total Shareholders' Equity $13,671.0 $15,109.0 $16,480.0 $18,466.0 $20,890.0 Common Stock 579.0 579.0 584.0 584.0 584.0 Odier Equity 331.0 358.0 18.0 (68.0) (46.0) Retained Earoings 12,761.0 14,172.0 15,878.0 17,950.0 20,352.0 Total Liabilities and Shareholders' Equity $26,162.0 $34,591.0 $38,920.0 $110,865.0 $128,344.0 • Income Statement 1985 1986 1987 1988 1989 Revenue $29,252.0 $36,725.0 $48,158.0 $50,089.0 $54,574.0 US Revenue 25,903.0 33,016.0 44,359.0 45,490.0 47,805.0 Non-US Revenue 3,349.0 3,709.0 3,799.0 4,599.0 6,769.0 Cost of Sales $20,843.0 $26,187.0 $29,649.0 $28,831.0 $29,700.0 R&D Expense $1,069.0 $1,300.0 $1,194.0 $1,155.0 $1,334.0 SG&A Expense $4,594.0 $5,963.0 $5,979.0 $6,250.0 $6,692.0 Capital Expense - - - - - Pretax Income $3,432.0 $3,689.0 $3,277.0 $4,721.0 $5,703.0 Pretax Margin (%) 11.73 10.04 6.70 9.43 10.45 Effective Tax Rate (%) 33.30 32.50 34.30 28.30 30.90 Net Income $2,277.0 $2,492.0 $2,915.0 $3,386.0 $3,939.0 Shares Outstanding, MiUions 455.4 456.3 902.9 902.1 904.8 Per Share Data Earnings $5.00 $5.46 $3.20 $3.75 $4.36 Dividend $2.23 $2.37 $1.32 $1.46 $1.70 Book Value $30.02 $33.11 $18.25 $20.47 $23.09

Table 3 (Continued) Comprehensive Financial Statement Fiscal Year Ending December (Millions of US DoUars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (limes) 1.41 1.25 1.24 1.31 1.28 Quick (Tmies) 0.96 0.80 0.75 1.20 1.19 Fixed Assets/Equity (%) 57.79 65.13 56.16 73.71 74.90 Current Liabilities/Equity (%) 65.24 75.86 76.89 334.67 353.77 Total Liabilities/Equity (%) 91.37 128.94 136.17 500.37 514.38 Profitability (%) Return on Assets - 8.20 7.93 4.52 3.29 Return on Equity - 17.32 18.46 19.38 20.02 Profit Margin 7.78 6.79 6.05 6.76 7.22 Other Key Ratios R&D Spending % of Revenue 3.65 3.54 2.48 2.31 2.44 Capital Spending % of Revenue 0 0 0 0 0 Employees 304,000 359,000 257,000 298,000 275,000 Revenue ($K)/Employee $96 $102 $187 $168 $198 Capital Spending % of Assets 0 0 0 0 0

Somce: General Electric Conqniiy Anmal Rqxicts and Fonns 10-K Dataquest (1990)

General Electric (GaAs Operations) Established 1981 Electronics Park No. of Employees: N/A EP-3, Box 4840 Syracuse, NY 13221 (315) 456-0123

BACKGROUND General Electric Company is an international, vertically integrated manufacturer of electrical and electronic systems and components. In 1986, the Company acquired RCA Corporation; in 1988, it sold part of its semiconductor operations, including Intersil, to Harris Corporation.

GE produces optoelectronic devices and GaAs MMICs. GE invested $3.5 million in advanced equipment for its GaAs R&D facility in 1985 and has made additional investments in the facility since that time. GE and Hughes Aircraft are one of the four prime contractor teams on DARPA's MIMIC program. Phase I. This team is developing 16 different GaAs IC chip types for radar and other military applications.

COMPANY EXECUTIVES • Manager, Electronics Laboratory—Dr. Walter Butler • Manager, Business Development—Louis Lego • Manager, GaAs Laboratory—Dr. Alan Swanson • Manager, MMIC Prototype Facility—Dr. Anthony Immorlica

ALLIANCES • Joint venture with Hughes Aircraft on DARPA's MIMIC program

PROCESS TECHNOLOGY

The Company uses submicron GaAs MESFET technology.

PRODUCTS • Optoelectronic devices • GaAs MMICs

Applications • Military and aerospace electronics • Commercial electronics

FACILITIES General Electric's laboratory in Syracuse, New York, has 120,000 square feet. Forty percent of this is for R&D and 60 percent is for GaAs products, including an 8,000-square-foot clean room for 3-inch wafer fab.

General Electric (GaAs Operations) Established 1981 Electronics Park No. of Employees: N/A Syracuse, NY 13221 (315)456-0123

BACKGROUND General Electric Company is an international, vertically integrated manufacturer of electrical and electronic systems and components. The Company recently acquired RCA Corporation, which is expected to have an as-yet undetermined effect on the two companies' semiconductor endeavors. GE produces optoelectronic devices and GaAs MMICs. RCA is developing a GaAs RISC chip and associated support chips. GE invested $3.5 million in advanced equipment for its GaAs R&D facility in 1985.

COMPANY EXECUTIVES • President/CEO—Walter Butler

• Marketing Director—Robert Fink

ALLIANCES Not available

PROCESS TECHNOLOGY The Company uses GaAs MESFET technology.

PRODUCTS • Optoelectronic devices • MMICs

Applications • Military and aerospace electronics • Commercial electronics

General Electric Company 3135 Easton Turnpike Fairfield, Connecticut 06431 Telephone: (203)373-02211 (Millions of Dollars except Per Share Data)

Balance Sheet (December 31) 1983 1984 1985 1986 im Working Capital $ 2,224 $ 2,945 $ 3,627 $ 2,827 $ 3,068 Long-Term Debt $ 915 $ 753 $ 753 $ 4,351 $ 4,491 Shareholders' Equity $11,137 $12,398 $13,671 $15,109 $16,480 After-Tax Return on Average Equity (%) 18.9% 19.0% 17.5% 17.3% 18.5% Operating Performance (Fiscal Year Ending December 31)

;993 1994 1985 1996 1987

Revenue $27,643 $28,920 $29,240 $36,728 $40,515 U.S. Revenue $22,885 $25,272 $26,140 $32,904 $36,716 Non-U.S. Revenue $ 4,758 $ 3,648 $ 3,100 $ 3,824 $ 3,799 Cost of Revenue $18,701 $20,401 $20,843 $26,187 $29,687 R&D Expense $ 919 $ 1,038 $ 1,069 $ 1,300 $ 1,200 SGStA Expense $ 4,463 $ 4,770 $ 4,594 $ 5,963 $ 5,979 Pretax Income $ 2,959 $ 3,269 $ 3,420 $ 3,692 $ 3,207 Pretax Margin (%) 10.7% 11.3% 11.7% 10.1% 7.9% Effective Tax Rate (%) 33.0% 31.5% 33.4% 32.5% 33.9% Net Income $ 2,002 ! 2,239 i 2,277 i 2,492 2,915 Average Shares Outstanding (Millions) 909.54 907.36 910.76 912.59 911.64 Per Share Earnings $ 2.20 $ 2.47 $ 2.50 $ 2.73 $ 3.20* Dividends $ 0.94 $ 1.03 $ 1.12 $ 1.19 $ 1.33 Book Value $ 12.04 $ 13.50 $ 14.88 $ 13.50 $ 13.89 Price Range $ 22.63- $ 24.13- $ 27.75- $ 33.25- $ 38.75- 29.38 29.63 36.88 44.38 66.38 Total Employees 335,000 316,000 292,000 359,000 302,000 Capital Expenditures 1,671 2,419 1,953 2,042 1,778- •Earnings per share before extraordinary loss and cumulative earnings from changes in accounting principles were $2.33 in 1987.

Source: General Electric Company Annual Reports Dataquest November 1988

THE COMPANY

Overview General Electric Company (GE) is a $40 billion conglomerate whose enterprises encompass the following 14 business segments: aircraft engines, aerospace, aerospace and defense, plastics, medical systems, factory automation, financial services, NBC, communications and services, appliances, lighting, industrial and power systems, electrical distribution and control, and motors. The Company was founded in 1892 in Schenectady, New York, as a manufacturer of electrical equipment. During the 1970s, GE intended to focus on nuclear reactors, jet engines, and consumer products, and so traded away its earlier computer venture and sold its IC operation. Although GE is a large user of electronic components, the Company had no manufacturing role in the high-technology growth market that began in the early 1980s, such as semiconductors, microprocessors, and information processing equipment. In 1981 GE began investing vast resources to catch up. GE completed a sweeping restructuring of its electronic component businesses aimed at increasing its participation in the IC merchant market. The Company also dedicated key microelectronic operations to supply its own internal needs for custom circuitry for use only in high-technology GE products.

Organization Semiconductors constitute a very small part of the Company's overall business. According to 1987 semiconductor revenue estimates, GE Solid State ranks as the seventh largest U.S. semiconductor company and among the top 20 semiconductor companies worldwide. Dataquest estimates that the Company's semiconductor revenue amounted to $569 million in 1987 as compared to total Company revenue of $40.5 billion in the same time period. GE has 14 large key businesses such as lighting, major appliances, aircraft engines, plastics, and military military electronics. The semiconductor business is one of the Company's smaller support operations. The commercial segments of GE's semiconductor business, formerly known as GE/RCA Solid State, became GE Solid State, effective August 1987. The division is responsible for the design, manufacturing, and marketing of GE, RCA, and Intersil semiconductors. Since the merger of GE, RCA, and Intersil semiconductor operations, GE Solid State has strengthened its position as a leading supplier of CMOS products while increasing its power product offering. Another objective of the GE Semiconductor business division is to further its support of the government segment where it has a leadership position. As part of this capability, GE has a dedicated facility called the Microelectronics Center in Research Triangle Park, (RTF), North Carolina. As RTF is part of GE's aerospace and defense activities, it is primarily engaged in semiconductor R&D work. Also in RTF, as part of the GE Semiconductor business division, is the Integrated Power Systems Department, home of GE's intelligent power business.

Acquisitions and Mergers In the last six years, GE's participation in the semiconductor market has been achieved primarily through acquisitions. The Company acquired a variety of parts that theoretically would be integrated. Calma was purchased for $100 million in 1980. Intersil's historical strength in CMOS was one of the prime factors leading to GE's acquisition of the chip maker in February 1981. Later, in March 1982, Intersil was made part of the newly established GE Semiconductor Business Division. As a result of the restructuring, Intersil was placed in charge of manufacturing, process development, and facilities operations at GE's new microelectronics plant in Research Triangle Park. GE's strategy at that time was a four-pronged one: Calma, with world-leading technology in mechanical design and IC layout; Intersil, with its IC technology; the enormous scientific resources of GE including corporate R&D and the Microelectronics Center; and the vast pool of applications expertise in high-technology products that resides in the Company's electronics businesses. Since its acquisition of RCA in mid-1986, there has been much speculation regarding GE's intentions in the merchant semiconductor market. Over the past year, the Company has frequently intimated its willingness to entertain a suitor for its semiconductor business. These rumors have now been put to rest with the August 15, 1988, announcement of an agreement in principle for Harris Corporation to acquire GE Solid State. GE's semiconductor activities comprise both corporate GE and GE Solid State. GE Solid State represents the Company's merchant semiconductor capabilities, and it is these operations that are under negotiation to be acquired by Harris Corporation. Specific details of the agreement have not been released. However, it was announced that GE's dedicated Microelectronics Center in Research Triangle Park, North Carolina, will be excluded from the deal, along with certain other military semiconductor operations acquired from RCA, which are part of GE's aerospace business. GE facilities at Mountaintop, Pennsylvania; Findlay, Ohio; Somerville, New Jersey; Cupertino, California; and overseas in Ireland and the Far East will be part of the package.

Financial Information Revenue from GE's other lines of business dwarf the Company's semiconductor revenue. Semiconductor revenue as a percentage of total has been less than 2 percent for the past five years. Because of the small fraction of the Company's overall business represented by semiconductors, it is not meaningful to compare revenue by lines of business for the Company as a way of illustrating the significance of the semiconductor segment. In general, it can be seen from Table 1 that General Electric derives most of its revenue from the domestic U.S. market.

Table 1 General Electric Company Revenue by RegicHi (Eiqiressed as a Percentage)

1985 1986 1997

United States 89.4% 89.6% 90.6% Other Regions 10.6% 10.4% 9.4%

Source: General Electric Annual Reports

Semiconductor Facilities Table 2 lists GE's semiconductor manufacturing facilities, which are concentrated in the United States. The first three locations listed are considered to be part of corporate GE, while the remainder form GE Solid State locations, the latter all performing high-reliability assembly and test. GE Solid State also has assembly and test operations in Malaysia, Singapore, and Taiwan. The Company has a plant in Dundalk, Ireland, making MOVaristors, which are not classified as semiconductor devices. Table 2 General Electric Company Semiconductor Facilities

Clean Room Location Technology/Products (sqt ftt) Typ»

GE Corporate R&D, Schenectady, Smart power, custom CID 20,000 R New York imagers

GE Electronics Lab.,, Syracuse/ MMIC, materials research 7,700 PAT New York

GE Microelectronics Center, Arrays, CBIC, custom 20,000 PAT Research Triangle, Georgia

GE Solid State, Findlay, Ohio CMOS logic, MPUs, linear, SRAM bipolar 103,000 NF

(Continued)

Table 2 (Continued) General Electric Company SemiconductCH* Facilities

Clean Room Location TechnolooY/Products (sqt ftt) Typ?

JGGE Solid State, Mountaintop, Power devices, discretes, Pennsylvania MOS and bipolar 47,000 NF

GE Solid State, Santa Clara, CMOS and bipolar, DSP, California Logic ASIC, Mil. Std. 18,000 PF

fcgggpcL

R s Research P = Pilot A s Assembly T = Test F = Fab N s Nondedicated foundry

Source: Dataquest November 1988

Semiconductor Capital and R&D Spending GE Solid State's capital spending (including the recently acquired RCA and Intersil), although moving in parallel with the industry as a percent of production, generally has been below that of the industry average. The Company's capital spending reached a peak level in 1984 when it recorded $107 million. We estimate that GE Solid State's 1987 spending level reached $53 million (see Table 3), as the Company continued to absorb RCA's semiconductor division. Most of this capital spending was for equipment, with particular emphasis on sub-2-micron processing and assembly and test equipment.

Table 3 General Electric Company Capital and R&D Spending as a Percentage of Revenue (Millions of Dollars)

1983 1994 1995 1986 1987

Company Revenue $27,643 $28,920 $29,240 $36,728 $40,515 Semiconductor Revenue $ 115 $ 136 $ 118 $ 465 $ 569 Capital Expenditures $ 64 $ 107 $ 81 $ 50 $ 53 R&D Expense $ 18 $ 21 $ 21 $ 33 $ 40 Combined Capital and R&D Spending 82 $ 128 $ 102 $ 83 93 Percentage Increase/Decrease 56.1% (20.3%) (18.6%) 12.0%

Source: General Electric Company Dataguest November 1988

PRODUCTS AND MARKETS

Semiconductor Product Markets Dataquest estimates that GE's worldwide semiconductor revenue for calendar 1987 was approximately $569 million, as shown in Table 4. The top three semiconductor product areas according to a revenue ranking are MOS logic, discretes and linear devices, which account for approximately 40 percent, 28 percent and 15 percent of semiconductor revenue, respectively. Table 5 provides a regional breakdown of semiconductor revenue for 1987.

Table 4 General Electric CompaiQr Estimated Wwldwide Semiconductn* Revenue (Millions of Dollars)

1983 1984 1985 ISM.* USl* Total Semiconductors 115 136 118 465 569 Total IC 3 4 6 303 382 MOS (Technology) 3 4 6 220 296

MOS (Function) 4 6 220 296 MOS Memory 26 27 MOS Micro Devices 37 41 MOS Logic 157 229

Linear 83 86

Total Discrete 94 104 92 139 161

Total Optoelectronic 18 28 20 23 26

*The semiconductor revenue for these years is more recent than what is currently in the "Market Share" service section, which will be updated in the future.

Table 5 General Electric Company Estimated 1987 Semiconductor Revenue by Regicm (Millions of Dollars) United S£atfi£ Jap EUCfiSfi ROW Worldwide

Total Semiconductors 382 12 119 46 569 Total IC 255 11 86 30 382 MOS 199' 9 66 22 296 Linear 56 2 20 8 86 Total Discrete 116 1 29 15 161 Total Optoelectronic 21 - 4 1 26

Source: Dataquest November 1988

Marketing Strategies GE is expected to use gate arrays in its own robotics, telecommunications, TV and audio equipment, computer simulation, vehicle controls, appliances, and medical instruments, and to sell excess gate array capacity on the merchant market. The semiconductor operations focus on military, automotive, and industrial applications that account for 65 percent of the Company's semiconductor sales.

SEMICONDUCTOR PRODUCTS AND TECHNOLOGIES

Logic GE occupies a strong position in the standard logic arena with estimated revenue of $110 million, ranking the Company in third place among worldwide suppliers of MOS standard logic. The most prominent position occupied by GE in the ASIC arena is in cell-based ICs, where GE's revenue of approximately $55 million places it fifth in a 1987 market amounting to $868 million. GE has estimated revenue of $17 million from sales of CMOS gate arrays and about $47 million from custom ASIC business. GE Solid State ASICs include standard cells in CMOS technologies of 1 to 4 microns. Gate arrays feature densities from 300 gates to 50,000 gates in the continuous gate array 1.5-micron technology.

Microcomponents GE offers the CDP 1800 series of microprocessors and the CDP6800 series of microprocessors and microcontrollers. The Company's microcomponent revenue is estimated at $41 million in a worldwide market of approximately $5 billion. These devices are heavily used in automotive and industrial control applications.

Memories GE supplies CMOS SRAMs to the military, is engaged in some purchase and resale business, and offers masked ROMs and RAMs for sale. The Company's memory business amounts to approximately $27 million.

Linear GE's linear IC products include a broad range of op amps, arrays, differential amplifiers, power-control circuits, sample and hold circuits, voltage references and detectors, and specialized circuits. Estimates of the Company's linear revenue amount to about $86 million in a worldwide market estimated at $7.3 billion.

Discrete Devices GE ranks about sixteenth in the worldwide discrete market with estimated 1987 revenue of $161 million. At about 29 percent of the Company's total semiconductor revenue, this represents a significant portion of GE's business. The majority of participants in the markets for discrete devices and linear voltage regulators plan to enter or expand their participation in the market for intelligent power products. GE Solid State is no exception. The Company has enjoyed an early leadership role in intelligent power. However, the challenge for GE is to vertically integrate its longstanding role in the consumer electronics and appliance industry with its position in power products.

Optoelectronic Devices Although GE has some presence in this market primarily in producing optoelectronic receivers, this segment is considered a niche market and was an inherited business. GE has made no new investments in this area.

SENDCONDUCTOR AGREEMENTS Table 6 provides a summary of the semiconductor agreements that GE has engaged in, followed by a short abstract containing more detail about each agreement. The first company is either GE or, where applicable, the company providing the product in the agreement. Table 6 GE Solid State Summary of Alliances

A* B* X2££ Products P&te

Laserpath Corp. GE Solid State MA ASICs 1986 GE Solid State Siemens/Toshiba JD Cell-based ICs 8/86 VLSI Tech. GE Solid State SS Gate arrays 7/87 WaferScale Int. GE Solid State FA/SS EPROMs 7/87 GE Solid State Mitsubishi/Westinghouse JV Discretes 9/87 GE Solid State IBM JD ASICs, power ICs 12/87

Legend: FA/SS = Foundry agreement/second source MA s Marketing agreement JD = Joint development SS = Second source JV = Joint venture

Where there is a transfer of rights/technology/process, etc., we generally designate Company A as the provider and Company B as the recipient.

Source: Dataguest November 1988

other Company Date Agrggtngnt Laserpath Corp. 1986 6E will market Laserpath's "one-day arrays' ASIC.

SGS 01/86 Five-year pact for CMOS cell libraries.

Toshiba 08/86 In August 1966, Toshiba, GE Solid State, Siemens and Siemens agreed to a five-year joint development project to develop a cell-based library based on 1.5-micron CMOS technology that will later be shrunk to l.O-micron and less. It is said to be the first inter national agreement on cell-based ICs involving major semiconductor manufacturers as well as the first agreement to span three continents.

VLSI Technology 07/87 GE will become an alternate source for VLSI Technolgy's gate array families. The families are the VGTIO and VGTIOO and complement GE/RCA's line of standard cells. The agreement includes fabrication and marketing. The VGTIO uses a 2-micron CMOS process and is available in from 1,600 to 10,000 gates. The VGTIOO uses a 1.5-micron process and ranges from 12,000 to 67,000 gates with 50,000 gates usable in the largest array.

WaferScale 07/87 WSI and GE/RCA agreed to include Integration Inc. manufacturing of the EPROM technology previously licensed by WSI to GE/RCA. WSI's 1.2-micron CMOS EPROM process will be transferred to GE/RCA's 5-inch fab in Findley, Ohio. GE/RCA will use the process to meinufacture programmable ASICs and second source WSI's EPROM memory products. WSI is guaranteed volume capacity at the facility.

Powerex 09/87 Powerex Inc. is a joint venture corporation Mitsubishi of General Electric Company, Mitsxibishi Electric Corp. Electric Corp., and Westinghouse. Most of the products Powerex is selling were developed by one of the three partners. One of the stipulations of the joint venture was that the companies would not compete with Powerex. (Continued)

other Company Date Agreement

IBM 12/87 6E and IBM will cooperate on ASICs and power BICMOS products. The agreement will span development and production through the early 1990s. GE will produce ASIC compo nents that will be used exclusively by IBM and will not be offered to the merchant market. However, once the technology and circuit library have been qualified, GE will work with other companies to develop new ASIC components and systems. With the IBM program, GE will expand its ASIC capability to include new process technologies, advanced design tools, and immediate systems offerings. GE is targeting the ASIC automotive arena, along with the commercial, military, industrial, and ED? markets.

Vitesse 03/88 General Electric selected Vitesse to supply Semiconductor GaAs gate arrays for the Consolidated Corporation Automated System Support (CASS) program for the Navy. The total contract with production options is valued at $14.1 million.

Toshiba 05/88 Toshiba announced the TC24SC series of Siemens cell-based ICs using 1.0-micron design rule technology. The new cells use the common cell library jointly developed by Toshiba, Siemens, and GE. The common cell library, called ADVANCELL, comprises 166 logic cells and several macrocells.

EDA Systems 05/88 GE Solid State and EDA Systems signed an agreement that allows GE to use EDA Systems' software products in FASTRACK, GE's next-generation design automation system for both military and commercial ASICs.

Nonsemiconductor Product Summary Operationally, GE divides its businesses into the following areas: technology businesses; services businesses; core manufacturing businesses; and support operations. Six core businesses (major appliances, lighting, turbine, transportation, motor, contractor equipment) are described as forming the heart of the Company. This business segmentation also comprises other businesses, as illustrated in the following chart.

Technology Services Core Manufacturing Support Businesses Businesses BVSJPggSes Qper&tiOPg

Aircraft engines Financial services Appliemces International Aerospace NBC Lighting corporate Aerospace and Communications and Industrial and trading defense services power systems Canada/Latin/ Plastics Electrical America Medical systems distribution semiconductors Factory automation and control LADD Petroleum Motors Supply Transportation Calma systems Aerospace technology Environmental programs Mktg. and sales Medical services

General Electric Company Pic 1 Stanhope Gate London WIA. lEH Telephone: +44 1493 8484

THE COMPAMY

Background

The General Electric Company Pic (GEC) as it is known today was originally founded in London in 1886 and was the first U.K. manufacturer of public telephone equipment. The present Company arose from the merger in the late 1960s of three leading British electrical manufacturers: GEC, AEI, and English Electric. Today, GEC is Britain's largest electrical and electronics company, with fiscal 1986 revenue of £5,969 million.

Operations

GEC's domestic companies are organized into eight operating sectors:

Electronic Systems and Components

Telecommunications and Business Systems

Automation and Control

Medical Equipment

Power Generation

Electrical Equipment

Consumer Products

Distribution and Trading

Fiscal 1986 revenue for these operations was £5,539 million, a slight increase compared with 1985 revenue. These operations constitute 93 percent of GEC's total revenue. Table 1 shows a breakdown of estimated revenue by business sector.

Table 1

The General Electric Company Pic ESTIMATED REVENUE BY BUSINESS SECTOR (Millions of Pounds Sterling)

Sector 1983 1984 1985 1986

Electronic Systems and Components £1,409 £1,578 £1,861 £1,928 Telecommunications and Business Systems 735 735 746 782 Automation and Control 425 436 463 475 Medical Equipment 412 435 472 420 Power Generation 680 623 655 665 Electrical Equipment 653 750 815 759 Consumer Products 264 279 300 331 Distribution and Trading 214 197 227 210

Total £7,792 £5,033 £5,539 £5,570

Associated Companies 408 395 353 307 Other Activities and Items 351 102 84 92

Total Revenue £8,551 £5,530 £5,976 £5,969

Source: The General Electric Company Pic Annual Report

International Operations

GEC has more than 40 overseas subsidiaries in Europe, the Americas, Australia/New Zealand, Asia, and Africa. As shown in Table 2, fiscal 1986 revenue from all non-U.K. subsidiaries decreased 5.1 percent to £2,681 million, from £2,826 million in 1985.

Table 2

The General Electric Company Pic ESTIMATED NON-U.K. REVENUE BY GEOGRAPHIC AREA (Millions of Pounds Sterling)

Area 1983 1984 1985 1986

Europe £ 485 £ 500 £ 511 £ 579 The Americas 887 967 1,141 951 Australia/New Zealand 245 247 229 234 Asia 567 594 707 713 Africa 350 306 238 204

Total £2,534 £2,614 £2,826 £2,681

U.K. Exports 1,138 1,209 1,236 1,276

Total Non-U.K. Revenue £3,672 £3,823 £4,062 £3,957

Source: The General Electric Company Pic Annual Report

Research and Development

GEC spent £650 million in 1986 on research and development, about 10 percent of which was on work undertaken by 2,400 scientific research staff at the Hirst Research Center at Wembley, the Marconi Research Center at Great Baddow, and the Engineering Research Centers at Whetstone and Stafford. The results of this considerable technical effort are to be seen across all product activities of the Company, such as: improving highly sophisticated defense systems and equipment, developing a mobile magnetic resonance imaging (MRI) system for medical diagnostics, and the use of new materials to produce vandal-proof insulators for high-voltage electrical installations.

Employees

The Company reduced the number of its employees from 166,000 in 1985 to 165,000 in 1986. Table 3 shows the average number of employees by business sector for the years 1983 through 1986.

Table 3

The General Electric Company Pic AVERAGE NUMBER OF EMPLOYEES BY BUSINESS SECTOR (Thousands of Employees)

Sector 1983 1984 1985 1986

Electronic Systems and Components 51 53 55 58 Telecommunications and Business Systems 29 26 24 22 Automation and Control 17 17 17 17 Medical Equipment 7 7 6 6 Power Generation 19 17 16 15 Electrical Equipment 34 33 30 29 Consumer Products 10 10 10 10 Distribution and Trading 4 4 4 4

Total 171 167 162 161

Other Activities 7 4 4 4

Total Employees 178 171 166 165

Source: The General Electric Company Pic Annual Report

ELECTRONIC SYSTEMS AND COMPONENTS ACTIVITIES

The Electronic Systems and Components business sector is the largest operating sector within GEC, accounting for 32.3 percent of total turnover in 1986.

GEC's electronic systems and components activities are conducted through the following subsidiaries:

• GEC Avionics Ltd.

• GEC Avionics Inc.

• Marconi Command and Control Systems Ltd.

• Marconi Defence Systems Ltd.

Marconi Secure Radio Systems Ltd.

Marconi Space Systems Ltd.

.Marconi Underwater Systems Ltd.

Marconi Radar Systems Ltd.

Marconi Communications Systems Ltd.

Marconi Instruments Ltd.

Marconi Electronic Devices Ltd.

The Marconi International Marine Company Ltd.

Easams Ltd.

Circuit Technology Inc.

Products manufactured by this division include:

Radar systems

Remotely piloted surveillance vehicles

Missile seekers

Thermal imaging systems

Torpedos

Satellites

Semiconductors

Marconi Electronic Devices Ltd. (MEDL)

Marconi Electronic Devices Limited (MEDL) was formed in 1980 as part of a major reorganization of the GEC/Marconi Group. It now comprises all the semiconductor activities within the group—consolidating AEI Semiconductor (specializing in rectifiers and high-power discrete components), GEC Semiconductor (specializing in MOS integrated circuits), and the semiconductor activities of Marconi Space and Defence Systems.

MEDL has eight operational sites in the United Kingdom and manufactures VLSI/CMOS integrated circuits, microwave and millimeter-wave active devices, power semiconductor devices, thick film microelectronic circuits for defense, telecommunications and industrial markets, and high-power microwave components and specialized wave-guide elements.

Most of the semiconductors produced by MEDL are consumed internally by companies within the GEC organization, particularly the telecommunications and military divisions.

AUTOMATION AND CONTROL ACTIVITIES

GEC's automation and control activities accounted for 8 percent of total turnover in 1986. Subsidiaries in this division include:

GEC Electrical Projects Ltd.

GEC Industrial Controls Ltd.

GEC Automation Projects Inc.

GEC Traffic Automation Ltd.

GEC Marine & Industrial Gears Ltd.

W. & T. Avery Ltd.

Avery Denison

Notable products manufactured by this division are:

Robots

Factory automation systems

Traffic control systems

Microcomputer-controlled testing machines

Industrial sales

Electronic point-of-sale terminals, electronic funds transfer, and management systems

TELECOMMDHICATIOHS ACTIVITIES

In 1986, GEC's telecommunications and business activities accounted for 13.1 percent of GEC's total sales and for 17.1 percent of GEC's profit. It employed 13.3 percent of GEC's employees.

GEC's telecommunications and business systems activities are conducted through the following subsidiaries:

• Telephone Switching Group—Manufactures modern digital telephone exchanges (System X and UXD 5)

• Transmission Group—Manufactures transmission equipment, fiber systems, microwave radio systems

• Private Systems Division of GEC Telecommunications—Manufactures and markets the CDSSI, a small 120-line stored program controlled by PABX; also manufactures and distributes the SL-1 PBX under license from Northern Telecom (The SL-l can serve from 100 to several thousand extensions.)

• Defence Systems Division—As prime contractor for project UNITER, the division is installing the fixed telecommunication network for the Royal Air Force

• Telephone Division—Produces the IXT telephone and a full range of key systems for small business users

• AEI Telecommunications (Canada) Ltd.—Large sales of key telephone sets, and exports automatic number identification equipment to the United States and Pakistan

• GEC Reliance Ltd Distributes:

PABX Systems

Security and communications systems

• GEC Computers Ltd.—Manufactures and markets:

The GEC 4000 line of computers

Military equipment

• Telephone Cables Ltd.—Manufactures:

Copper telephone cables, the sales of which are declining

Optical fiber cables, where sales are increasing

A.B. Dick Company—A U.S.-based company that manufactures word processing and printing equipment

Video Jet Systems International USA—Manufactures:

Graphic arts equipment

Coding and addressing equipment

Table 1

Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars)

1983 1984 1985 1986 1987 1988

Total Semiconductor 241 272 208 218 160 164

Total Integrated Circuit 113 91 70 69

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) 100 71 51 54 MOS Memory 54 43 26 31 MOS Microdevices 9 7 8 9 MOS Logic 37 21 17 14

Analog 13 20 19 15

Total Discrete 85 130 100 115 132 164

Total Optoelectronic 43 51 38 34 28

Table 2

General Instrument Corporation 1988 Worldwide Ranking by Semiconductor Markets (Revenue in Millions of Dollars)

Sales Industry 1988 1987 1988 % Change % Change Rank Rank Revenue 1987-1988 1987-1988

Total Semiconductor 41 36 $164 2.5% 33.0%

Total Integrated Circuit 15 18 $164 24.2% 37.4% Total Optoelectronic N/A 16 0 0 27.5%

N/A = Not Applicable

Source: Dataquest December 1989

Table 3 General Instrument Corporation Estimated 1988 Semiconductor Revenue by Geographic Region (Millions of Dollars)

U.S. Japan Europe ROW

Total Semiconductor $82 $27 $18 $37

Total Integrated Circuit

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) MOS Memory MOS Microdevices MOS Logic

Analog

Total Discrete $82 $27 $18 $37

Total Optoelectronic

Source! Dataquest December 1989

BACKGROUND AND OVERVIEW

General Instrument Corporation (GI) has for more than 50 years been among the leaders in the application of modern technology to entertain ment, industrial, military, data, and communications electronics.

GI entered the transistor business with the acquisition in 1960 of General Transistor Corporation, founded by Herman Fialkov. Mr. Fialkov, who became head of GI' s semiconductor division in the United States, was intrigued at the time by the potential of MOS technology. With the recruitment of Frank Wanlass, a key member of the MOS development team at Fairchild, and a team of designers, GI was able to begin a push in MOS development.

The advent of the digital cable converter in the 1970s convinced GI that it could gain leverage not only through cable product sales but through all communications equipment sales by applying its semiconductor expertise. During this time, the Company was transformed from a components manufacturer to a communications company.

GI' s early success in Europe emphasized the consumer end-user market segment, starting with the emerging calculator business. In the early 1970s, GI shifted its emphasis to the emerging strong, feature-oriented European television receiver market. By 1975, the Company had its ICs designed into almost every European television set. These circuits were all specified, designed, and produced at the GI facility in Glenrothes, Scotland. Later, the first game chip was designed at this facility, together with a range of telecommunications circuits.

In November 1980, Racal, in the United Kingdom, and GI signed an agreement in which both firms would cooperate on process and product development of silicon gate CMOS devices. In December 1981, Plessey Semiconductors and GI signed a second-sourcing agreement whereby Plessey would second-source GI' s PLC family of single-chip microcomputers and provide a new bipolar integrated data slicer circuit.

In October 1982, GI opened a major new facility at Glenrothes, Scotland, which greatly expanded its existing operation. The new plant is dedicated to silicon gate production in NMOS, CMOS, and nonvolatile memory processes. Announced concurrently with the opening of the new facility were three new products to extend GI's EEPROM range.

In February 1983, GI introduced the first commercial IC combining elements of speech recognition and speech synthesis on the same chip. This chip was the result of a joint development between GI and Milton Bradley (a U.S. manufacturer of low-cost electronics products). Also in February 1983, GI announced a voice synthesis module. The module, containing a single-chip NMOS IC, is able to synthesize any phrase in the English language.

In April 1983, Texas Instruments and GI signed a second-sourcing agreement whereby GI would second-source Texas Instruments' TMS 7000 family of NMOS and CMOS 8-bit single-chip microcomputers. In November 1984, this agreement was extended to include the TMS 70120 single-chip microcomputer.

Having sustained considerable losses in 1985, GI shut down its Glenrothes plant in Scotland. The Company also discontinued or consolidated a number of operations in the United States, including the movement of all electronics operations from Hicksville, New York, to GI' s Chandler, Arizona, facility.

In 1986, in an attempt to revamp the company's microelectronics division and to break into the military market, GI recruited five key managers from other semiconductor companies.

As shown in Table 1, Dataquest estimates that GI' s European revenue was $42 million in 1985.

Table 1

General Instrument Corporation ESTIMATED EUROPEAN SEMICONDUCTOR REVENUE BY PRODUCT LINE (Millions of U.S. Dollars)

1979 1980 1981 1982 1983 1984 1985

Total Semiconductor $65 $72 $52 $50 $44 $50 $42

Total Integrated Circuit $36 $39 $27 $24 $23 $28 $21 Bipolar Digital 0 0 0 0 0 0 0 MOS 32 35 24 21 20 24 17 Linear 4 4 3 3 3 4 4

Total Discrete $19 $20 $17 $17 $13 $13 $12 Transistor 0 0 0 0 0 0 0 Diode 19 20 17 17 13 13 12 Thyristor 0 0 0 0 0 0 0 Other 0 0 0 0 0 0 0

Total Optoelectronic $10 $13 $8 $9 $8 $9 $ 9

Source: Dataquest January 1986 Ref. 1086-05

1987 Dataquest Incorporated January ESIS Volume III General Instrument Corporation

PRODUCTS AND MARKETS SERVED

GI is the world's leading producer of low-current, up-to-30-ampere, rectifiers and is a major manufacturer of cable TV products, off-track and on-track wagering systems, and apparatus for defense applications. The Company also has interests in high-volume application-specific products for lamp dimming, home control, and entertainment.

One of GI's traditional strengths lies in nonvolatile memory and speech synthesis. The Company's speech chip product lines comprise a range of processors with enough on-board ROM for up to 20 seconds of natural speech; a range of speech ROMs of 16K, 32K, and 128K density; a range of speech interface circuits; and a complete speech synthesis module containing a 32-word vocabulary. Recently GI has also become strong in the field of DSPs and 1986 saw the introduction of a 2-micron CMOS DSP.

GI's main products in the nonvolatile memory field are 16K, 32K, and 64K ROMs and IK, 4K, 8K, and 15K EEPROMs. GI also has a 4K NVRAM--a chip that has both static RAM and EEPROM on the same substrate.

A 1MB ROM was planned for volume introduction in 1985, having been announced in 1984, but GI decided to deemphasize the ROM line and is now not producing ROMs greater than 256K.

The GI CMOS range was extended in 1985 and early 1985. In late 1985, GI announced a 256K CMOS UV EPROM, the first in a family of CMOS EPROMs soon to be made available, and in early 1986, GI introduced both the 64K CMOS EEPROM and a 2-micron CMOS DSP.

OUTLOOK

Dataguest expects GI to continue focusing its semiconductor activities toward the military, aerospace market.

ESIS Volume III © 1987 Dataguest Incoirporated January Company Backgrounder by Dataquest k General Signal Corporation 1 High Ridge Park P.O. Box 10010 Stamford, Connecticut 06904 Telephone: (203) 329-4100 Fax: (203) 329-4159 Dun's Number: 00-246-4100 Date Founded: 1904

CORPORATE STRATEGIC DIRECTION More detailed information is available in Tables 1 through 3, which appear after "Business Segment Strategic Direction" and present corporate highlights General Signal Corporation produces instrumentation and revenue by region and distribution channel. and controls and related systems and equipment for Table 4, a comprehensive financial statement, is at the semiconductor production, telecommunications trans mission, test and measurement, industrial automation, end of this profile. management of electrical energy, and transportation. General Signal serves these markets through four product areas: process controls, technology industries, electrical controls, and transportation controls. BUSINESS SEGMENT STRATEGIC In 1989, General Signal positioned itself for stronger DIRECTION worldwide sales and income growth through a series of reorganizations and consolidations in its Transpor tation Controls, Electrical Controls, and Technology Technol(^ Industries Industries sectors, including combining Technology ladustries' foreign semiconductor equipment opera After two years of losses, the Technology Industries tions into a single international unit In addition, sector posted operating earnings of $8.2 million on a General Signal acquired four new businesses: GCA, sales increase of 8.8 percent in fiscal 1989. Strategic Spectron, Hydromatic Pumps, and Turbo-MueUer. consolidations among international operations, the General Signal plans to continue pursuing these types merging of domestic photolithography sales and of product line acquisitions with the purpose of shar service organizations, and the broad support of pening its business focus and adding critical mass to Sematech, the principal domestic consortium dedi its operating units. cated to U.S. preeminence in semiconductor manufac turing technology, helped position General Signal to Total revenue increased 9 percent to $1.9 billion* in meet the industry's evolving product and service fiscal 1989 firom $1.76 billion in fiscal 1988. Net needs. income increased 211 percent to $78.5 million in fiscal 1989 fi-om$25. 2 million in fiscal 1988. General Signal employs 19,377 worldwide. The 1988 reorganization of General Signal's telecom munications equipment group into clearly defined product and market segments paid off iu 1989 as each Research and development expenditures totaled of its four business units measured significant perfor $111.1 million in fiscal 1989, representing about mance gains. The Company's data-network equip 6.0 percent of revenue. Capital spending expenditures ment manufacturer of networic restoration systems is totaled $62.0 million in fiscal 1989, representing now the largest in the world and one of the most about 3.2 percent of revenue. diversified suppliers of data conununications test and control equipment *A11 dollar amounts aie in U.S. dollars.

Process Controls General Signal's industrial pump sector improved its standing on major distribution and licensing agree The Process Controls sector had sales revenue of ments for a broad range of submersible pumps; it also $726.5 million with an operating margin of acquired Hydromatic Pumps, a manufacturer of 11.2 percent in fiscal 1989. This sector benefited from pumps for residential, commercial, and municipal a general economic expansion fueled by high- applications, in 1989. A new pump developed specifi capaci^ utilization and strong export demand in its cally for the vacuum food-packaging industry and the major markets, which include the chemical, minerals, introduction of foreign service centers in Italy, Tai pharmaceutical, water/wastewater, and pulp-and- wan, and the United Kingdom led to a successM year paper processing industries. for the Company's vacuum pump business: E:?q)ort sales increased more than 50 percent in 1987.

General Signal's mixing equipment operation main tained its world leadership position by meeting a Electrical Controls heightened demand for agitator equipment. The The Electrical Controls sector had record sales of Company's A-315 impeller, originally designed for $421.4 million with an operating margin of fermentation technology, has been extended to other 11.5 percent in fiscal 1989. The strongest sales gas-liquid processing applications. General Signal increases were derived J&om this sector's electrical also constructed a unique high-pressure, high- fittings, transformer and power distribution, and fire temperature oxidation test facility for gold processing alarm and signaling operations. and has installed flexible machining centers to boost productivity and reduce product costs. General Signal's power protection products opera tions experienced record sales in 1989 for uninter Demand for the Company's industrial valves con ruptible power systems, standby power sources, and tinued strong in 1988. General Signal introduced power conditioning units. To meet future market a cage-retained globe valve to control corrosive demands, a new regulating standby power source and hquids and gases at temperatures from -lOOT to a compact uninterraptible power system have been developed. 1,400°F. Export sales were paced by major orders from Korea and Mexico. General Signal's line of totally encapsulated industrial control transformers was improved in 1988; prinoiary With former unit BIF's instrumentation and supervi and secondary fusing features now comply with new sory control and data acquisition systems merged into industrial safety requirements. In addition. General L&N product lines, General Signal fortified its offer Signal expanded its soft-seal firestop product line in ings to the municipal water and wastewater treatment 1988 and introduced a microprocessor-based monitor market ing system for complex heat-trace applications. Also, Genoral Signal introduced in 1988 a minimum-wire microprocessor-based fire alarm system for small General Signal provided software and hardware buildings, a new line of emergency Ughting products, enhancements to its line of LN700 energy manage and a field-programmable analog fire alarm system ment systems, for both large and medium-size utilities for high-rises. and industrial companies. For small to medium-size applications. General Signal developed a series of software packages for its MICRO-MAX process lyansportation Controls management center. The Company also introduced a hybrid multipoint recorder, die SPEEDOMAX 25000, This sector's net sales were $289 million in fiscal which combines features of analog strip-chart record 1989, Willi an operating margin of 7.4 percent, com pared with a 2.9 percent operating margin in fiscal ers and programmable digital data loggers. 1988.

General Signal's coal feeder and weighing products In fiscal 1989, General Signal manufactured business developed a continuous coal analyzer to 700 locomotives requiring advanced equipment such improve operating efficiency and ensure the environ as General Signal's CCL Locomotive Control System mental compliance of sulfur emissions in coal-fired for monitoring and regulating speed, braking, and plants. critical electronic subsystems.

In fiscal 1988, General Signal combined its mainline General Signal continued to penetrate the bus fleet railroad and transit signaling, communications, brak management systems market in fiscal 1988 with the ing, and revenue control systems operations into one first phase of a $29 million order from the Southern group. Qose to 30,000 new frcigjat cars were ordered California Rapid Transit District The Company will in 1988, the highest level in eight years. The supply a system that provides vehicle location, Company's development of the CCL locomotive passenger, and routing data; radio communication control system has been sparked by parallel growth in between vehicles and a central control office; and an the market for new and rebuilt locomotives. emergency communications network for transit police. In fiscal 1988, General Signal's rail signaling opera tion received major orders for signaling and speed control equipment on rail lines in Boston, Further Information Los Angeles, and Washington D.C. Also in 1988, the Company received a $9 million contract to provide For more information about the Company's business automatic vehicle identification eqiiipment for the segments, please contact the appropriate industry national railroad of Spain. service.

Table 1 Five-Year Corporate Highlights (Millions of U.S. Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue 1,800.9 $1,583.4 $1,603.0 $1,760.2 $1,918.3 Percent Change (12.08) 1.24 9.81 8.98

Capital Expenditure $68.1 $45.7 $34.0 $38.8 $62.0 Percent of Revenue 3.78 2.89 2.12 2.20 3.23

R&D Expenditure $100.7 $98.0 $105.4 $115.6 $111.1 Percent of Revenue 5.59 6.19 6.58 6.57 5.79

Number of Employees 22,312 20,180 19,126 19,082 19,377 Revenue ($K)/Employee $80.71 $78.46 $83.81 $92.24 $99.00

Net Income $49.3 $74.6 $69.4 $25.2 $78.5 Percent Change 51.32 (6.97) (63.69) 211.51

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $478.41 $488.54 $473.83 $477.50 Quarterly Profit $19.82 $18.67 $17.92 $22.10

Somce: General Signal Coipoiation Annual R^its and Foims 10-K 1990 Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 91.31 88.63 88.02 87.43 86.48 Intemational 8.69 11.37 11.98 12.57 13.52 Japan Europe Asia/Pacific ROW Somce: Ocoetal Signal Coip

Channel 1988 1989 Direct Sales Indirect Sales VARs Distributors Dealers Mass Merchandisers Manufacturers' Representatives Source: Dataqnest 1990

Telenex Corp. (United States) The Merrick Corporation (United States) 1989 SALES OFFICE LOCATIONS Thun Inc. (United States) Xynetics Divestiture Corp. (United States)

Information is not available. Japan General Signal Kabushild Kaisha Stock Japan Ltd.

MANUFACTURING LOCATIONS Europe Algemen Sein Industrie B.V. (Netherlands) Stamford, Connecticut General Railway Signal Co. Ltd. (United Kingdom) Manufacturing activities include process controls, General Signal SEG GmbH (West Germany) semiconductor equipment, telecommunications General Signal SEG Ltd. (United Kingdom) equipment, defense electronics, and electrical General Signal SEG SARL (France) controls manufactured through 30 operating units. Leeds and Norflirup GmbH (Germany) The Company manufactures many of the Leeds and Northrup Italy S.ri. (Italy) components used in its products but also purchases Leeds and Northrup Ltd. (United Kingdom) a variety of basic materials and component parts. Leeds and Northrup S.A. (Spain) Also, General Signal is both a licenser and licensee Leeds and Northrup S.A.R.L. (France) of patents and realizes more income than expense Misurazioni Industiali S.r.L (Italy) from such arrangements. Misurazioni Industiali Trading S.r.l. (Italy) Xynetics (Netherlands) B.V. (Netherlands)

Asia/Pacific SUBSIDIARIES General Signal SEG Asia Ltd. (Hong Kong) Leeds and Northrup Australia Pty. Ltd. (Australia) Sola Basic Australia Ltd. (Australia) North America Aerotronic Associates Inc. (United States) ROW Assembly Technologies (United States) Aurora/Hydromatic Pumps Inc. (United States) Leeds and Northrup Mexicana S.A. (Mexico) Drytek Inc. (United States) Edwards Company, Inc. (United States) Electric Panelboard Company (United States) GCA Corporation-Nevada Corp. (United States) GCA Overseas Corp. (United States) ALLIANCES, JOI>fT VENTURES, AND GCA Technology Division (United States) LICENSING AGREEMENTS GSA Disc Inc. (United States) General Signal A.S.G.M Corp. (United States) General Signal Controls Inc. (United States) 1989 General Signal FSC Corp. (United States) General Signal Holdings Co. (United States) Olin Hunt Specialty Products General Signal Ltd. (Canada) General Signal and Ohn Hunt Specialty Products G.R.S. Trading Corp. (United States) agreed to set up a joint technical center in Belgium Leeds and Northrup Co. (United States) for development of a new application of wafer Old Company (United States) fabrication equipment and advanced materials. Serveng Inc. (United States) OUn Hunt currently provides photoresists to Sola Basic Puerto Rico Inc. (United States) General Signal.

1987 GCA General Signal acquired GCA, a semiconductor Cognex equipment manufacturer. Through the acquisition, General Signal's Electroglas subsidiary used General Signal will make gains in the area of Cognex's MVS in its wafer prober product line. stepper lenses and, possibly, in the areas of short The nonexclusive agreement called for Cognex to wave length optical technology. X-ray, and e-beam provide its Cognex 2000 single-board vision sys technologies. tem used to detect problems in alignment, gauging, inspection, and identification. 1988 Spectron General Signal acquired Spectron, which will oper MERGERS AND ACQUISITIONS ate as General Signal's Telenex subsidiary. Spectron manufactures and sells data test systems and products. 1989 Atlantic Research Corporation Teleproducts Division General Signal acquired the teleproducts division of Atlantic Research Corporation, a leading KEY OFFICERS manufacturer of data communication protocol analyzers for both the WAN and LAN markets. Edmund M. Carpenter Atiantic Research also manufactures a broad line Chairman and chief executive officer of switching and patching equipment and network test, restoration, and management systems. Joel S. Friedman Senior vice president. Operations International Mirtone Production Operations General Signal acquired International Mirtone's Peter A. Laing production operations. International Mirtone Senior vice president. Operations produces fire alarm equipment. George Falconer Suitomo GCA Vice president, Hiunan Resources General Signal merged its Japanese subsidiary with Suitomo GCA to form a new joint company, J. Roberts Hipps General Signal Japan. General Signal hopes the Vice president and controller merger will improve its current lackluster domestic sales of steppers, etching devices, and probers, and hopes the existing joint venture will expand its lineup by using technical and maintenance person nel at General SignaL PRINCIPAL INVESTORS Marley Pump Hydromatic Division General Signal acquired Marley Pump's Hydro J J*. Morgan and Company Inc.—8.6 percent matic division, which makes pumps for residential, American Express Company—^S.6 percent commercial, and municipal applications. Teachers Retirement System of Texas—^5.5 percent

Table 4 Comprehensive Financial Statement Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data) Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $927.0 $887.2 $867.8 $892.0 $774.0 Cash 30.3 43.6 82.9 81.4 22.9 Receivables 324.0 296.3 330.8 360.6 348.2 Marketable Securities 47.4 80.1 13.1 27.1 1.5 Inventory 426.7 360.4 343.1 372.8 324.3 Other Current Assets 98.6 106.8 97.9 50.1 77.1 Net Property, Plants $361.5 $345.6 $310.6 $312.5 $325.1 Other Assets $194.7 $225.3 $219.0 $192.1 $225.2 Total Assets $1,483.2 $1,458.1 $1,397.4 $1,396.6 $1,324.3 Total Current Liabilities $406.3 $351.0 $326.9 $395.6 $445.2 Long-Term Debt $124.0 $124.3 $110.5 $491.7 $331.2 Other Liabilities $48.9 $55.5 $52.8 $48.3 $41.8 Total Liabilities $579.2 $530.8 $490.2 $935.6 $818.2 Total Shareholders' Equity $904.0 $927.3 $907.2 $461.0 $506.1 Converted Preferred Stock Common Stock 40.4 40.5 40.7 41.8 41.9 Other Equity 197.8 204.0 224.2 293.9 300.0 Retained Earnings 689.4 712.3 731.0 705.2 749.3 Less: Treasury Stock (23.6) (29.5) (88.7) (579.9) (585.1) Total Liabilities and Shareholders' Equity $1,483.2 $1,458.1 $1,397.4 $1,396.6 $1,324.3 Income Statement 1985 1986 1987 1988 1989 Revenue $1,800.9 $1,583.4 $1,603.0 $1,760.2 $1,918.3 U.S. Revenue 1,644.4 1,403.4 1,410.9 1,538.9 1,659.0 Non-U.S. Revenue 156.5 180.0 192.1 221.3 259.3 Cost of Sales $1,278.6 $1,114.6 $1,151.5 $1,266.7 $1,378.0 R&D Expense $100.7 $98.0 $105.4 $115.6 $1U.1 SG&A Expense $372.7 $348.7 $356.0 $418.6 $403.6 Capital Expense $68.1 $45.7 $34.0 $38.8 $62.0 Pretax Income $80.2 $117.5 $96.9 $52.8 $106.5 Pretax Margin (%) 4.45 7.42 6.04 3.00 5.55 Effective Tax Rate (%) 38.60 36.50 28.40 52.30 26.30 Net Income $49.3 $74.6 $69.4 $25.2 $78.5 Shares Outstanding, Thousands 28,706.0 28,730.0 28,239.0 27,709.0 19,056.0 Per Share Data Earnings $1.72 $2.60 $2.46 $0.91 $4.12 Dividends $1.80 $1.80 $1.80 $1.80 $1.80 Book Value $31.50 $32.31 $32.13 $16.64 $26.57

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending December OVfillions of U.S. Dollai^, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (Times) 2.28 2.53 2.65 2.25 1.74 Quick (Times) 1.23 1.50 1.61 1.31 1.01 Fixed Assets/Equity (%) 39.99 37.27 34.24 67.79 64.24 Current Liabilities/Equity (%) 44.94 37.85 36.03 85.81 87.97 Total Liabilities/Equity (%) 64.07 57.24 54.03 202.95 161.67 Profitability (%) Return on Assets - 5.07 4.86 1.80 5.77 Return on Equity - 8.15 7.57 3.68 16.23 Profit Margin 2.74 4.71 4.33 1.43 4.09 Other Key Ratios R&D Spending % of Revenue 5.59 6.19 6.58 6.57 5.79 Capital Spending % of Revenue 3.78 2.89 2.12 2.20 3.23 Employees 22,312 20,180 19,126 19,082 19,377 Revenue ($K)/Employee $80.71 $78.46 $83.81 $92.24 $99.00 Capital Spending % of Assets 4.59 3.13 2.43 2.78 4.68

Source: Gmetal Signal Ccnpoiatioa Amnial Reports and FOims 10-K Dataquest 1990

General Signal Corporation Box 10010 Stamford, Connecticut 06904 Telephone: (203) 357-8800 (Millions of Dollars, Except Employees and Per Share Data)

Balance Sheet (December 31) 1980 1981 1982 1983 1984

Working Capital $ 428 $ 489 $ 523 $ 522 $ 571 Long-Term Debt $ 79 $ 84 $ 76 $ 75 $ 97 Shareholder's Equity $ 662 $ 753 $ 814 $ 846 $ 902 After-Tax Return on Average Equity (%) 16.80% 16.56% 13.84% 10.87% 12.42

Operating Performance (Fiscal Year Ending December 31)

1980 1981 1982 1983 1984

Revenue i 1,522 $ 1,,70 2 $ 1,622 $ 1,r57 5 $ 1,,78 7 Cost of Revenue $ 1,042 $ 1,,16 0 $ 1,110 $ 1.,09 7 $ 1,,24 0 R&D Expense $ 51 $ 64 $ 71 $ 79 ' $ 92 G&A Expense $ 231 $ 256 $ 251 $ 247 $ 270

Other Income (Exp.) $ (4) $ (4) $ 3 $ 3 $ 4 Pretax Income $ 193 $ 219 $ 193 $ 155 $ 188 Pretax Margin (%) 13% 13% 12% 10% 11% Effective Tax Rate (%) 46% 46% 44% 42% 42% Income taxes (Credits) $ 89 $ 102 $ 85 $ 65 $ 80 Net Income $ 104 $ 117 $ 108 $ 90 $ 109 Common Shares Outstanding (Thousands) 26,009 27,,69 4 28,013 28,,41 4 28,,56 8 Per Share Earnings $ 4.01 $ 4.23 $ 3.85 $ 3.16 $ 3.80 Book Value $ 24.78 $ 27.17 $ 28.66 $ 29.66 $ 31.53 Dividends $ 1.28 $ 1.48 $ 1.60 $ 1.68 $ 1.71 Price Range (High) $54 1/8- $51 3/8- $ 47- $52 3/8- $ 54- (Low) $2 8 1/4 $33 3/8 $ 28 $40 1/2 $39 5/8

Total Employees 26,016 26,621 23,049 23,530 24,129

Source: General Signal Corporation Annual Reports (1981-1984) and Form 10-K

General Signal Corporation STATEMENT OF EARNINGS FOR NINE MONTHS (Millions of Dollars Except Per Share Data) Mine Months Ended Septeaber 30, September 30, 1984 1985 Net Sales $1,326 $1,338 Cost of Sales $ 922 $ 953 Selling, General t Adain $ 272 $ 266 $1,194 $1,219 Operating Earnings S 132 $ 119 Interest Xncoae $ 9 $ 9 Interest Expanse $ 6 $. 7 Earnings Before Income Taxes $ 135 $ 121 Provision For Incom Taxes $ 60 $ SO Net Earnings $ 75 $ 71 Earnings Per Share of Coaaon Stock $ 2.66 $ 2.50 Dividends Paid Per Share $ 1.26 $ 1.35 BALANCE SHEET December 31, September 30 1984 1985

ASSETS

Current Assets Cash Short Term Investments $ 146 $ 49 Accounts Receivable, Net 313 347 Contracts In Progress 59 57 Inventories 434 444 Prepaid Expenses 6 9

Subtotal 958 906

Property, Plant & Equipment, Net 345 354 Investments, Intangibles, & Other Assets, Net 135 202

Total $1,438 $1,462

LIABILITIES AMD SHAREHOLDERS EQUITY

Current Liabilities Notes Payable Current Maturities of Long-Term Debt $ IS $ 9 Accounts Payable 120 104 Accrued Expenses 138 134 Income Taxes 114 118

Subtotal $ 387 $ 365

Long-Term Debt Less Current Maturities 97 95 Other Noncurrent Liabilities 53 52 Shareholders' Equity 902 949

Total $1,438* $1,462*

*Totals may not add due to rounding.

Source: General Signal Corporation Third Quarter 1985 and Nine Months Report

1986 Dataquest Incorporated Jan. 15 ed. SEMS Industry Econometrics General Signal Corporation

THE COMPANY

Background

General Signal Corporation, incorporated in New York in 1904, produces instrumentation and controls and related systems and equipment for semiconductor processing, telecommunications, industrial automation, and the management of electrical energy and rail transportation. The Company provides capital equipment to these markets through three product sectors:

• Electronic controls and systems

• Electrical controls and equipment

• Fluid controls and equipment

General Signal has a corporate goal for its sectors to achieve greater than 14 percent margins.

Operations

Each of the Company's three product sectors comprises many operating units owned by General Signal Corporation. Table 1 provides a list of these operating units.

Sales and orders in 1984 were at record levels for General Signal. The Company reports that its earnings per share recovered more than half of the ground lost during the recession of 1982. Sales rose 13.5 percent to $1.79 billion. Net earnings increased 21 percent to $108.5 million, and earnings per share gained 20.3 percent to $3.80 from $3.16 in 1983.

General Signal's 1985 third quarter net earnings declined by 21.6 percent to $20.2 million on essentially flat sales of $426.7 million. For the nine months ended September 30, net earnings declined 5.6 percent to $71.6 million on flat sales of $1.34 billion.

Table 1

General Signal Corporation OPERATING UNITS AND LOCATIONS Unit Location

Electronic Controls and Systems: Advanced Mechanization, Inc. Horsham, Pennsylvania Axel Electronics Jamaica, New York Cardion Electronics Woodbury, New York Circuits Processing Apparatus Fremont, California General Railway Signal Rochester, New York Henschel Newburyport, Massachusetts Karkar Electronics San Francisco, California Kayex Rochester, New York Leeds & Northrup Instruments North Wales, Pennsylvania Leeds & Northrup Systems North Wales, Pennsylvania Metallurgical Products Warrendale, Pennsylvania Micro Automation Fremont, California Semiconductor Systems, Inc. San Jose, California Sola Electric Elk Grove Village, Illinois Stock Equipment Chagrin Falls, Ohio Tau-tron Westford, Massachusetts Telecommunications Technology, Inc. Sunnyvale, California Ultratech Stepper Santa Clara, California Warren/Dielectric Littleton, Massachusetts Xynetics Santa Clara, California

Electrical Controls and Equipment: Anchor Electric Manchester, New Hampshire Blue M Electric Blue Island, Illinois Cincinnati Time Cincinnati, Ohio Dowzer Electric Mt. Vernon, Illinois Edwards Farmington, Connecticut GSE/Voorlas Carlisle, Pennsylvania Hevi-Duty Electric Goldsboro, North Carolina Lindberg Chicago, Illinois Nelson Electric Tulsa, Oklahoma 0-Z/Gedney Terryville, Connecticut

Fluid Controls and Equipment: Arrow Engineering Tulsa, Oklahoma Aurora Pump North Aurora, Illinois BIF West Warwick, Rhode Island Ceilcote Berea, Ohio DeZurik Sartell, Minnesota Dynapower/Stratopower Watertown. New York Hydreco Kalamazoo, Michigan Kinney Vacuum Canton, Massachusetts Marsh Instrument Skokie, Illinois Metal Forge Columbus, Ohio Mixing Equipment Company Rochester, New York New York Air Brake Watertown. New York

Source: General Signal Corporation

1986 Dataquest Incorporated Jan. 15 ed. SEMS Industry Econometrics General Signal Corporation

Electronic Controls and Systems

The electronic control sector, of which the semiconductor companies are a part, reported record sales and earnings in 1984—and margins greater than the 14 percent target margin the Company had set for all of its sectors. Led by the success of its semiconductor equipment, rail signaling and control, and power conditioning businesses, sales in the electronic control sector increased 21.6 percent in 1984 to $852.5 million. Earnings rose by 30.9 percent to $121.2 million {see Table 2) .

For the quarter ended September 30, 1985, however, sector performance was hurt by the decline in semiconductor capital equipment operations. Operating margins in this area are reported to have fallen considerably (see Table 3).

Table 2

General Signal Corporation BUSINESS SEGMENT INFORMATION

1960 1981 1982 1983 :L98 4 Net Sales Electronic controls and systems $ 556 $ 644 $ 663 $ 701 $ 852 Electrical controls and equipaent $ 371 $ 434 $ 406 $ 406 $ 406 Fluid controls and equipment $ 594 $ 625 $ 554 $ 468 $ 529 Operating Earnings Electronic controls and systems $ 79 S 83 $ 91 $ 93 $ 121 Electrical controls and equipment $ 44 $ 63 $ 43 $ 45 $ 37 Fluid controls and equipment $ 83 $ 86 $ 67 $ 26 s 41 Depreciation » Amortization of Fixed Assets Electronic controls and systems $ 9.5 $11.3 $13.1 $15.8 $18.9 Electrical controls and equipment $ 5.8 $6.7 $ 7.3 $ 7.8 $ 7.8 Fluid controls and equipment $11.0 $12.4 $13.4 $14.7 $16.0

Capital Expenditures Electronic controls and systems $20.3 $25.1 $18.8 $32.2 $44.1 Electrical controls and equipment $10.5 $12.7 $10.0 $ 9.9 $15.2 Fluid controls and equipment $17.6 $19.3 $17.0 $21.0 $29.1

Source: General Signal Corporation Annual Reports (1981-1984), 1985 Quarterly Reports, and Form 10-K

Table 3

General Signal Corporation SECTOR PERFORMANCE FOR NINE MONTHS ENDING SEPTEMBER 30, 1985 (Millions of Dollars)

Nine Months Ended September 30, September 30, 1984 1985 Net Sales Electronic Controls & Systems $ 628 $ 641 Electrical Controls & Equipment 310 284 Fluid Controls & Equipment 385 414

Total Net Sales $1,326 $1,338

Operating Earnings Electronic Controls & Systems $ 89 $ 67 Electrical Controls & Equipment 27 32 Fluid Controls & Equipment 30 31

Total Operating Earnings before Corporate Expenses & Equity Income 146 $ 129

Source: General Signal Corporation Third Quarter 1985 and Nine Months Report

In addition to recent difficulties in the semiconductor equip ment business, the Company also reports that in the quarter ended September 30, 1985, its coal metering and power conditioning businesses were below year-ago levels. The telecommunications, rail signaling, energy management, and shipboard systems businesses within this segment, however, report improvement in the quarter.

Electrical Controls and Equipment

In 1984, the Company's electrical controls and equipment sector reported flat sales at $405.8 million and a 16.4 percent decline in operating earnings to $3 7.3 million. However, for the quarter ended September 30, 1985, the Company reports that this sector's earnings have benefited from advances in power distribution operations, in heat- treating equipment and petroleum-related operations, and in fire- and smoke-detection operations.

Fluid Controls and Equipment

The fluid controls and equipment sector's sales rose to $528.6 million in 1984, 13 percent above the 1983 level. However, the sector is still far short of its 1981 level of $624.9 million. The railroad air brakes operations experienced a third consecutive year of difficult market conditions and finished the year with an operating loss. For the quarter ended September 30, 1985, the fluid sector reported modest earnings improvement despite lackluster process equipment market conditions and poor demand for new railroad freight cars.

International Operations

General Signal's U.S. sales have accounted for an increasing share of its worldwide sales in recent years. In 1980, the Company's U.S. sales amounted to 85 percent of its total worldwide sales; by 1984, it had risen to 91 percent, according to General Signal.

General Signal's Semiconductor Equipment Group reports that it does business in Japan through sales representatives, distributors, and joint ventures. In Europe, Xynetics markets most of General Signal's semiconductor equipment product line. The exception is Ultratech Stepper's product line, which is marketed by Ultratech Stepper itself.

Research and Development

During 1984, General Signal funded research and development (R&D) at $92.5 million, or 5.2 percent of sales. This was a 17.2 percent increase over the 1983 R&D expenditures of $79 million, or 5.0 percent of sales.

Employees

As of December 31, 1984, the Company had 24,129 employees worldwide, of which approximately 8,500 were represented by 63 different collective bargaining units. General Signal reports that it has generally good employee relations.

OPERATING GROUPS OR DIVISIONS

Electronic Controls and Systems

The major markets for this sector are the semiconductor, tele communications, and process industries; electric utilities, mainline railroads, and rail mass transit systems; and defense.

General Signal provides products for the semiconductor industry in each of the major segments of semiconductor manufacture. These products include crystal-growing furnaces, wafer saws and polishers, deposition and spin-bake equipment, wafer steppers, washers and dicing systems, and testing and packaging equipment.

Products for the telecommunications industry include voice, data, high-density, and multipoint microwave radio; multiplex equipment; electronic filters; analog-to-digital conversion equipment and fiber optic transmission test and measurement systems; central office power sources; and land-based mobile radio systems. To the process industries. General Signal offers computer-directed central control systems, distributed control systems, electronic instrumentation, and electronically controlled feeders and scales.

The Company also offers power conditioning equipment to many different markets to safeguard vital or sensitive electronic equipment.

Products offered to electric utilities include energy management systems, coal metering equipment, boiler and scrubber controls, and remote-controlled systems for handling radioactive waste.

To mainline railroads and rail mass transit systems. General Signal provides highly engineered systems and controls, including cab, wayside, and centralized traffic control components and systems, as well as push-button interlocking controls. For bus mass transit, the Company provides central control systems and electronic fareboxes; for civil and defense air traffic control and navigation, the Company provides radar navigation, identification, and ground weather-monitoring systems. General Signal also supplies shipboard communication systems and propulsion controls to the marine industry.

In the telecommunications field, the Company is focusing its strategy on equipment that improves the quality of transmission and the productivity of capital plant. General Signal's telecommunications operations performed well ahead of the 14 percent rise in overall capital equipment sales to this market.

In 1984, General Signal Corporation acquired two communications companies: Aerotron and Sideband Technology, Inc. Aerotron produces land mobile radio systems, and General Signal plans to develop this technology for use in its rail and bus transportation markets. Sideband Technology manufactures a new kind of land-based mobile radio equipment that significantly reduces band-width consumption.

In August 1985, General Signal acquired Karkar Electronics, Inc., a manufacturer of electronic equipment for long line voice and data communications. In September 1985, the Company agreed to acquire assets related to Northern Telecom Inc.'s Northeast Electronics instrument product line. This line comprises test, diagnostic, and maintenance instruments with field applications in transmission, signaling, service analysis, and switching.

Semiconductor Capital Equipment Group

In August 1985, General Signal made John E. Halter vice president and chief executive for this group. Mr. Halter was formerly senior vice president of the Integrated Circuits Products Group at Signetics.

Since 1980, General Signal has invested 3.6 million shares of its stock and $8 million in cash to acquire thirteen companies in the semiconductor capital equipment field. General Signal reports that its efforts in the semiconductor equipment market are quite successful. Although it only began to offer products in this market in 1980, by 1984 the Company was able to claim that it was one of the top three suppliers, along with Perkin-Elmer and Tokyo Electron Labs (TEL) , in the semi conductor equipment market. General Signal more than doubled both its sales and its earnings in 1984 compared with 1983.

The Company is increasing its commitment to this sector by developing automated systems for semiconductor manufacture. This group charter is to provide standardization and unity to the products being developed by each of the 13 autonomous semiconductor equipment units. General Signal plans to use its unique position as a supplier of both front- and back-end equipment to give the industry a degree of automation integration that it believes other suppliers will be unable to match.

The Company has integrated the data output of probe/test into the die selection and assembly processes; this "island of automation" is already installed at customer locations. There is also an integrated lithography island that includes the spin/coat/bake process of photoresist application, the exposure process using an Ultratech stepper, and, finally, a develop and hard bake system. The Company plans to add a critical dimension measurement system to this island for use after the hard bake.

Table 4 provides a list of the operating units in General Signal's Semiconductor Equipment Group.

Table 4

General Signal Corporation OPERATING UNITS IN SEMICONDUCTOR EQUIEMENT GROUP

Operation Unit Process

Xynetics Products Circuit & Mask Design Kayex Silicon Growing, Sawing, & Polishing Ultraglas Mask Glass Substrates Ultratech Photomask Pattern & Mask Generation/Imaging Ultratech Stepper Step & Repeat Lithography Circuits Processing Apparatus Sputtering Equipment Semiconductor Systems Wafer Track Equipment Tempress Diffusion and CVD Equipment Ultratech Equipment Wafer Cleaning Equipment Electroglas Wafer Probe Equipment Optoscan Line Width Measurement Rucker & Rolls Wafer Probe Equipment Advanced Mechanization Die Attach Equipment Micro Automation Wafer Sawing Equipment lonscan Ion Implant Measurement

Source: General Signal Corporation

Semiconductor Products

General Signal has introduced several new products to the semi conductor equipment market recently. In 1984, the Company introduced a new device for tracking ingot diameters as they are grown. Also in the crystal-growing area. General Signal introduced in 1985 a crystal-growing furnace for factory production of gallium arsenide (GaAs) ingots. At SemiconA^est in May of 1985, General Signal introduced a new sputtering system featuring 6-inch capability and cassette-to-cassette automation.

In June 1985, the Company announced that it had reached an agreement in principle for the acquisition of the lonscan business line from Rockor Inc., a subsidiary of Olin Corp. lonscan is a microcomputer-based test instrument for use in the production of semiconductor devices, measuring the dose and uniformity of ion implantation on silicon or gallium arsenide.

Also in the second quarter. General Signal acquired Optoscan. Optoscan produces laser-based line-width measurement equipment for measurement of semiconductor features. This equipment also measures registration error between mask levels and determines whether photoresist is cleared from contact holes.

Electrical Controls and Equipment

Principal markets for this sector are nonresidential and residential construction industries, electric utilities, and defense and petroleum industries.

Products offered to the construction market include electrical controls and components for power distribution; fire-, smoke-, and intrusion-detection equipment; electric metering equipment; and automatic time recording and parking lot control systems.

The company offers self-contained, unitized powerhouses to the cogeneration and refining industries; hazardous-location power distribution equipment to the petroleum industry; and heat-processing equipment to the primary and fabricated metals and electronics industries.

This sector also supplies electric motors for portable appliances, power tools, automobiles, pumps, and garden equipment.

Fluid Controls and Equipment

Markets for this sector include the chemical, petrochemical, petroleum, food and beverage, primary and fabricated metals, pulp and paper, and other process industries; industrial and municipal water and wastewater processing; agriculture; and construction.

Products for these markets include: specialty, telemetry, and supervisory control systems; valves and actuators; mechanical mixers and aerators; centrifugal, turbine, high-vacuum, and wastewater pumps; instruments for measuring pressure, flow, and temperature; biological waste-treatment systems; specialty air pollution control equipment; and corrosion control materials.

To the heavy-duty mobile construction, aerospace and defense, mining, materials-handling, agricultural, auto, and truck markets, this sector provides such control products as hydraulic gear pumps and directional control valves, piston pumps and motors, hydrostatic transmissions, advanced fluid power systems, and cold-forged components for vehicular steering and suspension. For the mainline railroad and rail mass transit markets, it offers pneumatic and hydraulic braking systems and related controls.

• «

Genicom Corporation Genicom Drive Waynesboro, Virginia 22980 Telephone: (703) 949-1000 Fax: (703) 949-1392 Dun's Number: 10-629-0422 Date Founded: 1983

CORPORATE STRATEGIC DIRECTION Genicom made significant reductions in its labor force and reduced invesbnent in its laser printer Genicom Corporation was formed in 1983 through program. Genicom has streamlined its Kigineering the acquisition of the printer and relay businesses department to shorten development cycles and has operated by the Data Communications Products Busi been targeting sales efforts in specific markets. In ness Department of General Electric Company. This 1990, Genicom will concentrate on achieving product department began selling printer products in 1969 and cost targets, enhancing product productibility, relay products in 1954. Genicom became a publicly expanding distribution relationships, and maintaining owned corporation in 1986. Genicom designs, material flow and careful material-handling manufactures, and markets a variety of computer disciplines. printers, principally in the medium- and high- performance segments. In addition, Genicom draws a considerable amount of revenue from customer- Genicom uses a direct sales force to sell to original service-related activities such as maintenance, leas equipment manufacturers (OEMs), as well as a net- ing, and the sale of spare parts and ribbons. wo^ of authorized distributors to sell to smaller OEMs, systems integrators, value-added resellers, retail dealers, and end users. Internationally, Genicom Total revenue decreased 11.9 percent to $256.9 mil principally sells its products tim>ugfa a network of lion* in fiscal year 1989 from $291.4 nuUion in fiscal subsidiaries located in Western Europe and Australia. year 1988. Genicom attributes the reduction to During fiscal years 1989, 1988, and 1987, interna delayed introduction and production shortfalls of its tional sales represented 24.9, 27.6, and 27.3 percent, new products, as well as the decrease in demand for respectively, of total revenue. midrange and minicomputer business in the United States and Europe. During fiscal year 1989, printer products accounted for 78.2 percent of total revenue; More detailed information is available in Tables 1 relay products accounted for 14.7 percent; and through 2 which appear after "Biisiness Segment service accounted for 7.1 percent Net loss totaled Strategic Direction" and present corporate highlights $24.3 million, representing a 557.4 percent decrease and revenue by region. Information on distribution from fiscal year 1988. Genicom employed channels is not available. Table 3, a comprehensive 3,259 people in fiscal year 1989. financial statement, is at the end of this profile.

Genicom had a difficult year in 1989. It experienced production start-up difficulties for its new products, which restricted its abihty to meet maricet demand. Genicom also encountered delays in introducing its BUSINESS SEGMENT STRATEGIC new laser products to market Finally, decreasing DIRECTION demand in tiie mini- and mid-range system computer market in the United States and Europe produced a large impact upon Genicom's revenue results in fiscal Serial, Impact, Dot Matrix (SIDM) Printers year 1989. To overcome these difficulties and prepare for 1990, Genicom began a restructure. To keep expebses in line with its 1990 revenue expectations, Three series exist under the serial, impact, dot matrix (SIDM) printer category: the Series 1000, *A]I dollar amounts are in U.S. dollais. the Series 2000, and the Series 3000. All tiiree

SCA 0006939 ©1990 Dataquest Incorporated Genicom Corporation series service the medium- and high-performance tear-off. The 3405 offers Courier and Gothic fonts segments of the SIDM printer market According with 6 fonts, bar codes, and oversize character print to Dataquest figures, Genicom possessed less dian ing as options. The 3405 is compatible with the 1 percent sbaie of Ihe SIDM maiket in 1988. majority of computers and software application pack ages. The Model 3410XDQ, built to be compatible The Series 1000 offers models 1020, 1025, and 1040, with the DEC LA210, prints 480 cps at 12 cpi and which are multifunctional, medium-duty cycle 400 cps at 10 cpi in draft. In letter-quaUty mode, the printers designed for high-speed office printing apph- 3410XDQ prints 120 q)s at 12 cpi and 100 cps at cations. The Series 1000 features plug-in font car 10 CPL The 3410XDQ has rear and bottom feed tridges that allow users to change type styles by widi adjustable tractors, as well as zero-inch tear- changing the font cartridge. The user can adapt the off and RS-232 and Centronics-parallel interfaces. printer to provide interface compatibihty with most popular computers and software in the personal com puter market through changing the personality car tridge. The paper-handling mechanism of the Series Line Matrix Printers 1000 allows bottom form feeding and enables the user to print single sheets and envelopes without The Series 4000 consists of nine specific models that unloading the forms. The Series' newest product, the are used basically for high-output performance in 1040, falls within the high-performance 24-wire mar imattended data processing applications and as shared ket with up to 432 characters per second (cps) speed response printers in office environments. The Series features. is capable of letter-quality text, graphics, and, through the use of options, bar code [ninting and multiple type styles. The Series 4000 can print from 300 to 2,000 The Series 2000 printers are principally used as com lines per minute (1pm), depending on die model, and puter consoles or teleprinter stations for message is characterized by a user-replaceable print module networks. The Series 2000 is made up of the 2030 that may be replaced quickly without a service calL and 2120 models. The printers use a proprietary re-inking cartridge ribbon and have a dual tractor design that provides Genicom's principal printer line is the Series 3000. accurate paper handling for graphics applications. Within the Series 3000, there are 21 different models. The Series is characterized by high-performance, heavy-duty cycle printers designed mostly for mul Page, Nonimpact, Plain Paper Printers tiuser applications in data processing and word processing environments. The models' data process The Series 6000 uses a combination of a raster image ing speeds range from 240 to 500 cps at 10 characters I>rocessor (RIP), the ACE page description language, per inch. They can print graphics resolution of up to 288 dots per inch (dpi) and are available with color device drivers for popular software applications, and printing, several paper-handling options, and multiple industry standard printer emulations to deliver type styles. 400-dpi resolution print at up to eight pages i>er minute (ppm). The Series 6000 consists of the 6100 and 6145 models. At the end of 1989, Genicom introduced three new products: the Model 3840, the Model 3405, and the Model 3410XDQ. The Model 3840, part of the 3800 Other Printers Series of printers, is characterized by its 16-charact«' liquid crystal display (LCD) panel allowing additional Genicom also carries the linewriter 1255, 400, 455, control panel flexibility in selecting configuration option, its second paper feed tractor, and its paper 800, and 855. These products are line, impact, fiilly rack. The 3830 features 19 popular bar code styles formed printers. that can be rotated three different ways and e:q)aiuled up to 10 inches. The 3830 standard emulations con sist of the ANSI X3.64, IBM Proprinter, Epson FX Relay Products 286e, and the IBM GP. The Model 3405, an extension of the Genicom 3000 Series, prints 400 cps in draft Genicom seUs a line of relays primarily used for [Hinting and 100 cps in letter-quality printing. It can signal-switching applications that require high func take up to six-part forms and features zero-inch forms tional reliability and product quality. Typical

applications include space vehicle telemetry, opera- Further Information tional and safety control of militaTy weapons, deep well drilling, radio communication switching, and test For more information about Genicom's business seg- equipment signal transfer. For fiscal years 1988, ments, please contact Dataquest's Western European 1987, and 1986, sales of relays represented 6.0, 5.7, Printer Industry Service (WEPIS) or Electronic and 12.7 percent, respectively, of total revenue. Printer Industry Service (EPIS),

Table 1 Five-Year Corporate Highlights (Thousands of U.S. Dollars)

1985 1986 1987 1988 1989 Rve-Year Revenue 26.456 $157,463 $302,151 $291,429 $256,873 Percent Change - 24.52 91.89 (3.55) (11.86)

Capital Expenditure NA NA NA NA NA Percent of Revenue NA NA NA NA NA

R&D Expenditure $5,999 $6,138 $14,931 $14,202 $11,223 Percent of Revenue 4.74 3.90 4.94 4.87 4.37

Number of Employees NA 4,000 NA 3,600 3,259 Revenue ($K)/Employee NA $39.37 NA $83.93 $78.82

Net Income $1,805 $8,608 $12,555 $5,304 ($24,260) Percent Change - 376.90 45.85 (57.75) (557.39)

1989 Calendar Year (US$M) Ql Q2 Q3 Q4 Quarterly Revenue $64.40 $72.58 $60.70 $59.20 Quarterly Profit ($1.00) $0.07 ($2.71) ($20.62)

NA - Not available SooTce: Oenicom Cotporatioii Annual Rqxms and F<»m8 10-K Dataquest (1990)

Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 93.38 81.84 72.66 72.41 75.11 International 6.62 18.16 27.34 27.59 24.89 Europe 6.62 18.16 27.34 27.59 24.89

Source: Qcniconi Coipofation Annual Repoits and Fonas 10-K Dalaqnest (1990)

Genicom Ltd. (United Kingdom) Genicom (No. 1) Limited (United Kingdom) 1989 SALES OFFICE LOCATIONS Genicom Operations Limited (United Kingdom) Genicom S.A. (France) North America—1 Genicom S.A.R.L. (France) Europe—^5 Genicom S.p.A. (France) Asia/Pacific—1 AsialPacific Genicom Pty. Limited (Australia) MANUFACTURING LOCATIONS ROW hiorth America Datacom de Mexico, S.A. de C.V. (Mexico) Hudson, New Hampshire Final assembly and testing of some manufactured products Richmond, Virginia Configuration, testing, and distribution of sotu-ced ALLIANCES, JOINT VENTURES, AND products LICENSING AGREEMENTS Waynesboro, Virginia Certain mechanical parts that need to be machined, stamped, injection molded, electroplated, and 1989 painted, as well as final assembly and testing of all manufactured products Cypress Distributing Cypress Distributing will carry Genicom's 1000 ROW Series desktop printers, 3000 Series dot-matrix printers, and 4(XX) Series printers. Reynosa, Mexico Printed circuit boards, high-speed matrix printheads, ribbon cartridges, and a variety of 7957 conventional electromechanical assemblies Chelgraph Genicom was licensed to market Chelgraph's ACE PDL and RIP technology. The technology will be applied in new Genicom printers and OEM SUBSIDIARIES products slated for shipment in early 1988.

North America Genicom Canada, Inc. (Canada) Crenicom Foreign Sales Corporation (Virgin Islands, MERGERS AND ACQUISITIONS United States) Genicom International Holdings Corporation (United States) 1987 Genicom International Sales Corporation (United States) Momentum Technologies Genicom Subsidiary Corporation (United States) Genicom acquired Momentum Technologies, a computer printer services company. Europe Centronics Data Computer Centronics Ireland B.V. (The Netherlands) Centronics Data was acqiured by Genicom. The Genicom AB acquisition expanded Genicom's range of medium- Genicom GmbH (West Germany) range and computer printers, as well as strength Genicom International Limited (United Kingdom) ened its worldwide distribution netwoik.

Tele Video Systems Carl D. Grotheer Genicom acquired TeleVideo's daisy wheel printer Vice president-Marketing, Product and Market assets. Development

Mark E. Reed Vice president. Domestic Sales KEY OFHCERS

Don E. Ackerman President and chief executive officer John V. Harker PRINCIPAL INVESTORS Executive vice president. Marketing and Sales Robert C. Easton Welsh, Carson, Anderson & Stowe, m Executive vice president. Printer Manufacturing J. H. Whitney & Co. Charles A. Ford J. H. Whimey Associates Vice president and general manager. Relay General Electric Company Products Division Don E. Ackerman Bruce K. Anderson Raymond D. Stapleton Vice president and general manager. Field Service Division

Table 3 Comprehensive Financial Statement Fiscsd Year Ending January (Thousands of U.S. Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $52,265 $71,960 $163,442 $158,913 $133,715 Cash 2,321 2,588 5,909 1,826 213 Receivables 19,210 31,221 72,874 61,247 45,554 Marketable Seciuities NA NA NA NA NA Inventory 28,043 36,006 80,854 88,154 77,981 Other Current Assets 2,691 2,145 3,805 7.686 9.967 Net Property, Plants $27,541 $25,696 $42,789 $41,400 $36,707 Other Assets $168 $134 $22,297 $23,596 $19,973 Total Assets $79,974 $97,790 $228,528 $223,909 $190,395 Total Current Liabilities $22,284 $32,159 $57,581 $54,033 . $56,299 Long-Term Debt $36,500 $16,621 $106,035 $106,173 $99,609 Other Liabilities $2,455 $3,346 $6,402 $2,138 NA Total Liabilities $61,239 $52,126 $170,018 $162,344 $155,908 Total Shareholders' Equity $18,735 $45,664 $58,510 $61,565 $34,487 Converted Preferred Stock NA NA NA NA NA Common Stock 77 100 115 111 106 Other Equity 11,032 29,330 29.606 27.361 24,548 Retained Earnings 7,626 16,234 28.789 34,093 9,833 Total Liabilities and Shareholders' Equity $79,974 $97,790 $228,528 $223,909 $190,395 Income Statement 1985 1986 1987 1988 1989 Revenue $126,456 $157,463 $302,151 $291,429 $256,873 U.S. Revenue 118,083 128,870 219,535 211,016 102,940 Non-U.S. Revenue 8,373 28,593 82,616 80,413 63,933 Cost of Sales $88,894 $103,222 $208,123 $210,183 $198,562 R&D Expense $5,999 $6,138 $14,931 $14,202 $11,223 SG&A Expense $24,149 $29,095 $48,054 $48,624 $47,291 Capital Expense NA NA NA NA NA Pretax Income $3,169 $16,011 $19,177 ($956) ($28,379) Pretax Margin (%) 2.51 10.17 6.35 (0.33) (11.05) Effective Tax Rate (%) 43.00 46.00 40.00 34.00 34.00 Net Income $1,805 $8,608 $12,555 $5,304 ($24,260) Shares Outstanding, Thousands 9,246 10,414 11,555 11.582 10,710 Per Share Data Earnings $0.20 $0.82 $1.09 $0.46 ($2.27) Dividend NA NA NA NA NA Book Value $2.03 $4.38 $5.06 $5.32 $3.22

Table 3 (Continued) Comprehensive Financial Statement Fiscal Year Ending January (Thousands of U.S. Dollars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (Times) 2.35 2.24 2.84 2.94 2.38 Quick (Times) 1.09 1.12 1.43 1.31 0.99 Fixed Assets/Equity (%) 147.00 56.27 73.13 67.25 106.44 Current Liabilities/Equity (%) 118.94 70.43 98.41 87.77 163.25 Total Liabilities/Equity (%) 326.87 114.15 290.58 263.70 452.08 Profitability (%) Return on Assets - 9.68 7.69 2.34 (11.71) Return on Equity - 26.73 24.10 8.83 (50.51) Profit Margin 1.43 5.47 4.16 1.82 (9.44) Other Key Ratios R&D Spending % of Revenue 4.74 3.90 4.94 4.87 4.37 Capital Spending % of Revenue NA NA NA NA NA Employees NA 4,000 NA 3,600 3,259 Revenue ($K)/Employec NA $39.37 NA $83.93 $78.82 Capital Spending % of Assets NA NA NA NA NA

NA s Not available Sonice: Oenicam C<»poiatian Anuual Rqiorts and Fomis 10-K Dataqaest (1990)

CORPORATE STRATEGIC DIRECTION fiscal 1988. Net income totaled £27.1 million (US$44.4 million) in fiscal 1989, up 26.6 percent from the previous year's figure of £21.4 million Gestetner Holdings Pic is a leading worldwide dis (US$35.1 million). (Percentage changes refer only to tributor of office and camera equipment The Com £ amounts; US$ percentage changes wiU differ pany has two divisions: the Office Systems Division and the newly acquired PhotograpUc Division. In because of fluctuations in Dataquest exchange rates.) August 1989, the Company jcompleted the acquisition of Hanimex Corporation Limited. Hanimex is a The Office Products Division increased sales 16 per worldwide distributor and marketer of photographic cent, accounting for £455.9 million (US$747.4 mil and related equipment under the Hanimex and '^vitar lion) in fiscal 1989, up from £382.9 million brand names. Its business is similar to that of (US$627.7 million) in 1988. Sales from the Photo Gestetner—sourcing products in Southeast Asia for graphic Division contributed for three months of the worldwide distribution. 1989 fiscal year and represented 14 percent of total revenue, or £74.2 million (US$121.7 million). The strategy the Conq)any plans to follow to sustain growth through the next decade has two key priori ties: strong customer relationships and economies of Europe contributed 57 percent of Gestetner's 1989 scale. The technology employed in modem office sales. North America accounted for 23 percent, Asia/ equipment is such diat it is becoming increasingly Pacific accoimted for 14 percent, and Latin America difficult to differentiate between products solely on a and Africa contributed 3 percent each. The Company competitive feature basis. Therefore, maintaining employed 9,843 people in fiscal 1989. strong customer relationships is especially important for the Company's service and supplies group, which Because of the Company's accounting policies and provides a stable income and currendy accounts for principles, a financial analysis is not possible. about 47 percent of the total revenue of the Office Products Division.

Gestetner wishes to further its economies of scale by increasing its size, allowing greater volume pur BUSINESS SEGMENT STRATEGIC chases. The Company also wants to improve the DIRECTION efficiency of its sales and service force, "^th more customers in a given region, the Company can achieve greater iise of its staff and therefore reduce Office Systems Division the cost of each customer calL Size also brings with it economies in the administration and inventory Products in the Office Systems Division include copi required to support selling and sovicing operations. ers, copyprinters, duplicators, offset printing presses, laser printers, facsimile machines, and supplies. All of Revenue increased 33.4 percent to £530.1 million Gestetner's copios are manufactured by Mita Corpo (US$869.0 million) in fiscal year ended October 31, ration. Gestetner entered into Segment 5 by introduc 1989, from £397.2 million (US$6S1.1 million) in ing the 2470ZDH in June 1990. Odier new machines

SCA 0008889 ©1990 Dataquest Incorporated Gestetner Holdings Pic introduced in 1989 and 1990 include the 235527 2355ZHD, 2345Z/2345ZHD, 2322Z/2322ZD, 2316ZS, 2316/2316Z, and 2222Z. MANUFACTURING LOCATIONS

According to Dataquest, Gestetner had approximately Europe 10,300 plain psqier copier placements, wifli neariy a 1 percent market share in the United States for 1989. Northampton, England In Western Europe, Gestemer placed 35,700 imits, Office supply products giving the Company 3.0 percent of the market for 1989, Dataquest estimates.

Gestemer's facsimile machines are manufactured by SUBSIDIARIES Samsung and Tokyo Electric Company. The Com pany offers a complete line of facsiinile machines North America with a wide range of price and performance. Dataquest estimates that Gestetner has less than a Commonwealth Graphics Ltd. (United States) 1 percent share in the worldwide facsimile market Gestemer Corporation (Puerto Rico) Gestemer Corporation (United States) Gestemer Inc. (Canada) Photographic Division Hanimex (Canada) Ltd. (Canada) Vivitar Corporation (United States) The Photographic Division, the Hanimex Group, mar kets a variety of products: compact and single-lens Europe reflex (SLR) cameras, camera lenses, electronic flash es, video accessories, camcorders, binoculars, film Gestemer AB (Sweden) and associated items, and X-ray and medical Gestemer Buromaschinen-Verkauf-gesellschaft mbH equipment (Austria) Gestemer BV (Netherlands) Gestetner Communications SA (Spain) The compact and SLR cameras range from inexpen Gestemer GmbH & Co. Bruosystems KG (Germany) sive novelty 110 compacts to sophisticated 35mm Gestetner Italia SpA (Italy) SLR cameras. The group has increased the number of Gestetner Limited (Great Britain) Vivitar and Hanimex lenses and electronic flashes it Gestetner Ltd. (Ireland) sells. This division markets a \^vitar camcorder and Gestetner Manufacturing Limited (Great Britain) more than 50 video accessory items, as well as film Gestetner SA (Belgium) and award-winning binoculars. Third-party agencies Hanimex (Deutschland) GmbH (Germany) are responsible for distributing aU the division's Hanimex (France) SA (France) products to various markets. Hanimex International AG (Switzerland) Hanimex (UK) Ltd. (Great Britain) Lance International SA (France) Further Information Rex-Rotaiy International Corporation A/S (Denmark) Rex-Rotary UK Ltd. (Great Britain) For further information about the Company's business SA Gestetner (France) segments, please contact the appropriate Dataquest 'N^vitar Belgium SA (Belgium) industry service. Asia/Pacific Gestetner Bangladesh Limited (Bangladesh) Gestetner International Limited (Hong Kong) 1989 SALES OFFICE LOCATIONS Gestetner Lasers Pty. Limited (Australia) Gestetner Malaysia Sendirian Berhad (Malaysia) North America—^5 Gestetner New Zealand Ltd. (New Zealand) Europe—19 Gestetner (Private) Limited (Pakistan) Asia^acific—12 Gestetner Private Limited (Singapore) ROW—12 Gestetner (Thailand) Ltd. (Thailand)

Hanimex (New Zealand) Ltd. (New Zealand) 1989 Hanimex Pty. Limited (Australia) Hanimex Vivitar Hong Kong Limited (Hong Kong) Hanimex Corporation Limited Hanimex '^vitar Japan K.K. (Japan) Gestetner purchased Hanimex, adding to the Com pany's distribution capability and adding a retail- oiiented distribution network. ROW Duplotechnica Limitada (Chile) Gestetner Comercio e Industria Limitada (Brazil) Gestetner (Israel) Limited (Israel) Gestetner Limited (Kenya) KEY OFFICERS Gestetner Limited (Malawi) Gestetner (Proprietary) Limited (South AMca) Gestetner (PvL) Limited (Zimbabwe) Basil Sellers Gestetner SA (Peru) Chairman and chief executive officer Gestetner SA (Venezuela) Gestetner SACL (Argentina) David Gestetner Gestetner SA de CV (Mexico) President

Brian Copsey Director of Hnance

ALLIANCES, JOINT VENTURES, AND R. Gregory Melgaard LICENSING AGREEMENTS Deputy chairman

Information is not available.

PRINCIPAL INVESTORS

MERGERS AND ACQUISITIONS Infonnation is not available. 1990 Nashua Corporation Gestetner purchased the Office Systems Business of Nashua Corporation for £90 million FOUNDERS (US$147.5 million) in an aim to increase the econ omies of scale and the Company's presence as an independent office equipment distributor. Information is not available.

GigaBit Logic, Inc. Established 1981 1908 Oak Terrace Lane No. of Employees: 118 Newbury Park, CA 91320 (805) 499-0610

GBL uses sales representatives, distributors, and a direct sales force to sell its products on a worldwide basis. Currently the Company has sales representatives nationwide, and franchised distributors in Australia, Canada, Denmark, France, Germany, Israel, Italy, Japan, Sweden, Taiwan, and the United Kingdom.

BOARD Chairman—John Heightley (GigaBit Logic, Inc.) Heinrich F. Krabbe (Analog Devices, Inc.) Richard C. Eden (GigaBit Logic, Inc.) David B. Jones (InterVen Partners, Inc.) Lawrence T. Sullivan (Analog Devices, Inc.) Mark C. Masur (Interfirst Venture) Chris C. Ellison (Development Finance Corp. of New Zealand)

COMPANY EXECUTIVES • President—John Heightley (formerly president, INMOS) • Vice President, R&D—Richard C. Eden (formerly principal scientist, Rockwell)

Vice President, Product Development—Frank Lee (formerly director, Rockwell) Vice President, Sales—Jim Brye (formerly vice president, Marketing/Sales, Vitesse) Vice President, Marketing—Mike Pawlik Vice President, Finance—Spencer Brown (formerly vice president. Finance, and CEO, CR Technology) Vice President, Manufacturing—Bryant M. Welch (formerly manager, GaAs Technology, Rockwell)

FINANCIAL BACKING March 1982—Seed financing $1 million from First Interstate Capital Corp., Riordan Venture Group, and Wood River Capital Corp. November 1982—Round 1, $8.1 million from Analog Devices Enterprises, First Interstate Capital Corp., and others November 1982—Leases, $3.5 million November 1982—R&D Partnership with Kidder, Peabody & Co., of $6.1 million September 1985—Round 2, $11.4 million from Analog Devices Enterprises, Gevenco, First Interstate Capital Corp., Interfirst Venture Corp., Standard Oil Company, and Union Venture Corp. April 1987—Round 3, $14.8 million from Analog Devices Enterprises, Cray Research Inc., Digital Equipment Corp., DEC New Zealand, Interfirst Venture Corp., Interven Partners, and others. April 1987—Leases, $4.5 million December 1988—$29.3 million order from Cray Research

STRATEGIC ALLIANCES • 1981—Kidder, Peabody & Co., R&D partnership to develop ultrahigh-speed GaAs SRAMs • 1987—Cray Research, customer/investor

• 1987—Digital Equipment, customer/investor • 1987—Tachonics Corporation, alternate sourcing agreement • 1988—NKT, Bronby, design center and European marketing support • 1988—SC Hightech Corporation (division of Sumitomo Group), Tokyo, marketing and product development agreement

SERVICES GBL provides a full-service foundry including standard cell library, multiproject chip, CAD support, fab, packaging, and test.

PROCESS TECHNOLOGY GBL uses 0.8 and l.Oum GaAs MESFET on DSW processing on 3-inch and 4-inch (100-mm) wafers. Its four processes are: • GaAs D-MESFET (depletion-mode) • GaAs D-MESFET (depletion-mode, low power) • GaAs HME/D (high margin enhancement/depletion) • GaAs E/D (enhancement/depletion)

PRODUCTS PicoLogic family of more than 40 standard digital logic devices

IK and 4K NanoRAM static RAMs Standard cell ASICs Standard cell arrays to 15,000 gates complexity ALUs 8x8 multiplier/accumulators Low-power logic

• 4K GaAs read-only memories (ROMs) • ATE driver/comparator logic • Telecom products, including fiber-optic transmitters and receivers • PLL subsystems • Prototyping and evaluation kits

Applications • Supercomputers (GBL chips are used in CRAY-3 supercomputers.) • High-speed computers and workstations • Fiber-optic communications • High-speed instrumentation

• Military/aerospace • UHF and microwave communications

FACILITES GBL is located in Newbury Park, California. Its 57,000-square-foot facility includes a 6,800-square-foot clean room with 5,000 square feet of Class 10 area. Capacity is approximately 2,500 3-inch and/or 4-inch wafer starts per month.

December 1985—GBL marketed its prototype development kit for PicoLogic and Nano-RAMs. March 1986—GBL founder, chairman, CEO and president, Dr. Fred Blum, left the company. Board member Heinrich Krabbe became chairman, president, and CEO while retaining his position as vice president at Analog Devices, Inc. August 1986—Mr. Heightley joined GBL as president and CEO; Mr. Krabbe retained position as chairman of the board. January 1987—Cray Research chose GBL as sole supplier of GaAs logic for CRAY-3 development, awarding GBL a $5.5 million contract; Cray discontinued its internal GaAs manufacturing activity. February 1987—GBL and Seattle Silicon announced the first compiler-generated IC designed through a technical collaboration. April 1987—Third-round equity funding totaled $14.8 million; Mr. Heightley was appointed chairman of the board. June 1987—GBL reduced pricing on its 256x4-bit NanoRAM by 60 percent, resulting in production volume pricing of less than $100.00. July 1987—GBL and Prisma entered into an agreement to produce a family of custom ICs for Prisma's 32-bit RISC architecture machine. September 1987—GBL released the industry's first comprehensive GaAs IC catalog, "GigaBit Logic Ultra-High Speed Solutions." September 1988—GBL announced European joint development with NKT. December 1988—GBL and SC Hightech Corporation jointly announced a marketing and product development agreement. December 1988—GBL received Cray order for $29.3 million.

January 1989—GBL announced seven new ICs for use in digital fiber-optic transmitters and receivers. April 1989—GBL published the conclusions of a GaAs IC survey of users, nonusers, and suppliers. May 1989—GBL announced a new GaAs LSI prototyping kit.

June 1989—GBL announced the 16G041-HPLL subsystem. August 1989—GBL announced availability of its updated 480-page GaAs IC data book. October 1989—GBL published the results of 3-inch to 100-mm wafer conversion efforts.

GigaBit Logic, Inc. Established 1981 1908 Oak Terrace Lane No. of Employees: 98 Newbury Park, CA 91320 (805) 499-0610

BACKGROUND GigaBit Logic, Inc. (GBL), was founded to design, develop, and manufacture diglCs capable of 1-GHz to 5-GHz operation. GBL's goal is to be the leader in the commercial digital GaAs IC market. The Company is targeting product segments in the military, mainframe computer, RF communication, instrumentation, and test equipment markets. GBL uses sales representatives, distributors, and a direct sales force to sell its products on a worldwide basis. Currently the company has sales representatives nationwide, and franchised distributors in Japan, Germany, Italy, France, the United Kingdom, Israel, Canada, Sweden, Denmark, Taiwan, and Australia.

COMPANY EXECUTIVES • President—John Heightley (formerly president, INMOS) • Vice President, R&D—Richard C. Eden (formerly principal scientist, Rockwell) • Vice President, Product Development—Frank Lee (formerly director, Rockwell)

• Vice President, Marketing/Sales—Jim Brye (formerly vice president, Marketing/Sales, Vitesse) • Vice President, Finance—Spencer Brown (formerly vice president. Finance, and CEO CR Technology) • Vice President, Manufacturing—Bryant M. Welch (formerly manager, GaAs Technology, Rockwell)

FINANCIAL BACKING • March 1982—Seed financing $1 million from First Interstate Capital Corp., Riordan Venture Group, and Wood River Capital Corp. • November 1982—Round 1, $8.1 million from Analog Devices Enterprises, First Interstate Capital Corp., and others • November 1982—Leases, $3.5 million • November 1982—R&D Partnership with Kidder, Peabody & Co., of $6.1 million • September 1985—Round 2, $11.4 million from Analog Devices Enterprises, Gevenco, First Interstate Capital Corp., Interfirst Venture Corp., Standard Oil Company, and Union Venture Corp. • April 1987—Round 3, $14.8 million from Analog Devices Ent., Cray Research Inc., Digital Equipment Corp., DFC New Zealand, Interfirst Venture Corp., Interven Partners, and others • April 1987—Leases, $4.5 million

STRATEGIC ALLIANCES • 1981—Kidder, Peabody, R&D partnership to develop ultrahigh-speed GaAs SRAMs • 1987—Cray Research, customer/investor • 1987—Digital Equipment, customer/investor

SERVICES GBL provides a full-service foundry including standard cell library, multiproject chip, CAD support, fab, packaging, and test.

PROCESS TECHNOLOGY GBL uses 0.8 and l.Oum GaAs MESFET and DSW processing and 3-inch wafers. Its four processes are: • GaAs D-MESFET (depletion-mode) • GaAs D-MESFET (depletion-mode, low power) • GaAs HME/D (high margin enhancement/depletion) • GaAs E/D (enhancement/depletion)

PRODUCTS • PicoLogic family of more than 30 standard digital logic devices • IK and 4K NanoRAM static RAMs • Standard cell ASICs

1988 Products • ALUs • 8x8 multiplier/accumulators • Low-power logic • 4K GaAs read-only memories (ROMs) • ATE driver/comparator • Telecom products

Amplications • Supercomputers (GBL chips are used in CRAY-3 supercomputers.) • Fiber-optic communications • High-speed instrumentation • Military/aerospace • UHF and microwave communications

FACILITIES GBL is located in Newbury Park, California. Its 57,000-square-foot facility includes a 6,800-square-foot clean room with 5,000 square feet of class 10.

COMPANY HIGHLIGHTS June 1984—GBL shipped its first PicoLogic divider circuits for high-frequency radio applications. October 1984—GBL signed Tokyo Electron to market its ICs in Japan. December 1984—GBL opened an office in Boston, Massachusetts. April 1985—GBL cuts GaAs IC prices by 38 percent. September 1985—Second round funding totaled more than $11 million. December 1985—GBL marketed its prototype development kit for PicoLogic and NanoRAMs. March 1986—GBL founder, chairman, CEO and president. Dr. Fred Blum, left the company. Board member Heinrich Krabbe became chairman, president, and CEO while retaining his position as vice president at Analog Devices, Inc. August 1986—John Heightley joined GBL as president and CEO; Mr. Krabbe retained position as chairman of the board. January 1987—Cray Research chose GBL as sole supplier of GaAs logic for CRAY-3 development, awarding GBL a $5.5M contract; Cray discontinued its internal GaAs manufacturing activity. February 1987—GBL and Seattle Silicon announced the first compiler- generated IC designed through a technical collaboration. April 1987—Third round equity funding totaled $14.8 million; Mr. Heightley was appointed chairman of the board. June 1987—GBL reduced pricing on its 256x4-bit NanoRAM by 60 percent, resulting in production volume pricing of less than $100.00. July 1987—GBL and Prisma entered into an agreement to produce a family of custom ICs for Prisma's 32-bit RISC architecture machine. September 1987—GBL released the industry's first comprehensive GaAs IC catalog, "GigaBit Logic Ultra-High Speed Solutions."

© 1988 Dataquest Incorporated January SIS GATA GM Hughes Electronics Corporation '• 3044 West Grand Boulevard Detroit, Michigan 48202 Telephone: (313) 556-3510 Fax: (313) 974-4487 Dun's Number: 00-535-6613 Date Founded: 1985

CORPORATE STRATEGIC DIRECTION More detailed information is available in Tables 1 through 3, which appear after "Business Segment Strategic Direction" and present corporate highlights GM Hughes Electronics Corporation (GMHE), and revenue by region and distribution chaimel. through its two major subsidiaries, Hughes Aircraft Table 4, a comprehensive financial statement, is at the Company (Hughes) and Delco Electronics Corpora end of this profile. tion, is a world leader in advanced automotive, defense, and space electronics. GMHE became a wholly owned subsidiary of General Motors effective December 31, 1985, coincident with GM's acquisi tion of Hughes for $2.7 billion.* BUSINESS SEGMENT STRATEGIC DIRECTION Hughes and Delco Electronics continued joint and separate work in 1988 to develop new automotive Hughes Aircraft Company electronic products and systems. Hughes was involved in almost 150 different projects to transfer In frscal 1989, Hughes Aircraft revenue totaled aerospace technologies to automotive uses, both in $7.44 billion, up from $7.40 billion in fiscal 1988. motor vehicles and in plants. Two of the earUest New orders totaled $8.7 billion, up from $6.4 billion projects to pay off have been the development of an in the prior year. automotive Head Up Display (HUD), and a holo graphic Center High-Mounted Stop Light (CHMSL). In response to changing conditions in Hughes' lines of business, the Company has begun to broaden its The Company's total revenue increased 1 percent to business base to nonmihtary areas while stiU serving $11.4 biUion in fiscal 1989 from $11.2 biUion in the mihtary market This new strategy also includes being more selective when bidding on development fiscal 1988. Net income decreased 3 percent to contracts that require front-end investment to ensure $632.4 miUion in fiscal 1989 from $653.3 million in that the probable long-term financial return is ade fiscal 1988. GMHE employs 75,000 people quate, increasing intematiooal business by upgrading worldwide. existing systems and codevcloping or coproducing new systems with international partners, and expand Research and development expenditures totaled ing Hughes' business in such commercial areas as $592 million in fiscal 1989, representing 5 percent of telecommuniciUdons and simulation and training. revenue. In 1989, the Hughes Research Laboratories claimed that it had developed the world's fastest tran Hughes is organized into seven operating groups, six sistor. The device is operated at a frequency of of which are engaged in prime contract bxisiness. The 250 GHz (250 billion cycles per second), 20 percent seventh group supplies high-technology components faster than any previously reported speed. to the Company's systems group and also markets its products externally. The seven operating groups aie Capital spending totaled $649 million in fiscal 1989, Electro-Optical and Data Systems, Ground Systems, representing 6 percent of revenue. Missiles Systems, Radar Systems, Space and Com munications, Training and Support Systons, and *AU dollar amounts are in U.S. dollais. Industrial Electronics.

The Electro-Optical and Data Systems Group designs electronic-simulation-based military training systems. and manufactures electro-optical sensors, weapon The group also estabUshed Hughes Training Systems control systems, and information processing systems Inc. to provide the total training services required for for space, aircraft, and surface applications. military and civil aircrews.

The Groimd Systems Group develops and builds The Industrial Electronics Group develops, produces, systems for automated airspace management, jam- resistant communications, land- and ship-based radar, and markets high-technology components for a vari undersea warfare, military displays, sonar, and elec ety of industrial, defense, commercial, and scientific tronic warfare systems. applications. One-third of the group's efforts are dedi cated to supplying the specialized custom components required by the Company's systems organizations. The Missile Systems Group designs, develops, and The balance of the group's sales are made to cus manufactures tactical guided missiles, guidance and control systems, and launchers. tomers in the electromcs and associated industries.

The Radar Systems Group produces airborne radar or In addition to Hughes' seven operating groups, the weapon control systems for three of the four current Company has three major organizations that provide frontline U.S. tactical aircraft. The group designs and research and development innovations, and the builds avionics systems, airborne radar reconnais unique products and technology required by the major sance/surveillance systems, airborne electronic war systems groups. The three laboratories are the Hughes fare systems, data links, and related displays and Research Laboratories, the Santa Barbara Research controls, including automotive displays. Center, and the Hughes Microelectronics Center.

The Space and Communications Group produces spacecraft for national defense, communications, Delco Electronics Corporation weather observation, and scientific space exploration. It also provides large-scale information processing In fiscal 1989, Delco Electronic's total revenue was systems and services, and operates and sells satellite $4.0 billion, up from $3.8 billion in fiscal 1988. communications services and terrestrial private busi ness networks. Two-thirds of this business is related to national defense. Delco Electronics consists of six strategic business units (SBUs): International, Automotive Electronics, The Training and Support Systems Group designs and Audio Systems, Instrumentation and Air Controls, IC develops advanced simulation, visual, and display Delco and Delco Systems Operations, and Delco systems for a variety of commercial and military Systems Operations. IC Delco and Delco Systems requirements. The organization also designs and Operations fabricates custom ICs to support Delco fabricates various automatic test systems and provides products. integrated logistic support for aerospace products worldwide. The group became a major competitor in the training and simulation market with the acquisi Further Information tion of Rediffiision Simulation, which has facilities in Canada and Texas. Rediffusion Simulation is one of For more information about the Company's business the world's largest suppliers of civil and military segments, please contact the appropriate industry flight simulators. Also, in December 1988, Hughes service. Dataquest tracks GM Hughes Electronics acquired Honejrwell's Training and Control Systems through its Military Aerospace Technology Market Division, one of the leading providers of Industry Service Group.

Table 1 Five-Year Corporate Highlights (Millions of U.S. Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue 119,503.8 $10,440.0 $10,481.0 $11,243.6 $11,359.0 Percent Change 9.85 0.39 7.28 1.03

Capital Expenditure $744.0 $700.6 $469.4 $533.0 $648.5 Percent of Revenue 7.83 6.71 4.48 4.74 5.71

R&D Expenditure $392.8 $408.1 $416.0 $550.9 $592.0 Percent of Revenue 4.13 3.91 3.97 4.90 5.21

Number of Employees 105,000 102,000 100,000 97,000 75,000 Revenue ($K)/Employee $90.51 $102.35 $104.81 $115.91 $151.45

Net Income $339.8 $445.1 $521.1 $653.3 $632.4 Percent Change 30.99 17.07 25.37 (3.20)

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $3,012.40 $2,881.30 $2,577.00 $2,888.30 (Quarterly Profit $172.90 $203.10 $110.60 $145.80

Soince: GM Hug^ Annoal Repoits and Fbnns 10-K Dataquest 1990 Table 2 Revenue by Geographic Region (Percent) Region 1985 1986 1987 1988 1989 North America 89.10 89.34 88.38 87.65 86.53 International 10.90 10.66 11.62 12.35 13.47

Source: GM Hug^ Annoal Repoits and Fonns 10-K Dataquest 1990 Table 3 Revenue by Distribution Channel (Percent)

Channel 1988 1989 Direct Sales 90.00 90.00 Indirect Sales 10.00 10.00 Source: Dataquest 1990

•~ the A-4M Skyhawk and AV-8B Harrier, production of the IR guidance section for the Air Force's GBU-15 1990 SALES OFTICE air-to-surface glide weapon; and validation/ LOCATIONS—HUGHES AIRCRAFT demonstration of the Advanced Anti-Tank Weapon COMPANY System Medium (AAWSM).

North America—12 Europe—10 Radar Systems Group: El Segundo, California Japan—1 Asia/Pacific—4 This group engages principally in the development ROW—2 and production of aerospace radars, radar-based avionics systems, synthetic aperture radars, airborne weapon control systems, aerospace displays and controls, aerovehicle dedicated data links, airborne electronic countermeasures/countermeasiu%s equip 1990 SALES OFFICE ment, and airborne computers. It also is involved in LOCATIONS—DELCO ELECTRONICS the production of aircraft and missile instrumentation CORPORATION and airborne and underwater telemetry equipment; the F-14 program, the F-15 program, the F/A-18 North America—3 program, and product operations; production of the Europe—4 APG-65 radar used on the F/A-18 Hornet and Japan—1 selected for the upgrade on the German F-4F Asia/Pacific—4 Phantom; production of the APG-70 radar, replacing die APG-63, which will be installed in the F-lSs and dual-role F-lSEs; production of the APG-71 radar for die F-144D Super Tomcat, whose predecessor was MANUFACTURING the AWG-9 System; development and production of LOCATIONS—HUGHES AIRCRAFT the AXQ-14 Data Link, a two-way communications COMPANY system providing an extended weapon control capability for the GBU-15 guided weapon; production of the Advanced Syntiietic Aperture Radar Missiles Systems Group: Canoga Park, California: System (ASAR-2) for the Air Force TR-1, which Tucson, Arizona; La Grange, Georgia provides real-time, high-resolution ground maps; development and production of Head Up Display This group specializes in the development and (HUD) for Sweden's JAS-39 Gripen production of advanced tactical guided missile systems. Associated fields of interest include missile fighter-attack-reconaissance aircraft; development of guidance and propulsion systems, missile launch laser radar, teamed with General Dynamics, for the equipment, and ancillary subsystems and Cruise Missile Advanced Guidance Demonstration components', production of tiie Phoenix (AIM-S4C) Program; development of the Airborne Shared long air-to-air missile; and production of the Aperture Program to integrate radar, electroiuc Tube-launched, Optically-tracked, Wire-guided countermeasures, and electronic support measures (TOW) heavy antitank missile. The Missile Systems into one system; and modification of die AWG-9 Group also has a contract to develop a wireless weapons control syston on the F-14. version. The group also produces the Maverick (AGM-65DF/F/G) air-to-giound missile for the Air Force and Marine Corps with Raytheon as the second source; tiae AMRAAM (AIM-120A) Advanced Space and Communications Group: El Segundo, Medium-Range Air-to-Air MissUe, which replaces the California Sparrow (AIM-7) with Raytheon again as the second source. The AMRAAN^[ program also includes This group specializes in the development and defense systems, land combat systems, missile production of eartii satellites tar telecommunications, development, naval systems, and strike systems; earth observation, and meteorology; and payloads for production of the Angle Rate Bombing Set (AKBS) space exploratiotu Additional responsibilities include for improving day and night bombing accuracy for deep-space communications equipment Supporting

capabilities include sophisticated antenna systems programs, and technology support. Additional design; hydraulic, mechanical and thrust-generating development and production include guidance components for space station keepiag and altitude electronic assemblies for the Trident 11, thermal control; space-qualified microwave and electronics imaging and laser range finders for the M-1 tank, a components; and space environmental test facilities. thermal imaging system for the F/A-18 Hornet, a Other activities include development and production turret-mounted night vision system for U.S. customs, of commercial systems, defense information systems, day-night vision sights for the TOW missile, a Marine government electronic systems, product operations, Corps laser target-pinpointing device, an advanced and systems applications; new work with INTELSAT; carbon dioxide laser radar, a small-package advanced development of a space battery; preliminary design for the National Test Bed; and production of Ireland computer, the IMPRINT beyond visual range aircraft and Japan's first conmiercial communications sateUite identification, laser range finders, the Sea Lite Beam systems. Director (SLBD), a thermal imaging system for the army's Cobra helicopter, and the TOW weapon subsystem for the army's Bradley Fighting Vehicle. Ground Systems Group: Fullerton, California

This group develops and produces automated Support Systems: Long Beach, California command-and-control and tactical air defense environment systems, civilian air traf^c control This group designs and fabricates test equipment and systems, communications systems and equipment, training and engineering simulators. It provides radar systems, electronic warfare systems, sonar integrated logistic support of aerospace products, systems and sonar-guided torpedos, data processing including field engineering, field installation and and display systems, land mine warfare systems, modification, repairs, provisions, and training and command-and-control systems, quality systems, technical publications. It also performs range systems operations systems, software engineering, and engineering, site activation and operation, field training systems. It also is involved in the service and support, support program development, development and production of the UYQ-21 navy and develops test and training systems. Additional tactical display system, an automated air traffic development and production includes the weapons control system for Korea, and air defense radars for tactics trainer for die F/A-18 Hornet, a simulator for Norway. It has a development contract for the Advanced Tactical Fighter (ATF), the replacement of the U.S. air traffic control system and REALSCENE high-resolution, real-time visual and is involved in the production and development of sensor system. Weapon Systems Test Sets for the weapon control display systems for the navy, the army's Enhanced Position Location Reporting System Marine Corps, and TOW testing for the Bradley (EPLRS), a sonar based on low-frequency acoustic Fighting Vehicle. sensors, TPQ-36 radar, TPQ-37(V)4 radar, Surveillance Towed Assay Sonar Systems, electronics for a battlefield mine, and SLQ-17A Naval Electronic Research Laboratories: Malibu, California Warfare system. This group engages in long-range applied research, principally in physics and electronics. Major areas of Electro-Optical and Data Systems Group: El research include sohd-state microwave devices and Segundo, California circuits; submicron microelectronics, VLSI techniques, and gallium arsenide (GaAs) integrated This group engages principally in the development circuits; ion beam technology, including ion and production of electro-optical sensors and fire propulsion systems; lasers and electro-optical control systems for use in space, airborne, and surface applications; tactical and high-energy laser systems; components; fiber and integrated optics; materials for and aerospace computers, signal and data processors, infrared sensors; pattem recognition and artificial and software systems. Additional responsibilities intelligence systems; display devices; and new include design and manufacturing of components, electronic materials. The group also engages in materials, and processes. Advanced tactical programs, chemical physics, exploratory studies, ion physics, product operations, software engineering, space and optical circuits, optical physics, plasma physics, and strategic systems, tactical engineering, tactical silicon integrated circuits.

Santa Barbara Research Center: Goleta, California This group engages in advanced infrared technology, SUBSIDIARIES electro-optical technology, and fire sensing and suppression systems. North America Industrial Electronics Group: Torrance, California Advanced Electronics Systems International (United This group develops and produces advanced systems States) components and equipment used in a variety of Delco Electronics Corporation (United States) scientific, industrial, military, and commercial Delco Electronics Overseas Corp. (United States) applications. Broad areas of interest include Delco Electronics Service Corp. (United States) microwave and millimeter-wave instruments, devices, ESAL Company (United States) components, and systems; image sensing; storage and Hughes Advanced Systems Company (United States) display devices; industrial and commercial lasers; Hughes-Aircraft Alabama (United States) production and automation equipment, multiplex wire Hughes Aircraft Co. Inc. (United States) and secure voice communication systems; hybrid Hughes Aircraft Company (United States) microcircuits; connectors and cable assemblies; solar Hughes Aircraft Holdings Canada Inc. (Canada) cells; high-power, high-frequency traveling wave Hughes Aircraft International Services Co. (United tubes; memory modules for high-speed computers; States) microwave iotegrated circuits for phase-array radars Hughes Aircraft Mississippi Inc. (United States) using GaAs; and high-power hylvid microcircuits. Hughes Aircraft South Carolina (United States) Hughes Aircraft Systems Canada Ltd. (Canada) Microelectronics Center: Carlsbad, California; Hughes Aircraft Systems International (United States) Newport, California Hughes Communications Inc. (United States) Hughes Foreign Sales Corp. (U.S. \^gin Islands) This center develops and produces custom and Hughes Georgia Inc. (United States) semicustom monolithic integrated circuits, including Hughes International Lie. (United States) gate arrays, very high-speed integrated circuit Hughes International Sales Corp. (United States) (VHSIC) class and other VLSI devices, and infrared Hughes Investment Management Co. (United States) focal plane components. Hughes Missiles Electronics (United States) Hughes Nadge Corp. (United States) Other Industrial Electronics Group Facilities: Hughes Network Systems Inc. (United States) Hughes Optical Products Inc. (United States) Irvine, California—This site has two facilities, one to Hughes Simulation Systems Inc. (United States) develop and manufacture connecting devices and Hughes Systems International (United States) one to develop and manufacture microelectronic Hughes Technical Services Co. (United States) systems. Hughes Training Systems, Inc. (United States) Carlsbad, California—^This site develops and International Electronics Systems (United States) produces industrial products. L-T Ranches Inc. (United States) Newport Beach, California—This site develops and MDP Ltd. (United States) produces microelectronic circuits. Rediffusion Commercial Simulation Inc. (United States) Rediffusion Simulation (Canada) Inc. (Canada) Rediffusion Simulation Inc. (United States) MANUFACTURING Santa Barbara Research Center (United States) Spectrolab Inc. (United States) LOCATIONS—DELCO ELECTRONICS Systems Building Corp. (United States) CORPORATION Kokomo, Indiana Europe The £>elco Systems Operating Group (DSO) produces Atlantic Satellites Ltd. (Ireland) computers, guidance, navigation, and avionics DCC Ltd. (United Kingdom) systems for commercial and military air and space Hughes Information Systems (Netherlands) vehicles, as weU as armament systems for armored Hughes (U.K.) Ltd. (England) vehicles. Husint S.A. (Switzerland) SCA & ©1990 Dataquest Incorporated 0006806 GM Hughes Electronics Corporation

Asia/Pacific 1988 GM Singapore Pte. Ltd. (Singapore) Honeywell Hughes Aircraft acquired Honeywell's Training ROW and Control Systems Division, one of the country's leading providers of electronic-simulation-based Dehios S.A. de S.V. (Mexico) military training systems.

7957

ALLIANCES, JOINT VENTURES, AND MA-Comm LICENSING AGREEMENTS GM Hughes Electronics acquired M/A-Comm Telecommunications, a satellite communications company, for $105 million. The acquired company 1989 is to operate tmder the name Hughes Network Systems as a division of Hughes Aircraft. Perkin-Elmer Hughes Aircraft and the Perkin-Elmer Corporation signed an agreement whereby Hughes is to pur chase Perkin-Elmer's Electro-Optics Technology Division (EOTD), a leading provider of electro- optical systems for specialized scientific and mili KEY OFFICERS tary applications. GM Hughes Electronics Corporation 1987 Robert J. Schultz Tektronix Chairman, president, and chief executive ofhcer Delco Electronics Corporation and Tektronix's Liquid Crystal Shutter Strategic Program Unit Donald J. Almquist (LCS SPU) entered into a joint technology Executive vice president and director development agreement The technology partner Malcom W. Currie ship gives Delco Electronics the exclusive license to use Tektronix LCS SPU's liquid crystal shutter Executive vice president and director display technology in automotive instrument panels. Hughes Aircraft Company Malcom R. Currie Chairman and chief executive officer MERGERS AND ACQUISITIONS D. Kenneth Richardson President, chief operating o£Gicer, and director 1989 James A. Abrahamson Executive vice president Sytek Hughes Aircraft acquired Sytek, Inc. from Michael T. Smith General Instrument Corporation. Senior vice president, chief tinancial officer, Western Union director Hughes Aircraft acquired Western Union Corpora tion's Westar communication sateUite system. The Delco Electronics Corporation agreement was subject to approval of the Federal Communications Commission, which was granted Donald J. Almquist in November 1989. Westar includes three satellites Chairman, president, and chief executive officer in orbit and one yet to be launched. Hughes already operates three satellites as the Galaxy sys Harry G. Olsen tem, which primarily services cable TV and radio. '^ce president, chief financial officer, director

Table 4 Comprehensive Financial Statement Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $3,062.3 $3,328.4 $4,126.3 $4,526.4 $4,533.6 Cash 142.8 260.5 731.3 698.3 652.4 Receivables 769.2 779.4 908.2 903.6 937.7 Maiketable Securities . . . 7.5 3.6 Inventory 616.6 633.8 664.0 783.9 795.4 Other Current Assets 1,533.7 1,654.7 1,822.8 2,133.1 2,144.5 Net Property, Plants $2,529.2 $2,767.2 $2,750.6 $2,805.0 $2,991.8 Other Assets $4,293.7 $4,286.3 $4,249.7 $4,476.4 $4,674.7 Total Assets $9,885.2 $10,381.9 $11,126.6 $11,807.8 $12,200.1 Total Current Liabilities $2,960.9 $2,946.2 $3,427.3 $3,424.3 $3,197.3 Long-Term Debt $261.7 $353.0 $168.4 $285.1 $270.5 Other Liabilities $296.7 $393.0 $459.5 $548.4 $834.1 Total Liabilities $3,519.3 $3,692.2 $4,055.2 $4,257.8 $4,301.9 Total Shareholders' Equity $6,365.9 $6,689.7 $7,071.4 $7,550.0 $7,898.2 Converted Preferred Stock . - - - - Common Stock 6,365.9 6,365.9 6,365.9 6,365.9 6,365.9 Other Equity - - 3.3 3.6 7.4 Retained Esumings - 323.8 702.2 1,180.5 1,524.9 Total Liabilities and Shareholders' Equity $9,885.2 $10,381.9 $11,126.6 $11,807.8 $12,200.1 Income Statement 1985 1986 1987 1988 1989 Revenue $9,503.8 $10,440.0 $10,481.0 $11,243.6 $11,359.0 U.S. Revenue 8,468.1 9,327.2 9,263.3 9.855.4 9,828.6 Non-U.S. Revenue 1,035.7 1,112.8 1,217.7 1,388.2 1,530.4 Cost of Sales $7,586.0 $8,154.8 $8,035.5 $8,446.1 $8,521,3 R&D E^qiense $392.8 $408.1 $416.0 $550.9 $592.0 SG&A Expense $830.5 $851.5 $882.9 $1,094.4 $1,112.3 Capital Expense $744.0 $700.6 $469.4 $533.0 $648.5 Pretax Income $541.8 $811.2 $899.2 $983.9 $987.7 Pretax Margin (%) 5.70 7.77 8.58 8.75 8.70 Effective Tax Rate (%) 37.30 45.10 42.00 35.50 36.00 Net Income $339.8 $445.1 $521.1 $653.3 $632.4 Shares Outstanding, Millions 131.0 127.8 130.8 127.9 95.7 Per Share Data Earnings $1.22 $1.48 $1.67 $2.01 $1.94 Dividends - - - - - Book Value $48.59 $52.35 $54.06 $59.03 $82.53

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data)

Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (Times) 1.03 1.13 1.20 1.32 1.42 Quick (Times) 0.83 0.91 1.01 1.09 1.17 Fixed Assets/Equity (%) 39.73 41.37 38.90 37.15 37.88 Current Liabilities/Equity (%) 46.51 44.04 48.47 45.35 40.48 Total Liabilities/Equity (%) 55.28 55.19 57.35 56.39 54.47 Profitability (%) Return on Assets - 4.39 4.85 5.70 5.27 Return on Equity - 6.82 7.57 8.94 8.19 Profit Margin 3.58 4.26 4.97 5.81 5.57 Other Key Ratios R&D Spending % of Revenue 4.13 3.91 3.97 4.90 5.21 Capital Spending % of Revenue 7.83 6.71 4.48 4.74 5.71 Employees 105,000 102,000 100,000 97,000 75,000 Revenue ($K)/Employee $90.51 $102.35 $104.81 $115.91 $151.45 Capital Spending % of Assets 7.53 6.75 4.22 4.51 5.32

Somce: GM Hughes Annual Reports and Farms 10-K Dataquest 1990

Table 1 Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars) 1984 1985 1986 1987 1988 Total Semiconductor 15 33 50 69 137 Total Integrated Circuit 12 30 49 68 136 Bipolar Digital (Function) 1 7 14 22 32 Bipolar Digital Memory Bipolar Digital Logic 1 7 14 22 32 MOS (Function) 1 5 5 20 63 MOS Memory 1 27 MOS Microdevices 1 2 1 1 4 MOS Logic 2 4 19 32 Analog 10 18 30 26 41 Total Discrete 3 3 1 1 , 1 Total Optoelectronic Table 2 Goldstar Semiconductor, Ltd. 1988 Worldwide Ranking by Semiconductor Markets (Revenue in Millions of Dollars)

Sales Industry 1988 1987 • 1988 % Change % Change Rank Rank Revenue1 1987-1988 1987-1988 Total Semiconductor 45 63 $137 98.6% 33.0% Total Integrated Circuit 40 54 $136 100.0% 37.4% Bipolar Digital (Function) 18 22 $ 32 45.5% 9.2% Bipolar Digital Logic 18 22 32 45.5% 9.0% MOS (Function) 47 61 $ 63 215.0% 54.5% MOS Memory 33 52 27 N/A 93.1% MOS Microdevices 44 46 4 300.0% 3 9.9% MOS Logic 41 47 32 68.4% 29.2% Analog 37 40 $ 41 57.7% 16.0% Total Discrete 45 45 $ 1 0 14.4%

N/A = Not Applicable

Source: Dataquest December 1989

Table 3 Goldstar Semiconductor, Ltd. Estimated 1988 Semiconductor Revenue by Geographic Region (Millions of Dollars)

U.S. Japan Europe ROW

Total Semiconductor $39 $9 $4 $85

Total Integrated Circuit $39 $9 $4 $84

Bipolar Digital (Function) $ 2 $1 $1 $28 Bipolar Digital Memory Bipolar Digital Logic 2 1 1 $28

MOS (Function) $16 $8 $3 $36 MOS Memory 6 5 1 14 MOS Microdevices 4 MOS Logic 10 2 2 18

Analog $21 $20

Total Discrete $ 1

Total Optoelectronic

Source: Dataquest December 1989

Gould Microwave Products Division Established 1975 2580 Junction Avenue No. of Employees: N/A San Jose, CA, 95134 (408) 943-9055

BACKGROUND Gould, Inc., is an integrated worldwide electronics company. It develops, manufactures, and markets electronics-based systems, products, and components for key high-growth worldwide markets: information systems, industrial automation, instrumentation, defense systems, semiconductors, and other electronic components and materials. Its Dexcel Division was sold in 1985; it was renamed Hytek-Dexcel and is based in Sunnyvale, California.

COMPANY EXECUTIVES • President/CEO—Gerard McLamon ' • Marketing Director—Gus Jansons

ALLIANCES Not available

SERVICES • Packaging • High-reliability screening

PROCESS TECHNOLOGY • Recessed-gate GaAs MESFET; HEMT • VPE, ion implantation, air-bridge interconnections

PRODUCTS • GaAs MESFETs • EMTs • Military amplifiers

Applications • Military electronics • Communications hardware • Instrumentation

FACnJTIES Not available

Table 1 Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars)

1983 1984 1985 1986 1987 1988

Total Semiconductor 162 164 140 155 85 101

Total Integrated Circuit 162 164 140 155 85 101

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) 162 164 140 155 85 101 MOS Memory 42 29 12 11 8 15 MOS Microdevices 9 8 7 6 MOS Logic 111 127 121 138 77 86

Analog

Total Discrete

Total Optoelectronic

Table 2 Gould Semiconductor Division 1988 Worldwide Ranking by Semiconductor Markets (Revenue in Millions of Dollars)

Sales Industry 1988 1987 1988 % Change % Change Rank Rank Revenue 1987-1988 1987-1988

Total Semiconductor 58 56 $101 18.8% 33.0%

Total Integrated Circuit 50 47 $101 18.8% 37.4%

MOS (Function) 39 37 $101 18.8% 54.5% MOS Memory 39 38 15 87.5% 93.1% MOS Logic 29 23 86 11.7% 29.2%

Source: Dataguest December 1989

Table 3 Gould Semiconductor Division Estimated 1988 Semiconductor Revenue by Geographic Region (Millions of Dollars)

U.S. Japan Europe ROW

Total Semiconductor $96 $2 $3

Total Integrated Circuit $96 $2 $3

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) $96 $2 $3 MOS Memory 13 2 MOS Microdevices MOS Logic 83

Analog

Total Discrete

Total Optoelectronic

Source: Dataquest December 1989

Groupe Bull (Compagnie Des Machines Bull) 121, avenue de Malakoff 75764 Paris, Cedex 16, France Telephone: (1)45 02 90 90 Fax: Not Available Dun's Number: 05-180-2627 Date Founded: 1931

CORPORATE STRATEGIC DIRECTION a truly global company, targeting the US market with increased advertising efforts. The companies of Groupe Bull market a wide range of information systems equipment and related serv In 1990, BuU announced that it would reorganize into ices for scientific, industrial, commercial, and busi four operating companies. Under this new structure, ness applications in the public and private sectors. BuU SA (France) wiU have responsibiUty for develop Compagnie des Machines Bull (CMB) is 93 percent ment, manufacturing, and sales in France. BuU Inter owned by the French state. Groupe BuU was formed national N.V. wiU handle operations in Europe (ex in France in 1983 from the combination of cluding Italy and the United Kingdom), A&ica, Latin Cii HoneyweU-BuU with Sems, Transac, and R2E. America, and certain markets in Asia. BuU HN wiU continue to direct operations in the United States, Canada, Mexico, Italy, the United Kingdom, The financial results of Groupe Bull include those of Australia, and certain Southeast Asian markets. CMB, Bull SA, and Bull HN firan January 1, 1989. Zenith Data Systems is now in charge of develop The financial results of Zenith Data Systems, ment, manufacturing, and sales of the group's acquired firom Zenith Electronics Corporation at the microcomputer and workstation products worldwide. end of 1989, are reflected in the consolidated balance AU of BuU's current microcomputer activities wUl be sheet of Groupe Bull as of December 31, 1989, and transferred to Zenith Data Systems, which wiU con have no impact on the 1989 consolidated statement of tinue to operate as an independent entity with its own income of the group. R&D, manufacturing, and sales resources.

Groupe Bull's consolidated 1989 revenue rose to FFr BuU SA (France) focuses on the development of 32.7 billion (US$5.12 billion) in 1989, from open, distributed systems, and provides particular FFr 31.5 billion (US$5.3 billion) in 1988. Due to the market strengths with GCOS 7 proprietary platforms combined effects of slower growth in the global and solutions; UNIX-based systems developed with information technology maricet and the higher relative BuU HN through BuU XS, their jointly held subsidi market share of lower-margin products, the group ary; OSI networking and communications products; reported a net loss for the year of FFr 267 million, artificial intelligence; multimedia application solu (US$41.8 million) compared with net earnings of FFr tions; smart-card technology; and a range of peripher 303 million (US$50.8 million) in 1988. The net result als. BuU SA (France) revenue in 1989 increased includes a FFr 405 miUion (US$63.5 million) provi 3.5 percent over 1988, to FFr 20.1 bmion. BuU SA sion for restructuring, covering essentially the recent (Irrance) is responsible for the development, manufac operating and distribution work force reduction at turing, and sales of BuU systems in the French mar Bull SA, in order to adapt the group to the new ket It is 100 percent owned by CMB, the parent market environment Sales outside France represented company. 62.6 percent of revenue. (Percentage changes refer only to FFr amounts; US$ percentage changes will differ because of fluctuations in Dataquest exchange BuU International N.V., also 100 percent owned rates.) BuU has begun to make a strong impression as by CMB, has 6,000 employees.

BuU HN, headquartered in Billerica, Massachusetts, approach and conforms with relational and industry has 18,236 employees worldwide and markets to standards to form an open alliance with UNIX. customers in 28 countries. BuU HN is held by CMB (69.4 percent), Honeywell (15.6 percent), and NEC (15.0 percent). Since 1972, Groupe Bull, Honeywell, Succeeding the Bull DPS 7 line, the Bull DPS 7000 and NEC have worked cooperatively in several ven family (19 models) targets central computers of large tures. Through this arrangement, NEC contributes and medium-size businesses and distributed systems technological skills in high-end mainframe systems, for larger companies. Technology (CMOS/VLSI), while the newly acquired Honeywell Federal Sys decentralized architecture (up to six CPUs), and soft tems Group manages marketing and sales to the US ware provide high-performance and availability fea government tures to these mainframes. The Bull DPS 7000 is manufactured in three countries and marketed world Bull HN provides particular market strength in the wide. areas of GCOS 6 midrange and GCOS 8 large sys tems and solutions, UNK-based systems, CASE tools and fourth-generation languages, open-systems The Bull DPS 6000 range introduced in 1989 is software, database management, and transaction composed of four families that function within the processing. In 1989, Bull HN revenue totaled same operating system. Current models support US$2.15 billion, down from US$2.20 billion in 1988; between 4 and 300 users and offer a range of process net profit was US$1.1 millioiL ing power from 0.7 to 10.1 mips. The Bull DPS 6000 and GCOS 6 support multienvirormient communica Zenith Data Systems is responsible for all of Groupe tions, transaction processing, office automation, deci Bull's microcomputer activities: worldwide develop sion support, and applications development. The Bull ment, manufacturing, and sales of portable and DPS 6000 also provides operating compatibility with desktop computers and workstations. The Company the previous Bull DPS 6 and Mini 6 ranges. Many will focus on end-user computing, local area network models in the Bull DPS 6000 range offer compatibil ing, and development of future Extended Industry ity with the GCOS 6 and UNIX environments. The Standard Architecture (EISA) and Micro Channel Company estimates that 60,000 systems have been Architecture (MCA) products. Although 100 percent installed worldwide. owned by CMB, Zenith Data Systems operates as an independent entity within the group, retaining its own name yet remaining closely integrated within the The Bull DPX/2 product line has four product fami group's corporate identity. Zenith Data Systems has lies including the PC-compatible micioservers based 3,715 employees worldwide. on the Intel 80386 microprocessor, single and multiprocessor systems featuring the 68030 and More detailed information is available in Tables 1 68040 Motorola microprocessor, and the high-end, and 2, which appear after "Business Segment Strate RISC-based mainstream server. The Bull DPX/2 gic I^rection" and present corporate highlights and range is characterized by its compatibility with inter revenue by region. Information on revenue by distri national standards and recommendations such as X/ bution channel is not available. Tables 3 and 4, com OPEN, POSK, SVID, and ISO. It allows access to a prehensive financial statements, are at the end of diis large catalog of standard applications developed by profile. numerous specialized companies.

Relational Data Base Communication (RDBC)

BUSINESS SEGMENT STRATEGIC Relational Data Base Communication is an integrated DIRECTION decision support solution that combines advanced hardware, software, and firmware, and employs an iimovative parallel processing architecture built upon Mainframes low-cost, industry-standard microprocessors. RDBC GCOS 8, the proprietary operating system for the is available for BuU HN's large systems famUy oper medium to very large systems DPS 8000, DPS 90, ating under GCOS 8, including the DPS 8000, DPS and DPS 9000, fully supports the open systems 9000, and DPS 90 computers.

Communications and Networking Service and Support

Bull's networking infrastructure provides a flexible Bull HN's Customer Services operation, headquar environment to meet the needs of its users. Bull's tered in Newton, Massachusetts, provides all hard own architecture, ISO/DSA, provides a communica ware and software service for Bull HN's US cus tomers and specific international customers. The tions platform across the entire range of the group's division has over 250 field locations providing systems from micros and minis to medium- and optional on-site service, and more than a dozen large-enterprise systems. ISO/DSA uses the same walk-in/mail-in service and support centers. model on which the OSI standards are based, provid ing users with a smooth transition to OSI as standards evolve. In addition, comprehensive SNA interwork- UNIX-Based Products ing facilities are provided at aU levels, from simple terminal controllers to units emulating network Four groups handle marketing and sales within processors. For open systems and distributed comput Groupe Bull. However, a fifth arm of the Company ing environments, TCP/IP is being provided on all exists, which is dedicated to R&D and marketing of platforms to complete BuU's network offerings. UNIX-based products. Groupe Bull has made a strong commitment to UNIX. The fifth branch, BuU XS, which uniquely supports UNIX, was created in 1986. It is an autonomous group able to move more Application Software quickly in the demanding and rapidly changing UNIX market. BuU is working closely with the Open Soft Bull directs significant resources to the development ware Foundation (OSF) to integrate the distributed and acquisition of software applications running on computing enviromnent (DCE) concept into its the Company's small, medium, and large computer architecture. systems. Customized software packages also support applications in the fields of science, engineering, financial management, business, education, banking, The Company is stiU committed to developing and retailing, and the public sector. supporting the multifunction proprietary systems that define Bull's product line, but there is now a strong move toward open systems dedicated to specific applications within a business, such as payroll Market Sector Approach accounting. The implementation of the strategy of DCE will be one of synergy between the Bull propri Bull realizes the increasing importance of application etary GCOS operating system and the open systems. software and beheves that differentiation in this area The DCE concept supports and provides the commu- gives a supplier a competitive edge. Accordingly, nication link for different systems, even those of other Bull is focusing on five vertical markets—banking, companies, operating together as if they were one insurance, retail and distribution, manufacturing, and large, transparent system. the public sector—^with the declared objective of sourcing, either by development or acquisition, Globally, Bull has made a commitment of more than products that wiU meet end-user requirements. This US$100 million to its R&D of UNIX-based systems strategy applies across the entire range of Bull prod and to the idea of coimectivity to the multifimction uct offerings in relation to UNIX and proprietary GCOS systems and to IBM The new product line of platforms. UNIX-based systems runs under the operating system BuU Open Software (BOS) 2.0. This is based on AT&T UNIX System V with added features of BSD Personal Computers 4,3, and is XPG3PLUS- and POSIX-compUanL

In 1989, Zenith Data Systems introduced a new Other product, the MinisPort, to its line of portable com puters. The notebook-style computer became the C2 security and disk mirroring are two technical smaUest and lightest portable in the Company's line. features on which BuU has concentrated. The C2 In 1990, the Company introduced discounts on the level security features are available through the Secu- MinisPort and reduced the retaU prices of selected ri^ Option package, which provides help in planning, accessories and add-on memory for aU portable PCs. implementation, training, and support.

Table 1 Five-Year Corporate Highlights (Thousands of US Dollars) 1985 1986 1987 1988 1989 Total Revenue (Excluding Taxes) $1,793,882.9 $2,567,981.5 $3,006,856.1 $5,293,104.4 $5,123,931.4 Rental and Services Income $751,129.1 $1,072,002.0 $1,274,409.2 $2,237,699.7 $2,120,891.6

Net Eamings/(Loss) $12,274.3 $39,108.9 $37,471.0 $50,848.8 ($41,769.2)

Cash Flow (Net Earnings + Depreciation) $146,810.7 $251,218.9 $301,691.2 $475,765.3 $360,940.8

Expenditure for Property $258,669.2 $365,497.8 $374,910.5 $479,338.9 $486,020.4

Number of Employees 26,403.0 26,804.0 26,337.0 45,557.0 43,617.0 (Revenue/Employee) $67.9 $95.8 $114.1 $116.1 $117.4

Exchange Rate (US$l=FFr) FFr 8.98 FFr 6.93 FFr 6.01 FFr 5.96 FFr 6.38 Source: Gnnipe Bull Annual Reports and Foouf 10-K Dataqoest (1990) Table 2 Revenue by Geographic Region (Percent)

Region 1988 1989 Western Europe 75.00 75.00 North America 18.00 18.00 Other Areas 7.00 7.00 Source: Cioupe Bull Anmial Repons and Foims 10-K Dataquest (1990)

SOFOM, SA (France) BuU International N.V. (Netlierlands) 1989 SALES OFFICE LOCATIONS Bull Data Systems N.V. (Nedierlands) European Computer Industry Research (France) North America—^50 Europe—48 Asia/Pacific—13 ROW—77 ALLIANCES, JOINT VENTURES, AND LICENSING AGREEMENTS MANUFACTURING LOCATIONS 1989 North America SAS Institute Lawrence and Brighton, Massachusetts (Bull HN) The SAS Instimte and Groupe Bull signed an agreement to jointly develop fourth-generation Phoenix, Arizona (Bull HN) software tools for Bull systems. St Joseph, Michigan (Zenith Data Systems) Motorola Bull signed a licensing agreement with Motorola to Europe have components of its CP8 smart cards manufac tured and marketed by Motorola. Angers/Joue-les-Tours, France (Bull SA) Information Builders Barcelona, Spain (Bull SA) Groupe Bull signed a contract with Information Builders to market its fourth-generation language, Belfort, France (Bull SA) FOCUS, on ttie GCOS 7 and 8 product lines. Milan (Caluso), Italy (Bull HN) Arthur Andersen and Co. Newhouse, Scotland (Bull HN) Arthur Andersen and Co. and BuU concluded a global agreement on the development and market Trappes, France (Bull SA) ing of Andersen's Foundation Software Engineer ViUeneuve d'Ascq, France (BuU SA) ing Workshop for GCOS 7 and 8. Mannesman Tally ROW Mannesman Tally is to supply Bull with eight ink Contagem, Brazil (Bull SA) jet and laser printer models on an OEM basis to Bangalore, India (Bull SA) complement Bull's dot matrix machines. Convergent Technologies Convergent Technologies and Bull renewed cooperation agreements for the development, SUBSIDIARIES manufacture, and sale of BuU Questar 400 work stations. North America Cycare Systems Bull HN Information Systems Inc. (United States) Cycare Systems, a health care VAR, contracted with BuU HN to seU BuU DPS 6, 6 PLUS, and Europe XPS-100 UNIX-based systems.

Subsidiaries of CMB (France) GOSSNAB (Soviet Unions's State Committees for Supplies) Bull SA (France) Bull re-signed cooperation agreements with OGIC (Omnium de Gestion de Valeurs bidustrielles GOSSNAB for progressive computerization of the et Commerciales) (France) USSR's regional distribution centers.

MIPS Computer Systems Roland Pampel Bull selected MlPS-supplied RISC technology for President and chief executive officer. Bull HN; its high-end UNIX-based systems. chairman, 2^mth Data Systems; and senior execu tive vice president, Groupe Bull Relational Technology International Bull and Relational Technology agreed to joindy Didier RuflTat produce and market the Ingres relational database President and chief executive officer, Bull Interna system of the BuU DPX 2000 and DPX/2 UNIX- tional N.V. based platforms. Michel Bloch 3Com Corp. Executive vice president. Corporate Strategy and Bidl Australia contracted with 3Com to manufac Planning ture 20,000 computer network workstations for 3Com over the next four years. Carlo Peretti Chairman and chief executive officer, BuU HN NEC Italy In the United States, NEC manufactures very large CPUs for Groupe Bull. Jean-Claude Albrecht President and chief executive officer. Bull SA Olivetti France Bull and Olivetti conducted joint-venture activities in banking and secure infonnation systems and Jean Segonds ATM manufacturing operations. Executive vice president. Group Marketing France Telecom Ward MacKenzie France Telecom and Groupe Bull agreed to work Executive vice president. Group Product Lines jointly to extend and expand Bull's worldwide Management telecommunications network integrating voice and data. Jacques Weber Executive vice president. Group Systems Integra The Hungarian Videoton group tion The Hungarian Videoton group and Groupe Bull signed an accord marking their intention to estab John Frank lish an industrial and commercial partnership in President and chief executive officer. Zenith Data information systems. Systems

MERGERS AND ACQUISITIONS PRINCIPAL INVESTORS

Infonnation is not available. 1989 Zenith Electronics Corporation Groupe Bull acquired the computo- business of Zenith Electronics Corporation, including Zenith Data Systems. FOUNDERS

Information is not available.

KEY OFFICERS

Francis Lorentz Chairman and chief executive officer, Groupe BuU

Table 3 Comprehensive Financial Statement* Fiscal Year Ending December (Thousands of US Dollars)

Balance Sheet—^Assets 1987 1988 1989 Property Land $25,100.3 $30,781.2 $31,510.0 Biiildings $377,415.5 $550,327.2 $570,388.2 Machinery/Equipment $911,026.1 $1,559,123.8 $1,508,714.8 Less: Depreciation ($549,317.1) ($1,099,142.1) ($1,082,166.3) Net $764,224.8 $1,041,090.1 $1,028,446.8 Rental Equipment $666,391.8 $1,033,000.0 $929,372.5 Less: Depreciation ($384,059.4) ($605,230.4) ($549,672.9) Net $282,332.4 $427,769.6 $379,699.7 Total $1,046,557.2 $1,468,859.7 $1,408,146.4 Investments Goodwill $45,826.8 $43,621.8 $200,037.0 Investments $167,677.7 $45,657.0 $44,809.6 Other $19,229.1 $45,152.7 $90,684.5 Total $232,733.6 $134,431.5 $335,531.0 Inventories $391,129.5 $712,808.6 $961,962.3 Other Current Assets Trade Receivables $698,968.2 $1,348,455.4 $1,615,943.0 Capital Subscribed $49,388.2 0 0 Other Receivables $111,376.7 $163,316.6 $168,967.7 Market Securities $383,318.0 $641,685.1 $306,703.6 Cash $40,176.5 $66,687.6 $67,487.0 Total $1,283,227.6 $2,220,144.6 $2,159,101.3 Total Assets $2,953,647.9 $4,536,244.5 $4,864,741.0

Table 3 (Continued) Comprehensive Financial Statemenf" Fiscal Year Ending December (Thousands of US Dollars)

Balance Sheet—Liabilities 1987 1988 1989 Stockholders' Equity Common Stock $802,707.3 $809,446.6 $906,539.8 Additional Paid-in Capital $13,844.1 $13,965.3 $13,033.8 Retained Earnings ($434,461.4) $7,037.9 ($35,200.8) Translation Adjustment $31,901.0 $26,305.4 $19,451.8 Total $805,006.0 $856,755.2 $903,824.6 Undated Subordinate Notes 0 $199,851.0 $161,812.9 Minority Interest $7,750.4 $133,921.8 $130,200.8 Long-Term Debt $804,008.5 $1,085,967.6 $1,303,060.8 Provisions $253,504.3 $291,073.5 $270,311.3 Deferred Taxes $6,936.8 $16,468.6 $11,730.5 Current Liabilities Trade Payables $413,939.9 $594,359.2 $72,507.4 Customer Advances $62,006.7 $67,865.8 $58,795.8 Income Taxes $8,132.6 $47,534.7 $18,718.4 Deferred Income $5,905.8 $9,664.1 $7,490.0 Accrued Liabilities $459,097.7 $818,862.4 $820,148.6 Current Maturities $56,617.5 $143,876.7 $182,289.4 Advance Contributions of French State 0 $168,632.6 $6,491.9 Short-Term Borrowing $45,777.7 $56,418.0 $179,770.1 Bank Overdrafts $24,964.1 $44,993.3 $84,597.7 Total $1,076,441.9 $1,952,206.7 $2,083,800.2 Total Liabilities $2,953,647.9 $4,536,244.5 $4,864,741.0

Table 3 (Continued) Comprehensive Financial Statement* Fiscal Year Ending December (Thousands of US Dollars)

Statement of Earnings 1987 1988 1989 Sales $1,732,446.9 $3,055,404.7 $3,003,039.8 Rental, Service, and Odier $1,274,409.2 $2,237,699.7 $2,120,891.6 Total Revenue $3,006,856.1 $5,293,104.4 $5,123,931.4 Cost of Revenue ($1,754,614.1) ($2,935,246.6) ($2,916,386.6) Gross Margin $1,252,241.9 $2,357,857.7 $2,207,544.8 R&D ($258,159.6) ($536,396.1) ($459,356.2) G&A ($912,991.0) ($1,613,892.1) ($1,646,251.8) Earnings from Operations $81,091.3 $207,569.5 $101,936.7 Interest Expense ($140,618.6) ($162,868.8) ($166,984.3) Interest Income $40,369.7 $56,732.2 $57,990.3 Other Income/(Expense) $52,353.6 $4,386.2 ($20,498.4) Earnings Before Taxes $33,196.0 $105,819.1 ($27,555.7) Provision for Income Taxes ($80,435.4) ($63,804.7) ($28,343.6) Extraordinary Credit $74,500.0 $13,161.4 $16,937.7 Equity in Net Earnings $11,586.4 ($2,783.2) ($4,064.2) Minority Interests ($1,375.9) ($1,543.8) $1,256.7 Net Eaniings/(Loss) $37,471.0 $50,848.8 ($41,769.2) Exchange Rate (US$l=FFr) FFr 6.01 FFr 5.96 FFr 6.38

*As a result of reorganization and acquisitions, restated financial Source: Groupe Bull information prior to 1987 is not available. Annual Reports and Forms 10-K Dataquest (1990)

Table 4 Comprehensive Financial Statement* Fiscal Year Ending December (Thousands of French Francs)

Balance Sheet—^Assets 1987 1988 1989 Property Land FFr 150,853.0 FFr 183,456.0 FFr 201,223.0 Buildings FFr 2,268,267.0 FFr 3,279,950.0 FFr 3,642,499.0 Machineiy/Equipment FFr 5,475,267.0 FFr 9,292,378.0 FFr 9,634,653.0 Less: Depieciation (FFr 3,301,396.0) (FFr 6,550,887.0) (FFr 6,910,714.0) Net FFr 4,592,991.0 FFr 6,204,897.0 FFr 6,567,661.0 Rental Equipment FFr 4,005,015.0 FFr 6,156,680.0 FFr 5,934,973.0 Less: Depreciation (FFr 2,308,197.0) (FFr 3,607,173.0) (FFr 3,510,211.0) Net FFr 1,696,818.0 FFr 2,549,507.0 FFr 2,424,762.0 Total FFr 6,289,809.0 FFr 8,754,404.0 FFr 8,992,423.0 Investments Goodwill FFr 275,419.0 FFr 259,986.0 FFr 1,277,436.0 Investments FFr 1,007,743.0 FFr 272,116.0 FFr 286,154.0 Other FFr 115,567.0 FFr 269,110.0 FFr 579,111.0 Total FFr 1,398,729.0 FFr 801,212.0 FFr 2,142,701.0 Inventories FFr 2,350,688.0 FFr 4,248,339.0 FFr 6,143,091.0 Other Current Assets Trade Receivables FFr 4,200,799.0 FFr 8,036,794.0 FFr 10,319,412.0 Capital Subscribed FFr 296,823.0 Other Receivables FFr 669,374.0 FFr 973,367.0 FFr 1,079,028.0 Market Securities FFr 2,303,741.0 FFr 3,824,443.0 FFr 1,958,609.0 Cash FFr 241,461.0 FFr 397,458.0 FFr 430,972.0 Total FFr 7,712,198.0 FFr 13,232,062.0 FFr 13,788,021.0 Total Assets FFr 17,751,424.0 FFr 27,036,017.0 FFr 31,066,236.0

Table 4 (Continued) Comprehensive Financial Statement* Fiscal Year Ending December (Thousands of French Francs)

Balance Sheet—LiabiUties 1987 1988 1989 Stockholders' Equity Common Stock FFr 4,824,271.0 FFr 4,824,302.0 FFr 5,789,163.0 Additional Paid-in Capital FFr 83,203.0 FFr 83,233.0 FFr 83,234.0 Retained Earnings (FFr 2,611,113.0) FFr 41,946.0 (FFr 224,792.0) Translation Adjustment FFr 191,725.0 FFr 156,780.0 FFr 124,219.0 Total FFr 4,838,086.0 FFr 5,106,261.0 FFr 5,771,824.0 Undated Subordinate Notes FFr 0.0 FFr 1,191,112.0 FFr 1,033,337.0 Minority Interest FFr 46,580.0 FFr 798,174.0 FFr 831,462.0 Long-Term Debt FFr 4,832,091.0 FFr 6,472,367.0 FFr 8,321,346.0 Provisions FFr 1,523,561.0 FFr 1,734,798.0 FFr 1,726,208.0 Deferred Taxes FFr 41,690.0 FFr 98,153.0 FFr 74,911.0 Current Liabilities Trade Payables FFr 2,487,779.0 FFr 3,542,381.0 FFr 463,032.0 Customer Advances FFr 372,660.0 FFr 404,480.0 FFr 375,470.0 Income Taxes FFr 48,877.0 FFr 283,307.0 FFr 119,536.0 Deferred Income FFr 35,494.0 FFr 57,598.0 FFr 47,831.0 Accrued Liabilities FFr 2,759,177.0 FFr 4,880,420.0 FFr 5,237,469.0 Current Maturities FFr 340,271.0 FFr 857,505.0 FFr 1,164,100.0 Advance Contiib. of Fr. State 0 FFr 1,005,050.0 FFr 41,457.0 Short-Term Borrowing FFr 275,124.0 FFr 336,251.0 FFr 1,148.012.0 Bank Overdrafts FFr 150,034.0 FFr 268,160.0 FFr 540,241.0 Total FFr 6,469.416.0 FFr 11,635,152.0 FFr 13,307,148.0 Total LiabiUties FFr 17.751,424.0 FFr 27,036,017.0 FFr 31,066,236.0

l^ble 4 (Continued) Comprehensive Financial Statement* Fiscal Year Ending December (Thousands of French Francs)

Statement of Earnings 1987 1988 1989 Sales FFr 10,412,006.0 FFr 18,210,212.0 FFr 19,177,412.0 Rental, Service, and Other FFr 7,659,199.0 FFr 13,336,690.0 FFr 13,544,014.0 Total Revenue FFr 18,071,205.0 FFr 31,546,902.0 FFr 32,721,426.0 Cost of Revenue (FFr 10,545,231.0) (FFr 17,494,070.0) (FFr 18,624,045.0) Gross Margin FFr 7,525,974.0 FFr 14,052,832.0 FFr 14,097,381.0 R&D (FFr 1,551,539.0) (FFr 3,196,921.0) (FFr 2,933,449.0) G&A (FFr 5,487,076.0) (FFr 9,618,797.0) (FFr 10,512,964.0) Earnings from Operations FFr 487,359.0 FFr 1,237,114.0 FFr 650,968.0 Interest Expense (FFr 845,118.0) (FFr 970,698.0) (FFr 1,066,362.0) Interest Income FFr 242,622.0 FFr 338,124.0 FFr 370,326.0 Other Income/(Expense) FFr 314,645.0 FFr 26,142.0 (FFr 130,903.0) Earnings Before Taxes FFr 199,508.0 FFr 630,682.0 (FFr 175,971.0) Provision for Income Taxes (FFr 483,417.0) (FFr 380,276.0) (FFr 181,002.0) Extraordinaiy Credit FFr 447,745.0 FFr 78,442.0 FFr 108,164.0 Equity in Net Earnings FFr 69,634.0 (FFr 16,588.0) (FFr 25,954.0) Minority Interests (FFr 8,269.0) (FFr 9,201.0) FFr 8,025.0 Net Bamings/QLoss) FFr 225.201.0 FFr 303,059.0 (FFr 266,738.0) Exchange Rate ($USl=FFr) FFr 6.01 FFr 5.96 FFr 6.38

*As a resnlt of recngaiiization and acquisitiaiis, restated financial Sonice: Gionpe Bull infonnation prior to 1987 is not available. Annual Rq)orts and Foims 10-K Dataqoest (1990)

Grumman Corporation 111 Stewart Avenue Bethpage, New York 11714-3580 Telephone: (516) 575-0574 Fax: (516) 575-2311 Dun's Number: 17-267-2040 Date Founded: 1929

CORPORATE STRATEGIC DIRECTION • $44.6 milUon with the navy for F-14 and E-2C aircraft • $60.7 million with the Department of Defense to Grumman Corporation was founded in 1929 under upgrade the Defense Logistics Center computer the name Grumman Aircraft Engineering Corpora system tion. Grumman is a parent company with high-tech operating units concentrated in the defense, factory More detailed information is available in Tables 1 and automation, high-tech service, software, subassembly, 2, which appear after "Business Segment Strategic test and measiuement, telecommunications, and trans Direction" and present corporate highlights and reve portation industries. In 1985, Grumman decided to nue by region. Information on revenue by distribution restructure die Company by rearranging its segments channel is not available. Table 3, a comprehensive to better represent the predominant activities. These financial statement, is at the end of this profile. segments are aerospace, electronic systems, special- purpose vehicles, and information and other services.

Total revemie decreased 2.5 percent firom$3.6 5 bil BUSINESS SEGMENT STRATEGIC lion* in fiscal year 1988 to $3.56 billion in fiscal year DIRECTION 1989. Grumman attributes the loss to fewer aircraft deliveries and the winding down of the F-14 and A-6 Aerospace Segment development programs in the aerospace segment Net income of $67.3 million for flscal year 1989 The aerospace segment generates die greatest amount represented a 22.2 percent decrease fix>m fiscal year of Grumman's sales, accoimting for 63.8 percent of total revenue in fiscal 1989, 64.7 percent in fiscal 1988. Grumman employed 28,900 people during 1988, and 65.4 percent in 1987. Grumman's 1989. aerospace segment designs and produces military aircraft, space systems, and commercial aircraft com The US government and its agencies contributed ponents and subassemblies. It also modernizes and $3.1 billion, $3.2 billion, and $2.9 billion, respective converts previously completed aircraft Products ly, to Grumman's total sales in fiscal years 1989, manufactured for the US government include the 1988, and 1987. These figures represent 86, 89, and F-14 Tomcat fighter, die EA-6B Prowler Electronic 85 percent, respectively, of total sales. Among the Aircraft, die A-6 Intruder attack aircraft, the E-2C many continuous contracts Grumman has with die US Hawkeye early warning aircraft, and the C-2A Grey- government are the following: hoimd carrier on-board dehvery system. Each of these aircraft systems integrates advanced electronic detec • $218.9 million with the navy for F-14D aircraft tion, attack and countermeasures equipment, all- • $125 million widi the navy for 12 F-14D fighters weather capability, and short take-off and landing • A four-year, $56.7 million contract with the army characteristics. The F-14 Tomcat fighter also pos for the Integrated Family of Test Equipment sesses a variable-sweep wing configuration and (IFTE) advanced radar, can carry Phoenix missiles, and can • $104.4 million with the navy for 6 E-2C tactical track 24 targets simultaneously. The E-2C Hawkeye control aircraft is the only military aircraft that Grumman markets to foreign governments such as Israel, Japan, Egypt, and *AU dollar amounts are in US dollats. Singapore.

Electronic Systems Segment designs and manufactures firefighting vehicles. The special-purpose vehicles segment represented The electronic systems segment accounted for 10.1 percent of Grumman's total revenue in fiscal 11.2 percent of Grumman's total revenue in fiscal 1989, 9.3 percent in fiscal 1988, and 6.6 percent in 1989, 12.6 percent in fiscal 1988, and 16.2 percent in fiscal 1987. fiscal 1987. The segment designs, manufactures, and integrates sophisticated electronics for aircraft, com puterized test equipment, and other defense-related Information and Other Services Segment products including airbome surveillance systems. The primary project in the electronic systems segment is Grumman's information and other services segment the Joint Surveillance Target Attack Radar (JSTAR) designs, develops, installs, operates, and supports system, which currently is an $850 miUion joint computer systems for scientific and management contract for the US Air Force and Army. Its second information. The segment provides electronic data largest project is the army's next generation of auto processing services for affiliates and other customers matic test equipment, the IFTE. The IFTE will be as well as real estate, insurance, and leasing services. used to diagnose the electronics problems of equip It also supphes technical services that aid the space ment in the field and in depot repair centers and the shuttle's flight, provides space station program sup factories of weapons systems manufacturers. The port, and services and Tnainfains flight simulators and IFTE's adaptability to the army's wide range of sys trainers diat support Grumman aircraft This segment tems eliminates the need for separate testers. accounted for 14.9 percent of Gnmunan's total reve nue in fiscal year 1989, 13.4 percent in 1988, and 11.8 percent in 1987. Special-Purpose Vehicles Segment

Grumman's special-purpose vehicles segment Further Information manufactures aluminum truck bodies that are mounted on purchased chassis and sold as delivery For more information on Grumman's business seg vans. In 1989, the segment was expected to produce ments, please contact Dataquest's Semiconductor 18,951 vehicles for the US Postal Service. It also Applications Markets.

l^ble 1 Five-Year Corporate Highlights (Thousands of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue $3,098,865.0 $3,501,911.0 $3,375,260.0 $3,648,892.0 $3,558,820.0 Percent Change 13.01 (3.62) 8.11 (2.47)

Capital Expenditure $170,967.0 $195,756.0 $177,700.0 $118,119.0 $65,725.0 Percent of Revenue 5.52 5.59 5.26 3.24 1.85

R&D Expenditure $158,695.0 $167,085.0 $149,350.0 $122,265.0 $114,563.0 Percent of Revenue 5.12 4.77 4.42 3.35 3.22

Number of Employees 32,000 33,400 33,700 32,000 28,900 Revenue ($K)/Employee $96.84 $104.85 $100.16 $114.03 $123.14

Net Income $81,535.0 $78,690.0 $35,650.0 $86,465.0 $67,264.0 Percent Change (3.49) (54.70) 142.54 (22.21)

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $905,376.00 $881,445.00 $905,389.00 $866,610.00 Quarterly Profit $16,027.00 $19,538.00 $16,936.00 $14,763.00

Somcc* GranuDan Corpor&ticni Aimnal Rqxnts and Fonns 10-K Dataquest (1990) Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 91.86 92.90 90.72 95.16 93.97 Litemational 8.14 7.10 9.28 4.84 6.03 Far East 4.19 3.42 1.23 2.40 3.30 Middle East 3.28 2.69 6.74 1.11 1.15 Europe 0.24 0.54 1.03 1.05 1.25 Western Hemisphere 0.43 0.45 0.28 0.28 0.33 Somcc: Onmunan CoiporaHon Ammal Repmts and Fonns 10-K Dataquest (1990)

Bethpage, New York The Data Systems Division designs, develops, 1990 SALES OFFICE LOCATIONS installs, operates, and supports computer systems and designs test instrumentation and automated telemetry systems. North America—1 Europe—2 Melbourne, Florida The Melboiune Systems Division is the design, Asia^acific—4 development integration, and test facility for the Japan—1 JSTARS program. Reston, Virginia The Space Station Program Support Division assists NASA in the overall iategration of various space station work packages. MANUFACTURING LOCATIONS Titusville, Florida The Technical Services Division, as part of a Lockheed team, helps to prepare space shutde North America launch-related computer systems prior to Bethpage, New York successive flights. The Aircraft Systems Division updates the E2-C Airborne Early Warning (AEW) System, avionics on F-8 jet fighters for China, and the F-14A Tomcat to the F-14D; retrofits die F-14A to die SUBSIDIARIES F-14A+ configuration; produces A-6F Intruders, EA-6B Prowlers, E-2C Hawkeyes, and C-2A Greyhounds; and performs development work on North America the X-29 forward swept-wing aircraft, on the A-6F Grumman Aerospace Corp. (United States) and F-14D flight simulators, on the protoQ^ of a Grumman Allied Industries Inc. (United States) robotic antiarmor system, and on a remotely Grumman Credit Corp. (United States) controlled antitank vehicle for the US Army. It Grumman Data Systems Corp. (United States) provides aircraft components and major Grumman Foreign Sales Corp. (United States) subassemblies to other aircraft manufacturers, Grumman International Inc. (United States) center wing sections for the Boeing 767 jetliner, Grumman Ohio Corp. (United States) nacelles and thrust reverses for the Gulfstream IV Grumman Ventures Inc. (United States) and Fokker aircraft, tail sections for die V-22 Paumanock Development Corp. (United States) Osprey Hit Rotor Aircraft, composite rudders for die F-15, and peacekeeper missile nose cones. It ROW also overhauls and modifies military and commercial aircraft Paumanock Insurance Co. Ltd. (Bermuda) Bethpage, New York The Electronics Systems Division designs electronic systems for integration into its own and other aircraft, for automatic test equipment, for space programs, for surveillance, and for missile, ALLIANCES, JOINT VENTURES, AND display, and trainer products. It also develops the LICENSING AGREEMENTS army's next generation of automatic test equipment and the Teleoperated Mobile Anti-Armor Prognun. 1989 Bethpage, New York Singapore Systems Private The Space Systems Division develops space-based Grumman's Data Systems Division and Singapwe radar, manages project integration for the space Systems Private jointly formed SCS-Grumman station, studies contracts for the Boost Surveillance Computer Systems Pte., in which Grumman owns and Tracking System (BSTS) as part of SDI, 49 percent and Singapsre Systetos Private owns conducts space shuttle and space station work 51 percent Located in Singapwe, SCS-Grumman under subcontract, and studies neutral particle will provide systems integration service for beam technology for the air force and aimy. large-scale manufacturing and science and

engineering applications, with emphasis on Renso L. Caporali services such as computer-aided design/ Vice chainnan. Corporate Technology computer-aided manufacturing (CAD/CAM), computer-integrated manufacturing (CIM), and Richard G. Anderson supercomputer networks. Vice president. Technology Development

Edward Balinsky 7955 \^ce president. Mergers and Acquisitions Bronto Skylift/China Fire Protection Equipment/ China Ministry of Public Security/Godiva/ Peter F. Barry Saval-Kronenburg Vice president, Washington Operations Grumman and sevraal coiiq>anies combined to form Shanghai-Grumman International Fire Equip George L. Brown ment, which win make firefighting vehicles and N^ce president, Washington Relations and EEO equipment The members of this joint venture are Bronto Skylift, China Fire Protection Equipment, Dana E. McGee China Mii^try of Public Security, Godiva, Grum \^ce president. Congressional Liaison man, and Saval-Kronenburg. The firefighting vehi cle output will be based at the Shanghai Fire Thomas J. McGrath Equipment General Plant in Song Jiang, China. Vice president. Corporate Manufacturing Gruppo Agusta Spa Grumman and Chuppo Agusta Spa formed a joint Thomas J. McKee venture to study die feasibility of producing a Vice president. Business Development and plane to compete for an air force contract for a Washington Operations new jet trainer aircraft Richard A. MUbum General Composite Technology/Technical U Vice president. International Affairs and Grumman, General Composite Technology, and Washington Operations Technical U jointly formed a 26,000-square-foot research center to develop advanced materials such David L. Walsh as composites, ceramics, superplastics, structurally Vice president. Marketing modified metals, and semiconducting compounds.

MERGERS AND ACQUISITIONS PRINCIPAL INVESTORS

1987 Employee Investment Plan of Grumman Corporation—^39.9 percent Fairchild Republic Grumman acquired Fairchild Republic's engineer ing center located in Farmingdale, New York. The center contains an aircraft flight systems simula tion laboratory and the oigineoing support team for the A-10 attack aircraft FOUNDERS

Information is not available.

KEY OFFICERS

John O'Brien Chairman of the board and president

T^ble 3 Comprehensive Financial Statement Fiscal Year Ending December (Ttiousands of US Dollars, except Per Share Data) Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $1,042,239.0 $1,305,388.0 $1,520,588.0 $1,749,559.0 $1,848,530.0 Cash 19,812.0 33,976.0 29,364.0 19,264.0 19,764.0 Receivables 377,763.0 577,192.0 573,689.0 801,953.0 709,560.0 Marketable Securities ' 82,905.0 95,263.0 108,280.0 30,631.0 42,095.0 Inventory 550,463.0 576,415.0 765,439.0 862,634.0 1.028,924.0 Other Current Assets 11,296.0 22,542.0 43,816.0 35,077.0 48,187.0 Net Property, Plants $411,836.0 $521,503.0 $592,441.0 $587,408.0 $539,207.0 Other Assets $131,698.0 $136,779.0 $141,540.0 $229,018.0 $203,325.0 Total Assets $1,585,773.0 $1,963,670.0 $2,254,569.0 $2,565,985.0 $2,591,062.0 Total Current Liabilities $555,835.0 $624,229.0 $657,707.0 $739,831.0 $759,576.0 Long-Term Debt $263,393.0 $420,974.0 $643,198.0 $802,078.0 $846,423.0 Other Liabilities $118,216.0 $151,622.0 $183,662.0 $201,821.0 $129,831.0 Total Liabilities $937,444.0 $1,196,825.0 $1,484,567.0 $1,743,730.0 $1,735,830.0 Total Shareholders' Equity $648,329.0 $766,845.0 $770,002.0 $822,255.0 $855,232.0 Converted Preferred Stock 44,975.0 44,963.0 42,588.0 40,086.0 37,561.0 Common Stock 200,826.0 277,231.0 284,804.0 290,530.0 296,056.0 Oflier Equity NA NA NA NA NA Retained Earnings 402,528.0 444,651.0 442,610.0 491,639.0 521,615.0 Total Liabilities and Shareholders' Equity $1,585,773.0 $1,963,670.0 $2,254,569.0 $2,565,985.0 $2,591,062.0 Income Statement 1985 1986 1987 1988 1989 Revenue $3,098,865.0 $3,501,911.0 $3,375,260.0 $3,648,892.0 $3,558,820.0 US Revenue 2,846,568.0 3,253,370.0 3,062,044.0 3.472,340.0 3.344.154.0 Non-U.S. Revenue 252,297.0 248,541.0 313,216.0 176,552.0 214,666.0 Cost of Sales $2,780,660.0 $3,159,806.0 $3,122,535.0 $3,317,830.0 $3,249,359.0 R&D Expense $158,695.0 $167,085.0 $149,350.0 $122,265.0 $114,563.0 SG&A E:q>ense $159,757.0 $176,304.0 $152,804.0 $115,703.0 $108,070.0 Capital Expense $170,967.0 $195,756.0 $177,700.0 $118,119.0 $65,725.0 Pretax Income $129,035.0 $117,190.0 $41,050.0 $130,465.0 $96,064.0 Pretax Margin (%) 4.16 3.35 1.22 3.58 2.70 EfEective Tax Rate (%) 46.00 40.00 40.00 40.00 34.00 Net Income $81,535.0 $78,690.0 $35,650.0 $86,465.0 $67,264.0 Shares Outstanding, Thousands 29,146.9 32,603.7 32.664.9 32,720.8 32,967.0 Per Share Data Earnings $2.65 $2.32 $0.94 $2.50 $1.91 Dividend $1.00 $1.00 $1.00 $1.00 $1.00 Book Value $22.24 $23.52 $23.57 $25.13 $25.94

Table 3 (Continued) Comprehensive Financial Statement Fiscal Year Ending December (Thousands of US DoUars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current CRnies) 1.88 2.09 2.31 2.36 2.43 Quick (Times) 0.88 1.17 1.15 1.20 1.08 Fixed Assets/Equity (%) 63.52 68.01 76.94 71.44 63.05 Current Liabilities/Equity (%) 85.73 81.40 85.42 89.98 88.82 Total Liabilities/Equity (%) 144.59 156.07 192.80 212.07 202.97 Profitability (%) Return on Assets _ 4.43 1.69 3.59 2.61 Return on Equity - 11.12 4.64 10.86 8.02 Profit Margin 2.63 2.25 1.06 2.37 1.89 Other Key Ratios R&D Spending % of Revenue 5.12 4.77 4.42 3.35 3.22 Capital Spending % of Revenue 5.52 5.59 5.26 3.24 1.85 Employees 32,000 33,400 33,700 32,000 28,900 Revenue ($K)/Employee $96.84 $104.85 $100.16 $114.03 $123.14 Capital Spending % of Assets 10.78 9.97 7.88 4.60 2.54 NA = Not available Source: Gnmnuui Coiporutioii Ammal Repents and Foims 10-K Dataquest (1990)

CORPORATE STRATEGIC DIRECTION GTE's telephone operating subsidiaries face signifi cant potential competition from alternative communi cations systems. Such systems may be provided by On July 1, 1982, General Telephone and Electronics Corporation changed its name to GTE Corporation intcrexchange carriers, end users, or specialized com- (GTE). GTE owns no plants, real property, or fian- muoications companies. In response to these potential chises, except through investments in subsidiaries. It competitors, GTE's telephone operating subsidiaries is segmented into three core businesses: telecommu are designing and constructing private networks and nications, lighting, and precision materials. GTE has providing other alternatives to serve specific customer six main business groups: GTE Telephone Opera needs. Dataquest ranks GTE first in the independent tions, GTE Mobile Communications, GTE Infoima- local telephone market; the Company has a tion Services, GTE Government Systems, GTE 10.5 percent market share. Electrical Products, and GTE Spacenet

Other telecommunications services provided by GTE In July 1990, GTE and Conlel Corporation agreed to include communications and intelligence systems, meige ia a transaction valued at about $6.2 billion.* communicatioiis switching and information systems, The proposed exchange of stock also would consoli date two large cellular phone businesses, expand cellular mobile telephone services, satellite-based telecommunications satellite opportunities, and even telecommunications services, telephone directories, tually yield more services to local customers. and directory advertising.

GTE's telephone operating subsidiaries served Total revenue increased 6 percent to $17.4 billion in approximately 14 million customers through 15.1 mil fiscal 1989 fi-om $16.5 billion in fiscal 1988. Net lion access lines in 31 states in the United States and income increased 16 percent to $1.4 billion in fiscal in two foreign countries as of March 30, 1990. These 1989 fiom $1.2 billion in fiscal 1988. GTE employs subsidiaries also provided many types of communica 158,000 people worldwide. tions services that ranged fiom telephone services for the home or office to highly con^lex voice and data services for industry and national defense. Subsidi R&D expenditure totaled $281 million in fiscal 1989, aries, accounting for the largest portion of total tele representing 2 percent of revenue. Capital spending phone revenue, include GTE Califomia, 23 perceiU; GTE North, 20 percent; GTE Florida, 10 percent; and totaled $3.2 billion in fiscal 1989, representing GTE Southwest, 10 percent. Other areas served 19 percent of revenue. include the Northwest, Southeast, Hawaii, British Columbia, the Dominican Republic, and a section of Quebec province. The largest cities served by GTE More detailed information is available in Tables 1 include Long Beach and West Los Angeles, Califor through 3, which appear after "Business Segment nia; Tampa and St Petersburg, Honda; Honolulu, Strategic Direction" mid present corporate highlights Hawaii; Lexington, Kentucky; Fort Wayne, Indiana; and revenue by region and distribution channel. Erie, Pennsylvania; and Vancouver, British Columbia. Table 4, a comprehensive financial statement, is at die end of this backgrounder. *A11 dollar amonots ate in US dollats.

Internationally, through its ownership of common stock of An^o-Canadian Telephone Company, GTE BUSINESS SEGMENT STRATEGIC possesses voting control of the British Columbia Tel DIRECTION ephone Company and Quebec Telephone. On Decem ber 31, 1989, die British Columbia Telephone Company served approximately 1.8 million access GTE Telephone Operations lines in British Columbia, Canada. Quebec Telephone GTE Telephone Operations accounted for 72 percent served more than 245,000 access lines in Quebec, of GTE's total consolidated revenue in fiscal 1989. Canada. GTE Telephone Operations provides service in the United States, Canada, and the Dominican Republic. GTE, dirough GTE Holdings (Canada) Ltd., a Cana dian holding company founded in 1990, also owns During 1989, GTE continued die consolidation of its the common stock of a telephone company furnishing seven US telephone companies into a single national local and long distance telephone service in the organization. The new organization consists of a cen- Dominican Republic. As of December 31, 1989, this trsdized headquarters and general of&ce in Irving, company served approximately 283,000 access lines. Texas, and four regional operating areas based in Florida, Indiana, Texas, and California. The consoU- Included in GTE Telephone Operations are two dation is designed to streamline GTE's business imregulated subsidiaries that provide support to the activities, improve the quality of customer service, GTE telephone subsidiaries: GTE Data Services Inc., standardize operating systems, and reduce operating which provides data processing and information costs. services; and GTE Supply, which is responsible for the procurement and distribution of supplies for the Since the divestiture of the Bell companies from domestic telephone operating companies. AT&T in 1984, interstate toll service revenue has been based generally on interstate switched, common- line, and special access tariffs approved by the Fed Telecommunications Products and Services eral Communications Commission (FCC). These Telecommunications products and services accounted tariff include access charges paid by interexchange for 16 percent of GTE's total consolidated revenue in carriers and end-user access charges on residentiid fiscal 1989. This business segment includes GTE and business customers. Mobile Communications, GTE Government Systems, GTE Information Systems, GTE Spacenet, and AG Since January 1984, die GTE telephone subsidiaries Communication Systems. have also provided toll service within designated geographic areas called local access and transport areas (LATAs). This has been conducted under agree GTE Mobile Communications ments with its connecting local exchange carriers in GTE Mobile Communications provides cellular conformity with individual state regulatory orders. mobile telephone service; markets cellular products, The telephone subsidiaries are conq)ensated dirough and provides air-to-groimd telephone service for air revenue-sharing arrangements similar to those in line passengers. effect prior to die divestiture with the other carriers or pursuant to access charge tarifife. All such compensa tion is subject to review by state and regulatory GTE Mobilenet Inc. is ranked as the fifdi largest commissions. provider of cellular mobile telephone services in the United States, according to Dataquest It operates in 34 metropolitan markets and three rural service areas, In 1989, GTE's telephone operations made progress serving a population of 23 millioiL In 1989, GTE in their bid to ent^ the video services field. In Mobilenet increased its customer base more than Cerritos, California, GTE began connecting residen tial customers to its "network of die future." Using 107 percent, to 263,000 customers. fiber optics, die Ceiritos project is a test of voice, data, and video services over differing transmission GTE Cellular Communications Corporation networks, including fiber optics, coaxial cable, and (GTECCQ operates approximately 40 retail sales and twisted-pair telephone wire. Advanced services such service centers. These retail outlets are located in both as video-on-demand, pay-per-view TV, interactive GTE Mobilenet franchised territories and in markets • educational services, and home banking and home where Mobilenet resells cellular service. In early shopping services will be included in the test 1989, GTECCC and Hertz began testing cellular

credit-card telephones in 1,600 Hertz rental cars. At business unit provides integrated information the end of 1989, GTECCC and Hertz agreed to install management systems, application software, network 50,000 cellular credit-card phones in the Hertz design and management, geographic informatian sys nationwide rental fleet over a five-year period. Cus tems, professional services, systems integration and tomers who rent cars equipped with the cellular complete installation, and maintenance and support credit-card phones can make and receive calls by services targeted at public safety and public work using a major credit card to activate the service. agencies.

GTE Airfone operates under an experimental license GTE Telecom provides communications systems granted by the FCC that allows it to provide air-to- integrated hmctions, network communications solu ground telephone service for passengers on commer tions, and management services. This unit also offers cial airlines. As of December 31, 1989, GTE Airfone design engineering, procurement, installation, main had phones on approximately 1,200 aircraft tenance, operation, and management services for customers that own and manage their own private GTE Government Systems networks.

GTE Government Systems is a supplier of command, Also formed in 1989, GTE Telecommunications control, and communications systems as well as intel Services (GTBTS) provides integrated information ligence and electronic defense systems to the US management and billing services to cellular carriers. government and a nimiber of foreign governments. It GTETS offers its services in aU of the operational also is a major supplier of tactical communications wireline markets and over 100 of the non-wireline switching systems to the US Department of Defense. markets across North America. In addition, this unit provides its services to cellular carriers in Mexico and The success of GTE Government Systems depends to the Caribbean. During 1989, approximately 40 per a large extent on its ability to compete successfully cent of GTETS' revenue was derived from the provi for contracts with governmental agencies, primarily sion of billing services to GTE MobUenet the Department of Defense. In the United States, this unit confronts intense and increasing competition in GTE Interactive Services Inc. consists of GTE anticipation of a shrinking US defense budget Prin TeleMessager and GTE Retail Information Services. cipal competitors include Boeing, CSC, GE/RCA, GTE TeleMessager provides advanced voice process IBM, ITT, Lockheed/Sanders, Martin Marietta, ing services and systems to large corporate customers. Rockwell-Collins, and TRW. The unit operates a nationwide network of service bureaus for the provision of voice messaging GTE Information Services services. These services enable customers to receive, send, redirect, and store voice messages. In 1989, GTE Information Services operates through seven GTE TeleMessager introduced Interactive Response business units: GTE Healtii Care Systems, GTE Edu services, enabling businesses to use touch-tone tele cation Services, GTE Government Information phones to interact with databases for scheduling, Services, GTE Telecom, GTE Telecommunications order entry, and a variety of other productivity- Services, GTE Interactive Services Inc., and GTE oriented applications. Directories. GTE Retail Information Services is a supplier of GTE Health Systems provides integrated information software and turnkey systems. These systems are management applications to the health care industry. designed for medium-size to large retail chain opera This package links health care providers through an tions, providing in-store gateway and wide host com intelligent network to customers, suppliers, and other munication management applications and PC-based health care providers. point-of-sale applications. In addition, GTE Retail Information Services offers its customers a full line of GTE Education Services provides integrated informa services related to these products, including project tion and communications services to tiie education management, training, comprehensive installation, community. and ongoing support

Fonned in 1989, GTE Government Information GTE Directories, die largest unit of GTE Information • Services develops and markets information manage Services, provides directory advertising sales and ment products for state and local governments. This publishes telephone directories for both GTE's

SCA 0007664 ©1990 Dataquest Incorporated GTE Corporatimi telephone subsidiaries and nonaffiliated telephone The joint venture between GTE and AT&T was estab companies worldwide. During 1989, GTE Directories lished to include GTE Coromunication Systems estabhshed a Marketing Services Division to provide Corporation's netwoit switching business. GTE holds telemarketing, specialty pubUcations, and direct mail a 51 percent interest in the venture, with AT&T marketing services. assuming 80 percent ownership in 1993 and 100 percent in the year 2003, through purchases of GTE's GTE Spacenet ownership interests. GTE Spacenet provides a comprehensive range of satellite-based telecommunications services and private communications networks. These services GTE Electrical Products are targeted at government agencies, major retail GTE Electrical Products accounted for 13 percent of chains, financial services, and news and business organizations. GTE's total consolidated revenue ia fiscal 1989. This business segment consists of GTE's lighting and pre cision materials businesses. The lighting business GTE Spacenet operates a multisatellite system that develops and manufactures lighting products for consists of six orbiting satellites offering a variety of coverage options to the United States, Puerto Rico, residential, commercial, industrial, and automotive and the US Virgin Islands. use. The precision materials business is a supplier of metal, ceramic, plastic, and electronic parts and com ponents. This group serves the aerospace, auMmotive, AG Communication Systems computer, communications, lighting, electrical, and AG Communication Systems began operations in electronic industries. January 1989 as a joint venture of GTE and AT&T. AG Commimications Systems designs, engineers, manufactures, distributes, installs, and maintains Further Information GTD-5 telecommunications switch and ancillary products, and provides services for telecommunica For more information about the Company's business tions markets. The joint venture will also develop segments, please contact the appropriate Dataquest new, advanced capabilities for the GTD-S EAX industry service. family of digital-switching systems.

T^ble 1 Five-Year Corporate Highlights (Millions of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue ".15,732.0 $15,112.0 $15,421.0 $16,460.0 $17,424.0 Percent Change (3.94) 2.04 6.74 5.86

R&D Expenditure $313.0 $291.0 $251.0 $297.0 $281.0 Percent of Revenue 1.99 1.93 1.63 1.80 1.61

Capital Spending $3,553.3 $3,124.4 $3,145.5 $3,087.0 $3,255.0 Percent of Revenue 22.6 20.7 20.4 18.8 18.5

Number of Employees 183,000 160,000 161,000 159,000 158,000 Revenue ($K)/Employee $85.97 $94.45 $95.78 $103.52 $110.28

Net Income ($161.1) $1,184.3 $1,118.8 $1,224.7 $1,417.0 Percent Change (835.13) (5.53) 9.47 15.70

1989 Calendar Year (Unaudited) Ql Q2 Q3 Q4 Quarterly Revenue $4,123, 00 K323.00 $4,354.00 $4,624.00 Quarterly Profit $317,,0 0 $316.00 $356.00 $381.00

Source: GTE Coipocation Auonal Reports and Foims 10-K Dataquest (1990) Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 100.00 100.00 100.00 100.00 100.00 International 0 0 0 0 0

Source: Dataquest (1990)

Table 3 Revenue by Distribution Channel (Percent) Channel 1988 1989 Direct Sales 100.00 100.00 Indirect Sales 0 0 Source: Dataquest (1990)

GTE International Incorporated (United States) GTE Investment Management Corporation 1989 SALES OFFICE LOCATIONS (United States) GTE Laboratories Inc. (United States) North America—104 GTE Leasing Corporation (United States) Europe—37 GTE Mobihiet Lie. (United States) Asia^*acific—^22 GTE North Inc. (United States) ROW—29 GTE Northwest Inc. (United States) GTE Product Corporation (United States) GTE Products of Connecticut Corporation (United States) GTE Realty Corporation (United States) MANUFACTURING LOCATIONS GTE Rotaflex Limited (United States) GTE Service Corporation (United States) North America GTE Shareholder Services Inc. (United States) GTE South Inc. (United States) The AG Communication Systems and Government GTE Southwest Inc. (United States) Systems business units operated six manufacturing GTE Spacenet Corporation (United States) plants throughout the United States. The Electrical GTE Telecom Inc. (United States) Products Group operated 73 manufacturing plants GTE Telecom Marketing Corporation (United States) throughout the United States and Puerto Rico. GTE Telemessager Inc. (United States) GTE Vanlenite Corporation (United States) International GTE Vantage Inc.(United States) Microtel Limited (Canada) The Electrical Products Group operated 39 C^ebec Telephone (Canada) manufacturing plants in 16 countries. Europe GTE Export Factoring Co. B.V. (Netherlands) SUBSIDIARIES GTE Finance N.V. (Netherlands) GTE Lighting (UK) Ltd. (England) GTE Rotaflex Ltd. (England) North America GTE LichL GmbH (Germany) AG Communication Systems Corporation (United States) ROW Anglo-Canadian Telephone Co. (United States) British Columbia Telephone Co. (Canada) Compania Dominicana De Telefonos (Dominican Canadian Telephones and Supplies Limited (Canada) Republic) Dominican Directory Co. Ltd. (Canada) GTE Reinsurance Co. Ltd. (Bermuda) GTE Aiifone Inc. (United States) GTE California Inc. (United States) GTE Cdlular Communications Corporation (United States) GTE Communications Services Inc. (United States) ALLIANCES, JOINT VENTURES, AND GTE Communication Systems Corporation (United LICENSING AGREEMENTS States) GTE Data Services Inc. (United States) 1990 GTE Directories Corporation (United States) GTE Finance Corporation (United States) Commstar Voice Messaging GTE Florida Inc. (United States) GTE TeleMessager and Conamstar Voice Messag GTE Global Corporation (United States) ing have signed an agreement to create a first link GTE Govenmient Systems Corporation (United between voice messaging services in Canada and States) fbc United States. The agreement calls for recipro GTE Hawaii Telephone Co. Inc. (United States) cal voice messaging network access between- GTE Information Services Inc. (United States) respective usos in the two countries. Both compa GTE Interactive Services Inc. (United States) nies will also jointly market each others' products.

Hertz companies are Locke Systems, which markets soft GTE Mobile Communications and Hertz have ware systems for automated management of public signed a multiyear agreement. Under the agree faciUties; Systems Choice, which provides soft ment, GTE Mobile Communications will provide ware and other services to the healdi care industry; cellular credit-card telephones in Hertz rental cars and "V^ion Technology, which suppUes software as well as the cellular network connection for all systems to law enforcement and public safety participating Hertz rental locations. agencies.

7959 AT&T GTE and AT&T formed a joint venture, AG Com munication Systems. The joint venture is integrat KEY OFFICERS ing advanced telecommunications technology with GTE's GTE>-5 series of digital telephone switches. James L. Johnson It also is taking over the network switching busi Chairman and chief executive officer ness of GTE Communication Systems. GTE has a 51 percent stake in the company, but AT&T will Charles R. Lee assume 100 percent ownership in 2003. AT&T's President and chief operating officer 5ESS ISDN switch technology will be hcensed to the new venture. Bruce Carswell Senior vice president. Human Resources and Tel Control GTE and Tel Control signed an agreement imder Administration which GTE will market three public safety Nicholas L. IVivisonno products made by Tel Control for E-911 emer Senior vice president. Finance gency response systems: Automatic Number Iden tification, Automatic Location Identification, and Edward C. Schmults Selective Routing Systems. Senior vice president. External Affairs and General Counsel

MERGERS AND ACQUISITIONS

1990 PRINCIPAL INVESTORS Contel Corporation The United States Trust Co. of N.Y., as Trustee— GTE and Contel agreed to merge in a transaction valued at about $6.2 billion. The proposed 12.5 percent exchange of stock also would consolidate two large cellular phone businesses, expand telecom munications satellite opportunities, and eventually yield more services to local customers. FOUNDERS Providence Journal Telecom GTE acquired Providence Joxunal Telecom, a cel lular phone system provider in North Carolina, Information is not available. South Carolina, Georgia, and \%ginia.

1989 Locke Systems, Systems Choice Inc., and Vision Technology Inc. GTE Information Services acquired three estab lished companies diat provide computer software and other systems and services to specialized sec tors of the information management market These

Table 4 Comprehensive Financial Statement Fiscal Year Ending December (Millions of US Dollars, except Per Share Data) Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $4,491.4 $4,217.1 $4,335.1 $5,611.9 $5,597.0 Cash and Investments 386.9 226.1 170.8 307.0 396.0 Receivables 2,198.2 2,122.0 2,419.8 2,893.7 3,191.0 Inventory 1.430.4 1,225.5 1,283.8 1,263.9 1,416.0 Other Current Assets 475.9 643.5 460.7 1,147.3 594.0 Net Property, Plants $21,167.9 $21,128.1 $22,002.0 $22,986.9 $23,700.0 Other Assets $898.5 $2,056.6 $2,408.1 $2,505.1 $2,689.0 Total Assets $26,557.8 $27,401.8 $28,745.2 $31,103.9 $31,986.0 Total Current Liabilities $5,567.8 $4,634.9 $4,611.0 $5,870.1 $5,703.0 Long-Term Debt $8,295.3 $8,880.7 $9,587.3 $9,704.7 $10,909.0 Total Liabilities $13,863.1 $13,515.6 $14,198.3 $15,574.8 $16,612.0 Reserves/Deferred Credits $4,374.5 $4,909.8 $5,149.1 $5,734.0 $5,625.0 Minority Interests $683.5 $732.9 $780.6 $861.8 $1,070.0 Preferred Stock, Subject to Mandatory Redemption $581.3 $358.3 $313.9 $302.0 $276.0 Total Shareholders' Equity $7,055.4 $7,885.2 $8,303.3 $8,631.3 $8,403.0 Converted Preferred Stock 225.4 222.2 544.0 504.8 468.0 Common Stock 706.1 33.1 34.1 34.9 35.0 Other Equity 3,183.1 4,257.2 4,087.3 4,113.4 3,472.0 Retained Earnings 2,940.8 3,372.7 3,637.9 3,978.2 4,428.0 Total Liabilities and Shareholders' Equity $26,557.8 $27,401.8 $28,745.2 $31,103.9 $31,986.0 Income Statement 1985 1986 1987 1988 1989 Total Revenue and Sales $15,732.0 $15,112.0 $15,421.0 $16,460.0 $17,424.0 Telephone Operations 9.981.0 11,278.0 11,794.0 11,686.0 12,459.0 Other Operations 5,752.0 3,833.0 3,627.0 4,774.0 4,965.0 Cost of Sales NA NA NA NA NA R&D Expense $313.0 $291.0 $251.0 $297.0 $281.0 SG&A E3q)ense NA NA NA NA NA Ci^tal Expense $3,553.3 $3,124.4 $3,145.5 $3,087.0 $3,225.0 Pretax Income ($170.0) $2,090.6 $1,751.9 $1,840.9 $2,064.0 Pretax Margin (%) (1.08) 13.83 11.36 11.18 11.85 Effective Tax Rate (%) NA 43.00 36.00 33.00 31.00 Net Income ($161.1) $1,184.3 $1,118.8 $1,224.7 $1,417.0 Shares Outstanding, Millions* 318.0 332.0 341.0 349.0 330.0 Per Share Data Earnings ($0.63) $3.53 $3.29 $3.58 $4.16 Dividend $2.08 $2.20 $2.48 $2.60 $2.80 Book Value $22.19 $23.75 $24.35 $24.73 $25.46

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending December (Millions of US Dollars, except Per Share Data)

Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (T^es) 0.81 0.91 0.94 0.96 0.98 Quick crimes) 0.55 0.65 0.66 0.74 0.73 Fixed Assets/Equity (%) 300.02 267.95 264.98 266.32 282.04 Current Liabilities/Equity (%) 78.92 58.78 55.53 68.01 67.87 Total Liabilities/Equity (%) 196.49 171.40 171.00 180.45 197.69 Profitability (%) Return on Assets _ 4.39 3.99 4.09 4.49 Return on Equity - 15.85 13.82 14.46 16.64 Profit Margin (1.02) 7.84 7.26 7.44 8.13 Other Key Ratios R&D Spending % of Revenue 1.99 1.93 1.63 1.80 1.61 Capital Spending % of Revenue 22.6 20.7 20.4 18.8 18.5 Employees 183,000 160,000 161,000 159.000 158,000 Revenue ($K)/Employee $85.97 $94.45 $95.78 $103.52 $110.28 Capital Spending % of Assets 13.4 11.4 10.9 9.9 10.1 'Restated for a thiee-for-two common stock split in Januarary 1987 Somce: GTE Coip

CORPORATE STRATEGIC DIRECTION GTE's three core businesses, telephone operations, telecommunications products and services, and elec trical products, contributed revenue during 1988 of On July 1, 1982, General Telephone and Electronics $11.7 billion, $2.6 billion, and $2.2 billion, Corporation changed its name to GTE Corporation (GTE). GTE owns no plants, real property, or fran respectively. chises, except through its investment in subsidiaries. GTE is segmented into three separate core businesses: In 1987 and 1988, telephone operations, the largest of telephone operations, telecommunications products GTE's core businesses, generated 76 and 71 percent and services, and electrical products. The telephone of consolidated revenue, respectively. Toll and access operations segment provides local telephone services charges accounted for 50 percent of telephone opera in 31 states in the United States, and conducts opera tion revenue inflow. tions in British Columbia and Quebec, Canada; and the Dominican Republic. As of December 31, 1988, the telephone operations segment represented 71 per GTE's favorable sales performance during 1988 cent of consolidated revenue and operated a total of resulted in record earnings for the year. Earnings 14.4 million access lines. increased from $1.1 billion in 1987 to $1.2 billion in 1988, a growth rate of 9.0 percent. After-tax profit margins for 1987 and 1988 w^e 7.3 percent and Operations that are conducted within the other two 7.4 percent, and earnings per share amounted to $3.29 business segments include communications and intel and $3.58, respectively. During 1988, the common ligence systems, communications switching and stock dividend was increased by 4.8 percent, from information systems, telephone directories and direc $2.48 to $2.60 per share. tory advertising, cellular mobile telephone services, and satellite-based telecommunications services. GTE operates the largest independent local telephone US Sprint Communications Company (US Sprint) is company in the United States and direcdy competes joindy owned by US Telecom, Inc., a wholly owned against the BeU operating companies. GTE is ranked subsidiary of United Telecommunications, Inc. (Unit first in local telephone service market share for 1988, ed), and GTE Communications Services Inc., a with 49.1 percent of the maricet As of December 31, whoUy owned subsidiary of GTE. In 1986, the opera 1988, GTC operated approximately 12.2 million tions of US Telecom, GTE Sprint, and GTE Telenet access lines in the United States, and offered many were combined to form an equally owned partoership, types of communication services, including residen US Sprint. However, effective January 3, 1989, tial and business telephone services, and data services United acquired an additional 30.1 percent interest in to business and government US Sprint, which decreased GTE's ownership to 19.9 percent. Consolidated revenue reached a record level for GTE during 1988, increasing from $15.4 billion* Since GTE's telephone subsidiaries are connected to in 1987 to $16.5 billion in 1988, an increase of other telephone companies, as well as to interex- 7 percent. change (long distance) companies, customers can make long distance calls to anywhere in the United *A11 dollar amounts are in U.S. dollars. States and almost anjrwhere internationally.

GTE also conducts telephone operations outside of Telecommunications Products and Services the United States. Because GTE owns all of the common stock of Anglo-Canadian Telephone Com The Telecommunications Products and Services pany (Anglo), a holding company, it has voting Group employs 22,000 people and comprises several control over British Columbia Telephone Company, business units, including GTE Mobile Communica which serves 1.7 million access lines, and Quebec tions, GTE Information Services, GTE Spacenet, Telephone, which serves 238,000 access lines. GTE Communication Systems, and GTE Government Through the ownership of Anglo, GTE also controls a Systems. company in the Dominican Republic that provides both local and long distance telephone operations and serves approximately 227,000 access lines. GTE Mobile Communications markets cellular products and provides cellular mobile telephone serv ices and air-to-ground telephone services for airline As of December 31, 1988, the Communication Systems and Government Systems business units, passengers. GTE Information Services includes the which are two units in the Telecommunication following business subunits: GTE Directories, GTE Products and Services Group, operated nine plants Health Systems, GTE Education Services, GTE and had 30 laboratories in eight states in the United Telecom, and Interactive Services. States. Also at year-end 1988, 78 plants and 14 laboratories in 16 states in the United States and GTE Spacenet Corporation not only offers sateUite- Puerto Rico were operated by the Electrical Products based telecommunications services but also o£fers Group. private networks for applications concerning data, video, and voice transmissions. Operations consist of More detailed information is available in Tables 1 30 earth stations and support facilities in 16 states. through 3, which appear after "Business Segment Strategic Direction" and present corporate highlights and revenue by region and distribution channel. GTE Communication Systems manufactures and Table 4, a comprehensive financial statement, is at the markets communications equipment that includes end of this profile. switching and PABX systems.

GTE Government Systems supplies command, control, and communications systems to both the United States government and foreign governments. BUSINESS SEGMENT STRATEGIC DIRECTION Electrical Products Telephone Operations The third of GTE's core businesses is GTE Electrical During 1988, GTE began to reorganize its telephone Products, which enq>loys 29,000 people. This busi operations in an effort to reduce expenditures and ness segment comprises two units: the Lighting unit, standardize operations. By 1993, the seven existing which develops lighting products for automotive, U.S. telephone companies are expected to be fuUy commercial, residential, and industrial applications; consolidated into four regional operating areas and the Precision Materials unit, which supplies (California, Florida, Indiana, and Texas) with central ceramic, electronic parts, metal, and plastic to the ized headquarters in Dallas. Approximately 104,000 aerospace, automotive, computer, communications, people are employed by the Telephone Operations electrical and electronics, and Ughting industries. Group.

Currently, two GTE subsidiaries support the tele Further Information phone operations. GTE Data Services Inc. provides data processing and information management serv For further information about the Company's business ices, and GTE Supply obtains and distributes supplies segments, please contact the appropiate industry for the domestic telephone operating companies. service.

Table 1 Five-Year Corporate Highlights (Millions of U.S. Dollars) 1984 1985 1986 1987 1988 Five-Year Revenue ;14,547.0 $15,732.0 $15,112.0 $15,421.0 $16,460.0 Percent Change 8.15 (3.94) 2.04 6.74

R&D Expenditure $265.0 $313.0 $291.0 $251.0 $297.0 Percent of Revenue 1.82 1.99 1.93 1.63 1.80

Capital Spending $3,525.8 $3,553.3 $3,124.4 $3,145.5 $3,087.0 Percent of Revenue 24.2 22.6 20.7 20.4 18.8

Number of Employees 185,000 183,000 160,000 161,000 159,000 Revenue ($K)/Employee $78.63 $85.97 $94.45 $95.78 $103.52

Net Income $1,125.1 ($161.1) $1,184.3 $1,118.8 $1,224.7 Percent Change (114.32) (835.13) (5.53) 9.47

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $4,122.62 $4,323.00 N/A N/A Quarterly Profit N/A N/A N/A N/A

N/A = Not Available Source: GTE Corporation Annual Reports and Forms 10-K Dataquest January 1990

Table 2 Revenue by Geographic Region (Percent)

Region 1984 1985 1986 1987 1988 North America 100.00 100.00 100.00 100.00 100.00 International 0 0 0 0 0

Source: Dataquest January 1990 Table 3 Revenue by Distribution Channel (Percent)

Channel 1987 1988 Direct Sales 100.00 100.00 Indirect Sales 0 0 Source: Dataquest January 1990

Europe

1988 SALES OFHCE LOCATIONS GTE Export Factoring Co. B.V. GTE Finance N.V. GTE Sylvania LichL GMBH North America—^Not available GTE UK Holdings Ltd. Japan—^Not available Europe—^Not available Asia/Pacific—^Not available ROW ROW—Not available Compania Dominicana De Telefonos Dominion Directory Co. Ltd.

SUBSIDIARIES ALLIANCES, JOINT VENTURES, AND LICENSING AGREEMENTS North America AG Communication Systems Corporation 1988 Anglo-Canadian Telephone Co. British Columbia Telephone Co. AT&T GTE and AT&T formed a new company, AG Canadian Telephones and Supplies Limited Communication Systems Corporation, to bring GTE Airfbne Inc. Integrated Services Digital Network (ISDN) to GTE Cahfomia Inc. GTE's digital telephone switching systems. The GTE Communications Services Inc. joint venture is 51 percent owned by GTE, but will GTE Communication Systems Corporation eventually be 100 percent owned by AT&T. GTE Data Services Inc. GTE Directories Corporation GTE Finance Corporation GTE Florida Inc. GTE Global Corporation KEY OFnCERS GTE Government Systems Corporation GTE Hawaii Telephone Co. Inc. James L. Johnson GTE Information Services Inc. Chairman and chief executive officer GTE Interactive Services Inc. Charles R. Lee GTE International Incorporated President and chief operating officer GTE Investment Management Corporation GTE MobUnet Inc. Bruce Carswell GTE North Inc. Senior vice president, Human Resources GTE Northwest Inc. Allan L. Rayfield GTE Products of Connecticut Corporation Senior vice president, Joint Venture Operations GTE Realty Corporation GTE Reinsurance Co. Ltd. Nicholas L. TVivisonno GTE Rotaflex Limited Senior vice president, Finance GTE Service Corporation Edward C. Schmuits GTE Shareholder Services Inc. Senior vice president. External Affairs, and general GTE South Inc. counsel GTE Southwest Inc. GTE Spacenet Corporation GTE Supply GTE Telecom Inc. GTE Telecom Marketing Corporation PRINCIPAL INVESTORS GTE Telemessager Inc. GTE Vanlenite Corporation The United States Trust Co. of N.Y., as Trustee Microtel Limited SCA Quebec-Telephone ©1990 Dataquest Incorporated January 0005894 GTE Corporation

Table 4 Comprehensive Financial Statement Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data)

Balance Sheet 1984 1985 1986 1987 1988 Total Current Assets $4,264.1 $4,491.4 $4,217.1 K335.1 $5,611.9 Cash and Investments 521.4 386.9 226.1 170.8 307.0 Receivables 2,061.1 2,198.2 2,122.0 2,419.8 2,893.7 Inventory 1,340.3 1,430.4 1,225.5 1,283.8 1,263.9 Other Current Assets 341.3 475.9 643.5 460.7 1,147.3 Net Property, Plants $21,068.8 $21,167.9 $21,128.1 $22,002.0 $22,986.9 Other Assets $1,031.3 $898.5 $2,056.6 $2,408.1 $2,505.1 Total Assets $26,364.2 $26,557.8 $27,401.8 $28,745.2 $31,103.9 Total Current Liabilities $4,355.3 $5,567.8 $4,634.9 $4,611.0 $5,870.1 Long-Tenn Debt $8,599.3 $8,295.3 $8,880.7 $9,587.3 $9,704.7 Total Liabilities $12,954.6 $13,863.1 $13,515.6 $14,198.3 $15,574.8 Reserves/Deferred Credits $4,463.1 $4,374.5 $4,909.8 $5,149.1 $5,734.0 Minority Interests $678.6 $683.50 $732.90 $780.60 $861.80 Preferred Stock, Subject to Mandatory Redemption $648.5 $581.30 $358.30 $313.90 $302.0 Total Shareholders' Equity $7,619.4 $7,055.4 $7,885.2 $8,303.3 $8,631.3 Converted Preferred Stock 245.7 225.4 222.2 544.0 504.8 Common Stock 680.8 706.1 33.1 34.1 34.9 Other Equity 2,903.3 3,183.1 4,257.2 4,087.3 4,113.4 Retained Earnings 3,789.6 2,940.8 3,372.7 3,637.9 3,978.2 Total Liabilities and Shareholders' Equity $26,364.2 $26,557.8 $27,401.8 $28,745.2 $31,103.9

Income Statement 1984 1985 1986 1987 1988 Total Revenue and Sales $14,547.0 $15,732.0 $15,112.0 $15,421.0 $16,460.0 Telephone Operations 9,065.0 9,981.0 11,278.0 11,794.0 11,686.0 Other Operations 5,482.0 5,752.0 3,833.0 3,627.0 4,774.0 Cost of Sales N/A N/A N/A N/A N/A R&D Expense $265.0 $313.0 $291.0 $251.0 $297.0 SG&A Expense N/A N/A N/A N/A N/A Capital Expense $3,525.8 $3,553.3 $3,124.4 $3,145.5 $3,087.0 Pretax Income $1,805.6 ($170.0) $2,090.6 $1,751.9 $1,840.9 Pretax Margin (%) 12.41 (1.08) 13.83 11.36 11.18 Effective Tax Rate (%) N/A N/A N/A N/A N/A Net Income $1,125.1 ($161.1) $1,184.3 $1,118.8 $1,224.7 Shares Outstanding, Millions* 306.0 318.0 332.0 341.0 349.0 Per Share Data Earnings $3.70 ($0.63) $3.53 $3.29 $3.58 Dividends $2.03 $2.08 $2.20 $2.48 $2.60 Book Value $24.90 $22.19 $23.75 $24.35 $24.73

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data) Key Financial Ratios 1984 1985 1986 1987 1988 Liquidity Ciurent (Times) 0.98 0.81 0.91 0.94 0.96 Quick (Times) 0.67 0.55 0.65 0.66 0.74 Fixed Assets/Equity (%) 276.52 300.02 267.95 264.98 266.32 Current Liabilities^quity (%) 57.16 78.92 58.78 55.53 68.01 Total Liabilities/Equity (%) 170.02 196.49 171.40 171.00 180.45 Profitability (%) Return on Assets - (0.61) 4.39 3.99 4.09 Return on Equity - (2.20) 15.85 13.82 14.46 Profit Margin 7.73 (1.02) 7.84 7.26 7.44 Other Key Ratios R&D Spending % of Revenue 1.82 1.99 1.93 1.63 1.80 Capital Spending % of Revenue 24.2 22.6 20.7 20.4 18.8 Employees 185,000 183,000 160,000 161,000 159,000 Revenue ($K)/Employee $78.63 $85.97 $94.45 $95.78 $103.52 Capital Spending % of Assets 13.4 13.4 11.4 10.9 9.9

*Restate

Hamamatsu Corporation Established 1957 360 Foothill Road No. of Employees: N/A Bridgewater, NJ 08807 (201)231-0960

BACKGROUND Hamamatsu Corporation, a privately held United States-based company, owns Hamamatsu Photonics K.K. Its Solid-State Division is the largest optoelectronic semiconductor facility in Japan. The Company specializes in photoelectronic semiconductor components and subassemblies.

PROCESS TECHNOLOGY • GaAs and other compound wafer processing by VPE and MOCVD

PRODUCTS • Phototransistors • GaP, GaAsP, and other photodiodes • GaAs, GaAlAs, and other infrared LEDs • Photocouplers and photointerruptors

• II-VI and III-V compound detectors

• GaAs and other lasers

FACILITIES The Hamamatsu City (Shizuoka Prefecture) facilities have a wafer start capacity of 15,000 3-inch GaAs and other III-V wafers per month.

Harris Microwave Semiconductor, Inc. Established 1980 1530 McCarthy Blvd. Number of Employees: 80 Milpitas, CA 95035 (408) 432-3330

BACKGROUND Harris Microwave Semiconductor (HMS) is a vertically integrated operation of Harris Corporation's Semiconductor Sector. The Company has capabilities for manufacturing GaAs crystals, wafers, chips, and packaged products. HMS is both a captive and merchant market producer and offers foundry services. Another Harris division has developed a proprietary packaging technique called WAFFLELINE, designed for efficient matched-impedance interconnection of GaAs devices. In February 1984, HMS introduced the world's first commercially available digital ICs based on GaAs. HMS claims to have the world's largest high-purity GaAs ingot growth capability, producing single-crystal ingots to seven inches in diameter. Harris is a subcontractor to the Hughes/GE MIMIC Phase I team. In 1988, HMS sold the amplifier operations to Litton Industries, Inc. The digital IC activity was deemphasized in 1987.

COMPANY EXECUTIVES • President/CEO—John T. Hartley • Vice President and General Manager, GaAs Operations—Dr. Joseph Barrera

• Director, Marketing and Sales—Victor Kovacevic • Director, Engineering—Dr. Jaime Tenederio

FINANCIAL BACKING The Company has been 100 percent financed by Harris Corporation since 1980.

SERVICES Foundry Design—GaAs D-MESFET cell library, 1 volt and 2 volt, l.Ou; three 0.5u MMIC design rule families; one l.Ou RF/analog design rule family Manufacturing Packaging

Test

PROCESS TECHNOLOGY HMS uses l.Ou, 0.5u, and 0.25u GaAs MESFET on 2- and -3-inch wafers.

PRODUCTS • HMF series GaAs FETs • HMM series GaAs MMICs • GaAs MMIC foundry service

Applications • Military Hi-Rel electronic systems • DSP • Microwave radar • Test equipment

FACILITIES HMS's Milpitas, California, facility has 38,000 square feet, including one 9,000-square-foot Class 1,000 clean room and one 6,000-square-foot Class 100 clean room.

© 1989 Dataquest Incorporated December SIS GAT A 0005371 Harris Corporation 1025 W. NASA Boulevard Melbourne, Florida 32919 Telephone: (407) 727-9100 Fax: (407) 727-9344 Dun's Number: 00-420-3337 Date Founded: 1926

CORPORATE STRATEGIC DIRECTION • Building its globally competitive position • Making the most of strategic alliances and Harris Corporation was incorporated in Delaware in partnerships 1926 as the successor to three companies founded in • Pursuing its extensive, corporate-wide programs the 1890s. Today, Harris consists of four major busi for continuous improvement ness sectors: Electronic Systems, Semiconductor, Communications, and Lanier Worldwide (a world Harris reported fiscal 1989 revenue of $2.2 billion, an wide office-equipment distribution network). increase of 23.1 percent over fiscal 1988 revenue of $1.8 billioiL Its net income decreased 78.8 percent to $21.3 million in fiscal 1989 as a result of the afore Fiscal 1989 mailced a change for Hairis. The Com mentioned $85 million restructuring provision. pany underwent restructuring as a result of reposition ing itself for the 1990s. Harris made several key acquisitions throughout the year including the acqui Research and development expenditure totaled sition of GE Solid State (GESS) and GE's Microelec $104 million in fiscal 1989, or 4.7 percent of tronics Center, which were incorporated into the revenue. The Con^any's capital expenditure totaled Harris Semiconductor Sector; die purchase of the $110 million, or 5.0 percent of revenue. Most of die outstanding SO percent interest in the Harris/3M joint capital spending is being devoted to the growth of venture (which now makes up Lanier Worldwide); Hanis' semiconductor business. and die acquisition of Allied Broadcast Equipment Corporation (ABEQ. More detailed information is available in Tables 1 through 3, which appear after "Business Segment Additionally, Harris restructured its business sectors Strategic Direction" and present corporate highlights and is in the process of selling businesses not aUgned and revenue by region and distribution channel. to the long-term strategy. These included Harris' data Table 4, a comprehensive financial statement, is at the communications and PC-based office systems busi end of this profile. nesses. This resulted in an $85 million* restructuring provision.

Electronic Systems is a new sector incorporating the former Government Systems Sector and three divi BUSINESS SEGMENT STRATEGIC sions from the former Information Systems Sector. DIRECTION

Harris directs approximately one-half of its focus on Electronic Systems the commercial sector and the other half on the government sector. The Company's five business The Company's Electronic Systems Sector, with 40 strategies for success are as follows: years of experience, accounted for 41 percent of total revenue widi 1989 net sales of $914.6 million. This • A strong market segment (mentation and commit sectcHT engages in R&D, design^ and productian of a ment to product differentiation broad range of hi^-technology systems for govern • Continuing development of its chosen technologies in support of its product programs and the syner ment and commercial organizations worldwide. gisms between diem Applications include avionics and space systems; sup port equipment; command, control, communi *A11 dollar amounts ate in US dollars. cation, and intelligence (C^; energy management;

newspaper composition; real-time and relational data and aerospace, power products, IC products, base computing; and design automation. Harris is a application-specific products, marketing, and major systems supplier to the US government manufacturing. The military and aerospace division provides standard, semicustom. and custom products Harris designs and manufactures high-performance for the military and government markets. The power computer systems for real-time and relational data products, commercial products, and commercial base applications. Products include the CX super application-specific IC (ASIC) divisions manufacture minicomputers and supermicrocomputers, the Harris power and integrated smart-power devices, general- Night-Hawk supermicrocomputers, and the H-Series purpose standard products for the signal processing superminicomputers, all for the aerospace/defense, and control market and commercial semicustom and business, engineering, and government markets. application-specific standard products. Application- specific standard products include circuit develop Harris* CX computer line comprises 32-bit super ment for the automotive and telecommunications minicomputers and supermicrocomputers for UNIX. markets. The Night-Hawk line comprises 32-bit supermicrocomputers for real-time simulation applications Primary customers include computer, commimica- based on die MC68030 microprocessor. The H-Series systems support 48 to 224 users and run real-time tions, telephone, industrial, medical, and other elec processing and precision research, and technical tronic equipment manufacturers, defense contractors, applications. and US government agencies. Products are marketed directiy or through distributors, both domestically and internationally. Harris also offers several operating systems including UNIX. CX/UX, CX/RT, Virtual C^)erating System (VOS), VOS/UNIX Environment (VUE), and Real- Mil/Aero Time Virtual Operating System (RT-VOS) and Harris' GE acquisition expanded its international cus RT-VOS/MP (Multiprocessing). tomer base, particularly in Europe and Southern Asia. Harris believes that this acquisition fits well into its In the technical computer maiket, Dataquest estimates market segment strategy. It also strengthened Harris' that Harris ranks seventh among US vendors based on position in ASIC and smart-power devices and its 1.6 percent market share and revenue of improved its govcmmentycommercial business bal $387 million in 1989. ance. Dataquest estioiates that Harris (GE/RCA) was the number one semiconductor supplier to the Semiconductor military/aerospace market in 1989. Overall, Harris is positioned well for long-term growth. The Semiconductor Sector constitutes 25 percmt of Harris' revenue, with 1989 net sales of $542.3 mil lion. Harris specializes in high-perfonnance, Communications application-specific segments such as signal process ing and control. The acquisition of GESS has had a The Communications Sector represents 20 percent of significant inq>act on Harris' position in both the the Company's total revenue, with $441.4 million in semiconductor and, in particular, analog product 1989 net sales. This sector offers conqirehensive line markets. equipment and systems for the communications industry. Products span virtually aU of the major Harris' 1989 revenue from its semiconductor business communications technologies and include microwave, increased 1S2 percent over 1988, partially due to the lightwave, two-way radio, broadcast radio, and televi acquisition of GESS. Dataquest estimates diat Harris' sion systems; digital telephone switches; satellite sys revenue of $830 million ranks it 21st in the overall tems; auxiliary telecommunications products; and worldwide semiconductor market turnkey communications systems.

Harris' semiconductor revenue comes from bipolar In North America, Harris produces analog and digital digital (7 percent), MOS devices (52 percent), and microwave systems under its Farinon trademark. analog devices (41 percent). According to a Additionally, Harris is a leading supplier of two-way Dataquest estimate, Harris ranks 16tii, 23rd, and 14th, HF, VHF, and UHF radio equipment It also offers a respectively, in these three segments. comprehensive line of products and systems for long and short distance oommunications and is a After the Company's restructuring, six divisions were worldwide supplier of digital network switching sys formed to address the new Company entity: military tems and PBXs.

Primary customers include foreign and domestic Copiers government and military agencies, business and industrial firms, radio and TV broadcasters, telephone Dataquest estimates that Harris/3M (now known as companies, utilities, construction companies, and oil Lanier Worldwide) was the eighth ranked copier ven companies. Domestically, it sells products directly to dor in the US market based on 1989 shipments of customers through the marketing organizations of the 51,600. Lanier competes in five of the six Dataquest operating divisions. The Company primarily uses copier segments. dealers, distributors, or sales representatives to market these products internationally. Facsimiles

Dataquest estimates that Harris/3M (now known as Lanier Worldwide Lanier Worldwide) was the number 12 fax vendor based on 1989 shipments of 36,600. This represents Lanier Worldwide, a Harris subsidiary, markets, sells, 2.5 percent of the fax market and services hnes of office equipment and business communications products on a global basis. Products include copiers, facsimiles, laser printers, dictating Further Information equipment, telephone systems, presentation and docu ment systems, and continuous-recording systems. For more information about the Company's business This division makes up 14 percent of Harris' total segments, please contact die appropriate Dataquest revenue, with $315.3 million in 1989 net sales. industry service.

Table 1 Five-Year Corporate Highlights (Millions of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue 2,281.2 $2,216.6 $2,079.0 $1,798.1 $2,213.7 Percent Change (2.83) (6.21) (13.51) 23.11

Capital Expenditure $163.0 $99.0 $75.0 $75.3 $110.0 Percent of Revenue 7.15 4.47 3.61 4.19 4.97

R&D Expenditure $115.7 $117.9 $118.0 $100.0 $104.0 Percent of Revenue 5.07 5.32 5.68 5.56 4.70

Number of Employees 31,400 26,700 24,300 22,600 35,100 Revenue ($K)/Employee $72.65 $83.02 $85.56 $79.56 $63.07

Net Income $80.3 $59.6 $84.5 $100.5 $21.3 Percent Change (25.78) 41.78 18.93 (78.81)

1989 Calendar Year* Ql Q2 Q3 Q4 Quarterly Revenue $430.07 $491.19 $524.22 $768.27 Quarterly Profit $138.09 $160.08 $186.38 $245.15

*Based on fiscal year ended June 30 Source: Haiiis CoiporBtion Anmial Rqxms Dataquest (1990)

Table 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 86.00 87.00 85.00 92.00 88.00 International 14.00 13.00 15.00 8.00 12.00

Sootce: Haitis Cotpoiation Animal RqKnis Dataqoest (1990)

Table 3 Revenue by Distribution Channel (Percent) Channel 1988* Direct Sales 27.94 Indirect Sales 72.06 OEMs 65.64 Distributors 6.42

*C(uapata systems only Sonrce: Dataqoest (1990)

Harris Data Conmnmications Inc. (United States) Harris Farinon Canada Ltd. (United States) 1989 SALES OFTICE LOCATIONS Harris Foreign Sales Corp. Inc. (United States) Harris Installation Corp. (United States) Information is not available. Harris International Sales Corp. (United States) Harris International Telecommunications Inc. (United States) Harris/Intersil Inc. (United States) Harris Investment of Delaware Inc. (United States) MANUFACTURING LOCATIONS Harris Semiconductor (Florida) Inc. (United States) Harris Semiconductor Inc. (United States) North America Harris Semiconductor International Inc. (United States) Atlanta, Georgia Harris Semiconductor (New Jersey) Inc. (United Copios, facsimiles, digital and analog dictation States) systems, PBXs, electronic key systems, recording Harris Semiconductor (Ohio) Inc. (United States) systems, docimient processing systems, office Harris Semiconductor Patents Inc. (United States) systems Harris Semiconductor (Pennsylvania) Inc. (United Camarillo, California States) Voice paging systems, subscriber-loop test systems Harris Solid State Inc. (United States) and tools. Integrated Services Digital Network Harris Southwest Properties Inc. (United States) (ISDN) terminal adapters Harris Space Systems Corp. (United States) Fort Lauderdale, Florida Harris Systems Ltd. (Canada) Computer systems Harris Technical Services Corp. (United States) Melbourne, Florida (6) Harris/3M Document Products de Puerto Rico (Puerto Communications and information processing Rico) systems, telecommunications networks, software, Harris/3M Document Products (Canada) Inc. semiconductors (Canada) Motmtain View, California Lanier Financial Services Inc. (United States) Systems Lanier Worldwide Inc. (United States) Novato, California Scientific Calculations Inc. (United States) Digital voice and data network switehes, PBXs, telephone sets Orlando, Florida Europe Application software ECCO Ltd. (Ireland) Quincy, Illinois GE (USA) Solid State SARL (France) Radio, television broadcast equipment Harris A.B. (Sweden) Rochester, New York HF, VHF, UHF, radio equipment and systems Harris Corp. B.V. (Netherlands) San Carlos, California Harris GmbH (Germany) Microwave and lightwave transmission systems Harris S.A. (Belgium) Somerville, New Jersey Harris SARL (France) Semiconductors, power devices Harris Semiconductor Ltd. (England) Syosset, New York Harris Semiconductor B.V. (Nedierlands) Simulation systems Harris Semiconductor GmbH (Germany) Harris SRL (Italy) Harris Systems Ltd. (England) Harris/3M Document Products A/S (Norway) SUBSIDIARIES Harris/3M Document Products B.V. (Netherlands) Harris/3M Document Products C. & I.S.A. (Greece) North America Lanier (Schweiz) A.G. (Switzerland) Lanier Denmark S/A (Denmark) Allied Broadcast Equipment Canada Ltd, (Canada) Lanier Deutschland GmbH (Germany) Allied Broadcast Equipment Corp. (United States) Lanier Espana S.A. (Spain) Executive Conference Center Inc. (United States) Lanier Europe B.V. (Netherlands) Gemco Electronics Inc. (United States) Lanier France S.A. prance) Lanier Italia S.p.A. (Italy) SCA 0007729 ©1990 Dataquest Incorporated Harris Corporation

Lanier Oy (Finland) Division for sales and distribution of the LM-IOCX) Lanier Svenska A.B. (Sweden) industry-standard hardware modeling system. Lanier United Kingdom Ltd. (United Kingdom) Lanier Worldwide Inc. GmbH (Austria) Siemens A.G. and Toshiba RCA GmbH (Germany) Fourteen new analog support functions are now available for the HSC4000 ADVANCELL library, AsialPacific a joint project whose parmers include Harris, Siemens, and Toshiba. Harris Advanced Technology Sdn. Bhd. (Malaysia) Harris Far East Ltd. (Taiwan) Autodesk, Inc. Harris K.K. (Japan) Harris' Scientific Calculations Division signed a Harris Semiconductor HK Ltd. (China) value-added reseller (VAR) agreement with Auto Harris Semiconductor (Malaysia) Sdn. Bhd. desk to resell the AutoCAD drafting and documen (Malaysia) tation package with an interface to (he Scicards Harris Semiconductor (Singapore) Pte. Ltd. package for printed circuit board and hybrid design (Singapore) through AutoCAD's DXF format Harris Semiconductor (Taiwan) Ltd. (Taiwan) Harris Solid State (Malaysia) SdrL Bhd. (Malaysia) Language Processors, Inc. (LPI) Harris/3M Document Products (Australia) Pty. Ltd. LPI and Harris' Computer Systems Division (Australia) announced the availability of LPI's COBOL Intersil (India) Ltd. (India) and its debugger, Code Watch, on the Harris Intersil (Singapore) Ptd. Ltd. (Singapore) Night-Hawk family of real-time multiprocessing Lanier (Australia) Pty. Ltd. (Australia) conq>utBr systems. Lanier Holding Pty. Ltd. (Singapore) Lanier (NZ) Inc. (New Zealand) 1989 ROW Tennessee Valley Authority (TVA) Harris Broadcast Systems (Mgeria) Hanis' Government Electronic Systems Division Harris S.A, de C.V. (Mexico) was selected to be system manager and integrator Harris Saudi Arabia Ltd. (Saudi Arabia) for die TVA's Nuclear Telecommunications System Hanis/3M Documento Productos de Costa Rica S.A. Project (Costa Rica) Harris/SM Documentos Productos de el Salvador VERDIX Corporation S.A. (m Salvador) VERDIX announced the signing of an OEM agree Hanis/3M Documentos y Productos S.A. (Columbia) ment with Harris Computer Systems, a division of Hanis/3M Document Products de Argentina S.A. Harris Corporation, for the resale of the VERDIX (Argentina) Secure Local Area Network (VSLAN) product Harris/3M Document Product de Chile S.A.N.V. worldwide. (Chile) HaTris/3M Document Products de Dominicana S.A. (Dcnninican Republic) 1988 Hanis/3M Document Products de Guatemala S.A. (Guatemala) Cipher Data Harris/3M Document Products de Panama S.A. Cipher Data announced fiiat Harris' Computer Sys (Panama) tems Division signed a two-year contract valued at $42.4 million for Cipher's ST150S 1/4-inch car tridge tape drives and the Microstreamer and CacheTape 1/2-inch reel-to-reel tape drives. ALLIANCES, JOINT VENTURES, AND LICENSING AGREEMENTS 1987 1990 Alloy Computer Products Logic Modeling Systems, Inc. Alloy and Harris entered a joint agreonent under Logic Modeling Systems announced an OEM whidi Harris would offer a broad range of third- relationship with Harris' Scientific Calculations party support services to Alloy customers.

Wesley E. Cantrell President, Lanier Worldwide MERGERS AND ACQUISITIONS James R. Oyler 1989 Senior vice president

Teleprobe Systems Bryan R. Roub Harris acquired Teleprobe Systems of Rochester, Senior vice president. Finance New York, which specializes in microprocessor- based systems to test subscriber loops for telcos. The purchase price was $2 millioa Teleprobe's Fayette Brown III operations will form part of Harris' Dracon Divi Vice president. Corporate Development sion in Camarillo, California. W. Peter Carney Harris/3M Document Products, Inc. Vice president. Corporate Relations Harris acquired the outstanding SO percent interest in the Harris/3M joint venture and renamed it Ricardo A. Diaz Lanier Worldwide. Lanier is now a wholly owned "^ce president. Manufacturing Programs subsidiary of Harris. Allied Broadcast Equipment Corporation (ABEC) Robert W. Fay During fiscal 1989, Harris acquired ABEC, the Vice president, treasurer largest US distributor to the international radiobroadcasting industry. John A. Hubner GE's Microelectronics Center (MEC) Vice president, controller Harris acquired MEC in July 1989. MEC special izes in high-density gate-array and standard-cell ASICs based on {dvanced process technologies.

1988 PRINCIPAL INVESTORS General Electric Solid State (GESS) Harris purchased the net assets of GESS firom General Electric for approximately $203 million in Information is not available. cash. GESS, which produces semiconductor products for both commercial and government markets, wiU operate in Hanis' Semiconductor Sector. FOUNDERS

KEY OFFICERS Information is not available.

John T. Hartley Chairman, president, chief executive O£&CCT

Table 4 Comprehensive Financial Statement Fiscal Year Ending June 30 (MiUions of US DoUars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $1,064.9 $1,041.8 $1,082.8 $836.4 $1,533.5 Cash 45.1 98.4 88.2 38.9 100.7 Receivables 414.3 381.2 376.5 316.9 582.8 Maiketable Securities 11.2 9.4 87.2 53.8 87.8 Inventory 364.6 279.9 263.0 169.2 419.4 Other Current Assets 229.7 272.9 267.9 257.6 342.8 Net Property, Plants $517.3 $498.5 $466.8 $415.9 $616.2 Other Assets $206.3 $252.8 $246.9 $365.9 $408.1 Total Assets $1,788.5 $1,793.1 $1,796.5 $1,618.2 $2,557.8 Total Current Liabilities $585.6 $549.7 $559.2 $443.7 $1,237.8 Long-Term Debt $190.2 $182.6 $145.9 $157.0 $314.6 Other Liabilities $145.1 $159.8 $106.9 $45.3 $58.3 Total Liabilities $920.9 $892.1 $812.0 $646.0 $1,610.7 Total Shareholders' Equity $867.6 $901.0 $984.5 $972.2 $947.1 Common Stock 40.3 40.3 41.7 41.8 38.7 Other Equity 124.0 133.2 166.7 89.2 156.4 Retained Earnings 703.3 727.5 776.1 841.2 752.0 Total Liabilities and Shareholders' Equity $1,788.5 $1,793.1 $1,796.5 $1,618.2 $2,557.7 Income Statement 1985 1986 1987 1988 1989 Revenue $2,281.2 $2,216.6 $2,079.0 $1,798.1 $2,213.7 US Revenue 1,969.2 1,937.6 1,767.1 1,693.3 1,953.5 Non-US Revenue 312.0 279.0 311.9 104.8 260.2 Cost of Sales $1,503.9 $1,488.6 $1,362.9 $1,199.9 $1,483.9 R&D Expense $115.7 $117.9 $118.0 $100.0 $104.0 SG&A Expense $677.7 $654.8 $610.6 $481.6 $565.1 Capital Expense $163.0 $99.0 $75.0 $75.3 $110.0 Pretax Income $99.9 $60.7 $122.4 $127.5 $167.2 Pretax Margin (%) 4.38 2.74 5.89 7.09 7.55 E£fective Tax Rate (%) 19.70 1.80 31.00 30.70 30.50 Net Income $80.3 $59.6 $84.5 $100.5 $21.3 Shares Outstanding, Millions 40.3 40.3 41.7 41.8 38.7 Per Share Data Earnings $0.88 $0.88 $0.88 $0.88 $0.88 Dividend $2.00 $1.48 $2.05 $2.50 $0.55 Book Value $21.53 $22.36 $23.61 $23.26 $24.47

Tkble 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending June 30 (Millions of US Dollars, except Per Share Data)

Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Cuirent (Times) 1.82 1.90 1.94 1.89 1.24 Quick (Times) 1.20 1.39 1.47 1.50 0.90 Fixed Assets/Equity (%) 59.62 55.33 47.41 42.78 65.06 Current Liabilities/Equity (%) 67.50 61.01 56.80 45.64 130.69 Total Liabilities/Equity (%) 106.14 99.02 82.48 66.45 170.06 Profitability (%) Return on Assets _ 3.33 4.71 5.89 1.01 Return on Equity - 6.74 8.96 10.27 2.22 I*Tofit Maigin 3.52 2.69 4.06 5.59 0.96 Other Key Ratios R&D Spending % of Revenue 5.07 5.32 5.68 5.56 4.70 Capital Spending % of Revenue 7.15 4.47 3.61 4.19 4.97 Employees 31,400 26,700 24,300 22,600 35,100 Revenue ($K)/Employee $72.65 $83.02 $85.56 $79.56 $63.07 Capital Spending % of Assets 9.11 5.52 4.18 4.65 4.30 Source: Hairis Coipoiatioii Aoimal Rqwits Dataqnest (1990)

Harris Corporation 1025 W. NASA Boulevard Melbourne, Florida 32919 Telephone: (407) 727-9100 (Millions of Dollars) Balance Sheet (June 30) 1985 1986 1987 1988 1989

Total Current Assets H/A H/A H/A 836.3 1 ,533.6 Cash H/A H/A H/A 92.7 188.6 Receivables H/A H/A H/A 316.9 582.8 Inventory H/A H/A H/A 169.2 419.4 Other Current Assets H/A H/A H/A 257.4 342.8 Net Property, Plant, and Equip. 502.9 480.5 443 415.9 616.2 Other Assets H/A H/A H/A 365.9 408.1 Total Assets 1,808.1 1,802.0 1,796.0 1,618.1 2 ,557.8

Total Current Liabilities N/A H/A H/A 443.7 1,,237. 8 Long-Term Debt 195.5 198.3 163.2 157.0 314.6 Other Liabilities M/A H/A H/A 45.3 58.2 Total Liabilities 940.6 901.2 811.7 645.9 1,,610. 6

Total Shareholder's Equity 867.5 900.8 984.3 972.2 947.2 Connnon Stock 40.3 40.3 41.7 41.8 38.7 Other Equity 124.1 133.2 166.7 173.2 156.4 Retained Earnings 703.4 727.5 776.1 841.2 752.0 Cost of Comnon Stock 0.2 0.2 0.2 84.0 -

Combined Liability/Equity 1,808.1 1,802.0 1,796.0 1,618.1 2,,557. 8

Income Statement (June 30) 1985 1986 1987 1988 1989

Revenue (sales, rentals, services) 967.1 1,907.3 1,797.3 1,798.1 2,213.6 Equity Income N/A H/A 17.2 20.0 15.3 Cost of Sales 1,330 1,311.3 1,204.6 1,199.8 1,483.9 Gross Margin (S) 32.4 31.2 33.0 33.3 33.0 SG&A Expense (includes engr.) N/A N/A 479.7 481.6 565.1 Other Operating Expenses N/A N/A (3.0) 17.0 1.6 Total Operating Expenses N/A N/A 1,681.3 1,698.4 2,050.6 Operating Income (Loss) H/A H/A 116 99.7 163 Interest, Net N/A N/A 7.8 7.8 (11.1) Pretax Income (from continuing operations) 97.9 100.5 141 127.5 167.2 Provision for Taxes (Credit) 23 27.6 50.1 39.1 51 Effective Tax Rate 23.5\ 27.5% 35.5\ 30.7% 30.5% Income from Discontinued Operations 5.4 (13.3) (6.4) (23) (94.8) Cumulative Effect of Acctg. Change - - - 35.1 - Net Income 80.3 59.6 84.5 100.5 21.4

Avg. Shares Outstanding (Millions) 40.2 40.3 41.2 40.2 38.7 Employees (Thousands) H/A N/A H/A 22.6 35.1 Capital Expenditure 126 69 71 75 110

n/k 3 Restated data not available for these categories for these years.

The corporation has taken a restructuring provision in fiscal 1989 for the sale of portions of its business. This resulted in the restatement of selected financial data to reflect the corporation's continuing operations.

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OVERVIEW—-THE COMPANY Harris Corporation is the successor of a 1967 merger between Harris-Intertype Corporation, a leading manufacturer of printing equipment, and Radiation Inc., an electronics company engaged in the design, development, and manufacture of advanced communications and information-processing equipment and systems. In February 1980, Farinon Corporation, a producer of microwave transmission and telephone equipment, merged with Harris Corporation. In April 1983, Harris sold its Printing Equipment Sector and concentrated on electronics equipment. In July 1983, Harris Corporation and Lanier Business Products, Inc., which produces and distributes office automation products, agreed in principle to the merger of Lanier into Harris on a pooling-of-interest basis. In 1986, Harris acquired Scientific Calculations, Inc., a leading supplier of electronic CAD/CAM software and systems.

Harris Corporation designs, produces, and markets information, communications, and semiconductor products, systems, and services to government and commercial customers worldwide. The Company's products are used in voice and video communications, data processing, data communications, and graphics communications systems.

COMPANY ORGANIZATION

Immediately following the merger of Radiation and Harris-Intertype, Harris Semiconductor became a division of that new company. In 1977, it became a group, and in April 1982, Harris Semiconductor reached sector status within the Harris Corporation. During the past two years, Harris Corporation has been undergoing considerable restructuring in keeping with the Company's future strategy of focusing on four profitable and strategically important core businesses in which Harris has a successful track record. Harris has made provisions for the sale of its data communications business and its personal computer-based office systems business. The Company completed its acquisition of GE Solid State in fiscal 1989 and exercised an option to purchase 3M Company's 50 percent interest in the jointly owned Harris/3M Documents Products, Inc. Following the purchase, Harris expanded the business by incorporating its Lanier Voice Products Division, renaming the wholly owned subsidiary Lanier Worldwide, Inc. Additionally, Harris acquired Allied Broadcast Equipment Corporation, a U.S. distributor to the radio broadcast industry. Harris now comprises four major business segments: Electronic Systems, Communications, Semiconductors, and Lanier Worldwide.

SEMICONDUCTOR-RELATED MERGERS AND ACQIHSITIONS

Matra-Harris Merger In September 1979, Harris and Matra, the French state-controlled arms and electronics group, formed a European joint venture known as Matra-Harris Semiconducteurs S.A. This venture was formed to jointly develop and manufacture semiconductor devices for the European markets, particularly France. In exchange for its CMOS technology, Harris received 49 percent equity in the joint venture. However, Harris announced a writedown of the joint venture assets in June 1988.

GE Solid State Acquisition On August 15, 1988, a letter of intent was signed announcing Harris' intention to purchase General Electric's semiconductor operations, GE Solid State. On November 8, 1988, one month ahead of schedule, the transaction valued at $206 million was completed. From an operational standpoint, the deal will be treated as a merger. Harris will retain the GE/RCA and Intersil brand names that already have market recognition but will redesign the sector logo for promotional purposes. Harris Corporation also announced in early July 1989 that it would acquire General Electric's Microelectronics Center (MEC). Located in Research Triangle Park near Raleigh, North Carolina, MEC was not originally a part of Harris' purchase of GE Solid State. Because of the military applications for MECs process technology, Harris will pick up a customer base that includes defense contractors, the Department of Defense, GE Aerospace, and U.S. government agencies.

The acquisition strengthens Harris' position in both the commercial and military markets. The combined military sales of the two companies ranks Harris number one in military sales in 1988 with sales of $245 million in government applications. The merger also results in the consolidation of the supply of super radiation-hardened (rad-hard) devices by Harris and RCA, worldwide leaders in this product area. Harris significantly improved its commercial market position with the acquisition of GE Solid State. According to Harris, commercial sales currently represent more than two-thirds of revenue, compared with 60 percent military sales prior to the acquisition. The acquisition also provides new capabilities in automotive applications and power (including smart power). In addition, the acquisition significantly improved Harris' international position with more than 30 percent of sales coming from overseas. Jon Cornell, president of the Harris Semiconductor Sector, will head the enterprise, as shown in Figure 1.

Figure 1 Harris Corporation SemiconductcH* Sector Organization Chart

Manufacturing Division Systems VP & Qen, Mgr. VP p Ruse Morcom Karl McCalley Military & Aerospace Division Human Resources Special Prelects VP & Gen. Mgr. Jay Davis Director Jacic Wilson Commercial Products Division l-iuman Resources VP & Gen. Mgr, Director Semiconductor Sector Jeff Peters Chairman and CEO Denny Marini President John T. Hartiey Jon Cornell Commercial AStC Legal Division Administration Sector Counsel VP & Gen. Mgr, Les Hart Director Steve Ahrens Tim Muth Power Products Finance Division Sector Controller VP & Gen. Mgr. Jim Schultz Gene Freeman Sector Terminology Marketing Division VP & Chief Scientist VP & Qen. Mgr. Chuck Nuese Ray Oglethorpe

0005722-1 Source: Harris Corporation

FINANCIAL INFORMATION For the fiscal year ending June 30, 1989, Harris Corporation reported a 23 percent increase in sales to $2,213.6 million dollars, although net income declined approximately 19 percent to $21.3 million. Net income includes an $85 million restructuring provision for selling the corporation's data communications and personal computer-based office systems businesses. In fiscal 1989, sales of products exported from the United States or manufactured abroad were $315 million, or 15.3 percent of the corporate total, compared with $305 million or 14.7 percent in fiscal 1987. The fact that Harris derives the bulk of its revenue from U.S. sales is not surprising when examined in terms of the composition of Harris' revenue by business sector. Sales made to the U.S. government by all segments, although primarily by the Electronic Systems Sector, accounted for 41.3 percent of total 1989 sales.

LINES OF BUSINESS The Electronic Systems Sector represents the largest of Harris' four businesses, generating approximately 41 percent of corporate revenue. The Electronics Systems Sector incorporates the former Government Systems Sector and three divisions from the former Information Systems Sector—Computer Systems, Controls and Composition, and Scientific Calculations. The recent acquisition of GE Solid State also altered the composition of Harris' business considerably, with semiconductor revenue accounting for approximately 17 percent of business in fiscal 1988 and increasing to 25 percent in fiscal 1989. During the past five years. Communications has consistently made up between 20 to 23 percent of the business. Lanier Worldwide revenue accounts for between 10 and 15 percent of the business. Table 1 shows revenue by these major lines of business for the last five years.

Table I Harris Corporation Net Revenue by Lines of Business 1985-1989 (Millions of Dollars)

1995 1999 1997 1999 1989

Lanier Worldwide $303.2 $259.7 $181.8 $187.4 $315.3 Percentage of Revenue 15.4% 13.6% 10.1% 10.4% 14.2%

Communications $452.8 $388.5 $379.7 $377.7 $441.4 Percentage of Revenue 23.0% 20.4% 21.1% 21.0% 19.9%

Semiconductors $273.5 $293.0 $285.6 $300.1 $542.3 Percentage of Revenue 13.9% 15.4% 15.9% 16.7% 24.5%

Electronic Systems $937.6 $966.1 $950.2 $932.9 $914.6 Percentage of Revenue 47.7% 50.0% 52.9% 51.9% 41.3%

Note: Percentages may not equal 100% because of rounding. •Prior year results have been restated to reflect the Corporation's continuing operations.

Source: Harris Corporation 1988 Annual Report

SEMICONDUCTOR SECTOR

Facilities The acquisition of GE Solid State has contributed significantly to the Company's manufacturing capabilities. Clean room capacity is estimated to have more than doubled as shown in Table 2, which lists Harris' semiconductor facilities followed by those acquired through GE Solid State. In addition to these wafer fabrication locations, Harris also has packaging and assembly plants in Melbourne, Florida, Milpitas, California, Santa Clara, California, Findlay. Ohio; and Mountaintop, Pennsylvania, all in the United States; Kuala Lumpur and ^^^oiaij, Malaysia; Dundalk, Ireland; Bombay, India; and Singapore. /fkuuO^. ^ Subsequent to its purchase of GE Solid State, Harris Corporation announced in July 1989 that it would acquire General Electrics' Microelectronics Center (MEC). Located in Research Triangle Park near Raleigh, North Carolina, MEC was not originally a part of Harris' purchase of GE Solid State. MEC, which employs 350 people, specializes in the design, development, fabrication and test of ASIC products— particularly gate array and standard cell devices based on CMOS and CMOS/SOS (silicon-on-sapphire) process technologies. The Research Triangle Park facility will provide a second-source foundry for Harris' rad-hard circuits and an ideal site for silicon-on-insulator (SOI) development. Table 2 Harris Corp(»^tion Semiconductor Manufacturing Facilities

Clean Room Company City State Type Proauct/Technoloqv Gross Sq. Ft.

Hams Melbourne PL NF Linear, 1091c, ASIC aiscrete/bipolar, CMOS N/A Hams Melbourne PL NP 286 MPU menory, logic, ASIC, ciacretei, CMOS 6, JOO HalCIS Melbourne PL NFT ASIC linear/CMOS 26,000 Hams Melbourne FL NF Arrays CBIC custom linear/bipolar CMOS HOS BlCMOS 6,000 Hams Melbourne FL NFAT Discrete linear shallow junction/bipolar CMOS 26,000 Hams Melbourne FL P HIL-STD/CnOS N/A Harris Hiciowave Milpitas CA NFAT MESFET CBIC linear logic/GAAS 7,500 Harris/GE Soiid State Finalay OH NF 16K SRAM, logic/bipolar CMOS/SOS 39,000 Hams/GE Solia State Finalay OH NPDSP DSP, logic, linear, MIL STO/CHOS HOS 42,000 uarris/G£ SoXia State Finalay oa NF DSP, MIL-STD/CMOS N-Nell M2 22,000 Harris/GS SoXia State Mountaintop PA NF Power transistor, opto/bipolar 40,000 Hams/GG Solia State Mountaintop PA NP Power discrete, op amp/BiCMOS CMOS 7,000 Harris/GE Solia State Santa Clara CA P DSP MIL-STD/CMOS 4,000 Uaciia/oe Solia State Santa Clara CA F Logic, discrete, ASIC, MIL-STD/CMOS 14,000 Harrla/GE Solia State Santa Clara CA F N/A/CMOS N/A Harris/GE Microelectronics Research Center Triangle Park NC PAT Arrays, CBlc/custom/CMOS, SOS 20,000

A • Assenoly N/A • Not Available P • Pilot line T • Test F > Fab MF - Nonaeaicatea tounary service available R • Research

Source: Harris Corporation

Capital and R&D Spendii^ Table 3 includes GESS expenditure in its 1988 data.

Table 3 Harris Corporation Semiconductor Capital and R&D Spendii^ by Calendar Year 1984-1988 (Millions of Dollars)

1984 1985 1986 1987 1988

Semiconductor Revenue $256.0 $247.0 $267.0 $275.0 $884.0

Semiconductor Capital Spending $47.0 $52.0 $37.0 $30.0 $65.0 As a % of Semiconductor Revenue 18.4% 21.1% 13.9% 10.9% 7.4% Percent Change in Capital Spending 51.6% 10.6% (28.8%) (18.9%) 116.7% Semiconductor R&D Spending $44.0 $47.0 $36.0 $37.0 $45.0 As a % of Semiconductor Revenue 17.2% 19.0% 13.5% 13.5% 5.1% Percent Change in Capital Spending 100.0% 6.8% (23.4%) 2.8% 21.6% Combined Capital and R&D Spending $91.0 $99.0 $73.0 $67.0 $110.0 As a % of Semiconductor Revenue 35.5% 40.1% 27.3% 24.4% 12.4% Percent Change in Capital Spending 71.7% 8.8% (26.3%) (8.2%) 64.2%

Source: Dataquest January 1990

Products and Markets The Harris Semiconductor Sector produces standard, semicustom, and custom integrated circuits (ICs) using CMOS, bipolar, dielectric isolation, gallium arsenide, and rad-hard technologies. These products—for both analog and digital applications— /^^ include memory, logic, data conversion, telecommunications, and microprocessor p^ circuits.' Harris concentrates on niche products for signal processing and control within '^^^t, five m^kets: government (avionics, missiles, communications, and satellites); industrial ' , (process control, instrumentation, and factory automation); automotive; electronic data fY\iHM.^^'^ processing (minicomputers and office automation); and communications r^ A-^i (telecommunication switches). Within these markets, Harris provides products for ^l>t applications that demand the highest level of performance in terms of speed, precision, - ^ low power, suitability for harsh environments, and reliability. The devices are sold to IC defense contractors and U.S. government agencies, as well as to commercial markets. From the perspective of the overall company, Harris' semiconductor operations always have been directed toward servicing the merchant market. Less than 5 percent of its ICs are internally consumed. In the past, the Company has successfully targeted this business toward certain applications within particular niche markets. The acquisition of GE Solid State has changed the profile of Harris' Semiconductor Sector. • The organization comprises the Commercial Products Division, Commercial ASICs Division, Commercial Power Division, and the Military and Aerospace Division. The Military and Aerospace Division markets military versions of commercial products and develops custom and semicustom circuits for military programs. Tables 4 and 5 provide Harris' semiconductor revenue by product and by region, respectively, and Table 6 shows the Company's worldwide ranking by major product category for 1988.

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Table 4 Estimated Worldwide Semiconductor Revenue by Product Category 1984-1988 (Millions of Dollars)

1994 1985 3,986 1987 1988*

Total Semiconductor $256 $247 $267 $275 $884

Total Integrated Circuit $256 $247 $267 $275 $718

Bipolar Digital (Technology) $ 55 $ 43 $ 46 $ 30 $ 62 TTL -55 43 29 23 58 ELC Other Bipolar Digital 17 7 4

Bipolar Digital (Function) $ 55 $ 43 $ 46 $ 30 $ 62 Bipolar Digital Memory 44 33 23 6 3 Bipolar Digital Logic 11 10 23 24 59

MOS (Technology) $105 $111 $108 $106 $390 NMOS - - - 15 2 PMOS CMOS 105 Ill 108 91 381 BiCMOS 7 MOS (Function) $105 $111 $108 $106 $390 MOS Memory 35 30 40 36 55 MOS Microdevices 52 58 42 44 110 MOS Logic 18 23 26 26 225

Analog $ 96 $ 93 $113 $139 $266

Total Discrete - - - - 145

Total Optoelectronic _ . ^ ^ 21

^Includes 6ESS.

Source: Dataquest January 1990

Table 5 Harris SemiccHiductor Estimated 1988 Worldwide SemiccHuluctor Revenue by Geographic Region (Millions of Dollars)

United States Japan Europe ROW Total Total Semiconductor $639 $23 $169 $53 $884 Total Integrated Circuits $522 $23 $134 $39 $718 Bipolar (Technology) $ 62 - - - $ 62 Digital Memory $ 3 - - - $ 3 Digital Logic $ 59 - - - $ 59 MOS (Technology) $282 $ 8 $ 83 $17 $390 Memory $ 42 - $ 12 $ 1 $ 55 Microdevices $ 86 $ 2 $ 21 $ 1 $110 Logic $154 $ 6 $ 50 $15 $225 Analog $178 $15 $ 51 $22 $266 Total Discrete $106 - $ 27 $12 $145 Total Optoelectronic $ 11 - $ 8 $ 2 $ 21 Table 6 Harris Corporation Worldvdde Ranking in Semicoixluctor Market (Millions of Dollars

Revenue Industry 1987 1988 1988 % Change % Change Rank Rank Revenue 1987-1988 1987-1988 Total Semiconductor 26 19 $884 11.2% 33.0% Total Integrated Circuits 23 18 $718 13.4% 37.4% Bipolar (Technology) 17 12 $ 62 106.7% 9.2% Digital Memory 10 10 $ 3 (50.0%) 11.0% Digital Logic 21 13 $ 59 145.8% 9.0% MOS (Technology) 30 17 $390 15.0% 54.5% Memory 27 27 $ 55 (6.8%) 93.1% Microdevices 22 16 $110 29.4% 39.9% Logic 39 12 $225 15.4% 29.2% Analog 17 15 $266 0.8% 16.0% Total Discrete - 18 $145 (0.7%) 14.4% Total Optoelectronic - 22 $ 21 31.3% 27.5%

*1987 rank according to Harris only semiconductor revenue. All 1988 data includes revenue of GESS. Source: DatagueSt January 1990

CMOS Digital Products The Company has focused on CMOS technology; Harris offers Intel-sourced microprocessors such as the 8086 and 80286 in CMOS, as well as a family of complementary peripheral devices. The Company ranked number 16 among worldwide suppliers of MOS microdevices, with sales revenue of $110 million. This figure represents growth of 29 percent over 1987. Early in 1988, Harris announced the RTX (Real-Time Express) 2000, a highly integrated microprocessor that offers on-board memory, timers, interrupt controllers, and more. The new design has four data buses rather than one, each of which operates in parallel with the main memory data bus. Within a single clock cycle, the Harris Real-Time Express (RTX) processor is able to operate concurrently on all four buses while directly executing high-level language instructions. The RTX core processor also has been incorporated into Harris' standard-cell library. Harris is a producer of CMOS SRAMs and PROMs primarily for military markets, with sales totaling $29 million in 1988. In late 1988, the Company began offering a new 2Kx8 rad-hard CMOS PROM. This product, HS-6617RH PROM, will be used in space and military applications, which to date have relied on bipolar or nonrad-hard CMOS PROMs. Developed at the Jet Propulsion Laboratory (the government-funded research center for NASA), the PROM is superior for space applications because of its rad-hard properties and its lower power requirements compared with bipolar PROMs. Also for space applications, Harris offers two rad-hard asynchronous CMOS static RAMs, the HS-65C162RH (with CMOS input levels) and the HS-65T162RH (with TTL input levels). Signal-Processing Products One of Harris' traditional strengths is in integrated circuits for analog applications. Analog circuits are used for signal processing in radio and telephone communication systems. Signal-processing products include linear, data acquisition and conversion, communications, and vertically integrated products. With total analog sales of $266 million in 1988, Harris ranked number 15 among worldwide suppliers in a total analog market of $8.6 billion. The Company is very much process driven in terms of its product offerings. Approximately 15 years ago, Harris developed the dielectric isolation process, a keystone technology that provides complementary (NPN/PNP) high-performance vertical transistors and allowed the Company to surmount the latch-up problems presented by the junction-isolated CMOS process. Harris has introduced to its product line a number of new products that employ this technology. The HA-5004 video buffer amplifier provides improved speed, output, and gain over earlier Harris products for such applications as

video gain blocking, high-speed peak detection, fiber-optic transmission, and current-to-voltage conversion for both military and nonmilitary uses. Other new products include the HI-222 broadcast quality, broad-bandwidth, high-speed video switch; the HA-2410 precision op amp with foiir digitally selectable channels; and the HV-1205 monolithic power supply. The HV-1205 incorporates a transformer, a rectifier, and a 5-volt regulator on a single chip, making it suitable for nonisolated applications requiring uninterrupted operation and protection against transient surges. It is the introductory part of a projected family of precision power supply products that will include power processors, power drivers, and high-voltage amplifiers. In late 1988, Harris introduced an 8-bit flash converter that employes the 80286 CMOS process. This new flash converter, according to Harris, serves as a bridge to Harris' planned introduction in 1989 of a BiCMOS fabrication process geared for data acquisition and high-speed telecommunications applications.

ASIC Products Harris has a strong ASIC program aimed toward the military market and has pursued the commercial market to a lesser extent. Prior to the GE Solid State acquisition, Harris' ASIC product offerings included cell-based full-custom ICs and gate arrays, with cell-based ICs showing the largest revenue contribution. GE Solid States' strong gate array technology and RCA's SOS process, both directed at the military market, solidify the Company's position in this area. Even more important to Harris is the fact that the GE Solid State acquisition strengthens Harris' commercial (including automotive) ASIC capabilities for standard cell, gate array, and mixed array products.

Smart Power Products Industry-wide smart power revenue was $620 million for 1988, with the data processing (DP) segment representing the largest share at 32 percent. The automotive segment of the smart power market presents a particularly promising growth area. This segment is projected to increase to 40 percent of that total market by 1995 with nearly $700 million in sales (up from 18 percent in 1988), Prior to the acquisition, Harris produced only a limited number of smart power ICs. The New Harris Semiconductor Smart Power Products group is located in Research Triangle Park, North Carolina; it was part of the GE Solid State purchase. It is primarily an IC marketing and design facility that serves a variety of power control markets. Smart power manufacturing is performed at Harris' Mountaintop, Pennsylvania, facility, Smart power develops low-level logic signals combined with power switching components in a hybrid or monolithic format. The present thrust is in analog/digital power monolithic integration of high-voltage and high-current materials using silicon-based bipolar/MOS technologies,

Nfilitary and Aerospace Division Harris serves government, space, medical, and other high-reliability markets that require special testing, program management, custom circuit design, and product assurance programs. Harris also markets a line of standard rad-hard ICs. A complete family of rad-hard microprocessor peripherals, gate arrays, and standard cell semiconductor logic is included in the division's portfolio.

Microwave Products An operation was created in 1980 to exploit the potential of gallium arsenide (GaAs) technology, a technology that promises the ultrahigh speed and increased radiation hardness particularly required for military electronic systems and microwave/radar applications. Sales were estimated at approximately $10 million in 1988. Harris offers product families of discrete devices and microwave ICs (the HMM series of linear ICs), as well as field-effective transistors (FETs), and provides foundry service based on the Company's microwave and analog cell libraries. In November 1988, the Company announced that it will be commercially producing GaAs FETs with gate lengths of 0.25 micron. During 1988, Harris sold its microwave hybrid assembly to Litton.

Technology Trends Historically, most of Harris' revenue has been derived from the areas of analog and CMOS logic. In the future, the emphasis on analog and CMOS logic products will continue but will be supplemented by the important addition of power product offerings that also focus on the signal-processing control applications of the various end markets served by Harris. The Company's internal activities are augmented by external research and development. Harris is a founding member of Sematech, the joint industry and government consortium aimed at developing advanced semiconductor manufacturing technology. The Company also maintains research contracts with several universities and participates in programs of the Semiconductor Research Corporation (SRC) and the Microelectronics and Computer Technology Corporation (MCC). Harris will also have continuing access to semiconductor research performed at GE and David Sarnoff Laboratories.

Semiconductor Alliances A summary of Harris' semiconductor alliances is listed in Table 7. Where applicable, we have indicated the source as Company A and the recipient as Company B. The table is followed by an abstract providing further details of each alliance.

Table 7 Harris Corporation Summary of Semiconductor Alliances

Company A Company B Type Products Date

Harris Toshiba and Siemens SS Cell-based ICs 1988 Harris Data Linear SS Analog ICs 1988 Harris Zoran TE DSP, MPU 1988 Harris VLSI Technology JD Gate arrays 1988 Harris Intel JD MPU telecom ICs 1984 Intel Harris TE MPU, MPR family 1981 Harris Matra-Harris JV CMOS ICs 1980

Source: Dataguest January 1990

Harris/Toshiba/Siemens

This is an agreement that Harris inherited as a result of the acquisition of GESS. GE, Siemens, and Toshiba agreed to jointly develop a common cell library called ADVANCELL. Harris/Data Linear

Data Linear is a second source for Harris' 5330 precision sample-and-hold amplifier. Harris/Zoran

Harris and Zoran signed a five-year product and technology exchange agreement for the development of digital signal processing (DSP) and real-time control products. Zoran becomes a second source for Harris' RTX 2000. Harris becomes a second source for Zoran's DSP and vector signal processors. Harris acquired an interest in Zoran and will serve as a foundry source, providing CAD technology and equipment to enhance future joint-product design activities.

Harris/VLSI Technology

Harris and VLSI Technology signed an agreement to codevelop a rad-hard gate array family called VGH. The family will be based on VLSI's high-density VGT200 gate array family and Harris' GAMMA III rad-hard VHSIC-like CMOS process. GE Solid State also has an agreement to alternate source VLSI gate arrays for commercial and standard military applications.

Harris/Intel This agreement between Intel and Harris provided Harris with the opportunity to develop a CMOS version of Intel's 80286. The 80C286 was successfully introduced, but the companies decided not to collaborate on telecom circuits. In addition, Harris, Intel, and Matra-Harris planned to jointly develop telecommunications circuits such as CODEC/Filters and SLICs. Intel/Harris In 1981, Intel provided Harris with architecture information on the 8086 and 8088 microprocessors and microperipherals for conversion to a CMOS version of the design. Harris provided Intel with its CMOS expertise, and both companies planned to produce CMOS versions of these parts. Harris/Ma tra-Harris Harris entered into a joint venture with Matra, Inc., of France (which led to the formation of Matra-Harris Semiconducteurs S.A.) to jointly develop and manufactxore ICs for the European market. In exchange for its CMOS technology, Harris received 49 percent equity in the joint venture. The companies exchange technology and product development information on an ongoing basis. Harris/Digital Equipment Corporation Harris and Digital agreed to jointly develop a microprocessor based on Digital's PDP-11 minicomputer architecture and Harris' CMOS technology.

Business Strategies for Semiconductor Sector Harris' basic strategy is to focus on signal processing and control applications in all end markets. The acquisition of GE Solid State significantly enhances that strategy by providing power (including smart power) technology, broader product lines in analog and CMOS logic, and a strong position in automotive-specific products. Because of market globalization, increasing international competition, and the escalating capital commitments required to be a worldwide semiconductor manufacturer, the acquisition of GE Solid State represents a major strategic initiative for Harris Corporation. The acquisition responds to the issue of critical mass in today's market; economies of scale in areas such as manufacturing, R&D, and marketing; and an improved market position for Harris in terms of a broader product portfolio and more diversified end-use and regional markets. Figures 2, 3, and 4 illustrate the impact of this acquisition on Harris' semiconductor business in terms of end-use markets, regional markets, and product market share, respectively. The addition of GE Solid State presents not only a more balanced market position in terms of government versus commercial segmentation but also in terms of markets and regions served.

Figure 2 Harris CorporatiCHi Semiconductor Sales by End-Use Maricets for Fiscal Year 1988

Communications IS.0%

Communications 5.5% Consumer/Auto 1.5%

Preacquisition Postacquisition

0006722-2 Source: Harris Corporation

Figure 3 Harris Corporation Semiconductor Sales by Region for Fiscal Year 1988

Preacquisition Postacquisition

0005722-3 Source: Harris Corporation

Figure 4 Harris Carporation Semiconductor Sales by Product for Fiscal Year 1988

Bipolar Logic/. Rad-Hard 11% Dlscreta

Preacquisition PostacquisJtion

0005722-4 Source: Harrii Corporation

NONSENflCGNDUCTOR PRODUCT SUMMARY Following major restructuring activities in fiscal 1989, Harris now consists Of four major business segments. As well as its Semiconductor Sector, Harris has reorganized to incorporate the former Government Systems Sector along with three division from the former Information Systems Sector into the Electronic Systems Sector; Harris acquired the outstanding 50 percent interest in the Harris/3M joint venture, expanded it and renamed it Lanier Worldwide; and the Communications Sector remains the same.

Electronic Systems Sector This sector, which is engaged in research, development, design, and production of a broad range of high-technology systems for government and commercial organizations in the United States and overseas, has ongoing annual sales approaching $1 billion. The principal products and programs of this sector include advanced communication and information-processing systems for aircraft and space vehicles; terrestrial and satellite communications systems; air-traffic control systems; ground-based systems involving the collection, processing, and distribution of information; multimedia commimication and information-processing systems and networks for federal, state, and local

governments; support systems and services covering maintenance-management, training/simulation, and automatic-test systems; control systems for electric utilities and railroads and composition systems for newspapers and publishing houses; computer systems for real-time and relational database applications; and software-based design automation systems for the electronics industry.

Communications The Harris Commvmications Sector offers products that span virtually all major communication technologies including microwave, lightwave, two-way radio, broadcast radio and television systems, digital telephone switches, satellite systems, auxiliary telecommimication products, and turnkey communication systems. Harris is a major producer of low- and medium-capacity analog and digital microwave systems in North America under the Farinon trademark; Harris supplies two-way HF, VHF, and UHF radio equipment, as well as a comprehensive line of products and systems for long- and short-distance communications; complete turnkey communications systems, radio and television transmission equipment to broadcasters worldwide; digital network switching systems and private branch exchanges to long-distance carriers, corporations, utilities and government agencies; test systems and tools used by telephone companies worldwide; and telephone-integrated voice-^saging systems for a variety of applications. .

Lanier Worldwide. Inc. Lanier Worldwide, Inc.. is a wholly owned subsidiary of Harris. Lanier markets, sells, and services office equipment and business communication products worldwide. In 1986, the subsidiary started operations under the name Harris/3M Document Products, Inc. as a joint venture equally owned by Harris Corporation and the 3M Company. In fiscal 1989, Harris acquired 3M's share, and the subsidiary was expanded by the addition of Harris' Lanier Voice Products Division and renamed Lanier Worldwide, Inc. Lanier Worldwide's product portfolio includes copying systems, facsimile units, laser printers, dictating equipment, telephone systems, presentation and document systems, and continuous- recording systems for monitoring and logging two-way voice communications.

BACKGROUHD AND OVERVIEW

Harris Corporation is the successor of a 1967 merger between Harris-Intertype Corporation, a leading manufacturer of printing equipment, and Radiation Inc., an electronics company engaged in the design, development, and manufacture of advanced communications and information processing equipment and systems. In February 1980, Farinon Corporation, a producer of microwave transmission and telephone equipment, merged with Harris Corporation. In April 1983, Harris sold its Printing Equipment Sector and became a 100 percent electronics company. In July 1983, Harris Corporation and Lanier Business Products, Inc., agreed in principle to the merger of Lanier into Harris on a pooling-of-interest basis. Lanier produces and distributes office automation products.

Harris Corporation designs, produces, and markets communications and information processing equipment, systems, and components. The Company's products are used in voice and video communications, data processing, data communications, and graphics communications systems.

Immediately following the merger of Radiation and Harris-Intertype, Harris Semiconductor became a division of the new Company, In 1977, it became a group, and in April 1982, Harris Semiconductor reached sector status within the Harris Corporation (the other four sectors being Communications, Information Systems, Lanier Business Products, and Government Systems).

Organizationally, Harris Semiconductor is composed of four divisions and a joint venture in Europe (Matra-Harris). (See Figure 1 for details.) Harris Corporation's executive offices and semiconductor fabrication facilities are located in Melbourne, Florida, in the United States. Harris Semiconductor operates a large assembly plant in Kuala Lumpur, Malaysia. The Company has plans for another offshore assembly facility to supplement existing domestic assembly capability.

In September 1979, Harris and Matra, the French state-controlled arms and electronics group, formed a European joint venture known as Matra-Harris. This venture was formed to manufacture semiconductor devices for the European markets, particularly the French.

In 1985, Harris and Analogic announced a linear IC pact in which Analogic is second-sourcing new Harris products, and there is a joint development of new hybrid products.

Harris Corporation COMPANY ORGANIZATION CHART

@ Harris «o Corporation CD

D tl) ft 0) tQ SECTORS C (D CA ft Information Lanier Business Governm Communications Semiconductor a Systenns Sector Products System n Sector o Sector Sector Secto

o o> ft (D Di DIVISION S

•il ro tr fi 0) Analog Digital Custom ICs Microwave »i Matra-H *^ Division Division Division Division

W Ui M (/) < O Marketing Sales Administration Finance (-•

H M Source: Harris Corp Harris Corporation

In early 1986, Harris and Matra-Harris began a new sales strategy. Their European sales force and distributor network has been separated to permit both companies direct and independent access to European customers.

Also in early 1986, Harris closed its Scottish factory in Irvine, Strathclyde, and sold it to a U.S. company.

As shown in Table 1, Dataguest estimates Harris' 1986 European revenue at $38 million, an increase of more than 22 percent from 1985 revenue.

Table 1

Harris Corporation ESTIMATED EUROPEAN SEMICONDUCTOR GROUP REVENUE BY PRODUCT LINE (Millions of U.S. Dollars)

1982 1983 19^4 1985 1986

Total Semiconductor $26 $28 $40 $31 $38

Total Integrated Circuit $26 $28 $40 $31 $38 Bipolar Digital 12 14 20 19 0 MOS 9 10 14 7 14 Linear 5 4 6 5 24

Total Discrete $ 0 $ 0 $ 0 $ 0 $ 0 Transistor 0 0 0 0 0 Diode 0 0 0 0 0 Other 0 0 0 0 0

Total Optoelectronic $ 0 $ 0 $ 0 $ 0 $ 0

Source: Dataguest February 1987 Ref. 0187-05

PRODUCTS AND MARKETS SERVED

The Harris Semiconductor sector produces standard and custom integrated circuits using bipolar, CMOS, dielectric isolation, and gallium arsenide technologies. These products, for both analog and digital applications, include memory, logic, data conversion, tele communications, and microprocessor circuits. The devices are sold to computer, communications, telephone, industrial, medical, and other electric equipment manufacturers, as well as to defense contractors and U.S. government agencies.

New products include the HM 6514 JAN-qualified CMOS RAM; the 16-bit static CMOS 80C86 CPU microprocessor, which Harris claims to be the first radiation-hardened chip of its kind; and the HA 5330, the "fastest sample/hold amplifier" according to Harris.

Table 2 lists Harris Semiconductor's product lines by division.

Table 2

Harris Corporation SEMICONDUCTOR SECTOR PRODUCT LINES

Digital IC Division

Memory Products Microprocessors CMOS SRAMs CMOS 12-bit MP0 and peripherals CMOS PROMs CMOS 80C86/88 family Bipolar PROMs CMOS data communications

Semicustom CMOS standard cell custom ICs (military and commercial) CMOS gate arrays (military) Bipolar FPLA Bipolar and CMOS PALs

Analog IC Division

Linear Data Acquisition Op-amps A/D converters Comparators D/A converters Control functions Multiplexers Sample-and-hold ICs

Communication ICs Vertical Integration Products SLICs Telecom and data acquisition PCM monolithic filters board-level products CVSD filters

Microwave Division

Gallium arsenide logic ICs Gallium arsenide FETs

Custom IC Division

Custom ICs cutting across all Harris technologies

Matra-Harris

CMOS SRAMs CMOS gate arrays CMOS communication ICs

Source: Harris Corporation

OUTLOOK

Over the past three years, Harris Semiconductor has invested $100 million in new plants, equipment, laboratories, and advanced-concept production modules. The Company has also upgraded several existing production plants.

The Company's goal is to keep its technological and processing capabilities at the forefront of the industry. With this goal in mind, Harris Semiconductor is working on developing the advancement of state-of-the-art integrated circuits, particularly in high-performance CMOS.

THE COMPANY

Background Harris Corporation was incorporated in Delaware in 1926. The present business reflects the outgrowth from a merger in 1967 between Harris-Intertype Corporation, a leading manufacturer of printing equipment; and Radiation Inc., an electronics company, engaged in the design, development, and manufacture of advanced communications 6ind information processing equipment, and systems. In February 1980, Farinon Corporation, a producer of microwave transmission and telephone equipment, merged with Harris Corporation.

Harris COTporation is a broad-based technology Company, which designs, produces, and markets communications, £ind information processing equipment, systems, and components. The Company's products are used in voice and video communications, data processing, data communications, and graphic communi cations systems.

Operations Harris Corporation's executive offices and semiconductor fabrication facilities £u>e located in Melbourne, Florida. A semiconductor assembly facility is located in Malaysia. The Semiconductor Products Group is organized into three divisions—Analog Products Division, CMOS Digital Products Division, and Bipolar Digital Products Division. Semiconductor Programs Division and Harris Microwave Semiconductor, Inc., also produce semiconductor devices, but report separately from the Semiconductor Products Group. CMOS manufacturing for the European market is conducted in Matra-Harris Semiconducteurs S.A., Nantes, France, and will be e3q)anded into bipolar technologies over the next two years. Harris Microwave Semiconductor, Inc., in Sunnyvale, California manufactures gallium arsenide—based semiconductors. Work is underway for a new production, engineering, and technical center in Palm Bay, Florida. In February 1981, Harris announced plans to build an assembly and final test plant in Sri Lanka. The plant, which is expected to cost $5.6 million to build and equip, should be operational by 1983.

Marketing Harris sells its products through sales representatives, dealers and distributors, both domestically and internationally. Marketing activities operate in subsidiaries located in Austria, Brazil, Canada, France, Germany, Mexico, Netherlands, Switzerland, and the United Kingdom.

Sales and marketing headquarters are: Harris Semiconductor Harris Microwave Semiconductor, Inc. P.O. Box 883 1530 McCarthy Avenue Melbourne, Florida 32919 Milpitas, California 95035 Telephone: (305) 727-9100 Telephone: (408) 262-2222

Research and Development In 1981, Harris established a centralized Advanced Process Development Laboratory where activity centers on the development of optical and chemical processes required to achieve minimum circuit geometries below one micrometer. Chemical research includes a shift from wet chemical etching on wafer surfaces to a dry plasma process. Other research includes investigations into reduced circuit defects and increased yields by the use of high-pressure oxidation at low temperatures; low pressure, low temperature chemical deposition; and laser annealing.

Total research and engineering expenditure by Harris in fiscal year 1981 was $203 million of which $83 million was Company-sponsored and the rest were funded by government and commercial customers. These figures apply to the entire Harris Corporation.

Employees Harris Corporation employed 25,800 people by the end of fiscal 1981, of whom approximately 2,000 were in the Semiconductor Products Group.

SEMICONDUCTOR ACTIVITIES Harris produces analog and digital integrated circuits based on bipolar and CMOS technologies. The standard product line includes programmable read only memories (PROMs), CMOS random access memories (RAMs), CMOS microprocessors, operational amplifiers, analog switches and multiplexers, and monolithic analog-to-digital and digital-to-auialog converters, Harris also designs, develops, and manufactures custom bipolar and MOS digital and linear circuits for the special needs of large commercial customers, and government agencies, including radiation-hardened circuits, which are designed to operate in a nuclear environment.

In mid-1981, Harris entered into a technology agreement with Intel Corporation for the design of CMOS microprocessors, and peripherals. This agreement includes the right to license the manufacturing and the marketing of these products to Matra-H arris.

Harris Microwave Semiconductor, Inc. Harris Corporation has an 80 percent interest in Harris Microwave Semiconductor, Inc., which was established in 1981 for the development and manufacture of gallium arsenide-based semiconductors. The Company currently manufactures gallium arsenide transistors, integrated circuits, and hybrid microwave amplifiers.

Matra-Harris Semicondueteurs S.A. Matra-Harris was established in 1980 to manufacture integrated circuits for the French and European mari

OTHER ACTIVITIES

Information Systems The Information Systems Group produces super-minicomputers, computer terminals, word processing and composition equipment, and supervisory control systems.

Communications Products from the Communications Group include radio and television broadcasting equipment, two-way radios, earth stations and antennae for satellite communications sytems, and turnkey command, control and communications systems.

Government Systems Harris produces custom communications, and information processing systems for U.S. Government agencies, foreign governments, and commercial customers.

Printing Equipment The Printing Equipment Group mtinufactures a full range of web offset presses, automated bindery, €ind newspaper mailroom systems.

Harris Corporation 1025 W. NASA Boulevard Melbourne, Florida 32919 Telephone: (305) 727-9100 (Millions of Dollars Except Per Share Data)

Balance Sheet (June 30, 1981)

1979 1980 1981

Working Capital $ 291.4 $ 378.1 $ 442.3 Long-Term Debt $ 102.1 $ 215.9 $ 213.3 Shareholders' Equity $ 383.9 $ 449.0 $ 556.0 After-Tax Return on Average Equity (%) 19.9 19.1 20.7

Operating Performance (Fiscal Year Ending June 30, 1981)

1979 1980 1981

Revenue SI ,074.9 $1 ,300.9 $1, ,551.5 U.S. Revenue $ 811.5 $ 981.8 $1, ,175.7 Non-U.S. Revenue $ 263.4 $ 319.1 $ 375.8 Cost of Revenue $ 706.6 $ 868.2 $1-,021.0 R&D Expense* $ 47.3 $ 57.0 s 83.0 SG&A Expense $ 247.3 $ 296.9 $ 376.1 Pretax Income $ 120.1 $ 132.8 $ 166.7 Pretax Margin (%) . 11.2 10.2 10.7 Effective Tax Rate (%) 42.7 40.0 37.6 Net Income $ 68.8 $ 79.7 $ 104.0 Average Shares Outstanding (Millions) 29.6 30.3 30.9 Per Share Earnings $ 2.28 $ 2.59 $ 3.33 Dividends $ .60 $ .72 $ .80 Book Value $ 12.75 $ 14.75 $ 17.81 Price Reuige $ 16 3/4- $ 25 1/4- $ 25 1/8- 30 5/8 36 1/2 39 1/2

Total Employees 19,400 24,100 25,800

*Does not include non-Ccanpany sponsored R&D

Source: Harris Corporation, Annual Reports DATAQUEST, Inc. June 1982

HARRIS' ACQUISITION OF GESS: THE IMPACT ON THE ANALOG MARKET

SUMMARY systems, $588.0 millicm; communications, $383.0 mil The acquisition of GE Solid State (GESS) has lion; and semiconductors, $299.2 million. The had a significant impact on Harris' position in both before-and-after operations scenarios are presented the semiconductor and analog product markets. The in Table 1. merger boosted Harris' overall semiconductor pres ence; it went from being the 29th largest supplier worldwide to being the 19th and moved from 19th THE SEMICONDUCTOR ORGANIZATION to 15th place among the world's analog product suppliers. Through the acquisition, Harris not only Six divisions were formed to address the new gains added credibility as a world-class supplier but company entity: military and aerospace, power adds operational balance and strength with GESS' products, commercial products, commercial ASIC, world-based facilities and commercial business marketing, and manufacturing. The military and emphasis. aerospace division provides standard, semicustom, and custom products for the military and govern ment markets. The power products, commercial BACKGROUND products, and commercial ASIC divisions manufac Harris acquired GESS for $206 million in the ture power and integrated smart-power devices, fall of 1988. With the acquisition, Harris changed general-purpose standard products for the signal- its operations mix—from military as the number processing and control market, and commercial one revenue generator, to semiconductors. Harris' semicustom and application-specific standard operations mix prior to the merger included products, including circuit development, for the government systems, $792.0 million; information automotive and telecommunications markets.

TABLE 1 Harris' 1988 Applications Focus—Before and After the Acquisition (Fiscal Year Ending June 20, 1988) Business/Application Sector Harris GESS Harris/GESS Communications $ 383.1 N/A $ 383.1 Infomfiation Systems* 587.8 N/A 587.8 Government Systems 792.5 N/A 7923 Semiconductors 299.2 $550.0 8492 Total $2,062.6 $550.0 $Z612.6

N/A = Not Applicable Source: Harris 1988 * Includes Lanier Division Annual Report

(S)1989 Dataquest Incorporated September-Reproduction Prohibited 0004997 SIS Newsletters 1989 Analog

77K content of this report represents our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness It does not contain material provided to us in confidence by our clients Individual companies reported on and analyzed by Dataquest may be clients of this and/or other Dataquest services. This information is not Jumished in connection with a sale or offer to sell securities or in connection with the solicitation of an cffer to buy securities. This firm and its parent and/or their officers, stockholders, or members of their families may, from time to time, have a long or short position in the securities mentioned and may sell or buy such securities.

Dataquest Incorporated, 1290 Ridder Park Drive, San Jose, CA 95131-2398 / (408) 437-8000 / Telex 171973 / Fax (408) 437-0292 ! HARRIS- ACQUISITION OF OESS: THE IMPACT ON THE ANALOG MARKET

The management center for power, digital REGIONAL MARKET IMPACT ICs, and ASICs is located in Somerville, New Jersey; integrated power is headquartered in The international flavor of the company also Research Triangle Park, North Carolina; and signal changed with the addition of GESS. Sales of semi processing/analog, military products, and the mar conductors and analog ICs to European and Asian keting and manufacturing divisions all are located markets strengthened considerably, as noted in in Melbourne, Florida. Figures 1 and 2.

FIGURE 1 Harris' 1988 Semiconductor Regional Sales-Before and After the Acquisition

/ \ Europe / \ 19% / EuropeX •^ow\ V- Japan 5% y 6%A t- Japan 3% 1-HOW 1%

\ North America I North America \ 36% \ 72%

Before After

0004997-1 Source: Dataquest September 1989 FIGURE 2 Harris' 1988 Analog IC Regional Sales-Before and After the Acquisition

/ / Europe \ / \ Europe / / 12% y\ / \ 19% -^ROwX 1 \ / Japan \ / / / 9% a%J \ Japan 6% J-ROW 2% 1

\ North America \ North America \ 77% j \ fi'"^

•• Before After

0004997-2 Source: Dataquest September 1989

WKWy^T M989 Dataquest Incorporated September-Reproduction Prohibited SIS Newsletters 1989 Analog HARRIS- ACQUISITION OF QESS: THE IMPACT ON THE ANALOG MARKET

TABLE 2 Harris/GESS—1988 Analog Market Repositioning (MUlions of Dollars; Position Rank)

Product Segment Harris Rank Harris/GESS Rank .^npiifias $48 7 $76 4 ReguJalor^Referaices 2 33 8 15

Compsidlats 0 19 6 7 btet&oe ICs 3 25 15 12 Data C(»iveiters 48 4 78 2 Otter Analog ICs 21 11 28 8 Telecom ICs 13 15 19 11 Consumer ICs 1 29 20 21 Hybrids 0 - 0 - Total Analog ICs $138 19 $250 15 Noie: Coluimu may not add to totals shown because of rounding. Source: Dataquest September 1989

ANALOG MARKET IMPACT successful union undoubtedly can create a much Focusing more specifically on the product stronger company that banks on the strengths of segments of analog, Dataquest notes upward posi both companies, Harris' military expertise, and tioning in certain markets. The most notable GE/RCA's commercial strength. The diversification changes are to data converters and amplifiers. As of operations can offer strength by balancing the shown in Table 2, Harris/GESS moved from fourth two application markets and opening up new to second place in data converters and ftx)m seventh opportunities. to fourth place in amplifiers. Positive rank changes are seen across the board in all product areas. Barbara Van

DATAQUEST CONCLUSIONS The unification of the companies was from the first a challenge, considering the very different entities of Harris, GE, RCA, and Intersil. Yet the

Harris Microwave Semiconductor, Inc. Established 1980 1530 McCarthy Blvd. . Number of Employees: 215 Milpitas, CA 95035 (408) 262-2222

BACKGROUND Harris Microwave Semiconductor, Inc. (HMS) is a vertically integrated subsidiary of Harris Corporation. The firm has capabilities for manufacturing GaAs crystals, wafers, chips, packaged products, and subsystems. HMS is both a captive and merchant market producer, and offers foundry services. The Company has developed a proprietary packaging technique called WAFFLELINE, designed for efficient matched-impedance interconnection of GaAs devices. In February 1984, HMS introduced the world's first commercially available digital ICs based on GaAs. HMS claims to have the world's largest high-purity GaAs ingot growth capability, producing single-crystal ingots to seven inches in diameter.

COMPANY EXECUTIVES • Vice President and General Manager, GaAs Operations—Joe Barrera • Manager Sales and Marketing—Victor Kovacevic

FINANCIAL BACKING The Company has been 100 percent financed by Harris Corporation since 1980.

SERVICES Foundry Design—GaAs D-MESFET cell library, 1 volt and 2 volt, l.Ou; three 0.5u MMIC design rule families; one l.Ou RF/analog design rule family Manufacturing

Packaging

Test

PROCESS TECHNOLOGY HMS uses l.Ou and 0.5u GaAs MESFET on 2- and 3-inch wafers.

PRODUCTS • GaAs discretes, MMICs, diglCs including gate arrays • HMD series diglCs • HMM series MMICs • GaAs digIC evaluation kits

Applications • DSP • Microwave radar • Military electronic systems

• Test equipment

FACILITIES HMS's Milpitas, California, facility has 75,000 square feet, including three 9,000-square-foot, class 1,000 clean rooms and one 6,000-square-foot, class 100 clean room.

Hewlett-Packard Company 3000 Hanover Street Palo Alto, California 94303 Telephone: (415) 857-1501 Fax: (415) 857-5518 Dun's Number: 00-912-2532 Date Founded: January 1, 1939

CORPORATE STRATEGIC DIRECTION HP also consohdated its growing personal computer activities into one product group designed for what Hewlett-Packard Company (HP) is engaged world the Company feels is greater marketing, engineering, wide in the desigji, manufacture, and servicing of a and manufacturing efficiency. broad array of precision electronic instruments and systems for measurement, analysis, and computation. HP offers integrated systetns solutions to specific Hewlett-Packard operates in six business segments, customer problems. Founded in 1939 by William R. all of which are engaged in the design and manufac Hewlett and David Packard, HP cunently employs ture of precision electronic equipment for measure 93,000 people worldwide and had revenue of ment, analysis, and computation. These segments are $11.9 billion* during fiscal year 1989. Measurement; Peripherals and Network Products; Service for Equipment, Systems, and Peripherals; Medical Electronic Equipment and Service; Analyti Fiscal 1989's $11.9 billion revenue was a 21.0 per cal Instrumentation and Service; and Electronic cent increase over fiscal 1988's $9.8 billion total Components. revenue. Net income increased 1.6 percent to $826 million in fiscal 1989 £rom $816 million in fiscal 1988. The Company has more than 428 sales and service offices in approximately 160 cities tiiroughout the During fiscal years 1989, 1988, and 1987, domestic Umted States and in 102 countries. Approximately sales totaled $5.6 billion, $4.8 biUion, and $4.1 bil 29 percent of the sales and service offices are located lion, respectively. International sales reached in the United States. In areas where HP has no sales $6.3 billion, $5.1 billion, and $4.0 billion in fiscal or service offices, it markets through more than years 1989, 1988, and 1987, representing 53.0, 145 distributorships located in 65 cotmtries. 52,0, and 49.0 percent, respectively, of total revenue. The majority of international orders were from cus tomers other than foreign governments. Approxi Hewlett-Packard markets approximately 60 percent mately 60, 65, and 67 percent of die international of its products direcdy trough its own sales organi orders were derived from Europe duiing fiscal years zation. Marketing operations are supported by 1989, 1988, and 1987, respectively. The majority of {^proximately 36,000 individuals, including field Hewlett-Packard sales in international markets are service engineers, service personnel, and administra made by foreign sales subsidiaries. tive support staff. The remaining revenue is obtained through value-added resale channels including dealers I>uring 1983, HP made several structural changes. and original equipment manufacturers (OEMs). Ainong them was the restructuring of its computer organization. Begun in late 1982, the computer reorganization was undertaken to respond to a Currently, Hewlett-Packard offers more than 10,000 marketplace that was looking for more packaged products, which range from scientific measuring software applications, networks to link systems and instruments to hand-held calculators. The Company's workstations, and coordinated support and service. principal offerings in die business computer market are the HP 3000 line, several workstations, and per *AU dollar amounts aie in US dollars. sonal computers such as the Vectra. The HP 3000 line

includes models in the following Dataquest segments: strategy allows customers to select the best available business unit, large department, and small depart products from HP or other vendors and link them into ment In 1987, HP introduced two models in this line open, cooperative networks that make information based on reduced-instruction-set computing (RISC) easier to acquire, share, and manage. technology, which the Company calls HP Precision Architecture. More detailed information is available in Tables 1 through 3, which appear after "Business Segment Traditionally, HP's key areas of strength have been Strategic Direction" and present corporate highlights test and measurement equipment and minicomputers. and revenue by region and distribution channel. Now, the Company is successfully established (after Table 4, a comprehensive financial statement, is at the some delay) in the UNIX workstation market. end of this profile. HP possesses the key ingredients to be a major force in computer-integrated manufacturing (CIM), with its high-performance instruments, peripheral products, UNIX platforms, and networking products. Local R&D has allowed HP to adapt its products quickly to BUSINESS SEGMENT STRATEGIC suit local European markets. In addition, HP will DIRECTION benefit firom the telecommunications market deregu lation, with its specialist measurement instruments for With $3.2 billion in revenue, Hewlett-Packard held that market 4.8 percent market share of the 1989 worldwide multiuser systems market In 1987, HP began shipping Precision Architecture computers. Today, both the massive RISC-based com Supercomputers and- Visualization Systems puter architecture project (the HP 3000 Series (MPE operating system)—and the HP 9000 Series— Hewlett-Packard, through its Apollo Systems UNIX—computers are successful product lines. Division, offers the Apollo Series 10000 personal supercomputers and visualization systems designed Hewlett-Packard sells and distributes its products into for graphics-intensive applications. Both systems the business, technical, scientific, medical, and educa- incorporate multiprocessing capabilities, parallel- tiotial markets. instruction dispatch and extension, advanced- compiler technology, a RISC-based instruction set, and the capability to be configured with the IBM In November 1989, Hewlett-Packard introduced HP Token-Ring network or Ethernet as native networks. NewWave Office. It is an integrated office system During 1990, every major component of the that enables users to share data and information— supercomputer-class, multiprocessing Series 10000 even with con:^)uters and software from different computer will receive the following upgrades: a new vendors. With HP NewWave Office, Hewlett-Packard PRISM CPU that doubles computer power from also unveiled its office-systems strategy and vision 22 mips to 44 mips (12 mflops) per processor, for office computing in the 1990s. HP's strategy is to parallelizing and vectorizing compilers that increase deliver a complete office system that combines indus system performance two to four times; a specialized try standards with emetging technologies, allowing software-development environment for parallel customers to quickly and easily receive the informa programs and an interactive scientific-software com tion they need. A major part of the strategy is to putation and visualization environment; main memory integrate existing applications and systems firom mul capacity expanded by a factor of four, disk capacity tiple vendors to protect customers' computing invest improved by a factor of six; and local area network ments. Over 60 software developers and resellers are (LAN) bandwidth increased by a factor of 10. supporting HP NewWave Office with a full range of word processing, spreadsheet, database, graphics, communications, and multimedia applications as well Technical Computers as vertical market solutions. Hewlett-Packard's small- to medium-scale, general- purpose computers include the HP 1000 Series, ^tii its introduction of HP NewWave 3.0 in May designed for factory automation and real-time data 1990, Hewlett-Packard extended its HP NewWave acquisition. This series includes the E Series, F Computing strategy based on industry standards. This Series, A600, A700, and A900. Although HP has

phased out these products since it introduced the HP Business Computers 9000 Series, it will continue to provide support and services for them through the 1990s. The HP 3000 Series of supenninicomputer systems span a broad performance range and is designed for business data processing applications. Introduced in The HP 9000 Series includes desktop-size worksta 1970, the HP 3000 series is suited for on-line transac tions and multiuser systems originally intended to be tion processing (OLTP) and distributed processing used by scientists and engineers. The HP 9000 family and is compatible throughout the product line. The includes the 300 and 800 Series. HP's workstation HP 3000 family shares the MPE operating system and products range from the low-end HP9000 340M, uses HP's Precision Architecture in the higher-end which is focused at 2-D monochrome appUcations, to systems. The HP 3000 family includes the HP die HP9000 935 Turbo SRX, which addresses 3-D MICRO 3000LX and 3000GX systems, the Series high-performance graphics. The HP9000 800 Series 925 and 935 systems. Series 70 system, and Series 950 and 955 systems. All HP 3000 computers use an of superminicomputers is oriented toward technical "open network computer" philosophy for customers and real-time computing in the manufacturing sector with a multivendor or multiarchitecture enviromnent and toward general-purpose UNIX computing in the govenmaent and commercial markets. Hewlett- Packard recendy added five new HP 9000 systems Hewlett-Packard unveiled eight new multiuser HP based on its HP Precision Architecture (HP-PA) RISC 3000 systems in January 1990. They consist of the technology. The new Models 870S/100 and 870S/200 foUowing: 980/100, 980/200, 949, 922LX, 922RX, are the first HP 9000 systems based on an advanced 922, 932, and MICRO 3000RX. The Series 980/100 submicron CMOS implementation of HP-PA. The and 980/200 arc the first systems to use advanced 8708/200 has two-way multiprocessing and offers up CMOS (complementary metal-oxide semiconductor) to 95-mips performance. The uniprocessor 870S/100 technology on a single VLSI chip. The 980/100 is is rated at 50 mips. With the new Model 870 com expected to operate at 60 to 70 transactions per puters, Hewlett-Packard has expanded the system second (tps,). The 980/200 offers fuUy symmetric two- memory to offer 768 Mbytes and the disk-storage way multiprocessing and is expected to operate at capacity to 83 Gbytes. The Models 845S and 845SE, more than 100 tps. The 922LX, 922RX. 922, and 932 rated at 23-mips performance, are small modular sys provide OLTP performance of 7.7 tps, and the 932 tems that may be used for applications requiring high provides 60 percent greater perfonnaitce than the 922. performance for departments of 16 to 100 users. The They support 16 to 240 users and are designed for Model 832S offers midrange performance of 15 mips small to medium-size businesses, departments of and supports 32 to 64 users. large corporations, or branch offices. The HP MICRO 3000RX is a complete entry-level business system that can support up to 24 users. It is fully compatible with the HP 3000 product line and includes a system During January 1990, Hewlett-Packard introduced disk, tape cartridge, console, 16 terminal ports, oper two new 3-D RISC workstations, die model 834SRX ating system, database and HP Easytime, and a menu- and model 834 TurboSRX. Both have system- driven interface. processing power of 14 mips (2,02 mflops) and increased power in the graphics subsystems for engineers performing mechanical computer-aided Personal Computers engineering (CAE) applications, such as SDRC's IDEAS and PDA's PATRAN. The workstations come Since its entry into the PC business, HP has been a standard with 8 Mbytes of ECC RAM (expandable to high-end PC vendor aiming at the business market 96 Mbytes), a 19-inch color monitor with a resolution The Company's strategy in the PC market tradition of 1,280 X 1,024, a keyboard, and a mouse. They are ally has been that of catering to the overall PC needs able to connect sim\iltaneously to seven human- of small and large accounts. However, its PC jjroducts interface devices. competed in somewhat limited environments during 1987.

In April 1989, HP acquired Apollo Computer for During 1987, the HP150 was sold mainly as an $500 miUioa The acquisition gave HP an installed intelligent terminal to existing HP corporate clients. base of about 84,000 Apollo machines at almost This somewhat restricted positioning was die conse 3,000 sites and another proprietary RISC architecture. quence of the machine's limited success within other

market segments. The HP150 was MS-DOS but not attention and positive acceptance. In May 1990, PC-DOS compatible in a market that increasingly Hewlett-Packard introduced the HP NewWave 3.0, a stressed the IBM compatibility issue. software-appUcations environment that runs on any industry-compatible MS-DOS PC with an Intel 80286 The 286 Vectra, one of the first IBM AT compatibles or 80386 microprocessor. The HP NewWave 3.0 available on the market, met with significant success utilizes the enhancements made by Microsoft to ^^- in 1986, when it was the number-two product in dows, including improvements to memory manage Europe at this end of the market, after IBM's AT. In ment and the user interface. From this, HP NewWave 1987, however, with the increased availability of 3.0 requires only 2 Mbytes instead of 3 Mbytes of price/performance AT compatibles, it lost market extended memory to run several applications. Over share. Although most 286 Vectra sales were within 100 independent software vendors, including the corporate market, the Vectra also reemphasized Micrografx Inc. and Microsoft Corporation, have HP's presence in advanced/technical niches of the committed resources to develop HP NewWave apph- market, in particular as part of CAD/CAM and desk cations. FutureSoft Engineering Inc., Lotus Develop top pubUshing solutions. ment Corporation, New Media Graphics Corporation, and VideoLogic have begtm shipping it Hewlett- Packard also has signed hcensing agreements for HP The HP Vectra 486 personal computer is the highest- NewWave with AT&T Computer Systems Inc., performing member of the HP Vectra family. It is a Canon, Data General, and NCR. floor-standing unit based on the Intel i486 microprocessor. It uses the extended industry standard architecture (EISA), and the design optimizes perfor The HP LAN Manager/X software for HP 9000 mance for high-end personal computing (e.g., PC technical con:q)uters began shipping in September CAD multiuser, LAN serve) and provides the speed 1989. It win be docanapeaoied by HP LAN Manager/ for high-powered single-user applications. The X software for HP-UX system-based HP Vectra 486 supports up to 64 Mbytes of RAM on a single personal computers in the future. memory board, 1.3 Gbytes of mass storage, and a video graphics adapter. It comes standard with During January 1990, Hewlett-Packard came out with 2 Mbytes of random-access memory (RAM); one a series of new software products as well as enhanc 5.25-inch, 1.2-Mbyte flexible-disk drive; two serial ing and extending some of its existing software (RS-232-C) ports; one parallel (Centronics) port; con products. New software products were HP VPLUS/ nections for four flexible disks and tow-embedded Windows, HP OpenMFG, and HP CASEdge. hard disks; keyboard (Mini-DIN) and mouse (Mini- Hewlett-Packard also made available SoftPC DIN) ports; HP disk-cache software; and memory- Synthetic Hardware, Release 2.0, which is an management software. It also offers an array of advanced PC software emulator that allows UNIX bard-disk drives, memory, and video products. system users to run MS-DOS applications in a work station's high-performance windowed environment. On May 14, 1990, Hewlett-Packard introduced the Major enhancements were made to HP Manufacturing HP Vectra 286/12 PC, a lower-priced desktop Management H (HP MM II). It is Hewlett-Packard's machine tiiat replaces the HP Vectra ES/12 PC. The solution for manufacturing resources planning (MRP HP Vectra 286/12 PC is a 12-MHz, 80286-based n) applications for medium to large manufacturers. computer with 1 Mbyte of zero wait-state memory. It Among the new features in HP MM n are modular features HP's surface-mount technology (SMT4); enhancements to HP Materials Management/ embedded controller hard-disk drives; an extended- Advanced Version, HP Maintenance Management, resolution, integrated, super-VGA video contioUcr; and a new financial software solution, HP Financial and reduced parts and power requirements. It Management supports the industry-standard (fully backward- compatible) VGA resolution of 640 x 480 as well as super-VGA resolution of 800 x 600. Peripherals HP's peripherals products include video display ter Software minals, magnetic disk and tape drives, plotters, and laser printers, HP's laser printers were first introduced Although HP offers a selection of software for busi in 1975. Technology exchanges and license agree ness and technical applications, a vital part of its ments with Canon led to HP's 2680 laser printer Cooperative Computing Environment is the series, which includes the 2689, an IBM-compatible NewWave environment, which has attracted much version.

The Company added to its printer offering in 1989 The prime driving force has been to support the with the introduction of the HP LaserJet IIP and two Company's internal requirements, and the product low-priced, laser-quality ink jet printers—the DeskJet range reflects this priority. Merchant sales have thus Plus and the Apple-compatible HP DeskWritcr. been primarily an ancillary business for semiconduc Hewlett-Packard also introduced the HP 700/X family tor operations. With the current trend of traditionally of X Window System graphics terminals. The HP captive suppliers moving into the merchant semicon 700/X family consists of a comprehensive set of color ductor market (e.g., AT&T, Honeywell, and NCR), and monochrome network-based graphics terminals coupled with HP's leadership position in stJUe-of-the- based on the industry-standard X '^^ndow System art IC technology, this stance has changed. The Com from Massachusetts iistitute of Technology (MIT). The terminals are designed to operate in multivendor pany is responding to an industry trend toward networked environments, and provide the equivalent integrated-design and factory-automation systems, graphics and LAN performance of an entry-level with rcduced-insiruction-set computing (RISC) com workstation configured as an X-server. puters. In early 1986, HP aimounced flrnt it was pulling out of the US market for semiconductor manufacturing automation systems, although it would Telecommunications stm support the worldwide installed base for at least HP's vision of future information technology is called five years. the "Cooperative Computing Environment." Its goal is to develop "smart networks of both general-purpose and specialized computers working together as a sin Computer Storage gle, integrated system—^no matter where they're located, who made them, or what operating system In 1989, Hewlett-Packard introduced a family of they use." These "smart" networks will manage the 5.25-inch hard-disk storage systems for entry-level simultaneous transmission of voices, data, and video. through high-end HP computer systems, two digital- The resulting distributed system, which can integrate data-storage (DDS) format tape drives for HP com diverse applications, environments, and computers, will allow managers to manage information more puter systems, and a family of mass-storage systems effectively. that combine a high-capacity hard-disk mechanism with a choice of two additional drives (digital audio tape drive, compact-disc read-only-memory (ROM) In October 1989, Hewlett-Packard, through its Apollo device, rewritable-optical disk drive, and/or additional Division, introduced fiber distributed-data interface hard-disk drives). (FDDI) network-controller boards based on the American National Standards Institute's (ANSI's) standards. FDDI is a high-speed data network with the capability to support up to 200 Mbits per second Further Information (Mbps). The new controller board will be available initially on the Apollo Series lOCKX) personal super For further information about the Company's business computers. segments, please contact the appropriate industry service. Semiconductors According to Dataquest, Hewlett-Packard ranked thirty-second in the worldwide semiconductor market during 1989.

Hewlett-Packard manufactures a number of dedicated integrated circuits (ICs) for internal consumptiDn only. These are supported fay a wide range of optoelectronic devices (both components and modules) that are generally available on the merchant market, together with several specialized diode and transistor products.

Table 1 Five-Year Corporate Highlights (Millions of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue $6,505 $7,102 $8,090 $9,831 $11,899 Percent Change 9.18 13.91 21.52 21.04

Capital Expenditure $9,631 $497 $510 $649 $857 Percent of Revenue 148.06 7.00 6.30 6.60 7.20

R&D Expenditure $685 $824 $901 $1,019 $1,269 Percent of Revenue 10.53 11.60 11.14 10.37 10.66

Number of Employees 84,000 82,000 82,000 87,000 95,000 Revenue ($K)/Employee $77.44 $86.60 $98.65 $113.00 $113.00

Net Income $489 $516 $644 $816 $829 Percent Change 5.52 24.81 26.71 1.59

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $2,657.00 $2,864.00 $3,001.00 $3,377.00 Quarterly Profit $193.0 $203.00 $187.00 $246.0

Sonce: Hewlett-Puskard Co. Annual Repoits Dataquest (1990)

Table 2 Revenue by Geographic Region (Percent) Region 1985 1986 1987 1988 1989 North America 57.00 54.00 51.00 48.00 47.00 International 43.00 46.00 49.00 52.00 53.00 Europe 27.00 31.00 33.00 34.00 35.00 All Chhers 16.00 15.00 16.00 18.00 18.00 Souce: Hewlett-Packard Co. Anuual Reports Dataqaest (1990)

Table 3 Revenue by Distribution Channel (Percent) Channel 1988* 1989* Direct Sales 60.00 60.00 Indirect Sales 40.00 40.00 Distributors 1.00 NA Dealers 1.00 NA OEMs 38.00 NA *Conq>iiteT systems only Source: Hewlett-Packard Co. NA = Not available Amraal Reports Dataqaest (1990)

San Diego, California Plotters 1989 SALES AND SERVICE OFFICE San Jose, California LOCATIONS Microwave, opto, diodes, transistors Santa Clara, CaMomia Electronic instruments, ASICs North America—126 Santa Rosa, California Japan—^26 Microwave test equipment, microwave, opto, Europe—105 diodes, transistors Asia/Pacific—43 Spokane, Washington ROW—128 Test equipment Sunnyvale, California C^ systems, workstation systems integration, PCs, workstations Vancouver, Washington Printers MANUFACTURING LOCATIONS Waltham, Massachusetts Medical equipment Waterloo, Ontario, Canada North America Industrial terminals Aguadilla, Puerto Rico Japan Terminals Andover, Massachusetts Tokyo Medical equipment Software, business computers, component and Avondale, Pennsylvania semiconductor measurement instruments and Electronic instruments systems Boise, Idaho Yokogawa Disk drives, printers Instruments, peripherals Colorado Springs, Colorado Electronic test instruments, telecom test equipment Europe CorvaUis, Oregon Calculators, workstations, ASICs, floating-point Barcelona, Spain microprocessors Printers, drives Cupertino, California Berkshire, England Minicomputers Office automation software Everett, Washington Boeblingen, West Germany Electronic instruments Workstations, midrange computers, analytical Fort Collins, Colorado instruments, medical instruments Woricstations, network controUers, ASICs, RISC Bristol, England Disk drives microprocessors Eybens, France Greeley, Colorado PCs, terminals, communications hardware and Printers, tape drives software Loveland, Colorado Grenoble, France Logic design systems ' Networking products, personal computers McMiimville, Oregon Lyon, France Medical equipment Midrange computers Palo Alto, California South Queensferry, Scotland Test equipment Telecom test equipment, microwave test equipment Rockaway, New Jersey \^efontaine, France Test equipment A-series and various industrial automation and Rohnert Park, California medical products, networks, telecommunication Test equipment products RoseviUe, California Waldbronn, West Germany Network products, personal computers Analytical instruments

AsialPacific Hewlett-Packard Equipment Leasing Ltd. (United Kingdom) Penang, Malaysia Hewlett-Packard Espanola S.A. (Spain) Semiconductor devices Hewlett-Packard Finance Ltd. (United Kingdom) Singapore Hewlett-Packard France S.A. (France) Software networks, printers, graphics imaging Hewlett-Packard Ges.m.b.H. (Austria) components, calculators, keyboards, terminals, Hewlett-Packard GmbH (West Germany) optoelectronic LED components Hewlett-Packard International Sales Corporation N.V. South Korea, Seoul (Netherlands) Instruments, peripherals Hewlett-Packard Ireland Ltd. (RepubUc of Ireland) Taipei, Taiwan Hewlett-Packard Leasing Ltd. (United Kingdom) Asian language PC products Hewlett-Packard Ltd. (United Kingdom) Hewlett-Packard Nederland B.V. (Netherlands) Hewlett-Packard Norge A/S (Norway) ROW Hewlett-Packard Oy (Finland) Hewlett-Packard Product Leasing Ltd. (United Guadalajara, Mexico Kingdom) PCs, multiuser systems Hewlett-Packard S.A. (Switzerland) Ringwood, Austraha Hewlett-Packard (Schweiz) AG (Switzerland) Application development tools Hewlett-Packard Sverige AB (Sweden) Hewlett-Packard (Technical) B.V. (Netherlands) Hewlett-Packard Trading S.A. (Switzerland)

AsialPacific SUBSIDIARIES Austraha Moriya Pty. Ltd. (Austraha) China-Hewlett-Packard Ltd. (China) North America Hewlett-Packard Asia Ltd. (Hong Kong) ApoUo Computers (United States) Hewlett-Packard Austraha Finance Ltd. (Austraha) Hewlett-Packard Austraha Ltd. (Austraha) Conductus Company (United States) Hewlett-Packard FPG (Chma) Heet Systems Inc. (United States) Hewlett-Packard Hong Kong Ltd. (Hong Kong) Hewlett-Packard Atlantic Inc. (United States) Hewlett-Packard Malaysia Sdn. Bhd. (Malaysia) Hewlett-Packard (Canada) Ltd. (Canada) Hewlett-Packard (NZ) Ltd. (New Zealand) Hewlett-Packard Delaware Inc. (United States) Hewlett-Packard Penang Sdn. Bhd. (Malaysia) Hewlett-Packard Delaware Trading Inc. (United Hewlett-Packard Sales (Malaysia) Sdn. Bhd. States) (Malaysia) Hewlett-Packard Export Trade Co. (United States) Hewlett-Packard Singapore (Pte.) Ltd. (Singapore) Hewlett-Packard Finance Company (United States) Hewlett-Packard Singapore (Sales) Pte. Ltd. Hewlett-Packard Hellas Inc. (United States) (Singapore) Hewlett-Packard Inter-Americas Western Hemisphere Hewlett-Packard Taiwan Ltd. (China) Trade Corp. (United States) Samsung Hewlett-Packard Ltd. (South Korea) Hewlett-Packard Pipeline Co. (United States) Hewlett-Packard Puerto Rico ROW Octel Communications Co. (United States) Airendadora Hewlett-Packard S.A. de C.V. (Mexico) Grupo Hewlett-Packard S.A. de C.V. (Mexico) Japan Hewlett-Packard Argentina S.A. (Argentina) Hewlett-Packard do Brasil Industria e Comercio Ltds. Yokogawa-Hewlett-Packard Ltd. (Japan) (Brazil) Hewlett-Packard do BrasU S.A. (Brazil) Europe Hewlett-Packard de Mexico S.A. de C.V. (Mexico) Hewlett-Packard de Venezuela C.A. (Venezuela) Geneva Investments N.V. (Netherlands Antilles) Hewlett-Packard Investment Ltd. (Liberia) Hewlett-Packard A/S (Denmark) Hewlett-Packard South Africa (Pty.) Ltd. (South Hewlett-Packard Belgium S.A./N.V. (Belgium) Africa) Hewlett-Packard Benelux B.V. (Netherlands) Sispor Participacoes Ltda. (Brazil)

agreement HP has the right to use most of Sequoia's fault-tolerance, multiprocessor technol ALLIANCES, JOINT VENTURES, AND ogy in future HP systems. The agreement also calls LICENSING AGREEMENTS for the cross-Ucensing of any improvements to this technology by either company. 1990 NCR/Data General/Canon AT&T Computer Systems Hewlett-Packard signed an agreement to license Hewlett-Packard signed an agreement to license the HP NewWave software environment to NCR HP NewWave software to AT&T Computer Sys Corporation, Data General Corporation, and Canon tems. Terms of the contract were not disclosed. Inc. Hughes Aircraft Company Penstock, Inc. Hewlett-Packard and Hughes Aircraft Company Hewlett-Packard announced that Penstock Inc. has signed a strategic agreement to develop and become a distributor of HP RF and microwave manufacture advanced workstations, personal com components and integrated products in the United puters, and other related eqmpment. States and Canada. Under the terms of the agree Cascade Microtech Inc. ment, Penstock will focus on selling devices tar Hewlett-Packard pivchased a minority equity posi geted for applications above 1 GHz and will stock tion in Cascade Microtech Inc. and licensed some a broad line of silicon and gallium arsenide (GaAs) wafer-probing technology to Cascade. bemn-lead and chip devices, as well as packaged versions of these products. In addition. Penstock MAI Basic Four Inc. will have inventory of selected HP mechanical MAI Basic Four Inc. became a Hewlett-Packard switches, programmable step attenuators, and fixed value-added reseller (VAR). Under the VAR agree coaxial attenuators. ment, MAI Basic Four will resell the computers with MANBASE, its MRP II (manu- Numetrix Inc. facturing/resource/planning) software solution to Hewlett-Packard and Numetrix Inc. signed an manufactures. agreement in which Numetrix's Schedulex produc Octel Communications Corporation tion scheduling software will be ported to HP 9000 Hewlett-Packard and Octel Communications Cor Series 800 Precision Architecture (HP-PA) com poration have become strategic partners in bringing puters and HP Vectra personal computers. HP and high-performance voice-processing equipment to Numetrix will market the HP-based Schedulex Europe. software solution to process manufacturers in the food, beverage, pulp and paper, chemical, phar McDonnell Douglas Systems Integration Co. maceutical, and consumer packaged goods Hewlett-Packard and McDonnell Douglas Systems industries. Integration Co. entered into a three-year, $75 mil lion VAR agreement that allows McDonnell Doug Mentor Graphics Corporation las to resell HP's Motorola- and RISC-based HP Hewlett-Packard and Mentor Graphics Corporation 9000 family of workstations with its Unigraphics announced a multimillion-dollar software- software. marketing agreement Under the terms of the Actel Corporation agreement, Hewlett-Packard will adapt Mentor Hewlett-Packard and Actel Corporation announced Graphics' design and analysis software for board- that tiwy will cooperate in developing, licensing, test applications and will market it with future HP and manufacturing an advanced family of field- board-test products. programmable gate arrays (FPGAs), Under the terms of the five-year agreement, HP has immedi ate access to Actel's FPGA design software and 1989 will make a 5 percent equity investment in ActeL Calera Recognition Systems Inc. Sequoia Systems Inc. Calera Recognition Systems Inc. signed a distribu Hewlett-Packard and Sequoia Systems Inc. tion agreement with Hewlett-Packard to distribute aimounced a strategic relationship ttiat includes a Calera's TrueScan Model S dociunent recognition marketing agreement, technology licensing, and an product through HP authorized dealers in the equity investment Under the technology licensing United States and Canada.

Aeritalia's Systems and RPVs Group of Italy Decision Data Inc. (DDI) Hewlett-Packard, Aeritalia's Systems, and RPVs Hewlett-Packard (HP) and Decision Data Inc. Group of Italy signed a joint agreement to market established an original equipment manufacturer EMC measurement systems. (OEM) agreement in which DDI mtends to pur chase $20 million of newly developed HP termi Philips Components nals compatible with IBM System/3X and AS/400 Hewlett-Packard and Philips Components of the computers. The new terminals will be resold by Netherlands announced an agreement to develop Decision Data Computer Corp., a subsidiary of and make high-voltage optocouplers. DDI. The OEM tenninals, developed joindy by HP and DDI, are being manufactured at HP's auto Samsung Electronics Co., Ltd. mated facihty in Roseville. The terminals will be Hewlett-Packard and Samsung Electronics Co., sold exclusively to DDI. Ltd., in Korea formed an agreement for Samsung to develop, manufacture, and resell chip sets, National Semiconductor Corporation workstations, and other computers using HP's Hewlett-Packard and National Semiconductor RISC technology. Corporation announced joint development efforts Nellcor Inc. aimed at providing integrated semiconductor and Hewlett-Packard was granted a hcense tmder Nell system network products diat conform to the IEEE cor Inc.'s sensor-coding patents to use NeUcor's 802.3 lOBASE-T network standard. oximeter sensors with HP patient-monitoring systems Sony of America Sony of America will supply 5.25-inch rewritable Compression Labs Inc. optical disk storage products to Hewlett-Packard Compression Labs Inc. (CLI) signed an agreement for the HP C17QA Optical Disk Library System, with Hewlett-Packard to provide videoconferenc the first rewritable optical disk autochanger. The ing systems for HP's international communications Sony drive and controller will also be used for a network. The agreement, worth more than $2 mil standalone rewritable optical disk subsystem, the lion, calls for CLI to provide 50 videoconferencing HP C1711A, which is fully compatible with the systems over a two-year period. Optical Disk Library System. VHA Supply Company Inc. Carlisle Memory Products Group Hewlett-Packard and VHA Supply Company Hewlett-Packard signed a $4.5 million contract signed a two-year extension to a thiee-year pur that renews and expands a previous agreement to chase agreement signed in 1987, covering a variety purchase Carlisle half-inch tape reels in all world of HP medical-electronic and computer products. wide locations. Under the terms of the agreement, HP will provide critical-care and diagnostic equipment as well as Interphase computer systems to VHA's national network of Hewlett-Packard, through its ApoUo Division, 669 locaUy owned hospitals and their 177 affili extended its OEM agreement with Interphase for ates. Included in the critical-care equipment axe the another two years at a value of {q>proximately HP CareVue 9000 clinical information system and $2.1 million. the HP Component Monitoring System. NEC Spatial Technology Inc. Hewlett-Packard and NEC announced an agree Hewlett-Packard and Spatial Technology Inc. have ment to develop comprehensive development tools an agreement to jointly market solid-modeling for several NEC original microprocessors and software for the mechanical computer-aided design microcomputers. Under the terms of the agree and computer-aided manufacturing (CAM) market ment, HP will develop, sell, and support HP 64700 HP bought about a 10 percent equity stake in series emulators for many of NEC's original Spatial. microprocessors and microcontrollers. Agfa Compugraphic Division Blue Star Ltd. Hewlett-Packard and Agfa Compugraphic Division HP has established Hewlett-Packard India Pvt have jointly developed Type Director. Type Direc Ltd., a joint-venture company with Blue Star Ltd., tor is based on Compugraphic's Intellifont font- the sole distributor of HP products in India. HP scaling technology and has been implemented will have 40 percent equity in die venture and Blue according to Hewlett-Packard's specifications. Star 20 percent

Oracle Corp. installed base of about 84,000 Apollo machines at HP, through its Apollo Division, announced a mar almost 3,000 sites and another proprietary RISC keting agreement with Oracle under which both architecture. companies will promote and market the Oracle relational database management systems (DBMSs) Optotech software products. Hewlett-Packard purchased certain assets of 3Com Opotech, a privately held company that designs HP announced a strategic alliance with 3Com, and develops optical disk drives. which wiU Ucense its OS/2-based 3+Open LAN Manager network operating system to HP. HP will sell the product under the name HP3+Open LAN Manager. Oki Electric Industry Co. Ltd. KEY OFFICERS The two companies agreed to btiild and operate a printed circuit board faciUty in Puerto Rico. Microsoft Corporation David Packard The two companies are engaging in joint develop Chairman of the board ment to port the MS LAN Manager OS/2 technol ogy to die UNIX system environment. John A. Young President, chief executive officer 7955 Dean O. Morton Octet Communications Corporation Executive vice president, chief operating officer Hewlett-Packard and Octel Communications Cor poration established an agreement for HP to dis Harold E. Edmondson tribute Octel voice-processing products in Europe Vice president, director of Corporate and to acquire 10 percent equity interest in Octel. Manufacturing Conductus Inc. Hewlett-Packard made a 15 percent equity invest Dick Alberding ment in Conductus Inc. of Palo Alto, California. Executive vice president of Marketing and STET International Hewlett-Packard signed an agreement with STET to buy 35 percent of Network Control Systems SpA (NECSY) in Padua, Italy. Sony HP recruited three digital audiotape (DAT) drive PRINCIPAL INVESTORS manufacturers to license the DDS format diat HP developed with Sony. The new licensees are Aiwa, Alliance, and Mitsumi. David Packard—^17.1 percent Zenith ^Mlliam R. Hewlett—12.2 percent The two companies made an OEM agreement for laptop computers.

FOUNDERS MERGERS AND ACQUISITIONS '^lliam R. Hewlett (stepped down as vice president 1989 of the board of directors in February 1987) Apollo Computer David Packard TTiis merger gave HP a strong foothold in the networidng arena, with a 30.4 percent of the 1988 workstation market The acquisition gave HP an

Table 4 Comprehensive Financial Statement Fiscal Year Ending October 31 (Millions of US Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $3,342 $3,814 $5,490 $4,562 $5,731 Cash 1,020 1,372 2,645 814 906 Receivables 1,249 1,344 1,561 1,982 2,494 Marketable Securities 0 0 0 118 20 Inventory 993 981 1,117 1,478 1.947 Other Current Assets 80 117 167 170 364 Net Property, Plants $2,149 $2,236 $2,328 $2,516 $2,893 Other Assets $189 $237 $315 $780 $1,451 Total Assets $5,680 $6,287 $8,133 $7,858 $10,075 Total Current Liabilities $1,376 $1,518 $2,735 $2,589 $3,743 Long-Term Debt $102 $110 $88 $392 $474 Other Liabilities $220 $285 $288 $344 $412 Total Liabilities $1,698 $1,913 $3,111 $3,325 $4,629 Total Shareholders' Equity $3,982 $4,374 $5,022 $4,533 $5,446 Converted Preferred Stock 0 0 0 0 0 Common Stock 780 712 776 234 459 Other Equity 0 0 0 0 0 Retained Earnings 3,202 3,662 4,246 4,299 4,987 Total Liabilities and Shareholders' Equity $5,680 $6,287 $8,133 $7,858 $10,075

Income Statement 1985 1986 1987 1988 1989 Revenue $6,505 $7,102 $8,090 $9,831 $11,899 US Revenue 3,696 3,812 4,122 4,763 5,561 Non-US Revenue 2,809 3,290 3,968 5,068 6,338 Cost of Sales $3,166 $3,353 $3,785 $4,832 $6,091 R&D Expense $685 $824 $901 $1,056 $1,269 SG&A Expense $1,896 $2,145 $2,442 $2,859 $3,327 Capital Expense $9,631 $497 $510 $648 $857 Pretax Income $758 $780 $962 $1,142 $1,151 Pretax Margin (%) 11.65 10.98 11.89 11.62 9.67 Effective Tax Rate (%) 35.50 33.90 33.10 28.50 28.00 Net Income $489 $516 $644 $816 $829 Shares Outstanding, Millions 256.9 256.1 257.3 234.2 238.0 Per Share Data Earnings $1.91 $2.02 $2.50 $3.36 $3.52 Dividend $0.22 $0.22 $0.23 $0.28 $0.36 Book Value $15.50 $17.08 $19.52 $19.35 $22.88

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending October 31 (Millions of US Dollars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Cxirrent (Times) 2.43 2.51 2.01 1.76 1.53 Quick (Times) 1.71 1.87 1.60 1.19 1.01 Fixed Assets/Equity (%) 53.97 51.12 46.36 55.50 53.12 Current Liabilities/Equity (%) 34.56 34.71 54.46 57.11 68.73 Total Liabilities/Equity (%) 42.64 43.74 61.95 73.35 85.00 Profitability (%) Return on Assets . 8.62 8.93 10.21 9.25 Return on Equity - 12.35 13.71 17.08 16.61 Profit Margin 7.52 7.27 7.96 8.30 6.97 Other Key Ratios R&D Spending % of Revenue 10.53 11.60 11.14 0.74 10.66 Capital Spending % of Revenue 148.06 7.00 6.30 6.59 7.20 Employees 84,000 82,000 82,000 87,000 95,000 Revenue ($K)/Employee $77.44 $86.60 $98.65 $113.00 $113.00 Capital Spending % of Assets 169.56 7.91 6.27 8.25 8.51 Source: Hewlett-Fackaid Co. Aninial Reports Datatpiest (1990)

SCA ©1990 Dataquest Incoiporated 13 0007030 Hewlett-Packard Company 3000 Hanover Street Palo Alto, California 94303 Telephone: (415) 857-1501 Fax: (415) 857-5518 Dun's Number: 00-912-2532 Date Founded: January 1, 1939

CORPORATE STRATEGIC DIRECTION Measurement; Peripherals and Network Products; Service for Equipment, Systems, and Peripbo'als; Hewlett-Packard Company (HP) is engaged world Medical Electronic Equipment and Service; Anal)rti- wide in the design, manufacture, and servicing of a cal Instrumentation and Service; and Electronic Com broad array of precision electronic instruments and ponents. systems for measurement, analysis, and computation. HP offers integrated systems solutions to specific The Company has more than 400 sales and service customer problems. Founded in 1939 by WUham R, office in approximately 130 cities diroughout the Hewlett and David Packard, HP employs 86,000 United States and in 37 foreign countries. Approxi people worldwide and had revenue of $9.8 bUhon* mately 30 percent of the sales and service offices are during 1988. Approximately 65 percent of HP's reve located in the United States. In areas where HP has nue is derived from information systems. no sales or service offices, it markets through more than 145 distributorships located in 65 countries. Fiscal 1988's $9.8 billion revenue was a 21.5 percent increase over fiscal 1987*s $8.1 bUhon total revenue. Hewlett-Packard markets approximately 70 percent of Net income increased 26.7 percent to $816 milhon in its products directly through its own sales organiza- fiscal 1988 from $644 million in fiscal 1987. tioiL Marketing operations are supported by approxi mately 30,000 individuals, including field service Non-U.S. sales contribution to the total revenue grew engineers, service personnel, and administrative to $5.1 milhon in 1988. Non-U.S. sales accounted for support staff. The remaining revenue is obtained 52 percent of the total, up from 49 percent in fiscal through value-added resale channels including dealers 1987. and original equipment manufacturers (OEMs).

During 1983, HP made several structural changes. Currendy, Hewlett-Packard offers more than 10,000 Among them was the restructuring of its computer products, which range from scientific measuring organization. Begun in late 1982, the computer reor instruments to hand-held calculators. The Company's ganization was undertaken to respond to a market principal offerings in the business computer market place that was looking for more packaged software are the HP 30(K) line, several workstations, and per applications, networks to link systems and work sonal computers, such as the Vectra. The HP 3000 stations, and coordinated support and service, HP also line includes models in the following Dataquest consohdated its growing personal computer activities segments: business unit, large department, and small into one product group designed for what the Com department In 1987, HP introduced two models in pany feels is greater marketing, engineering, and this line based on reduced-instmction-set computing manufacturing efficiency. (RISC) technology, which the Company calls HP Precision Architecture. Hewlett-Packard operates in six business segments, all of which are engaged in the design and manufac Traditionally, HP's key areas of strength have been ture of precision electronic equipment for measure test and measurement equipment and miiucomputers. ment, analysis, and computation. These segments are Now, the Company is successfully estabhshed (after some delay) in the UNIX workstation market HP *AU doUar amounts are in U.S. dollais. possesses the key ingredients to be a major force in

computer-integrated manufacturing (CIM), with its high-performance graphics. The HP9000 800 Series high-performance instruments, peripheral products, of superminicomputers is oriented toward technical UNIX platforms, and networking products. Local and real-time computing in the manufacturing sector R&D has allowed HP to adapt its products quickly to and toward general-purpose UNIX computing in the suit local European markets. In addition, HP will government and commercial markets. benefit from the telecommunications market deregu lation, with its specialist measurement instruments for that market. In April 1989, HP acquired Apollo Computer for $476 million. Based on Dataquest's 1988 year-end In 1987, HP began shipping Precision Architecture market share numbers, the combined venture has a computers. Today, both the massive RISC-based 30.4 percent share of the workstation market, as computer architecture project (the HP 3000 Series opposed to Sun Microsystems, which had a (MPE operating system)) and the HP 9000 Series 28.3 percent share. The acquisition gives HP an (UNIX) computers are successful product lines. installed base of about 84,(XX) Apollo machines at almost 3,000 sites and another proprietary RISC Hewlett-Packard sells and distributes its products into architecture. the business, technical, scientific, medical, and educa tional markets. Business Computers More detailed information is available in Tables 1 through 3, which appear after "Business Segment In the U.S. business computer market, HP ranked Strategic Direction" and present corporate highlights fourth with revenue of $1.5 billion, behind third-place and revenue by region and distribution channel. Digital Equipment, which had more than 70 percent Table 4, a comprehensive financial statement, is at the more revenue, $2.0 biUion, in 1988. end of this profile. The HP 3000 Series of superminicomputer systems spans a broad performance range and is designed for business data processing applications. It was BUSINESS SEGMENT STRATEGIC introduced in 1970 and is weU suited for on-line DIRECTION transaction processing (OLTP) and distributed processing although it is usually used in a standalone mode. One of its primary advantages is the compati Technical Computers bility throughout the product line. The HP 3000 A substantial portion of HP's revenue comes from the family shares the MPE operating system and uses U.S. technical computer market, which accounted for HP's Precision Architecture in flie higher-end sys revenue of $2.1 bDlion, giving HP the number three tems. The HP 3000 family includes the HP MICRO position in this market during 1988. 3000LX and 3000GX systems, the Series 925 and 935 systems, Series 70 system, and Series 950 and Hewlett-Packard's small- to medium-scale, general- 955 systems. All HP 3(K)0 computers use an "open purpose computers include the HP 1000 Series, network computer" philosophy for customers with a designed for factory automation and real-time data multivendor or multiarchitecture environment '^th acquisition. This Series includes the E Series, more than 40,000 installed units, the HP 3000 is F Series, A600, A700, and A900. Although HP has the second most widely installed general-purpose phased out these products since it introduced the business computer. HP 9000 Series, it will continue to provide support and services for them through the 1990s. Personal Computers The HP 9000 Series includes desktop-size worksta tions and multiuser systems originally intended to be Since its entry into the PC business, HP has been a used by scientists and engineers. The HP 9000 family high-end PC vendor aiming at the business market includes the 300 and 800 Series. HP's workstation The Company's strategy in the PC market tradition products range from the low-end HP 9000 340M, ally has been that of catering to the overall PC needs which is focused at 2-D monochrome applications, to of small and large accounts. However, its PC products die HP 9000 935 Turbo SRX, which addresses 3-D competed in somewhat limited environments during

1987. The HP LAN Manager/X software for HP 9000 technical computers began shipping in September During 1987, the HP150 was sold mainly as an 1989. It wiU be accompanied by HP LAN Manager/X intelhgent terminal to existing HP corporate clients. software for HP-UX system-based HP Vectra per This somewhat restricted positioning was the conse sonal computers in the future. quence of the machine's limited success within other market segments. The HP150 was MS-DOS but not Peripherals PC-DOS-compatible in a market that increasingly stressed the ffiM compatibility issue. HP's peripherals products include plotters and laser printers. HP's laser printers were first introduced in 1975. Technology exchanges and licetise agreements The 286 Vectra, one of the first IBM AT compatibles with Canon led to HP's 2680 laser printer series, available on the market, met with significant success which includes the 2689, an IBM-compatible versioiL in 1986, when it was the number-two product in Etu-ope at this end of the market, after BBM's AT. In 1987, however, with the increased availability of In 1984, the introduction of the ThinkJet and the price/performance AT compatibles, it lost market LaserJet printers illustrated that HP intended to share. Although most 286 Vectra sales were within achieve leadership in the personal printer market. In the corporate market, the Vectra also reemphasized fact, the LaserJet was the first laser printer introduced HP's presence in advanced/technical niches of the for general personal computing for single-user sys market, in particular as part of CAD/CAM and desk tems at an affordable price, a result of HP's pioneer top pubhshing solutions. ing concept in low-cost, nonimpact printers.

In the past, HP's PC ofterings consisted of single, Telecommunications high-quality products. With the 1987 aimoimcement of the Vectra family, the Company appears to have HP's vision of future information technology is called drawn a full-fledged, comprehensive PC marketing the Cooperative Computing Environment Its goal is strategy for the first time. The introduction of the to develop "smart networks of both general-purpose NewWave software environment makes large and specialized computers working together as a sin accounts, traditionally the main market segment for gle, integrated system—^no matter where they're HP products, the natural target for the new PC line. located, who made them, or what operating system With the full adherence to the market standards and they use." These "smart" networks will manage the with the resolution of the connectivity and standard simultaneous transmission of voices, data, and video. user interface issues, HP PCs should find visibility far The resulting distributed system, which can integrate beyond HP's large cHent base to which they have diverse applications, environments, and computers, been somewhat confined. wiU allow managers to manage information more effectively. The newly introduced range of terminals should fur ther widen HP's potentially large cUent base by In October 1989, Hewlett-Packard, through its Apollo increasing the brand's visibility throughout the Division, introduced fiber distributed-data interface market. (FDDI) network-controUer boards based on the American National Standards Institute's (ANSI's) standards. FDDI is a high-speed data network with Software the capability to support up to 200 Mbits per second (Mbps). The new controller board will be available Hewlett-Packard holds the number one market share initially on the Apollo Series 10000 personal super position for UNIX software in 1988. UNIX revenue computers. totaled $2.8 biUion, or 24 percent of total revenue that year. Semiconductors Although HP offers a selection of software for busi Hewlett-Packard manufactures a number of dedicated ness and technical appUcations, a vital part of its integrated circuits (ICs) for internal consumption Cooperative Computing Environment is the New only. These are supported by a wide range of optoe Wave environment. NewWave, a powerful platfonn lectronic devices (both components and modules) that for integrating PC and data processing apphcations, are generally available on the merchant market, has attracted much attention and positive acceptance. together with several specialized diode and transistor

The optoelectronic segment is led by a range of Display Terminals high-quality, performance-visible components that are generally regarded as industry leaders. Other Hewlett-Packard competes in three of the five strengths in this area are bar code readers, couplers, segments in the display terminal industry. For 1988, sensor-emitter arrays, assemblies, and fiber optics. HP held 3.6 percent of the overall display terminal market. HP ranks fourth in Segment 1 and ninth in Segments 3 and 4. The prime driving force has been to support the Company's internal requirements, and the product range reflects this priority. Merchant sales have thus Computer Storage been primarily an ancillary business for semiconduc tor operations. With the current trend of tradidooaUy Hewlett-Packard ranked among the top 10 vendors of captive suppUers moving into the merchant semicon 5.25-inch rigid disk drives in 1988 xmits shipped. ductor market (e.g., AT&T, Honeywell, and NCR), coupled with HP's leadership position in state-of-the- art IC technology, this stance has changed. The Com Further Information pany is responding to an industry trend toward For further information about the Company's business integrated-design and factory-automation systems, segments, please contact the appropriate industry with reduced-instruction-set computing (RISC) com service. puters. In early 1986, HP announced that it was pulling out of the U.S. market for semiconductor manufacturing automation systems, although it would still support the worldwide installed base for at least five years.

Table 1 Five-Year Corporate Highlights (Millions of U.S. Dollars)

1984 1985 1986 1987 1988 Five-Year Revenue $6,044 $6,505 $7,102 $8,090 $9,831 Percent Change 7.63 9.18 13.91 21.52

Capital Expenditure $658 $9,631 $497 $510 $649 Percent of Revenue 10.89 148.06 7.00 6.30 6.60

R&D Expenditure $592 $685 $824 $901 $1,019 Percent of Revenue 9.79 10.53 11.60 11.14 10.37

Number of Employees 82,000 84,000 82,000 82,000 87,000 Revenue ($K)/Employee $73.70 $77.44 $86.60 $98.65 $113.00

Net Income $665 $489 $516 $644 $816 Percent Change (26.47) 5.52 24.81 26.71

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $2,864.00 $2,394.00 $3,001.00 N/A Quarterly Profit $203.0 $258.0 $187.00 N/A N/A = Not Available Source: Hewlett-Packard Co. Annual Rq>OTts Dataquest January 1990

Table 2 Revenue by Geographic Region (Percent) Region 1984 1985 1986 1987 1988 North America 58.00 57.00 54.00 51.00 48.00 International 42.00 43.00 46.00 49.00 52.00 Europe 27.00 27.00 31.00 33.00 34.00 All Others 15.00 16.00 15.00 16.00 18.00 Source: Hewlett-Packard Co. Annual Reports Dataquest January 1990

Table 3 Revenue by Distribution Channel (Percent) Channel 1987* 1988" Direct Sales 58.00 60.00 Indirect Sales 42.00 40.00 Distributors 1.00 1.00 Dealers 1.00 1.00 OEMs 40.00 38.00 •Computer systems only ce: Hewlett-Packard Co. Annual Reports Dataquest Januaiy 1990

Plotters San Jose, Cahfomia 1988 SALES AND SERVICE OFTICE Microwave, opto, diodes, transistors LOCATIONS Santa Clara, Cahfomia Electronic instruments, ASICs Santa Rosa, Cahfomia North America—130 Microwave test equipment, microwave, opto, Japan—21 diodes, transistors Europe—HI Spokane, Washington Asia/Pacific—44 Test equipment ROW—127 Sunnyvale, California CIM systems, workstation systems integration, PCs, workstations Vancouver, Washington Printers MANUFACTURING LOCATIONS Waltham, Massachusetts Medical equipment Waterloo, Ontario, Canada North America Industrial terminals AguadiUa, Puerto Rico Terminals Europe Andover, Massachusetts Medical equipment Barcelona, Spain Avondale, Pennsylvania Printers, iives Electronic instruments Berkshire, England Boise, Idaho Ofhce automation software Boeblingen, West Germany Disk drives, printers Workstations, midrange computers, analytical Colorado Springs, Colorado instruments, medical instruments Electronic test instruments, telecom test equipment Bristol, England CorvaUis, Oregon Disk drives Calculators, workstations, ASICs, floating-point Eybens, France microprocessors PCs, terminals, communications hardware and Cupertino, California software Minicomputers Grenoble, France Everett, Washington Networking products, personal computers Electronic instruments Lyon, France Fort Collins, Colorado Midrange computers Workstations, network controllers, ASICs, RISC South Queensferry, Scotland microprocessors Telecom test equipment, microwave test equipment Greeley, Colorado \^efontaine, France Printers, tape drives A-series and various industrial automation and Loveland, Colorado medical products, networks, telecommunication Logic design systems, high-frequency linear products McMinnviUe, Oregon Waldbronn, West Germany Medical equipment Analytical instruments Palo Alto, California Test equipment Japan Rockaway, New Jersey Test equipment Tokyo Rohnert Park, Cahfomia Software, business computers, component and Test equipment semiconductor measurement instruments and Roseville, California systems Network products, personal computers Yokogawa San Diego, Cahfomia Instruments, peripherals

AsialPacific February 1989 Penang, Malaysia 3Com Semiconductor devices HP announced a strategic alliance with 3COM, Ringwood, Australia which will license its OS/2-based 3+Open LAN Application development tools Manager network operating system to HP. HP will Seoul, South Korea sell the product under the name HP3+Open Lan Instruments, peripherals Manager. Singapore Software networks, printers, graphics imaging 1989 components, calculators, keyboards, terminals, Ok! Electric Industry Co. Ltd. optoelectronic LED components The two companies agreed to buUd and operate a Taipei, Taiwan printed circuit board facility in Puerto Rico. Asian language PC products Microsoft Corporation The two companies are engaging in joint develop ROW ment to port the MS LAN Manager OS/2 technol ogy to the UNIX system environment. Guadalajara, Mexico PCs, multiuser systems December 1988 Sony HP recruited three digital audiotape (DAT) drive manufacturers to license the DDS format that HP SUBSIDIARIES developed with Sony. The new licensees are Aiwa, Alliance, and Mitsumi.

North America 1988 ApoUo Computer (United States) Zenith Hewlett-Packard Finance Company (United States) The two companies made an OEM agreement for laptop computers.

ALLIANCES, JOINT VENTURES, AND MERGERS AND ACQUISITIONS LICENSING AGREEMENTS April 1989 October 1989 Apollo Computer This merger gives HP a strong foothold in the Blue Star Ltd. networking arena, with 30.4 percent of the 1988 HP has established Hewlett-Packard India Pvt. workstation market The acquisition gave HP an Ltd., a joint-venture company with Blue Star Ltd., installed base of about 84,0{X) Apollo machines at the sole distributor of HP products in India. HP almost 3,000 sites and another proprietary RISC will have 40 percent equity in the venture and Blue architecture. Star 20 percent.

June 1989 KEY OFFICERS Oracle Corp. HP, through its Apollo Division, announced a mar keting agreement with Oracle under which both David Packard companies will promote and market the Oracle Chairman of the board relational database management systems (DBMSs) John A. Young software products. President, chief executive officer

Dean O. Morton •^^^^^^•^^^•^^^^^^^^^^^^~"~ Executive vice president, chief operating officer Robert Wayman FOUNDERS Senior vice president, chief financial officer

Harold E. Edmondson WiUiam R. Hewlett (stepped down as vice president Vice president, director of Corporate Manufactur- ^f ^ y^^^ ^f directors in February 1987) "^g David Packard Dick Alberding Executive vice president of Marketing

PRINCIPAL INVESTORS

David Packard—17.1 percent William R. Hewlett—12.2 percent

Table 4 Comprehensive Financial Statement Fiscal Year Ending October 31 (Millions of U.S. Dollars, except Per Share Data) Balance Sheet 1984 1985 1986 1987 1988 Total Current Assets $3,201 $3,342 $3,814 $5,490 $4,420 Cash 938 1,020 1,372 2,645 918 Receivables 1,180 1,249 1,344 1,561 1,860 Marketable Securities 0 0 0 0 0 Inventory 1,023 993 981 1,117 1,478 Other Current Assets 60 80 117 167 164 Net Property, Plants $1,868 $2,149 $2,236 $2,328 $2,516 Other Assets $84 $189 $237 $315 $561 Total Assets $5,153 $5,680 $6,287 $8,133 $7,497 Total Current Liabilities $1,322 $1,376 $1,518 $2,735 $2,570 Long-Term Debt $81 $102 $110 $88 $61 Other Liabilities $205 $220 $285 $288 $333 Total Liabilities $1,608 $1,698 $1,913 $3,111 $2,964 Total Shareholders' Equity $3,545 $3,982 $4,374 $5,022 $4,533 Converted Preferred Stock 0 0 0 0 0 Common Stock 775 780 712 776 234 Other Equity 0 0 0 0 0 Retained Earnings 2,770 3,202 3,662 4,246 4,299 Total Liabilities and Shareholders' Equity $5,153 $5,680 $6,287 $8,133 $7,497

Income Statement 1984 1985 1986 1987 1988 Revenue $6,044 $6,505 $7,102 $8,090 $9,831 U.S. Revenue 3,527 3,696 3,812 4,122 4,763 Non-U. S. Revenue 2,517 2,809 3,290 3,968 5,068 Cost of Sales $2,865 $3,166 $3,353 $3,785 $3,444 R&D Expense $592 $685 $824 $901 $1,019 SG&A Expense $1,727 $1,896 $2,145 $2,442 $2,938 Capital Expense $658 $9,631 $497 $510 $649 Pretax Income $860 $758 $780 $962 $1,142 Pretax Margin (%) 14.23 11.65 10.98 11.89 11.62 Effective Tax Rate (%) 36.40 35.50 33.90 33.10 28.50 Net Income $665 $489 $516 $644 $816 Shares Outstanding, Millions 256.5 256.9 256.1 257.3 234.2 Per Share Data Earnings $2.13 $1.91 $2.02 $2.50 $3.36 Dividends $0.20 $0.22 $0.22 $0.23 $0.28 Book Value $13.82 $15.50 $17.08 $19.52 $19.35

Table 4 (Continued) Comprehensive Financial Statement Fiscal Year Ending October 31 (Millions of U.S. Dollars, except Per Share Data) Key Financial Ratios 1984 1985 1986 1987 1988 Liquidity Current (Times) 2.42 2.43 2.51 2.01 1.72 Quick (Times) 1.65 1.71 1.87 1.60 1.14 Fixed Assets/Equity (%) 52.69 53.97 51.12 46.36 55.50 Current Liabilities/Equity (%) 37.29 - 34.56 34.71 54.46 56.70 Total Liabilities/Equity (%) 45.36 42.64 43.74 61.95 65.39 Profitability (%) Return on Assets - 9.03 8.62 8.93 10.44 Return on Equity - 12.99 12.35 13.71 17.08 Profit Margin 11.00 7.52 7.27 7.96 8.30 Other Key Ratios R&D Spending % of Revenue 9.79 10.53 11.60 11.14 10.37 Capital Spending % of Revenue 10.89 148.06 7.00 6.30 6.60 Employees 82,000 84,000 82,000 82,000 87,000 Revenue ($K)/Employee $73.70 $77.44 $86.60 $98.65 $113.00 Capital Spending % of Assets 12.77 169.56 7.91 6.27 8.66

Source: Hewlett-Packaid Co. Anonal Rq)orts Dataquest Januaiy 1990

Table 1

Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars)

1983 1984 1985 1986 1987 1988

Total Semiconductor 130 182 206 218 243 270

Total Integrated Circuit

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) MOS Memory MOS Microdevices MOS Logic

Analog

Total Discrete 30 40 40 52 57 57

Total Optoelectronic 100 142 166 166 186 213

Table 2

Hewlett-Packard Company 1988 Worldwide Ranking by Semiconductor Markets (Revenue in Millions of Dollars)

Sales Industry 1988 1987 1988 % Change % Change Rank Rank Revenue 1987-1988 1987-198^

Total Semiconductor 33 31 $270 11.1% 33.0%

Total Discrete 30 27 $ 57 0 14.4% Total Optoelectronic 4 2 $213 14.5% 27.5%

Source: Dataquest December 1989

Table 3 Hewlett-Packard Company Estimated 1988 Semiconductor Revenue by Geographic Region (Millions of Dollars)

U.S. Japan Europe ROW

Total Semiconductor $166 $29 $53 $22

Total Integrated Circuit

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) MOS Memory MOS Microdevices MOS Logic

Analog

Total Discrete $ 46 $ 5 $ 4 $ 2

Total Optoelectronic $120 $24 $49 $20

Source: Dataquest ' December 1989

Hewlett-Packard Company Established 1965 3000 Hanover Street (HP Labs activities) Palo Alto, CA 94304 No. of Employees: N/A (415) 857-1501

BACKGROUND Hewlett-Packard is a vertically integrated electronics company that develops and manufactures products for the worldwide marketplace. HP's principal products include integrated instrument and computer systems, test/measurement instruments, computers, peripherals, medical electronics, chemical analysis instrumentation, hand-held calculators, and solid state components. HP Labs conducts research to extend its technology base. The laboratories originated LED displays, the Schottky-gate GaAs FET X-band amplifier, and GaAs MMICs. HP's Microwave Division (MSD) makes transistors and other microwave components. The Optoelectronics Division (OED) produces LEDs, light bars, and linear arrays. The Optocommunication Division's (OCD) products include fiber optics and couplers. HP ships approximately $200 million in merchant and captive optoelectronic components per year. GaAs ICs are now used in more than one dozen of HP's instrumentation products.

COMPANY EXECUTIVES • Lab Director—Frank Carruba • Executive Vice President, Marketing and International—Dick Alberdin • General Manager, MSD—Paul Sedlewicz

• General Manager, OED—Mike Cowley • General Manager, OCD—Rick Kniss

PROCESS TECHNOLOGY HP uses GaAs, GaAlAs, and related III-V opto device processes.

PRODUCTS • LEDs • Optocouplers • Microwave diodes • Transistors

Ai^lications HP products are used in military and commercial electronics hardware.

FACILITIES Not available

Hewlett-Packard Company Established 1965 3000 Hanover Street (HP Labs activities) Palo Alto, CA 94304 No. of Employees: N/A (415) 857-1501

BACKGROUND Hewlett-Packard is a vertically integrated electronics company that develops and manufactures products for the worldwide marketplace. HP's principal products include integrated instrument and computer systems, test/measurement instruments, computers, peripherals, medical electronics, chemical analysis instrumentation, hand-held calculators, and solid state components. HP Labs conducts research to extend its technology base. The laboratories originated LED displays, the Schottky-gate GaAs FET X-band amplifier, and GaAs MMICs. HP's Microwave Division makes transistors and other microwave components. The Optoelectronics Division produces LEDs, light bars, and linear arrays. The Optocommunication Division's products include fiber optics and couplers.

COMPANY EXECUTIVES • Lab Director—John Doyle • Marketing Director—Dick Alberdin (Optoelectronics)

PROCESS TECHNOLOGY

HP uses GaAs, GaAlAs, and related III-V opto device processes.

PRODUCTS • LEDs • Optocouplers • Microwave diodes • Transistors

Ai^lications HP products are used in military and commercial electronics hardware.

FACILITIES Not available

BACKGROUMD AND OVERVIEW

In 1938, William Hewlett and David Packard decided to form their own electronics company. They converted the small garage behind the Packard home in Palo Alto, California, into a workshop and constructed a resistance-tuned audio oscillator, which they named Model 200A. This model, after being displayed at the Institute of Radio Engineers, caught the attention of Walt Disney, who placed an order for eight slightly adapted oscillators for his film studios. Hewlett and Packard thus founded their company on January 1, 1939, to build the new Model 200B, a derivative of the Model 200A. From this modest start, Hewlett-Packard Company grew to become the world's largest manufacturer of test and measurement instruments.

In 1952, Hewlett-Packard (HP) introduced the first frequency counter. It was able to display frequencies up to 10 MHz. HP was one of the first companies to follow Digital Equipment Corporation into small-computer technology. In 1966, HP introduced its Model 2116A instrumentation computer and a year later its 16-bit general-purpose Model 2115A.

Another field where Hewlett-Packard made an early impact was in oscilloscopes. HP manufactured a very high-speed oscilloscope, the Model 185A; and in 1966, the Company introduced the Model 180A, the world's first solid-state oscilloscope.

The first oscilloscope to use a microprocessor was Hewlett-Packard's Model 1722, announced in 1974. It used a microprocessor of HP's own design, designated the 352. Developed originally for the HP 35 calculator, the microprocessor computed frequency and time intervals that could be displayed on the oscilloscope's light-emitting diode (LED) display.

The display requirement of semiconductor electronic equipment led HP into the production of optoelectronic semiconductors for the merchant market, with the first devices launched into the merchant market in the early 1970s. The Company is now among the world's top three producers of optoelectronic devices.

Hewlett-Packard made its debut in the transient waveform recorder market with the development of the Model HP-5180 waveform analyzer in 1982. In February 1982, HP developed a 32-bit microprocessor with a record number of devices on one chip. HP does not currently sell its integrated circuits on the merchant market.

Hewlett-Packard's first computer was introduced in 1966. Its purpose was to gather and analyze the data produced by HP electronic instruments. Today HP computers and their peripheral devices (terminals, mass storage devices, printers, and plotters) are themselves a major product line and account for a substantial portion of the Company's sales. By 1985, HP had decided to focus on the office automation business with a scheme called the Personal Productivity Center. This includes everything from micro- and minicomputer hardware to data base management, word processing, electronic mail, and networking software.

European Operations

HP has greatly expanded its operations in France; in 1984, the French operation grew by 30 percent. By the end of 1985, the Company employed a total of 3,000 people in France. HP announced in early 1986 that it would spend Pta 2.5 billion on a new plant at San Cuget de Valles, Spain, to manufacture graphic plotters. Due to a softening in the tester market, HP's proposed $13 million investment at South Queensferry, Scotland, has been temporarily postponed. During 1985, all U.K. salaries were cut temporarily by 5 percent because of the slump in European semiconductor orders.

As shown in Table 1, Dataguest estimates that Hewlett-Packard's European semiconductor revenue was $46 million in 1986, as compared to 1985's revenue of $39 million. Table 1

Hewlett-Packard Company ESTIMATED EUROPEAN SEMICONDUCTOR REVENUE BY PRODUCT LINE (Millions of U.S. Dollars)

1992 1983 19?4 1985 1986

:al Semiconductor $32 $31 $41 $39 $46

Total Integrated Circuit 0 0 0 0 0 Bipolar Digital 0 0 0 0 0 MOS 0 0 0 0 0 Linear 0 0 0 0 0

Total Discrete $ 9 $ 6 . $ 7 $ 5 $ 5 Transistor 5 3 4 3 3 Diode 4 3 3 2 2 Thyristor 0 0 0 0 0 Other 0 0 0 0 0

Total Optoelectronic $23 $25 $34 $34 $41

Source: Dataquest February 1987 Ref. 0187-05

PRODUCTS AMD MARKETS SERVED

Hewlett-Packard manufactures a number of dedicated integrated circuits for internal consumption only. These are supported by a wide range of optoelectronic devices (both components and modules) that are generally available on the merchant market, together with several specialized diode and transistor products.

The optoelectronic segment is led by a range of high-quality, performance-visible components, which are generally regarded as industry leaders. Other strengths in this area are;

Bar code readers

Couplers

Sensor-emittor arrays

Assemblies

Fiber optics

The prime driving force has been to support the Company's internal requirements, and the product range reflects this priority. Merchant sales have thus been primarily an ancillary business for semiconductor operations. With the current trend of traditionally captive suppliers moving into the merchant semiconductor market (e.g., NCR, Honeywell, and Western Electric), coupled with HP's leadership position in state-of- the-art IC technology, this stance has changed. The Company is responding to an industry trend toward integrated-design and factory- automation systems, with reduced-instruction-set computers (RISCs). In early 1986, HP announced that it was pulling out of the U.S. market for semiconductor manufacturing automation systems, though it would still support the worldwide installed base for at least five years.

Hewlett-Packard has a well-established captive integrated circuit operation. It designs, develops, and manufactures devices for the Company's 32 divisions. Most of the wafer fabrication currently takes place at HP's facility in Fort Collins, Colorado. A new line was installed in mid-1983 at the Company's facility in Cupertino, California.

In September 1983, Hewlett-Packard entered the general business market for personal computers with the introduction of the HP 150. The HP 150 uses the same operating system as IBM's personal computer, the current de facto industry standard.

In May 1984, Hewlett-Packard launched the "portable." This is a lightweight computer with a 16-line 80-column LCD display, a 256K RAM, and a built-in Lotus 1-2-3 spreadsheet. (Lotus 1-2-3 is a U.S. trademark of Lotus Development Corporation.)

The United Kingdom has become Hewlett-Packard's largest sales region outside the United States. The United Kingdom's computer peripherals factory at Yate, Bristol, was expanded during 1984 and 1985, and a printed circuit board assembly line with automatic equipment will be among the additional processes to be added to the existing two assembly lines. Up to 80 percent of this operation's total output is expected to be exported to Europe.

OUTLOOK

Traditionally, Hewlett-Packard's key areas of strength have been test and measurement equipment and minicomputers. The Company has always been a leader in technology, with its RISC-based computers, computer-integrated manufacturing (CIM), and VLSI testers. Recently, the Company has experienced delays in bringing products to market and has dropped CIM. Profitability has also been a problem. Hewlett-Packard's management, however, is showing every sign of being able to direct the company safely through this difficult period of restructuring.

Company Backgrounder by Dataquest

IDEAssociates, Inc. 29 Dunham Road Billerica, Massachusetts 01821 Telephone: (508) 663-6878 Fax: (508) 663-8851 Dun's Number: Not Available Date Founded: 1982

CORPORATE STRATEGIC DIRECTION Courier, Inc. Immediately after the purchase of AIS, IDEAssociates' cofounder and CEO Gautum Gupta IDEAssociates, Inc., also known as IDEA, is a reduced employment, terminated Courier's PC clone privately held company founded in 1982. It is cur- business, and closed three of its five factories. After rendy backed by a number of investors including losing $22 miUion* in fiscal 1988, die subsidiary Chemical Bank, Hambro International Fund, John achieved a net mcome of $6.5 million in fiscal 1989. Hancock Venture Management, Merrill Lynch Venture Capital, and The Palmer Organization. IDEAssociates has grown firom an original cash investment of $27,000 to a $215 million company, The Company currentiy consists of three operations: with a net income of $9 million in 1989. In its first IDEAssociates, Inc., IDEA Courier, Inc., and IDEA six years, IDEA demonstrated a 106 percent annual Servcom. IDEAssociates is a developer and manufac growth rate. Mr. Gupta believes that the Company turer of midrange terminals, printers, and controllers; will reach sales of $350 million by 1993. PC/Macintosh links to IBM midrange systems; and PC Unks to IBM mainframes. IDEA Courier develops terminals, controllers, and printers for IBM main IDEA products are distributed duough a network of frames. IDEA Servcom maintains and services large value-added resellers (VARs) and distributors computers. throughout the United States and Canada, supported by sales offices in \^gitua, Texas, Illinois, and IDEAssociates began as a PC add-on vendor with California. IDEA distributes in over 40 countries add-on memory and multifunction boards for PCs. worldwide, and international sales currentiy account When these markets became saturated, IDEAssociates for approximately 60 percent of the totaL changed its strategy by moving toward the communi cations industry with modems and PC-to-mainframe A detailed financialsummar y is not available becaiise and PC-to-midrange links. In 1987, the Company IDEAssociates is a privately held company and is continued to depart from the PC peripherals market therefore not obligated to release such information. and focused on terminals and communications products for midrange computers.

IDEAssociates began building on its strength in emu lation boards, particularly PC-to-IBM System/3X. BUSINESS SEGMENT STRATEGIC The Company launched a terminal series, die IDEA DIRECTION 197, to connect to System 3X machines. In 1987, IDEAssociates also introduced the first emiilation products allowing the newly announced PS/2s to IDEAssociates, Inc. connect to System/3X con4>uters. IDEAssociates' data communications products offer In November 1988, IDEAssociates bought Alcatel easy access to die information stored on a user's IBM information Systems (AIS), a maker of mainframe host system. IDEA'S memory and multifunction computer peripherals that was roug|hly five times the boards oihance the ability to process this information. size of IDEAssociates. Alcatel had been ITT Corpo ration's Courier subsidiary, and was renamed IDEA *AU dollar amuuuUi are in US dollan.

The Company's midrange communications product IDEA Concert is configured as an IBM line includes a complete range of terminals, printers, 3174-compatible controller that can link IBM System/ and controllers for IBM midrange systems, Macintosh 370 mainframes; System/36, System/38, and AS/400 to midrange system connections, and local, remote, minicomputers; and DEC VAX minicomputers. The and gateway connections for the PC and PS/2. IDEA Concert is available in three sizes: the 80286-based Concert 10300, die 80386-based Con cert 10400, and the 80386-based Concert 10500. The Ideamax/MC memory board for IBM PS/2 and compatible microcomputers adds up to 12 Mbytes of memory using up to six pairs of 256-Kbyte or Along with the 3174-compatible Concert controllers, 1-Mbjrte single in-line memory modules (SIMMs). the Company announced the IDEA Concert 394, The adaptor can be installed in PS/2 50, 60, 70, or 80. which IDEAssociates states is the first IBM Utilities are provided for extended memory diagnos 5394-compatible midrange controller to support tics, allowing parallel ports to be swapped, redirecting multihost and multiple device links. printer output temporarily, and allowing output to serial ports COMl, COM2, and COM3 to be redirected. IDEA Courier also offers a selection of Non- Integrated Printer Controllers (NlPCs) that address a wide variety of hard-copy needs. An NIPC is a IDEAssociates ranked sixth in Dataquest's 1989 nonspecific printer device that interfaces to the IDEA North American Display Terminal Segment 1 (IBM 942X and 944X Controllers. It is available in four 5250) with 2.4 percent of die market share based on models with either parallel or serial interfaces 7,800 units shipped. that support coaxial cable or twisted-pair input connectivity. roEA Courier, Inc. IDEA Courier ranked fourth in Dataquest's 1989 Headquartered in a 550,0(X)-square-foot facility in North American Display Terminal Segment 3 with Tempe, Arizona, IDEA Courier manufactures termi 5.5 percent market share based on IDEA'S shipment nals, controllers, a range of matrix and laser printers, of 35,800 units. and intelligent workstations that are compatible with IBM mainframe systems. IDEA Courier products include intelligent system printers diat interface with IDEA Servcom host programs for graphics output, mainframe con trollers that allow multiple access to both Digital The IDEA Servcom division provides service for over Equipment Corporation (DEC) and IBM systems, and 10,000 MIS departments throughout die United States workstations featuring on-board computing capabili and Canada. A complete range of services is offered, ties similar to high-performance personal computers. including installation, relocation, repair, refurbish The workstations allow concurrent access to multiple ment, and preventive maintenance. These services are IBM sessions, as well as DEC and DOS applications. provided for IDEA equipment and for equipment IDEA Courier products are network compatible and from other manufacturers. Close coordination are backed by IDEA Servcom. between IDEA Servcom and the R&D departments at IDEAssociates and IDEA Courier is encouraged in order to promote design improvements. New connectivity products include the Concert range of terminal controllers and advanced function termi nals. The IDEA Concert controller is the jQrst in a The IDEA Servcom network includes 160 field series of multivendor communications products offices and 500 field engineers. It is driven by a designed to provide "any to any" connectivity among centralized dispatching and reporting system that is microcomputers, mainframes, and minicomputers. It manned 24 hours a day, sevoi days a week. can support IBM SNA hosts, IBM midrange machines, and DEC VAXes as equal pailners. Also, depending on the configuration, it can support Further Information upstream communication with any combination of the hosts, plus downstream support for any combination For further information about the Company's business of 3270 co-ax-A, IDEA 9000 Series co-ax, 5250 segmoots, please contact the appropriate Dataquest twin-ax, and asynchronous devices. industry service.

1989 SALES OFFICE LOCATIONS MERGERS AND ACQUISITIONS

Nordi America—47 1988 Europe—2 Asia^acific—1 Alcatel Information Systems (AIS) AIS offers a series of commimications products and terminals as well as computer maintenance and support services. IDEAssociates purchased AIS for approximately $100 million. The majority of funds came from bank loans and venture capital. AIS MANUFACTURING LOCATIONS was renamed IDEA Courier, Inc.

North America Billerica, Massachusetts Data communications products; midrange KEY OFFICERS terminals, printers, and controllers; memory and multifunction boards Gautum Gupta Tempe, Arizona President and chief executive officer IDEA Courier's manufacturing facility, which manufactures terminals, piinters, controllers, and David Page workstations Vice president. Operations David Hunter Vice president. Research and Development, general manager of IDEA Courier SUBSIDIARIES Alain Daste Vice President, Sales and Marketing Europe Nora Gildea \^ce President, Sales and Marketing IDEA France SA (France) IDEA UK (United Kingdom) Joel Adler Controller, Finance Asia/Pacific IDEA Asia/Pacific (Hong Kong) PRINCIPAL INVESTORS

Chemical Bank ALLIANCES, JOINT VENTURES, AND Hambro International Fund LICENSING AGREEMENTS John Hancock Venture Management Merrill Lynch Venture Capital The Palmer Organization 1990 Computer Marketing V\c Computer Marketing altered die IBM midrange market with an agreement to distribute IDEAs FOUNDERS sociates' 3270 communications products for per sonal camputers, Macs, and local area networks to Gautum Gupta, cofounder AS/400S, 36s, and 38s. Information about othm: cofoundars is not available.

IMNET Imaging Systems 34 Maple Avenue Pine Brook, New Jersey 07058 Telephone: (201) 882-2777 Fax: (201) 882-2767 Dun's Number: Not Available Date Founded: July 1986

CORPORATE STRATEGIC DIRECTION Because IMNET Imaging Systems is a wholly owned subsidiary, financial information is not available, and financial tables are not included in this backgrounder. IMNET was founded in July 1986, when it acquired Ragen hifbnnation Systems, Inc., and the rights to its document storage and handling systems technology. In 1988, IMNET merged with Communications & Cable, and in March 1989, the corporation changed its name to IMNET Imaging Systems to reflect its BUSINESS SEGMENT STRATEGIC commitment to the imaging market IMNET operates DIRECTION as a subsidiary of the parent conq>any, IMNET Inc. IMNET hnaging Systems provides mid- to high- volume networked imaging systems that run on pra*- IMNET Imaging Systems develops and markets sonal computers (PCs) and local area networks image management systems that provide on-line (LANs), and integrate widi host transaction process integration of image information with text and data. ing systems. Dataquest estimates IMNET's share of The Company enhanced the technology acquired the 1989 worldwide maricet for midvolume systems at from Ragen, added optical laser disk and magnetic 2.8 percent storage-and-retrieval capabilities, and merged it with document-handling technology to create the Image^^ew image management Systran. IMNET's The ImageView product is a single or multiuser products are targeted for use in mediimi-size to large electronic image system. Image\^ew comprises PC companies and local, state, and federal government 286/386-compatible workstations, 150-dots-per-inch agencies. (dpi) displays, 200- and 400-dpi scaimers, low- and iiigh-speed laser printers, an image network manager that controls up to 160 devices, a variety of optical In the United States, IMNET markets its products and fiObn storage-and-retrieval devices, and a data through a direct sales force and through joint maricet- management processor that controls indexing func ing agreements with Ameritedi, NCR, and Unisys for tions. IMNET offers bodi optical disk and on-line cooperative marketing of IMNET products. Interna microfilm storage options, and a microfilm camera is tionally, the Company's products are sold through also available on the network. IMNET's largest high- indirect distributor channels. The Company distrib utes products in Canada through Bell & Howell; in capacity autochanger jukebox supports up to ninety- Japan, South Korea, and Taiwan through Nissho five 12-inch disks and can store up to 5.3 miUion Electronics; in Europe through AEG; and in England pages of information. An ImageView system may dirough ROCC Computers Ltd. IMNET also markets have multiple optical and/or film jiikeboxes on-line. products through value-added resellers (VARs). The Company currently has VAR relationships diat sell to IMNET offers a distributed, expandable approach to the insurance, legal, pharmaceutical, and federal electronic image management Servers on the net- government markets. Dataquest estimates that woric manage the various image management tasks IMNET sells 30 percent of its products through direct such as indexing, networking, database management, channels and 70 percent through original equipmrait and printing. The Company believes that this manufacturers (OEMs) and VARs. approach provides several advantages: No single

device becomes a processing bottieneck as can hap Further Information pen in CPU-dependent configurations; if one server goes down, functions controlled by the other network For further information regarding IMNET's business servers are still operational; and through a distributed segments, please contact the appropriate Dataquest approach, users can expand their systems as their industry service. image management needs grow. IMNET bases its systems around industry-standard PC workstations and networks, enabling users to add electronic imag ing to their current information processing environ ments. IMNET's system is packaged with DESQ- 1989 SALES OFTICE LOCATIONS view, a multitasking environment that permits users to access host applications as well as mtdtiple MS-DOS North America—2 programs while using the system, and to transfer data between programs.

Image View is a generic system. This allows cus tomers or VARs to supply appUcation-specific soft MANUFACTURING LOCATIONS ware using IMNET's developer's kit. Although single-user configurations initially constimted most of IMNET's business, today the Company specializes in North America providing networked, midtiuser systems. Pine Brook, New Jersey Image management systems and software In June 1989, IMNET introduced the MegaSAR on line microfilm storage-and-retrieval unit. This computer-controlled device enables Image'êw sys tem users to locate and access images stored on microfilm. Since both on-line microfilm and optical SUBSIDIARIES disk media can be implemented in the same system, users have simultaneous and transparent access to IMNET has no subsidiaries. their entire image base, regardless of whether the images are stored on film or optical media. MegaSAR stores a total of 300 cartridges of 16mm-roll fihn with 4,000 to 20,000 images per cartridge, equivalent to betweoi 1.2 million and 6.0 million images. ALLIANCES, JOINT VENTURES, AND LICENSING AGREEMENTS Another offering intended to help users make the transition from off-line storage media such as paper 1989 and microfiche to optical storage is Computer Ouût to Laser Disk (COLD). COLD transfers compatesi NCR information such as account statements, fonns, and IMNET and NCR signed an agreement for NCR to reports direcdy from the user's mini- or mainframe market IMNET products with NCR systems. conûter to the Image\êw system, automatically indexes it, and stores it as ASCQ text on an opticd Unisys disk. Not only does this provide efficient archiving of IMNET signed a marketing agreement with information, but it also lets users view and print UNISYS for joint marketing of the two com reports, forms, and related data upon request panies' products.

A software-only version of the ImageView network system was made available in June 1989. This prod uct is offered in three versions: The first package MERGERS AND ACQUISITIONS offers full Image\^ew software functionality; die sec ond offers database directory viewing and printing; and the third retrieves, displays, and prints ASCII IMNET has participated in no mergers or data stored on optical disk. acquisitions.

KEY OFFICERS PRINCIPAL INVESTORS

Robert Gardner Information is not available. Chief executive officer Michael Wise ^^^^g^m^ President and chairman ^ .. „, . FOUNDERS David Black Vice president. Research and Development Michael '^se Lester Anderson Director of Marketing

Informix Software, Inc. 4100 Bohannon Drive Menlo Park, California 94025 Telephone: (415) 926-6300 Fax: (415) 926-6571 Dun's Number: 16-087-0648 Date Founded: 1980

CORPORATE STRATEGIC DIRECTION vertical applications. Internationally, Informix sells its products through a network of subsidiaries located in Europe and Singapore. Dataquest estimates that Founded in 1980, Infonnix Corporation develops and Infonnix ranked 14th in worldwide PC software markets high-performance relational database revenue in 1989. management and office automation software through its operating subsidiary Informix Software, Inc. The Company pioneered development of a fully relational More detailed information is available in Tables 1 and database management system (RDBMS) for multiuser 2, which appear after "Business Segment Strategic computers in 1980. Originally founded as Relational Direction" and present corporate highlights and reve Database Systems, Inc., the Company changed its nue by region. Information on revenue by distribution name to Informix in 1986. In 1988, Informix Soft channel is not available. Table 3, a comprehensive ware merged with and into Lmovative Software, Inc. financial statement, is at the end of this profile. As a result. Innovative became a wholly owned sub sidiary of Informix Corporation and changed its name to Informix Software, Inc.

Revenue totaled $145 million* in 1989, compared BUSINESS SEGMENT STRATEGIC with $103.4 miUion for 1988. Net income was DIRECTION $6.4 million, representing a 338 percent increase over the previous year's net income of $1.5 million. Informix provides high-performance database management systems (DBMSs) for managing infor During 1989, the Company added new top-level mation on UNIX server platforms, complementary executives in almost every area of the Company and tools tiiat provide multiplatform access to data, and established three worldwide sales headquarters in the connectivity software that allows information to be United States, Europe, and Asia to take advantage shared transparently firom PCs to mainfirames within of global market opportunities. The Company the corporate computing environment re-established single corporation headquarters in Menlo Park, California, while maintaining office Informix-OnLine is a high-performance OLTP engine automation product development and manufacturing that supports a multimedia RDBMS for UNIX in Lenexa, Kansas. environments. 'S^^th OnLine, users can store spread sheets, word processing documents, digitized Informix products are distributed worldwide through images, and voice as ordinary fields in a database value-added resellers (VARs), original equipment record. Informix-SE is a structured query language (SQL) database engine targeted at smaller MIS manufacturers (OEMs), systems integrators, resellers, organizations that require Ught transaction processing and a direct sales force to Fortune 1000 companies. for more traditional decision support applications. Informix has more than 1,500 VARs that have used Informix-4GL is the first fourth-generation program Informix database software as the foundation for ming language designed specifically for database *A11 dollar amonnts are in US dollars. application development.

Wngz is the first graphic spreadsheet to Mly exploit and AT&T StarGROUP, and give users the ability to windowing environments. The HyperScript applica share information across a network. tion development language included in the product allows development of custom applications. Wmgz Informix-Net client/server software products allow supports multiple platforms including Macintosh Informix database applications to connect to Informix A/UX, the NeXT Computer, and DOS with databases across a TCP/IP or StarGROUP network. MS-Windows, and soon will be available for OSF/Motif and Open Lxwk on Sun workstations. The Wingz-DataLink interface links desktop Professional' Services from Informix offers both con computers with SQL databases. Informix-SQL is a sulting and training programs to meet the needs of menu-driven application development tool for end individual users. Informix's maintenance services are users and programmers. available at two different levels: standard main tenance and Regency Support Standard maintenance includes regular product updates; unlimited telephone Informix-QuickStep is an interactive report generator support; Tech Notes, a quarterly publication from that enables users to build SQL database queries and Informix to help customers with troubleshooting; and customer reports through an easy-to-use interface. an on-line bulletin board that provides technical infor SmartWare is integrated office automation software mation and assistance. Regency Support offers a high that includes database management, word processing, level of service to customers with complex, on-line transaction processing-based applications. Through spreadsheet with graphics, and communication Regency Support, customers have access to an capabilities. Informix-Star distributed database engineer that is familiar with the appUcation, an software products enable users to access data from on-line bulletin board, and an option for 24-hour/ multiple Informix-OnLine databases on multiple 7-day-a-week support. remote servers.

Further Information Informix Network-Ready Application Tools file- sharing products support DOS networks standards For more information about Informix, please contact including Novell NetWare, 3Com 3+, IBM PC LAN, Dataquest's Microcomputer Systems Service.

Table 1 Five-Year Corporate Highlights (Thousands of US DoUars)

1985 1986 1987 1988 1989 Five-Year Revenue $18,878.0 $36,184.0 $68,471.0 $103,405.0 $145,000.0 Percent Change 91.67 89.23 51.02 40.23

Capital Expenditure $625.0 $1,281.0 $7,376.0 $17,656.0 $6,347.0 Percent of Revenue 3.31 3.54 10.77 17.07 4.38

R&D Expenditure $1,470.0 $2,438.0 $5,087.0 $7,833.0 $11,118.0 Percent of Revenue 7.79 6.74 7.43 7.58 7.67

Number of Employees 124 214 419 1,100 1,183 Revenue ($K)/Employee $152,242 $169,084 $163,415 $94,005 $122,570

Net Income $1,174.0 $2,463.0 $9,308.0 $1,458.0 $6,379.0 Percent Change 109.80 277.91 (84.34) 337.52

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $31,002.00 $33,608.00 $37,178.00 $43,212.00 Quarterly Profit $482.00 $1,113.00 $2,078.00 $2,706.00

Sonice: Infomiix Software, Inc. Aimnal Rqiorts and Fonns 10-K Dataqoest (1990)

Ikble 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 85.00 76.00 89.00 80.00 64.00 International 15.00 24.00 11.00 20.00 36.00 Europe 15.00 24.00 11.00 20.00 34.00 Ofliers 0 0 0 0 2.00 Source: Infonnix Software, Inc. Annual Reports and Fonns 10-K Dataqoest (1990)

Claris Corporation Claris acquired the rights to technology in the 1989 SALES OFFICE LOCATIONS Wingz graphic spreadsheet to develop and enhance software for the Macintosh. North America—^21 The Santa Cruz Operation (SCO) Europe—1 SCO and Informix will jointly market and promote Asia^acific—^3 Informix's W^gz graphic spreadsheet on Open Desktop through joint advertising, trade shows, and other marketing opportunities. Wingz is the first graphic spreadsheet for SCO's Open Desktop. MANUFACTURING LOCATIONS AT&T A cooperative agreement between Informix and AT&T will integrate Informix software with North America System/r on AT&T platforms. System/T is a trans action processing monitor designed to enhance Lenexa, Kansas performance in large-scale, transaction-intensive Software duplication applications. Menlo Park, California Software duplication Lockheed Integrated Solutions Company Lockheed will resell customized document and image management solutions based on the Informix-OnLine multimedia database engine. SUBSIDIARIES Unisys Unisys wiU offer a new version of the Informix- OnLine OLTP database engine for its new Open/ Informix considers its sales offices to be subsidiaries. OLTP environment

1989 Ingram Micro D ALLIANCES, JOINT VENTURES, AND Ingram and Informix signed an agreement for the LICENSING AGREEMENTS retail distribution of SQL DBMS products. Sun Microsystems 1990 A strategic vendor agreement calls for the joint developmoit, marketing, and sales of Informix's TechData Corp. line of information management software for all TechData will distribute Informix's entire product currendy available Sun hardware platforms. line with a focus on delivering UNIX-based infor mation. IBM The agreement gives IBM the right to market and MERGERS AND ACQUISITIONS sell Informix's line of information management products for IBM's AlX-based hardware platforms. 1988 Top Log International Top Log and Informix signed a two-year contract Innovative Software, Inc. for the pan-European distribution of Informix's Informix Software, Inc., merged with and into complete line of UNIX-based information manage Innovative Software, Inc., as part of a plan of ment software. Top Log will distribute Informix's reorganization. As a result. Innovative became a software throughout the United Kingdom, France, wholly owned subsidiary of Informix corporation Gennany, Spain, and the Benelux countries. and dianged its name to Informix Software, Inc.

KEY OFFICERS PRINCIPAL INVESTORS

Roger J. Sippl BEA Associates—^9.8 percent Chainnan FMR Corporation—^5.5 percent PhilUp £. White Chief executive officer Richard C. Blass FOUNDERS Yice president, corporate controller

Jeffrey G. Berk Roger J. Sippl "N^ce president. Marketing Mark R. Callegari Vice president and site general manager, Lenexa D. Kenneth Coulter \^ce president, Europe Howard H. Graham \^ce president. Finance; and chief financial officer

Table 3 Comprehensive Financial Statement Fiscal Year Ending December (Thousands of US Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $5,822.0 $18,735.0 $90,786.0 $82,853.0 $107,404.0 Cash 2,808.0 12,120.0 32,594.0 15,223.0 25,018.0 Receivables 2,556.0 5,615.0 21,224.0 43,535.0 72,500.0 Maiketable Securities 0.0 0.0 30,144.0 12,600.0 143.0 Inventory 208.0 531.0 2,864.0 3,985.0 5,281.0 Other Current Assets 250.0 469.0 3,960.0 7,510.0 4,462.0 Net Property, Plants $1,119.0 $1,978.0 $9,444.0 $23,493.0 $21,710.0 Other Assets $130.0 $415.0 $5,562.0 $10,071.0 $14,067.0 Total Assets $7,071.0 $21,128.0 $105,792.0 $116,417.0 $143,181.0 Total Current Liabilities $3,042.0 $4,774.0 $13,872.0 $23,220.0 $36,501.0 Long-Term Debt $706.0 $675.0 $30,751.0 $26,645.0 $32,451.0 Other Liabilities $0.0 $0.0 $137.0 $123.0 $225.0 Total Liabilities $3,748.0 $5,449.0 $44,760.0 $49,988.0 $69,177.0 Total Shareholders' Equi^ $3,323.0 $15,679.0 $61,032.0 $66,429.0 $74,004.0 Common Stock 1,944.0 72.0 115.0 120.0 123.0 Other Eqiii^ (439.0) 11,326.0 47,756.0 51,690.0 52,883.0 Retained Efunings 1,818.0 4,281.0 13,161.0 14,619.0 20,998.0 Total Liabilities and Shareholders' Equity $7,071.0 $21,128.0 $105,792.0 $116,417.0 $143,181.0 Income Statement 1985 1986 1987 1988 1989 Revenue $18,878.0 $36,184.0 $68,471.0 $103,405.0 $145,000.0 US Revenue 16,046.0 27,500.0 61,216.0 82,827.0 92,558.0 Non-US Revenue 2,832.0 8,684.0 7,255.0 20,578.0 52,442.0 Cost of Sales $897.0 $1,767.0 $8,533.0 $12,016.0 $18,182.0 R&D Expense $1,470.0 $2,438.0 $5,087.0 $7,833.0 $11,118.0 SG&A Expense $6,173.0 $12,535.0 $41,273.0 $83,968.0 $105,082.0 Capital Expense • $625.0 $1,281.0 $7,376.0 $17,656.0 $6,347.0 Pretax Income $2,118.0 $4,647.0 $15,206.0 $580.0 $10,126.0 Pretax Margin (%) 11.22 12.84 22.21 0.56 6.98 Effective Tax Rate (%) 44.60 47.00 41.50 36.00 37.00 Net Income $1,174.0 $2,463.0 $9,308.0 $1,458.0 $6,379.0 Shares Outstanding, Thousands 6,075.0 6,860.0 12,074.0 12,554.0 13,223.0 Per Share Data Earnings $0.19 $0.36 $0.77 $0.12 $0.48 Dividend 0 0 0 0 0 Book Value $0.55 $2.29 $5.05 $5.29 $5.60

Ikble 3 (Continued) Comprehensive Fmancial Statement Fiscal Year Ending December (Thousands of US Dollars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Uquidity Current (Tunes) 1.91 3.92 6.54 3.57 2.94 Quick (Times) 1.85 3.81 6.34 3.40 2.80 Fixed Assets/Equity (%) 33.67 12.62 15.47 35.37 29.34 Current Liabilities/Equity (%) 91.54 30.45 22.73 34.95 49.32 Total Liabilities/Equity (%) 112.79 34.75 73.34 75.25 93.48 Profitability (%) Return on Assets _ 17.47 14.67 1.31 4.91 Return on Equity - 25.92 24.27 2.29 9.08 Profit Margin 6.22 6.81 13.59 1.41 4.40 Other Key Ratios R&D Spending % of Revenue 7.79 6.74 7.43 7.58 7.67 Capital Spending % of Revenue 3.31 3.54 10.77 17.07 4.38 Employees 124 214 419 1,100 1,183 Revenue ($K)/Employee $152,242 $169,084 $163,415 $94,005 $122,570 Capital Spending % of Assets 8.84 6.06 6.97 15.17 4.43 Note: Infonnix and Innovative Software meiged in 1988. 1987 and 1988 revenue Source: Infonnix Software, Inc. for Infonnix includes both Infonnix imd Innovative Software revenue. Annual Rq)ons and Fonns 10-K Dataqoest (1990)

Infotron Systems Corporation Cherry Hill Industrial Center Cherry Hill, New Jersey 08003 Telephone: (609) 424-9400 Fax: (609) 424-6461 Dun's Number: 04-455-1612 Date Founded: 1968

CORPORATE STRATEGIC DIRECTION Total revenue decreased 1 percent to $94.1 million* in fiscal 1989 from $94.7 million in fiscal 1988. Net income decreased 28 percent to $2.9 million in fiscal Infotron Systems Corporation designs, manufactures, 1989 from $4.0 million in fiscal 1988. Infotron markets, and services data, voice, and image en^loys 918 people worldwide. networks used by large corporations and public enti ties tbroughout the world. Its principal products include data/voice network exchanges, concentrators, and network management systems. R&D expenditure totaled $9.9 million in fiscal 1989, representing 11 percent of revenue.

Infotron's customer base consists largely of major corporations, domestic arid international cranmunica- More detailed information is available in Tables 1 and tions common carriers, and government agencies that 2, which appear after "Business Segment Strategic operate extraisive data coomiunications networks. Direction" and present corporate highlights and reve nue by region. Information on revenue by distribution Through its own direct sales force, Infotron markets channel is not available. Table 3, a conqnjehensive its equipment and systems in die United States. Its financial statement, is at the end of diis backgrounder. two wholly owned subsidiaries market in Canada and die United Kingdom. Unough a separate division, Infotron has a networic of distributors to market certain of its low-end and midrange multiplexers and mod^n products in the United States and interna BUSINESS SEGMENT STRATEGIC tional markets. Infotron also maricets and sovices DIRECTION its products internationally through a network of distributors managed by its New Jersey-based international sales group and a sales and support Infotron communications networks can satisfy a wide coordination office located in BelgiunL range of systems needs, frcaa entry-level point-to- point configurations to sophisticated multinode sys Infotron's principal competitors in the high-speed net tems serving diousands of users. Sjrstem upgrade and working market are Codex Corporation (a subsidiary reconfiguration are facilitated by the modular design of Motorola), Digital Commimications Associates of the product's hardware and software orientations. (DCA), General DataComm Industries, Network Infotron's products are compatible across its product Equipment Technologies (NET), and Hmeplex (a line of statistical multiplexors, switching systems, division of Unisys). Ccnnpetition in the networic con networic concentrators, and network processors. This centrator maitetplace is mainly from Codex and framework provides both a centralized single-point DCA in die United States and Comfniter and Systems management of an integrated data/voice communica Engineering Ltd. in Europe. To a lesser extent, Info tions network and a migration padi among products tron's network systems also compete in the United within die network of products. States with public data networks and networks provided by mainframe manufacturers. *AU dollai amonnts are in US dollais.

Network Exchanges In 1988, Infotron introduced die Streamline 45, a new T3 synchronous transmission multiplexer capa Introduced in 1987, the iofostream NX4600 and ble of handling up to 28 Tl or 672 DS-0 links from a NX3200 Network Exchanges were developed fmax T3 Une. In 1990, Infotron upgraded the StreamLine die INX Intelligence Switch architecture and are 45 DS-3 multiplexer. New capabilities of the digital designed for muMnode, integrated voice, data, and communications gear, develqped by Infotron subsidi video networics operating at speeds up to Tl and ary Licom Inc., include its integration into Infotron's CEPT. Interfaces are provided for asynchronous data, network management platform. It also offers a backup digitized compressed video, and low- and high-speed feature that allows a new connection in the event of a voice PBX interfaces. The NX4600 and NX3200 are DS-3 circuit breakdown. In addition, it can handle a designed to meet botii domestic and international single, redundant 45-Mbps DS-3 link. As of February speeds and interfacing standards to enable tiiem to be 1990, approximately 200 StreamLine multiplexers used in both markets. had been installed in the preceding two years.

In 1988, Infotron released the IM-2000N. This is an In 1989, Infotron introduced the StreamLine 25, an enhanced variation of the Iofostream 1500 that is integrated switching system that combines a packet targeted specifically at die fractional Tl opportunities switching system, transparent circuit switching, and resulting from many carriers employing an NX64 multiplexing in one unified system for wide area service scheme. networks.

In 1990, Infotron extended the capabilities of the Mostream NX Tl/El Network Exchange product Network Management/Control line by mtrodudng die NX3040 and NX3020 feeder The Advanced Network Manager (ANM) is a series multiplexers. These products are targeted at users that of products that provide more sophisticated network have remote locations that require high link speeds, management capabilities for Infotron's 990 and 992 yet have low numbers of input/ouqmt devices. Networic Processors (ANM800), die INX Intelligent Switches (ANM4000), and die NX4600 and NX3200 Network Exchanges. These products process and Network Processors/Concentrators store event data and display the results using color The 892 and 990 Network I*rocessors and their gn^bics. predecessor, the 790 Network Concentrator, each are designed to serve as the access portion of a commimi- The ANM units are designed to manage one product; cations network. They provide multinode statistical for example, die ANM800 manages only 990 Net multiplexing, plus extensive centralized network work Processors. The ANM series is based on the management capabili^. The activi^ level and perfor IBM PC XT or AT with Infotron's custom-developed mance of all remote network nodes are reported software and hardware interfaces. centrally and may be tested and controlled from a central console. This feature allows users to control Litroduced in 1986, die Integrated Network Manager an entire networic, providing flexibility to reconfigure (INM) is a high-^id network management system diat and dynamically change systems parameters such as permits configuration, diagnostics, events monitoring, operating speed and protocol These products are and restoration of a network comprising SL45s, compatible with Infotron's statistical multiplexers so Infostream NX Tl multiplexers, SL25 packet/circuit as to oiable customers to e:q>and thek communica switches, 990NP statistical multiplexers, LAN Span tions networks incorporating a faQ range of Infotron LAN-WAN bridges, and a Commix LAN saver. products. Using high-resolution color gr^hics, die INM's func tion screens display real-time status of the network at ai^ levels selected. In addition to displaying real-time Multiplexers information, the INM gathers usage statistics, lliis Infotron provides models of statistical and time- unit is based cm an Apollo Microconq>uter and propri division multiplexers that offer a wide range of per etary software. formance characteristics to meet the needs of various users. Some of these products are used in conjunction Further Information with 790 Network Concentrators, 990 Network Processors, INX switches, and NX Network For more information about die Compaixy's business Exchanges in forming large networics. They also can segments, please contact the appropriate Dataquest be used in smaller point-to-point systems. industry service.

Table 1 Five-Year Corporate Highlights (Thousands of US Dollars)

1985 1986 1987 1988 1989 Five-Year Revenue $72,199.0 $81,049.0 $83,305.0 $94,728.0 $94,059.0 Peicent Change 12.26 2.78 13.71 (0.71)

Ct^ital Expenditure Percent of Revenue

R&D Expendltore $8,027.0 $9,768.0 $11,648.0 $10,473.0 $9,914.0 Percent of Revenue 11.12 12.05 13.98 11.06 10.54

Number of En^>loyees 1,021 1,068 927 913 918 Revenue ($K)/Employee $70.71 $75.89 $89.87 $103.75 $102.46

Net Income $3,703.0 ($2,335.0) ($10,921.0) $4,030.0 $2,890.0 Percent Change (163.06) (367.71) 136.90 (28.29)

1989 Calendar Year Qi Q2 Q3 Q4 Quarterly Revenue $22,689.00 $23,896.00 $19,380.00 $28,094.00 Quarterly Profit $1,031.00 $1,049.00 $673.00 $137.00

Source: lnfotiQii Systenos Cofporation Animal Reports and Ftonns 10-K Dataqnest (1990) Tkble 2 Revenue by Geographic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 88.29 85.18 73.01 70.66 68.46 International 11.71 14.82 26.99 29.34 31.54

SoDioe: Infotnm Systems Cotpotation Annnal RqKJCts and Forms 10-K (1990)

Societe d'Etudies et de Constructions Electronics Infotron and Societe d'Etudies et de Constructions 1989 SALES OFFICE LOCATIONS Electronics, a $60 million engineering firm, jointly fonned Infotron Secre Commuoications, which Norfli America—10 will market and service Infotron equipment in Europe—6 France. Asia/Pacific—3

MERGERS AND ACQUISITIONS MANUFACTURING LOCATIONS

North America 1989 Cherry HUl, New Jersey Licom Inc. Manufacturing activities involve the assembly of Infotron acquired Licom Inc., which primarily purchased electrical and mechanical components engages in the design, manufacture, marketing, and such as custom-made printed circuit boards, service of telecommunications equipment The total cost of the acquisition was $2.8 miUiotL standard integrated circuits, and power supplies, in accordance with Infotron's proprietary designs. Info-Com N.VJS.A. Extensive product testing follows assembly. Infotron acquired 60 percent of the outstanding shares of Info-Com N.V./S.A. (subsequently renamed Infotron Systems Belgium N.V.). Infotron Systems Belgium is a Belgian distributor of SUBSIDIARIES telecommunications eqiupment, including equip ment manufactured by InfotroiL North America 1988 Infotron Canada Ltd. (Canada) Ucom Inc. (United States) Infotron Systems Pty. Ltd. Infotron purchased an additional 48 percent of the Europe outstanding shares of Infotron Systems P^. Ltd., a distributor of telecommunications equipment in Infotron-Secre Communications SA. (France) Australia. The acquisition of the additional shares Infotron Systems Belgium N.V. (Belgium) by Infotron increased its ownership interest to Infotron Systems International Ltd. (United 96 percent Kingdom) Infotron Systems Ltd. (United Kingdom) Infotnm Systems Sweden AB (Sweden)

Asia/Pacific KEY OFFICERS

Infotron Systems Pty. Ltd. (Australia) James C. Castle Chairman of the board, president, and chief execu tive officer Gerard D. Ei^el ALLIANCES, JOINT VENTURES, AND Senior vice president. Marketing and US Sales and LICENSING AGREEMENTS Services 1989 Stig Y. Persson Senior vice president. Product Development and Netrix Corporation Engineering Infotnm and Netiix entered into an agreement under which Infotron will market Netrix's Norman R. San Soucie integrated packet- and drcuit-swiiched products. Senior vice president, Mantifacturing

Michael McGraU \^ce president and managing director, Infotron Systems International Ltd. FOUNDERS Robert McCalley Vice president. Corporate Marketing Information is not available. James 'Ring "V^ce president. Far East Operations

PRINCIPAL INVESTORS

Pitcaim Group LP., Pitcaim Company, and Pitcaim Trust Company—17.9 percent Wellington Management Company—9.2 percent Monotec Data Inc.—8.7 percent

Table 3 Comprehensive Financial Statement Fiscal Year Ending September (Thousands of US Dollars, except Per Share Data)

Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $54,717.0 $53,223.0 $56,430.0 $55,727.0 $58,361.0 Cash 13,523.0 10,418.0 7,426.0 3,232.0 1,194.0 Receivables 12,710.0 17,400.0 25,519.0 27,185.0 27,576.0 Maricetable Securities - - - 1,677.0 - Inventory 23,069.0 21,708.0 20,552.0 19,822.0 26,259.0 Other Ciurent Assets 5,415.0 3,697.0 2,933.0 3,811.0 3,332.0 Net Property, Plants $19,067.0 $21,847.0 $20,765.0 $19,146.0 $21,743.0 Other Assets $11,650.0 $17,140.0 $7,158.0 $5,655.0 $13,875.0 Total Assets $85,434.0 $92,210.0 $84,353.0 $80,528.0 $93,979.0 Total Currrat Liabilities $20,590.0 $31,964.0 $33,225.0 $15,154.0 $35,015.0 Long-Term Debt $403.0 $291.0 - $10,121.0 $2,503.0 Other Liabilities $2,482.0 - - - - Total Liabilities $23,475.0 $32,255.0 $33,225.0 $25,275.0 $37,518.0 Total Shareholders' Equity $61,959.0 $59,955.0 $51,128.0 $55,253.0 $56,461.0 Common Stock 52.0 52.0 52.0 52.0 53.0 Other Equity 35,264.0 35,595.0 37,689.0 37,784.0 36,101.0 Retained Earnings 26,643.0 24,308.0 13,387.0 17,417.0 20,307.0 Total Liabilities and Shareholders' Equity $85,434.0 $92,210.0 $84,353.0 $80,528.0 $93,979.0 Income Statement 1985 1986 1987 1988 1989 Revenue $72,199.0 $81,049.0 $83,305.0 $94,728.0 $94,059.0 US Revenue 64,330.0 64,024.0 56,043.0 59,527.0 62,752.0 Non-US Revenue 7,869.0 17,025.0 27,262.0 35,201.0 31,307.0 Cost of Sales $32,424.0 $40,609.0 $40,285.0 $42,347.0 $40,785.0 R&D Expense $8,027.0 $9,768.0 $11,648.0 $10,473.0 $9,914.0 SG&A E3q>ense $27,537.0 $33,467.0 $32,493.0 $37,274.0 $38,180.0 Capital Expense - - - - - Pretax Jncome $4,450.0 ($4,503.0) ($10,404.0) $4,235.0 $3,107.0 Pretax Margin (%) 6.16 (5.56) (12.49) 4.47 3.30 Effective Tax Rate (%) - - - - - Net Income $3,703.0 ($2,335.0) ($10,921.0) $4,030.0 $2,890.0 Shares Outstanding, Millions 5.2 5.1 5.1 5.2 5.2 Per Share Data Earnings $0.72 ($0.45) ($2.15) $0.78 $0.56 Dividend - - - - - Book Value $12.03 $11.66 $10.03 $10.63 $10.86

Tkble 3 (Contmued) Comprehensive Financial Statement Fiscal Year Ending September (Thousands of US Dollars, except Per Share Data)

Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Cuirent (Times) 2.66 1.67 1.70 3.68 1.67 Qoick Climes) 1.54 0.99 1.08 2.37 0.92 Fixed Assets/Equity (%) 30.77 36.44 40.61 34.65 38.51 Cuirent Liabilities/Eq^ty (%) 33.23 53.31 64.98 27.43 62.02 Total Uabilities/Eqaity (%) 37.89 53.80 64.98 45.74 66.45 Profitability (%) Return on Assets - (2.63) (12.37) 4.89 3.31 Return on Equity - (3.83) (19.66) 7.58 5.17 Profit Margin 5.13 (2.88) (13.11) 4.25 3.07 Other Key Ratios R&D Spending % of Revalue 11.12 12.05 13.98 11.06 10.54 Capital Spending % of Revenue - - - - - Employees 1,021 1,068 927 913 918 Revenue ($K)/Employee $70.71 $75.89 $89.87 $103.75 $102.46 Capital Spending % of Assets - - - - -

Source: Infotron Systems Coiponitiaii Ammal Rqxnts and Foons 10-K Dataquest (1990)

SCA 0007638 ©1990 Dataquest locoiporatBd Integrated Device Technology, Inc. 2975 Slender Way Santa Clara, California 95054 Telephone: (408) 727-6116 Fax: (408) 492-8674 Dun's Number: 03-814-2600 Date Founded: 1980

CORPORATE STRATEGIC DIRECTION IDT primarily sells to the domestic marketplace through its direct sales force. IDT also uses sales representatives within the United States and indepen Integrated Device Technology (IDT), Inc., designs, dent stocking representatives or distributors located in manufactures, and markets very large-scale integrated several major foreign markets. During fiscal years (VLSI) circuits using advanced complementary 1989, 1988, and 1987, respective intemational sales metal-oxide semiconductor (CMOS) and bipolar com accounted for 23, 20, and 19 percent of total revenue. plementary metal-oxide semiconductor (BiCMOS) IDT's business base used to be 75 percent mihtary process technologies. Dataquest classifies IDT prod and 25 percent commercial; however, during fiscal uct lines into six specific product families: year 1989, 62 percent of its net sales were attributed static RAM (SRAM), specialty memory products, to commercial sales. subsystems, logic elements, complex logic products, and reduced-instruction-set-computing (RlSC)-based microprocessor products. Based upon revenue figures More detailed information is available in Tables 1 for 1989, Dataquest ranks IDT 38tii in the worldwide and 2, which appear after "Business Segment semiconductor market Strategic Direction" and present corporate highlights and revenue by region. Information on revenue by distribution channel is not available. Table 3, a com Total revenue increased 49.3 percent to $180.7 mil prehensive financial statement, is at the end of tiiis lion* in fiscal year 1989, up from $121.1 miUion in profile. fiscal year 1988. IDT attributes record level sales to the continued introduction of new high-performance products. Net income reached $17.9 miUion in fiscal year 1989, representing a 54.9 percent increase over fiscal year 1988. IDT currentiy employs 1,878 people BUSINESS SEGMENT STRATEGIC throu^out the world. DIRECTION

IDT respectively spent $30.8 million, $18.8 miUion, Static RAMs (SRAMs) and $14.2 miUion on R&D activities in fiscal years 1989, 1988, and 1987. These figures respectively IDT is a leader in high-speed 16K, 64K, and reflect 17.1, 15.5, and 18.2 percent of total revenue. 256K CMOS SRAMs. RAMs are used to store data In fiscal year 1989, IDT increased its R&D expenses that can be readUy altered and retrieved. A RAM by 64 percent over fiscal year 1988. R&D activities consists of an array of memory cells into which are focused toward the design and development of data can be written, stored, and read whUe in use, new products, the enhancement of existing products, with no limitation as to the number of times its and tiie development and enhancement of manufac contents may be altered. An SRAM wiU sustain its turing processes. In 1990, construction of a new contents with no electrical reinforcement, whUe a Technology Development Center was completed in dynamic RAM (DRAM) requires electrical reinforce San Jose, California. Its total 135,000 square feet are ment of the memory contents to ensure data integrity. SRAMs are normaUy faster and easier to use than are utilized for R&D activities; the center includes a DRAMs, which are generally less expensive. state-of-the-art 6-inch wafer fabrication facihty. Fast SRAMS are used in a "buffer," "scratch pad," *A11 dollar amoonts aie in US dollars. or "cache" memory to store data being processed by

SCA 0007649 ©1990 Dataquest Incorporated Integrated Device Technology, Inc. the computer's central processing unit (CPU). single component that can be inserted into printed SRAMs are utilized to gready enhance performance circuit boards (PCBs). Early modules contained interaction between veiy fast CPUs and other devices. SRAMs only. Recently IDT began combining SRAMs are key to the development of "zero wait microprocessors and logic elements with SRAMs to state" systems. Dataquest beheves that IDT captured create complete fully tested subsystems. IDT's prod 7.1 percent of the fast SRAM worldwide market as uct focus is on the following areas: shared-port solu measured in billions of bits for 1989; thus, it ranked tions, cache memories, writable control store solu third in the market behind Fujitsu and Hitachi. tions, a higher level of integration of standard SRAM and FIFO memories, and fuUy custom modules. Specialty Memory Products The Static RAM Division produces a series of spe Logic Elements cialty CMOS static RAMs consisting of multiport IDT's logic product line comprises high-performance RAMs and application-specific memories. Dual-port RAMs provide two access ports to a single SRAM, CMOS logic devices compatible with industry- making them ideally suited for applications requiring standard transistor-transistor logic (7TL) devices. access by more than one processor simultaneously. These products offer pin/performance compatibility IDT recently took this technology a step further by at SO to 60 percent increases in speed over standard introducing the world's first four-port RAM. TTL logic at one-third to one-fifth the power consumption. IDT's emitter-coupled logic (ECL) interface product line is the first to be based on IDT's BiCEMOS Complex Logic Products process. BiCEMOS is derived firom IDT's CEMOS technology platform with the addition of high- IDT supphes highly integrated CMOS building block performance vertical bipolar transistors. IDT's first solutions for digital signal processing, real-time BiCEMOS product was a 64Kxl ELC I/O static embedded controllers, and image capture. Error RAM with a IS-nanosecond access time. IDT detection and correction (EDC) memory support introduced a 10-nanosecond part as well. A recently introduced 8-nanosecond part was developed by allows improved integriQr of system memory data. using IDT's second-generation BiCEMOS process. RISC Microprocessors Cache memories increase overall system througlq>ut by acting as a high-speed buffer between the higji- IDT is a licensed source of MIPS Computer Systems' speed central processing unit and slow main memory. RXOOO series of RISC microprocessors. IDT remains During 1989, IDT developed the IDT 71586 a leading supplier of the fastest (33-MHz) R3000 CacheRAM diat enables optimal performance for components in production. It recently introduced a systems based on Intel's high-performance 80386 derivative of the R3000 RISC microprocessor, the CPU. IDT extended this concept by developing the R3001 RISC controller, in response to customer IDT 71589, i486-specific cache RAM. interest in a lower-cost, high-performance RISC solu tion for embedded processing applications. IDT ofBsrs 19 first-in first-out(FIFO ) products, which are used to solve the problem of interfacing logic controllers and peripheral devices that are transfraring RISC Subsystems digital data at varying data rates. During 1989, IDT introduced the BiFIFO, a bidirectional FIFO, which IDT is also offering board- and module-level RISC allows a single-chip solution that matches 8-bit products diat can shorten the design and development peripherals with 16- and 32-bit microprocessors. cycles of RISC-based systems.

Subsystems Further Information Since 1983, IDT has been supplying modules com For more information on IDT's business segments, prising IDT standard devices in surface-mount pack please contact Dataquest's Semiconductor Industry ages on a single ceramic substrate. Each module is a Service.

Table 1 Five-Year Corporate Highlights (Thousands of US Dollars)

1985 1986 1987 1988 1989 Kve-Year Revenue $38,392.0 $57,738.0 $77,807.0 $121,094.0 $180,730.0 Percent Change 50.39 34.76 55.63 49.25

Capital Expenditure $30,566.0 $13,677.0 $17,512.0 $27,894.0 NA Percent of Revenue 79.62 23.69 22.51 23.03 0

R&D Expenditure $5,770.0 $12,121.0 $14,150.0 $18,771.0 $30,835.0 Percent of Revenue 15.03 20.99 18.19 15.50 17.06

Number of Employees 478 691 862 1,328 1,878 Revenue ($K)/Employee $80.32 $83.56 $90.26 $91.19 $96.24

Net Income $5,565.0 $4,631.0 $2,565.0 $11,583.0 $17,942.0 Percent Change (16.78) (44.61) 351.58 54.90

1989 Calendar Year Ql Q2 Q3 Q4 Quarterly Revenue $43,410.00 $46,271.00 $43,470.00 $47,579.00 Quarterly Profit $5,111.00 $5,714.00 $2,888.00 $4,229.00

NA = Not available Sooice: Integrated Device TKhnology, Inc. Axnmal Reports and Fonns 10-K Dataqiiest (1990) Table 2 Revenue by Gec^raphic Region (Percent)

Region 1985 1986 1987 1988 1989 North America 83.00 84.00 81.00 80.00 77.00 International 17.00 16.00 19.00 20.00 23.00 Europe NA NA NA 14.00 16.00 Asia/Pacific NA NA NA 6.00 7.00

NA = Not available Source: Integrated Device Technology, Inc. Animal Reports and Fonns 10-K Dataqnest (1990)

1988

1989 SALES OFTICE LOCATIONS MIPS Computer Systems IDT has licensed MIPS Computer Systems' R3000 microprocessor and R3010 floating-point North America—16 coprocessor. Eiirope—^3 Asia/Pacific—1 Japan—1 1987 Tachibana Tektron Co., Ltd. A distribution agreement calls for Tachibana Tektron to market IDT's SRAM, dual-port mem MANUFACTURING LOCATIONS ory and digital signal processor. VTC North America A licensing agreement calls for VTC to manufac ture and market IDT's fast CMOS TTL-compatible Salinas, California (FCT) CMOS logic devices. The devices will Static RAM and specialty memory operations conform to the JEDEC JC-40.2 proposed specifi San Jose, California cations for advanced CMOS logic chips. Technology development, FIFO, ECL I/O Santa Qara, California Technology development, subsystems and logic operations, RISC, complex logic operations MERGERS AND ACQUISITIONS Asia/Pacific Penang, Malaysia Information is not available. Assembly and testing operations

KEY OFFICERS SUBSIDIARIES D. John Carey Information is not available. Chairman of the board and chief executive officer Leonard C. Perham President and chief operating officer Charles R. Clark ALLIANCES, JOINT VENTURES, AND "^ce president. Subsystems Products LICENSING AGREEMENTS \^Iiam Cortelyou '^ce president. Wafer Operations, Salinas 1989 Robin H. Hodge Marubun Corporation Vice president. Assembly IDT and Marubun Corporation have formed an agreement for Marubun to maiket IDT's products Dr. Fu-Chieh Hsu in Japan. "^ce president. Technology Development Dia Semicon Systems Inc. Alan H. Huggins An agreement calls for Dia Semicon Systems to Vice president and general manager. Memory maiket IDT's RISC microprocessors and ultrahigli- Division speed SRAMs.

Larry T. Jordan Christopher P. Schott Vice president, Marketing Vice president. Specialty Memory Products John R. Mick Joseph J. Zabkar Vice president and general manager, RISC Vice president. Sales Subsystems Division and Product Definition Daniel R. Morris Vice president and general manager. Static RAM Division PRINCIPAL INVESTORS John Payne Vice president and general manager. Microproces John D. Carey—6.39 percent sor Logic Division Carl E. Berg—5.49 percent Richard R. Picard \^ce president. Logic Products Michael J. Rooney Vice president, FIFO Memory Products FOUNDERS

Joseph F. Santandrea Information is not available. Vice president and general manager. Wafer Fabrication Operations

Table 3 Comprehensive Financial Statement Fiscal Year Ending April (Thousands of US Dollars, except Per Share Data) Balance Sheet 1985 1986 1987 1988 1989 Total Current Assets $25,261.0 $55,815.0 $64,708.0 $87,883.0 $108,579.0 Cash 8,885.0 30,928.0 24,994.0 28,787.0 29,913.0 Receivables 7,413.0 12,459.0 17,433.0 25,607.0 33,453.0 Inventory 4,736.0 11,166.0 14,408.0 21,168.0 27,901.0 Other Current Assets 4,227.0 1,262.0 7,873.0 12,321.0 17,312.0 Net Property, Plants $35,897.0 $42,691.0 $49,333.0 $63,646.0 $87,502.0 Other Assets $6.0 $2,460.0 $1,927.0 $1,775.0 $1,531.0 Total Assets $61,164.0 $100,966.0 $115,968.0 $153,304.0 $197,612.0 Total Current Liabilities $23,425.0 $15,494.0 $25,872.0 $40,928.0 $56,343.0 Long-Term Debt $12,780.0 $16,886.0 $14,638.0 $20,905.0 $25,177.0 Other Liabilities 0 $728.0 $3,666.0 $5,034.0 $6,739.0 Total Liabilities $36,205.0 $33,108.0 $44,176.0 $66,867.0 $88,259.0 Total Shareholders' Equity $24,959.0 $67,858.0 $71,792.0 $86,437.0 $109,353.0 Common Stock 28,115.0 66,374.0 23.0 24.0 25.0 Other Equity (27.0) (18.0) 67,702.0 70,764.0 75,737.0 Retained Earnings (3,129.0) 1,502.0 4,067.0 15,649.0 33,591.0 Total Liabilities and Shareholders' Equity $61,164.0 $100,966.0 $115,968.0 $153,304.0 $197,612.0

Income Statement 1985 1986 1987 1988 1989 Revenue $38,392.0 $57,738.0 $77,807.0 $121,094.0 $180,730.0 US Revenue 31,865.4 48,499.9 63,023.7 96,875.2 139,162.1 Non-US Revenue 6,526.6 9,238.1 14,783.3 24,218.8 41,567.9 Cost of Sales $17,308.0 $24,925.0 $39,956.0 $55,733.0 $84,844.0 R&D Expense $5,770.0 $12,121.0 $14,150.0 $18,771.0 $30,835.0 SG&A Expense $8,825.0 $12,901.0 $19,759.0 $28,142.0 $34,287.0 Capital Expense $30,566.0 $13,677.0 $17,512.0 $27,894.0 NA Pretax Income $6,157.0 $5,106.0 $3,247.0 $18,057.0 $29,904.0 Pretax Margin (%) 16.04 8.84 4.17 14.91 16.55 Effective Tax Rate (%) NA NA NA NA NA Net Income $5,565.0 $4,631.0 $2,565.0 $11,583.0 $17,942.0 Shares Outstanding, Thousands 20,765.0 21.038.0 24,245.0 25,272.0 25,465.0 Per Share Data Earnings $0.15 $0.15 $0.11 $0.46 $0.70 Dividend 0 0 0 0 0 Book Value $1.20 $3.23 $2.96 $3.42 $4.29

Table 3 (Continued) Comprehensive Financial Statement Fiscal Year Ending April (Thousands of US Dollars, except Per Share Data) Key Financial Ratios 1985 1986 1987 1988 1989 Liquidity Current (Times) 1.08 3.60 2.50 2.15 1.93 Quick (Times) 0.88 2.88 1.94 1.63 1.43 Fixed Assets/Equity (%) 143.82 62.91 68.72 73.63 80.02 Current Liabilities/Equity (%) 93.85 22.83 36.04 47.35 51.52 Total Liabilities/Equity (%) 145.06 48.79 61.53 77.36 80.71 Profitability (%) Return on Assets _ 5.71 2.36 8.60 10.23 Return on Equity - 9.98 3.67 14.64 18.33 Profit Maigin 14.50 8.02 3.30 9.57 9.93 Other Key Ratios R&D Spending % of Revenue 15.03 20.99 18.19 15.50 17.06 Capital Spending % of Revenue 79.62 23.69 22.51 23.03 0 Employees 478 691 862 1,328 1,878 Revenue ($K)/Employee $80.32 $83.56 $90.26 $91.19 $96.24 Capital Spending % of Assets 49.97 13.55 15.10 18.20 0 NA s Not available Sonrce: Integrated Device Technology, Inc. Animal Reports and Forms 10-K Dataqoest (1990)

Table 1 Estimated Worldwide Semiconductor Revenue by Calendar Year (Millions of Dollars)

1983 1984 1985 1986 1987 1988

Total Semiconductor 10 33 51 72 98 171

Total Integrated Circuit 10 33 51 72 98 171

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (Function) 10 33 51 72 98 171 MOS Memory 10 30 49 66 85 135 MOS Microdevices 1 2 5 15 MOS Logic 3 1 4 8 21

Analog

Total Discrete

Total Optoelectronic

Table 2 Integrated Device Technology, Inc. 1988 Worldwide Ranking by Semiconductor Markets (Revenue in Millions of Dollars)

Sales Industry 1988 1987 1988 % Change % Change Rank Rank Revenue 1987-1988 1987-1988

Total Semiconductor 39 50 $171 74.5% 33.0%

Total Integrated Circuit 33 41 $171 74.5% 37.4%

MOS (Function) 28 32 $171 74.5% 54.5% MOS Memory 18 17 135 58.8% 93.1% MOS Microdevices 40 39 15 200.0% 3 9.9% MOS Logic 51 62 21 162.5% 29.2%

Table 3 Integrated Device Technology, Inc. Estimated 1988 Semiconductor Revenue by Geographic Region (Millions of Dollars)

U.S. Japan Europe RQ

Total Semiconductor $118 $11 $39 $3

Total Integrated Circuit $118 $11 $39 $3

Bipolar Digital (Function) Bipolar Digital Memory Bipolar Digital Logic

MOS (function) $118 $11 $39 $3 MOS Memory 98 8 27 2 MOS Mierodevices 9 6 MOS Logic 11 3 6 1

Analog

Total Discrete

Total Optoelectronic

Source: Dataquest December 1989

THE COMPANY

Background Integrated Device Technology, Inc. (IDT), was founded in Santa Clara, California, in 1980 by George Hwang, Frank Lee, and Chun Chiu (aU formerly with Hewlett-Packard), and Norman Godinho (formerly with Zilog). The Company raised $1 million in venture capital when it was founded, and a second round of financing, totalling $7.5 million, included investments by First Interstate Bank, Inco Securities Corporation, Montgomery Ventures and Securities, Union Venture Capitalists, West Coast Venture Capitalists, and Whitehead Associates.

D. John Carey, who was elected chairman of the board of IDT in early 1982, was named president and CEO of the Company in September 1982. IDT produces high-performance CMOS integrated circuits. The Company manufactures memory devices for the military and commercial markets, with emphasis on the military market and high-reliability, high-speed uses.

Operations IDT's headquarters and manufacturing facility are located in Santa Clara, California. The Company's products are manufactured using IDT's proprietary CEMOS 1 process, which employs 2.5-micron feature sizes. (CEMOS is a trademark of Integrated Devices Technology, Inc.)

The Company does all its own wafer processing except for ion implantation. IDT uses an outside supplier to package its devices, which are available in ceramic DIP and leadless chip carriers. The Company also has full in-house test and burn-in capability and can perform final test to military specifications.

IDT plans to expand its fabrication facilities from the current 6,000 square feet to approximately 9,000 square feet of space by the third quarter of 1983.

Marketing IDT markets and distributes its products through a direct sales force of three area sales managers (East, Central, and West Coast), and through independent representatives and distributors in the United States, Canada, and Europe. IDT's marketing and sales headquarters are:

Integrated Device Technology, Inc. 3236 Scott Boulevard Santa Clara, CA 95051 Telephone: (408)727-6116 TWX: 910-338-2070 SUIS Volume II Copyright © 15 February 1983 Dataquest Incorporated IDT-1 Integrated Device Technology, Inc.

Research and Development IDT is currently working on the development of CEMOS 2A, a scaled process developed from current CEMOS 1 technology. The process is expected to be available in the third quarter of 1983. CEMOS 2A yields die sizes about two-thirds those of CEMOS 1 thereby achieving a 25 percent speed improvement.

Employees The Company more than doubled its staff in 1982, and now employs more than 115 people.

PRODUCTS IDT manufactures CMOS static RAMs primarily for the high-performance military market. Table 1 lists the product types they presently offer. The Company's first product was a 2Kx8 device, the IDT 6116. It is offered at speeds of 70, 90, and 120ns. This part was sampled in late 1981 and has been in full production since early 1982. In September 1982, IDT introduced the IDT 6167, a low-power 16Kxl bit CMOS static RAM. The commercial version of this part is available at speeds of 45, 55, 70, and 85ns, while the military version offers four speed options, 55, 70, 85, and 100ns. The device is available in JEDEC standard 20-pin DIP or 20-pin leadless chip carrier.

The Company's latest offerings are two 4Kx4 CMOS static RAMs with speeds of 45 to 85ns. The IDT 6168 is offered in a 20-pin DIP and the IDT 71681, which offers separate data I/O lines, is packaged in a 24-pin "skinny" DIP. Samples of these devices will be available in the first quarter of 1983.

FINANCIAL INFORMATION IDT^s first production was in 1981. DATAQUEST estimates of the Company's semiconductor revenues through 1983 are listed below. The Company plans to quadruple its revenues in 1984, and to more than double them again in 1985. Estimated Sales Year (Millions of Dollars)

1981 $ 0 1982 $ 2.7 1983 $ 13.0

Table 1

Integrated Device Technology, Inc. PRODUCTS

Device Type Organization Speed Packaging 24-pin FP IDT 6116 16K CMOS 2Kx8 70, 90, 120ns 24-pin DIP Static RAM 28-pin LCC 32-pin LCC

IDT 6167 16K CMOS 16Kxl 45, 55, 70, 85ns 20-pin DIP Static RAM 20-pin LCC 20-pin FP

IDT 6168 16K CMOS 4Kx4 45 - 85ns 20-pin DIP Static RAM 20-pin LCC 20-pin FP

IDT 71681 16K CMOS 4Kx4 45 - 85ns 24-pin "skinny" DIP Static RAM 28-pin LCC

Source: Integrated Device Technology, Inc. DATAQUEST February 1983

SUIS Volume n Copyright © 15 February 1983 Dataquest Incorporated IDT-3 Ing. C. Olivetti, S.p.A. Via Jervis 77, 10015 Ivrea, Italy Telephone: 39 (125) 525 Fax: 39 (125) 522467 Dun's Number: 42-870-4217 Date Founded: 1908

CORPORATE STRATEGIC DIRECTION The Company's total revenue increased 12 pax:ait to $6.4 billion* in fiscal 1988 from $5.7 lallion in fiscal 1987. Net income decreased 13 percent to Ing. C. Olivetti, S.p.A., is the leading West European manufacturer of office automation and data i>rocess- $270 million in fiscal 1988 from $310 million in ing equipment and the most profitable of Italy's large fiscal 1987. Olivetti employs more than 57,500 industrial companies. people worldwide.

In January 1989, Olivetti's reorganization transformed The European sales contribution to the Company's the Company into a holding company beneath which total revenue grew to $5.0 biUion in fiscal 1988. are three operating companies: OUvetti Office, which European sales accounted for 79 percent of total encompasses personal and business products for text, sales, down fixjm 80 percent in fiscal 1987. Most of data, and imaging management; Olivetti Systems and OUvetti's sales offices are in Europe. The Company Networks, which includes personal computers, has manufacturing locations worldwide, with a con minicomputers, local and wide area networks, termi centration in Europe. nals, workstations, teleccmmunications, mainframes, software, and application systems; and Ohvetti Infor Research and development expenditures totaled mation Services, which supphes software and com $343 milUon in fiscal 1988, representing 5 percent of puter services. In addition, the Company formed the revenue. Technological Activities Group to keep its products current with key technologies. More detailed information is available in Tables 1 through 3, which appear after "Business Segment The Company's new corporate strategy is to make Strategic Direction" and present corporate highUghts full use of its potential in each market segment. It no and revenue by region and distribution channel. Table longer views the information services market as an 4, a comprehensive financial statement, is at the end area of diversification, but rather as a key area. of this profile. Due to the Company's accounting mediods, a financial ratio analysis is not available. OUvetti's most important distributed data processing and office automation products were minicomputers, terminals, and personal computers. Minicomputers and terminals contributed 32.9 percent of OHvetti's 1988 revenue; personal computers contributed BUSINESS SEGMENT STRATEGIC 29.6 percent. Electronic professional typewriters and DIRECTION videotyping systems accoimted for 9.4 percent of 1988 revenue, down from 12.2 percent in fiscal 1987. Nine percent of the revenue was from printer sales; Minicomputers and Terminals telecommunications eqxiipment accounted for 4.1 per cent. In the office products business segment, porta In 1988, minicomputers and terminals accoimted for ble, office manual, and electric typewriters accounted 32.9 percent of OUvetti's total revenue. Nineteen for 5.9 percent of sales, copiers for 4.4 percent, eighty-eight was a year of transition from the old LI calculators and cash registers for 3.4 percent, and office furniture for the remainiag 1.3 percent. "•All dollar amounts are in U.S. dollars.

offering to the new system line of LSXs. Olivetti commitment to satisfying the manifold market pursued its systems renewal program by completing requirements by bringing out a new Une of product and upgrading the new LSX line and introducing the compatible with the new Micro Channel Architecture new low-end LSX 3010 and high-end models LSX (MCA) in 1989 aimed mainly at large users. 3070 and LSX 3080. This system line, which is one of the key features of Open System Architecture (OSA), permits OUvetti to supply advanced solutions Electronic Typewriters and Videotyping to even the most demanding apphcation areas; it runs Systems both the proprietary operating system MOS—^thus Electronic typewriters and videotyping systems sales bringing continuity to customers who already use this accounted for 9.4 percent of OUvetti's total 1988 environment—^and also an architecture based on a sales. In the professional typewriter sector, OUvetti platform of standard hardware and software compo sales volumes of standard electronic typewriters were nents. However, Olivetti's European share of this in line with market trends, which led to a continued market dropped from 10.0 percent in fiscal 1987 to decrease in demand. 8.5 percent in fiscal 1988, according to a Dataquest estimate. Both OUvetti and the market in general achieved increased sales volumes in the videotyping systems Ohvetti is focusing its development activities on sector. OUvetti enhanced its videotyping offering with increasing the configurability of present models with LAN interfaces that integrate secretarial workstations improvements in system and data security, work with systems environments, an im[)ortant feature for station management, and magnetic and optical medium and large users in particular. peripherals. Printers Sales volumes of general-purpose terminals were in line with those of 1987, whereas upward trends could Nine percent of the Company's total 1988 revenue be seen in speciahzed terminals. The line of point-of- came from printer sales. Printer sales volumes sale (POS) terminals for the automation of medium- increased over 1987. OUvetti offers several dot matrix volume and mass merchandising was particularly printers and a laser page printer. During 1988, the strengthened in 1988. low-end models were renewed and upgraded, and several new midrange models were introduced. Production also began on two medium- to high-end Personal Computers IBM plug-compatible models. In March 1989, Hermes Precisa International, an OUvetti subsidiary, OUvetti is the second largest competitor in the Euro presented new general-purpose dot matrix printers pean business PC market, after IBM. Worldwide in offering unproved speeds, noiselessness, and options. 1988, OUvetti captured 2.3 percent of the market share, according to a Dataquest estimate. In 1988, 29.6 percent of the Company's total revenue was Telecommunications Elquipment attributable to personal computer sales. OrigioaUy OUvetti made concerted efforts during 1988 to renew known in Europe for its office machine production, the entire PABX offering in the ItaUan private tele after a decUne in the early 1980s, OUvetti again phone sector. Telecommunications equipment achieved success in two stages, first with electronic accoimted for 4.1 percent of 1988 revenue. In the typewriters and then with its line of MS-DOS- telegraph sector, teleprinter sales volumes remained compatible PCs. The 1985 agreement between similar to those recorded for the previous year. In the OUvetti and AT&T marked an important step in telematics sector, facsimile sales volumes were OUvetti's recovery. OUvetti, which is now 25 percent favorable. During 1988, the facsimile product range owned by AT&T, is the PC developer and producer was enhanced with the introduction of low-end facsi for the American company. miles as weU as a couple of midrange to high-end offerings. OUvetti offers a wide range of PCs based on Intel's 8086, 80286, and 80386 processors. As part of a Portable, Oifice Manual, and Electric group of other well-established manufacturers, Typewriters OUvetti announced its commitment to develop and produce Extended Industry Standard Architecture OUvetti's 1988 sales of portable, office manual, and (EISA)-based personal computers compatible with the electric typewriters increased, strengthening its present AT architecture. OUvetti also confirmed its leadership position in this area. These three areas

combined accounted for 5.9 percent of the Calculators and Cash Registers Company's total revenue in 1988. Olivetti's calculator sales volumes decreased slightly, as did cash register sales, which are limited to the replacement of existing models and purchases for Copiers new retail outlets. Of the total revenue in fiscal 1988, 3.4 percent was attributable to sales of calculators and Copiers accounted for 4.4 percent of OUvetti's total cash registers. fiscal 1988 revenue. Olivetti manufactures and distributes plain paper copiers, primarily in Etirope. The Company no longer sells copiers in the United Further Information States. In Europe, Olivetti also markets copiers manufactured by Canon and Konica. A joint venture, For more information about the Company's business Olivetti-Canon Industriale, S.p.A., was created at the segments, please contact the appropriate industry beginning of 1987, initially to produce copiers. Even service. tually, the joint venture wiU develop and produce automatic image processing equipment, such as larger page printers and facsimile machines.

Table 1 Three-Year Corporate Highlights* (Millions of U.S. Dollars)

1986 1987 1988 Three-Year Revenue $4,910.7 $5,690.5 IS6,370. 2 Percent Change - 15.88 11.94

R&D Expenditure $262.6 $330.8 $342.5

Percent of Revenue ••• 5.35 5.81 5.38

Number of Employees 59,091 58,087 57,560 Revenue ($K)/Employee $83.10 $97.97 $110.67

Net Income $379.5 $310.2 $269.9 Percent Change - (18.28) (12.99)

1989 Calendar Year Qi Q2 Q3 Q4 Quarterly Revenue N/A N/A N/A N/A Quarterly Profit N/A N/A N/A N/A

*1984 and 1985 aonual reports not available Source: Olivetti Group N/A = Not Available Aimual Reports Dataquest January 1990

Table 2 Revenue by Geographic Region (Percent)

Region 1986 1987 1988 Europe 73.16 80.10 78.82 International 26.84 19.90 21.18 North America 15.34 9.10 10.20 Latin America 3.50 3.10 2.90 AU Others 8.00 7.70 8.08

Source: Oliv^ Group Annual Reports Dataquest January 1990

Table 3 Revenue by Distribution Channel (Percent)*

Channel 1987 1988 Direct Sales 46.00 46.00 Indirect Sales 54.00 54.00 VARs 21.60 21.60 Dealers 32.40 32.40

^European PC distribution only Source: Dataquest January 1990

Olivetti Peripherals Europe, S.p.A., South Bernardo d'lvrea 1988 SALES OFFICE LOCATIONS Peripherals Olivetti Prodotti Industrial!, S.p.A., Marcianise North America—6 Factory automation Europe—18 Olivetti Synthesis, S.p.A., Massa Asia/Pacific—8 Oi^ce accessories and furniture ROW—8 Olivetti Telecommunicazioni, S.p.A., Pozzuoli Telecommunications products Olteco, S.p.A., Ivrea Not available MANUFACTURING LOCATIONS OSAI A-B, S.p.A., South Bernardo d'lvrea Control units North America Prodest International S.p.A., Pozzouli Not available Olivetti Supplies Inc., Harrisburg, Pennsylvania Scannagno, Italy Not available Personal computers Selin Societa' per I'Elettronica Industriale e Navale, Europe—Italy S.p.A., Genova Aros, S.p.A., Cormano Components, motors and electromechanical and Components, motors and electromechanical and electronic equipment electronic equipment Societa' Generale Elastomeri-S.G.E., S.p.A., South Baltea, S.p.A., Leini Olcese Office accessories and furniture Rubber and silicone components Balteadisk, S.p.A., Amad Tecnosafe, S.p.A., Milano Office accessories and furniture Security systems Circuiti Stampati latalia, S.p.A., Pianezza Tecnost, S.p.A., Ivrea Printed circuit boards Factory automation equipment Dating, S.p.A., Borgoticino Tecnotour, S.p.A., Zola Predosa Data entry systems Control systems Diaspronsud, S.p.A., Pozzuoli Tecsinter, S.p.A., Ivrea Office accessories and furniture Di.W.S. Plastic, S.r.l., Abbiategrasso Powder sintering Thermoplastic components Teknecomp, S.p.A., CavagUa Eleprint, S.p.A., Ivrea Printed circuit boards Thermoplastic components Larimart, S.p.A., Roma Protected telecommunications equipment Europe—France Mael, S.p.A., Carsoli Lottery systems, office automation S.I.A.B. S.A., Cassis Manifattura Valle dell'Orco, S.p.A., Sparone Not available Canavese Rubber and silicone components Microfusione Italiana, S.p.A., Fizzonasco di Pieve Europe—West Germany Emanuele Casting TA Triumph-Adler AG, Numberg Naples, Italy Not available Personal computers Nord Elettronica, S.p.A., Altare Printed circuit boards Europe—Spain Olivetti-Canon Industriale, S.p.A., Aglie' Copiers Hermes Precisa International S.A., Yverdon Olivetti Peripheral Equipment, S.p.A., Bernardo Printers d'lvrea Hispano Olivetti S.A., Barcelona Peripherals Personal computers

Europe—Norway Nord Elettronica, S.p.A., Altare Olivetti-Canon Industriale, S.p.A., Aglie' Norsk Computer Industri A/S, Sandnes Olivetti Information Services, S.p.A., MUano Personal computers Olivetti Peripheral Equipment, S.p.A., Bernardo dTvrea AsialPacific Olivetti Peripherals Europe, S.p.A., South Bernardo dTvrea Olivetti (Singapore) Pte. Ltd., Singapore Olivetti Prodotti Industriali, S.p.A., Marcianise Not available Olivetti Ricerca, Societa' consortile per azioni, Pozzuoli ROW Olivetti Synthesis, S.p.A., Massa Olivetti Telecommunicazioni, S.p.A., Pozzuoli Hileia S.A., Manaus, Brazil Olteco, S.p.A., Ivrea Not available OSAI A-B, S.p.A., South Bernardo dlvrea Multidata S/A, Manaus, Brazil Prodest International S.p.A., Pozzouli Not available Radiocor, S.p.A., Milano Olivetti do Brasil S.A., Sao Paulo, Brazil Selin Societa' per I'Elettronica Industriale e Navale, Not available S.p.A., Genova Sixcom, S.p.A., Milano Societa* Generale Elastomeri-S.G.E., S.p.A., South Olcese SUBSIDIARIES Software Sistemi, S.p.A., Ban Systena, S.p.A., Roma Tecnosafe, S.p.A., Milano North America Tecnost, S.p.A.., Ivrea Tecnotour, S.p.A., Zola Predosa Bunker Ramo Corp., Dover, Pennsylvania Tecsinter, S.p.A., Ivrea Olivetti Canada Ltd., Toronto, Canada Teknecomp, S.p.A., Cavaglia Olivetti de Puerto Rico Inc., San Juan, Puerto Rico Triumph-Adler Distribuzione Italia, S.p.A., Milano Olivetti Supplies Inc., Harrisburg, Pennsylvania Olivetti USA Inc., Irving, Texas Triumph-Adler Royal Inc., Mountainside, New Jersey Europe-Austria Austro Olivetti GmbH, Wien Japan Decision Data Computer Gesellschaft m.b.H., Ohvetti Corporation of Japan, Tokyo Salzburg

Europe—Italy Europe—Belgium Aros, S.p.A., Cormano Decision Data Computer S.A., Bagnolet Baltea, S.p.A., Leini Decision Data Computer (Belgium) S.A./N.V., Balteadisk, S.p.A., Amad Bruxelles Ciesse Control Systems, S.p.A., Padova Hermes Precisa Belgium S.A., Bruxelles Circuiti Stampati latalia, S.p.A., Pianezza Olivetti Beige S.A., Bruxelles Dating, S.p.A., Borgoticino Diaspronsud, S.p.A., Pozzuoli Europe—Denmark Di.W.S. Plastic, S.r.l., Abbiategrasso Olivetti A/S, Kobenhavn Elea, S.p.A., Burolo Eleprint, S.p.A., Ivrea G4S Ricerca, Societa' consortile per azioni, Bari Europe—England Ibimaint, S.p.A., Assago Acom Computer Group, Pic, Cambridge Larimart, S.p.A., Roma British Olivetti Ltd., London Mael, S.p.A., Carsoli Decision Data Computer (G.B.) Ltd., Sunbury on Manifattura Valle dell'Orco, S.p.A., Sparone Thames Canavese Hermes Precisa Ltd., Colchester Microfusione Italiana, S.p.A., Fizzonasco di Pieve Triumph-Adler (U.K.) Ltd., London Emanuele SCA ©1990 Dataquest Incorporated January 0005858 Ing. C. Olivetti, S.p.A.

Europe-Finland ROW Olivetti (Suomi) O.Y., Helsinki Hileia S.A., Manaus, Brazil Multidata S/A, Manaus, Brazil Europe—France Olivetti Africa (Pty.) Ltd., Johannesburg, South Africa Japy Hermes Precisa France S.A., Paris OUvetti Argentina S.A., Buenos Aires, Argentina Ohvetti-Logabax S.A., Paris OUvetti Colombiana S.A., Bogota, Columbia S.LA.B. S.A., Cassis OUvetti de Chile S.A., Santiago, Chile Triumph-Adler France S.A., Rueil-Malmaison OUvetti de Venezuela C.A., Caracas, Venezuela OUvetti do Brasil S.A., Sao Paulo, BrazU OUvetti Elektronik sanayi Ve Ticaret A.S., Istanbul, Europe-Greece Turkey Olivetti Hellas A.E., Athens OUvetti Mexicana S.A., Ciudad de Mexico, Mexico OUvetti Peruana S.A., Lima, Peru

Europe-Netherlands Hermes Precisa B.V., Gouda Olivetti Nederland B.V., Ed Leiden ALLIANCES, JOINT VENTURES, AND LICENSING AGREEMENTS Europe-Norway Norsk Computer Industri A/S, Sandnes 1989 Olivetti Norge A/S, Oslo Eastman Kodak Company Scanvest Ring A/S, Sandnes The companies agreed to jointly develop, manufac ture, and market 5.25- and 3.5-inch optical disk Europe-Portugal drives for personal computers. Olivetti Portuguesa, S.a.r.l., Lisboa Wyse Technology Wyse agreed to supply Olivetti with DEC- compatible terminals for the ANSI market. Europe—Spain

Hermes Precisa hitemational S.A., Yverdon 1988 Hispano Olivetti S.A., Barcelona Y-E Data The companies formed a joint venture, called Europe—Sweden Pegasus, to develop, produce, and market business Olivetti A/B, Malmo laptop computers. Conner Peripherals Europe-West Germany The companies formed a joint venture to produce and market "'^^chester disk drives for minicom Decision Data Computer GmbH, Dusseldorf puters and personal computers. Deutsche Olivetti GmbH, Frankfurt TA Triumph-Adler AG, Numberg 1987 Asia/Pacific Ibimaint, S.p.A. OUvetti made an equity investment in a company OUvetti Australia (Pty.) Ltd., Sydney, Australia that provides maintenance for IBM and compatible Ohvetti (H.K.) Ltd., Hong Kong minicomputers and peripherals. Olivetti (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia Canon, Inc. Olivetti Pacific Distributors Ltd., Hong Kong The companies formed a joint venture company, OUvetti (Singapore) Pte. Ltd., Singapore OUvetti-Canon Industriale, S.p.A., to develop and TA Triumph-Adler (Australia) F*ty. Ltd., Silverwater, produce copiers and general automatic image- AustraUa processing equipment

Microsoft The companies formed a joint venture, called Eikon and headquartered in Rome, to develop KEY OFMCERS optical disks for the European market. Laser Friendly The companies formed a strategic partnership that Carlo de Benedetti gave Olivetti exclusive European distribution Chairman and chief executive officer rights to The Office PubUsher, Laser Friendly's PC-based desktop publishing software. Franco de Benedetti Managing director Lee Data Lee Data signed an agreement with OUvetti to form joint venture companies to market a combina Vittorio Cassoni tion of Lee Data and Olivetti products for the 3270 Managing director market in countries outside the United States and Italy. Vittorio Levi Executive vice president. Operations

Elserino Piol Executive vice president. Strategy and Develop MERGERS AND ACQUISITIONS ment

1987 Scanvest Ring OUvetti acquired the controlling interest in one of the leading information technology companies. PRINCIPAL INVESTORS Dr. Ing Franco lachello & C, S.p.A. Ohvetti acquired this company, which develops and installs telephone and telematics equipment Camillo Olivetti and systems. Digiservice, Inc. Ohvetti acquired full control of Digiservice.

Table 4 Comprehensive Financial Statement* Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data)

Balance Sheet 1986 1987 1988 Fixed Assets $1,096.1 $1,354.3 $1,436.7 Investments 110.2 134.5 141.8 Guarantee Deposits 54.7 50.0 57.3 Long-Term Receivables 1.7 2.6 13.8 Deferred Income Taxes 4.2 0 3.1 Leased Products $32.4 $21.8 $15.3 Net Property, Plants and Equipment $868.6 $1,106.2 $1,165.8 Deferred Charges $24.4 $39.2 $39.6 Current Assets $5,627.5 $6,943.7 $7,484.8 Marketable Securities 2,215.7 2,498.8 1,913.1 Receivables 1.987.9 2,464.0 3,047.0 Cash 236.5 650.5 855.6 Inventory 995.5 1,041.8 1,389.1 Other Current Assets 191.8 288.5 280.0 Net Assets $6,723.6 $8,298.0 $8,921.6 Current Liabihties $2,508.6 $3,107.3 $3,406.6 Lxjng-Tenn Debt $1,522.6 $1,881.7 $2,173.8 Other Liabilities $455.9 $610.8 $609.2 Minority Interest $120.0 $166.3 $177.2 Total Liabilities $4,607.0 $5,766.2 $6,366.9 Capital and Reserves $2,116.5 $2,531.8 $2,554.7 Share Capital 367.4 424.2 416.6 Capital Surplus 648.3 750.3 736.9 Treasury Stock (4.0) (3.0) (3.3) Revaluation Reserves 283.6 332.9 327.6 Retained Earnings 463.9 745.8 801.5 Translation Adjustment (22.2) (28.6) 5.5 Net Income 379.5 310.2 269.9 Total Liabilities and Shareholders' Equity $6,723.6 $8,298.0 $8,921.6

Income Statement 1986 1987 1988 Revenue $4,910.7 $5,690.5 $6,370.2 European Revenue 3,592.9 4,557.9 5,021.0 International Revenue 1,317.8 1,132.6 1,349.2 Cost of Sales $2,983.2 $3,503.4 $398.0 SG&A Expense $1,356.2 $1,596.3 $1,743.1 R&D Expense $262.6 $330.8 $342.5 Operating Profit $308.7 $260.0 $307.6 Pretax Income $483.5 $414.7 $327.8 Pretax Margin (%) 9.85 7.29 5.15 Effective Tax Rate (%) 32.50 23.80 25.40 Net Income $379.5 $310.2 $269.9 Shares Outstanding, Millions 547.4 549.8 549.8

Table 4 (Continued) Comprehensive Financial Statement* Fiscal Year Ending December (Millions of U.S. Dollars, except Per Share Data) Balance Sheet 1986 1987 1988 Per Share Data Earnings $12.40 $10.20 $13.90 Dividends $0.23 $0.23 $0.23 Book Value $3.87 $4.60 $4.65 Exchange Rate: US$l/Lit 1,490.00 1,296.10 1,319.80

*1984 and 1985 annual reports not available. Source: Olivetti Group Annual Reports Dataquest January 1990

BACKGROUND AMD OVERVIEW

Inmos International pic was founded in 1978 by two Americans, Richard Petritz and Paul Schroeder, and an Englishman, lann Barron. Inmos was primarily a spin-off company from Mostek Corporation, Mr. Petritz having been a founder of Mostek and Mr. Schroeder having been one of Mostek's key memory design managers. Because several other key Mostek personnel were also seconded away at the time, a legal battle between Mostek Corporation and Inmos Ltd. ensued. Several of the former Mostek employees subsequently left Inmos to form a new company. Micron Technology Incorporated, specializing in memory and memory-related products.

Under the original agreement, Inmos Ltd. was to be a British-backed semiconductor venture funded by the National Enterprise Board (NEB). The concept called for design and manufacturing facilities both in the United States and the United Kingdom. In this way, Inmos planned to gain synergy from the existing high-technology base in the United States. The then Labour government in the United Kingdom approved the plan in May 1978 and invested an initial £50 million in the Company.

Inmos' strategy was to start out by making high-performance, high- priced chips. These were to be sold to customers in demanding areas (e.g., telecommunications, measuring equipment, military equipment, and large computers). Once established in this market, Inmos then planned to move into lower-cost products and more competitive markets.

In January 1979, Inmos opened the Harrison Park facility in Colorado Springs, Colorado. Wafer fabrication operations began within a few months.

Inmos faced an uncertain future, however, with the Conservative government election victory in 1979. Under the Conservative government, the NEB—later renamed the British Technology Group (BTG)—started divesting its investments acquired under the previous government. At the same time, Inmos was seeking further funding.

After an eight-month delay, the NEB, in August 1980, invested an additional £25 million. This brought the total of U.K. taxpayers' investment in Inmos to approximately £100 million. Attached to the loan was the condition that the new U.K. production facility should be situated in Newport, South Wales, an economically depressed area some distance from the Company's Bristol design and corporate headquarters facility.

By December 1980, Inmos' first product, a 16K NMOS SRAM, went on sale. In February 1981, a second facility at Colorado Springs, Colorado, U.S.A., was opened. In July 1982, Inmos released its IMS 2600 high-speed 64Kxl DRAM; in December 1982, the first sample batches of IMS 2630" 8Kx8 DRAMs became available. This was the first memory product from the Inmos European design center in Bristol. In May 1982, Inmos launched its IMS 2620 16Kx4 DRAM. This completed the Inmos family of high-performance 64K DRAMs.

In 1983, Inmos established common user specifications for CMOS DRAMs with Intel. This agreement allows the company the freedom to compete in technology and product design.

From its inception, Inmos has been engaged in microprocessor development. The first results have been OCCAM, a new programming language, and its associated programming tools. Throughout 1984, OCCAM became accepted as a major programming language by major developers and users of advanced software products.

In 'November 1983, Inmos unveiled the transputer—a device that combines all aspects of a computer onto a single chip, thus becoming an "intelligent" component for building systems.

In 1984, the IMS 1423, a 16K CMOS SRAM, was introduced. Toward the end of the year, the IMS 1600, a 64K CMOS SRAM, was sampled. The DRAM range was also extended to include two new versions of the IMS 2600 64K DRAM.

In 1984, the semiconductor boom confirmed a need for an assembly operation under Inmos' direct control and near the Newport production site. In September 1984, the Company broke ground for a 100,000 square foot assembly facility at Coed Rhedyn, Newport. This facility was to assemble a high percentage of the existing Newport production and to test all devices made there, thus freeing space in Newport for expansion of existing activities. By 1985, the facility was almost complete, but was mothballed because of the depressed state of the semiconductor industry. In 1986, Inmos announced that it would reopen the Coed Rhedyn facility.

Inmos has also entered into the following agreements with other companies:

• In June 1984, an agreement was signed with RACAL-REDAC Limited, licensing that company to sell Inmos' computer-aided engineering system for VLSI chip design.

• In June 1984, Inmos signed an agreement with NMB Semiconductors, by which NMB is to have access to Inmos advanced CMOS DRAM technology, and will second-source the Inmos 256K DRAM. A proportion of NMB's output will be available for sale by Inmos. Inmos also received an initial payment and will receive royalties on future sales.

• At the end of 1984, a similar agreement was signed with Hyundai of Korea. This licensing agreement gave Hyundai access to Inmos' 256K CMOS DRAM technology, and Hyundai agreed to market the product. In early 1986, Hyundai sued Inmos for having failed to perform to the agreement. To date, Inmos has won a stay of a court order to submit to binding arbitration with Hyundai.

At the end of 1984, Inmos had 2,135 employees worldwide, with 1,014 in the United Kingdom and 1,121 in the United States. The Company invested $32 million in capital expenditure in 1984, a large proportion of it in developing the Newport operation. The semiconductor recession resulted in a large amount of redundancies, and the size of the Company was reduced by one-half, both in the United States and the United Kingdom. Working hours were also cut.

In September 1984, THORN-EMI acquired the U.K. government's 76.1 percent shareholding in Inmos for £95 million. The total holding of THORN-EMI in Inmos currently stands at 94.7 percent. The remaining shares are held by minority shareholders. THORN-EMI has made a commitment to publicly offer Inmos shares at an appropriate time, depending upon market conditions.

In mid-1985, Inmos launched its revolutionary transputer, a microprocessor designed to be used in electronic systems that require a large amount of processing power. The Company believes that the transputer and the new IMS AlOO (a cascadable signal processor) will bring Inmos into profit again.

As shown in Table 1, Dataquest estimates that Inmos' European semiconductor revenue for 1985 was $18 million, showing a decline of almost 30 percent in comparison to 1984. Table 2 shows Dataquest's estimates of Inmos' 1985 worldwide semiconductor revenue to be $85 million in comparison with 1984 revenue of $146 million.

Table 1

Inmos International pic ESTIMATED EUROPEAN SEMICONDUCTOR REVENUE BY PRODUCT LINE (Millions of U.S. Dollars)

1981 1982 1983 1984 1985

Total Semiconductor $1 $4 $9 $25 $18

Total Integrated Circuit $1 $4 $9 $25 $18 Bipolar Digital 0 0 0 0 0 MOS 1 4 9 25 18 Linear 0 0 0 0 0

Total Discrete 0 0 0 0 0 Transistor 0 0 0 0 0 Diode 0 0 0 0 0 Thyristor ' 0 0 0 0 0 Other 0 0 0 0 0

Total Optoelectronic

Source: Dataguest January 1987 Ref. 1086-05

1987 Dataguest Incorporated January ESIS Volume III Inmos International pic

Table 2

Inmos International pic ESTIMATED WORLDWIDE SEMICONDUCTOR REVENUE BY PRODUCT LINE (Millions of U.S. Dollars)

1981 1982 1983 1984 1985 ^"^n Total Semiconductor $4 $26 $58 $146 $85 m^ Total Integrated Circuit $4 $26 $58 $146 $85 Bipolar Digital 0 0 0 0 0 MOS 4 26 58 146 85 Linear 0 0 0 0 0 •+

Total Discrete 0 0 0 0 0 Transistor 0 0 0 0 0 Diode 0 0 0 0 0 Thyristor 0 0 0 0 0 Other 0 0 0 0 0

Total Optoelectronic

Source: Dataguest January 1987 Ref. 1086-05

PRODUCTS AND MARKETS SERVED

Inmos has pursued highT-performance market niches to avoid the intense competition prevalent in standard memory products. Production has been geared for high-speed devices such as the 16K SRAM, which Inmos sells for a higher average selling price to supercomputer and military users. In 1985, the Company introduced two new CMOS memories—a 16K SRAM and a 64K SRAM.

The Company's product range includes mainly SRAMs; DRAMs are being .phased out. The NMOS technology currently used is being replaced by advanced CMOS technologies. Inmos has also launched the transputer, a component that has the potential to completely change the approach to the - design of computers and other microprocessor-controlled equipment. The transputer is called the T414. On a 76-sguare-millimeter die, it incorporates a 32-bit processor, 2 Kbytes of 50ns SRAM, 4 Gbytes of linear address space, a 25-Mbytes-per-second external memory bandwidth, and four 10-Mbits-per-second full-duplex Inmos links. Peripheral devices to connect transputers to each other are also available.

In 1986, Inmos announced that it had extended its transputer family to include other devices, coming under the categories of silicon devices, evaluation boards, and software tools, all with a capacity of 20 megabits per second. One new member of the transputer family is ITEM 400, a supercomputer module that runs at 400 million instructions per second.

In 1986 Inmos also launched the IMS AlOO, a cascadable signal processor. This is a digital transversal filter capable of performing 80 million multiplications and additions per second.

OUTLOOK

Inmos has withdrawn from the DRAM market. The Company will now concentrate on the SRAM market and on the transputer. It has put on hold for the next four to five years the final part of Inmos' original strategy—development of three areas in succession: memories, microprocessors, and future higher levels of integration in which complete systems are implemented in silicon through computer-aided design.

Inmos has undergone managerial reorganization and cut its work force by 50 percent, but has recently reactivated the assembly plant project near the existing Newport facility.

Dataguest believes that if the transputer is accepted and a suitable second source is found, the product will be a success and help balance the peaks and valleys in revenue that Inmos has experienced in its participation in the memory market.

1987 Dataguest Incorporated January ESIS Volume III