Maxim Integrated Products, Inc. Form 10-K

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any Amendment to this Form 10-K. o

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of August 30, 2002 was approximately $7,353,000,000. Shares of voting stock held by executive officers, directors and holders of more than 5% of the outstanding voting stock have been excluded from this calculation because such persons may be deemed to be affiliates. Exclusion of such shares should not be construed to indicate that any of such persons possesses the power, direct or indirect, to control the Registrant, or that any such person is controlled by or under common control with the Registrant.

Number of shares outstanding of the Registrant’s Common Stock, $.001 par value, as of August 30, 2002: 232,631,686.

Part III of this Report on Form 10-K incorporates information by reference from the Registrant’s Proxy Statement for its 2002 Annual Meeting of Stockholders.

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, that have been made pursuant to and in reliance on the provisions of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Annual Report, other than statements that are purely historical, are forward-looking statements.

Forward-looking statements include statements regarding a flight to quality by investors and the likely beneficiaries of renewed emphasis on value; the belief that over 80 percent of Dallas parts will be tested in Cavite in fiscal year 2003; the expectation of future reductions in the percentage of Dallas products being sold through third party distributors and a resulting increase in gross margins; the anticipation of additional margin improvement; plans for further increases in Dallas product introductions; plans to enter the microcontroller market; the belief that the Company will perform well, despite uncertain times; optimistic beliefs about the resumption of demand and the ability to ship at revenue levels above $400 million per quarter and the maintenance of the Company’s high levels of efficiency and profitability; the objectives to develop and market circuits that meet increasingly stringent quality standards; strategies to target both linear and mixed-signal markets; the acquisition of Dallas Semiconductor Corporation and its supplementing new product development capabilities; intentions to discontinue production of six-inch wafers at the Dallas, Texas and San Jose, California facilities upon implementing and expanding eight-inch wafer production at both facilities; the belief that the Company will continue to compete favorably with competitors; the ability to retain occupancy of facilities; adequacy of buildings and contiguous land for business purposes; the outcome of the lawsuit with Linear Technology Corporation and other litigation matters and their effect on the Company’s financial position, results of operations, or liquidity; the plan to complete construction of, and start production at, an 8-inch wafer manufacturing facility located in Dallas, Texas in fiscal year 2003; the plan to concentrate test operations at facilities located in Philippines and Thailand; forecasts that revenues will be up sequentially for the first quarter of fiscal 2003; the belief that end market consumption of products is close to current bookings levels; the belief that the Company’s net revenues will be somewhat higher in the first quarter of fiscal year 2003 than in the fourth quarter of fiscal year 2002; the belief that the Company can still perform well for its stockholders; the Company’s commitment to finding the right mix of operating efficiencies and market success that will produce results; the Company’s plan to implement expense control and reduction plans, to focus on new product and process introduction plans and to complete manufacturing and other operational improvements; the sufficiency of available funds and cash generated from operations to meet cash and working capital requirements for the next twelve months; the belief that the adoption of SFAS 141, 142, 144, and 146 will not have a material impact on the Company’s financial condition, results of operations or liquidity; and the effect of gains and losses on forward exchange contracts and related hedged items. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions relating to the future identify forward-looking statements.

All forward-looking statements are based on the Company’s current outlook, expectations, estimates, projections, beliefs and plans or objectives about its business and its industry. These statements are not guarantees of future performance and are subject to risk and uncertainty. Actual results could differ materially from those predicted or implied in any such forward-looking statements.

Risks and uncertainties that could cause actual results to differ materially include those set forth throughout this Annual Report on Form 10-K and in the documents incorporated herein by reference. Particular attention should be paid to the section entitled “Trends, Risks and Uncertainties” at pages 8 through 13 and to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” at pages 18 through 26.

The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information relating to existing conditions, future events or otherwise. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report on Form 10-K. Readers should carefully review future reports and documents that the Company files from time to time with the Securities and Exchange Commission, such as its quarterly reports on Form 10-Q (particularly Management’s Discussion and Analysis of Financial Condition and Results of Operations) and any current reports on Form 8-K.

Maxim Integrated Products, Inc. (“Maxim” or the “Company”) designs, develops, manufactures, and markets a broad range of linear and mixed-signal integrated circuits, commonly referred to as analog circuits. The Company also provides a range of high-frequency design processes and capabilities that can be used in custom design. The analog market is fragmented and characterized by many diverse applications, a great number of product variations, and, as to many circuit types, relatively long product life cycles. Maxim’s objective is to develop and market both proprietary and industry-standard analog integrated circuits that meet the increasingly stringent quality standards demanded by customers. Based on product announcements by its competitors, Maxim believes that in the past 19 years it has developed more products for the analog market, including proprietary and second-source products, than any of its competitors over the same period.

In the fourth quarter of fiscal year 2001, the Company acquired Dallas Semiconductor Corporation. The Company issued approximately 41.0 million shares of its common stock in exchange for all the outstanding common stock of Dallas Semiconductor. In addition, the Company assumed all stock options to purchase Dallas Semiconductor common stock in exchange for options to purchase approximately 5.9 million shares of the Company’s common stock. The transaction was accounted for as a pooling-of-interests. Accordingly, unless specifically stated otherwise, all financial data of the Company was restated to include the historical financial data of Dallas Semiconductor. See Note 3 “Business Combination” of the Notes to Consolidated Financial Statements at pages 39 and 40. At the time of the acquisition, Dallas Semiconductor’s product line consisted of 390 proprietary base products sold to over 15,000 customers worldwide. Applications for those products include battery management, broadband telecommunications, wireless handsets, cellular base stations, networking, servers, data storage, and a wide variety of industrial equipment.

The Company is a Delaware corporation that was originally incorporated in California in 1983. It is headquartered in Sunnyvale, California. The mailing address for the Company’s headquarters is 120 San Gabriel Drive, Sunnyvale, California 94086, and the Company’s telephone number is (408) 737-7600. Additional information about the Company is available on the Company’s website at www.maxim-ic.com.

All electronic signals fall into one of two categories, linear or digital. Linear (or analog) signals represent real world phenomena, such as temperature, pressure, sound, or speed, and are continuously variable over a wide range of values. Digital signals represent the “ones” and “zeros” of binary arithmetic and are either on or off.

Three general classes of semiconductor products arise from this partitioning of signals into linear or digital. There are those, such as memories and microprocessors, that operate only in the digital domain. There are linear devices such as amplifiers, references, analog multiplexers, and switches that operate primarily in the analog domain. Finally, there are mixed-signal devices that combine linear and digital functions on the same integrated circuit and interface between the analog and digital worlds. Maxim’s strategy has been to target both the linear and mixed-signal markets, often collectively referred to as the analog market. In addition, Maxim has added some Dallas Semiconductor products that are exclusively or principally digital as well as a significant number of engineers skilled in digital design and software development. Although the acquisition has not substantially affected Maxim’s strong focus on the linear and mixed signal market, it has supplemented Maxim’s capabilities in the digital area in ways that should enable development of new products, mixed signal and other, with very sophisticated digital characteristics. Risks associated with fulfilling this expectation are discussed in “Item 1., Business — Trends, Risks and Uncertainties” at pages 8 through 13.

The Company believes that, compared to the digital integrated circuit market, the analog market has generally been characterized by a wider range of standard products used in smaller quantities by a larger number of customers, and in many cases, by longer product life cycles and lower capital requirements as a result of generally using less dense manufacturing technologies. The Company believes that the widespread

application of low-cost microprocessor-based systems and of digital communication technologies has affected the market for analog integrated circuits by increasing the need for signal conditioning interfaces between the digital and analog world.

The analog market is a fragmented group of markets, serving numerous and widely differing applications for instrumentation, industrial control, data processing, communications, military, video, and selected medical equipment. For each application, different users may have unique requirements for circuits with specific resolution, accuracy, linearity, speed, power, and signal amplitude capability, which results in a high degree of market complexity. Maxim’s products can be used in a variety of applications, but serve only certain portions of the total analog market.

The Company believes that it addresses the requirements of the market by providing competitively priced products that add value to electronic equipment with superior quality and reliability.

The Company’s research and development programs emphasize development of technically innovative processes and products. In addition, the Company also develops second source products. The Company’s products are available with numerous packaging alternatives, including packages for surface mount technology.

The following table illustrates the major industries served by the Company and typical applications for which the Company’s products can be used:


		White Goods Wireless Headsets

Data Processing		Bar-code Readers Disk Drives Global Positioning Systems Hand-Held Computers/ PDAs Mainframes Personal Computers Printers Point of Sale Terminals Servers Storage Systems Tape Drives Workstations

Industrial Control		Control of • Flow • Position • Pressure • Temperature • Velocity Robotics

Instrumentation		Automatic Test Equipment Analyzers Data Recorders Measuring Instruments • Electrical • Light • Pressure • Sound • Speed • Temperature • Time Testers

The Company also sells products for military, video, and selected medical equipment.

While Maxim’s proprietary products have received substantial market acceptance, some of Maxim’s competitors have developed second source products for some of Maxim’s successful innovative proprietary products. Typically in the semiconductor industry, when a proprietary product becomes second sourced, the credibility of the original design is enhanced, and there is an opportunity to increase total revenues as the potential customers’ reluctance to design in a sole-source product is removed, but gross margins may be adversely affected due to increased price competition.

Maxim places strong emphasis on product quality from initial design through final quality assurance for the end product. In the product design phase, Maxim applies a set of circuit design rules that it believes result in enhanced product reliability. Upon receipt from Maxim’s own fabrication facilities or from silicon foundries, a majority of processed wafers are tested for conformance with specific parameters. Products are individually tested using specialized test equipment and complex programs to ensure that they meet data sheet performance levels. In addition, long-term operating life and mechanical stress tests are routinely performed on samples to assure continued, long-term product performance. Dallas Semiconductor has adopted Maxim’s

Semiconductor fabrication is a complex process. Although Maxim believes that the above testing regime is comprehensive and that it meets or exceeds industry standards, a possibility exists that failure mechanisms could elude detection. This could expose the company to liability, unforeseen customer returns, and loss of reputation.

Maxim uses its own wafer fabrication and, to a small extent, silicon foundries to produce wafers. The majority of processed wafers are subjected to parametric and functional testing at the Company’s facilities. As is customary in the industry, the Company ships most of its processed wafers to foreign assembly subcontractors, located in the Philippines, Malaysia, Thailand and South Korea, where wafers are separated into individual integrated circuits and assembled into a variety of packages.

After assembly has been completed, the majority of the assembled product is shipped to the Company’s test facilities located in Cavite, the Philippines, and Samutprakarn Province, Thailand. The Company performs about half of its wafer sort operations at its U.S. facilities and about half of its wafer sort operations at its facility located in Cavite, the Philippines, with the capacity to electronically test and laser trim the majority of the Company’s wafers. During fiscal year 2002, the Company transferred the testing operations for Dallas product to the Company’s test facilities located in Cavite, the Philippines, with the exception of low volume Dallas product, which will continue to be tested in Dallas, Texas. At the end of fiscal year 2002, approximately 75% of the testing of Dallas product was performed at the Company’s test facilities located in Cavite, the Philippines.

In fiscal year 2002, the Company expanded manufacturing space at its second test facility located in Samutprakarn Province, Thailand. It is expected that this facility, as well as the facility in Cavite, the Philippines, will continue to expand test capacity as demand dictates. Currently, the Company’s facilities located in Cavite, the Philippines and Samutprakarn Province, Thailand combined have enough test manufacturing and shipping space to meet the Company’s fiscal year 2003 financial plan, subject always to normal and to unforeseen challenges in meeting product demand.

Once testing has been completed, finished product from the Company’s test facility located in Samutprakarn Province, Thailand is shipped to the Company’s finished goods location at its test facility in Cavite, the Philippines. Finished product is either shipped directly from Cavite, the Philippines to customers worldwide or to other Company locations for sale to end customers or distributors.

The broad range of products demanded by the analog integrated circuit market requires multiple manufacturing process technologies. Many different process technologies are currently used for wafer fabrication of the Company’s products. Historically, wafer fabrication of analog integrated circuits has not required the state-of-the-art processing equipment necessary for the fabrication of advanced digital integrated circuits, although newer processes do utilize and require some of these facilities and equipment. In addition, hybrid products are manufactured using a complex multichip technology featuring thin-film, thick-film, and laser-trimmed resistors.

For the majority of these technologies, the Company relies on its fabrication facilities in San Jose, California; Beaverton, Oregon; Dallas, Texas; and, to a small extent, manufacturing subcontractors. The Company currently uses five subcontract silicon foundries that represent less than 5% of wafer production. None of the subcontractors currently used by Maxim is affiliated with Maxim.

Most of the wafers produced in fiscal year 2002 were manufactured at one of the Company’s three wafer fabrication facilities. The Company’s wafer fabrication facility located in Dallas, Texas was originally built in 1986 and expanded in 1989, 1994 and 2001. This facility currently produces six-inch wafers. The Company is in the process of replacing six-inch production capacity at this facility with eight-inch wafer production. Once the production of eight-inch wafers has been fully implemented, it is the Company’s intention to discontinue production of six-inch wafers at this facility. See Note 13 “Merger and Special Charges” of the Notes to

Consolidated Financial Statements at pages 49 to 51. In December 1989, the Company acquired a four-inch wafer fabrication facility in Sunnyvale, California capable of producing 3 micron CMOS and bipolar products. In May 1994, the Company acquired a mixed-class wafer fabrication facility in Beaverton, Oregon capable of producing CMOS and bipolar products. In November 1997, the Company acquired a sub-micron wafer fabrication facility in San Jose, California. The Company transferred production from the 4-inch wafer fabrication facility in Sunnyvale to the Beaverton facility and suspended wafer production at the Sunnyvale facility in December 1998. The Beaverton, Oregon and San Jose, California wafer fabrication facilities currently manufacture 6-inch wafers. The Company is in the process of expanding production capacity at its San Jose, California facility to include 8-inch wafer production. Once this has been completed, the Company intends to discontinue 6-inch wafer production at this facility. See “Item 2., Properties” at page 14.

In the past and as sometimes happens in the semiconductor industry, the Company has experienced disruptions in the supply of processed wafers due to quality problems or failure to achieve satisfactory electrical yields. If the foundries used by the Company were unwilling or the Company’s own internal wafer fabrication facilities were unable to produce adequate supplies of processed wafers conforming to the Company’s quality standards, the Company’s business and relationships with its customers could be adversely affected.

Due to the relatively lengthy manufacturing cycle, the Company builds some of its inventory in advance of receiving orders from its customers. As a consequence of inaccuracies inherent in forecasting, inventory imbalances periodically occur that result in surplus amounts of some Company products and shortages of others. Such shortages can adversely affect customer relations and surpluses can result in larger-than-desired inventory levels, which can adversely affect the Company’s financial position. Excess inventory issues can also arise when customers cancel orders. Finished products and work in process for those orders may be unsaleable. See “Item 1., Business — Trends, Risks and Uncertainties — Factors Affecting Future Operating Results” at page 8.

In the United States and Canada, the Company sells its products through a direct sales and applications organization in nine regional sales offices and through its own and other unaffiliated distribution channels. As is customary in the industry, most domestic distributors are entitled to certain price rebates and product return privileges.

International sales are conducted by 25 Maxim sales offices, 2 sales representative organizations and 30 distributors. In fiscal year 2002, the Company completed the reorganization and consolidation of the worldwide distribution channel. The Company sells in both United States dollars and various foreign currencies. A majority of the Company’s international sales are billed and payable in United States dollars and are therefore not directly subject to currency exchange fluctuations. A portion of the Company’s sales from its United Kingdom, French, and German affiliates is denominated in the local currencies. The majority of the sales to customers and distributors located in Japan are denominated in yen. The Company enters into foreign currency forward contracts to protect the United States dollar value of its firm sales commitments and net monetary assets. Changes in the relative value of the dollar, however, may create pricing pressures for Maxim’s products. In addition, various forms of protectionist trade legislation have been proposed in the United States and certain foreign countries. A change in current tariff structures or other trade policies could adversely affect the Company’s foreign marketing strategies. In general, payment terms for foreign customers, distributors and others, which represent a majority of the Company’s accounts receivable at June 29, 2002, are longer than for U.S. customers. Certain major Japanese customers have payment terms that are generally well beyond payment terms extended to customers in other geographic locations. As is customary in the semiconductor industry, the Company’s domestic distributors may market products competitive with Maxim’s.

International sales accounted for approximately 66%, 57%, and 53% of net revenues in fiscal years 2002, 2001 and 2000, respectively. See Note 12 “Segment Information” of the Notes to Consolidated Financial Statements at pages 48 and 49.

As of June 29, 2002, the Company’s backlog was approximately $239 million as compared to approximately $234 million at June 30, 2001. The Company includes in its backlog customer-released orders with firm schedules for shipment within the next 12 months. As is customary in the semiconductor industry, these orders may be canceled in most cases without penalty to the customers. In addition, the Company’s backlog includes orders from domestic distributors as to which revenues are not recognized until the products are sold by the distributors. Accordingly, the Company believes that its backlog at any time should not be used as a measure of future revenues. All of the backlog numbers have been adjusted to be net of cancellations and estimated future U.S. distribution ship and debit pricing adjustments.

The Company warrants its products to its customers generally for 12 months from shipment, but in certain cases for longer periods. Warranty expense to date has been minimal. In certain other cases, the Company warrants products to include liability beyond the cost of replacing the product.

The Company believes that research and development is critical to its future success. Objectives for the research and development function include definition, design, and layout of innovative proprietary products that meet customer needs, development of second-source products, design of parts for high yield and reliability, test development, and development of manufacturing processes and advanced packaging to support an expanding product line.

Due to the research and development plans of the Company and the shortage of qualified design engineering talent, the Company does not always have the number of engineers required to meet its research and development goals.

Research and development expenses were approximately $275.5 million, $280.2 million, and $216.8 million in fiscal years 2002, 2001, and 2000 respectively.

The analog integrated circuit industry is intensely competitive, and virtually all major semiconductor companies presently compete with, or conceivably could compete with, some segment of the Company’s business. Maxim’s competitors are Altera Corporation, Anadigics Inc., Analog Devices, Inc., Applied Micro Circuits Corporation, Conexant Systems Inc., Cygnal Integrated Products, Inc., Exar Corp., Infineon Technologies AG, Intel Corporation’s Level One Communications, Inc. Subsidiary, Intersil Corporation, Linear Technology Corporation, Lucent Technologies, Micrel Inc., Microchip Technology Inc., Mitsubishi Corporation, Mitsui & Co. Ltd., Motorola Inc., National Semiconductor Corporation, ON Semiconductor Corporation, Philips Electronics N.V., PMC-Sierra Inc., RF Micro Devices Inc., Ricoh Company Ltd., Seiko Corporation, Semtech Corporation, STMicroelectronics N.V., Silicon Laboratories Inc., Siliconix Inc., Sipex Corporation, Texas Instruments Inc., Vitesse Semiconductor Corporation and others, including start-up companies. Some of Maxim’s competitors have substantially greater financial, manufacturing, and marketing resources than the Company, and some of Maxim’s competitors have greater technical resources. The Company believes it competes favorably with these corporations primarily on the basis of technical innovation, product definition, quality, price, and service. There can be no assurance that competitive factors will not adversely affect the Company’s future business.

The Company currently owns 412 U.S. patents and 60 foreign patents with expiration dates ranging from 2002 to 2020. In addition, the Company has applied for 120 U.S. patents, a large number of which have corresponding patent applications in multiple foreign jurisdictions. It is the Company’s policy to seek patent

protection for significant inventions that may be patented, though the Company may elect, in appropriate cases, not to seek patent protection even for significant inventions if other protection, such as maintaining the invention as a trade secret, is considered more advantageous. In addition, the Company has registered certain of its mask sets under the Semiconductor Chip Protection Act of 1984.

There can be no assurance that any patent will issue on pending applications or that any patent issued will provide substantive protection for the technology or product covered by it. The Company believes that patent and mask work protection is of less significance in its business than experience, innovation, and management skill.

Maxim has registered several of its trademarks with the U.S. Patent and Trademark Office and in foreign jurisdictions.

Maxim is a party to a number of licenses, including patent licenses and other licenses obtained from Tektronix in connection with its acquisition of Tektronix’s ICO in May 1994.

Due to the many technological developments and the technical complexity of the semiconductor industry, it is possible that certain of the Company’s designs or processes may involve infringement of patents or other intellectual property rights held by others. From time to time, the Company has received, and in the future may receive, notice of claims of infringement by its products on intellectual property rights of third parties. (See “Item 1., Business — Trends, Risks and Uncertainties — Intellectual Property Litigation and Claims” at page 12, and “Item 3., Legal Proceedings” at page 15.) If any such infringements were to exist, the Company might be obligated to seek a license from the holder of the rights and might have liability for past infringement. In the past, it has been common semiconductor industry practice for patent holders to offer licenses on reasonable terms and rates. Although in some situations, typically where the patent directly relates to a specific product or family of products, patent holders have refused to grant licenses, though the practice of offering licenses appears to be generally continuing. However, no assurance can be given that the Company will be able to obtain licenses as needed in all cases or that the terms of any license that may be offered will be acceptable to Maxim. In those circumstances where an acceptable license is not available, the Company would need either to change the process or product so that it no longer infringes or else stop manufacturing the product or products involved in the infringement.

Federal, state, and local regulations impose a variety of environmental controls on the storage, handling, discharge and disposal of certain chemicals and gases used in semiconductor manufacturing. The Company’s facilities have been designed to comply with these regulations, and it believes that its activities are conducted in material compliance with such regulations. There can be no assurance, however, that interpretation and enforcement of current or future environmental regulations will not impose costly requirements upon the Company. Any failure of the Company to control adequately the storage, use, and disposal of regulated substances could result in future liabilities.

Increasing public attention has been focused on the environmental impact of electronic manufacturing operations. While the Company to date has not experienced any materially adverse effects on its business from environmental regulations, there can be no assurance that changes in such regulations will not have a materially adverse effect on the Company’s financial position or results of operations.

The supply of skilled engineers required for Maxim’s business is limited, and competition for such personnel is intense. The Company’s growth also requires the hiring or training of additional middle-level managers. If the Company is unable to hire, retain, and motivate qualified technical and management personnel, its operations and financial results will be adversely affected.

None of the Company’s employees is subject to a collective bargaining agreement.

An investment in the securities of Maxim involves certain risks. In evaluating the Company and its business, prospective investors should give careful consideration to the factors listed below, in addition to the information provided elsewhere in this Annual Report on Form 10-K, in the documents incorporated herein by reference and in other documents filed with the Securities and Exchange Commission.

The Company’s future operating results are difficult to predict and may be affected by a number of factors.

The semiconductor market has historically been cyclical and subject to significant economic downturns at various times. After a period of increasing demand that extended through fiscal year 2000, the semiconductor industry, including the portions in which the Company participates, experienced dramatically decreased demand. Although some of the causes of that decrease are known, including significant excess inventories in the hands of equipment manufacturers and other potential customers, it remains unclear what all the causes may have been and whether that period of decreased demand has ended. In the last several quarters Maxim has achieved modest increases in net revenues and profit. However, Maxim’s ability to achieve future revenue growth depends on whether, and the extent to which, demand for its products increases and reflects real end user demand and whether customer cancellations and delays of outstanding orders remain small.

Other key factors affecting the Company’s revenues and operating results that could cause actual results to differ materially from past or predicted results include the timing of new product announcements or introductions by the Company and its competitors, competitive pricing pressures, fluctuations in manufacturing yields and manufacturing efficiency, adequate availability of wafers and other materials and manufacturing capacity, changes in product mix, and economic conditions in the United States and international markets. As a result of these and other factors, there can be no assurance that the Company will not experience material fluctuations in its future operating results on a quarterly or annual basis.

The Company’s ability to realize its quarterly revenue goals and projections is affected to a significant extent by its ability to match inventory and current production mix with the product mix required to fulfill orders on hand and orders received within a quarter for delivery in that quarter (referred to as “turns business”). This issue, which has been one of the distinguishing characteristics of the analog integrated circuit industry, results from the very large number of individual parts offered for sale and the very large number of customers, combined with limitations on Maxim’s and its customers’ ability to forecast orders accurately, and relatively lengthy manufacturing cycles. Because of this extreme complexity in the Company’s business, no assurance can be given that the Company will achieve a match of inventory on hand, production units, and shippable orders sufficient to realize quarterly or annual revenue goals.

In addition, in certain markets where end-user demand may be particularly volatile and difficult to predict, such as notebook computers and cellular handsets, some Maxim customers place orders that require Maxim to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product. At any given time, this situation could affect a portion of the Company’s backlog. As a result, in any quarterly fiscal period, the Company is subject to the risk of cancellation of orders leading to a sharp fall-off of sales and backlog. Further, those orders may be for products that meet the customer’s unique requirements so that those cancelled orders would, in addition, result in an inventory of unsaleable products, resulting in potential inventory write-offs. Because of lengthy manufacturing cycles for certain of the products subject to these uncertainties, the amount of unsaleable product could be substantial. The Company routinely estimates inventory reserves required for such product. Actual results may differ from these reserve estimates, and such differences may be material to Maxim’s financial condition, gross margins, and results of operations.

The Company’s future success will continue to depend on its continued ability to introduce new products and to develop new process technologies. Semiconductor design and process technology are subject to rapid technological change, requiring a high level of expenditures for research and development. Design and process development for the portions of the semiconductor market in which the Company participates are particularly challenging. The success of new product introductions is dependent on several factors, including proper new product selection, timely product introduction, achievement of acceptable production yields, and market acceptance. From time to time, Maxim has not fully achieved its new product introduction and process development goals. There can be no assurance that the Company will successfully develop or implement new process technologies or that new products will be introduced on a timely basis or receive substantial market acceptance.

In addition, the Company’s growth is dependent on its continued ability to penetrate new markets where the Company has limited experience and competition is intense. There can be no assurance that the markets being served by the Company will grow (for example, older markets do saturate and decline); that the Company’s existing and new products will meet the requirements of such markets; that the Company’s products will achieve customer acceptance in such markets; that competitors will not force prices to an unacceptably low level or take market share from the Company; or that the Company can achieve or maintain profitability in these markets.

The fabrication of integrated circuits is a highly complex and precise process. Minute impurities, contaminants in the manufacturing environment, difficulties in the fabrication process, defects in the masks used in the wafer manufacturing process, manufacturing equipment failures, wafer breakage, or other factors can cause a substantial percentage of wafers to be rejected or numerous dice on each wafer to be nonfunctional. The Company has from time to time experienced lower-than-expected production yields and reliability problems, which have delayed product shipments and adversely affected gross margins. There can be no assurance that the Company will not experience a decrease in manufacturing yields or reliability problems, or that the Company will be able to maintain acceptable manufacturing yields and reliability in the future.

The number of shippable dice per wafer for a given product is critical to the Company’s results of operations. To the extent the Company does not achieve acceptable manufacturing yields or experiences delays in its wafer fabrication, assembly or final test operations, its results of operations could be adversely affected. During periods of decreased demand, fixed wafer fabrication costs could have an adverse effect on the Company’s financial condition, gross margins, and results of operations.

The Company is currently in the process of upgrading and expanding certain of its wafer manufacturing capacity at its existing wafer manufacturing facilities in order to convert to eight-inch wafers and develop new processes in anticipation of increased customer demand for its products. Should the Company be unsuccessful in completing this expansion on time or should customer demand fail to increase and the Company no longer needs the additional capacity, the Company’s financial position and results of operations could be adversely impacted.

The Company manufactures over 95% of its wafer production requirements internally. Given the nature of the Company’s products, it would be very difficult and costly to arrange for independent manufacturing facilities to supply such products. Any prolonged inability to utilize one of the Company’s manufacturing facilities as a result of fire, natural disaster, unavailability of electric power or otherwise, would have a material adverse effect on the Company’s results of operations and financial condition.

The Company experiences intense competition from a number of companies, some of which have significantly greater financial, manufacturing, and marketing resources than the Company and some of which

have greater technical resources than the Company and have intellectual property rights to which the Company is not privy. To the extent that the Company’s proprietary products become more successful, competitors will offer second source products for some of those products, possibly causing some erosion of profit margins. See “Item 1., Business — Competition” at page 6.

A significant portion of the Company’s sales is realized through independent electronics distributors and a limited portion of the Company’s sales is realized through independent sales representatives that are not under the control of the Company. Dallas Semiconductor continues to have a larger percentage of their sales through the distribution channel than the Maxim only business. These independent sales organizations generally represent product lines offered by several companies and thus could reduce their sales efforts applied to the Company’s products or terminate their representation of the Company. Payment terms for foreign distributors are substantially longer, either according to contract or by practice, than for U.S. customers. The Company generally requires foreign distributors to provide a letter of credit to the Company in an amount equal to the credit limit set for accounts receivable from such foreign distributors. The letter of credit provides for collection on accounts receivable from the foreign distributor should the foreign distributor default on their accounts receivable to the Company. The Company does not require letters of credit from any of its domestic distributors and is not protected against accounts receivable default or bankruptcy by these distributors. The inability to collect open accounts receivable could adversely affect the Company’s results of operations. Termination of a significant distributor, whether at the Company’s or the distributor’s initiative, could be disruptive to the Company’s current business. If the Company were unable to find suitable replacements, terminations by significant distributors or representatives could have a material adverse impact on the Company. See “Item 1., Business — Sales and Marketing” at pages 5 and 6.

Although the Company has an internal capability to fabricate most of its wafers, Maxim remains dependent on outside silicon foundries for a small but important portion of its wafer fabrication and wafer processing for chip scale packaging. None of the foundries currently used by Maxim is affiliated with Maxim. As is typical in the semiconductor industry, from time to time, the Company has experienced disruptions in the supply of processed wafers from these foundries due to quality problems, failure to achieve satisfactory electrical yields, and capacity limitations. Procurement from foundries is done by purchase order and contracts. If these foundries are unable or unwilling to produce adequate supplies of processed wafers conforming to the Company’s quality standards, the Company’s business and relationships with its customers for the limited quantities of products produced by these foundries would be adversely affected. Finding alternate sources of supply or initiating internal wafer processing for these products would not be economically feasible.

Maxim relies on assembly subcontractors located in the Philippines, Malaysia, Thailand, and South Korea to separate wafers into individual integrated circuits and package them. The Company performs wafer sort operations for about half of its wafers and final testing for about two-thirds of its products at a Philippines facility owned by the Company. During fiscal year 2002, the Company transferred a significant portion of the testing of Dallas Semiconductor product to the Company’s test facility located in Cavite, the Philippines. In the past, South Korea and the Philippines have experienced political disorders, labor disruptions, and natural disasters. Although the Company has been affected by these problems, none has materially affected the Company’s revenues or costs to date. However, similar problems in the future or more aggravated consequences of current problems, could affect deliveries to Maxim of assembled, tested product, possibly resulting in substantial delayed or lost sales and/or increased expense. The Thailand test facility performs about one-fourth of the Company’s final testing for its products but would not provide sufficient capacity to make up for a significant disruption in the Philippines test facility. Reliability problems are experienced by the Company’s assemblers and could cause serious problems in delivery and quality resulting in potential product liability to the Company.

The Company performs substantially all of its final testing at its facilities in the Philippines and Thailand. Given the nature of the Company’s test operations, it would be very difficult and costly to arrange for independent testing facilities to supply such test services. Any prolonged inability to utilize one of the Company’s testing facilities as a result of fire, natural disaster, unavailability of electric power or otherwise, would have a material adverse effect on the Company’s results of operations and financial condition.

As previously noted, once testing has been completed on the Company’s product, finished product from the Company’s test facility located in Samutprakarn Province, Thailand is shipped to the Company’s finished goods location at its test facility in Cavite, the Philippines. Finished product is either shipped directly from Cavite, the Philippines to customers worldwide or to other Company locations for sale to end customers or distributors. See “Item 1., Business — Manufacturing” at pages 4 and 5. Should there be disruption for any reason to the shipping operations in Cavite, the Philippines the Company might not be able to meet its revenue plan in the fiscal period impacted. Failure to meet the revenue plan may materially adversely impact the Company’s results of operations.

Over the past few years, the semiconductor industry has experienced a very large expansion of fabrication capacity and production worldwide. As a result of increasing demand from semiconductor manufacturers, availability of certain basic materials and supplies, such as polysilicon, silicon wafers, ultra-pure metals, lead frames and molding compounds, and of subcontract services, like epitaxial growth and ion implantation and assembly of integrated circuits into packages, have from time to time, over the past few years, been in short supply and may be expected to come into short supply again if overall industry demand increases in the future. Maxim devotes continuous efforts to maintain availability of all required materials, supplies, and subcontract services. However, Maxim does not have long-term agreements providing for all of these materials, supplies, and services, and shortages could occur as a result of capacity limitations or production constraints on suppliers that could have a materially adverse effect on Maxim’s ability to achieve its planned production.

A number of Dallas Semiconductor products, including nonvolatile SRAMs, real time clocks, and iButton^TM products use static memory circuits, batteries, PC boards, and crystals that are acquired from third parties. The Company anticipates that from time to time supplies of these circuits may not be sufficient to meet all customer requested delivery dates for products containing the circuits. As a result of any such shortages, future sales and earnings from products using these components could be adversely affected. Additionally, significant fluctuations in the purchase price for these circuits could affect gross margins for the products involved. Suppliers could also discontinue the manufacture of such purchased products or could have quality problems that could affect the Company’s ability to meet customer commitments.

In addition, suppliers of semiconductor manufacturing equipment are sometimes unable to deliver test and/or fabrication equipment to a schedule or equipment performance specification that meets the Company’s requirements. Delays in delivery of equipment needed for planned growth could adversely affect the Company’s ability to achieve its manufacturing and revenue plans in the future.

The Company relies primarily upon know-how, rather than on patents, to develop and maintain its competitive position. There can be no assurance that others will not develop or patent similar technology or reverse engineer the Company’s products or that the confidentiality agreements upon which the Company relies will be adequate to protect its interests. Other companies have obtained patents covering a variety of semiconductor designs and processes, and the Company might be required to obtain licenses under some of these patents or be precluded from making and selling the infringing products, if such patents are found to be valid. There can be no assurance that Maxim would be able to obtain licenses, if required, upon commercially reasonable terms. See “Item 1., Business — Patents, Licenses, and Other Intellectual Property Rights” at pages 6 and 7, and “Item 1., Trends, Risks and Uncertainties — Intellectual Property Litigation and Claims” at page 12.

The Company is subject to various legal proceedings (See “Item 3., Legal Proceedings” at page 15) and other similar claims that involve possible infringement of patent or other intellectual property rights of third parties. Maxim is currently a defendant in a lawsuit brought by Linear Technology Corporation in which Linear alleges that Maxim has willfully infringed Linear Technology Corporation’s patent relating to control circuits and methods for maintaining high efficiencies over broad current ranges in a switching regulator circuit. Linear Technology Corporation seeks unspecified actual and treble monetary damages and a permanent injunction against Maxim. In addition to the above, from time to time, the Company receives notices that its products or processes may be infringing the intellectual property rights of others. See “Item 1., Business — Patents, Licenses, and Other Intellectual Property Rights” at pages 6 and 7.

If one or more of the Company’s products or processes were determined to infringe any such intellectual property rights, a court might enjoin the Company from further manufacture and/or sale of the affected products. The Company would then need to obtain a license from the holders of the rights and/or to reengineer the Company’s products or processes in such a way as to avoid the alleged infringement. In any of those cases, there can be no assurance that the Company would be able to obtain any necessary license on commercially reasonable terms or that the Company would be able to reengineer its products or processes to avoid infringement. An adverse result in litigation arising from such a claim could involve an injunction to prevent the sales of a material portion of the Company’s products, a reduction or the elimination of the value of related inventories, and the assessment of a substantial monetary award for damages related to past sales which could have a material adverse effect on the Company’s result of operations and financial condition.

The Company has insurance contracts with independent insurance companies that provide its employees with health (medical and dental) benefits, worker’s compensation coverage, long term disability income coverage, life insurance coverage, and fiduciary insurance coverage for employee and Company funds invested under the Employee Retirement Income and Security Act. In addition, the Company has insurance contracts that provide officer and director liability coverage for the Company’s officers and directors. Other than the specific areas mentioned above, the Company is self-insured as it relates to all other insurance risks and exposures. Based on management’s assessment and judgment, the Company has determined that it is more cost effective to self-insure these risks rather than incur the insurance premium costs. The risks and exposures the Company self insures include, but is not limited to, fire, property and casualty, natural disaster, product defects, political risk, general liability, patent infringement, and employment issues. Should there be events such as fires, explosions, or earthquakes, among many other possibilities, or adverse court or similar decisions in any area in which the Company is self-insured, the Company’s financial condition, results of operations, and liquidity may be materially adversely affected. See “Item 3., Legal Proceedings” at page 15.

Many of the materials and manufacturing steps in the Company’s products are supplied by foreign companies or by the Company’s operations abroad, such as its test operations in the Philippines and Thailand. Approximately 66% of the Company’s net revenues in fiscal year 2002 were from foreign customers. Accordingly, both manufacturing and sales of the Company’s products may be adversely affected by political or economic conditions abroad. In addition, various forms of protectionist trade legislation have been proposed in the United States and certain foreign countries. A change in current tariff structures or other trade policies could adversely affect the Company’s foreign manufacturing or marketing strategies. Currency exchange fluctuations could also increase the cost of components manufactured abroad and the cost of the Company’s products to foreign customers or decrease the costs of products from the Company’s foreign competitors. Although export sales are subject to government regulation, those regulations have not caused the Company significant difficulties to date. See “Item 1., Business — Manufacturing” at pages 4 and 5, and “Item 1., Business — Sales and Marketing” at pages 5 and 6.

The Company’s success depends to a significant extent upon the continued service of its president, John F. Gifford, its other executive officers, and key management and technical personnel, particularly its experienced engineers, and on its ability to continue to attract, retain, and motivate qualified personnel. The competition for such employees is intense. The loss of the services of Mr. Gifford or several of the Company’s executive officers could have a material adverse effect on the Company. In addition, there could be a material adverse effect on the Company should the turnover rates for engineers and other key personnel increase significantly or should the Company be unable to continue to attract qualified personnel.

The Company does not maintain any key person life insurance policy on any of its officers or employees.

The Company acquired Dallas Semiconductor on April 11, 2001. Since that time, the Company has been in the process of integrating the personnel and operations of Dallas Semiconductor, with the goals of reducing costs and increasing efficiency and productivity. That process has been proceeding well in most regards, but no assurance can be given that the integration will be fully completed according to the Company’s schedule or that the results of the remaining integration will be successful.

Maxim’s headquarters is located in Sunnyvale, California. Manufacturing and other operations are conducted in several locations worldwide. The following table provides certain information as to the Company’s principal general offices and manufacturing facilities.

In addition to the leased property listed in the table, the Company also leases sales, engineering, and manufacturing offices and other premises at various locations in the United States and overseas under operating leases. These leases expire at various dates through the year 2010. The Company anticipates no difficulty in retaining occupancy of any of its manufacturing, office or sales facilities through lease renewals prior to expiration or through month-to-month occupancy or in replacing them with equivalent facilities.

The Company expects these buildings and the contiguous land to be adequate for its business purposes through fiscal year 2003.

Linear Technology Corporation vs. Maxim Integrated Products, Inc. et al., Action No. C-98-1727 FMS in the Federal District Court for the Northern District of California.

The complaint further alleges that the Company’s actions have been, and continue to be, willful and deliberate and seeks a permanent injunction against the Company as well as unspecified actual and treble damages including costs, expenses, and attorneys fees.

The Company answered the complaint on October 20, 1997, denying all of LTC’s substantive allegations and counterclaiming for a declaration that LTC’s patent is invalid and not infringed.

On September 21, 2001, the Federal District Court for the Northern District of California issued an order dismissing the patent litigation action by LTC. The court found that the Company did not infringe any of the claims of the asserted patent. The Company had moved for summary judgment on a number of subjects, including noninfringement, invalidity and unenforceability of the patent. The court found that the Company’s remaining summary judgment motions were rendered moot by its noninfringement ruling. LTC has appealed the decision. While the Company continues to believe the claims are without merit, no assurance can be given as to the outcome of the appeal. The Company does not believe that the ultimate outcome of these matters will have a material adverse effect on the financial position or liquidity of the Company. If, however, the appellate court in the action brought by LTC were to reverse the trial court’s dismissal of the patent litigation claims brought by LTC against the Company, and were LTC to prevail in its claims against the Company, the Company’s operating results could be materially adversely affected.

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

The Company’s common stock is traded on the Nasdaq National Market under the symbol “MXIM”. At June 29, 2002, there were approximately 2,214 stockholders of record of the Company’s common stock.

The following table sets forth the range of the high and low closing prices by quarter for fiscal years 2002 and 2001:

The Company paid no cash dividends in fiscal year 2002. In fiscal years 2001 and 2000, Dallas Semiconductor paid $6.0 million and $7.8 million in cash dividends, respectively.

The selected financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Financial Statements and notes thereto included elsewhere in this Report.

Net income for fiscal year 2001 included merger and special charges of $163.4 million ($0.30 diluted earnings per share). Excluding the merger and special charges noted above, net income and diluted net income per share would have been $442.8 million and $1.22, respectively, for the year ended June 30, 2001. See Note 13 to the Notes to Consolidated Financial Statements for additional information on the “Merger and Special Charges” at pages 49 to 51.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements as noted in Item 14(a)(1).

In the fourth quarter of fiscal year 2001, the Company acquired Dallas Semiconductor Corporation, a leading supplier of specialty semiconductors. The acquisition was undertaken as a result of the Company’s belief that the engineering talent, product offerings, and management philosophy at Dallas Semiconductor, when combined with those of the Company, would lead to synergies that would positively impact operating results and increase stockholder value. The Company issued approximately 41.0 million shares of its common stock in exchange for all the outstanding common stock of Dallas Semiconductor. In addition, the Company exchanged all options to purchase Dallas Semiconductor common stock for options to purchase approximately 5.9 million shares of the Company’s common stock. As was permitted under applicable accounting rules in effect at the time, the transaction was accounted for as a pooling-of-interests and qualifies as a tax-free reorganization.

All financial data of the Company presented in these financial statements was restated to include the historical financial data of Dallas Semiconductor in accordance with accounting principles generally accepted in the United States and pursuant to Regulation S-X of the Securities and Exchange Commission. Adjustments relating to deferral of income on shipments to distributors were required to conform to the accounting policies of the acquired company. The Company and Dallas Semiconductor had certain differences in the classification of revenues and expenses in their historical statements of income and assets and liabilities in their historical balance sheets. Adjustments were made to conform the combined company’s income statement and balance sheet classifications. In addition, the lives of the property, plant and equipment acquired as part of the merger with Dallas Semiconductor were conformed to the lives used by the Company as appropriate. The change, which was prospective in nature, reflects the Company’s anticipated economic benefit from those assets. See Note 3 “Business Combination” of Notes to Consolidated Financial Statements at pages 39 and 40.

The Company reported net revenues of $1,025.1 million in fiscal year 2002, a 35.0% decrease from net revenues of $1,576.6 million in fiscal year 2001. This decrease is primarily related to downturns in certain industry segments (particularly telecom and information technology businesses) and in the general economy. This downturn, which began in fiscal year 2001, resulted in sequential quarter-over-quarter decreases in net revenues through the first quarter of fiscal year 2002. Order rates stabilized during the first quarter of and throughout fiscal year 2002 resulting in net revenues increasing slightly quarter-over-quarter from the second quarter through the fourth quarter of fiscal year 2002.

The Company reported net revenues of $1,576.6 million in fiscal year 2001, a 14.6% increase from net revenues of $1,376.1 million in fiscal year 2000. This increase was primarily related to higher unit shipments resulting from continued introduction of new proprietary products and increased market acceptance of the Company’s existing proprietary and second-source products, and an increase in market demand for analog semiconductor products in general. This increased demand resulted in net revenues being greater in the first, second, and third quarters of fiscal year 2001 than net revenues for the comparable quarters in fiscal year 2000. While net revenues increased from fiscal year 2000 to fiscal year 2001, market demand for the Company’s products decreased significantly in the third and fourth quarters of fiscal year 2001 due to downturns in certain industry segments (particularly telecom and information technology businesses) and in the general economy. This resulted in net revenues’ being less in the fourth quarter of fiscal year 2001 than the fourth quarter of fiscal year 2000.

Approximately 66%, 57%, and 53% of the Company’s net revenues in fiscal years 2002, 2001, and 2000, respectively, were derived from customers located outside the United States, primarily in the Pacific Rim and Europe. While the majority of these sales are denominated in U.S. dollars, the Company enters into foreign currency forward contracts to mitigate its risks on firm commitments and net monetary assets denominated in foreign currencies. The impact of changes in foreign exchange rates on net revenues and the Company’s results of operations for fiscal years 2002, 2001, and 2000 was immaterial.

The Company’s gross margin as a percentage of net revenues was 69.5% in fiscal year 2002 compared to 65.9% in fiscal year 2001. The improvement in gross margin as a percentage of net revenues from fiscal year 2001 to fiscal year 2002 was attributable to lower fixed asset and inventory charges recorded during fiscal year 2002 as compared to fiscal year 2001. This was offset slightly by a decrease in the Company’s gross margin in the fourth quarter of fiscal year 2002 primarily as a result of revenue growth in lower margin products. Gross margin for fiscal year 2002 was negatively impacted by inventory write downs of $12.5 million. Gross margin for fiscal year 2001 was negatively impacted by $39.2 million recorded to reduce the carrying value of plant and equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation, and inventory write downs of $39.9 million. See “Critical Accounting Policies — Inventories” at page 24.

The Company’s gross margin as a percentage of net revenues was 65.9% in fiscal year 2001 compared to 63.4% in fiscal year 2000. The improvement in gross margin as a percentage of net revenues in fiscal year 2001 was principally due to production efficiencies obtained through economies of scale and cost reductions. The increase in gross margin for fiscal year 2001 was offset by $39.2 million recorded to reduce the carrying value of plant and equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation and inventory write downs of $39.9 million. Gross margin for fiscal year 2000 was negatively impacted by $27.1 million recorded to reduce the carrying value of plant and equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation, and inventory write downs of $3.3 million.

Research and development expenses were $275.5 million and $280.2 million for fiscal years 2002 and 2001, respectively, which represented 26.9% and 17.8% of net revenues, respectively. The decrease in research and development expenses in absolute dollars is due to no fixed asset charges recorded during fiscal year 2002 as compared to fiscal year 2001. This was offset by increased headcount related expenses to continue product development to support revenue growth and increased wafer and mask expenses to support new product development. Included in research and development expenses in fiscal year 2001 was $11.2 million recorded to reduce the carrying value of equipment, that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation.

Research and development expenses were $280.2 million and $216.8 million in fiscal years 2001 and 2000, respectively, which represented 17.8% and 15.8% of net revenues, respectively. The increase in research and development expenses both in terms of absolute dollars and as a percentage of net revenues in fiscal year 2001 was due primarily to increased headcount related expenses to continue product development to support revenue growth, increased wafer and mask expense to support new product development, and $11.2 million recorded to reduce the carrying value of equipment, that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation. Included in research and development expenses in fiscal year 2000 was $8.1 million recorded to reduce the carrying value of equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened resulting in accelerated depreciation.

The level of research and development expenditures as a percentage of net revenues will vary from period to period, depending, in part, on the level of net revenues and, in part, on the Company’s success in recruiting the technical personnel needed for its new product introductions and process development. The Company continuously attempts to control and, if possible, reduce expense levels in all areas including research and development. However, the Company views research and development expenditures as critical to maintaining a high level of new product introductions, which in turn are critical to the Company’s plan for future growth.

Selling, general and administrative expenses were $92.0 million and $150.6 million in fiscal years 2002 and 2001, respectively, which represented 9.0% and 9.6% of net revenues, respectively. The decrease in selling, general and administrative expenses both in terms of absolute dollars and as a percentage of net revenues in fiscal year 2002 is primarily due to lower sales representative commissions and decreased headcount related expenses due mainly to a reorganization of the combined Company’s sales organization completed in the fourth quarter of fiscal year 2001. In addition, there was a decrease of $5.5 million in charges recorded for technology licensing.

Selling, general and administrative expenses were $150.6 million and $146.9 million in fiscal years 2001 and 2000, respectively, which represented 9.6% and 10.7% of net revenues, respectively. The increase in selling, general, and administrative expenses in absolute dollars in fiscal year 2001 was primarily due to additional headcount and related employee expenses to support the Company’s increased level of revenues offset by a decrease of $9.5 million in charges recorded primarily for technology licensing.

As a result of the merger with Dallas Semiconductor, during the fourth quarter of fiscal year 2001, the Company recorded merger costs of approximately $26.4 million. These costs consisted of approximately $14.1 million intended to satisfy the change in control payments under previously existing employment contracts and other non-employee director arrangements for which there was no future economic benefit; a $5.8 million payment to be made under a change in control provision in a previously existing life insurance arrangement for which there was no future economic benefit; and $6.5 million for fees related to investment banking, legal, accounting, filings with regulatory agencies, financial printing, and other related costs. Approximately $6.6 million of the direct transaction costs were paid out of existing cash reserves in fiscal year 2002. The remaining unpaid direct transaction costs of approximately $1.7 million are related to change in control payments under previously existing employment contracts and other non-employee director arrangements which will be paid out in future periods according to the terms of the related agreement.

During the fourth quarter of fiscal year 2001, the Company recorded special charges of $137.0 million. These special charges resulted from the significant decrease in demand that occurred during the fourth quarter of fiscal year 2001 for Dallas Semiconductor’s products in combination with the Company’s intention to close Dallas Semiconductor’s 6-inch wafer manufacturing facility and dispose of the related equipment. The Company intends to complete construction of an 8-inch wafer manufacturing facility located in Dallas, Texas that was under construction when the merger was consummated between the Company and Dallas Semiconductor. Once complete, the 8-inch wafer manufacturing facility will serve as Dallas Semiconductor’s primary wafer manufacturing facility. In addition, the Company planned to concentrate a significant portion of its test operations of the combined company at the Company’s test facilities located in the Philippines and Thailand. The Company concluded that the above facts indicated that Dallas Semiconductor’s long-lived assets might be impaired, and as required by accounting principles general accepted in the United States, performed a cash flow analysis of the related assets. Based on the cash flow analysis, the cash flows expected to be generated by Dallas Semiconductor’s long-lived assets during their estimated remaining useful lives were not sufficient to recover the net book value of the assets. Based on the cash flow analysis, an impairment charge of $124.4 million was recorded to reduce the net book value of Dallas Semiconductor’s long-lived assets to fair value. The Company continued construction of the 8-inch wafer manufacturing facility located in Dallas, Texas during fiscal year 2002 although at a slower pace than originally anticipated due to unforeseen complexities and resource constraints related to converting existing 6-inch processes to 8-inch processes. The

Company plans to complete construction and start up of the 8-inch wafer manufacturing facility in fiscal year 2003. The concentration of test operations of the combined company noted above was completed in fiscal year 2002 as planned.

In addition to the above, the Company recorded special charges of $12.6 million to reflect the reorganization of the Company’s sales organization, purchase order cancellation fees, and the reduction in the Company’s manufacturing workforce. The above actions directly impacted employees in the Company’s sales, marketing, and manufacturing organizations. The Company terminated 137 employees and 93 employees in fiscal years 2002 and 2001, respectively, and paid $0.5 million and $2.0 million in termination benefits in fiscal years 2002 and 2001, respectively, related to the above actions.

During fiscal year 2002, the Company recorded additional special charges of $4.1 million related to additional reductions in the Company’s manufacturing workforce. These additional reductions were required to better match capacity with demand for the Company’s product. In fiscal year 2002, the Company terminated an additional 350 employees and paid an additional $4.0 million of termination benefits related to these actions, bringing the total number of employees terminated to 487 and the total termination benefits paid to $4.5 million in fiscal year 2002.

Based on developments that occurred during fiscal year 2002 related to the special charges recorded during the fourth quarter of fiscal year 2001, the Company revised its estimate of the reserve balance needed for purchase order cancellation fees. Based on the current status of negotiations, the amount that will ultimately be paid will be approximately $4.3 million less than the amount recorded for such charges at June 30, 2001. Accordingly, the Company decreased the amount recorded for purchase order cancellation fees by $4.3 million to reflect this change in estimate leaving a remaining reserve balance for purchase order cancellation fees of $3.2 million at June 29, 2002.

Interest income and other, net decreased to $41.5 million in fiscal year 2002 from $59.8 million in fiscal year 2001. This decrease was due to lower levels of invested cash, cash equivalents, and short-term investment combined with lower average interest rates.

Interest income and other, net increased to $59.8 million in fiscal year 2001 from $52.7 million in fiscal year 2000. The increase in interest income and other, net in fiscal year 2001 was primarily due to significantly higher levels of invested cash, cash equivalents, and short-term investments and higher average interest rates. Included in interest income and other, net in fiscal year 2000 was a $4.5 million gain from the cash sale of the Company’s 50% interest in its high-frequency packaging and assembly subsidiary and a $5.6 million gain from the sale of an investment in an unrelated test equipment company.

The effective tax rate was 33.0%, 33.7%, and 33.5% for fiscal years 2002, 2001, and 2000, respectively. The fiscal years 2002, 2001 and 2000 effective rates were lower than the U.S. federal and state combined statutory rate primarily due to tax benefits on export sales.

Realization of the net deferred tax asset of $108.1 million at June 29, 2002 is dependent primarily upon achieving future U.S. taxable income of $309 million. The Company believes it is more likely than not that the net deferred tax assets will be realized based on historical earnings and expected levels of future taxable income. Levels of future taxable income are subject to the various risks and uncertainties discussed in “Item 1., Business — Trends, Risks and Uncertainties” at pages 8 through 13. An increase in the valuation allowance against net deferred tax assets may be necessary if it is more likely than not that all or a portion of the net deferred tax assets will not be realized. The Company periodically assesses the need for increases to the deferred tax asset valuation allowance.

At the end of the fourth quarter of fiscal year 2002, backlog shippable within the next 12 months was approximately $239 million (compared to $234 million at the end of fiscal year 2001), including approximately $210 million (compared to $185 million at the end of fiscal year 2001) requested for shipment in the first quarter of fiscal year 2003. Although the Company’s backlog grew 9% in the fourth quarter of fiscal year 2002, there is still limited visibility in many of its end markets. Because the Company’s backlog of orders at any point is not necessarily based on firm, noncancelable orders and because the Company’s customers do in fact routinely cancel orders for their own convenience with little notice, backlog has limited value as a predictor of future revenues.

During the fourth quarter of fiscal year 2002, bookings were approximately $310 million, a 4% increase over the previous quarter’s level of $299 million. Turns orders remained high during the fourth quarter of fiscal year 2002 at 45% of bookings (turns orders are customer orders that are for delivery within the same quarter and may result in revenue within the same quarter if the Company has available inventory that matches those orders). The Company’s customers continue to order to support near-term requirements. Turns orders received during the fourth quarter of fiscal year 2002 were $140 million. Bookings increased in the U.S. and Japan and were approximately flat with the third quarter of fiscal year 2002 in other geographic areas.

The fourth quarter of fiscal year 2002 results were generally consistent with the Company’s expectations. Revenues increased approximately 8% over the third quarter of fiscal year 2002. The Company increased its revenues during the second, third, and fourth quarters of fiscal year 2002, and the Company forecasts that revenues will be up sequentially for the first quarter of fiscal 2003. The Company believes that end market consumption of its products is close to its current bookings level. As of the end of the second week of September 2002, the Company believes that its net revenues will be somewhat higher in the first quarter of fiscal year 2003 than in the fourth quarter of fiscal year 2002, but the Company does not have sufficient visibility based on current backlog and bookings to make confident predictions for future periods.

If the business climate does not recover to levels the Company experienced a couple of years ago, the Company believes it can still perform well for its stockholders. The Company is committed to finding the right mix of operating efficiencies and market success that will produce results for its stockholders. To this end the Company is implementing expense control and reduction plans throughout the Company while at the same time continuing to focus on its new product and process introduction plans and completion of the manufacturing and other operational improvements discussed elsewhere in this report.

Total assets decreased to $2,010.8 million at the end of fiscal year 2002, down from $2,430.5 million at the end of fiscal year 2001. The decrease is primarily due to the repurchase of 20.1 million shares of the Company’s common stock for $864.0 million. This decrease was offset by an increase in cash generated from operations of $403.8 million in fiscal year 2002 and $109.3 million from employee stock option exercises and stock purchase plan purchases. Accounts receivable declined to $129.8 million at the end of fiscal year 2002 from $152.5 million at the end of fiscal year 2001, primarily due to a decrease in sales volume in the fourth quarter of fiscal year 2002 compared to the fourth quarter of fiscal year 2001. Net inventory declined to $139.2 million in fiscal year 2002 from $162.7 million in fiscal year 2001 due to better matching of capacity with demand. Deferred tax assets grew to $144.7 million at the end of fiscal year 2002 from $103.2 million at the end of fiscal year 2001 primarily due to timing differences between tax and financial reporting.

The Company’s primary sources of funds for fiscal years 2002, 2001, and 2000 has been from net cash generated from operating activities of approximately $403.8 million, $809.6 million, and $666.3 million, respectively. In addition, the Company received approximately $109.3 million, $114.3 million, and $99.1 mil-

Another source of cash from the Company’s stock option programs is the tax deductions that arise from exercise of options. These tax benefits amounted to $140.0 million, $238.9 million, and $155.0 million in fiscal years 2002, 2001, and 2000, respectively.

The principal uses of funds for fiscal years 2002, 2001, and 2000 were repurchases of $864.0 million, $250.7 million, and $270.2 million of the Company’s common stock, and purchases of property, plant and equipment of $90.4 million, $336.5 million, and $292.1 million, respectively.

In the past, it was the Company’s policy to reduce the dilution effect from stock options by repurchasing its common stock from time to time in amounts based on estimates of proceeds from stock option exercises and of tax benefits related to such exercises. That stock repurchase policy was discontinued in the third quarter of fiscal year 2001. During the first and second quarters of fiscal year 2002, the Company repurchased common stock in response to actions taken by the Securities and Exchange Commission following the extraordinary events of September 11, 2001. During the third and fourth quarters of fiscal year 2002, the Company repurchased common stock as it was determined to be a more effective use of the Company’s funds rather than reinvesting maturing investments, which had a high rate of return, in securities that would have yielded a much lower rate of return. The Company will continue to repurchase its common stock in fiscal year 2003. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including the price of the Company’s common stock, general market conditions, and other factors. See Note 14 “Common Stock Repurchases” at pages 51 and 52 and Note 15 “Subsequent Event” at page 52 of the Notes to Consolidated Financial Statements regarding repurchases of common stock during and subsequent to fiscal year 2002.

The Company is subject to pending legal proceedings. See Note 7 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements at pages 42 and 43 for information regarding pending patent litigation. Although the results of such legal proceedings are unpredictable, the Company does not believe that any pending legal proceedings will have a material adverse impact on its liquidity or financial position. If, however, the appellate court in the action brought by Linear Technology Corporation were to reverse the trial court’s dismissal of the patent litigation claims brought by Linear Technology Corporation against the Company, and were Linear Technology Corporation to prevail in its claims against the Company, the Company’s operating results could be materially adversely affected.

As of June 29, 2002, the Company’s available funds consisted of $765.5 million in cash, cash equivalents, and highly liquid investment securities. The Company anticipates that the available funds and cash generated from operations will be sufficient to meet cash and working capital requirements, including its anticipated level of capital expenditures and common stock repurchases, for the next twelve months.

Management’s discussion and analysis of the financial condition and results of operations is based upon the consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. The Company bases its estimates and judgments on its historical experience, knowledge of current conditions and its beliefs of what could occur in the future given available information. Actual results may differ from these estimates under different assumptions or conditions.

The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its financial statements. The Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of the Company’s financial condition and results of operations, and require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are

inherently uncertain. Based on this definition, the Company’s most critical accounting policies include revenue recognition and accounts receivable allowances, which impacts the recording of revenues; valuation of inventories, which impacts costs of goods sold and gross margins; the assessment of recoverability of long-lived assets, which impacts write-offs of fixed assets; accounting for income taxes, which impacts the income tax provision; and assessment of contingencies, which impacts charges recorded in cost of goods sold and selling, general and administrative expenses. These policies and the estimates and judgments involved are discussed further below. The Company has other key accounting policies that either do not generally require estimates and judgments that are as difficult or subjective, or it is less likely that such accounting policies would have a material impact on the Company’s reported results of operations for a given period.

Revenue from product sales to the Company’s direct customers is recognized upon shipment, provided that persuasive evidence of a sales arrangement exists, the price is fixed and determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations.

A portion of the Company’s sales is made to domestic distributors under agreements that provide the possibility of certain sales price rebates and limited product return privileges. Given the uncertainties associated with the levels of returns and other credits that will be issued to these distributors, the Company defers recognition of such sales until the product is sold by the domestic distributors to their end customers. Revenue on all shipments to international distributors is recognized upon shipment to the distributor, when the above criteria are met, with appropriate provision of reserves for returns and allowances, as these distributors generally do not have price rebate or product return privileges. The Company estimates the provision for returns and price rebates based on historical experience and known future returns and price rebates. Accounts receivable from both domestic and international distributors are recognized and inventory is relieved upon shipment as title to inventories generally transfers upon shipment at which point the Company has a legally enforceable right to collection under normal terms.

The Company must make estimates of potential future product returns and sales allowances related to current period product revenue. Management analyzes historical returns, changes in customer demand, and acceptance of products when evaluating the adequacy of sales returns and allowances. Estimates made by the Company may differ from actual product returns and sales allowances. These differences may materially impact reported revenue and amounts ultimately collected on accounts receivable.

Inventories are stated at the lower of cost, which approximates actual cost on a first-in-first-out basis, or market value. Because of the cyclicality of the market, inventory levels, obsolescence of technology, and product life cycles, the Company writes down inventories to net realizable value based on backlog, forecasted product demand, and historical sales levels. Backlog is subject to revisions, cancellations, and rescheduling. Actual demand and market conditions may be lower than those projected by the Company. This difference could have a material adverse effect on the Company’s gross margin should inventory write downs beyond those initially recorded become necessary. Alternatively, should actual demand and market conditions be more favorable than those estimated by the Company, gross margin could be favorably impacted. During fiscal year 2002 and 2001, the Company had inventory write downs of $12.5 million and $39.9 million, respectively, due to decreases in backlog and forecasted demand due to a downturn in certain industry segments (particularly telecom and information technology businesses) and the general economy.

The Company’s standard cost revision policy is to continuously monitor manufacturing variances and revise standard costs when necessary. The Company’s policy for recording a write down of inventory is generally to write down, at standard cost, finished goods inventory in excess of an estimate of twelve months of demand based on backlog and historical sales levels and work in process that is greater than 90 days old, which has no forecasted product demand.

The Company evaluates the recoverability of property, plant and equipment in accordance with Statement of Financial Accounting Standards No. 121 (SFAS 121), “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.” The Company performs periodic reviews to determine whether facts and circumstances exist that would indicate that the carrying amounts of property, plant and equipment might not be fully recoverable. If facts and circumstances indicate that the carrying amount of property, plant and equipment might not be fully recoverable, the Company compares projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful life against their respective carrying amounts. In the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets. Evaluation of impairment of property, plant and equipment requires estimates in the forecast of future operating results that are used in the preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of the Company’s property, plant and equipment could differ from the Company’s estimates used in assessing the recoverability of these assets. These differences could result in additional impairment charges, which could have a material adverse impact on the Company’s results of operations.

As previously noted, in fiscal year 2001, the Company recorded a charge of $124.4 million for the impairment of Dallas Semiconductor wafer fabrication equipment and test equipment. The impairment charge was determined based on the difference between the fair value and the carrying value attributable to such assets. Additionally, in fiscal year 2001 and 2000, the Company recorded charges of $50.4 million and $35.2 million, respectively, to reduce the carrying value of plant and equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation. The charges noted above were classified as operating expenses in the consolidated statements of income.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS 144 supersedes SFAS 121 and requires that one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. The Company adopted SFAS 144 effective June 30, 2002 and believes that this standard will not have a material impact on the Company’s financial condition, results of operations or liquidity.

The Company records a valuation allowance to reduce the net deferred tax asset to the amount that is more likely than not to be realized. In assessing the need for a valuation allowance, historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and practicable tax planning strategies are considered. In the event it is determined that the deferred tax assets to be realized in the future would be in excess of the net recorded amount, an adjustment to the deferred tax asset valuation allowance would be recorded. This adjustment could increase income in the period such determination was made. Likewise, should it be determined that all or part of the net deferred tax asset would not be realized in the future, an adjustment to increase the deferred tax asset valuation allowance could be charged to income in the period such determination would be made. At June 29, 2002 the Company recorded a valuation allowance against the net deferred tax asset of $141.7 million attributable to the expected tax benefits on gains to be realized from the exercise of stock options, which if and when realized, will be recorded as a credit to additional paid-in-capital.

On a periodic basis the Company evaluates its deferred tax asset balance for realizability. To the extent the Company believes it is more likely than not that some portion of its deferred tax assets will not be realized, the Company will increase the valuation allowance against the deferred tax assets. Realization of the Company’s deferred tax assets is dependent primarily upon future U.S. taxable income. The Company’s judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require possible material adjustments to

From time to time, the Company receives notices that its products or manufacturing processes may be infringing the patent or intellectual property rights of others. The Company periodically assesses each matter in order to determine if a contingent liability in accordance with Statement of Financial Accounting Standards No. 5 (SFAS 5), “Accounting for Contingencies,” should be recorded. In making this determination, management may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts. Based on the information obtained combined with management’s judgment regarding all the facts and circumstances of each matter, the Company determines whether it is probable that a contingent loss may be incurred and whether the amount of such loss can be estimated. Should a loss be probable and estimable, the Company records a contingent loss in accordance with SFAS 5. In determining the amount of a contingent loss, the Company takes into consideration advice received from experts in the specific matter, current status of legal proceedings, settlement negotiations which may be ongoing, prior case history and other factors. Should the judgments and estimates made by management be incorrect, the Company may need to record additional contingent losses that could materially adversely impact the Company’s results of operations. Alternatively, if the judgments and estimates made by management are incorrect and a particular contingent loss does not occur, the contingent loss recorded would be reversed thus favorably impacting the Company’s results of operations. See “Item 3., Legal Proceedings” at page 15.

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment portfolio, which includes primarily U.S. Treasury and Federal Agency debt securities. Investments mature at frequent intervals during the year, at which time the funds are available for use in the business, or for reinvestment, as cash demands dictate. The Company places its investments only in high-quality financial instruments, limits the amount invested in any one institution or instrument, and limits portfolio duration. This policy is intended to reduce default risk, market risk, and reinvestment risk. The Company does not use derivative financial instruments in its investment portfolio. The fair value of the Company’s investment portfolio and related interest income would not be materially impacted by a change in market interest rates of 100 basis points, due to the primarily short-term nature of the Company’s investment portfolio. At June 29, 2002, the Company’s investment portfolio had an expected weighted average return of 2.8% (5.0% at June 30, 2001) and a weighted maturity of 147 days (303 days at June 30, 2001).

The Company transacts business in various non-U.S. currencies, primarily the Japanese Yen, British Pound, and the Euro. The Company is exposed to fluctuations in foreign currency exchange rates on accounts receivable from sales in these foreign currencies and the net monetary assets and liabilities of the related foreign subsidiary. The Company has established risk management strategies designed to protect against reductions in value and volatility of future cash flows caused by changes in exchange rates. These strategies reduce, but do not always entirely eliminate, the impact of currency exchange movements.

Currency forward contracts are used to offset the currency risk of non-U.S. dollar-denominated assets and liabilities. Changes in fair value of the underlying assets and liabilities are generally offset by the changes in fair value of the related currency forward contract. The net realized and unrealized gains or losses from hedging non-U.S. dollar denominated assets and liabilities was immaterial in fiscal year 2002. The Company had forward contracts to buy and sell foreign currencies with a U.S. dollar equivalent of $59.3 million at June 29, 2002. The fair value of these contracts, which generally have maturities of less than 3 months, at June 29, 2002 was $56.0 million.

Reference is made to the financial statements and supplemental data required by this item and set forth at the pages indicated in item 14(a) of this Report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Other than as follows, the information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders under the headings “Proposal 1 — Election of Directors” and “Compliance with Section 16(a) of the Securities Exchange Act of 1934.”

The officers of the Company, including executive officers and other Vice Presidents, are as follows:

Mr. Gifford, a founder of the Company, has served as President, Chief Executive Officer and Chairman of the Board since the Company’s incorporation in April 1983.

Mr. Beck, a founder of the Company, has served as Vice President since May 1983, except for a medical leave between December 1991 and January 1994.

Mr. Doluca joined Maxim in October 1984 and was promoted to Vice President in July 1994. Prior to July 1994, he served in a number of integrated circuit development positions.

Dr. Gal joined Maxim in April 1999 as Vice President. Prior to joining Maxim, he was with Applied Micro Circuits Corporation where he served as Vice President of Engineering from January 1997 to April 1999. Before joining Applied Micro Circuits Corporation, Dr. Gal’s tenure included eleven years at Unisys Corporation (1983-1994) and three years at Motorola Inc. (1994-1997) in various technical and management positions.

Mr. Georges joined Maxim in June 1983 and was promoted to Vice President in June 2000.

Mr. Ghaffaripour joined Maxim in March 1999 and was promoted to Vice President in January 2001. Prior to joining Maxim, he was with National Semiconductor Corporation from 1990 to 1999 where he held various technical and management positions, most recently including that of Product Line Director for the Audio Business Unit.

Ms. Gilbert joined Maxim in November 1986 and was promoted to Vice President in July 2001.

Mr. Hale joined Dallas Semiconductor Corporation in June 1987 and served as Vice President and Chief Financial Officer of Dallas Semiconductor Corporation since 1992. He became an officer of Maxim upon the consummation of the merger between the Company and Dallas Semiconductor Corporation in April 2001.

Mr. Hood, a founder of the Company, joined the Company in June 1983 and was promoted to Vice President in February 1997. Prior to February 1997, he served in a number of engineering and manufacturing positions.

Mr. Huening joined Maxim in December 1983 and was promoted to Vice President in December 1993. Prior to December 1993, he served in a number of quality assurance positions.

Mr. Jasper joined Maxim in May 1998 as the Principal Accounting Officer and was promoted in April 1999 to Vice President and Chief Financial Officer. Prior to joining Maxim, he was with Read-Rite Corporation from November 1995 to April 1998, where he held the position of Vice President, Corporate Controller, and prior to that was with Ernst & Young LLP from September 1983 to November 1995.

Dr. Navid joined Maxim in May 1997 as Vice President. Prior to joining Maxim and since 1980, he was with Philips Semiconductors, where he served in a number of technical and management positions for the wireless communications product line.

Mr. Parvarandeh joined Maxim in August 1988 and was promoted to Vice President in July 1997. Prior to July 1997, he served in a number of integrated circuit development positions.

Mr. Rigg joined Maxim in August 1996 as Managing Director and General Counsel and was promoted to Vice President in April 1999. Prior to joining Maxim, he was with Ropers, Majeski, Kohn and Bentley from 1970 to 1996 where he held various positions, including director.

Ms. Smith-Lenox joined Maxim in October 1999 as Principal Accounting Officer. Prior to joining Maxim, she was with Hewlett Packard Company from September 1983 to October 1999, where she held various management positions in Accounting and Finance, most recently that of Controller. Prior to that she was with KPMG, San Francisco, from 1980 to 1983.

Mr. Ullal joined Maxim in December 1989 and was promoted to Vice President in March 1996. Prior to March 1996, he served in a number of wafer fab operation positions.

The information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders under the headings “Executive Compensation” and “Performance Graph.”

The information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders under the heading “Security Ownership of Certain Beneficial Owners and Management.”

The information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders under the heading “Certain Relationships and Related Transactions.”


	(2) Financial Statement Schedule.

	The following financial statement schedule is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the financial statements.


	All other schedules are omitted because they are not applicable, or because the required information is included in the consolidated financial statements or notes thereto.

	(3) The Exhibits filed as a part of this Report are listed in the attached Index to Exhibits.

The financial statement schedule required by this Item is listed under Item 14(a), above.

Maxim Integrated Products, Inc. (the Company) designs, develops, manufactures, and markets linear and mixed-signal integrated circuits and is incorporated in the state of Delaware. The Company’s products include data converters, interface circuits, microprocessor supervisors, operational amplifiers, power supplies, multiplexers, delay lines, real-time clocks, microcontrollers, switches, battery chargers, battery management circuits, RF circuits, fiber optic transceivers, sensors, and voltage references. The Company is a global company with manufacturing facilities in the United States, testing facilities in the Philippines and Thailand, and sales offices throughout the world. The Company’s products are sold to customers in numerous markets, including automotive, communications, consumer, industrial control, instrumentation, and data processing.

In the fourth quarter of fiscal year 2001, the Company acquired Dallas Semiconductor Corporation (Dallas Semiconductor), a leading supplier of specialty semiconductors. At the completion of the merger, Dallas Semiconductor became a wholly owned subsidiary of the Company. The transaction was accounted for as a pooling-of-interests for financial reporting purposes in accordance with accounting principles generally accepted in the United States, and accordingly, all financial data of the Company presented in these financial statements was restated to include the historical financial data of Dallas Semiconductor. See Note 3 “Business Combination” of these Notes to Consolidated Financial Statements regarding this transaction.

The consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated. The Company has a 52-to-53-week fiscal year that ends on the last Saturday of June. Accordingly, every sixth or seventh year will be a 53-week fiscal year. Fiscal years 2002 and 2000 were 52-week years. Fiscal year 2001 was a 53-week year. The impact of the additional week on the Company’s operating results consisted primarily of additional salary-related expenses. These additional expenses were not material.

Certain amounts in the prior-year financial statements in Note 6 “Property, Plant, and Equipment” and Note 11 “Income Taxes” of these Notes to Consolidated Financial Statements have been reclassified to conform to the current year’s presentation.

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of demand accounts, government securities, and money market funds. Short-term investments consist primarily of U.S. Treasury and Federal Agency debt securities with original maturities beyond three months.

All of the Company’s cash equivalents and short-term investments are considered available-for-sale. Such securities are carried at fair market value based on market quotes. Unrealized gains and losses, net of tax, on securities in this category are reported as a separate component of stockholders’ equity. The cost of securities sold is based on the specific identification method. Interest earned on securities is included in “Interest income and other, net” in the consolidated statements of income.

reductions in value and volatility of future cash flows caused by changes in exchange rates. These strategies reduce, but do not always entirely eliminate, the impact of currency exchange movements.

Currency forward contracts that are used to hedge exposure to variability in anticipated non-U.S.-dollar-denominated cash flows are designated as cash flow hedges. The maturities of these instruments are generally less than 3 months. The Company had forward contracts to buy and sell foreign currencies with a U.S. dollar equivalent of $59.3 million at June 29, 2002. For these derivatives, the effective portion of the gain or loss is reported as a component of other comprehensive income (loss) in stockholders’ equity and is reclassified into earnings in the same period or periods in which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in earnings, net during the period of change. During fiscal year 2002, the portion of hedging instruments’ gains or losses excluded from the assessment of effectiveness and the ineffective portions of hedges had an immaterial impact on earnings for either cash flow or fair value hedges.

Currency forward contracts are used to offset the currency risk of non-U.S. dollar-denominated assets and liabilities. Changes in fair value of the underlying assets and liabilities are generally offset by the changes in fair value of the related derivatives. The net realized and unrealized gains or losses from hedging non-U.S. dollar denominated assets and liabilities was immaterial in fiscal year 2002. The realized and unrealized amounts will fluctuate based on changes in the fair value of open contracts at the end of each reporting period.

For currency forward contracts, effectiveness of the hedge is measured using forward rates to value the forward contract and the forward value of the underlying hedged transaction. Any ineffective portions of the hedge, as well as amounts not included in the assessment of effectiveness, are recognized currently in interest and other income, net. If a cash flow hedge were to be discontinued because it is probable that the original hedged transaction will not occur as anticipated, the unrealized gains or losses would be reclassified into earnings. Subsequent gains or losses on the related derivative instrument would be recognized in income in each period until the instrument matures, is terminated or is sold. In fiscal year 2002 no cash flow hedges were discontinued as a result of forecasted transactions that did not occur.

As of June 29, 2002, the Company had forward exchange contracts with a cost basis of $59.3 million and an estimated fair value of $56.0 million.

Property, plant and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets, which range from 2 to 40 years. Leasehold improvements are amortized over the lesser of their useful lives or the remaining term of the related lease. The Company evaluates the recoverability of property, plant and equipment in accordance with Statement of Financial Accounting Standards No. 121 (SFAS 121), “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.” The Company performs periodic reviews to determine whether facts and circumstances exist that would indicate that the carrying amounts of property, plant and equipment

exceeds their fair values. If facts and circumstances indicate that the carrying amount of property, plant and equipment might not be fully recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful life is compared against their respective carrying amounts. In the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets.

Revenue from product sales to the Company’s direct customers is recognized upon shipment provided that persuasive evidence of a sales arrangement exists, the price is fixed and determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements and there are no remaining significant obligations.

Based on historical returns, changes in customer demand, and acceptance of products, the Company records product return and sales allowances to current period revenue as needed.

Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the Consolidated Statements of Income. Advertising expenses were $13.6 million, $18.7 million, and $17.1 million in fiscal years 2002, 2001, and 2000, respectively.

The U.S. dollar is the functional currency for the Company’s foreign operations. Using the U.S. dollar as the functional currency, monetary assets and liabilities are remeasured at the year-end exchange rates. Certain non-monetary assets and liabilities are remeasured using historical rates. Statements of operations are remeasured at the average exchange rates during the year. Net gains and losses from foreign currency remeasurements have been minimal and are included in selling, general and administrative expenses.

The Company accounts for its stock option and employee stock purchase plans in accordance with provisions of the Accounting Principles Board’s Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees.” In addition, the Company discloses pro forma information related to its stock plans according to Financial Accounting Standards Board Statement No. 123 (SFAS 123), “Accounting for Stock Based

Compensation. See Note 9 “Employee Stock and Benefit Plans” of these Notes to Consolidated Financial Statements.

Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options. The number of incremental shares from the assumed issuance of stock options is calculated applying the treasury stock method. See Note 10 “Earnings Per Share” of these Notes to Consolidated Financial Statements.

In July 2001, the Financial Accounting Standards Boards issued Statement of Financial Accounting Standards No. 141 (SFAS 141), “Business Combinations”, and Statement of Financial Accounting Standards No. 142 (SFAS 142) “Goodwill and Other Intangible Assets”. SFAS 141 requires the use of the purchase method for all business combinations initiated after June 30, 2001, and provides new criteria for determining whether an acquired intangible asset should be recognized separately from goodwill. SFAS 142 eliminates the amortization of goodwill and replaces it with an impairment-only model. The provisions of SFAS 141 and SFAS 142 will be effective for fiscal years beginning after December 15, 2001. The Company adopted SFAS 141 and 142 effective June 30, 2002 and believes that these standards will not have a material impact on the Company’s financial condition, results of operations or liquidity.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 144 supersedes SFAS 121 and addresses financial accounting and reporting for the long-lived assets to be held and used, and disposed of. The statement will be effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company adopted SFAS 144 effective June 30, 2002 and believes that this standard will not have a material impact on the Company’s financial condition, results of operations or liquidity.

In July 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146 (SFAS 146), “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS 146 addresses the financial accounting and reporting for obligations associated with an exit activity, including restructuring, or with a disposal of long-lived assets. Exit activities include, but are not limited to, eliminating or reducing product lines, terminating employees and contracts and relocating plant facilities or personnel. SFAS 146 specifies that a company will record a liability for a cost associated with an exit or disposal activity only when that liability is incurred and can be measured at fair value. Therefore, commitment to an exit plan or a plan of disposal expresses only management’s intended future actions and, therefore, does not meet the requirement for recognizing a liability and the related expense. SFAS 146 is effective prospectively for exit or disposal activities initiated after December 31, 2002, with earlier adoption encouraged. The Company adopted SFAS 146 effective June 30, 2002 and believes that this standard will not have a material impact on the Company’s financial condition, results of operations or liquidity.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates relate to the useful lives and fair value of fixed assets, allowances for doubtful accounts and customer returns, inventory reserves, potential reserves relating to litigation matters, accrued liabilities, and other reserves.

Actual results may differ from those estimates, and such differences may be material to the financial statements.

Due to the Company’s credit evaluation and collection process, bad debt expenses have not been significant. Credit risk with respect to trade receivables is limited, because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the credit risk. While a significant portion of the Company’s revenues is made through domestic and international distributors, no single customer has accounted for greater than 10% of net revenues in the last three fiscal years.

The Company maintains cash, cash equivalents, and short-term investments with various high credit quality financial institutions, limits the amount of credit exposure to any one financial institution or instrument, and is exposed to credit risk in the event of default by these institutions to the extent of amounts recorded at the balance sheet date. To date, the Company has not incurred losses related to these investments.

The semiconductor industry is characterized by rapid technological change, competitive pricing pressures, and cyclical market patterns. The Company’s results of operations are affected by a wide variety of factors, including general economic conditions, both at home and abroad; economic conditions specific to the semiconductor industry and to the analog portion of that industry; demand for the Company’s products; the timely introduction of new products; implementation of new manufacturing technologies; manufacturing capacity; the ability to manufacture efficiently; the availability of materials and supplies; competition; the ability to safeguard patents and intellectual property in a rapidly evolving market; and reliance on assembly and, to a small extent, wafer fabrication subcontractors and on independent distributors and sales representatives. As a result, the Company may experience substantial period-to-period fluctuations in future operating results due to the factors mentioned above or other factors.

In the fourth quarter of fiscal year 2001, the Company acquired Dallas Semiconductor, a leading supplier of specialty semiconductors. The Company issued approximately 41.0 million shares of its common stock in exchange for all the outstanding common stock of Dallas Semiconductor. In addition, the Company exchanged all options to purchase Dallas Semiconductor common stock for options to purchase approximately 5.9 million shares of the Company’s common stock. The transaction was accounted for as a pooling-of-interests and qualifies as a tax-free reorganization. As a result of the acquisition, during the fourth quarter of fiscal year 2001, the Company recorded merger costs of $26.4 million. In addition, the Company recorded special charges of $137.0 million in the fourth quarter of fiscal year 2001. The special charges resulted from the significant decrease in demand that occurred during the fourth quarter of fiscal year 2001 for Dallas Semiconductor products in combination with the Company’s plan for the utilization of Dallas Semiconductor’s long-lived assets. See “Merger and Special Charges” in Note 13 of these Notes to Consolidated Financial Statements.

All financial data of the Company presented in these financial statements was restated to include the historical financial data of Dallas Semiconductor in accordance with accounting principles generally accepted in the United States and pursuant to Regulation S-X of the Securities and Exchange Commission. Adjustments relating to deferral of income on shipments to distributors were required to conform the accounting policies of the acquired company. Both the Company and Dallas Semiconductor have sales to domestic distributors under agreements that provide for certain price rebates, allowances and return privileges. The Company defers recognition of these sales until the merchandise is sold by the domestic distributors. Dallas Semiconductor recognized these sales, which were reduced by estimated future price reductions and

returns, upon shipment to domestic distributors. These adjustments reflect the conformity of Dallas Semiconductor’s accounting policies and presentation to that of the Company’s.

The Company and Dallas Semiconductor had certain differences in the classification of revenues and expenses in their historical statements of operations and assets and liabilities in their historical balance sheets. Adjustments have been made to conform the combined companies’ income statement and balance sheet classifications. In addition, the lives of the property, plant and equipment acquired as part of the merger with Dallas Semiconductor were conformed to the lives used by the Company as appropriate. The change, which was prospective in nature, reflects the Company’s anticipated economic benefit from those assets.

The Company’s statement of income for the fiscal year ended June 24, 2000 was combined with the Dallas Semiconductor statement of income for the fiscal year ended December 31, 2000. The Company’s statement of income for the fiscal year ended June 30, 2001 includes the results of operation for Dallas Semiconductor for the 12 months ended June 30, 2001. This presentation has the effect of including Dallas Semiconductor’s results of operations for the 6-month period ended December 31, 2000 in both the Company’s fiscal year ended June 24, 2000 and June 30, 2001. Net revenues and net income for Dallas Semiconductor for the 6-month period ended December 31, 2000, were $270.4 million and $48.9 million, respectively. The net income for Dallas Semiconductor for the 6-month period ended December 31, 2000, of $48.9 million has been reported as a decrease to the Company’s fiscal year 2001 retained earnings within the Consolidated Statement of Stockholders’ Equity for the year ended June 30, 2001.

The combined periods for the Consolidated Statements of Income are summarized as follows:

The results of operations previously reported by the separate entities and the combined amounts presented in the accompanying financial statements are summarized below:

In accordance with Statement of Financial Accounting Standard No. 115 (SFAS 115), “Accounting for Certain Investments in Debt and Equity Securities,” the Company recorded an unrealized holding gain of $3.2 million on short-term investments at June 29, 2002 ($7.2 million at June 30, 2001). The unrealized holding gain resulted from a decline in interest rates that occurred during fiscal year 2002. Fair market values are calculated based upon prevailing market quotes at the end of each fiscal year.

Available-for-sale investments, all of which have contractual maturities of one year or less, at June 29, 2002 were as follows:

Gross realized gains or losses for fiscal years 2002, 2001, and 2000 were immaterial.

At June 29, 2002, and June 30, 2001, the Company held forward exchange contracts, all having maturities of less than one year, to exchange various foreign currencies for U.S. dollars in the amount of $59.3 million and $63.6 million, respectively. The table below summarizes, by currency, the notional amounts of the Company’s forward exchange contracts and net unrealized gain or loss at the end of fiscal years 2002 and 2001. The net unrealized gain or loss approximates the carrying value of these contracts.

The net unrealized gain, if any, is potentially subject to market and credit risk as it represents appreciation of the hedge position over the spot exchange rates at year-end. The Company controls credit risk through credit approvals and monitoring procedures.

During fiscal year 2001, the Company recorded charges of $39.2 million to cost of goods sold and $11.2 million to research and development costs to reduce the carrying value of plant and equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation. In addition, in the fourth quarter of fiscal year 2001, the Company recorded impairment charges of $124.4 million related to the long-lived assets of Dallas Semiconductor. See Note 13 “Merger and Special Charges” of these Notes to Consolidated Financial Statements. During fiscal year 2000, the Company recorded charges of $27.1 million to cost of goods sold and $8.1 million to research and development costs to reduce the carrying value of plant and equipment that was abandoned, no longer in use, or whose estimated useful lives were shortened, resulting in accelerated depreciation.

On June 26, 1997, a complaint was filed by Linear Technology Corporation (“LTC”) naming the Company and certain other unrelated parties as defendants. The complaint alleges that each of the defendants, including the Company, has willfully infringed, induced infringement and contributorily infringed LTC’s United States Patent 5,481,178 relating to control circuits and methods for maintaining high efficiencies over broad current ranges in a switching regulator circuit, all of which has allegedly damaged LTC in an unspecified amount. The complaint further alleges that the Company’s actions have been, and continue to be, willful and deliberate and seeks a permanent injunction against the Company as well as unspecified actual and treble damages including costs, expenses, and attorneys fees. The Company answered the complaint on

October 20, 1997, denying all of LTC’s substantive allegations and counterclaiming for a declaration that LTC’s patent is invalid and not infringed.

In addition to the above, the Company is subject to other legal proceedings and claims that arise in the normal course of its business. The Company does not believe that the ultimate outcome of these matters will have a material adverse effect on the financial position of the Company.

The Company leases certain of its facilities under various operating leases that expire at various dates through 2010. The lease agreements generally include renewal provisions and require the Company to pay property taxes, insurance, and maintenance costs.

Rent expense was approximately $3.0 million, $3.7 million, and $2.7 million in fiscal years 2002, 2001, and 2000, respectively.

Comprehensive income consists of net income and net unrealized gains (losses) on available-for-sale investments and forward exchange contracts. The components of other comprehensive income (loss) and related tax effects were as follows:

Accumulated other comprehensive loss presented in the Consolidated Balance Sheets at June 29, 2002 consists of net unrealized gains on available-for-sale investments of $2.1 million, net unrealized losses on forward exchange contracts of $(1.5) million, and foreign currency translation adjustments of $(1.5) million. Foreign currency translation adjustments are not tax affected.

At June 29, 2002, the Company has reserved a total of 96,295,559 of its common shares for issuance to employees and certain others under its 1996 Stock Incentive Plan, 1993 Officer and Director Stock Option Plan, 1987 Stock Option Plan, 1987 Supplemental Stock Option Plan, 1983 Incentive Stock Option Plan, 1987 Employee Stock Participation Plan (ESP Plan), 1988 Nonemployee Director Stock Option Plan, and Supplemental Nonemployee Stock Option Plan. Under the plans, options are generally granted at a price not less than fair market value as determined by the Board or Plan administrator at the date of grant. Subject to certain limitations, the Board or Plan administrator has authority to make grants at prices less than fair market value. Options granted under the stock option plans described above generally vest within 5 years and expire from 5 to 10 years from the date of the grant or such shorter term as may be provided in the agreement. Under the 1987 Employee Stock Participation Plan and, until April 11, 2001, the Dallas Semiconductor Stock Purchase Plan, employees of the Company may purchase shares of common stock at a price not less than the lesser of 85% of the fair market value of the stock on the date the purchase right is granted or the date the right is exercised. During fiscal 2002, the Company recorded $139,987,000 of tax benefit on the exercise of nonqualified stock options and on disqualifying dispositions under stock plans ($238,934,000 in fiscal year 2001 and $154,958,000 in fiscal year 2000).

Information with respect to activity under the stock option plans and ESP Plan is set forth below:

At June 29, 2002, 36,116,676 options to purchase shares of common stock were exercisable. Options exercisable at June 30, 2001 and June 24, 2000 were 33,070,686 and 32,811,193, respectively.

The following table summarizes information about options outstanding at June 29, 2002:

Under SFAS 123, the Company may elect to continue to account for the grant of stock options under APB Opinion 25, in which options granted with an exercise price equal to the fair market value on the date of grant do not require recognition of expense in the Company’s financial statements. Under SFAS 123, the Company is, however, required to provide pro forma disclosure regarding net income and earnings per share as

if the Company had accounted for its employee stock options (including shares issued under the 1996 Stock Incentive Plan, 1993 Officer and Director Stock Option Plan, 1987 Stock Option Plan, 1987 Supplemental Stock Option Plan, 1988 Nonemployee Director Stock Option Plan, and Supplemental Nonemployee Stock Option Plan, collectively called “options”) granted subsequent to June 30, 1995, under the methodology prescribed by that statement. Since the Company has elected to account for the grant of options under APB Opinion No. 25, the following information is for disclosure purposes only.

The valuation of options granted in fiscal years 2002, 2001, and 2000 reported below has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate of value, in the opinion of management, the existing models do not provide a reliable single measure of the value of the options. The following is a summary of weighted average grant date values generated by application of the Black-Scholes model:

As required under SFAS 123, the reported net income and earnings per share have been presented to reflect the impact had the Company been required to include the amortization of the Black-Scholes option value as an expense. The adjusted amounts are as follows:

The Company sponsors a 401(k) retirement plan (401(k) Plan) under which full-time U.S. employees may contribute, on a pretax basis, between 1% and 20% of their total annual income from the Company, subject to a maximum aggregate annual contribution imposed by the Internal Revenue Code. Company contributions to the 401(k) Plan were $2.6 million, $3.0 million, and $2.5 million in fiscal years 2002, 2001 and 2000, respectively.

The following table sets forth the computation of basic and diluted earnings per share:

Approximately 11.8 million, 3.9 million, and 1.0 million of the Company’s stock options were excluded from the calculation of diluted earnings per share for fiscal years 2002, 2001, and 2000, respectively. These options were excluded, as they were antidilutive; however, such options could be dilutive in the future.

Pretax income from foreign operations was approximately $22.7 million, $9.2 million, and $17.4 million for the years ended June 29, 2002, June 30, 2001, and June 24, 2000, respectively.

The Company enjoys tax holidays with respect to its operations in Thailand and certain of its operations in the Philippines. Some of the Company’s tax holidays expired in fiscal year 2002 and some will expire in fiscal year 2004. The impact of these tax holidays was to increase net income by approximately $1.6 million ($0.005 diluted earnings per share), $1.1 million ($0.003 diluted earnings per share), and $2.7 million ($0.008 diluted earnings per share) during fiscal years 2002, 2001, and 2000, respectively. At June 29, 2002,

accumulated pretax earnings of approximately $17.7 million are intended to be permanently reinvested outside the United States, and no federal tax has been provided on these earnings.

The provision for income taxes differs from the amount computed by applying the statutory rate as follows:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows:

The valuation allowance of $141.7 million is attributable to the tax benefits on gains realized from the exercise of stock options, and when realized, will be recorded as a credit to additional paid-in-capital. Realization of the net deferred tax assets is dependent upon the Company’s ability to generate future taxable income.

The Company operates and tracks its results in one reportable segment. The Company designs, develops, manufactures and markets a broad range of linear and mixed-signal integrated circuits. The Chief Executive

Officer has been identified as the Chief Operating Decision Maker as defined by Statement of Financial Accounting Standard No. 131 (SFAS 131), “Disclosures about Segments of an Enterprise and Related Information.”

Enterprise-wide information is provided in accordance with SFAS 131. Geographical revenue information is based on the customer’s bill-to location. Long-lived assets consist of property, plant and equipment. Property, plant and equipment information is based on the physical location of the assets at the end of each fiscal year.

As a result of the merger with Dallas Semiconductor, during the fourth quarter of fiscal year 2001, the Company recorded merger costs of approximately $26.4 million. These costs consist of approximately $14.1 million intended to satisfy the change in control payments under previously existing employment contracts and other non-employee director arrangements for which there was no future economic benefit; a $5.8 million payment to be made under a change in control provision in a previously existing life insurance arrangement for which there was no future economic benefit; and $6.5 million for fees related to investment banking, legal, accounting, filings with regulatory agencies, financial printing, and other related costs. Approximately $6.6 million of the direct transaction costs were paid out of existing cash reserves in fiscal year 2002. The remaining unpaid direct transaction costs of approximately $1.7 million are related to change in control payments under previously existing employment contracts and other non-employee director arrangements that will be paid out in future periods according to the terms of the related agreement.

significant portion of its test operations of the combined company at the Company’s test facilities located in the Philippines and Thailand. The Company concluded that the above facts indicated that Dallas Semiconductor’s long-lived assets might be impaired, and as required by accounting principles generally accepted in the United States, performed a cash flow analysis of the related assets. Based on the cash flow analysis, the cash flows expected to be generated by Dallas Semiconductor’s long-lived assets during their estimated remaining useful lives were not sufficient to recover the net book value of the assets. Based on the cash flow analysis, an impairment charge of $124.4 million was recorded to reduce the net book value of Dallas Semiconductor’s long-lived assets to fair value. The Company continued construction of the 8-inch wafer manufacturing facility located in Dallas, Texas during fiscal year 2002 although at a slower pace than originally anticipated due to unforeseen complexities and resource constraints related to converting existing 6-inch processes to 8-inch processes. The Company plans to complete construction and start up of the 8-inch wafer manufacturing facility in fiscal year 2003. The concentration of test operations of the combined company noted above was completed in fiscal year 2002 as planned.

The following table summarizes the activity related to the above actions for the fiscal years ended June 29, 2002 and June 30, 2001:

Following the extraordinary events on September 11, 2001, the Securities and Exchange Commission issued an Emergency Order pursuant to Section 12(k)(2) of the Securities Exchange Act of 1934. This Emergency Order was issued to temporarily ease the restrictions of Rule 10 b-18 during the five business days following the opening of the U.S. securities market on September 17, 2001. The Emergency Order also provided that, despite pooling-of-interests provisions in Accounting Principles Board Opinion No. 16, Business Combinations, and the related interpretations of the American Institute of Certified Public Accountants, consensuses of the Financial Accounting Standards Board’s Emerging Issues Task Force, rules and regulations of the Commission and interpretations by its staff, and other authoritative accounting guidance, a company could continue to account for its business combination transactions as a pooling-of-interests if it repurchased its own common stock pursuant to the Emergency Order. Subsequently, the Securities Exchange Commission extended this Emergency Order to September 28, 2001. As a result of the Emergency Order, the Company authorized the repurchase of up to 10 million shares of its common stock for the ten business days following the opening of the U.S. securities markets on September 17, 2001. During the period from September 17, 2001 to September 28, 2001, the Company repurchased approximately 8.2 million shares of its common stock for $286.6 million.

On September 28, 2001, the Securities and Exchange Commission issued an Exemptive Order to respond to market developments. Similar to its previously issued Emergency Order, the Exemptive Order eased the restrictions of Rule 10b-18 and provided that, despite pooling-of-interests provisions in Accounting Principles Board Opinion No. 16, Business Combinations, and the related interpretations of the American Institute of Certified Public Accountants, consensuses of the Financial Accounting Standards Board’s Emerging Issues Task Force, rules and regulations of the Commission and interpretations by its staff, and other authoritative accounting guidance, a company could continue to account for its business combination transactions as a pooling-of-interests if it repurchased its own common stock pursuant to the Exemptive Order during the period from October 1, 2001 to October 12, 2001. On October 1, 2001 the Company increased the number of shares authorized to be repurchased to 15 million, and during the period from October 1, 2001 to October 12, 2001, the Company repurchased 2.0 million shares of its common stock for $67.8 million. To the extent that

the Board’s authorization on October 1, 2001 to repurchase shares of the Company’s common stock was not fully executed by October 12, 2001, that authorization was rescinded.

Due to decreases in market interest rates that occurred during fiscal 2002, in combination with investments maturing during the six months ended June 29, 2002, which had a high rate of return that would have been reinvested at a much lower rate of return, the Company determined it would be a more effective use of its funds to repurchase its common stock rather than reinvesting maturing amounts. Given prevailing market interest rates combined with the market price of the Company’s common stock, the Company concluded that repurchases of common stock would be accretive to earnings. In light of the above, on February 28, 2002, the Board of Directors authorized the repurchase of the Company’s common stock from time to time at the discretion of the Company’s management. The Board of Directors further defined this authority during the third and fourth quarters of fiscal year 2002, when it approved extensions of the share repurchase authorization announced on February 28, 2002. These extensions authorize the Company to repurchase up to 20 million shares of its common stock from time to time between the dates of such authorization and the end of the Company’s fiscal year 2003.

During the six months ended June 29, 2002, the Company repurchased approximately 10.0 million shares of its common stock for $509.6 million. As of June 29, 2002, approximately 10.9 million shares remained available under the repurchase authorization. The number of shares to be repurchased and the timing of such repurchases will be based on several factors, including the price of the Company’s common stock, general market and business conditions, and other factors.

During the period June 30, 2002 through September 13, 2002, the Company repurchased 2.0 million shares for $69.0 million.

Net income for the quarter ended June 30, 2001, included merger and special charges of $163.4 million ($0.30 diluted earnings per share). Excluding the merger and special charges noted above, net income and diluted net income per share would have been $91.7 million and $0.25, respectively, for the quarter ended June 30, 2001. See Note 13 “Merger and Special Charges” to these Notes to Consolidated Financial Statements for additional information on the “Merger and Special Charges.”

We have audited the accompanying consolidated balance sheets of Maxim Integrated Products, Inc., as of June 29, 2002 and June 30, 2001, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended June 29, 2002. Our audits also included the financial statement schedule listed in the Index at Item 14(a).These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We did not audit the financial statements and schedule of Dallas Semiconductor Corporation, a wholly owned subsidiary, which statements and schedule reflect total assets of $728.4 million as of December 31, 2000, total revenues of $517.0 million for the year then ended and Additions Charged to Costs and Expenses, Deductions, and a Balance at End of Period of $1,000, $4,000, and $477,000 as of and for the year ended December 31, 2000 respectively. Those statements and schedule were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for Dallas Semiconductor for the year ended December 31, 2000, is based solely on the report of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Maxim Integrated Products, Inc., at June 29, 2002 and June 30, 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 29, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


	By:	/s/ CARL W. JASPER



	Carl W. Jasper
	Vice President and Chief Financial Officer
	(For the Registrant and as Principal Financial Officer)


	By:	/s/ SHARON E. SMITH-LENOX



	Sharon E. Smith-Lenox
	Corporate Controller
	(Principal Accounting Officer)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of John F. Gifford, Carl W. Jasper and Sharon E. Smith-Lenox as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


	1. I have reviewed this annual report on Form 10-K of Maxim Integrated Products, Inc.;

	2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and

	3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.


	1. I have reviewed this annual report on Form 10-K of Maxim Integrated Products, Inc.;

	2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and

	3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

At June 29, 2002, there were approximately 2,214 stockholders of record of the Company’s common stock. Maxim common stock is traded on the Nasdaq National Market under the symbol “MXIM”.

The annual meeting of stockholders will be on Thursday, November 14, 2002 at 11:00 a.m. at the Company’s Event Center, 433 Mathilda Avenue, Sunnyvale, California 94086.


(1)	Incorporated by reference to the exhibit with the corresponding exhibit number in the Company’s Annual Report on Form 10-K for the year ended June 30, 1995.


(2)	Incorporated by reference to the exhibit with the corresponding exhibit number in the Company’s Annual Report on Form 10-K for the year ended June 30, 1997, to the exhibit with the corresponding exhibit number in the Company’s Annual Report on Form 10-K for the year ended June 30, 1998, to the exhibit with the corresponding exhibit number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 25, 1999, and to the exhibit with the corresponding exhibit number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2000.

(3)	Incorporated by reference to exhibit 10.7 in the Company’s Annual Report on Form 10-K for the year ended June 30, 1994.

(4)	Incorporated by reference to exhibit 10.34 in the Company’s Registration Statement on Form S-1 (File No. 33-19561).

(5)	Incorporated by reference to the exhibit with the corresponding exhibit number in the Company’s Annual Report on Form 10-K for the year ended June 30, 1995.

(6)	Incorporated by reference to the exhibit with the corresponding exhibit number in the Company’s Annual Report on Form 10-K for the year ended June 27, 1998.

(7)	Incorporated by reference to the exhibit with the corresponding exhibit number in the Company’s Annual Report on Form 10-K for the year ended June 30, 2001.

EX-3.4 3 f84464exv3w4.txt EXHIBIT 3.4 EXHIBIT 3.4 BYLAWS AS AMENDED THROUGH SEPTEMBER 10, 2002 OF MAXIM INTEGRATED PRODUCTS, INC. (A DELAWARE CORPORATION) BYLAWS OF MAXIM INTEGRATED PRODUCTS, INC. (A DELAWARE CORPORATION) ARTICLE I OFFICES Section 1. Registered Office. The registered office of the Corporation in the State of Delaware shall be in the City of Dover, County of Kent. Section 2. Other Offices. The Corporation shall also have and maintain an office or principal place of business in Sunnyvale, California, or at such other place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II CORPORATE SEAL Section 3. Corporate Seal. The Corporate seal shall consist of a die bearing the name of the Corporation and the inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE III STOCKHOLDERS' MEETINGS Section 4. Place of Meetings. (a) Meetings of stockholders may be held at such place, either within or without the State of Delaware, as may be designated by or in the manner provided in these bylaws or, if not so designated, as determined by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by paragraph (b) of this Section 4. (b) If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication: (1) Participate in a meeting of stockholders; and (2) Be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (A) the 1 Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (B) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (C) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation. (c) For purposes of this Section 4, "remote communication" shall mean electronic mail or other form of written or visual electronic communication satisfying the requirements of Section 13. Section 5. Annual Meeting. The annual meeting of the stockholders of the Corporation, for the purpose of election of Directors and for such other business as may lawfully come before it shall be held on such date and at such time as may be designated from time to time by the Board of Directors, or, if not so designated, then at 11 o'clock a.m. on the third Thursday in November in each year if not a legal holiday, and, if a legal holiday, at the same hour and place on the next succeeding day not a holiday. Section 6. Special Meetings. Special meetings of the stockholders of the Corporation may be called at any time, for any purpose or purposes, by the Board of Directors or by the holders of outstanding stock of the Corporation holding at least ten (10) percent of the voting power of the Corporation. Section 7. Notice of Meetings and Adjourned Meetings. (a) Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders, specifying the place, if any, date and hour and purpose or purposes of the meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote thereat, directed to his address as it appears upon the books of the Corporation; except that where the matter to be acted on is a merger or consolidation of the Corporation or a sale, lease or exchange of all or substantially all of its assets, such notice shall be given not less than 20 nor more than 60 days prior to such meeting. (b) If at any meeting action is proposed to be taken which, if taken, would entitle shareholders fulfilling the requirements of section 262(d) of the Delaware General Corporation Law to an appraisal of the fair value of their shares, the notice of such meeting shall contain a statement of that purpose and to that effect and shall be accompanied by a copy of that statutory section. (c) When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken unless the adjournment is for more than thirty days, or unless after the adjournment a new record date is fixed for the adjourned meeting, in which event a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (d) Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, either before or after such meeting, and, to the extent permitted by law, will be waived by any stockholder by his attendance thereat, in person or by proxy. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. (e) Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of this chapter, the 2 certificate of incorporation, or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if (i) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent, and (ii) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given pursuant to this subparagraph (e) shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of these bylaws, "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. Any shares, the voting of which at said meeting has been enjoined, or which for any reason cannot be lawfully voted at such meeting, shall not be counted to determine a quorum at such meeting. In the absence of a quorum any meeting of stockholders may be adjourned, from time to time, by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, all action taken by the holders of a majority of the voting power represented at any meeting at which a quorum is present shall be valid and binding upon the Corporation. Section 9. Adjournment of Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are present either in person or by proxy. Section 10. Voting Rights. (a) Except as otherwise provided by law, only persons in whose names shares entitled to vote stand on the stock records of the Corporation on the record date for determining the stockholders entitled to vote at said meeting shall be entitled to vote at such meeting. (b) Every person entitled to vote or to execute consents shall have the right to do so either in person or by an agent or agents authorized by a written proxy executed by such person or his duly authorized agent, which proxy shall be filed with the Secretary of the Corporation at or before the meeting at which it is to be used. Said proxy so appointed need not be a stockholder. No proxy shall be voted on after three (3) years from its date unless the proxy provides for a longer period. Unless and until voted, every proxy shall be revocable at the pleasure of the person who executed it or of his legal representatives or assigns, except in those cases where an irrevocable proxy permitted by statute has been given. All elections of Directors shall be by ballot, unless otherwise provided in the Certificate of Incorporation. Such ballot may be in writing executed by the stockholder or his proxyholder or it may be cast by electronic transmission, provided that the transmission includes information showing that the transmission was authorized by the stockholder or proxyholder. 3 (c) Without limiting the manner in which a stockholder may authorize another person or persons to act for him as proxy pursuant to subsection (b) of this section, the following shall constitute a valid means by which a stockholder may grant such authority: (1) A stockholder may execute a writing authorizing another person or persons to act for him as proxy. Execution may be accomplished by the stockholder or his authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature. (2) A stockholder may authorize another person or persons to act for him as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. Such authorization can be established by the signature of the stockholder on the proxy, either in writing or by a signature stamp or facsimile signature, or by a number or symbol from which the identity of the stockholder can be determined, or by any other procedure deemed appropriate by the inspectors or other persons making the determination as to due authorization. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information upon which they relied. (d) Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to subsection (c) of this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Section 11. Joint Owners of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the General Corporation Law of Delaware, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even split for the purpose of this subsection shall be a majority or even split in interest. Section 12. List of Stockholders. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. The Corporation need not include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to 4 stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Section 13. Action without Meeting. (a) Any action required by statute to be taken at any annual or special meeting of the stockholders, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. (b) Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the Corporation in the manner herein required, written consents signed by a sufficient number of stockholders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. (c) A telegram, cablegram or other electronic transmission consent to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this section, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the Corporation can determine (i) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder, and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in this State, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the Corporation or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded if to the extent and in the manner provided by resolution of the Board of Directors of the Corporation. (d) Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. 5 (e) No such action by written consent may be taken following the effectiveness of the registration of any class of securities of the Corporation under the Securities Exchange Act of 1934, as amended. Section 14. Organization. At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or, if the President is absent, the most senior Vice President present, or in the absence of any such officer, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting. ARTICLE IV DIRECTORS Section 15. Number and Term of Office. The number of Directors that shall constitute the whole of the Board of Directors shall be six (6) until November 14, 2002 as of which date the number of Directors that shall constitute the whole of the Board of Directors shall be five(5) . The number of authorized Directors may be modified from time to time by amendment of this Bylaw in accordance with the provisions of Section 43 hereof. Except as provided in Section 17, the Directors shall be elected by the stockholders at their annual meeting in each year and shall hold office until the next annual meeting and until their successors shall be duly elected and qualified, or until their death, resignation or removal. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the Directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws. Section 16. Powers. The powers of the Corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation. Section 17. Vacancies. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director, and each Director so elected shall hold office for the unexpired portion of the term of the Director whose place shall be vacant and until his successor shall have been duly elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Section 17 in the case of the death, removal or resignation of any Director, or if the stockholders fail at any meeting of stockholders at which directors are to be elected (including any meeting referred to in Section 19 below) to elect the number of Directors then constituting the whole Board of Directors. Section 18. Resignation. Any Director may resign at any time by delivering his resignation to the Secretary in writing or by electronic transmission, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more Directors shall resign from the Board of Directors, effective at a future date, a majority of the Directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take 6 effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office for the unexpired portion of the term of the Director whose place shall be vacated and until his successor shall have been duly elected and qualified. Section 19. Removal. At a special meeting of stockholders called for the purpose in the manner hereinabove provided, subject to the limitation set forth in Section 141(k) of the General Corporation Law of Delaware, the Board of Directors, or any individual Director, may be removed from office, with or without cause, and a new Director or Directors elected by a vote of stockholders holding a majority of the outstanding shares entitled to vote at an election of Directors. Section 20. Meetings. (a) Annual Meetings. The annual meeting of the Board of Directors shall be held immediately after the annual meeting of stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board of Directors shall be necessary and such meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it. (b) Regular Meetings. Except as hereinafter otherwise provided, regular meetings of the Board of Directors shall be held at the office of the Corporation required to be maintained pursuant to Section 2 hereof. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may also be held at any place within or without the State of Delaware which has been designated by resolution of the Board of Directors or the written consent of all Directors. (c) Special Meetings. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board or the President or any Vice President or the Secretary of the Corporation or any two (2) Directors. (d) Telephone Meetings. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. (e) Notice of Meetings. Notice of the date, time and place of all meetings of the Board of Directors, other than regular meetings held pursuant to Section 20(a) or (b) above shall be delivered personally, orally or in writing, or by telephone or telegraph or by electronic transmission to each Director, at least forty-eight (48) hours before the meeting, or sent in writing to each Director by first-class mail, charges prepaid, at least four (4) days before the meeting. Such notice may be given by the Secretary of the Corporation or by the person or persons who called a meeting. Such notice need not specify the purpose of the meeting. Notice of any meeting may be waived in writing or by electronic communication at any time before or after the meeting and will be waived by any Director by attendance thereat, except when the Director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. (f) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the Directors not present shall sign a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 21. Quorum and Voting. (a) Quorum. Unless the Certificate of Incorporation requires a greater number and except with respect to indemnification questions arising under Section 41(a) hereof, for which a quorum shall be 7 one-third of the exact number of Directors fixed from time to time in accordance with Section 15 of these Bylaws, but not less than one (1), a quorum of the Board of Directors shall consist of a majority of the exact number of Directors fixed from time to time in accordance with Section 15 of these Bylaws, but not less than one (1); provided, however, at any meeting whether a quorum be present or otherwise, a majority of the Directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting. (b) Majority Vote. At each meeting of the Board of Directors at which a quorum is present all questions and business shall be determined by a vote of a majority of the Directors present, unless a different vote be required by law, the Certificate of Incorporation or these Bylaws. Section 22. Action without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Section 23. Fees and Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors or any meeting of a committee of directors. Nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor. Section 24. Committees. (a) Executive Committee. The Board of Directors may by resolution passed by a majority of the whole Board of Directors, appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and specifically granted by the Board of Directors, shall have and may exercise when the Board of Directors is not in session all powers of the Board of Directors in the management of the business and affairs of the Corporation, including, without limitation, the power and authority to declare a dividend or to authorize the issuance of stock, except such committee shall not have the power or authority to amend the Certificate of Incorporation, to adopt an agreement of merger or consolidation, to recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, to recommend to the stockholders of the Corporation a dissolution of the Corporation or a revocation of a dissolution or to amend these Bylaws. (b) Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, from time to time appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one (1) or more members of the Board of Directors, and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall such committee have the powers denied to the Executive Committee in these Bylaws. (c) Term. The members of all committees of the Board of Directors shall serve a term coexistent with that of the Board of Directors which shall have appointed such committee. The Board of Directors, subject to the provisions of subsections (a) or (b) of this Section 24, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation. The Board of Directors may at any time for any reason remove any individual committee member and the Board 8 of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 24 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at the principal office of the Corporation required to be maintained pursuant to Section 2 hereof, or at any place which has been designated from time to time by resolution of such committee or by written consent of all members thereof, and may be called by any Director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any Director by attendance thereat, except when the Director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. Section 25. Organization. At every meeting of the Directors, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or if the President is absent, the most senior Vice President, or, in the absence of any such officer, a chairman of the meeting chosen by a majority of the Directors present, shall preside over the meeting. The Secretary, or in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting. ARTICLE V OFFICERS Section 26. Officers Designated. The officers of the Corporation shall be the Chairman of the Board of Directors, the President, one or more Vice Presidents, the Secretary and the Chief Financial Officer, all of whom shall be elected at the annual meeting of the Board of Directors. The order of the seniority of the Vice Presidents shall be in the order of their nomination, unless otherwise determined by the Board of Directors. The Board of Directors may also appoint such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the Corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the Corporation shall be fixed by or in the manner designated by the Board of Directors. Section 27. Tenure and Duties of Officers. (a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. 9 (b) Duties of Chairman of the Board of Directors. The Chairman of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform the duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. (c) Duties of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. The President shall, subject to the control of the Board of Directors and unless otherwise determined by the Board of Directors, serve as the Chief Executive Officer of the Corporation and shall have general supervision, direction and control of the business and officers of the Corporation. The President shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors and the Chairman of the Board, if one has been appointed, shall designate from time to time. (d) Duties of Vice Presidents. The Vice Presidents, in the order of their seniority, may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (e) Duties of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors, and shall record all acts and proceedings thereof in the minute book of the Corporation. The Secretary shall give notice in conformity with these Bylaws of all meetings of the stockholders, and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties given him in these Bylaws and other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (f) Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the Corporation in a thorough and proper manner, and shall render statements of the financial affairs of the Corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct any Assistant Chief Financial Officer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Assistant Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. Section 28. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Section 29. Removal. Any officer may be removed from office at any time, either with or without cause, by the vote or written consent of a majority of the Directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors. 10 ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION Section 30. Execution of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the Corporation any corporate instrument or document, or to sign on behalf of the Corporation the corporate name without limitation, or to enter into contracts on behalf of the Corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the Corporation. Unless otherwise specifically determined by the Board of Directors or otherwise required by law, promissory notes, deeds of trust, mortgages and other evidences of indebtedness of the Corporation, and other corporate instruments or documents requiring the corporate seal, and certificates of shares of stock owned by the Corporation, shall be executed, signed or endorsed by the Chairman of the Board of Directors, the President or any Vice President, and by the Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All other instruments and documents requiring the corporate signature, but not requiring the corporate seal, may be executed as aforesaid or in such other manner as may be directed by the Board of Directors. All checks and drafts drawn on banks or other depositaries on funds to the credit of the Corporation or in special accounts of the Corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do. Section 31. Voting of Securities Owned by the Corporation. All stock and other securities of other Corporations owned or held by the Corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of Directors, the President, or any Vice President. ARTICLE VII SHARES OF STOCK Section 32. Form and Execution of Certificates. Certificates for the shares of stock of the Corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the Corporation. Where such certificate is countersigned by a transfer agent other than the Corporation or its employee, or by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or back thereof, in full or in summary, all of the designations, preferences, limitations, restrictions on transfer and relative rights of the shares authorized to be issued. Section 33. Lost Certificates. 11 A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The Corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the Corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. Section 34. Transfers. Transfers of record of shares of stock of the Corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares. Section 35. Fixing Record Dates. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing or by electronic transmission without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing or by electronic transmission without a meeting, when no prior action by the Board of Directors is required by the Delaware General Corporation Law, shall be the first date on which a signed written consent or electronic transmission setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded; provided that any such electronic transmission shall satisfy the requirements of Section 2.11(b) and, unless the Board of Directors otherwise provides by resolution, no such consent by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing or by electronic transmission without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. (c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more 12 than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 36. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VIII OTHER SECURITIES OF THE CORPORATION Section 37. Execution of Other Securities. All bonds, debentures and other corporate securities of the Corporation, other than stock certificates, may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the Corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the Corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the Corporation. ARTICLE IX DIVIDENDS Section 38. Declaration of Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Section 39. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of 13 Directors shall think conducive to the interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE X FISCAL YEAR Section 40. Fiscal Year. Unless otherwise fixed by resolution of the Board of Directors, the fiscal year of the Corporation shall end on the last day of June. ARTICLE XI INDEMNIFICATION Section 41. Indemnification of Officers, Directors, Employees and Other Agents. (a) Directors. The Corporation shall indemnify its directors to the fullest extent permitted by the Delaware General Corporation Law. (b) Officers, Employees and Other Agents. The Corporation shall have power to indemnify its officers, employees and other agents as set forth in the Delaware General Corporation Law. (c) Good Faith. (1) For purposes of any determination under this Bylaw, a Director, or any member of a committee designated by the Board of Directors, shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, to have had no reasonable cause to believe that his conduct was unlawful, if he relied in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. (2) The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding, that he had reasonable cause to believe that his conduct was unlawful. (3) The provisions of this paragraph (C) shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth by the Delaware General Corporation Law. (d) Expenses. The Corporation shall advance, prior to the final disposition of any proceeding, promptly following request therefor, all expenses incurred by any Director in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under this Bylaw or otherwise. (e) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances under this Bylaw shall be deemed to be contractual rights and be effective to 14 the same extent and as if provided for in a contract between the Corporation and the Director who serves in such capacity at any time while this Bylaw and other relevant provisions of the Delaware General Corporation Law and other applicable law, if any, are in effect. Any right to indemnification or advances granted by this Bylaw to a Director shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. The Corporation shall be entitled to raise by pleading as an affirmative defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any proceeding in advance of its final disposition when the required undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. (f) Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The Corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent permitted by the Delaware General Corporation Law. (g) Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a Director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (h) Insurance. To the fullest extent permitted by the Delaware General Corporation Law, the Corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Bylaw. (i) Amendments. Any repeal or modification of this Bylaw shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the Corporation. (j) Savings Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director to the full extent permitted by any applicable portion of this Bylaw that shall not have been invalidated, or by any other applicable law. (k) Certain Definitions. For the purposes of this Bylaw, the following definitions shall apply: (1) The term "proceeding" shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement and appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative. (2) The term "expenses" shall be broadly construed and shall include, without limitation, court costs, attorneys' fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding. 15 (3) The term the "Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Bylaw with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (4) References to a "director," "officer," "employee," or "agent" of the Corporation shall include, without limitation, situations where such person is serving at the request of the Corporation as a Director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise. (5) References to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a Director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such Director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Bylaw. ARTICLE XII NOTICES Section 42. Notices. (a) Notice to Stockholders. Whenever, under any provision of these Bylaws, notice is required to be given to any stockholder, the same shall be given either (1) in writing, either personally or timely and duly deposited in the United States Mail, postage prepaid, and addressed to his last known post office address as shown by the stock record of the corporation or its transfer agent, or (2) by a means of electronic transmission that satisfies the requirements of Section 7 of these Bylaws, and has been consented to by the stockholder to whom the notice is given. (b) Notice to Directors. Any notice required to be given to any Director may be given by the method stated in subsection (e) of Section 20 of these Bylaws except that such notice other than one which is delivered personally shall be sent to such address as such Director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such Director. (c) Address Unknown. If no address of a stockholder or Director be known, notice may be sent to the office of the Corporation required to be maintained pursuant to Section 2 hereof. (d) Affidavit of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the Corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, or Director or Directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall be conclusive evidence of the statements therein contained. (e) Time Notices Deemed Given. All notices given by mail, as above provided, shall be deemed to have been given as at the time of mailing and all notices given by electronic transmission shall be 16 deemed to have been given as at the sending time recorded by the electronic transmission equipment operator transmitting the notices. (f) Methods of Notice and Waiver Thereof. It shall not be necessary that the same method of giving notice be employed in respect of all Directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others. Whenever any notice is required to be given under any provision of law or of the Certificate of Incorporation, or Bylaws of the Corporation, a waiver thereof in writing signed by the person or persons entitled to said notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto. (g) Failure to Receive Notice. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any Director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent him in the manner above provided, shall not be affected or extended in any manner by the failure of such stockholder or such Director to receive such notice. (h) Notice to Person with Whom Communication Is Unlawful. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the Corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. ARTICLE XIII AMENDMENTS Section 43. Amendments. Except as otherwise set forth in paragraph 41(i) hereof, these Bylaws may be repealed, altered or amended or new Bylaws adopted by the stockholders. In addition to any vote of the holders of any class or series of stock of this Corporation required by law or by these Bylaws, the affirmative vote of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required to adopt, amend or repeal any provisions of the Bylaws of the Corporation. Except as otherwise set forth in paragraph 41(i) hereof, the Board of Directors shall also have the authority, if such authority is conferred upon the Board of Directors by the Certificate of Incorporation, to repeal, alter or amend these Bylaws or adopt new Bylaws (including, without limitation, the amendment of any Bylaw setting forth the number of Directors who shall constitute the whole Board of Directors) subject to the power of the stockholders to change or repeal such Bylaws and provided that the Board of Directors shall not make or alter any Bylaws fixing the qualifications, classifications, term of office or compensation of Directors. 17 EX-21.1 4 f84464exv21w1.txt EXHIBIT 21.1 EXHIBIT 21.1 SUBSIDIARIES OF THE COMPANY

- --------------- * This Subsidiary is 40% owned by the Registrant. EX-23.1 5 f84464exv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-88535, 33-57849, 33-72186, 33-54026, 33-44485, 33-37470, 33-37469, 33-34728, 33-34519, 33-25639, 33-22147, and 333-58772) pertaining to the 1996 Stock Incentive Plan, the 1983 Incentive Stock Option Plan, the 1983 Supplemental Nonemployee Stock Option Plan, the 1987 Supplemental Stock Option Plan, the 1987 Employee Stock Participation Plan, the 1988 Nonemployee Director Stock Option Plan, the Amended and Restated 1987 Stock Option Plan, and the 1993 Officer and Director Stock Option Plan of Maxim Integrated Products, Inc. of our report dated August 6, 2002, with respect to the consolidated financial statements and schedule included in the Annual Report (Form 10-K) for the year end June 29, 2002. /s/ ERNST & YOUNG LLP San Jose, California September 20, 2002 EX-23.2 6 f84464exv23w2.txt EXHIBIT 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT The Board of Directors Maxim Integrated Products, Inc.: We consent to the incorporation by reference in the Registration Statements previously filed on Form S-8 (Nos. 333-88535, 33-57849, 33-72186, 33-54026, 33-44485, 33-37470, 33-37469, 33-34728, 33-34519, 33-25639, 33-22147, and 333-58772) of our report dated January 12, 2001, except for Note 7 which is as of January 28, 2001, with respect to the consolidated balance sheet of Dallas Semiconductor Corporation as of December 31, 2000, and the related consolidated statements of income, stockholders' equity, cash flows and financial statement schedule for the year then ended, which report appears in the December 31, 2000 annual report on Form 10-K of Dallas Semiconductor Corporation and has been filed as an exhibit to the annual report on Form 10-K of Maxim Integrated Products, Inc. for the fiscal year ended June 29, 2002. /s/ KPMG LLP Dallas, Texas September 20, 2002 EX-99.1 7 f84464exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 REPORT OF KPMG LLP To the Board of Directors and Stockholders: We have audited the accompanying consolidated balance sheet of Dallas Semiconductor Corporation and subsidiaries as of December 31, 2000 and the related consolidated statements of income, stockholders' equity, and cash flows for the fiscal year then ended. Our audit also included the financial statement schedule listed in the Index at Item 14(a) as of and for the year ended December 31, 2000. These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dallas Semiconductor Corporation and subsidiaries at December 31, 2000, and the consolidated results of their operations and their cash flows for the fiscal year then ended, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related consolidated financial statement schedule as of and for the year ended December 31, 2000, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ KPMG LLP Dallas, Texas January 12, 2001, except for Note 7 which is as of January 28, 2001 -----END PRIVACY-ENHANCED MESSAGE-----


(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the Fiscal Year Ended June 29, 2002

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to


Delaware		94-2896096
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)


		Name of each exchange
Title of each class		on which registered

None		None


TABLE OF CONTENTS
PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Consolidated Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
PART IV
	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNATURES
CERTIFICATION
CERTIFICATION
CORPORATE DATA AND STOCKHOLDER INFORMATION
EXHIBIT INDEX
EXHIBIT 3.4
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 99.1


Industry		Typical Application

Automotive		Displays Global Positioning Systems Keyless Entry Pressure Sensing

Communications		Broadband Networks Cable Systems Cellular Base Stations Central Office Switches Direct Broadcast TV DSL Modems Fiber Communications Optical Transceivers Pagers PBXs Phones • Cellular/ PCS • Cordless Satellite Communications T1/E1 and T3/E3 Video Communications Wireless Communications

Consumer		Digital Cameras DVDs MP3 Players PDAs Personal Computers Phones • Cellular • Cordless


		Page

PART I
Item 1.	Business		1
Item 2.	Properties		14
Item 3.	Legal Proceedings		15
Item 4.	Submission of Matters to a Vote of Security Holders		15
PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters		16
Item 6.	Selected Financial Data		17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		26
Item 8.	Consolidated Financial Statements and Supplementary Data		27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		27
PART III
Item 10.	Directors and Executive Officers of the Registrant		28
Item 11.	Executive Compensation		29
Item 12	Security Ownership of Certain Beneficial Owners and Management		29
Item 13.	Certain Relationships and Related Transactions		29
PART IV
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		30
Signatures			56
Certification			58
Corporate Data and Stockholder Information			60


	*Dependence on Independent Distributors and Sales Representatives*


	*Dependence on Independent Foundries, Subcontractors, and the Philippines Test and Shipping Facility*


	*Availability of Materials, Supplies, and Subcontract Services*


Owned Property Location		Use	Floor Space

	Sunnyvale, California	Corporate headquarters, office space, engineering, manufacturing, administration, customer service, shipping, and other		319,000 sq. ft.
	San Jose, California	Wafer fabrication, office space, and administration		80,000 sq. ft.
	Chelmsford, Massachusetts	Engineering, office space, and administration		30,000 sq. ft.
	Beaverton, Oregon	Wafer fabrication, engineering, office space, shipping, and administration		226,000 sq. ft.
	Hillsboro, Oregon	Engineering, manufacturing, office space, and administration		325,000 sq. ft.
	Dallas, Texas	Dallas Semiconductor headquarters, office space, engineering, manufacturing, administration, wafer fabrication, customer service, warehousing, shipping, and other		705,000 sq. ft.
	Cavite, the Philippines	Manufacturing, engineering, office space, shipping, and administration		234,000 sq. ft.


Leased Property Location		Use	Floor Space

	Sunnyvale, California	Engineering and office space		30,000 sq. ft.
	Samutprakarn Province, Thailand	Manufacturing, engineering, office space, and administration		25,000 sq. ft.



	Quarter Ended

Fiscal Year 2002	6/29/02		3/30/02		12/29/01		9/29/01

High	$	57.01	$	59.35	$	61.42	$	51.19
Low	$	35.92	$	45.76	$	33.40	$	33.68



	Quarter Ended

Fiscal Year 2001	6/30/01		3/31/01		12/30/00		9/23/00

High	$	58.40	$	69.06	$	85.06	$	87.69
Low	$	34.92	$	41.59	$	47.75	$	62.19



			Fiscal Year

			2002			2001			2000			1999			1998


			(Amounts in thousands, except per share data)
Net revenues			$	1,025,104		$	1,576,613		$	1,376,085		$	1,002,849		$	904,438

Cost of goods sold			$	312,223		$	537,148		$	503,801		$	379,242		$	346,071
Gross margin %				69.5	%		65.9	%		63.4	%		62.2	%		61.7	%

Operating income			$	345,352		$	445,166		$	508,560		$	370,158		$	331,959
	% of net revenues			33.7	%		28.2	%		37.0	%		36.9	%		36.7	%

Net income			$	259,183		$	334,939		$	373,083		$	265,281		$	234,000

Earnings per share:
		Basic	$	0.80		$	1.03		$	1.18		$	0.88		$	0.79
		Diluted	$	0.73		$	0.93		$	1.04		$	0.77		$	0.69

Shares used in the calculation of earnings per share:
		Basic		325,527			325,736			316,887			303,038			296,151
		Diluted		355,821			361,620			359,548			344,360			340,356

Dividends declared per share			$	—		$	0.02		$	0.02		$	0.02		$	0.02

Cash, cash equivalents and short-term investments			$	765,501		$	1,220,352		$	896,936		$	710,074		$	453,302
Working capital			$	1,006,637		$	1,373,715		$	1,045,548		$	886,697		$	589,340
Total assets			$	2,010,812		$	2,430,531		$	2,087,438		$	1,603,122		$	1,242,190
Stockholders’ equity			$	1,741,151		$	2,101,154		$	1,719,939		$	1,369,449		$	1,034,422


	*Revenue Recognition and Accounts Receivable Allowances*


	*Dependence on New Products and Process Technologies*


	*Manufacturing Risks*


	*Competition*


	*Protection of Proprietary Information*


Name	Age		Position

John F. Gifford		61	President, Chief Executive Officer and Chairman of the Board
Frederick G. Beck		64	Vice President
Tunc Doluca		44	Vice President
Laszlo V. Gal, Ph.D.		54	Vice President
Rob B. Georges		44	Vice President
Parviz Ghaffaripour		39	Vice President
Jennifer E. Gilbert		36	Vice President
Alan P. Hale		41	Vice President
Richard C. Hood		52	Vice President
Kenneth J. Huening		41	Vice President
Carl W. Jasper		46	Vice President and Chief Financial Officer
Nasrollah Navid, Ph.D.		53	Vice President
Pirooz Parvarandeh		42	Vice President
Charles G. Rigg		58	Vice President
Sharon E. Smith-Lenox		50	Corporate Controller and Principal Accounting Officer
Vijay Ullal		43	Vice President


Item 14.	*Exhibits, Financial Statement Schedules, and Reports on Form 8-K*


Consolidated Balance Sheets at June 29, 2002 and June 30, 2001			31
Consolidated Statements of Income for each of the three years in the period ended June 29, 2002			32
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended June 29, 2002			33
Consolidated Statements of Cash Flows for each of the three years in the period ended June 29, 2002			34
Notes to Consolidated Financial Statements			35
Report of Ernst & Young LLP, Independent Auditors			54


			June 29,			June 30,
			2002			2001


			(Amounts in thousands,
			except share data)
ASSETS
Current assets:
	Cash and cash equivalents		$	173,807		$	93,796
	Short-term investments			591,694			1,126,556

		Total cash, cash equivalents and short-term investments		765,501			1,220,352

	Accounts receivable, (net of allowance for doubtful accounts of $3,176 in 2002 and $3,280 in 2001)			129,812			152,488
	Inventories			139,206			162,656
	Deferred tax assets			144,717			103,205
	Income tax refund receivable			53,164			50,187
	Other current assets			3,264			10,204

		Total current assets		1,235,664			1,699,092

Property, plant and equipment, at cost, less accumulated depreciation				746,161			712,039
Other assets				28,987			19,400

		TOTAL ASSETS	$	2,010,812		$	2,430,531

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	45,284		$	100,921
	Income taxes payable			10,633			8,963
	Accrued salary and related expenses			64,321			75,992
	Accrued expenses			81,606			94,105
	Deferred income on shipments to distributors			27,183			45,396

		Total current liabilities		229,027			325,377

Other liabilities				4,000			4,000
Deferred tax liabilities				36,634			—
Commitments and contingencies

		Total liabilities		269,661			329,377

Stockholders’ equity:
	Preferred stock, $0.001 par value; Authorized: 2,000,000 shares; Issued and outstanding: none			—			—
	Common stock, $0.001 par value Authorized: 960,000,000 shares; Issued and outstanding: 320,060,896 in 2002 and 330,235,460 in 2001			320			330
	Additional paid-in capital			54,935			351,652
	Retained earnings			1,686,816			1,745,638
	Accumulated other comprehensive (loss) income			(920	)		3,534

		Total stockholders’ equity		1,741,151			2,101,154

		TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	2,010,812		$	2,430,531



			For the Years Ended

			June 29,		June 30,		June 24,
			2002		2001		2000


			(Amounts in thousands, except per share data)
Net revenues			$	1,025,104	$	1,576,613	$	1,376,085
Cost of goods sold				312,223		537,148		503,801

		Gross margin		712,881		1,039,465		872,284
Operating expenses:
	Research and development			275,547		280,228		216,823
	Selling, general and administrative			91,982		150,622		146,901
	Merger and special charges			—		163,449		—

		Total operating expenses		367,529		594,299		363,724

		Operating income		345,352		445,166		508,560
Interest income and other, net				41,488		59,822		52,657

		Income before provision for income taxes		386,840		504,988		561,217
Provision for income taxes				127,657		170,049		188,134

		Net income	$	259,183	$	334,939	$	373,083

Earnings per share:
	Basic		$	0.80	$	1.03	$	1.18
	Diluted		$	0.73	$	0.93	$	1.04

Shares used in the calculation of earnings per share:
	Basic			325,527		325,736		316,887
	Diluted			355,821		361,620		359,548

Dividends declared per share			$	—	$	0.02	$	0.02



			Common Stock						Additional						Other Accumulated
									Paid-In			Retained			Comprehensive
			Shares			Par Value			Capital			Earnings			(Loss) Income			Total


			(Amounts in thousands, except share data)
Balance, June 26, 1999				310,214,152		$	310		$	274,236		$	1,096,372		$	(1,470	)	$	1,369,448
Components of comprehensive income:
	Net income			—			—			—			373,083			—			373,083
	Unrealized gain on available-for-sale investments			—			—			—			—			1,377			1,377

		Total comprehensive income																	374,460

Exercises under the Stock Option and Purchase Plans				18,130,266			18			99,111			—			—			99,129
Repurchase of common stock				(5,905,111	)		(6	)		(270,213	)		—			—			(270,219	)
Tax benefit on exercise of non-qualified stock options and disqualifying dispositions under stock plans				—			—			154,958			—			—			154,958
Dividends declared				—			—			—			(7,837	)		—			(7,837	)

Balance, June 24, 2000				322,439,307			322			258,092			1,461,618			(93	)		1,719,939
Components of comprehensive income:
	Net income			—			—			—			334,939			—			334,939
	Unrealized gain on forward- exchange contracts			—			—			—			—			406			406
	Unrealized gain on available-for-sale investments			—			—			—			—			4,598			4,598

		Total comprehensive income																	339,943

Adjustments to conform fiscal year of pooled entity				(384,103	)		—			(8,950	)		(44,942	)		(1,377	)		(55,269	)
Exercises under the Stock Option and Purchase Plans				12,206,590			12			114,257			—			—			114,269
Repurchase of common stock				(4,026,334	)		(4	)		(250,681	)		—			—			(250,685	)
Tax benefit on exercise of non-qualified stock options and disqualifying dispositions under stock plans				—			—			238,934			—			—			238,934
Dividends declared				—			—			—			(5,977	)		—			(5,977	)

Balance, June 30, 2001				330,235,460			330			351,652			1,745,638			3,534			2,101,154
Components of comprehensive income:
	Net income			—			—			—			259,183			—			259,183
	Unrealized loss on forward- exchange contracts			—			—			—			—			(1,911	)		(1,911	)
	Unrealized loss on available-for-sale investments			—			—			—			—			(2,543	)		(2,543	)

		Total comprehensive income																	254,729

Exercises under the Stock Option and Purchase Plans				9,959,279			10			109,283			—			—			109,293
Repurchase of common stock				(20,133,843	)		(20	)		(545,987	)		(318,005	)		—			(864,012	)
Tax benefit on exercise of non-qualified stock options and disqualifying dispositions under stock plans				—			—			139,987			—			—			139,987

Balance, June 29, 2002				320,060,896		$	320		$	54,935		$	1,686,816		$	(920	)	$	1,741,151



			Increase (Decrease) in Cash and Cash Equivalents
			For the Years Ended

			June 29, 2002			June 30, 2001			June 24, 2000


			(Amounts in thousands)
Cash flows from operating activities:
Net income			$	259,183		$	334,939		$	373,083
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation, amortization, and other			56,252			90,861			79,267
	Plant and equipment charges			—			50,365			35,200
	Charge for impairment of long-lived assets			—			124,432			—
	Adjustment to conform fiscal year of pooled entity			—			3,608			—
	Changes in assets and liabilities:
		Accounts receivable		22,676			77,365			(92,307	)
		Inventories		23,450			(27,939	)		(18,876	)
		Deferred taxes		6,404			27,385			(29,415	)
		Income tax refund receivable		(2,977	)		(43,937	)		30,821
		Other current assets		4,044			7,225			(5,624	)
		Accounts payable		(55,637	)		(3,602	)		41,147
		Income taxes payable		132,751			163,263			163,743
		Deferred income on shipments to distributors		(18,213	)		7,428			4,911
		All other accrued liabilities		(24,170	)		(1,745	)		84,302

Net cash provided by operating activities				403,763			809,648			666,252

Cash flows from investing activities:
	Additions to property, plant and equipment, net			(90,374	)		(336,545	)		(292,106	)
	Other non-current assets			(9,587	)		(4,845	)		(11,402	)
	Purchases of available-for-sale securities			(1,298,660	)		(1,352,264	)		(706,144	)
	Proceeds from sales/maturities of available-for-sale securities			1,829,588			1,037,978			553,335

Net cash provided by (used in) investing activities				430,967			(655,676	)		(456,317	)

Cash flows from financing activities:
	Issuance of common stock			109,293			114,269			99,129
	Repurchase of common stock			(864,012	)		(250,685	)		(270,219	)
	Dividends paid			—			(5,977	)		(7,837	)

Net cash used in financing activities				(754,719	)		(142,393	)		(178,927	)

Net increase in cash and cash equivalents				80,011			11,579			31,008
Cash and cash equivalents:
	Beginning of year			93,796			82,217			51,209

	End of year		$	173,807		$	93,796		$	82,217

Supplemental disclosures of cash flow information:
Cash paid, net during the year for:

	Income taxes		$	(9,106	)	$	21,796		$	21,573


		For the Year Ended
		June 24, 2000

		(Amounts in thousands)
Net revenues:
	Maxim	$	864,924
	Dallas Semiconductor		516,965
	Adjustments to conform accounting policies		(8,116	)
	Reclassifications to conform financial statement presentation		2,312

	Combined	$	1,376,085

Net income:
	Maxim	$	280,619
	Dallas Semiconductor		95,415
	Adjustments to conform accounting policies		(2,951	)

	Combined	$	373,083


			Unrealized		Unrealized		Estimated
	Cost		Gain		Loss		Fair Value


	(Amounts in thousands)
U.S. Treasury securities	$	271,918	$	1,473	$	—	$	273,391
Federal Agency Debt securities		316,048		1,747		—		317,795
Municipal bonds		502		6		—		508

	$	588,468	$	3,226	$	—	$	591,694



		June 29, 2002					June 30, 2001

		Notional		Unrealized			Notional		Unrealized
		Amounts		Gain/(Loss)			Amounts		Gain/(Loss)


		(Amounts in thousands)
Currency:
	Japanese Yen	$	28,162	$	(1,489	)	$	30,089	$	1,084
	British Pound Sterling		18,137		(823	)		18,295		356
	Euro		12,272		(938	)		14,659		648
	Swiss Franc		739		(46	)		552		27

		$	59,310	$	(3,296	)	$	63,595	$	2,115


Fiscal Year	(Amounts in thousands)

2003	$	3,240
2004		2,241
2005		1,405
2006		955
2007		676
2008-2010		776

	$	9,293



					Outstanding Options

		Shares						Weighted
		Available			Number of			Average Price
		for Grant			Shares			Per Share

Balance, June 26, 1999			8,276,351			90,203,499		$	9.11
	Shares reserved		14,910,256			—			—
	Options granted		(14,571,524	)		14,571,524		$	39.77
	Options terminated		3,443,779			(3,443,779	)	$	14.70
	Options exercised		—			(18,130,266	)	$	4.75

Balance, June 24, 2000			12,058,862			83,200,978		$	14.86
	Adjustment to conform fiscal year of pooled entity		(2,374,944	)		(941,841	)		—
	Shares reserved		13,607,256			—			—
	Options granted		(23,022,427	)		23,022,427		$	46.78
	Options terminated		3,789,540			(3,789,540	)	$	25.31
	Options exercised		—			(12,206,590	)	$	9.44

Balance, June 30, 2001			4,058,287			89,285,434		$	24.20
	Shares reserved		13,200,000			—			—
	Options granted		(17,948,876	)		17,948,876		$	39.12
	Options terminated		2,730,123			(3,019,006	)	$	33.50
	Options exercised		—			(9,959,279	)	$	10.27

Balance, June 29, 2002			2,039,534			94,256,025		$	28.25



	Outstanding Options						Options Exercisable

			Weighted
			Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
	Outstanding at		Contractual		Exercise		Exercisable at		Exercise
Range of Exercise Prices	June 29, 2002		Life (Years)		Price		June 29, 2002		Price

$ 1.48 - $10.36		19,568,195		2.69	$	5.34		18,470,414	$	5.30
$10.65 - $21.06		20,491,138		5.55	$	15.17		10,966,461	$	14.66
$21.31 - $35.16		20,793,855		8.12	$	31.54		2,461,973	$	30.44
$35.19 - $48.19		21,561,651		8.94	$	42.06		2,852,843	$	40.06
$48.44 - $87.06		11,841,186		8.13	$	57.79		1,364,985	$	57.06

$ 1.48 - $87.06		94,256,025		6.62	$	28.25		36,116,676	$	14.56



										Employee Stock
	Stock Option Plans									Participation Plan

	2002			2001			2000			2002			2001			2000

Expected option holding period (in years)		4.5			4.5			4.6			0.5			0.5			0.5
Risk-free interest rate		4.4	%		5.1	%		5.9	%		2.2	%		5.1	%		5.6	%
Stock price volatility		0.61			0.59			0.54			0.61			0.59			0.54
Dividend yield		—			.04	%		.05	%		—			.04	%		.05	%



	Weighted Average Grant Date Value
	For the Years Ended

	June 29, 2002		June 30, 2001		June 24, 2000

Stock Option Plans	$	19.58	$	23.86	$	20.93
Employee Stock Participation Plans	$	13.15	$	12.29	$	7.82


										Purchase Order
	Merger			Impairment						Cancellation
	Costs			Charges			Severance			Fees			Other			Total


	(Amount in thousands)
Merger and special charges	$	26,434		$	124,432		$	2,542		$	7,797		$	2,244		$	163,449
Non-cash charges		(2,622	)		(124,432	)		—			—			—			(127,054	)
Cash payments		(15,671	)		—			(1,989	)		(284	)		—			(17,944	)

Reserve balance at June 30, 2001	$	8,141		$	—		$	553		$	7,513		$	2,244		$	18,451
Special charges		—			—			4,097			—			—			4,097
Adjustment		141			—			—			(4,285	)		47			(4,097	)
Cash payments		(6,559	)		—			(4,548	)		—			(572	)		(11,679	)

Reserve balance at June 29, 2002	$	1,723		$	—		$	102		$	3,228		$	1,719		$	6,772


				Additions
				Charged
		Balance at		to Costs				Balance at
		Beginning		and				End
		of Period		Expenses		Deductions(1)		of Period


		(Amounts in thousands)
Allowance for doubtful accounts:
	Year ended June 24, 2000	$	1,965	$	501	$	218	$	2,248
	Year ended June 30, 2001	$	2,248	$	1,032	$	0	$	3,280
	Year ended June 29, 2002	$	3,280	$	0	$	104	$	3,176



Signature	Title	Date


/s/ JOHN F. GIFFORD John F. Gifford	President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	September 25, 2002

/s/ JAMES R. BERGMAN James R. Bergman	Director	September 25, 2002

/s/ B. KIPLING HAGOPIAN B. Kipling Hagopian	Director	September 25, 2002

/s/ ERIC P. KARROS Eric P. Karros	Director	September 25, 2002

/s/ M.D. SAMPELS M.D. Sampels	Director	September 25, 2002

/s/ A.R. WAZZAN A.R. Wazzan	Director	September 25, 2002


Exhibit
Number			Description

	3	.1(1)	Restated Certificate of Incorporation of the Company
	3	.3(2)	Amendments to Restated Certificate of Incorporation of the Company
	3	.4	Amended and Restated Bylaws of the Company, as amended
	4	.1	Reference is made to Exhibits 3.1, 3.3 and 3.4
	10	.5(3)	Agreement between John F. Gifford and the Company, dated as of July 14, 1987, as amended and restated(A)
	10	.8(4)	The Company’s Form of Indemnity Agreement
	10	.11(5)	The Company’s Incentive Stock Option Plan, as amended(A)
	10	.12(6)	The Company’s 1987 Supplemental Stock Option Plan, as amended(A)
	10	.13(6)	The Company’s Supplemental Nonemployee Stock Option Plan, as amended(A)
	10	.14(7)	The Company’s 1987 Employee Stock Participation Plan, as amended(A)
	10	.15(6)	The Company’s 1988 Nonemployee Director Stock Option Plan, as amended(A)
	10	.16(7)	The Company’s 1996 Stock Incentive Plan, as amended(A)
	10	.17(7)	Dallas Semiconductor Corporation — 1993 Officer and Director Stock Option Plan, as amended, together with forms of stock option agreements thereunder
	10	.18(7)	Dallas Semiconductor Corporation Amended 1987 Stock Option Plan, together with forms of stock option agreements thereunder
	10	.19(7)	Assumption Agreement relating to the Split Dollar Insurance Agreement between Dallas Semiconductor Corporation and Alan P. Hale, dated July 20, 2000, as amended
	10	.20(7)	Assumption Agreement relating to the Split Dollar Insurance Agreement between Dallas Semiconductor Corporation and M.D. Sampels, dated July 20, 2000, as amended
	10	.21(7)	Form of Shareholder Agreements between Dallas Semiconductor Corporation and employee stockholders, as amended
	10	.22(7)	Agreement between Dallas Semiconductor Corporation and Alan P. Hale, dated May 20, 1999, as amended
	10	.23(7)	Employment Agreement between Dallas Semiconductor Corporation and Alan P. Hale, dated April 11, 2001
	10	.24(7)	Split Dollar Insurance Agreement between Dallas Semiconductor Corporation and Alan P. Hale, dated July 20, 2000, as amended
	10	.25(7)	Split Dollar Insurance Agreement between Dallas Semiconductor Corporation and M.D. Sampels, dated July 20, 2000, as amended
	10	.26(7)	Assumption Agreement, dated April 11, 2001, relating to Dallas Semiconductor Corporation Executives Retiree Medical Plan, as amended
	10	.27(7)	Assumption Agreement, dated April 11, 2001, relating to Dallas Semiconductor Corporation stock options
	10	.28(7)	Dallas Semiconductor Corporation Executives Retiree Medical Plan, as amended
	10	.29(7)	Form of Indemnification Agreement between Dallas Semiconductor Corporation and its directors and officers
	21	.1	Subsidiaries of the Company
	23	.1	Consent of Ernst & Young LLP, Independent Auditors
	23	.2	Consent of KPMG LLP, Independent Certified Public Accountants
	24	.1	Power of Attorney (see page 57)
	99	.1	Report of KPMG LLP