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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                            ------------------------

                                   FORM 10-K

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

FOR THE FISCAL YEAR ENDED MARCH 31, 2000          COMMISSION FILE NUMBER 0-26092
                            ------------------------

                             C.P. CLARE CORPORATION

             (Exact Name of Registrant as Specified In its Charter)
                            ------------------------

<TABLE>
<S>                                            <C>
             MASSACHUSETTS                                  04-2561471
    (State or Other Jurisdiction of                      (I.R.S. Employer
    Incorporation or Organization)                     Identification No.)

         78 CHERRY HILL DRIVE
              BEVERLY, MA                                     01915
    (Address of Principal Executive                         (Zip Code)
               Offices)
</TABLE>

                                 (978) 524-6700
              (Registrant's Telephone Number, Including Area Code)
                            ------------------------

          Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                        PREFERRED STOCK PURCHASE RIGHTS

                             (Title of Each Class)

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

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

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of June 19, 2000, was $33,763,622.

    The number of shares of the Registrant's Common Stock, par value $.01 per
share, outstanding as of June 19, 2000, was 9,612,916.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the 2000 Proxy Statement for the Registrant's Annual Meeting of
Stockholders, to be filed with the Securities and Exchange Commission within 120
days after the end of the year covered by this Form 10-K, are incorporated by
reference in Part III, Items 10, 11, 12 and 13, of this Form 10-K.

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                               TABLE OF CONTENTS

ITEM

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                                                                                        PAGE
                                                                                      --------
<S>                     <C>                                                           <C>
PART I
1.                      Business....................................................         1
2.                      Properties..................................................        10
3.                      Legal Proceedings...........................................        10
4.                      Submission of Matters to a Vote of Securityholders..........        10
PART II
5.                      Market for Registrant's Common Equity and Related
                        Stockholder Matters.........................................        11
6.                      Selected Financial Data.....................................        12
7.                      Management's Discussion and Analysis of Financial Condition
                        and Results of Operations...................................        13
7a.                     Quantitative and Qualitative Information about Market
                        Risk........................................................        18
8.                      Financial Statements and Supplementary Data.................        19
9.                      Changes in and Disagreements with Accountants on Accounting
                        and Financial Disclosure....................................        48
PART III
10.                     Directors and Executive Officers of the Registrant..........        48
11.                     Executive Compensation......................................        48
12.                     Security Ownership of Certain Beneficial Owners and
                        Management..................................................        48
13.                     Certain Relationships and Related Transactions..............        48
PART IV
14.                     Exhibits, Financial Statement Schedule and Reports on Form
                        8-K.........................................................        48
                        (a) Financial Statements....................................        48
                        (b) Reports on Form 8-K.....................................        49
                        (c) Exhibits................................................        49
                        (d) Financial Statement Schedules...........................        49
15.                     Signatures..................................................        50
</TABLE>

THIS ANNUAL REPORT ON FORM 10-K CONTAINS 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, AS AMENDED. THE COMPANY'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING
STATEMENTS. CERTAIN FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE ARE DISCUSSED IN
THE SECTION ENTITLED "CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS" ON
PAGE 9 OF THIS FORM 10-K.
<PAGE>
                                     PART I

ITEM 1. BUSINESS

    C.P. Clare Corporation (the "Company" or "Clare") is a leading provider of
high voltage analog semiconductor integrated packages, discrete components, and
reed switches (DYAD-Registered Trademark-), to the world's foremost
manufacturers of electronic communications equipment. The Company's primary
products supply the interface between signals transmission and electronic
components by providing the basic isolation and switching functions required by
electronic communications applications.

    Clare is a technology leader in the semiconductor segment of the small
signal relay market. Clare's semiconductor products are capable of integrating a
number of functions previously provided by discrete components into one package
and have contributed to the development of a number of new product applications
such as 56K PCMCIA modems, modem interfaces to the Internet, cable set top
boxes, and other computer telephony uses such as voice mail systems.
Semiconductor products represent the core of the Company's growth strategy for
communication applications.

    Clare focuses on providing solutions for the telecommunications and data
communications markets because of the significant use of analog semiconductor
components and growing demand for integrated semiconductor packages in these
industries. The Company's customers include leading global OEMs such as
Motorola, Compaq, 3Com, ABB, Alcatel, LM Ericsson, Lucent Technologies, Nokia,
Samsung, Dialogic, Psion, and Daewoo.

    Clare was founded in 1937 to design, manufacture and sell electromagnetic
products and was subsequently sold to General Instrument Corporation (GI) in
1967. Theta-J Corporation, founded in 1975 to design, manufacture and market
semiconductor based electronic components, purchased the Clare division of GI in
1989 and changed its name to C.P. Clare Corporation. In July 1999, the Company
acquired Micronix Integrated Systems, Inc. ("Clare-Micronix"), a designer and
manufacturer of analog and mixed-signal application specific integrated
circuits, located in Aliso Viejo, California. During August 1999, the Company
sold substantially all of the electromagnetics business to Sumida Electric
Company of Tokyo, Japan. The Company is incorporated under the laws of
Massachusetts and principal offices are located at 78 Cherry Hill Drive,
Beverly, Massachusetts, 01915.

BACKGROUND

    The growth in the worldwide telecommunications and data communications
markets is being fueled by the convergence of several technological and market
trends which are leading to a broad and increasing array of communications,
networking, computer telephony, and computing products. Advances in computer
hardware and software have accelerated the technological shift to distributed
processing over communications networks. Trends toward portability and
miniaturization and broader functionality have resulted in significant growth in
mobile communications and portable computing and network access products.

    Analog semiconductor integrated packages and circuits and discrete
components provide the interface between voltages and currents for a broad range
of products in the telecommunications and data communications markets, as well
as for products in a wide array of other applications such as telemetering and
remote access, consumer electronics, appliances, computer peripherals, gaming
equipment, automotive, aerospace, automatic test equipment, industrial controls,
and instrumentation. The Company's analog semiconductor integrated packages and
discrete components provide two basic functions required by virtually all
electronic and electrical products: isolation and switching. Isolation separates
the low current communication signal circuit from the higher power circuit,
while the switching function controls the flow of current. Various types of
integrated packages and components based on semiconductor technologies have been
developed to meet these isolation and switching requirements. Clare designs,
manufactures, and sells analog semiconductor products for voltage and

                                       1
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current applications. These technologies and resulting products are utilized for
various communications applications based on a number of factors, including
performance, sensitivity, resistance, size, speed and cost.

STRATEGY

    Clare's strategy for the past 5 years has been to become the preferred
supplier of unique mixed-signal interface integrated circuits to the
communications industry. In addition to operating on the "network's edge" with
analog front ends for analog, ADSL, cable, HomePNA, and other solutions, the
Company is committed to the telecommunications voice, data and video interface
markets in central office or gateway applications. The primary focus is on the
communications industry where the Company has excellent name recognition and
customer contacts worldwide. The Company also endeavors to supply mixed signal
interface chips to other related market niches for high-profit applications that
will dominate and keep the technology breadth alive. These complementary
technical applications will provide counter-cyclicality, but more importantly
enables the Company to pursue a number of markets simultaneously creating strong
growth.

    Clare's product strategy is straightforward. First, the Company continues to
develop and expand the solid state relay (SSR) business supplying SSR's to the
data communications market at falling commodity prices but with a cost advantage
over competition. At the same time, the Company will attempt to expand SSR
offerings into profitable niches in the instrumentation, industrial controls,
telecommunications and power markets. Second, the Company will continue to
invest in and grow the Application Specific Integrated Circuit (ASIC) business.
Third, from the ASIC business, the Company will look to develop standard
products (also called ASSP's or Application Specific Standard Products) for
communications/networking applications as well as clearly defined and isolated
market niches that can be dominated with identical technologies. Finally, the
reed switch business will focus on the high growth portable phone hook switch
and portable device on/off switch.

    The Company's focus is on the continuing shift in technology. The ability to
receive and transmit large amounts of information (data, voice or video) is
becoming more critical than the ability to process that information. The power
of individual personal computers (PCs) is now adequate for most needs so that
the bottleneck is in the pipes that carry data between PCs and other devices.
Pipes using a variety of technologies but all growing dramatically through the
ubiquitous reach of the Internet. As the Internet has emerged in its third
generation as a powerful, all-reaching fabric for communications, it has become
the heart and soul of the end-to-end broadband network. Many companies are
focused on these pipes. Clare is unique in that we have technology, expertise,
and facilities to address the interfaces of these pipes to the real world.

    Key elements of this strategy are:

    CAPITALIZE ON SEMICONDUCTOR OPPORTUNITIES.  Clare is a leader in
semiconductor relay technology, offering a broad line of semiconductor products
in a wide variety of package types and specifications. The Company seeks to
significantly expand the application of its semiconductor technology into
existing and new markets such as communications and instrumentation through the
integration of more functions using fewer chips. From its 5-inch wafer
fabrication facility in Beverly, Massachusetts, Clare is developing new process
technologies in order to engineer high voltage analog integrated circuits. The
Company anticipates that new products and additional capacity from the facility
will better position it for increased product demand resulting from technology
advances in the communications market. During fiscal year 2000, the Company
commenced shipping several new products, including the LiteLink DAA and a solid
state relay in the smallest 4 pin package available in the market today.

    FOCUS ON COMMUNICATIONS INDUSTRY.  The Company has focused primarily on
developing solutions for the computer telephony, data communications, and
telecommunications industries because of the significant use of analog
semiconductor discrete components and the increased need for analog

                                       2
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semiconductor integrated packages and circuits. The Company's semiconductor
products are an enabling technology in certain applications such as modems,
computer telephony and communication interfaces. Clare's
DYAD-Registered Trademark- products are integral components in other
applications such as cellular telephones and accessories. During the year,
product sales to the communications industry represented a significant portion
of the Company's total sales. The Company is qualifying processes and designs
which can capitalize on its core competencies of optical isolation, high voltage
analog semiconductor processes, experience with bonded wafer technology, and
multi-chip packaging for integrated circuits.

    NEW PRODUCT DEVELOPMENT.  The Company has increased and intends to continue
to increase its investment in new product development and strengthen the
functionality of existing products in an effort to enter new markets and gain
share in existing markets. Product development also includes further integration
of new and existing analog semiconductor integrated packages and components into
fewer circuits. Company sponsored research and development expenses were $13.4
million (12.5% of total revenues) and $9.7 million (6.7% of total revenues), for
fiscal years 2000 and 1999, respectively. During fiscal year 2000, in spite of
overall workforce reductions, the Company continued to expand the engineering
workforce.

    LEVERAGE CUSTOMER RELATIONSHIPS AND PURSUE NEW MARKET OPPORTUNITIES.  The
Company has established long-standing customer relationships because of strong
worldwide brand recognition, broad product offerings, and quality customer
service and attention. The Company intends to further leverage customer
relationships by offering complementary and new products to the existing
customer base and by pursuing new market opportunities. The Company is
capitalizing on its worldwide brand recognition to expand into new geographic
markets and new industries. The Company is seeking to increase local and
re-export sales to Japan, China, India and Southeast Asia, where significant
opportunities exist.

    ACQUISITIONS AND BUSINESS COMBINATIONS  The Company's strategy includes
growth in engineering resources and revenue from strategic partnerships and
acquisitions. During fiscal year 2000, Clare entered into a licensing agreement
with X-Com Inc. to obtain access to modulation technology important to
small-office, home-office (SOHO) networking products. Similarly, the Company
made a strategic equity investment during the year in EnrichNet Inc., a
developer of Quality of Service (QoS) software solutions, technology also
complimentary to the SOHO networking market.

CUSTOMERS

    Clare has established a broad base of approximately 1,020 customers
representing a wide range of industries and applications. The communications
industry represents the Company's largest customers due to the industry's
pervasive use of analog semiconductor integrated packages and the need for more
highly integrated circuits. Sales to customers outside the United States
comprised 49%, 40%, and 40%, of the Company's net sales for the fiscal years
2000, 1999 and 1998, respectively. During fiscal year 2000, one customer
accounted for 12% of the Company's sales revenue.

PRODUCT APPLICATIONS

    The Company's products are used in a wide variety of applications, including
telephone network interfaces, caller identification, high current MOSFET
switching, integrated package testers, high frequency communications, cellular
telephones, scanners and RF equipment. Set forth below is a representative
sample of applications for the Company's semiconductor and
DYAD-Registered Trademark- products.

    COMMUNICATIONS

    TELEPHONE NETWORK INTERFACES.  The Company develops products for and sells
into interface and network applications for the communications industry. Clare
was the first to introduce semiconductor products in thin, small flat-pack
packages that integrate the functionality previously provided by a

                                       3
<PAGE>
number of discrete components. These products are referred to as the Data Access
Arrangement (DAA). The DAA is an arrangement of discrete components principally
used in analog data communications, which interface with telephone networks
applications. In certain DAA products such as the Cybergate 2000 and 2100, the
complete DAA function is designed for both European and U.S markets. This
manufacturing capability has allowed Clare to become a leading worldwide
supplier of semiconductor analog integrated packages and components to the major
manufacturers of communication products such as PCMCIA card modems. PCMCIA cards
are thin, credit card size modems which insert into a designated slot in mobile
computer equipment, allowing the portable computer to transmit data over
telephone lines and function as a facsimile machine.

    CELLULAR PHONES.  Cellular telephones and accessories, which are becoming
commonplace, require a high degree of durability and reliability. The Company's
DYAD-Registered Trademark- products, an enabling component of the flip phone,
are surface-mountable switches which maintain switch orientation and provide
cost-effective, reliable and automated assembly in small package sizes for
wireless, modem and video switching requirements. During fiscal 2000, the
Company introduced the Ultra-mini DYAD-Registered Trademark-, a device one-third
the size of the DYAD-Registered Trademark- with the same functionality.

    AUTOMATED PROCESS CONTROL/INSTRUMENTATION AND METERING

    METERING AND REMOTE ACCESS.  Water, gas, electricity meter reading systems
as well as vending machines and gas pumps have been developed to allow the
remote reading of such systems. Semiconductor relays have been incorporated into
these systems and provide a high-speed interface between low level power signals
and the high power output signals required to enhance metering functionality.

    CONTROL INSTRUMENTATION.  Operations such as power plants require multiple
processes to be monitored and controlled under a broad range of environmental
conditions. A high degree of reliability is required in these applications
because if the relay does not function properly, false readings and equipment
damage may result. The Company's electromagnetic wetted reed relay,
semiconductor and surge protection products are used to provide isolation and
surge protection.

    AUTOMATIC TEST EQUIPMENT

    ELECTRICAL TESTERS.  Semiconductor and printed circuit board testers require
precise measurement of smaller, complex products such as integrated circuits,
silicon wafers and printed circuit board assemblies. In each of these pieces of
equipment, placing a dry reed relay on each electrical path creates test points.
If the test path is functioning correctly, the dry reed relay is activated.
Clare's dry reed relays feature low capacitance, a critical feature for this
application which requires sensitivity and precision; and are offered in small
surface mount, high frequency signals up to 1 GHz.

    SECURITY.  The security industry requires low cost, high reliability relay
and switch products for use in proximity sensors, infrared detectors, smoke
detectors, carbon dioxide sensors and supervisory control panels. For example,
the Company's electromagnetic dry reed switches provide a low cost, rugged and
reliable switch for use in proximity sensors which cause the switch to be
activated by use of an external magnet when a door or window is opened.

PRODUCTS

    The Company manufactures several hundred standard products and also develops
and manufactures products for specific customer applications. The Company has
three major product families: (1) Integrated Circuits, which include application
specific integrated circuits (ASICs); customer premise equipment such as data
access arrays and embedded modem modules; networking products for the SOHO
marketplace; and central office equipment such as Line Card Access Switch
(LCAS),

                                       4
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(2) Solid State Relays, including optocouplers and integrated packages, and
(3) DYAD-Registered Trademark- products. Each product line builds on one or more
of the Company's core competencies in the areas of semiconductor technology
design and processing, multi-chip packaging, and materials processing.

    INTEGRATED CIRCUITS

    The Clare-Micronix business unit specializes in the design and manufacture
of analog and mixed signal ASICs and ASSPs, utilizing CMOS, BiCMOS, and Bipolar
semiconductor technologies. Clare-Micronix sells into a wide variety of
marketplaces and is focusing on high-voltage ASICs and searching for ASSP spin
offs.

    The Customer Premise Equipment business unit targets customers in a variety
of markets with common data transmissions requirements. The LiteLink, Cybergate,
and Embedded Modem Module products are data access arrangements for applications
such as voice over Internet protocol, telemetering, and PCMCIA cards.

    The Central Office business unit concentrates on products for telephone
central office switching applications. Clare's LCAS product is a solid state
solution to a function traditionally performed by electromagnetic devices with a
very large market opportunity.

    The Networking Products business unit is focused on the SOHO marketplace.
The Company is currently sampling an inexpensive high speed solution for home
phone line networking of multiple appliances and internet connectivity.

    SOLID STATE RELAYS

    The Company manufactures a wide variety of semiconductor products consisting
primarily of high voltage analog components, optocouplers, and integrated
packages which are sold in a broad line of over 270 configurations. The
Company's semiconductor products are sold primarily to communications customers
and are also utilized in a number of applications in other industries such as
automated process control, data acquisition, aerospace and automotive.
Semiconductor products achieve the required isolation and switching functions
with no moving parts, eliminating the mechanical wear typically associated with
other types of electromagnetic relays, thus improving reliability with low
distortion. The Company has integrated several additional functions into one
small package, thereby further reducing board size requirements and providing
the user with lower component and assembly costs

    DYAD-REGISTERED TRADEMARK- PRODUCTS

    The Company manufactures several different sized DYAD-Registered Trademark-
products used in applications such as cellular telephones, security and relays.
The DYAD-Registered Trademark- switch consists of two flat metal blades, which
are encapsulated in a glass tube and hermetically sealed in an inert atmosphere.
DYAD-Registered Trademark-s have an extremely hard refractory metal applied to
the contacts and are actuated by use of an external magnetic field. The
DYAD-Registered Trademark- was the first commercially available switch to have
surface mount capabilities, which maintain orientation between the pads and the
switch. Surface mounting allows for the automated placement of the switch onto
circuit boards, thus lowering manufacturing costs. The
DYAD-Registered Trademark- switch has a rugged design, which may increase
product life and has lower bounce, which provides less electronic noise and is
particularly important for applications with a high degree of sensitivity. These
products, which can be manufactured in high volumes at low cost, can function
through millions of operations and have low resistance, which causes less heat
generation and power consumption. The Company has recently introduced the
Ultra-mini DYAD-Registered Trademark-, a miniaturized, surface mount, high
frequency product to its customers. The communications industry, with products
such as cellular phones, modems and facsimile machines, represents the largest
market opportunity; however, these products also widely used

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in automatic test equipment applications, due to their high sensitivity and low
resistance, and alarm sensors for residential and commercial security
applications.

    PRODUCT DEVELOPMENT

    The Company intends to build upon its history of innovation in both the
semiconductor and switching and sensors markets. The Company's product
development strategy is driven by two objectives: meeting customer application
requirements and extending the Company's technical capabilities. The Company has
focused on utilizing its relationships with key OEMs and its applications
engineering capability to enhance existing products and develop new products.

SALES AND DISTRIBUTION

    Clare sells through a network of direct salespeople, contract sales
representatives and distributors in North America, Europe, Japan and the Far
East.

    In general, sales representatives and distributors have entered into
agreements that allow for termination by either party upon 30 days' notice and
return of products by distributors. These agreements generally allow
representatives and distributors to market and sell products competitively with
those of the Company and generally permit representatives and distributors to
return a small portion of products purchased by them during the term of such
agreements and to return all products (other than obsolete products) purchased
by them upon termination of such agreements.

BACKLOG

    The Company's backlog reporting method includes only those purchase orders
scheduled for shipment within 6 months following the order date. As of
March 31, 2000, six-month order backlog was approximately $13.6 million. The
comparable (including only ongoing product lines) six-month backlog from a year
ago was $16.1 million. Although the Company's contract terms may vary from
customer to customer, purchasers of standard products may generally cancel or
reschedule orders without significant penalty. Since backlog can be canceled or
rescheduled, the Company's backlog at any time is not necessarily indicative of
future revenue.

MANUFACTURING

    The Company's Beverly and St. Louis manufacturing and assembly facilities
are ISO 9001 certified. ISO 9001 certification is an international certification
for quality control systems, the receipt of which emphasizes the Company's
commitment to quality control and assists the Company in becoming a qualified
supplier for certain customers. During fiscal 2001, the Company will be moving
DYAD-Registered Trademark- production from an undersized 14,000 square foot
facility in the St. Louis area to a new nearby 44,000 square foot facility. The
Company is taking every precaution to ensure delivery of product is not
interrupted; however, there can be no guarantees.

    The manufacturing of semiconductor products involves two general phases of
production: the wafer fabrication (chip manufacturing) process, and the assembly
(chip packaging) process. The Company's new Massachusetts wafer fabrication
facilities design, manufacture and test chips. All fabricated chips for
discretes are shipped for assembly to a subcontractor in the Philippines.
Certain assembled relays are returned to Massachusetts for testing, packaging,
and shipment to the customer. Wafer fabrication and assembly operations for ASIC
products are sub-contracted; however, probe testing of wafers and final product
testing are performed at the Company's Aliso Viejo, California facility.

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COMPETITION

    The markets in which the Company operates are highly competitive, and the
Company faces competition from a number of different manufacturers in each of
its product areas and geographic markets. The principal competitive factors
affecting the market for the Company's products include performance,
functionality, price, brand recognition, product size, customer service and
support and reliability.

    Many of the Company's competitors have substantially greater financial,
marketing, technical, manufacturing and distribution resources. While the
Company believes that it's broad product offerings, worldwide sales coverage,
customer service and brand recognition enable the Company to compete
effectively, there can be no assurance that the Company will be able to continue
to do so.

EMPLOYMENT

    As of March 31, 2000, the Company had approximately 500 employees. The
Company believes that relations with employees are generally good, and none are
unionized.

PROPRIETARY RIGHTS

    The Company holds a number of United States and foreign patents and
trademarks. The Company has additional U.S. and foreign patent and trademark
applications pending. The Company intends to continue to seek patents on its
products, as appropriate. The Company believes that although these patents may
have value, given the rapidly changing nature of the industries in which the
Company competes, the Company depends primarily on the technical competence and
creativity of its technical work force and its ability to continue to introduce
product improvements rapidly. The Company does not believe that the success of
its business is materially dependent on the existence, validity or duration of
any patent, license or trademark.

    The Company attempts to protect its trade secrets and other proprietary
rights through formal agreements with employees, customers, suppliers and
consultants. Each employee of the Company is required to sign an agreement
regarding ownership of proprietary rights and trade secrets. Although the
Company intends to protect its intellectual property rights vigorously, there
can be no assurance that these and other security arrangements will be
successful. The process of seeking patent protection can be long and expensive,
and there can be no assurance that existing patents or any new patents that may
be issued will be of sufficient scope or strength to provide meaningful
protection or any commercial advantage to the Company. The Company may be
subject to or may initiate interference proceedings in the patent office, which
can demand significant financial and management resources. The Company has from
time to time received, and may in the future receive, communications from third
parties asserting patents on certain of the Company's products and technologies.
Although the Company has not been a party to any material intellectual property
litigation, in the event any third party were to make a valid claim and a
license were not available on commercially reasonable terms, the Company's
operating results could be materially and adversely affected. Litigation, which
could result in substantial cost to and diversion of resources of the Company,
may also be necessary to enforce patents or other intellectual property rights
of the Company or to defend the Company against claimed infringement of the
rights of others. The failure to obtain necessary licenses or the occurrence of
litigation relating to patent infringement or other intellectual property
matters could have a material adverse affect on the Company's business and
operating results.

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ENVIRONMENTAL

    The Company's facilities are regulated pursuant to foreign, state and
federal statutes, including those addressing hazardous waste, clean water and
clean air. The Comprehensive Environmental Response, Compensation and
Liabilities Act of 1980, as amended (the "Superfund Act"), imposes retroactive,
strict and, in certain cases, joint and several liability upon certain persons
in connection with the cleanup of sites at which there has been a release or
threatened release of hazardous substances into the environment. The Superfund
Act provides for immediate response and removal actions coordinated by the
Environmental Protection Agency to releases of hazardous substances into the
environment, and authorizes the government to respond to the release or
threatened release of hazardous substances or to order persons responsible for
any such release to perform any necessary cleanup. The statute imposes liability
for these responses and other related costs, including the cost of damages to
natural resources, to the parties involved in the generation, transportation and
disposal of such hazardous substances and to those who currently own or operate
or who previously owned or operated the property upon which such releases
occurred. Under the statute, and given the manufacturing processes used by the
Company, the Company may be deemed liable as a generator or transporter of a
hazardous substance which is released into the environment, or as the current or
former owner or operator of a facility from which there is a release of a
hazardous substance into the environment. The Company has not to date had any
action brought against it under the Superfund Act, but there can be no assurance
that there will be no action brought against the Company in the future. Local
sewer discharge requirements are applicable to certain of the Company's
facilities. The Company's facilities are subject to local siting, zoning and
land use restrictions. The Company believes it is in compliance with all
foreign, federal, state and local laws regulating its business. The Company
however has not undertaken a comprehensive review of its properties to determine
whether or not hazardous materials have been discharged at any time in the past,
whether by the Company or a previous occupant of the facility.

    Any failure by the Company to control the use of, or to restrict adequately
the discharge of, hazardous materials under present or future regulations could
subject the Company to fines or substantial liability. In addition, the Company
could be held financially responsible for remedial measures if its properties
were found to be contaminated whether or not the Company was responsible for
such contamination.

    An environmental site investigation commissioned in 1992, by the Company on
its West Pratt Avenue facility in Chicago, Illinois ("Site"), reported evidence
of contamination at the Facility. The Company voluntarily reported the discovery
to the Illinois Environmental Protection Agency ("IEPA"), and has since been
involved in discussions with IEPA and the U.S. Environmental Protection Agency
regarding the implications of the investigation and the need for further
investigation and remedial work. The Company and General Instrument have agreed
to share the costs of implementing the proposed cleanup plan at both the Site
and the adjacent properties. Pursuant to that agreement, General Instrument will
pay for 75% of the costs of the soil remediation and related environmental
cleanup costs, and the Company will bear 25% of such costs and the complete cost
of removing asbestos from the building structure and building demolition. The
agreement is subject to a reservation of both parties' rights to reallocate
these costs or litigate concerning final liability at the Site. If a final
accounting acceptable to Clare cannot be attained, Clare may commence litigation
against General Instrument to recover its fair share of such costs.

    During fiscal 1998 and fiscal 1999, the Company completed remediation of the
Site to industrial/ commercial standards and obtained a no-further-remediation
letter from the IEPA.

    Further testing has confirmed that some of the contamination has migrated
onto two adjacent properties. The Company is working with those parties and
their environmental consultants to establish the procedures and costs for
remediating these properties. The Company has completed the

                                       8
<PAGE>
remediation agreed to by the parties on one of the adjacent sites and expects
that such site will receive a no-further-remediation letter with respect to the
work done by the Company.

    The Company and General Instrument are continuing to address contamination
that has been found on the two adjacent sites. Management continues to analyze
the estimated environmental remediation liability and has recorded additional
amounts when known events have required revised estimates. However, given the
current stage of the remediation process and the magnitude of contamination
found at the Site and adjacent sites, the ultimate disposition of this
environmental matter could have a significant negative impact on the Company's
consolidated financial results for a future reporting period.

CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

    The information contained in and incorporated by reference in this Form 10-K
contains forward-looking statements with the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended. The Company's actual results could differ materially
from those set forth in the forward-looking statements. Factors that may affect
future operating results include:

    DEVELOPMENT OF NEW PRODUCTS.  Technological change and new product
introductions characterize the markets for the Company's products. In
particular, the Company is dependent on the communications industry, which is
characterized by intense competition and rapid technological change. The Company
expects sales to the communications industry to continue to represent a
significant portion of its sales for the foreseeable future. A decline in demand
for computer-related equipment such as facsimile machines, modems and cellular
telephones would cause a significant decline in demand for the Company's
products. The Company has invested heavily over the past several years in the
capital expenditures necessary to develop its new products. Slower than expected
acceptance of these new products will have the effect of adversely affecting the
Company's operating results. To remain competitive, the Company must continue to
develop new process and manufacturing capabilities to meet customer needs and
introduce new products that reduce size and increase performance. If the Company
is unable to develop such new capabilities or is unable to design, develop and
introduce competitive new products, its operating results would be adversely
affected.

    INTERNATIONAL OPERATIONS.  The Company's international operations are
subject to several risks including, but not limited to, fluctuations in the
value of foreign currencies, changes to import and export duties or regulations,
greater difficulty in collecting accounts receivable and labor unrest. While to
date these factors have not had a material impact on the Company's results,
there can be no assurance that there will not be such an impact in the future.

    COMPETITION.  Clare competes with various companies across the world.
Certain of the Company's competitors may have greater manufacturing, engineering
or financial resources than the Company.

    COMPLETION OF THE NEW WAFER FABRICATION FACILITY.  The Company recently
completed construction of a larger, more advanced semiconductor facility in
Beverly, Massachusetts, to address capacity constraints and operating
efficiencies in the production of its semiconductor products. The new facility
must be effectively and fully utilized in order for the Company's projected
efficiencies to be fully realized. The continuing lack of effective utilization
could have a material, adverse effect on the Company's future operating results.

    RELIANCE ON KEY SUPPLIERS.  The Company relies on certain suppliers of raw
materials and services for sole source supply of critical items. There can be no
assurance that in the future the Company's suppliers will be able to meet the
Company's needs effectively and on a timely basis. Any such disruption could
have a material, adverse impact on future results.

                                       9
<PAGE>
    NEW SYSTEMS.  The Company is in the process of completing the implementation
of an Oracle Enterprise Resource Planning system for all applications and
locations along with Lotus NOTES Rev. 5 secure communications system and, as a
result, may experience disruptions, which may have material, adverse impact on
the Company's results of operations.

    The Company has experienced fluctuation in its operating results in the past
and its operating results may fluctuate in the future. The Company has changed
the scope and geographic area of its operations. This expansion has resulted in
new and increased responsibilities for management personnel and has placed
pressures on the Company's operating systems. These operating systems are in the
process of being updated and centralized, while the existing operating systems
are phased out. The Company's future success will depend in large part on its
ability to manage these changes and effectively manage its remote offices and
facilities.

    DIVESTITURE.  On August 20, 1999, the Company sold all of the issued and
outstanding shares of common stock of Clare EMG, Inc. ("EMG"), a wholly owned
subsidiary of the Company, to Sumida Electric Co., Ltd. ("Sumida"), for $37,426
in cash. EMG included the Company's advanced magnetic winding, reed relay, and
surge arrestor product lines together with the second tier affiliate Clare
Mexicana S.A. de C.V.

ITEM 2.  PROPERTIES

    Clare, headquartered in Beverly, Massachusetts, operates the following
manufacturing facilities worldwide:

<TABLE>
<CAPTION>
LOCATION                            SQUARE FOOTAGE   INTEREST         PRODUCTS MANUFACTURED
--------                            --------------   --------         ---------------------
<S>                                 <C>              <C>        <C>
Beverly, Massachusetts............      83,000       Leased     Corporate Headquarters
                                                                Semiconductor Products
St. Louis, Missouri (1)...........      20,000       Leased     Dry Reed Products and Surge
                                                                Arresters
Aliso Viejo, California...........      27,000       Leased     ASIC design and manufacture
</TABLE>

------------------------

(1) Multiple locations.

    The Company also leases additional sales offices in Belgium and Taiwan. The
Company believes its office facilities are adequate for its current needs.

    The Company also has a site located in Chicago, Illinois, which is not in
use. See "BUSINESS--Environmental".

ITEM 3.  LEGAL PROCEEDINGS

    The Company is subject to routine litigation incident to the conduct of its
business. None of such proceedings is considered material to the business or
financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

                                       10
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Company's Common Stock began trading on the Nasdaq National Market
System (the "Nasdaq") on June 21, 1995, under the symbol "CPCL". The following
table sets forth the quarterly high and low closing sales prices per share
reported on the Nasdaq.

<TABLE>
<CAPTION>
PERIOD OR QUARTER ENDED                                         HIGH         LOW
-----------------------                                       --------     --------
<S>                                                           <C>          <C>
April 1, 1998--June 30, 1998................................    $14 1/2      $ 8 5/8
July 1, 1998--September 30, 1998............................      9 1/2        5 3/16
October 1, 1998--December 31, 1998..........................      7 3/4        3 7/8
January 1, 1999--March 31, 1999.............................      7 3/4        3 5/8
April 1, 1999--June 30, 1999................................      5 15/16      3 5/8
July 1, 1999--September 30, 1999............................      7 1/2        5 3/16
October 1, 1999--December 31, 1999..........................     12 5/8        4 11/16
January 1, 2000--March 31, 2000.............................     11 1/2        8 3/16
</TABLE>

    On May 26, 2000, the last reported sale price of the Common Stock on the
Nasdaq was $6.6875 per share. On May 26, 2000, there were 149 holders of record
of the Company's Common Stock.

DIVIDEND POLICY

    The Company has never paid cash dividends on its Common Stock. The Company
currently intends to retain earnings to finance the growth and development of
its business and does not anticipate paying cash dividends in the foreseeable
future. Any payment of cash dividends in the future will depend upon the
financial condition, capital requirements and earnings of the Company, as well
as other factors the Board of Directors may deem relevant. In addition, the
Company is currently restricted under the terms of certain credit agreements
from paying dividends in certain circumstances to stockholders.

RECENT SALES OF UNREGISTERED SECURITIES

    None.

                                       11
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

    The following table sets forth selected consolidated financial and other
information on a consolidated historical basis for the Company and its
subsidiaries as of and for each of the years in the five-year period ended March
31, 2000. This table should be read in conjunction with the Consolidated
Financial Statements of the Company and the Notes thereto included elsewhere in
this Form 10-K.

<TABLE>
<CAPTION>
                                              1996       1997       1998       1999       2000
                                            --------   --------   --------   --------   --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales.................................  $127,928   $128,161   $156,271   $143,913   $107,494
Cost of sales.............................    86,464     85,603    107,427    102,876     84,240
                                            --------   --------   --------   --------   --------
  Gross profit............................    41,464     42,558     48,844     41,037     23,254
                                            --------   --------   --------   --------   --------
Operating expenses:
  Selling, general and administrative.....    23,857     28,330     28,157     28,191     23,526
  Research and development (R&D)..........     4,447      6,543      8,869      9,678     13,399
  In-process R&D write-off (1)............        --         --         --      5,000         --
  Gain on sale of Clare EMG (2)...........        --         --         --         --    (11,515)
  Restructuring costs (3).................        --     14,250         --      3,700       (875)
                                            --------   --------   --------   --------   --------
Operating income (loss)...................    13,160     (6,565)    11,818     (5,532)    (1,281)
Interest income...........................     1,052      1,578      1,454        571        960
Interest expense..........................    (1,300)      (452)      (215)      (232)      (155)
Other (expense) income, net...............       (20)        (8)       135       (390)       551
                                            --------   --------   --------   --------   --------
Income (loss) before provision for income
  taxes...................................    12,892     (5,447)    13,192     (5,583)        75
  Provision (benefit) for income taxes....     5,158      1,464      4,880         --     (1,688)
                                            --------   --------   --------   --------   --------
Net income (loss).........................  $  7,734   $ (6,911)  $  8,312   $ (5,583)  $  1,763
                                            ========   ========   ========   ========   ========
Basic and diluted earnings (loss) per
  share
  Basic earnings (loss) per share.........  $   1.22   $  (0.77)  $   0.90   $  (0.59)  $   0.19
  Diluted earnings (loss) per share.......  $   0.95   $  (0.77)  $   0.83   $  (0.59)  $   0.18
Weighted average number of common shares
  outstanding:
Basic.....................................     6,316      8,992      9,280      9,398      9,519
Diluted...................................     8,176      8,992      9,967      9,398      9,723

CONSOLIDATED BALANCE SHEET DATA:
Total assets..............................  $115,208   $111,170   $114,186   $109,215   $100,660
Long-term debt and capital lese
  obligations, net of current portion.....     4,034        550         --        282        146
</TABLE>

------------------------

(1) See Note 9 of the Notes to Consolidated Financial Statements for information
    on the in-process R&D write-off in fiscal 1999.

(2) On August 20, 1999, the Company sold the EMG business. See Note 11 for
    unaudited pro forma financial data.

(3) See Note 10 of the Notes to Consolidated Financial Statements for more
    information on restructuring costs.

                                       12
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

    Clare is a leading provider of high voltage analog and mixed-signal
semiconductor integrated packages and discrete components,
DYAD-Registered Trademark- switches, surge protection devices, transformers, and
specialized electronic components to the world's foremost manufacturers of
electronic communications equipment.

    On August 20, 1999, the Company sold all of the issued and outstanding
shares of common stock of Clare EMG, Inc. ("EMG"), a wholly owned subsidiary of
the Company, to Sumida Electric Co., Ltd. ("Sumida") for $37,426 in cash. EMG
included the Company's advanced magnetic winding, reed relay, and surge arrestor
product lines together with the second tier affiliate Clare Mexicana S.A. de
C.V.

RESULTS OF OPERATIONS

    The following table sets forth the relative percentages that certain income
and expense items bear to net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED
                                                                        MARCH 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................   100.0%     100.0%     100.0%
Cost of sales...............................................    68.7       71.5       78.4
                                                               -----      -----      -----
  Gross profit..............................................    31.3       28.5       21.6
Operating expenses:
  Selling, general and administrative.......................    18.0       19.6       21.9
  Research and development..................................     5.7        6.7       12.5
  In-process research and development.......................      --        3.5         --
  Gain on sale of Clare EMG.................................      --         --      (10.7)
  Restructuring costs.......................................      --        2.5       (0.8)
                                                               -----      -----      -----
Operating income (loss).....................................     7.6       (3.8)      (1.3)
Interest income.............................................     0.9        0.4        0.9
Interest expense............................................    (0.1)      (0.2)      (0.1)
Other (expense) income, net.................................      --       (0.3)       0.5
                                                               -----      -----      -----
Income (loss) before provision for income taxes.............     8.4       (3.9)        --
Provision (benefit) for income taxes........................     3.1         --       (1.6)
                                                               -----      -----      -----
  Net income (loss).........................................     5.3%      (3.9)%      1.6%
                                                               =====      =====      =====
</TABLE>

FISCAL YEAR 2000 COMPARED WITH FISCAL YEAR 1999

    NET SALES.  In fiscal 2000, net sales totaled $107.5 million compared with
$143.9 million in fiscal 1999, a decrease of 25%. This decrease was attributable
largely to the sale of the electromagnetics business in August 1999, which
resulted in four months of revenues for that business in fiscal 2000 versus a
full year in fiscal 1999. Sales of semiconductor products declined by $10.9
million in fiscal 2000, or 16%, primarily as a result of lower prices for solid
state relays. Higher sales of application specific integrated circuits (ASICs)
at Clare-Micronix partially offset the solid state relay price declines by $2.9
million. Demand for the Company's DYAD-Registered Trademark- switches by
cellular telephone manufacturers was significantly higher in fiscal 2000 as the
volume of units shipped increased by $5.7 million or nearly 50%.

                                       13
<PAGE>
    Net sales by segment were as follows:

<TABLE>
<CAPTION>
                                                             FISCAL YEAR ENDED
                                                                 MARCH 31,
                                                            -------------------
                                                              1999       2000
                                                            --------   --------
                                                               (IN MILLIONS)
<S>                                                         <C>        <C>
Semiconductor products....................................   $69.4      $58.5
Electromagnetic and other products........................    74.5       49.0
</TABLE>

    Net sales to customers located outside the United States (primarily Europe
and Asia) decreased to $52.7 million (49% of total revenue) in fiscal 2000 from
$57.9 million (40% of total revenue) in fiscal 1999, with decreased demand in
all regions except Japan. The Company expects that foreign sales in the current
year will continue to account for a substantial portion of product sales, but
continued economic and currency related uncertainties in a number of foreign
countries could reduce the Company's sales to these markets. The Company will
continue to focus on new markets and expansion of certain existing international
markets.

    GROSS PROFIT.  The Company's gross profit as a percentage of net sales
decreased to 21.6% in fiscal 2000 from 28.5% in fiscal 1999. The decrease in
gross profit was due to competitive pricing pressures, under-utilization of
semiconductor wafer fabrication capacity, and yield issues on
DYAD-Registered Trademark- products.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (SG&A).  SG&A expenses of $23.5
million in fiscal 2000 were down $4.7 million, or 17% from fiscal 1999. Lower
costs were largely the result of the sale of EMG and related employment
reductions. SG&A expenses as a percentage of revenues increased from 19.6% to
21.9%. This was due to a greater decline in revenues from fiscal 1999 to fiscal
2000, than decline in SG&A expenses.

    RESEARCH AND DEVELOPMENT EXPENSE.  Research and development expense
increased in fiscal 2000 to $13.4 million from $9.7 million in fiscal 1999.
Higher spending was principally attributable to increased license fees for
technology utilized in the home phone network product and higher process
development expense associated with the Beverly fab facility, and higher
amortization of acquired technology related to Clare-Micronix. The Company
expects to maintain its current rate of research and development spending as
current R&D programs are continued, particularly for new integrated circuits and
fabrication process development.

    IN-PROCESS RESEARCH AND DEVELOPMENT.  In fiscal 1999, the Company acquired
Micronix Integrated Systems, Inc., a designer and manufacturer of analog and
mixed-signal application specific integrated circuits. Of the acquisition cost,
$5.0 million represented the appraised value of projects that did not have
future alternative uses and was charged to operations as in-process research and
development.

    RESTRUCTURING COSTS.  In fiscal 1999, the Company recorded a restructuring
charge of $3.7 million, or $0.25 per share after income taxes, as a result of a
worldwide reduction in personnel and the closing of the wafer fabrication
facility in Wakefield, Massachussetts. A portion of this charge was restored to
operations in fiscal 2000 due to a change in estimated severance costs. See Note
10 of Notes to Consolidated Financial Statements.

    DIVESTITURE.  On August 20, 1999, the Company sold all of the issued and
outstanding shares of common stock of Clare EMG, Inc. ("EMG") a wholly owned
subsidiary of the Company to Sumida Electric Co., Ltd. ("Sumida"), for $37,426
in cash. EMG included the Company's advanced magnetic winding, reed relay, and
surge arrestor product lines together with the second tier affiliate Clare
Mexicana S.A. de C.V.

    INTEREST INCOME.  Interest income increased in fiscal 2000 to $1.0 million
from $0.6 million in fiscal 1999 on higher average cash balances, primarily as
the result of proceeds from the sale of the EMG

                                       14
<PAGE>
business. Interest income was derived from investments in both commercial paper
and tax exempt variable rate municipal bonds.

    INTEREST EXPENSE.  Interest expense of $0.2 million in fiscal 2000 was flat
compared with fiscal 1999.

    OTHER INCOME (EXPENSE), NET.  Other income totaled $0.6 million in fiscal
2000. Other expense totaled $0.4 million in fiscal 1999. These were comprised
principally of net foreign currency exchange transaction gains and losses.

    INCOME TAXES.  The Company recorded an income tax benefit of $1.7 million in
fiscal 2000. The benefit relates to current period net operating losses that the
Company carried back to prior years, resulting in refunds of taxes previously
paid. The Company recorded no provision for income taxes in 1999 due to a net
operating loss position partially offset by non-deductible in-process research
and development and goodwill amortization associated with the acquisition of
Clare-Micronix. The Company's effective income tax rate in 1999 was less than
the combined federal, state and foreign tax rates due primarily to utilization
of state tax credits and investment income derived from tax exempt securities.
See Note 14 of Notes to Consolidated Financial Statements.

    At March 31, 1999, the Company had net operating loss carryforwards in the
United States and Taiwan of approximately $9.1 million. The Company also had
capital loss carryforwards of approximately $25.0 million in the United States.
The Company's ability to use its United States net operating loss carryforwards
against taxable income is subject to limitations under Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code"), due to the change in
ownership of the Company in 1989. The Company's ability to use its capital loss
carryforwards is subject to its ability to generate future capital gains to
offset these losses. Accordingly, the Company has not benefitted from all of its
net operating and capital loss carryforwards. See Note 14 of Notes to
Consolidated Financial Statements.

FISCAL YEAR 1999 COMPARED WITH FISCAL YEAR 1998

    NET SALES.  In fiscal 1999, net sales totaled $143.9 million compared with
$156.3 million in fiscal 1998, a decrease of 8%. Sales of semiconductor products
were essentially flat, while electromagnetic and other products decreased 14%.

    The Company's semiconductor products are primarily used in data
communication applications such as modems. The overall downturn in the
electronic components market significantly impacted fiscal 1999 demand for solid
state relays; however, sales of application specific integrated circuits by
Clare-Micronix offset these shortfalls.

    The Company's electromagnetic products are primarily used in
telecommunication applications such as telephone switching gear and cellular
phones. Demand for both dry reed and wetted reed relays was significantly lower
in fiscal 1999 versus the prior year and accounted for the majority of the
variance. Sales of application specific design and manufacturing services for
magnetic components were also lower in the year.

    Net sales by segment were as follows:

<TABLE>
<CAPTION>
                                                             FISCAL YEAR ENDED
                                                                 MARCH 31,
                                                            -------------------
                                                              1998       1999
                                                            --------   --------
                                                               (IN MILLIONS)
<S>                                                         <C>        <C>
Semiconductor products....................................   $69.7      $69.4
Electromagnetic and other products........................    86.6       74.5
</TABLE>

                                       15
<PAGE>
    Net sales to customers located outside the United States (primarily Europe
and Asia) decreased 8% in fiscal 1999 to $57.9 million from $62.9 million in
fiscal 1998, with decreased demand in all regions except Japan.

    GROSS PROFIT.  The Company's gross profit as a percentage of net sales
decreased to 28.5% in fiscal 1999 from 31.3% in fiscal 1998. The decrease in
gross profit was primarily due to competitive pricing pressures and
under-utilization of semiconductor wafer fabrication and sensor assembly
facilities. Semiconductor products gross profit was essentially flat from year
to year. The Company's electromagnetic products gross profit decreased $8,959 or
37.2% based on lower demands for both dry reed and wetted reed relays.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (SG&A).  SG&A expenses of $28.2
million in fiscal 1999 were flat compared with fiscal 1998, and represented
19.6% and 18.0% of sales in fiscal years 1999 and 1998, respectively.

    RESEARCH AND DEVELOPMENT EXPENSE.  Research and development expense
increased in fiscal 1999 to $9.7 million from $8.9 million in fiscal 1998 and
increased as a percentage of net sales to 6.7% in fiscal 1999 from 5.7% in
fiscal 1998. Higher year over year spending was principally attributable to
Clare-Micronix.

    IN-PROCESS RESEARCH AND DEVELOPMENT.  In fiscal 1999, the Company acquired
Micronix Integrated Systems, Inc., a designer and manufacturer of analog and
mixed-signal application specific integrated circuits. $5.0 million of the
acquisition cost was allocated as in-process research and development. This
represents the appraised fair value of projects that did not have future
alternative uses.

    RESTRUCTURING COSTS.  In fiscal 1999, the Company recorded a restructuring
charge of $3.7 million, or $0.25 per share after income taxes, as a result of a
worldwide reduction in personnel and the closing of the wafer fabrication
facility in Wakefield, Massachussetts. See Note 10 of Notes to Consolidated
Financial Statements.

    INTEREST INCOME.  Interest income decreased in fiscal 1999 to $0.6 million
from $1.5 million in fiscal 1998 on lower cash balances, primarily as the result
of the acquisition of Clare-Micronix. Interest income was derived from the
short-term investment of the Company's cash in both commercial paper and tax
exempt variable rate municipal bonds.

    INTEREST EXPENSE.  Interest expense of $0.2 million in fiscal 1999 was flat
as compared to fiscal 1998.

    OTHER INCOME (EXPENSE), NET.  Other expense in fiscal 1999 was primarily
comprised of net foreign currency exchange transaction losses offset by other
expenses. In fiscal 1998, other expense was primarily comprised of net foreign
currency exchange transaction gains.

    INCOME TAXES.  The Company recorded no provision for income taxes due to the
net operating loss position, partially offset by non-deductible in-process
research and development and goodwill amortization associated with the
acquisition of Clare-Micronix. The provision for income taxes in fiscal 1998
totaled, $4.9 million, a 37% effective rate. The Company's effective income tax
rate in 1998 is less than the combined federal, state and foreign tax rates due
primarily to utilization of state tax credits and investment income derived from
tax exempt securities. See Note 13 of Notes to Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

    In fiscal 2000, as well as fiscal 1999, the Company funded its operations
from cash flows generated from operations, and from the use of cash, cash
equivalents and investments.

                                       16
<PAGE>
    During the year ended March 31, 2000, the Company's cash, cash equivalents
and investments increased by $29.5 million, primarily as the result of the sale
of the electromagnetics business. Capital expenditures totaled $5.1 million
during the year and the Company acquired additional capital equipment valued at
$4.5 million through operating leases. Cash provided by operations totaled $0.9
million while net cash flows from investing activities provided $28.2 million
consisting of $33.3 million of proceeds from the divestiture of Clare EMG offset
by capital expenditures. Cash flows from financing activities provided $0.3
million primarily resulting from proceeds from the issuance of common stock and
exercise of options.

    The Company maintains a $15.0 million unsecured committed revolving credit
facility. Interest on loans is based on either the bank's base rate or the
London Interbank Offered Rate (LIBOR) plus a spread ranging from 0.50% to 1.50%,
based on Company performance. The Company has had no borrowings under this
credit facility during fiscal 2000.

    The Company manages its foreign exchange exposure by monitoring its net
monetary position using natural hedges of its assets and liabilities denominated
in local currencies and entering into forward contract hedges as needed. There
can be no assurance that this policy will eliminate all currency exposure.
During the year ended March 31, 1999, the Company entered into several forward
contracts to cover its exposure under trade transactions. During the year ended
March 31, 2000, no such contracts were entered into.

    The Company believes that cash generated from operations, cash, cash
equivalents and investments and amounts available under its credit agreement and
through operating leases will be sufficient to satisfy its working capital needs
and planned capital expenditures for the foreseeable future. However, there can
be no assurance that events in the future will not require the Company to seek
additional capital sooner or if so required that adequate capital will be
available on terms acceptable to the Company.

EFFECT OF INFLATION

    The Company does not believe that inflation has had any material effect on
the Company's business over the past three years.

NEW ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
No. 133, as amended by SFAS No. 137, is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at fair value. The
statement requires that changes in the derivatives fair value be recognized in
earnings currently, unless specific hedge accounting criteria are met. Special
accounting or qualifying hedges allows derivative gains or losses to offset
related results on the hedged item in the income statement, and require that a
Company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. The Company does not expect that
such adoption will have an impact on the Company's results of operations,
financial position or cash flows.

    In March 2000, the FASB issued FASB interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation--An Interpretation of APB
Opinion No. 25 (Interpretation 44)". Interpretation No. 44 clarifies the
application of APB No. 25 in certain situations, as defined. Interpretation 44
is effective July 1, 2000 but is retroactive for certain events that occurred
after December 15, 1998. The Company does not expect that the adoption of
Interpretation 44 will materially affect its consolidated results of operations.

                                       17
<PAGE>
    The Securities and Exchange Commission issued Staff Accounting Bulletin
(SAB) No. 101, "Revenue Recognition", in December 1999. The Company is required
to adopt this new accounting guidance through a cumulative charge to operations,
in accordance with Accounting Principles Board Opinion (APB) No. 20, "Accounting
Changes", no later than June 30, 2000. The Company believes that the adoption of
the guidance provided in SAB No. 101 would not have a material impact on future
operating results.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company's primary market risk exposures are in the areas of interest
rate risk and foreign currency exchange rate risk. The Company's primary
interest rate risk would be related to borrowings under its revolving credit
agreement. The interest rate on those borrowings fluctuates with changes in
short-term borrowing rates. There were no borrowings from the credit facility
during the year.

    The Company is also exposed to currency exchange rate fluctuations as they
pertain to its operations in Europe. Operations in Europe were denominated in
Belgium Francs through March 31, 1999. The Company hedged its currency exposure
by entering in forward exchange contracts. The Company has denominated its
Europe operations in Euro, effective April 1, 1999. The exchange rate between
the U.S. dollar and Euro has fluctuated since the Euro's inception January 1,
1999. The Company has not engaged in currency hedging activities since April 1,
1999 and attempts to minimize exchange risk by converting excess Euro funds to
U.S. dollars as often as practicable.

                                       18
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                    C.P. CLARE CORPORATION AND SUBSIDIARIES
         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS SCHEDULE

<TABLE>
<CAPTION>
                                                              FORM 10-K
                                                              PAGE NO.
                                                              --------
<S>                                                           <C>
Report of Independent Public Accountants....................     20
Consolidated Balance Sheets-March 31, 1999 and 2000.........     21
Consolidated Statements of Operations for the years ended
  March 31, 1998, 1999 and 2000.............................     22
Consolidated Statements of Stockholders' Equity for the
  years ended March 31, 1998, 1999 and 2000.................     23
Consolidated Statements of Cash Flows for the years ended
  March 31, 1998, 1999 and 2000.............................     24
Notes to Consolidated Financial Statements..................     26
Report of Independent Public Accountants on Schedule II.....     51
Schedule II-Valuation and Qualifying Accounts...............     52
</TABLE>

                                       19
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To C.P. Clare Corporation:

    We have audited the accompanying consolidated balance sheets of C.P. Clare
Corporation (a Massachusetts corporation) and subsidiaries as of March 31, 1999
and 2000, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended March 31,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

    We conducted our audits in accordance with 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 provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C.P. Clare Corporation and
subsidiaries as of March 31, 1999 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
2000, in conformity with accounting principles generally accepted in the United
States.

                                          /s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
April 26, 2000 (Except with respect to
the matter in Note 7 as to which
the date is June 20, 2000)

                                       20
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                (DOLLARS IN THOUSANDS, EXCEPT SHARE INFORMATION)

<TABLE>
<CAPTION>
                                                                   MARCH 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
<S>                                                           <C>        <C>
                           ASSETS
Current assets:
    Cash, cash equivalents and investments..................  $  7,796   $ 37,267
    Accounts receivable, less allowance of $1,365 and
      $1,287, respectively..................................    18,672     11,068
    Inventories.............................................    23,842     11,406
    Other current assets....................................     2,932      1,636
    Deferred income taxes...................................     4,036      2,733
                                                              --------   --------
  Total current assets......................................    57,278     64,110
Property, plant and equipment, net..........................    40,275     26,294
Intangible assets, net of accumulated amortization of $1,526
  and $3,410 respectively...................................    11,244      9,354
Deferred income taxes.......................................        --        451
Other assets................................................       418        451
                                                              --------   --------
                                                              $109,215   $100,660
                                                              ========   ========

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt and capital lease
      obligations...........................................  $    248   $    139
    Accounts payable........................................    11,805      5,151
    Accrued liabilities.....................................    10,175      5,896
                                                              --------   --------
  Total current liabilities.................................    22,228     11,186
Long-term capital lease obligations, net of current
  portion...................................................       282        146
Deferred income taxes.......................................       510         --
                                                              --------   --------
  Total liabilities.........................................    23,020     11,332
                                                              --------   --------
Commitments and contingencies (Note 8)
Stockholders' equity:
    Preferred stock, $.01 par value, Authorized: 2,500,000
      shares. Issued and outstanding: None..................        --         --
    Common stock, $.01 par value, Authorized: 40,000,000
      shares.
    Issued and outstanding: 9,454,339 shares and 9,591,266
      shares, respectively..................................        95         96
    Additional paid-in capital..............................    96,228     96,895
    Deferred compensation...................................       (62)        --
    Accumulated deficit.....................................    (8,973)    (7,210)
    Accumulated other comprehensive loss....................    (1,093)      (453)
                                                              --------   --------
  Total stockholders' equity................................    86,195     89,328
                                                              --------   --------
                                                              $109,215   $100,660
                                                              ========   ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       21
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                    YEARS ENDED MARCH 31,
                                                              ---------------------------------
                                                                1998        1999        2000
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
Net sales...................................................  $ 156,271   $ 143,913   $ 107,494
Cost of sales...............................................    107,427     102,876      84,240
                                                              ---------   ---------   ---------
  Gross profit..............................................     48,844      41,037      23,254
Operating expenses:
  Selling, general and administrative.......................     28,157      28,191      23,526
  Research and development..................................      8,869       9,678      13,399
  In-process research and development.......................         --       5,000          --
  Gain on sale of Clare EMG (Note 11).......................         --          --     (11,515)
  Restructuring costs.......................................         --       3,700        (875)
                                                              ---------   ---------   ---------
Operating income (loss).....................................     11,818      (5,532)     (1,281)
Interest income.............................................      1,454         571         960
Interest expense............................................       (215)       (232)       (155)
Other income (expense), net.................................        135        (390)        551
                                                              ---------   ---------   ---------
Income (loss) before provision for income taxes.............     13,192      (5,583)         75
Provision (benefit) for income taxes........................      4,880          --      (1,688)
                                                              ---------   ---------   ---------
  Net income (loss).........................................  $   8,312   $  (5,583)  $   1,763
                                                              =========   =========   =========
Basic earnings (loss) per share.............................  $    0.90   $   (0.59)  $    0.19
Diluted earnings (loss) per share...........................  $    0.83   $   (0.59)  $    0.18

Weighted average number of common shares outstanding:
Basic.......................................................  9,280,424   9,398,144   9,518,984
Diluted.....................................................  9,967,366   9,398,144   9,723,477
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       22
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                    FOR THE THREE YEARS ENDED MARCH 31, 2000

                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                      COMMON STOCK
                                  --------------------                                              ACCUMULATED
                                   NUMBER       $.01     ADDITIONAL                                    OTHER           TOTAL
                                     OF         PAR       PAID-IN       DEFERRED     ACCUMULATED   COMPREHENSIVE   STOCKHOLDERS'
                                   SHARES      VALUE      CAPITAL     COMPENSATION     DEFICIT         LOSS           EQUITY
                                  ---------   --------   ----------   ------------   -----------   -------------   -------------
<S>                               <C>         <C>        <C>          <C>            <C>           <C>             <C>
Balance, March 31, 1997.........  9,176,657     $92        $94,115       $(409)       $(11,702)       $  (830)        $81,266
Exercise of stock options.......    132,599       2            904          --              --             --             906
Common stock issued for services
  rendered......................      2,000      --             50          --              --             --              50
Issuance of common stock under
  the Employee Stock Purchase
  Plan..........................     30,837      --            290          --              --             --             290
Exercise of warrants............     14,359      --             27          --              --             --              27
Tax benefit of disqualifying
  disposition of incentive stock
  options.......................         --      --            267          --              --             --             267
Net income......................         --      --             --          --           8,312             --           8,312
Translation adjustment..........         --      --             --          --              --           (216)           (216)
Amortization of deferred
  compensation..................         --      --             --         255              --             --             255
Comprehensive net income........
                                  ---------     ---        -------       -----        --------        -------         -------
Balance, March 31, 1998.........  9,356,452      94         95,653        (154)         (3,390)        (1,046)         91,157
Exercise of stock options.......     27,250                    129          --              --             --             129
Common stock issued for services
  rendered......................     28,214      --            207          --              --             --             207
Issuance of common stock under
  the Employee Stock Purchase
  Plan..........................     41,123       1            226          --              --             --             227
Exercise of warrants............      1,300      --              2          --              --             --               2
Tax benefit of disqualifying
  disposition of incentive stock
  options.......................         --      --             11          --              --             --              11
Net loss........................         --      --             --          --          (5,583)            --          (5,583)
Translation adjustment..........         --      --             --          --              --            (47)            (47)
Amortization of deferred
  compensation..................         --      --             --          92              --             --              92
Comprehensive net loss..........
                                  ---------     ---        -------       -----        --------        -------         -------
Balance, March 31, 1999.........  9,454,339      95         96,228         (62)         (8,973)        (1,093)         86,195
Exercise of stock options.......     41,060                    192          --              --             --             192
Common stock issued for services
  rendered......................      9,960      --             55          --              --             --              55
Issuance of common stock under
  the Employee Stock Purchase
  Plan..........................     85,907       1            420          --              --             --             421
Net income......................         --      --             --          --           1,763             --           1,763
Translation adjustment..........         --      --             --          --              --            640             640
Amortization of deferred
  compensation..................         --      --             --          62              --             --              62
Comprehensive net income........
                                  ---------     ---        -------       -----        --------        -------         -------
Balance, March 31, 2000.........  9,591,266     $96        $96,895       $  --        $ (7,210)       $  (453)        $89,328
                                  =========     ===        =======       =====        ========        =======         =======

<CAPTION>

                                  COMPREHENSIVE
                                     INCOME
                                      LOSS
                                  -------------
<S>                               <C>
Balance, March 31, 1997.........
Exercise of stock options.......
Common stock issued for services
  rendered......................
Issuance of common stock under
  the Employee Stock Purchase
  Plan..........................
Exercise of warrants............
Tax benefit of disqualifying
  disposition of incentive stock
  options.......................
Net income......................     $ 8,312
Translation adjustment..........        (216)
Amortization of deferred
  compensation..................
                                     -------
Comprehensive net income........     $ 8,096
                                     =======
Balance, March 31, 1998.........
Exercise of stock options.......
Common stock issued for services
  rendered......................
Issuance of common stock under
  the Employee Stock Purchase
  Plan..........................
Exercise of warrants............
Tax benefit of disqualifying
  disposition of incentive stock
  options.......................
Net loss........................     $(5,583)
Translation adjustment..........         (47)
Amortization of deferred
  compensation..................
                                     -------
Comprehensive net loss..........     $(5,630)
                                     =======
Balance, March 31, 1999.........
Exercise of stock options.......
Common stock issued for services
  rendered......................
Issuance of common stock under
  the Employee Stock Purchase
  Plan..........................
Net income......................     $ 1,763
Translation adjustment..........         640
Amortization of deferred
  compensation..................
                                     -------
Comprehensive net income........     $ 2,403
                                     =======
Balance, March 31, 2000.........
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       23
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  YEARS ENDED MARCH 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................  $  8,312   $ (5,583)  $  1,763
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Depreciation and amortization.............................     5,341      9,488      9,120
  Non-cash portion of restructuring charge..................        --      1,015         --
  Write-off of acquired in-process R&D......................        --      5,000         --
  Gain on disposal of business activities...................        --         --    (11,515)
  Provision (benefit) for deferred income taxes.............       356       (915)        --
  Compensation expense associated with stock options........       255         92         62
  Common stock issued for services rendered.................        50        207         55
  Provision for environmental costs.........................       925         --         --
  Write-down of property, plant and equipment...............        --        400         --
    Changes in assets and liabilities, net of effect from
      acquisition in 1999 and disposition in 2000:
  Accounts receivable.......................................    (4,239)     1,829      8,304
  Inventories...............................................    (2,083)    (1,702)     2,610
  Other current assets......................................     1,373       (835)     1,278
  Accounts payable..........................................        10       (661)    (6,781)
  Accrued expenses and income taxes payable.................    (7,505)       440     (4,040)
                                                              --------   --------   --------
  Net cash provided by operating activities.................     2,795      8,775        856
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment...................   (15,262)   (10,837)    (5,070)
Purchase of Micronix, net of cash acquired..................        --    (16,012)        --
Net proceeds from disposal of business activities...........        --         --     33,256
                                                              --------   --------   --------
  Net cash (used in) provided by investing activities.......   (15,262)   (26,849)    28,186
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock..................       290        227        421
Proceeds from exercise of options and warrants..............       933        131        192
Payments of principal on long-term debt.....................      (371)      (666)        --
Payments on capital lease obligations.......................        --       (154)      (269)
Tax benefit of disqualifying disposition of incentive stock
  options...................................................       267         11         --
                                                              --------   --------   --------
  Net cash provided by (used in) financing activities.......     1,119       (451)       344
                                                              --------   --------   --------
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND
  INVESTMENTS...............................................       282        (43)        85
                                                              --------   --------   --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND
  INVESTMENTS...............................................   (11,066)   (18,568)    29,471
Cash, cash equivalents and investments, beginning of year...    37,430     26,364      7,796
                                                              --------   --------   --------
Cash, cash equivalents and investments, end of year.........  $ 26,364   $  7,796   $ 37,267
                                                              ========   ========   ========
</TABLE>

                                       24
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (DOLLARS IN THOUSANDS) (CONTINUED)

<TABLE>
<CAPTION>
                                                                  YEARS ENDED MARCH 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid during the period for:
Interest....................................................  $    143   $     98   $    194
Income taxes paid, net of refunds...........................  $  5,283   $  2,479   $ (2,895)

Acquisition of Micronix:
During fiscal 1999, the Company acquired Micronix Integrated
  Systems, Inc. as described in Note 9. This acquisition is
  summarized as follows:
Fair value of assets acquired, excluding cash...............  $     --   $ 20,825   $     --
Payments in connection with the acquisition, net of cash
  acquired..................................................        --    (16,012)        --
Liabilities assumed.........................................  $     --   $  4,813   $     --

Sale of business:
Carrying amount of net assets sold..........................  $     --   $     --   $(21,741)
Cash received...............................................        --         --     37,426
Expenses....................................................        --         --     (4,170)
Gain on sale after expenses.................................  $     --   $     --   $ 11,515
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       25
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 1.  SUMMARY OF OPERATIONS

    C.P. Clare Corporation (the "Company") is a leading provider of high-voltage
mixed-signal and analog semiconductor integrated packages and discrete
components, surge-protection devices, transformers and specialized electronic
components to the world's foremost manufacturers of electronic communications
equipment.

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES

    The accompanying consolidated financial statements reflect the application
of the following significant accounting policies:

(A) FISCAL PERIODS

    The Company's fiscal year is comprised of either 52 or 53 weeks and ends on
the Sunday closest to March 31st each year. Fiscal years 1998, 1999 and 2000
were each 52 weeks. For convenience, the Company's fiscal year-end has been
presented as March 31.

(B) PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

(C) CASH, CASH EQUIVALENTS AND INVESTMENTS

    The Company considers all highly liquid investment instruments with
maturities of three months or less to be cash equivalents. The Company carries
its investments in accordance with Statement of Financial Accounting Standards
("SFAS") No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES. Investments at March 31, 1999 and 2000 principally consist of
overnight demand notes and short-term tax-exempt commercial paper and tax-exempt
variable rate municipal bonds. The Company has the option to require the issuers
of the tax-exempt variable rate municipal bonds to purchase these investments
upon seven day's notice. The Company has deemed these investments to be
available-for-sale at both March 31, 1999 and 2000 and they are carried at cost,
which approximates market value.

(D) REVENUE RECOGNITION

    Revenues from product sales are recognized when the products are shipped.
Certain shipments to distributors are subject to limited right-of-return
provisions. Pursuant to SFAS No. 48, REVENUE RECOGNITION WHEN RIGHT OF RETURN
EXISTS, distributor returns are accrued at the time of product shipment and are
based on management estimates and known return authorizations. The Company
recognizes revenue on their Micronix funded research and development projects at
successful completion of each project phase.

                                       26
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) EARNINGS (LOSS) PER COMMON AND COMMON SHARE EQUIVALENT

    Basic earnings per share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution of stock options and warrants
that could share in the earnings of the Company.

    The reconciliation of amounts used in the computation of basic and diluted
earnings (loss) per share consist of the following at March 31, 1998, 1999 and
2000:

<TABLE>
<CAPTION>
                                                                1998        1999        2000
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
Basic weighted average shares outstanding...................  9,280,424   9,398,144   9,518,984
Weighted average common equivalent shares...................    686,942          --     204,493
                                                              ---------   ---------   ---------
Diluted weighted average shares outstanding.................  9,967,366   9,398,144   9,723,477
                                                              =========   =========   =========
</TABLE>

    Securities that were not included in computing diluted earnings per share
because their effect would be antidilutive consist of the following at
March 31, 1998, 1999 and 2000:

<TABLE>
<CAPTION>
                                                                1998       1999        2000
                                                              --------   ---------   ---------
<S>                                                           <C>        <C>         <C>
Options and warrants to purchase common stock...............  434,750    2,468,511   1,594,521
</TABLE>

(F) FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

    The Company translates the assets and liabilities of its foreign
subsidiaries at the exchange rates in effect at fiscal year-end in accordance
with SFAS No. 52, FOREIGN CURRENCY TRANSLATION. Revenues and expenses are
translated using exchange rates in effect during each period. Because the
Company's subsidiaries in Mexico (through the date of disposition--see Note 11)
and Taiwan are considered extensions of domestic operations, the translation
(losses) gains of ($139), ($10) and $21 recognized in fiscal years 1998, 1999
and 2000, respectively, have been included in the accompanying consolidated
statements of operations and, accordingly, are classified as other income
(expense) (see Note 15). The cumulative translation adjustment component of
stockholders' equity relates primarily to the Company's European operations.

(G) RESEARCH AND DEVELOPMENT EXPENSE

    Expenditures for research and development of products and manufacturing
processes are expensed as incurred.

(H) DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

    SFAS No. 119, DISCLOSURE ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires disclosure of any significant
derivative or other financial instruments. Prior to fiscal 2000, the Company had
hedged its net intercompany trade balance (Belgian francs), which related to
trade sales to third-party customers in the ordinary course of business. Since
the start of a common European currency (euro) the Company has ceased all
hedging activity. At March 31, 1999, the Company had one outstanding Belgian
franc ("BF") forward contract amounting to 23,000 BF or $625

                                       27
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
with a gross deferred loss of $4 from the rollover of such contracts to the
planned settlement date. At March 31, 2000, the Company had no forward currency
contracts.

    SFAS No. 107, DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires
disclosure of an estimate of the fair value of certain financial instruments.
The fair value of financial instruments pursuant to SFAS No. 107 approximated
their carrying values at March 31, 1999 and 2000. Fair values have been
determined through information obtained from market sources and management
estimates.

(I) CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

    Financial instruments that potentially expose the Company to concentrations
of credit risk consist primarily of cash and cash equivalents, short-term
investments and trade accounts receivable. The Company places its temporary cash
investments in financial institutions. The Company has not experienced
significant losses related to receivables from individual customers or groups of
customers in any specific industry or by geographic area. Due to these factors,
no additional credit risk beyond amounts provided for collection losses is
believed by management to be inherent in the Company's accounts receivable.
During fiscal years 1998, 1999 and 2000, one customer accounted for 14%, 13% and
12%, respectively, of the Company's net sales. One customer accounted for 17% of
the Company's accounts receivable as of March 31, 1999. No customer accounted
for greater than 10% of accounts receivable as of March 31, 2000.

(J) STOCK-BASED COMPENSATION

    The Company accounts for its stock-based compensation plans under Accounting
Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. SFAS No. 123 establishes a fair value method of accounting for
stock-based compensation plans. The Company has adopted the disclosure-only
alternative under SFAS No. 123, which requires disclosures of the pro forma
effects on earnings and earnings per share as if SFAS No. 123 had been adopted,
as well as certain other information (see Note 12).

(K) USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(L) NEW ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No.
133, as amended by SFAS No. 137, is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at fair value. The
statement requires that changes in the derivatives fair

                                       28
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
value be recognized in earnings currently, unless specific hedge accounting
criteria are met. Special accounting or qualifying hedges allows derivative
gains or losses to offset related results on the hedged item in the income
statement, and require that a Company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. The
Company does not expect that such adoption will have an impact on the Company's
results of operations, financial position or cash flows.

    In March 2000, the FASB issued FASB interpretation No. 44, ACCOUNTING FOR
CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION--AN INTERPRETATION OF APB
OPINION NO. 25 (INTERPRETATION NO. 44). Interpretation No. 44 clarifies the
application of APB Opinion No. 25 in certain situations, as defined.
Interpretation No. 44 is effective July 1, 2000 but is retroactive for certain
events that occurred after December 15, 1998. The Company does not expect that
the adoption of Interpretation No. 44 will materially affect its consolidated
results of operations.

    The Securities and Exchange Commission issued Staff Accounting Bulletin
(SAB) No. 101, REVENUE RECOGNITION, in December 1999. The Company is required to
adopt this new accounting guidance through a cumulative charge to operations, in
accordance with APB Opinion No. 20, ACCOUNTING CHANGES, no later than June 30,
2000. The Company believes that the adoption of the guidance provided in SAB No.
101 will not have a material impact on future operating results.

(M) COMPREHENSIVE INCOME (LOSS)

    SFAS No. 130, REPORTING COMPREHENSIVE INCOME (LOSS), requires disclosure of
comprehensive income (loss) and its components. Comprehensive income (loss) is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources.
Comprehensive income (loss) consists entirely of the net loss plus the Company's
translation adjustment accounts and is disclosed in the accompanying statements
of stockholders' equity.

NOTE 3.  INVENTORIES

    Inventories include materials, labor and manufacturing overhead and are
stated at the lower of cost (first-in, first-out) or market and consist of the
following at March 31, 1999 and 2000:

<TABLE>
<CAPTION>
                                                              1999       2000
                                                            --------   --------
<S>                                                         <C>        <C>
Raw materials.............................................  $10,259    $ 3,200
Work in process...........................................    8,227      5,858
Finished goods............................................    5,356      2,348
                                                            -------    -------
                                                            $23,842    $11,406
                                                            =======    =======
</TABLE>

                                       29
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 4.  PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are stated at cost and consist of the
following at March 31, 1999 and 2000:

<TABLE>
<CAPTION>
                                                                                      ESTIMATED
DESCRIPTION                                                     1999       2000      USEFUL LIFE
-----------                                                   --------   --------   -------------
<S>                                                           <C>        <C>        <C>
Machinery and equipment.....................................  $50,698    $31,837     3 to 7 years
Furniture and fixtures......................................    2,820      1,935    5 to 10 years
Leasehold improvements......................................   13,951     11,073    Life of lease
Projects in process.........................................    4,978      1,878
Property held for sale (Note 8).............................    1,348      1,348
                                                              -------    -------
                                                               73,795     48,071
Less: Accumulated depreciation and amortization.............   33,520     21,777
                                                              -------    -------
                                                              $40,275    $26,294
                                                              =======    =======
</TABLE>

    The Company provides for depreciation and amortization using the
straight-line method by charges to operations in amounts that allocate the cost
of property, plant and equipment over their estimated useful lives, as noted
above.

NOTE 5.  INTANGIBLE ASSETS

    The Company assesses the realizability of its intangible and other
long-lived assets in accordance with SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT
OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.

    Intangible assets consist of goodwill and existing technology relating to
the acquisition of Micronix in 1998. Goodwill and existing technology are
amortized on a straight-line basis over periods ranging from four to eight
years.

    Intangible assets consist of the following at March 31, 1999 and 2000:

<TABLE>
<CAPTION>
                                                              1999       2000
                                                            --------   --------
<S>                                                         <C>        <C>
Existing Technology--Micronix Acquisition.................  $ 2,456    $ 2,456
Goodwill--Micronix Acquisition............................   10,308     10,308
Less: Accumulated Amortization............................   (1,520)    (3,410)
                                                            -------    -------
                                                            $11,244    $ 9,354
                                                            =======    =======
</TABLE>

                                       30
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 6.  ACCRUED EXPENSES

    Accrued expenses consist of the following at March 31, 1999 and 2000:

<TABLE>
<CAPTION>
                                                               1999       2000
                                                             --------   --------
<S>                                                          <C>        <C>
Payroll and benefits.......................................  $ 3,881     $2,679
Restructuring (Note 10)....................................    2,152        149
Environmental remediation (Note 8).........................      922        854
Other......................................................    3,220      2,214
                                                             -------     ------
                                                             $10,175     $5,896
                                                             =======     ======
</TABLE>

NOTE 7.  BORROWINGS AND CREDIT FACILITIES

(A) CREDIT FACILITY

    The Company has a $15.0 million unsecured committed revolving credit
facility (the "Credit Facility"). Interest on 30 day loans is based on either
LIBOR plus a spread ranging from 0.50% to 1.50%, based on Company performance
(7.13% at March 31, 2000); or the higher of the latest Federal Funds rate plus
0.50% or the bank's reference rate (9.50% at March 31, 2000).

    The Credit Facility contains certain financial covenants that require the
Company to maintain minimum tangible net worth and working capital, maintain an
interest coverage ratio, maintain a ratio of total funded debt to earnings
before interest, taxes, depreciation and amortization, and limit the payment of
cash dividends. The Credit Facility also contains certain non-financial
covenants. The Credit Facility expires on June 30, 2001. The Company was not in
compliance with all covenants as of March 31, 2000. On June 20, 2000, the
Company received a waiver for noncompliance with certain covenants as of
March 31, 2000. There have been no borrowings since the inception of the Credit
Facility in March 1999.

(B) CAPITAL LEASES

    The Company leases certain equipment under capital leases. Future minimum
lease payments under these leases as of March 31, 2000 are as follows:

<TABLE>
<CAPTION>
MARCH 31,                                                      AMOUNT
---------                                                     --------
<S>                                                           <C>
2001........................................................    $174
2002........................................................     113
2003........................................................      46
2004........................................................       1
                                                                ----
Total Minimum lease payments................................     334
Less: Amount representing interest..........................      49
                                                                ----
Capital Lease Obligation....................................     285
Less: Current portion of capital lease obligations..........     139
                                                                ----
Total.......................................................    $146
                                                                ====
</TABLE>

                                       31
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 8.  COMMITMENTS AND CONTINGENCIES

(A) OPERATING LEASES

    The Company leases certain office and production facilities and various
equipment under operating leases expiring at various dates through September
2011.

    Future minimum rent payments under these leases are as follows as of
March 31, 2000:

<TABLE>
<CAPTION>
MARCH 31,                                                      AMOUNT
---------                                                     --------
<S>                                                           <C>
2001........................................................  $ 5,896
2002........................................................    4,137
2003........................................................    2,941
2004........................................................    2,290
2005........................................................    1,598
Thereafter..................................................    5,460
                                                              -------
Total.......................................................  $22,322
                                                              =======
</TABLE>

    Total rent expense for fiscal years 1998, 1999 and 2000 was $4,663, $5,514
and $5,719, respectively.

(B) ENVIRONMENTAL MATTERS

    The Company accrues for estimated costs associated with known environmental
matters when such costs are probable and can be reasonably estimated. The actual
costs to be incurred for environmental remediation may vary from estimates,
given the inherent uncertainties in evaluating and estimating environmental
liabilities, including the possible effects of changing laws and regulations,
the stage of the remediation process and the magnitude of contamination found as
the remediation progresses. Management believes the ultimate disposition of
known environmental matters will not have a material adverse effect upon the
liquidity, capital resources, business or consolidated financial position of the
Company. However, one or more environmental matters could have a significant
negative impact on the Company's consolidated financial results for a particular
reporting period.

(C) UNITED STATES

    In connection with the acquisition of the Clare Division of General
Instrument Corporation in 1989, the Company purchased a manufacturing facility
located in Chicago. From the acquisition date until January 1994, the Company
used this facility primarily as office space. During fiscal 1993, the Company
discovered environmental contamination at this facility and voluntarily reported
this discovery to the Illinois Environmental Protection Agency ("IEPA") and has
since been involved in discussions with the IEPA and the U.S. Environmental
Protection Agency regarding the need for remediation. The Company believes that
any environmental contamination predates the Company's acquisition of the
facility from General Instrument. The Company and General Instrument jointly
retained an independent environmental consulting firm to assess the remediation
requirements and develop a plan to voluntarily remediate this property in
accordance with federal and state law such that the property could be used for
residential purposes. Prior to commencing such voluntary remediation, the
Company and General Instrument entered into a cost-sharing agreement; however,
both parties have reserved their rights to litigate concerning the final
cost-sharing arrangement.

                                       32
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 8.  COMMITMENTS AND CONTINGENCIES (CONTINUED)
    During fiscal 1997, the Company and General Instrument began the remediation
at the site. The approved clean-up method produced conditions that were not
acceptable to the community. As a result, the Company determined the most likely
scenario was to remediate the property to make it useable as
industrial/commercial, rather than residential property, as originally assessed.

    During the year ended March 31, 1997, the Company incurred $2,567 of
remediation costs and related expenses including a write-down of the facility to
net realizable value of $1,500.

    During the year ended March 31, 1998, the Company incurred $301 of
remediation costs. By the end of the fiscal 1998-year, the Company completed its
industrial/commercial remediation for the Chicago facility and has subsequently
received a no further remediation letter from the IEPA.

    During the year ended March 31, 1999, the Company incurred $544 of
remediation costs including an additional write-down of the facility by $400.
This resulted in a net realizable value of the facility of $939, which is
included on the accompanying balance sheet as property held for sale. The
facility is not under agreement as of March 31, 2000.

    During the year ended March 31, 2000, the Company incurred $68 of
remediation costs.

    The Company and General Instrument continue to address contamination that
has been found on adjacent sites. Management continues to analyze the estimated
environmental remediation liability and has recorded additional amounts when
known events require.

(D) BELGIUM

    During fiscal 1997, the Company retained an independent environmental
consulting firm to assess the environmental condition of its facility located in
Tongeren, Belgium. The scope of their work was to assess potential contamination
in light of newly adopted Belgium legal requirements and develop a plan to
remediate the property if necessary. Preliminary results show certain
groundwater contamination that may have resulted from the Company's past
operations or from neighboring manufacturing companies.

    In January 1997, the Company completed the sale of the Tongeren
Manufacturing Company ("TMC"). Upon the sale of TMC, the Company agreed to
indemnify Gunther GmbH (the "buyer") for up to $350 for established
environmental remediation costs, subject to certain condition and limitations.
The Company recorded this environmental remediation indemnification during
fiscal 1998.

(E) LEGAL PROCEEDINGS

    In the ordinary course of business, the Company is party to various types of
litigation. The Company believes it has meritorious defenses to all claims and,
in its opinion, all litigation currently pending or threatened will not have a
material effect on the Company's financial position or results of operations.

NOTE 9.  ACQUISITION

    On July 6, 1998, the Company acquired Micronix Integrated Systems, Inc.
("Clare-Micronix"), a designer and manufacturer of analog and mixed-signal
application specific integrated circuits. The Company paid $16,012 for the
acquisition and direct costs, net of cash acquired and assumed liabilities

                                       33
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 9.  ACQUISITION (CONTINUED)
of $4,813, for a total purchase price of $20,825. The acquisition was accounted
for as a purchase in accordance with APB Opinion No. 16 BUSINESS COMBINATIONS,
and accordingly, Clare-Micronix's operating results since the date of
acquisition are included in the accompanying consolidated condensed financial
statements. In accordance with APB Opinion No. 16, the Company allocated the
aggregate purchase price to the assets acquired based on their fair values. An
independent appraisal, using proven valuation procedures and techniques, was
used to determine the fair value of the purchased intangible assets.

    Acquired intangible assets include existing technologies and goodwill. These
intangible assets are being amortized over their estimated useful lives of four
to eight years. The purchase price allocation is as follows:

<TABLE>
<S>                                                           <C>
Current assets..............................................  $ 1,268
Property, plant and equipment...............................    1,118
Existing technology.........................................    2,456
Other assets................................................      644
Goodwill....................................................   10,339
In-process R&D..............................................    5,000
Liabilities assumed.........................................   (4,813)
                                                              -------
                                                              $16,012
                                                              =======
</TABLE>

    The $5,000 allocated to purchased in-process research and development
("in-process R&D") represented the appraised fair value of projects that did not
have future alternative uses. This allocation represented the estimated fair
value based on risk-adjusted cash flows related to the in-process research and
development projects. The development of these projects had not yet reached
technological feasibility and the research and development in process had no
alternative uses. Accordingly, these costs were expensed as of the acquisition
date.

    In-process research and development value is comprised of six primary
research and development programs. These programs include the introduction of
certain new technologies. At the acquisition date, these programs ranged in
completion from 10% to 85%. As of March 31, 2000, two of these six products were
in production. Additionally, two products were in the final stages of the
development phase. One project was subsequently cancelled, but the technology
has been used to develop a new standard product. The remaining project was
cancelled and the technology abandoned. The research and development investment
in the Micronix technology made by the Company from the date of acquisition
through March 31, 2000 was $2,786. The Company believes it will incur additional
funding to complete each acquired program. There is no assurance that each
project will meet with either technological or commercial success. The
substantial delay or outright failure of the in-process research and development
would materially impact the Company's financial condition.

    The value assigned to purchased in-process technology was determined by
estimating the costs to develop the purchased in-process technology into
commercially viable products, estimating the resulting net cash flows from the
projects and discounting the net cash flows to their present value. The revenue
projection used to value the in-process research and development is based on
estimates of relevant market sizes and growth factors, expected trends in
technology and the nature and expected timing of

                                       34
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 9.  ACQUISITION (CONTINUED)
new products. The rates utilized to discount the net cash flows to their present
value are based on the weighted average cost of capital for Clare-Micronix. This
discount rate is commensurate with Clare-Micronix's corporate maturity and the
uncertainties in the economic estimates described above.

    The forecasts used by the Company in valuing in-process research and
development were based upon assumptions the Company believes to be reasonable
but which are inherently uncertain and unpredictable. The Company's assumptions
may be incomplete or inaccurate, and unanticipated events and circumstances are
likely to occur. For these reasons, actual results may vary significantly from
the projected results.

    The Company has not included pro forma information, as the results of
Micronix operations are not material to the Company.

NOTE 10.  RESTRUCTURING

    In fiscal 1999, the Company announced a restructuring of its operations and
recorded a pretax charge of $3,700 in accordance with the criteria set forth in
EITF 94-3. The 1999 restructuring charge includes severance-related costs
associated with workforce reduction of approximately 60 persons on a worldwide
basis, half of which are in manufacturing and the remainder in sales, general
and administrative. The balance of the 1999 restructuring includes a write-down
of assets associated with the closure of the Company's Wakefield, MA production
facility, which was substantially completed in the fourth quarter of 1999.

    The components of the 1999 restructuring expenses are as follows:

<TABLE>
<S>                                                           <C>
Employee severance, benefits and related costs..............   $2,084
Write-off and write-down of assets to be disposed...........    1,034
Lease termination and relocation costs......................      420
Other.......................................................      162
                                                               ------
  Total.....................................................   $3,700
                                                               ======
</TABLE>

    In fiscal 2000, the Company revised the estimated cost of this restructuring
by reversing $875. The revision reflects lower than expected severance costs.
The Company expects all remaining 1999 restructuring expenses to be paid by
September 2000.

NOTE 11.  DIVESTITURE

    On August 20, 1999, the Company sold all of the issued and outstanding
shares of common stock of Clare EMG, Inc. ("EMG"), a wholly owned subsidiary of
C.P. Clare, and certain assets to Sumida Electric Co., Ltd. ("Sumida"), for
$37,426 in cash. EMG included the Company's advanced magnetic winding, reed
relay, and surge arrestor product lines together with the second tier affiliate
Clare Mexicana S.A. de C.V.

                                       35
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 11.  DIVESTITURE (CONTINUED)
    The gain on sale of EMG is calculated as follows:

<TABLE>
<S>                                                           <C>
Cash received...............................................  $37,426
Less: Net assets divested...................................   21,741
                                                              -------
Gain on sale before expenses................................   15,685
Less: Direct expenses.......................................   (4,170)
                                                              -------
Net Gain on sale............................................  $11,515
                                                              =======
</TABLE>

    Unaudited pro forma financial data for continuing operations is as follows:

<TABLE>
<CAPTION>
                                                       YEARS ENDED MARCH 31,
                                                   ------------------------------
                                                     1998       1999       2000
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Net sales........................................  $84,797    $85,721    $81,834
Gross margin.....................................   23,068     30,413     19,996
</TABLE>

NOTE 12.  STOCKHOLDERS' EQUITY

(A) SHARES RESERVED

    As of March 31, 2000, shares of common stock reserved for issuance were as
follows:

<TABLE>
<S>                                                           <C>
Exercise of stock options...................................  3,085,933
Employee Stock Purchase Plan................................    100,772
                                                              ---------
                                                              3,186,705
                                                              =========
</TABLE>

(B) STOCK OPTIONS

    The Company maintains an equity incentive plan, the C. P. Clare Corporation
Amended and Restated 1995 Stock Option and Incentive Plan (the "1995 Plan"). The
1995 Plan provides for the issuance of options to purchase up to 4,680,000
shares of the Company's common stock. The 1995 Plan permits the issuance of both
incentive stock options and nonqualified stock options. All options, grants,
pricing, expiration periods and vesting periods are determined by the Board of
Directors, or pursuant to delegated authority, by the president of the Company,
and options must be granted at a price not less than 100% of the fair market
value at the date of grant in the case of incentive stock options or at 85% of
the fair market value in the case of nonqualified stock options. The Company
recognizes the difference, if any, between the fair market value of the
Company's stock on the date of grant and the exercise price of the options as
deferred compensation and recognizes any compensation expense over the
applicable vesting periods.

    In fiscal 1996, the Company recorded $651 of deferred compensation related
to the issuance of 605,600 options during the period. The Company amortized the
deferred compensation over the vesting period of the related options of one to
five years. During fiscal years 1998, 1999 and 2000, the Company recognized
$255, $92, and $62 respectively, of compensation expense in the consolidated
statements of operations related to the grant of these options.

                                       36
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 2000 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 12.  STOCKHOLDERS' EQUITY (CONTINUED)
    The 1995 Plan also provides for an automatic grant of non-qualified stock
options to purchase 10,000 shares of common stock to each independent director
as of June 20, 1995. Each new director elected after June 20, 1995 was granted a
nonqualified stock option to purchase 10,000 shares of common stock. Currently,
each independent director serving as a Director five days after the Company's
annual stockholders meeting shall automatically be granted a nonqualified stock
option to purchase 5,000 shares of common stock.

    The 1995 Plan also provides for stock appreciation awards, stock awards,
performance share awards and dividend equivalent rights. The stock appreciation
rights may be granted in tandem with or independent of stock options. The
Company has not granted any stock appreciation rights or dividend equivalent
rights as of March 31, 2000.

    As of March 31, 2000, there are 877,300 shares available for future grant
under the 1995 Plan.

    The following table summarizes incentive and nonqualified stock option
activity under the 1995 Plan for the fiscal years ended March 31, 1998, 1999 and
2000:

<TABLE>
<CAPTION>
                                                                                          WEIGHTED
                                                                                           AVERAGE
                                                             NUMBER OF   EXERCISE PRICE   PRICE PER
                                                              OPTIONS      PER SHARE        SHARE
                                                             ---------   --------------   ---------
<S>                                                          <C>         <C>              <C>
Outstanding at March 31, 1997..............................  1,696,782    $0.50-$24.63     $ 9.06
  Granted..................................................    337,144      8.12-19.00      15.38
  Exercised................................................   (132,599)     0.50-13.62       7.03
  Canceled.................................................    (57,128)     0.50-24.63       8.47
                                                             ---------    ------------
Outstanding at March 31, 1998..............................  1,844,199      0.50-24.63      10.36
  Granted..................................................  1,089,714      4.38-13.19       7.73
  Exercised................................................    (55,464)     0.50-13.19       6.05
  Canceled.................................................   (409,938)     0.50-17.25       9.13
                                                             ---------    ------------
Outstanding at March 31, 1999..............................  2,468,511      0.50-24.63       9.34
  Granted..................................................    481,612      3.38-11.47       5.73
  Exercised................................................    (51,020)     0.50-11.47       4.84
  Canceled.................................................   (690,470)     0.50-18.00       9.67
                                                             ---------    ------------
Outstanding at March 31, 2000..............................  2,208,633    $0.50-$24.63     $ 8.52
                                                             =========    ============
Exercisable at March 31, 2000..............................    787,891    $0.50-$24.63     $ 9.38
                                                             =========    ============
Exercisable at March 31, 1999..............................    603,001    $0.50-$24.63     $10.07
                                                             =========    ============
Exercisable at March 31, 1998..............................    392,929    $0.50-$24.63     $ 8.29
                                                             =========    ============
</TABLE>

                                       37
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 12.  STOCKHOLDERS' EQUITY (CONTINUED)

    The following table summarizes information about stock options outstanding
and exercisable at March 31, 2000:

<TABLE>
<CAPTION>
                                                OUTSTANDING OPTIONS
                                               ---------------------
                                                           WEIGHTED               OPTIONS EXERCISABLE
                                                            AVERAGE               --------------------
                                                             YEARS     WEIGHTED               WEIGHTED
                                                           REMAINING   AVERAGE                AVERAGE
                                               NUMBER OF   CONTRACT    EXERCISE   NUMBER OF   EXERCISE
EXERCISE PRICE RANGE                            OPTIONS      LIFE       PRICE      OPTIONS     PRICE
--------------------                           ---------   ---------   --------   ---------   --------
<S>                                            <C>         <C>         <C>        <C>         <C>
$0.50.......................................      99,621     3.48       $ 0.50      99,621     $ 0.50
$3.50-$6.25.................................     552,902     8.81       $ 5.62      93,900       6.16
$6.31-$10.25................................   1,209,860     7.87       $ 8.39     372,670       8.86
$10.50-$15.50...............................     166,750     7.23       $13.32     102,900      12.40
$15.88-$19.00...............................     169,500     6.41       $17.90     108,800      17.81
$24.63......................................      10,000     5.31       $24.63      10,000     $24.63
                                               ---------                           -------
                                               2,208,633                           787,891
                                               =========                           =======
</TABLE>

    Options granted in 1998, 1999 and 2000 have been valued using the
Black-Scholes option-pricing model prescribed by SFAS No. 123. The
weighted-average assumptions used for fiscal years 1998, 1999 and 2000 are as
follows:

<TABLE>
<CAPTION>
                                                                1998        1999        2000
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
Risk-free interest rate.....................................    6.0%        5.0%        5.0%
Expected dividend yield.....................................     --          --          --
Expected lives..............................................   6 years     6 years     6 years
Expected volatility.........................................     80%         80%        118%
Weighted average grant-date fair value per share of options
  granted at fair market value during the period............    $9.14       $9.27       $5.00
Weighted average exercise price of options granted at fair
  market value during the period............................   $15.38       $7.73       $5.73
Weighted average remaining contractual life of options
  outstanding...............................................  7.6 years   8.2 years   7.7 years
</TABLE>

    The Black-Scholes option pricing model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions, including expected stock price volatility. Since
the Company's employee stock options have characteristics significantly
different from those of traded options, and changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

                                       38
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 12.  STOCKHOLDERS' EQUITY (CONTINUED)
    Had compensation cost been determined consistent with SFAS No. 123, the
Company's net income (loss) and pro forma net income (loss) per common share
outstanding on a basic and diluted basis for fiscal years 1998, 1999 and 2000
would have been as follows:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net income (loss):
  As reported...............................................   $8,312    $(5,583)    $1,763
  Pro forma.................................................   $6,491    $(8,556)    $  256

Basic earnings (loss) per share:
  As reported...............................................   $ 0.90    $ (0.59)    $ 0.19
  Pro forma.................................................   $ 0.70    $ (0.91)    $ 0.03

Diluted earnings (loss) per share:
  As reported...............................................   $ 0.83    $ (0.59)    $ 0.18
  Pro forma.................................................   $ 0.65    $ (0.91)    $ 0.03
</TABLE>

(C) EMPLOYEE STOCK PURCHASE PLAN

    Under the C.P. Clare Corporation 1995 Employee Stock Purchase Plan (the
"Purchase Plan"), all U.S. and Belgian employees (including officers) of the
Company, as defined, are eligible to purchase the Company's common stock at an
exercise price equal to 85% of the fair market value of the common stock. The
Purchase Plan provides for up to 300,000 shares for issuance under the Purchase
Plan. As of March 31, 2000, 199,228 shares have been issued under this Purchase
Plan, and rights to purchase 100,772 shares are available for purchase.

(D) SHAREHOLDER RIGHTS PLAN

    On April 29, 1996, the Directors of the Company adopted a shareholder rights
agreement (the "Rights Agreement"). Pursuant to the terms of the Rights
Agreement, the Board of Directors declared a dividend distribution of one
preferred stock purchase right (a "right") for each outstanding share of common
stock of the Company to stockholders of record as of the close of business on
May 15, 1996 (the "Record Date"). In addition, one Right will automatically
attach to each share of common stock issued subsequent to the Record Date, until
April 29, 2006. Each Right entitles the registered holder to purchase from the
Company, upon the occurrence of certain events, a unit consisting of one one-
thousandth of a share (a "unit") of Series A Junior Participating Cumulative
Preferred Stock, par value $0.01 per share (the "preferred stock"), at a cash
exercise price of $100 per Unit (the "Exercise Price"), subject to adjustment.
The Company has reserved 150,000 shares of the Preferred Stock for issuance upon
exercise of the Rights.

    The Rights currently are not exercisable and are attached to and trade with
the outstanding shares of common stock. Under the Rights Agreement, the Rights
become exercisable (i) if a person as defined in the rights plan becomes an
"acquiring person" by acquiring 15% or more of the outstanding shares of common
stock (ii) if a person who owns 10% or more of the common stock is determined to
be an "adverse person" by the Board of Directors, or (iii) if a person commences
a tender offer that would result in that person owning 15% or more of the common
stock. Upon the occurrence of any

                                       39
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 12.  STOCKHOLDERS' EQUITY (CONTINUED)
one of these events, each holder of a Right (other than the acquiring person or
the adverse person) would be entitled to acquire such number of shares of the
Company's preferred stock which are equivalent to such number of shares of
common stock having a value of twice the then current exercise price of the
Right. If the Company is acquired in a merger or other business combination
transaction after any such event, each holder of a Right would then be entitled
to purchase, at the then current exercise price, shares of the acquiring
company's common stock having a value of twice the exercise price of the Right.

    Until a Right is exercised, the holder will have no rights as a stockholder
of the Company (beyond those as an existing stockholder), including the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Units, other securities of the Company, other consideration, or
common stock of an acquiring company.

NOTE 13.  EMPLOYEE BENEFIT PLANS

(A) 401(K) BENEFIT PLAN

    U.S. employees of the Company may participate in a supplemental retirement
program (the "401(k) Plan") established under Section 401(k) of the Internal
Revenue Code of 1986, as amended. The Company matches 75% of individual
contributions, up to 3% of base pay, as defined. Employee contributions vest
immediately, while Company matching contributions fully vest after two years of
service, as defined. For fiscal years 1998, 1999 and 2000, the Company
contributed $245, $329, and $317, respectively, under the 401(k) Plan.

(B) DEFINED BENEFIT PLAN

    All employees of the Company located in Taiwan are entitled to retirement
benefits under regulatory requirements. The actuarial present value of these
benefits has been recorded in the accompanying consolidated financial statements
in accordance with SFAS No. 87, EMPLOYERS' ACCOUNTING FOR PENSIONS.

    The components of the net periodic pension cost for fiscal years 1998, 1999
and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Service cost-benefit earned during the period...............    $ 78       $23        $29
Interest cost on projected benefit obligation...............     140        29         28
Expected return on assets...................................     (19)      (21)       (25)
                                                                ----       ---        ---
Net periodic pension cost...................................    $199       $31        $32
                                                                ====       ===        ===
</TABLE>

                                       40
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 13.  EMPLOYEE BENEFIT PLANS (CONTINUED)
    The funded status of the plan at March 31, 1998, 1999 and 2000 was as
follows:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Actuarial present value of accumulated plan benefits:
  Vested....................................................    $109       $109       $90
  Non-vested................................................      61         61       122
                                                                ----       ----       ---
                                                                 170        170       212
Additional amounts related to projected salary increases....     239        239       221
                                                                ----       ----       ---
Actuarial present value of projected benefit obligation.....     409        409       433
Plan assets at fair value...................................     287        287       382
                                                                ----       ----       ---
Projected benefit obligation in excess of plan assets.......    $122       $122       $51
                                                                ====       ====       ===
</TABLE>

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Assumptions:
Rate of return on plan assets...............................     7%         7%        6.5%
Discount rate for projected benefit obligations.............     7%         7%        6.5%
Rate of increase in future compensation levels..............     7%         7%        6.5%
</TABLE>

    The Company closed the manufacturing operations located in Taiwan and the
number of participants in the pension plan was reduced from the 156 employees in
fiscal 1997 to 12 employees in fiscal 1998. The number of participants was
reduced to 9 during fiscal 2000.

(C) BONUS PLAN

    Under the 1995 Key Employee Incentive Plan (the "Bonus Plan"), the Company
has the discretion to determine whether certain employees of the Company are
eligible for a bonus if certain milestones established for the Company and for
each individual are achieved, as defined. Participants may elect to defer
payment of their bonus to a later date and will be entitled to interest on
deferred amounts. The Company also has the discretion to pay the bonus in cash,
or partially or fully in stock, options or discounted options under the 1995
Stock Plan. During fiscal years 1998, 1999 and 2000, the Company incurred
$1,629, $80 and $100, respectively, related to the Bonus Plan.

NOTE 14.  INCOME TAXES

    The Company accounts for income taxes in accordance with SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. The statement requires that deferred income tax
accounts reflect the tax consequences on future years of differences between the
carrying amount of assets and liabilities for financial reporting purposes and
the amounts for income tax purposes. In addition, SFAS No. 109 requires the
recognition of future tax benefits, such as net operating loss carryforwards
("NOL"), to the extent that realization of such benefits is more likely than
not.

                                       41
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 14.  INCOME TAXES (CONTINUED)
    The components of domestic and foreign income (loss) before the provision
for income taxes for fiscal years ended March 31, 1998, 1999 and 2000 are as
follows:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Domestic....................................................  $ 9,214    $(6,907)     $168
Foreign.....................................................    3,978      1,324       (93)
                                                              -------    -------      ----
                                                              $13,192    $(5,583)     $ 75
                                                              =======    =======      ====
</TABLE>

    The components of current and deferred provision for income taxes for fiscal
years ended March 31, 1998, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Current:
  Federal...................................................   $2,631     $(444)    $(1,907)
  State.....................................................      522       (41)         --
  Foreign...................................................    1,371     1,400         219
                                                               ------     -----     -------
  Total current.............................................    4,524       915     $(1,688)
                                                               ------     -----     -------

Deferred:
  Federal...................................................      801      (510)         --
  State.....................................................     (370)     (341)         --
  Foreign...................................................      (75)      (64)         --
                                                               ------     -----     -------
  Total deferred............................................      356      (915)         --
                                                               ------     -----     -------
Provision (Benefit) for Income Taxes........................   $4,880     $  --     $(1,688)
                                                               ======     =====     =======
</TABLE>

    The income tax provision is different from that, which would be computed by
applying the U.S. federal income tax rate to income before taxes for fiscal
years ended March 31, 1998, 1999 and 2000, as follows:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Federal statutory tax rate..................................    34.0%     (34.0)%       34.0%
State income taxes, net of federal income tax benefit.......     0.2       (3.8)      (691.0)
Tax exempt interest.........................................    (2.4)      (1.3)          --
Non-deductible in-process research and development..........      --       30.4           --
Non-deductible goodwill amortization........................      --        6.4        855.0
Non-deductible foreign expenses.............................     4.4         --        430.0
Difference in foreign provision versus statutory U.S.
  rate......................................................    (0.5)       5.3           --
Decrease in valuation allowance relating to net operating
  loss carryforwards........................................    (0.8)      (1.9)    (2,543.0)
Other.......................................................     2.1       (1.1)      (336.0)
                                                                ----      -----     --------
                                                                37.0%       0.0%    (2,251.0)%
                                                                ====      =====     ========
</TABLE>

                                       42
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 14.  INCOME TAXES (CONTINUED)
    Significant components of deferred income tax assets and liabilities at
March 31, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                1999       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Current deferred income tax assets:
  Net operating loss carryforwards..........................  $   106    $    22
  Reserves and accruals not yet deducted for tax purposes...    4,753      2,857
  Less: Valuation allowance.................................     (823)      (146)
                                                              -------    -------
  Net current deferred income tax assets....................  $ 4,036    $ 2,733
                                                              =======    =======

Long-term deferred income tax assets:
  Net operating loss carryforwards..........................  $ 2,336    $ 2,717
  Net capital loss carryforwards............................    9,581      9,581
  State tax credits.........................................      486        404
  Less: Valuation allowance.................................  (11,066)   (10,189)
                                                              -------    -------
  Net long-term deferred income tax assets..................    1,337      2,513
                                                              -------    -------

Long-term deferred income tax liabilities:
  Depreciation..............................................   (1,068)    (1,523)
  Acquired intangible assets................................     (779)      (539)
                                                              -------    -------
  Net long-term income tax liabilities......................   (1,847)    (2,062)
                                                              -------    -------
Long-term deferred income tax asset (liability), net........  $  (510)   $   451
                                                              =======    =======
</TABLE>

    The Internal Revenue Code (the "Code") limits the amount of net operating
loss and tax credit carryforwards that companies may utilize in any one year in
the event of cumulative changes in ownership over a three-year period in excess
of 50%. In connection with the acquisition of the Clare Division of General
Instrument in 1989 and the simultaneous issuance of common stock and warrants,
the Company incurred a cumulative change in ownership in excess of 50% as
defined in the Code. This change in ownership has limited the Company's ability
to utilize, in any one year, the net operating loss and credit carryforwards
incurred prior to this change in ownership. The Company estimates that the total
NOL through January 1989 subject to this limitation is $7,492. The use of the
available NOL is limited to $311 in each year subsequent to this change in
ownership. In Taiwan, the Company has NOL carryforwards of $1,508 at March 31,
1999, which began to expire in fiscal 1999.

    In January 1997, the Company completed the sale of TMC to Gunther GmbH. As a
result of this transaction, the Company incurred a capital loss of approximately
$25.0 million, which the Company may carry forward for a period of five years.
The Company's ability to utilize this capital loss carryforward is limited to
the amount of capital gains that the Company generates in the carryforward
period. The Company has provided a full valuation allowance against the capital
loss carryforward as the Company believes that it is more likely than not that
the Company will be able to utilize such a carryforward.

                                       43
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 14.  INCOME TAXES (CONTINUED)
    The remainder of the valuation allowance relates to the limited use of
certain net operating loss carryforwards. Taxes have not been provided on
foreign subsidiaries' undistributed earnings of $2,886 at March 31, 2000, which
are deemed indefinitely invested.

NOTE 15.  OTHER INCOME (EXPENSE)

    Other income (expense) consists of the following for fiscal years 1998, 1999
and 2000:

<TABLE>
<CAPTION>
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net gain (loss) from foreign currency exchange..............    $378      $(227)      $(13)
Other.......................................................    (243)      (163)       564
                                                                ----      -----       ----
                                                                $135      $(390)      $551
                                                                ====      =====       ====
</TABLE>

NOTE 16.  SUMMARY OF QUARTERLY INFORMATION (UNAUDITED)

    Quarterly financial information for the fiscal years 1999 and 2000 is as
follows:

<TABLE>
<CAPTION>
                                                 FIRST      SECOND     THIRD      FOURTH     TOTAL
                                                QUARTER    QUARTER    QUARTER    QUARTER      YEAR
                                                --------   --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>        <C>
1999
Net sales.....................................  $36,694    $33,887    $37,248    $36,084    $143,913
Gross profit..................................   11,180      9,174     10,074     10,609      41,037
Net income (loss).............................    1,693     (7,693)        91        326      (5,583)
Basic earnings (loss) per share...............     0.18      (0.82)      0.01       0.03       (0.59)
Diluted earnings (loss) per share.............  $  0.17    $ (0.82)   $  0.01    $  0.03    $  (0.59)
</TABLE>

<TABLE>
<CAPTION>
                                                 FIRST      SECOND     THIRD      FOURTH     TOTAL
                                                QUARTER    QUARTER    QUARTER    QUARTER      YEAR
                                                --------   --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>        <C>
2000
Net sales.....................................  $36,038    $28,934    $21,617    $20,905    $107,494
Gross profit..................................    8,526      4,722      5,869      4,137      23,254
Net (loss) income.............................     (678)    10,506     (2,231)    (5,834)      1,763
Basic (loss) earnings per share...............  ($ 0.07)   $  1.10    ($ 0.23)   ($ 0.61)   $   0.19
Diluted (loss) earnings per share.............  ($ 0.07)   $  1.08    ($ 0.23)   ($ 0.61)   $   0.18
</TABLE>

NOTE 17.  FINANCIAL INFORMATION BY SEGMENT

    The Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, during the fourth quarter of 1999. SFAS No.
131 established standards for reporting information about operating segments in
annual financial statements and requires selected information about operating
segments in interim financial reports issued to stockholders. It also
established standards for related disclosures about products and services, and
geographic areas. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker, or decision making group, in
deciding how

                                       44
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 17.  FINANCIAL INFORMATION BY SEGMENT (CONTINUED)
to allocate resources and in assessing performance. The Company's chief
operating decision making group is composed of the chief executive officer,
members of senior management and the board of directors.

    The Company's reportable operating segments are Semiconductor and
Electromechanical products.

    The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on gross profit. Revenues are attributed to geographic areas
based on where the customer is located. The Company does not measure transfers
of sales between company segments. Segment information for the years March 31,
1998, 1999 and 2000 is as follows.

<TABLE>
<CAPTION>
                                                                     ELECTRO-
                                                     SEMICONDUCTOR   MAGNETIC   CORPORATE    TOTAL
                                                     -------------   --------   ---------   --------
<S>                                                  <C>             <C>        <C>         <C>
1998
Net product sales from external customers..........     $69,676      $86,595     $   --     $156,271
Intersegment net sales.............................          --           --         --           --
  Total net revenue................................      69,676       86,595         --      156,271
Gross profit.......................................      24,783       24,061         --       48,844
Depreciation and amortization......................       1,701        3,640         --        5,341
Interest income
  External.........................................          --           --      1,454        1,454
  Intersegment.....................................          --           --         --           --
  Total interest income............................          --           --      1,454        1,454
Interest expense (external)
  External.........................................          --           --        215          215
  Intersegment.....................................          --           --         --           --
  Total interest expense...........................          --           --        215          215
Other items
  Charge for in-process research and development...          --           --         --           --
  Restructuring....................................          --           --         --           --
Income taxes.......................................          --           --      4,880        4,880
Property, plant and equipment......................      12,409       26,368         --       38,777
</TABLE>

                                       45
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 17.  FINANCIAL INFORMATION BY SEGMENT (CONTINUED)

<TABLE>
<CAPTION>
                                                                     ELECTRO-
                                                     SEMICONDUCTOR   MAGNETIC   CORPORATE    TOTAL
                                                     -------------   --------   ---------   --------
<S>                                                  <C>             <C>        <C>         <C>
1999
Net product sales from external customers..........      69,365       74,548         --      143,913
Intersegment net sales.............................          --           --         --           --
  Total net revenue................................      69,365       74,548         --      143,913
Gross profit.......................................      25,935       15,102         --       41,037
Depreciation and amortization......................       4,926        4,562         --        9,488
Interest Income
  External.........................................          --           --        571          571
  Intersegment.....................................          --           --         --           --
  Total interest income............................          --           --        571          571
Interest expense (external)
  External.........................................          --           --        232          232
  Intersegment.....................................          --           --         --           --
  Total interest expense...........................          --           --        232          232
Other items
  Charge for in-process research and development...       5,000           --         --        5,000
  Restructuring....................................          --           --      3,700        3,700
Income taxes.......................................          --           --         --           --
Property, plant and equipment......................      20,943       19,332         --       40,275

2000
Net product sales from external customers..........      58,487       49,007         --      107,494
Intersegment net sales.............................          --           --         --           --
  Total net revenue................................      58,487       49,007         --      107,494
Gross profit.......................................      13,122       10,132         --       23,254
Depreciation and amortization......................       5,750        3,370         --        9,120
Interest income
  External.........................................          --           --        960          960
  Intersegment.....................................          --           --         --           --
  Total interest income............................          --           --        960          960
Interest expense (external)
  External.........................................          --           --        155          155
  Intersegment.....................................          --           --         --           --
  Total interest expense...........................          --           --        155          155
Other items
  Charge for in-process research and development...          --           --         --           --
  Restructuring....................................          --           --       (875)        (875)
Income taxes.......................................          --           --     (1,688)      (1,688)
Property, plant and equipment......................      21,475        4,819         --       26,294
</TABLE>

                                       46
<PAGE>
                    C.P. CLARE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

   MARCH 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 17.  FINANCIAL INFORMATION BY SEGMENT (CONTINUED)
    Interest income and expense, restructuring, and income taxes are considered
corporate level activities and are therefore, not allocated to segments.
Management believes transfers between geographic areas are accounted for on an
arms-length basis.

    Long-lived tangible assets by geographic area were as follows:

<TABLE>
<CAPTION>
GEOGRAPHIC AREA                                               1999       2000
---------------                                             --------   --------
<S>                                                         <C>        <C>
United States.............................................  $26,058    $26,107
Belgium...................................................      296        153
France....................................................        8         11
Germany...................................................       14         11
Mexico....................................................   13,857         --
Taiwan....................................................       42         12
                                                            -------    -------
                                                            $40,275    $26,294
                                                            =======    =======
</TABLE>

    Revenues by geographic area for the years ended March 31, 1998, 1999 and
2000 were as follows:

<TABLE>
<CAPTION>
GEOGRAPHIC AREA                                   1998       1999       2000
---------------                                 --------   --------   --------
<S>                                             <C>        <C>        <C>
United States.................................  $ 93,369   $ 86,059   $ 54,823
France........................................     7,910      6,164      3,967
Germany.......................................     5,804      6,708      4,996
Ireland.......................................     5,664      2,003      1,574
Italy.........................................     2,394      2,683      1,595
Netherlands...................................     1,968      1,429        634
Sweden........................................     2,635      3,673      3,568
United Kingdom................................    10,921     12,412      7,825
Other.........................................    25,606     22,782     28,512
                                                --------   --------   --------
                                                $156,271   $143,913   $107,494
                                                ========   ========   ========
</TABLE>

                                       47
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

    None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

    Incorporated herein by reference to the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the end of the year covered by this Form 10-K with respect to its
Annual Meeting of Stockholders to be held on September 21, 2000.

ITEM 11.  EXECUTIVE COMPENSATION

    Incorporated herein by reference to the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the end of the year covered by this Form 10-K with respect to its
Annual Meeting of Stockholders to be held on September 21, 2000.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Incorporated herein by reference to the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the end of the year covered by this Form 10-K with respect to its
Annual Meeting of Stockholders to be held on September 21, 2000.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Incorporated herein by reference to the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the end of the year covered by this Form 10-K with respect to its
Annual Meeting of Stockholders to be held on September 21, 2000.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a) Financial Statements.

    (1) Financial Statements

    The consolidated financial statements and notes are set forth under
Part II, Item 8, Financial Statements and Supplementary Data.

    Index to Consolidated Financial Statements.

       (a) Consolidated Balance Sheets as of March 31, 1999 and 2000.

       (b) Consolidated Statements of Operations for the Years Ended March 31,
           1998, 1999 and 2000.

       (c) Consolidated Statements of Stockholders' Equity for the Years Ended
           March 31, 1998, 1999 and 2000.

       (d) Consolidated Statements of Cash Flows for the Years Ended March 31,
           1998, 1999 and 2000.

       (e) Notes to Consolidated Financial Statements.

    (2) Financial Statement Schedules

                                       48
<PAGE>
    The following financial schedule of C.P. Clare Corporation is included in
this Annual Report on Form 10-K.

    Schedule II--Valuation and Qualifying Accounts  Page 52

    Schedules other that which is listed above have been omitted because those
are either not required, are not applicable, or the required information is
shown in the consolidated financial statements or related notes.

    (3) Exhibits

    Exhibits are as set forth in the "Exhibit Index" which begins on page 53 of
this Annual Report and precedes the exhibits filed.

(b) Reports on Form 8-K.

    None.

(c) Exhibits.

    The Company hereby files as part of this Annual Report on Form 10-K the
Exhibits listed in the attached Exhibit Index on pages 53 through 57 of this
Annual Report.

(d) Financial Statement Schedules.

    The Company hereby files as part of this Annual Report on Form 10-K the
financial statement schedule listed in Item 14(a)(2) set forth above.

                                       49
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, C.P. Clare Corporation certifies that it has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in Beverly, Massachusetts on June 23, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       C.P. CLARE CORPORATION

                                                       By:
                                                            -----------------------------------------
                                                                       Arthur R. Buckland,
Date: June 23, 2000                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

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

<TABLE>
<CAPTION>
                     SIGNATURES                                     TITLE                    DATE
                     ----------                                     -----                    ----
<C>                                                    <S>                               <C>
                                                       President, Chief Executive
     -------------------------------------------         Officer and Chairman            June 23, 2000
                 Arthur R. Buckland

                                                       Senior Vice President and Chief
     -------------------------------------------         Financial Officer               June 23, 2000
                   Harry Andersen

                                                       Director
     -------------------------------------------                                         June 23, 2000
               Winston R. Hindle, Jr.

                                                       Director
     -------------------------------------------                                         June 23, 2000
                   John G. Turner

                                                       Director
     -------------------------------------------                                         June 23, 2000
                    James K. Sims

                                                       Director
     -------------------------------------------                                         June 23, 2000
                 Larry K. Mihalchik

                                                       Director
     -------------------------------------------                                         June 23, 2000
                   Andrew E. Lietz
</TABLE>

                                       50
<PAGE>
            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE II

To C.P. Clare Corporation:

    We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of C.P. Clare Corporation and subsidiaries
included in this Form 10-K and have issued our report thereon dated April 26,
1999. Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14 is the
responsibility of the Company's management and is presented for the purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. The schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

                                          ARTHUR ANDERSEN LLP

Boston, Massachusetts
April 26, 2000

                                       51
<PAGE>
                                                                     SCHEDULE II

                             C.P. CLARE CORPORATION

                       VALUATION AND QUALIFYING ACCOUNTS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     RECOVERIES
                                        BALANCE AS OF               FOR ACCOUNTS   UNCOLLECTIBLE   BALANCE AT
                                          BEGINNING                  PREVIOUSLY      ACCOUNTS        END OF
ACCOUNTS RECEIVABLE ALLOWANCE             OF PERIOD     PROVISION   WRITTEN OFF     WRITTEN OFF      PERIOD
-----------------------------           -------------   ---------   ------------   -------------   ----------
<S>                                     <C>             <C>         <C>            <C>             <C>
Year Ended March 31, 2000.............     $1,365        $1,312       $      --       $1,390         $1,287
Year Ended March 31, 1999.............      1,177           461              --          273          1,365
Year Ended March 31, 1998.............        675           579              66          143          1,177
</TABLE>

<TABLE>
<CAPTION>
                                                     BALANCE AS OF                           BALANCE AT
                                                       BEGINNING     PROVISION                 END OF
RESTRUCTURING RESERVE                                  OF PERIOD     (CREDIT)    CASH PAID     PERIOD
---------------------                                -------------   ---------   ---------   ----------
<S>                                                  <C>             <C>         <C>         <C>
Year Ended March 31, 2000..........................     $2,152        $ (875)     $(1,128)     $  149
Year Ended March 31, 1999..........................         --         2,684         (532)      2,152
Year Ended March 31, 1998..........................      5,082            --       (5,082)         --
</TABLE>

                                       52
<PAGE>
                                 EXHIBIT INDEX

    Listed and indexed below are all Exhibits filed as part of this Report.
Certain Exhibits are incorporated by reference to documents previously filed by
the Company with the Securities and Exchange Commission pursuant to Rule 12b-32
under the Securities Exchange Act of 1934, as amended.

<TABLE>
<CAPTION>
EXHIBIT NO.                                        TITLE
-----------                                        -----
<C>                     <S>
        2.1             Agreement and Plan of Merger by and among C.P. Clare
                        Corporation, Clare Micronix Integrated Systems, Inc.,
                        Micronix Integrated Systems, Inc., Dennis Cocco and the
                        Principal Stockholders of the Company (as such term is
                        defined therein) dated as of July 6, 1998(6).

        3.1             Amended and Restated Articles of Organization of the
                        Registrant(2).

        3.2             Certificate of Vote of Directors Establishing a Series of A
                        Class of Stock(5).

        3.3             Amended and Restated By-laws of the Registrant(1).

        4.1             Specimen Certificate for shares of Common Stock, $.01 par
                        value, of the Registrant(1).

        4.2             Shareholder Rights Agreement, dated April 29, 1996, between
                        C.P. Clare Corporation and State Street Bank and Trust
                        Company, as Rights Agent(3).

       10.2             Amended and Restated Multicurrency Credit Agreement by and
                        among the Registrant, C.P. Clare N.V., Bank of America
                        National Trust and Savings Association, as Agent and the
                        Other Financial Institutions Party thereto dated March 6,
                        1998(7).

       10.3             Revolving Note in the amount of $20,000,000 made by the
                        Registrant and C.P. Clare N.V. in favor of the Bank of
                        America National Trust and Savings Association dated March
                        6, 1998 pursuant to that certain Amended and Restated
                        Multicurrency Credit Agreement of even date(7).

       10.4             Revolving Note in the amount of $20,000,000 made by the
                        Registrant and C.P. Clare N.V. in favor BankBoston, N.A.
                        dated March 6, 1998 pursuant to that certain Amended and
                        Restated Multicurrency Credit Agreement of even date(7).

       10.6             Negative Pledge Agreement by certain subsidiaries to Bank of
                        America National Trust and Savings Association dated
                        September 11, 1995 pursuant to that certain Multicurrency
                        Credit Agreement of even date(2).

       10.7             Reaffirmation of guaranties and Negative Pledge Agreements
                        by certain subsidiaries to Bank of America National Trust
                        and Savings Association dated March 6, 1998, pursuant to
                        that certain Amended and Restated Multicurrency Credit
                        Agreement of even date(7).

       10.8             C.P. Clare Corporation Voluntary Deferred Compensation Plan
                        for Key Employees effective as of April 1, 1998(7).

       10.35            Commercial Lease between the Registrant and Rosner and
                        Associates for 45 Progress Parkway, St. Louis, Missouri
                        dated September 23, 1991, as amended November 25, 1992(1).

       10.36            Standard Industrial Lease between General Instrument
                        Corporation and Davis Properties for 48 Progress Parkway,
                        St. Louis, Missouri dated December 15, 1987(1).

       10.37            Lease between the Registrant and the Trustees of Elandzee
                        Trust for 430 Bedford Street, Lexington, MA dated December
                        1, 1994(1).

       10.37.1          First Amendment to Lease between the Registrant and the
                        Trustees of Elandzee Trust for 430 Bedford Street,
                        Lexington, MA dated July 18, 1995(2).
</TABLE>

                                       53
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                        TITLE
-----------                                        -----
<C>                     <S>
       10.38            Subordination, Nondisturbance and Attornment Agreement
                        between the Registrant, Mortimer B. Zuckerman and Edward H.
                        Linde, Trustees of the Elandzee Trust and The Sakura Bank,
                        Limited, New York Branch dated December 1, 1994(1).

       10.47            Cleanup Agreement between the Registrant and General
                        Instrument Corporation dated May 1, 1995(1).

       10.49            Employment Agreement between the Registrant and Arthur R.
                        Buckland dated September 15, 1993, as amended by Amendment
                        dated March 20, 1995(1).

       10.59            1995 Stock Option and Incentive Plan, as amended and
                        restated as of September 29, 1996(2).

       10.60            1995 Employee Stock Purchase Plan, as amended and restated
                        as of October 23, 1995(2).

       10.61            C.P. Clare Corporation Key Employee Incentive Plan effective
                        April 1, 1995, as amended and restated as of October 2,
                        1995(2).

       10.63            The C.P. Clare Corporation Savings Plan(1).

       10.66            Lease Agreement dated as of October 31, 1995, by and between
                        Thomas J. Flatley, d/b/a The Flatley Company and C.P. Clare
                        Corporation(4).

       10.71.1          Employment Agreement between the Company and Dennis Cocco
                        dated July 6, 1998(6).

       10.72            Non-Competition Agreement between the Company and Dennis
                        Cocco dated July 6, 1998(6).

       10.73            C.P. Clare Non-Qualified Stock Option Plan, pursuant to
                        which options were granted to Dennis Cocco, dated July 6,
                        1998(9).

       10.74            Employment Agreement between the Company and Dave Adams
                        dated July 6, 1998(6).

       10.75            Non-Competition Agreement between the Company and Dave Adams
                        dated July 6, 1998(6).

       10.76            First Amendment to Amended and Restated Employment Agreement
                        between the Company and Thomas B. Sager dated November 23,
                        1998(7).

       10.77            First Amendment to Employment Agreement between the Company
                        and Richard Morgan dated November 23, 1998(7).

       10.78            Employment Agreement between the Company and Harry Andersen
                        dated December 22, 1998(7).

       10.79            Loan Agreement between the Company and Bank Boston, N.A
                        dated March 1, 1999(7).

       10.80            Form of Revolving Credit Note, Principal Amount $15,000,000
                        by the Company to Bank Boston, N.A. dated March 1, 1999(7).

       10.81            Pledge Agreement between the Company and Bank Boston, N.A.
                        dated March 1, 1999(7).

       21               Subsidiaries of the Registrant.*

       23               Consent of Arthur Andersen LLP.*

       27               Financial Data Schedule (Edgar).*
</TABLE>

------------------------

*   Filed herewith

**  Confidential treatment requested for portions of these documents

                                       54
<PAGE>
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
    (File No. 33-91972) and incorporated herein by reference thereto.

(2) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
    (File No. 33-98646) and incorporated herein by reference thereto.

(3) Incorporated by reference to Current Report on Form 8-K filed with the
    Commission on April 30, 1996.

(4) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
    the quarterly period ended December 31, 1995 and incorporated herein by
    reference thereto.

(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
    year ended March 31, 1997 and incorporated by reference thereto.

(6) Filed as an exhibit to the Registrant's Report on Form 8-K filed with the
    Commission on July 16, 1998 and incorporated by reference thereto.

(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
    year ended March 31, 1999 and incorporated by reference thereto.

                                       55