2015-11-16T13:25:00-06:00 2014-12-31 861065772 DELOITTE TAX LLP 555 MISSION STREET SAN FRANCISCO CA 94105 990 2014-01-01 941160950 SRI INTERNATIONAL SRII 6508592000 333 RAVENSWOOD AVENUE MENLO PARK CA 94025 LUTHER LAU CFO & TREASURER 6508594304 2015-11-13 1 JOAN S MCMAHON P00966494 4157834000 2014 2016-02-25 16:41:14Z LUTHER LAU 333 RAVENSWOOD AVENUE MENLO PARK CA 94025 554739757 0 X WWW.SRI.COM X 1946 CA WORLD-CHANGING SOLUTIONS MAKING PEOPLE SAFER, HEALTHIER, AND MORE PRODUCTIVE. 13 9 2555 0 127854451 -3798297 52041334 52523183 475881566 472030769 5274901 1769087 16879552 13091659 550077353 539414698 0 0 0 0 303205317 298442491 0 0 0 243910036 240885207 547115353 539327698 2962000 87000 303182000 294959000 121295000 114106000 181887000 180853000 X SRI INTERNATIONAL CREATES WORLD-CHANGING SOLUTIONS MAKING PEOPLE SAFER, HEALTHIER, AND MORE PRODUCTIVE. 0 0 229189700 250638478 ENGINEERING & SYSTEMS DIVISION (ESD), SRI'S LARGEST GROUP, COMPRISES MORE THAN 800 STAFF MEMBERS CONDUCTING SCIENTIFIC RESEARCH AND DEVELOPMENT, SUPPORTING AND DEPLOYING TECHNOLOGIES AND SYSTEMS, AND FIELDING PRODUCTS FOR ITS GOVERNMENT AND NONGOVERNMENT CLIENTS. OUR EXPERTISE INCLUDES IONOSPHERIC AND SPACE RESEARCH, RADAR AND REMOTE SENSING, SIGNAL PROCESSING AND ALGORITHM DEVELOPMENT, MEDICAL DEVICES, ROBOTICS, VIDEO PROCESSING, PERSISTENT SURVEILLANCE, BIOMETRICS, SIGNALS AND ELECTRONIC INTELLIGENCE, SOFTWARE ENGINEERING, TRAINING SYSTEMS, AND WIRELESS COMMUNICATIONS. 68997900 75145527 INFORMATION AND COMPUTING SCIENCES (ICS) CONDUCTS SCIENTIFIC RESEARCH TO DEVELOP AND ADVANCE NEW TECHNOLOGIES IN MACHINE INTELLIGENCE, SPEECH AND NATURAL LANGUAGE, PERCEPTION AND VISUAL SCIENCES, BIOINFOMATICS, FORMAL METHODS, AND COMPUTER SECURITY. THE GROUP'S PIONEERING INNOVATIONS HAVE BEEN LEADING THE FIELD OF COMPUTER SCIENCE FOR DECADES. 57497000 62438034 SRI'S PHYSICAL SCIENCES DIVISION CONDUCTS SCIENTIFIC RESEARCH TO ADDRESS IMPORTANT TECHNICAL CHALLENGES IN CHEMISTRY, PHYSICS, MATERIALS SCIENCE, MECHANICS, OPTICS, NANOTECHNOLOGY AND MANY OTHER FIELDS. IT OFFERS MULTIDISCIPLINARY TEAMS TO SOLVE TECHNICAL CHALLENGES THROUGH LABORATORY EXPERIMENTS, COMPUTER SIMULATIONS, AND TESTING. THE WORK RANGES FROM FUNDAMENTAL RESEARCH AND LABORATORY EXPERIMENTS TO COMPUTER SIMULATIONS, PILOT-SCALE TESTING, AND SYSTEMS DEVELOPMENT. 98222539 84117553 SRI ENGAGES IN A BROAD RANGE OF OTHER RESEARCH INITIATIVES IN FURTHERANCE OF ITS EXEMPT MISSION, AS EXEMPLIFIED BY THE BIOSCIENCES DIVISION AND POLICY DIVISION. THE BIOSCIENCES DIVISION IS A UNIQUE ORGANIZATION OF APPROXIMATELY 250 PEOPLE, WITH ALL OF THE RESOURCES NECESSARY TO TAKE CHEMICAL AND BIOLOGICAL RESEARCH PROGRAMS FROM "IDEA TO IND" - FROM INITIAL DISCOVERIES TO INVESTIGATIONAL NEW DRUG APPLICATIONS TO START HUMAN CLINICAL TRIALS. THE BIOSCIENCES DIVISION PERFORMS BASIC RESEARCH ON DISEASE MECHANISMS, DRUG DISCOVERY AND THE DEVELOPMENT OF BIOLOGICS, AND FULL-SERVICE PRECLINICAL CONTRACT RESEARCH AND DEVELOPMENT. THE POLICY DIVISION UNDERTAKES RESEARCH TO ADDRESS PROBLEMS POSED BY COMPLEX ISSUES IN EDUCATION, HEALTH, ECONOMIC DEVELOPMENT AND HUMAN SERVICES. POLICY EXPERTS DEVELOP RESEARCH-BASED SOLUTIONS TO PROBLEMS POSED BY RAPID SOCIAL, TECHNOLOGICAL, AND ECONOMIC CHANGES IN SOCIETY. THE RESEARCH IS USED TO SHAPE INNOVATIONS TO IMPROVE PRODUCTIVITY AND QUALITY OF LIFE AT HOME, AT SCHOOL, AND IN THE WORKPLACE. 98222539 84117553 453907139 1 1 0 1 0 0 0 0 0 0 1 0 0 0 1 0 0 1 0 1 1 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 1 1 0 0 0 1 674 0 1 2555 1 1 1 1 JA GL 0 0 0 0 0 0 0 0 X 13 9 1 0 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 1 1 CA OR X X LUTHER LAU 6508592644 333 RAVENSWOOD AVENUE MENLO PARK CA 94025 CURTIS R CARLSON PRESIDENT/CEO (THROUGH 08/2014) 40.00 X X 1419443 0 51266 WILLIAM A JEFFREY CEO 40.00 X X 210278 0 2638 SAMUEL H ARMACOST BOARD MEMBER 6.00 X 56500 0 0 MARIANN BYERWALTER BOARD CHAIR 12.00 X 170000 0 0 VERNON E CLARK BOARD MEMBER 4.00 X 55000 0 0 CHARLES A HOLLOWAY BOARD MEMBER 6.00 X 66500 0 0 ROBERT L JOSS BOARD MEMBER 6.00 X 64000 0 0 LESLIE F KEENE BOARD MEMBER 6.00 X 64000 0 0 HENRY KRESSEL BOARD MEMBER 4.00 X 55000 0 0 DAVID LIDDLE BOARD MEMBER 4.00 X 85800 0 0 PHILIP J QUIGLEY BOARD MEMBER 4.00 X 52000 0 0 WENDELL WIERENGA BOARD MEMBER 4.00 X 55000 0 0 JOHN J YOUNG JR BOARD MEMBER 4.00 X 58000 0 0 RICHARD H ABRAMSON V.P. GENERAL COUNSEL 40.00 X 582387 0 68192 THOMAS J FURST SR. V.P. & CFO (THROUGH 01/2014) 40.00 X 367821 0 38252 LUTHER LAU CFO 40.00 X 370551 0 42727 BYRON P ROVEGNO TREASURER 20.00 X 163179 0 42426 WILLIAM MARK V.P. INFO & COMPUTING SCIE 40.00 X 820708 0 71210 JOHN W PRAUSA V.P. ENGINEERING & SYSTEMS 40.00 X 607567 0 44346 STEPHEN J CIESINSKI V.P. STRATEGIC BUSINESS IN 40.00 X 504313 0 59314 WALTER H MOOS V.P. BIOSCIENCES 40.00 X 483736 0 42807 DONALD S SEATON V.P. ENGINEERING & R&D DIVISION 40.00 X 433911 0 48804 MARK A CLIFTON V.P. PRODUCTS & SERVICES D 40.00 X 410575 0 68511 ERIC M PEARSON V.P. PHYSICAL SCIENCES 40.00 X 409320 0 29715 JEAN E TOOKER V.P. HUMAN RESOURCES 40.00 X 346587 0 59774 PHILIP A PORRAS PROGRAM DIRECTOR 40.00 X 1190207 0 54448 PATRICK D LINCOLN LABORATORY DIRECTOR 40.00 X 911689 0 70400 DOUGHLAS A BERCOW DIRECTOR BUSINESS DEVELOPMENT 40.00 X 464283 0 54411 STEVEN S WEINER DEPUTY GENERAL COUNSEL IP 40.00 X 456742 0 70005 NORMAN WINARSKY V.P. SRI VENTURES 40.00 X 538239 0 60614 11473336 0 979860 970 0 1 0 ADVANTAGE TECHNICAL RESOURCING 220 NORWOOD PARK SOUTH NORWOOD MA 02062 STAFFING 3017864 REYNOLDS CLEANING SERVICES 1472 ODDSTAD DRIVE REDWOOD CITY CA 94063 JANITORIAL 1146339 CLP RESOURCES INC 1380 GREG STREET SUITE 208 SPARKS NV 89431 STAFFING 786481 JACQUETTE CONSULTING INC 710 PROVIDENCE ROAD MALVERN PA 19355 CONSULTING 729513 PRICEWATERHOUSE COOPERS 300 MADISON AVENUE NEW YORK NY 10017 ACCOUNTING 626703 100 52431183 92000 53380 52523183 SCIENTIFIC RESEARCH 541700 344176318 344176318 COMMERCIAL TECH SERVICE 541900 127854451 127854451 472030769 1642278 1642278 16855815 16855815 3075488 7148467 -4072979 -4072979 -4072979 8303401 8176592 126809 126809 126809 OTHER INCOME 900099 308823 308823 308823 539414698 344485141 127854451 14551923 X 8508619 17522 8491097 192841760 162491522 30350238 18360918 15207273 3153645 63096232 52388465 10707767 15634962 12949524 2685438 2702369 2702369 944919 62043 882876 73500 73500 132545354 119493785 13051569 345673 345673 19684999 17411093 2273906 8511794 2387404 6124390 13648240 7266836 6381404 14388700 13661080 727620 1498581 1224916 273665 665682 665682 17504306 15506665 1997641 2041134 215245 1825889 EQUIPMENT PURCHASES 20329249 20254738 74511 OTHER EXPENSES 13343556 13343556 PRINTING/PUBLICATIONS 73661 25472 48189 REALLOCATION EXPENSE -7416510 -7416510 539327698 453907139 85420559 0 292526 1042757 27610474 31340243 100514000 89045000 4248000 4666000 4642000 6658000 315247522 213455522 107191000 101792000 51236000 52412000 7448000 8003000 303182000 294959000 65225000 57612000 31701000 29912000 1762000 2110000 22607000 24472000 121295000 114106000 X 180019000 179583000 1868000 1270000 181887000 180853000 303182000 294959000 X 87000 -130000 -991000 X 0 1 X 1 1 1 X 43076732 38406936 44879486 52041334 52523183 230927671 357981268 539077064 502896065 474808566 344176318 2218939281 401058000 577484000 547775551 526849900 396699501 2449866952 0 192029553 238801140 201342735 130975862 145352569 908501859 192029553 238801140 201342735 130975862 145352569 908501859 1541365093 7983000 8103474 17161390 20638558 21573581 75460003 7983000 8103474 17161390 20638558 21573581 75460003 -131000 2723564 995034 1515895 308823 5412316 408910000 588311038 565931975 549004353 418581905 2530739271 0.60910 0.60040 0.02980 0.02480 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 1 0 0 0 0 1 226328 0 1 73500 299828 0 PART II-B, LINE 1: THE AMOUNT REFLECTED IN LINE 1 (G) AS OTHER ACTIVITIES REPRESENTS THE EXPENSES ASSOCIATED WITH PAID STAFF OR MANAGEMENT. IN ADDITION, SRI INTERNATIONAL CONTRACTED WITH LOBBYING FIRMS TO MEET WITH MEMBERS OF CONGRESS AND THEIR STAFF TO EDUCATE THEM ON SRI-SPECIFIC INITIATIVES THAT WERE DETERMINED WOULD BE OF VALUE TO THE NATION. THESE INITIATIVES INCLUDED AREAS SUCH AS CYBER SECURITY, BIO DEFENSE, ECONOMIC DEVELOPMENT, EDUCATIONAL ENHANCEMENTS AND MILITARY PERSONNEL READINESS. PAYMENTS TO THESE LOBBYING FIRMS ARE REFLECTED ON LINE 1(I). 13488793 13488793 206618255 159981555 46636700 9582923 5497846 4085077 70330945 42314884 28016061 15226606 5661237 9565369 101792000 CLIENT ADVANCES & CREDITS 16389000 REMEDIATION RESERVE 6971000 TENANT ALLOWANCE 1112000 24472000 EUROPE 1 4 PROGRAM SERVICES NSF ATMOSPHERIC RESEARCH FACILITY 428000 EAST ASIA 1 4 INTERNATIONAL PROJECT DEVELOPMENT INTERNATIONAL PROJECT DEVELOPMENT 728000 NORTH AMERICA 0 0 PROGRAM SERVICES NSF ATMOSPHERIC RESEARCH FACILITY 418000 2 8 0 0 2 8 1574000 0 1574000 0 0 0 0 0 1 X X 1 1 X X X X X 1 0 1 0 0 0 1 1 0 CURTIS R CARLSON PRESIDENT/CEO (THROUGH 08/2014) 594644 0 361707 0 463092 0 25926 0 25340 0 1470709 0 0 0 WILLIAM A JEFFREY CEO 159444 0 50631 0 203 0 0 0 2638 0 212916 0 0 0 MARIANN BYERWALTER BOARD CHAIR 170000 0 0 0 0 0 0 0 0 0 170000 0 0 0 RICHARD H ABRAMSON V.P. GENERAL COUNSEL 324052 0 52500 0 205835 0 28327 0 39865 0 650579 0 0 0 THOMAS J FURST SR. V.P. & CFO (THROUGH 01/2014) 192807 0 20000 0 155014 0 19703 0 18549 0 406073 0 0 0 LUTHER LAU CFO 306621 0 40000 0 23930 0 28327 0 14400 0 413278 0 0 0 BYRON P ROVEGNO TREASURER 146640 0 16000 0 539 0 23581 0 18845 0 205605 0 0 0 WILLIAM MARK V.P. INFO & COMPUTING SCIE 393302 0 125000 0 302406 0 28327 0 42883 0 891918 0 0 0 JOHN W PRAUSA V.P. ENGINEERING & SYSTEMS 396004 0 85000 0 126563 0 28327 0 16019 0 651913 0 0 0 STEPHEN J CIESINSKI V.P. STRATEGIC BUSINESS IN 330026 0 90000 0 84287 0 28327 0 30987 0 563627 0 0 0 WALTER H MOOS V.P. BIOSCIENCES 352309 0 42500 0 88927 0 28327 0 14480 0 526543 0 0 0 DONALD S SEATON V.P. ENGINEERING & R&D DIVISION 307906 0 80000 0 46005 0 28327 0 20477 0 482715 0 0 0 MARK A CLIFTON V.P. PRODUCTS & SERVICES D 302715 0 60000 0 47860 0 28327 0 40184 0 479086 0 0 0 ERIC M PEARSON V.P. PHYSICAL SCIENCES 304475 0 30000 0 74845 0 28327 0 1388 0 439035 0 0 0 JEAN E TOOKER V.P. HUMAN RESOURCES 233873 0 40000 0 72714 0 28327 0 31447 0 406361 0 0 0 PHILIP A PORRAS PROGRAM DIRECTOR 241348 0 48000 0 900859 0 28327 0 26121 0 1244655 0 0 0 PATRICK D LINCOLN LABORATORY DIRECTOR 284663 0 57000 0 570026 0 28327 0 42073 0 982089 0 0 0 DOUGHLAS A BERCOW DIRECTOR BUSINESS DEVELOPMENT 238546 0 30000 0 195737 0 27111 0 27300 0 518694 0 0 0 STEVEN S WEINER DEPUTY GENERAL COUNSEL IP 250946 0 29000 0 176796 0 28327 0 41678 0 526747 0 0 0 NORMAN WINARSKY V.P. SRI VENTURES 341694 0 77000 0 119545 0 28327 0 32287 0 598853 0 0 0 PART I, LINE 1A SRI'S TRAVEL POLICY IS STRUCTURED FOR COMPLIANCE WITH FAR 31 205-46. UNDER SUB-SECTION (D) OF THIS PROVISION, AIRLINE COSTS IN EXCESS OF THE LOWEST CUSTOMARY STANDARD ARE ALLOWABLE IN SITUATIONS TO ACCOMMODATE THE PHYSICAL OR MEDICAL NEEDS OF THE TRAVELER. THE DECISION TO PERMIT SUCH TRAVEL, SOLELY FOR MEDICAL REASONS ON AN INDIVIDUAL BASIS, WAS ISSUED FROM THE CONTROLLER'S OFFICE WITHIN THE AUSPICES OF THE CHIEF FINANCIAL OFFICER (CFO). A TEMPORARY HOUSING SUBSIDY IS OCCASIONALLY INCLUDED AS PART OF THE RELOCATION PACKAGE OFFERED TO QUALIFIED EMPLOYEES. PART I, LINES 4A-C PART I, LINE 4A: FORMER PRESIDENT/CEO CURTIS R. CARLSON WAS PAID SEVERANCE OF $285,000 UPON HIS DEPARTURE. PART I, LINE 4C: LIKE MOST UNIVERSITIES AND OTHER RESEARCH INSTITUTIONS, AND CONSISTENT WITH THE REQUIREMENTS OF THE BAYH-DOLE ACT [35 U S C 200 ET SEQ], SRI SHARES WITH SRI INVENTORS AND OTHER CONTRIBUTORS ROYALTIES IN THE FORM OF CASH OR EQUITY RECEIVED FROM SPIN-OFF AND OTHER COMPANIES TO WHOM SRI INTELLECTUAL PROPERTY IS LICENSED OR TRANSFERRED. THE TERMS AND CONDITIONS UNDER WHICH SRI SHARES SUCH EQUITY ARE LAID OUT IN DETAIL IN SRI'S INTELLECTUAL PROPERTY AND EQUITY SHARING PROGRAM THAT WAS APPROVED BY THE IRS IN A PRIVATE LETTER RULING ISSUED IN 1999. OF THE 20 OFFICERS, DIRECTORS, KEY EMPLOYEES, AND HIGHEST COMPENSATED EMPLOYEES LISTED IN PART II 11 RECEIVED EQUITY-BASED PAYMENTS TOTALING $28,872, WITH INDIVIDUAL AMOUNTS RANGING FROM $118 TO $9,585 PART I, LINE 6 LIKE MOST UNIVERSITIES AND OTHER RESEARCH INSTITUTIONS, AND CONSISTENT WITH THE REQUIREMENTS OF THE BAYH-DOLE ACT [35 U S C 200 ET ERQ], SRI SHARES WITH SRI INVENTORS AND OTHER CONTRIBUTORS ROYALTIES IN THE FORM OF CASH OR EQUITY WHICH IS RECEIVED FROM SPIN-OFF AND OTHER COMPANIES TO WHOM SRI INTELLECTUAL PROPERTY IS LICENSED OR TRANSFERRED. AS NOTED ABOVE, THE IRS APPROVED SRI'S INTELLECTUAL PROPERTY ROYALTY AND EQUITY SHARING PROGRAM IN A PRIVATE LETTER RULING ISSUED IN 1999. OF THE 20 OFFICERS, DIRECTORS, KEY EMPLOYEES, AND HIGHEST COMPENSATED EMPLOYEES SHOWN IN PART II 18 RECEIVED ROYALTY PAYMENTS TOTALING $2,945,295 WITH INDIVIDUAL AMOUNTS RANGING FROM $539 TO $895,962. PART I, LINE 7 THE AMOUNTS SHOWN IN COLUMN (II) OF SECTION B OF PART II ON THE PRECEDING PAGE ALL REPRESENT PBC (PERFORMANCE BASED COMPENSATION). PBC IS A FINANCIAL INCENTIVE POOL OF FUNDS THAT IS PRE-APPROVED BY THE BOARD OF DIRECTORS ANNUALLY. PBC PAYOUT IS BASED ON THE FOLLOWING FACTORS THAT ARE DESIGNED TO ALIGN INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE WITH THE NON-PROFIT MISSION OF SRI - GROWTH IN ORDER BOOKINGS, GROWTH IN CONTRACT LABOR REVENUE, MEETING THRESHOLD INCOME FROM RESEARCH CONTRACTS, GENERATING ROYALTY INCOME, GENERATING NEW EQUITY ASSETS RESULTING FROM SPIN-OFF COMPANIES, GENERATING NEW PATENTS, PUBLISHING RESEARCH RESULTS, AND OTHER SUCH METRICS AS DEEMED RELEVANT BY MANAGEMENT FOR THE FISCAL YEAR. A CA INFRASTRUCTURE AND DEVELOPMENT 630304653 13033W3N1 2010-03-10 15000000 RESEARCH FACILITIES UPGRADE 0 0 0 B CA INFRASTRUCTURE AND DEVELOPMENT 630304653 SEEPARTVI 2012-06-28 18590000 REFINANCING 2003 ISSUE 0 0 0 A 15000000 603000 14397000 2011 0 0 1 1 B 18590000 185000 2012 1 0 1 1 A 0 0 0 0 1 0 0 B 0 0 0 0 1 0 0 A 0 0 0 1 1 0 0 0 1 B 0 0 0 1 0 0 0 0 1 A 1 B 1 PART I ROW B COLUMN C CUSIP MATURITY DATE PRINCIPAL 13034ABN9 09/01/2013 $1,075,000 13034ABP4 09/01/2014 $1,110,000 13034ABQ2 09/01/2015 $1,145,000 13034ABR0 09/01/2016 $890,000 13034ABS4 09/01/2017 $925,000 13034ABT6 09/01/2018 $960,000 13034ABU3 09/01/2019 $1,000,000 13034ABV1 09/01/2020 $1,040,000 13034ABW9 09/01/2021 $1,095,000 13034ABX7 09/01/2022 $1,150,000 13034ABX7 09/01/2028 $8,200,000 TOTAL $18,590,000 PART IV 2 C A 07/13/12 REFERRING TO 08/24/2008 B 04/05/12 C NOT YET NICHOLAS CHAPIN FAMILY MEMBER OF CHARLES HOLLOWAY, DIRECTOR 26113 EMPLOYMENT 0 X 1 53380 COMPARABLE SALES 0 1 1 PART I, LINE 32B: STOCK CONTRIBUTIONS ARE DEPOSITED INTO A BROKERAGE ACCOUNT AND EITHER HELD OR SOLD. FORM 990, PART VI, SECTION A, LINE 2 RICHARD ABRAMSON AND TOM FURST (BOTH OFFICERS) MAINTAINED A BUSINESS RELATIONSHIP IN REGARDS TO THEIR OVERSIGHT ROLES (DIRECTORS) IN A CORPORATION PREVIOUSLY SPUN-OUT FROM SRI (AVERATEK). FORM 990, PART VI, SECTION B, LINE 11 THE FORM 990 IS REVIEWED BY SRI STAFF (TAX MANAGER, CFO, CEO), OUTSIDE LEGAL COUNSEL AND THE AUDIT COMMITTEE. A COPY OF THE FINAL VERSION OF THE FORM 990 IS FURNISHED TO THE EACH MEMBER OF THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 12C SRI MAINTAINS, TRAINS ITS OFFICERS, DIRECTORS AND EMPLOYEES REGARDING, AND ENFORCES STANDARDS OF CONDUCT AND CONFLICT-OF-INTEREST POLICIES WHICH, AMONG OTHER THINGS, REQUIRE SUCH PERSONS TO IDENTIFY, DISCLOSE AND AVOID INTERESTS THAT COULD GIVE RISE TO ETHICAL CONFLICTS. TRAINING IN SRI'S CODE OF CONDUCT AND ITS ETHICS AND CONFLICTS-OF-INTEREST POLICIES IS PROVIDED THROUGH SRI'S LEGAL DEPARTMENT, AS WELL AS THROUGH ITS PROFESSIONAL CONTRACTS STAFF. THE ETHICS AND CONFLICT-OF-INTEREST POLICIES ARE POSTED ON SRI'S INTERNAL WEBSITE. SRI'S ETHICS OFFICER IS REACHABLE BY ALL EMPLOYEES THROUGH SRI'S ETHICS "HOTLINE". SRI'S INTERNAL AUDIT STAFF ASSIST THE ETHICS OFFICER IN INVESTIGATING POTENTIAL VIOLATIONS AND RECOMMENDING REMEDIAL MEASURES. SENIOR MANAGEMENT OVERSEES THESE PERSONNEL AND POLICIES AND TAKES CORRECTIVE AND, AS WARRANTED, DISCIPLINARY ACTION. SRI REQUIRES ITS OFFICERS AND DIRECTORS TO COMPLETE AN ANNUAL DISCLOSURE FORM WHICH IS REVIEWED FOR POTENTIAL CONFLICTS. IN THE EVENT OF POTENTIAL CONFLICTS, THE PERSONS INVOLVED ARE BARRED FROM PARTICIPATING IN THE DELIBERATIONS AND DECISIONS REGARDING THE MATTER WHICH IS THE SUBJECT OF THE CONFLICT. FORM 990, PART VI, SECTION B, LINE 15 AMONG THE COMMITTEES OF THE SRI BOARD OF DIRECTORS IS THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE (THE "COMMITTEE"), WHICH IS COMPOSED OF FOUR INDEPENDENT DIRECTORS. ON AN ANNUAL BASIS, THE COMMITTEE REVIEWS AND APPROVES COMPENSATION LEVELS FOR SRI'S SENIOR STAFF AND CEO, BASED ON COMPARABLE COMPENSATION INFORMATION FOR SIMILARLY-SITUATED COMPANIES. THIS COMPARABLE COMPENSATION INFORMATION IS DEVELOPED OR OBTAINED BY A QUALIFIED, EXPERIENCED AND INDEPENDENT COMPENSATION CONSULTANT, WHO PROVIDES A REPORT AND OPINION TO THE COMMITTEE REGARDING THE REASONABLENESS OF THE PROPOSED COMPENSATION LEVELS IN LIGHT OF THE EXTERNAL DATA. THE MINUTES OF THE COMMITTEE REFLECT AND DOCUMENT THE DECISIONS, AND THE BASIS THEREOF, REACHED BY THE COMMITTEE, AND RECORDS RELATING TO THE DATA CONSIDERED BY THE COMMITTEE. THE MINUTES OF THE COMMITTEE'S MEETINGS ARE MAINTAINED BY THE VP OF HUMAN RESOURCES AND THE GENERAL COUNSEL. FORM 990, PART VI, SECTION C, LINE 19 SRI'S ORGANIZATION DOCUMENTS AND FINANCIAL STATEMENTS ARE MADE AVAILABLE TO THE PUBLIC UPON REQUEST. COPIES OF THE FINANCIAL STATEMENTS CAN ALSO BE OBTAINED FROM THE OFFICE OF THE CALIFORNIA SECRETARY OF STATE, WHERE A COPY IS FILED ANNUALLY. SRI'S CONFLICT OF INTEREST POLICY IS NOT MADE AVAILABLE TO THE PUBLIC. FORM 990, PART IX, LINE 11G OTHER FEES: PROGRAM SERVICE EXPENSES 119,493,785. MANAGEMENT AND GENERAL EXPENSES 13,051,569. FUNDRAISING EXPENSES 0. TOTAL EXPENSES 132,545,354. FORM 990, PART XI, LINE 9: INCOME TAX BENEFIT 6,000. EQUITY AND EARNINGS FROM SUBSIDIARY -997,000. AVERATEK 550 NUTTMAN STREET SANTA CLARA CA 95054 260836519 CIRCUIT COMPONENTS CA SRI C -985395 417216 0.80950 1 SRI HOLDINGS 333 RAVENSWOOD AVENUE MENLO PARK CA 94025 931201429 BUSINESS CONSULTANT CA SRI C 1.00000 1 INNOVATIVE POLYMER TECHNOLOGIES LLC 333 RAVENSWOOD AVENUE MENLO PARK CA 94025 HOLDING COMPANY DE SRI C 1.00000 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 AVERATEK - 26-0836519 B 712982 CASH VALUE AVERATEK - 26-0836519 O 192000 AVERAGE PERCENT OF TIME DEVOTED