-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ar3dAxA4Q+uWmH4Heq04mwK2ixrdcMIKe/0/uprSu0njiYegFR5nwUZvzORnsAvD Qej44US+ijSrGl7W5gLD7w== 0000898430-95-002651.txt : 19951219 0000898430-95-002651.hdr.sgml : 19951219 ACCESSION NUMBER: 0000898430-95-002651 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951004 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events FILED AS OF DATE: 19951218 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEMTECH CORP CENTRAL INDEX KEY: 0000088941 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 952119684 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06395 FILM NUMBER: 95602317 BUSINESS ADDRESS: STREET 1: 652 MITCHELL RD CITY: NEWBURY PARK STATE: CA ZIP: 91320 BUSINESS PHONE: 8054982111 MAIL ADDRESS: STREET 2: 652 MITCHELL ROAD CITY: NEWBURY PARK STATE: CA ZIP: 91320 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 4, 1995 -------------------------- SEMTECH CORPORATION ------------------------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-6395 95-2119684 ------------------- ----------- --------------------- (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION FILE NUMBER) IDENTIFICATION NO.) OF INCORPORATION) 652 MITCHELL ROAD, NEWBURY PARK, CALIFORNIA 91320 ----------------------------------------------------------------------- ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (805) 498-2111 -------------------------- NOT APPLICABLE ---------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On October 4, 1995, the Registrant entered into an Agreement and Plan of Merger ("Merger Agreement") among the Registrant, Semtech Acquisition Corp. (a wholly owned subsidiary of the Registrant), Gamma Inc. (dba ECI Semiconductor) and the Shareholders of Gamma Inc. dated October 4,1995. Pursuant to the Merger Agreement, on October 4, 1995, Semtech Acquisition Corp. was merged into Gamma Inc., and Gamma Inc. was the surviving corporation and became a wholly-owned subsidiary of the Registrant. Gamma Inc. was then renamed Semtech Santa Clara Corp. Each share of Gamma Inc. Stock outstanding on October 4, 1995, by virtue of the Merger Agreement, was exchanged for and converted into fully paid and nonassessable voting common shares, par value $.01 per share, of Semtech Corporation common stock, at the exchange rate of 775,000 shares of Semtech Corporation common stock, for 147,566 shares of Gamma Inc. common stock. This agreement defines the terms under which all the outstanding shares of Gamma Inc. were exchanged. Semtech Corporation acquired Gamma Inc. to integrate and complement its existing businesses and technology. The Registrant also entered into a Registration Rights Agreement dated October 4, 1995. This agreement provides that the Semtech Corporation will file with the Securities and Exchange Commission, not later than 90 days after October 4, 1995, a Registration Statement under the Securities Act covering the 775,000 shares of newly issued common stock of the Semtech Corporation which was exchanged for all of the outstanding stock of Gamma Inc. The Registration shall be on Form S-3 or another appropriate form permitting registration of such securities for resale by the former shareholders of Gamma Inc. from time to time. Semtech issued 775,000 new shares of common stock in exchange for all of Gamma, Inc.'s (dba ECI Semiconductor) outstanding stock. Semtech Corporation agreed to use its best efforts to cause this registration to become effective under the Securities Act of 1933, as amended, as soon as practicable following the date on which it is filed. The Registrant also entered into the Escrow Agreement dated October 4, 1995 among the Registrant, the former shareholders of Gamma Inc. and Bank of America NT&SA. This agreement defines terms under which 50,000 (approximately 6.5%) of the shares of Semtech Corporation common stock acquired by the shareholders of Gamma Inc through the Merger Agreement will be held in escrow for a period which under no circumstances will exceed one year for the purpose of satisfying any indemnification obligations of such shareholders arising under the Merger Agreement. The foregoing descriptions are qualified in their entirety by reference to the full texts of the Merger Agreement, the Registration Rights Agreement and Escrow Agreement, which were previously filed with the Securities and Exchange Commission in an 8-K filing done 15 days after the subject event. ITEM 5. FINANCIAL STATEMENTS AND EXHIBITS (a) The following financials statements of Gamma, Inc. are filed herewith: Report of Independent Public Accountants Balance Sheet as of January 29, 1995 Statement of Income for the Twelve Months Ended January 29, 1995 Statement of Cash Flows for the Twelve Months Ended January 29, 1995 Notes to Financial Statements (b) The following Pro Forma financial statements are filed herewith: Pro Forma Combined Balance Sheet as of July 30, 1995 Pro Forma Combined Statements of Income for the Twelve Months Ended January 29, 1995 Pro Forma Combined Statements of Income for the Six Months Ended July 30, 1995 (c) The following exhibits were previously filed with the Commission within 15 days of the subject event. 2.1 Agreement and Plan of Merger ("Merger Agreement") among the Semtech Corporation, Semtech Acquisition Corp., Gamma Inc. (dba ECI Semiconductor) and the Shareholders of Gamma Inc. dated October 4,1995. 2.2 Registration Rights Agreement dated October 4, 1995. 2.3 Escrow Agreement among Semtech Corporation, Michael Himes, Michael Wilson, Jim Preston, Troy Speers, and Extek Company and Bank of America NT&SA, dated October 4, 1995. 99.1 Press Release, dated October 4, 1995. SIGNATURES Pursuant to the requirements 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. SEMTECH CORPORATION ------------------- (Registrant) Date: December 18, 1995 /s/ David G. Franz, Jr. ----------------------------------- David G. Franz, Jr. Vice President Finance and Chief Financial Officer, Secretary and Treasurer REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To the Board of Directors of Gamma, Inc. (dba ECI Semiconductor): We have audited the accompanying balance sheet of GAMMA, INC. (dba ECI Semiconductor, a California corporation), as of January 29, 1995, and the related statements of income, shareholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gamma, Inc. (dba ECI Semiconductor) as of January 29, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Los Angeles, California December 6, 1995 GAMMA, INC. ----------- (dba ECI SEMICONDUCTOR) ----------------------- BALANCE SHEET ------------- AS OF JANUARY 29, 1995 ----------------------
ASSETS ------ Current Assets: Cash $ 424,487 Accounts receivable, net of allowance for doubtful accounts of $62,975 865,552 Inventories 651,347 Prepaid expenses 16,898 Deferred income taxes 352,209 ---------- Total current assets 2,310,493 ---------- Property, Plant and Equipment, at cost: Machinery and equipment 422,463 Office equipment 72,284 Vehicles 9,576 Leasehold improvements 56,446 ---------- 560,769 Less accumulated depreciation and amortization (516,085) ---------- Net property, plant and equipment 44,684 Deposits 21,049 ---------- Total assets $2,376,226 ==========
The accompanying notes are an integral part of this financial statement. GAMMA, INC. ----------- (dba ECI SEMICONDUCTOR) ----------------------- BALANCE SHEET ------------- AS OF JANUARY 29, 1995 ----------------------
LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Current liabilities: Accounts payable $1,027,872 Deferred revenue 200,000 Accrued liabilities 732,066 Notes payable 36,047 Income taxes payable 190,577 Deferred rent 18,696 ---------- Total current liabilities 2,205,258 Deferred compensation 955,000 ---------- Total liabilities 3,160,258 ---------- Commitments and contingencies - Note 4 Shareholders' deficit: Common stock, no par value: Authorized - 1,000,000 shares Outstanding - 147,566 shares 61,534 Accumulated deficit (845,566) ---------- Total shareholders' deficit (784,032) ---------- Total liabilities and shareholders' deficit $2,376,226 ==========
The accompanying notes are an integral part of this financial statement. GAMMA, INC. ----------- (dba ECI SEMICONDUCTOR) ----------------------- STATEMENT OF INCOME ------------------- FOR THE YEAR ENDED JANUARY 29, 1995 ----------------------------------- Sales $8,795,491 Cost of goods sold 5,791,163 ---------- Gross profit 3,004,328 ---------- Operating expenses: Research and development 704,471 Selling, general and administrative 1,961,473 ---------- 2,665,944 ---------- Income from operations 338,384 Other expense 4,299 ---------- Income before provision for income taxes 334,085 Provision for income taxes 19,237 ---------- Net income $ 314,848 ==========
The accompanying notes are an integral part of this financial statement. GAMMA, INC. ----------- (dba ECI SEMICONDUCTOR) ----------------------- STATEMENT OF SHAREHOLDERS' DEFICIT ---------------------------------- FOR THE YEAR ENDED JANUARY 29, 1995 -----------------------------------
Common Stock Accumulated Shareholders' Shares Amount Deficit Deficit ------ ------ ----------- ------------- Balance, January 30, 1994 140,066 $26,082 $(1,160,414) $(1,134,332) Common stock issued in exchange for services 7,500 35,452 - 35,452 Net income - - 314,848 314,848 ------- ------- ----------- ----------- Balance, January 29, 1995 147,566 $61,534 $ (845,566) $ (784,032) ======= ======= =========== ===========
The accompanying notes are an integral part of this financial statement. GAMMA, INC. ----------- (dba ECI SEMICONDUCTOR) ----------------------- STATEMENT OF CASH FLOWS ----------------------- FOR THE YEAR ENDED JANUARY 29, 1995 -----------------------------------
1995 ---------- Cash flows from operating activities: Net income $ 314,848 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 30,310 Deferred income taxes (130,221) Provision for doubtful accounts (20,892) Common stock issued in exchange for services 35,452 (Increase) decrease in operating assets: Accounts receivable (298,782) Inventories (273,652) Prepaid expenses (6,553) Deposits (10,000) Increase (decrease) in operating liabilities: Accounts payable 267,587 Deferred Revenue (7,092) Accrued liabilities 126,733 Income taxes payable 149,502 Deferred rent (15,798) --------- Net cash provided by operating activities 161,442 --------- Cash flows used in financing activities; Principal payments on notes payable (16,916) --------- Net increase in cash 144,526 Cash, beginning of year 279,961 --------- Cash, end of year $ 424,487 =========
The accompanying notes are an integral part of this financial statement. GAMMA, INC. ----------- (dba ECI SEMICONDUCTOR) ----------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- JANUARY 29, 1995 ---------------- 1. Line of Business and Summary of Significant Accounting Policies --------------------------------------------------------------- Organization - Gamma, Inc. (the Company), was incorporated in April 1977 ------------ and commenced operations in 1988. The Company manufactures silicon wafers for the electronics industry. Inventories - Inventories are stated at the lower of cost or market and ----------- consist of materials, labor and overhead. Cost is determined on the first- in, first-out (FIFO) method. Property, Plant and Equipment - Property, plant and equipment are stated at ----------------------------- cost and are being depreciated on the straight-line method over the lesser of 5 years or the life of the lease. Income taxes - Income taxes are provided for the tax effects of ------------ transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes relate primarily to temporary differences between the bases of assets and liabilities for financial and income tax reporting purposes using the statutory marginal income tax rate in effect for the year in which the differences are expected to reverse. The deferred taxes represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Revenue Recognition - The Company recognizes product revenue upon shipment. ------------------- Product design and engineering revenue is recognized during the period in which services are performed. 2. Inventories ----------- Inventories as of January 29, 1995, were comprised of the following components:
Raw materials $ 16,637 Work in process 623,514 Finished goods 11,196 -------- $651,347 ========
- 2 - 3. Income taxes ------------ The provision for income taxes for the year ended January 29, 1995 consists of the following: Current: Federal $ 112,675 State 36,783 --------- 149,458 Deferred: Federal (100,199) State (30,022) --------- (130,221) --------- Provision for income taxes $ 19,237 =========
The components of the net deferred income tax asset at January 29, 1995 are as follows: Deferred tax assets: Payroll and related $ 474,406 Environmental accrual 100,345 Research and development tax credit 143,000 Reserve for credit memos 60,207 Deferred revenue 30,505 Other deferred assets 43,914 --------- Total deferred income taxes 852,377 Valuation reserve (500,168) --------- Net deferred income taxes $ 352,209 =========
The provision for income taxes reconciles to the amount computed by applying the statutory federal rate to income before taxes as follows:
Amount Percent -------- --------- Computed expected tax $113,589 34.0% State income taxes, net of federal benefit 20,713 6.2% Change in valuation reserve (96,045) (28.7)% Other (19,020) (5.7)% -------- ------- Provision for income taxes $ 19,237 5.8% ======== =======
- 3 - The Company has federal and state research and development tax credit carryforwards of approximately $103,000 and $40,000, respectively. These credits are available to offset future income taxes and expire in various years through 2010. 4. Commitments and Contingencies ----------------------------- Building lease -------------- The Company leases its facilities under long-term non-cancelable operating leases which expire at various dates through November 1997. Certain lease payments increase over the life of the leases. The difference between the lease payments required and the lease expense recognized on the straight- line method is recorded as deferred rent. Rent expense for the year ended January 29, 1995, was approximately $225,000. The future minimum annual lease payments are summarized as follows:
Fiscal Year Ending ----------- 1996 $219,351 1997 94,344 1998 70,758 -------- $384,453 ========
Deferred Compensation --------------------- On September 10, 1989, the Company entered into an employment contract with its majority shareholder. The agreement guarantees continuing salary payments to the shareholder upon termination of employment equal to his compensation at the point of termination, plus certain benefits, for a period of three years. The liability was recorded by the Company in the year the contract was entered into. The present value of this commitment as of January 29, 1995 is $955,000 which is reflected in the accompanying financial statements. 5. Major customers --------------- As of January 29, 1995, three customers accounted for 29, 28 and 7 percent of sales, as well as 36, 17 and 11 percent of accounts receivable, respectively. 6. Accrued Liabilities ------------------- Accrued liabilities consist of the following: Payroll and related $304,614 Sales tax 27,452 Environmental 250,000 Reserve for credit memos 150,000 -------- $732,066 ========
- 4 - 7. Notes payable ------------- Note payable, bearing interest at 7.25%, due in monthly installments to 1996, collateralized by certain equipment $ 18,553 Note payable, bearing interest at 7.25%, due in monthly installments to 1996, collateralized by certain equipment 17,494 --------- $ 36,047 =========
8. Environmental Matters --------------------- The Company utilizes several types of acids and solvents in the manufacturing process which are neutralized in a series of underground tanks. The Company has decided to remove underground acid neutralization tanks to be replaced with an upgraded system as certain contaminants have been collected from a monitoring well on the property. The Company has accrued $250,000 for the removal of the underground tanks, installation of a treatment system and filtering of compounds. Based on advice of environmental consultants, Company management believes this reserve is adequate to cover the related costs and any future clean-up. 9. Employee Benefit Plan --------------------- The Company maintains a defined contribution plan under section 401(k) of the Internal Revenue Code. Under this plan, employees may defer up to 12% of their salary, subject to Internal Revenue Service limits. Company contributions to the plan are at the discretion of the board of directors. The Company contributed $49,000 to the plan for fiscal 1995 which is accrued in the accompanying financial statements. 10. Deferred Revenue ---------------- Deferred revenue represents cash advances from customers for product design and engineering services. Services are generally performed within one year. 11. Statement of Cash Flows ----------------------- The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. For the year ended January 29, 1995, $35,452 of services were contributed in exchange for 7,500 shares of the Company's common stock. The services have been recorded in the accompanying income statement at the fair market value of the services at the date of the transfer as determined by Company management. For the year ended January 29, 1995, cash payments for interest were approximately $3,000, and there were no cash payments for income taxes. - 5 - 12. Subsequent event ---------------- In October 1995, the shareholders of the Company agreed to exchange their stock for 775,000 shares of common stock of Semtech Corporation. This transaction is being accounted for as a pooling of interests. SEMTECH CORPORATION AND SUBSIDIARIES ------------------------------------ UNAUDITED PRO-FORMA BALANCE SHEET --------------------------------- AS OF JULY 30, 1995 ------------------- (In thousands except per share amounts)
ASSETS ------ Historical ------------------------ (a) Gamma, Inc. Semtech Pro-Forma Pro-Forma (Unaudited) (Unaudited) Adjustments (Unaudited) ------------ ----------- ------------- ------------ Cash and cash equivalents $1,036 $ 4,018 $ $ 5,054 Temporary investments - 411 411 Receivables, net 1,324 6,336 (78)(c) 7,582 Inventories 818 7,005 7,823 Income tax refundable - 80 80 Other current assets 9 396 405 ------ ------- ------ ------- Total current assets 3,187 18,246 (78) 21,355 ------ ------- ------ ------- Property plant and equipment 74 4,348 4,422 Deferred tax asset 364 214 578 Other Assets 21 393 414 ------ ------- ------ ------- Total assets $3,646 $23,201 (78) 26,769 ====== ======= ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current portion of long-term debt $ 36 $ 297 $ $ 333 Accounts payable 1,278 2,382 (78)(c) 3,582 Accrued liabilities 1,076 1,550 300 (e) 2,926 Income taxes payable 740 510 324 1,250 Other current liabilities 216 - 216 ------ ------- ------ ------- Total current liabilities 3,346 4,739 222 8,307 ------ ------- ------ ------- Long-term debt, less current - 547 547 Deferred Compensation 639 - 639 SHAREHOLDERS' EQUITY: Common stock 62 65 (54)(a) 73 Additional paid-in capital - 9,064 54 (a) 9,118 Retained earnings (401) 9,046 (324)(e) 8,345 Cumulative translation adjustment - (260) (260) ------ ------- ------ ------- Total shareholders' equity (339) 17,915 (300) 17,276 ------ ------- ------ ------- Total liabilities and shareholders' equity $3,646 $23,201 $ (78) $26,769 ====== ======= ====== =======
The accompanying notes are an integral part of this pro-forma financial statement. SEMTECH CORPORATION AND SUBSIDIARIES ------------------------------------ UNAUDITED PRO-FORMA COMBINED ---------------------------- INCOME STATEMENTS ----------------- FOR THE SIX MONTHS ENDED ------------------------ JULY 30, 1995 ------------- (In thousands except per share amounts)
Historical ------------------------ (b) Gamma, Inc. Semtech Pro-Forma Pro-Forma (Unaudited) (Unaudited) Adjustments (Unaudited) ------------ ----------- -------------- ------------ NET SALES $7,616 $19,916 $ (78)(c) $ 27,454 COST OF SALES 4,672 11,874 (78)(c) 16,468 ------ ------- ------- -------- Gross profit 2,944 8,042 - 10,986 ------ ------- ------- -------- OPERATING COSTS AND EXPENSES: Selling, general and administrative 1,470 3,723 5,193 Product development and engineering 638 599 - 1,237 ------ ------- ------- -------- Total operating costs and expenses 2,108 4,322 - 6,430 ------ ------- ------- -------- Income from operations 836 3,720 - 4,556 ------ ------- ------- -------- OTHER (INCOME) EXPENSE: Interest 4 (28) (24) Other expense, net 35 - - 35 ------ ------- ------- -------- Income before taxes 797 3,748 - 4,545 ------ ------- ------- -------- PROVISION FOR INCOME TAXES 353 1,113 - 1,466 ------ ------- ------- -------- Net income $ 444 $ 2,635 $ - $ 3,079 ====== ======= ======= ======== INCOME PER COMMON SHARE: Primary $0.49 $0.50(d) Fully diluted $0.47 $0.49(d) WEIGHTED AVERAGE SHARES OUTSTANDING: Primary 5,370 6,145 (d) Fully diluted 5,566 6,341 (d)
The accompanying notes are an integral part of this pro-forma financial statement. SEMTECH CORPORATION AND SUBSIDIARIES ------------------------------------ UNAUDITED PRO-FORMA COMBINED INCOME STATEMENTS ---------------------------------------------- FOR THE YEAR ENDED JANUARY 29, 1995 ----------------------------------- (In thousands except per share amounts)
Historical -------------------- (b) Pro-Forma Pro-Forma Gamma, Inc. Semtech Adjustments (Unaudited) ----------- -------- ----------- ------------ NET SALES $8,795 $25,810 $ $34,605 COST OF SALES 5,791 17,542 - 23,333 ------ ------- -------- ------- Gross profit 3,004 8,268 - 11,272 ------ ------- -------- ------- OPERATING COSTS AND EXPENSES: Selling, general and administrative 1,962 5,623 7,585 Product development and engineering 704 884 - 1,588 ------ ------- -------- ------- Total operating costs and expenses 2,666 6,507 - 9,173 ------ ------- -------- ------- Income from operations 338 1,761 - 2,099 ------ ------- -------- ------- OTHER (INCOME) EXPENSE: Interest expense - 160 160 Other expense, net 4 (93) - (89) ------ ------- -------- ------- Income before taxes 334 1,694 - 2,028 ------ ------- -------- ------- PROVISION FOR INCOME TAXES 19 507 - 526 ------ ------- -------- ------- Net income $ 315 $ 1,187 $ - $ 1,502 ====== ======= ======== ======= INCOME PER COMMON SHARE: Primary $0.25 $0.27(d) Fully diluted $0.22 $0.25(d) WEIGHTED AVERAGE SHARES OUTSTANDING: Primary 4,743 5,518(d) Fully diluted 5,328 6,103(d)
The accompanying notes are an integral part of this pro-forma financial statement. SEMTECH CORPORATION AND SUBSIDIARIES ------------------------------------ NOTES TO UNAUDITED PRO-FORMA COMBINED STATEMENTS ------------------------------------------------ (a) Assumes the merger was consummated at the end of the period. (b) The pro-forma profit and loss adjustments do not include non-recurring merger expenses to be incurred by the Company estimated at approximately $490,000, and related tax benefit of approximately $190,000. (c) Represents intercompany sales and related accounts receivable and accounts payable. (d) Based on exchanging 147,566 shares of Gamma Inc. stock for 775,000 shares of Semtech Corporation common stock as if the merger had occurred on January 31, 1994, the beginning of the fiscal year. (e) Represents non-recurring merger expenses estimated at approximately $300,000, net of tax benefit. -----END PRIVACY-ENHANCED MESSAGE-----