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(Amendment No. ___)
Filed by a Party other than the Registranto
o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to Section 240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |
(1) Title of each class of securities to which transaction applies: | ||
(2) Aggregate number of securities to which transaction applies: | ||
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 | ||
(Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) Proposed maximum aggregate value of transaction: | ||
(5) Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
(1) Amount Previously Paid: | ||
(2) Form, Schedule or Registration Statement No.: | ||
(3) Filing Party: | ||
(4) Date Filed: | ||
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President and Chief Executive Officer
David D. French
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is being mailed with this Proxy Statement.
You may receive an additional copy of these documents at no charge upon request directed to:
Cirrus Logic Investor Relations
2901 Via Fortuna, Austin, Texas 78746
telephone: (512) 912-3222; email: InvestorRelations@cirrus.com
Financial reports may also be accessed on our Web site at
www.cirrus.com.
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YOUR VOTE IS IMPORTANT
1:00 P.M.
Cirrus Logic, Inc.
2901 Via Fortuna
Austin, Texas 78746
(i) | the election of seven Company directors for one-year terms; | |
(ii) | the ratification and approval of the Cirrus Logic, Inc. 2006 Stock Incentive Plan; | |
(iii) | the ratification of the appointment of Ernst &Young LLP (“Ernst & Young”) as our independent registered public accounting firm; and | |
(iv) | such other business as may properly come before the meeting. |
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THE ANNUAL MEETING, AND VOTING PROCEDURES
Q: | Why am I receiving these materials? | |
A: | Our Board of Directors (“Board”) is soliciting your proxy for the annual meeting of stockholders to take place on July 28, 2006. As a stockholder, you are invited to attend the meeting and are entitled to and requested to vote on the proposals described in this proxy statement. | |
Q: | What information is contained in these materials? | |
A: | The information included in this proxy statement relates to the proposals to be voted on at the meeting, the voting process, the compensation of directors and our most highly paid executive officers, and certain other required information. Our 2006 Annual Report to Stockholders for the fiscal year ended March 25, 2006 is also enclosed. | |
Q: | What proposals will be voted on at the meeting? | |
A: | There are three proposals scheduled to be voted on at the meeting: |
• | the election of seven directors; | ||
• | the ratification and approval of the Cirrus Logic, Inc. 2006 Stock Incentive Plan; and | ||
• | the ratification of the appointment of Ernst & Young as our independent registered public accounting firm. |
Q: | What is Cirrus Logic’s voting recommendation? | |
A: | Our Board recommends that you vote your shares “FOR” each of the director nominees, and “FOR” both of the other proposals. | |
Q: | What shares owned by me can be voted? | |
A: | All shares owned by you as of the close of business on the Record Date, may be voted by you. These shares include (1) shares held directly in your name as thestockholder of record, including shares purchased through the Company’s Employee Stock Purchase Plan, and (2) shares held for you as thebeneficial ownerthrough a stockbroker or bank. | |
Q: | What is the difference between holding shares as a stockholder of record and as a beneficial owner? | |
A: | Most stockholders of the Company hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. | |
Stockholder of Record | ||
If your shares are registered directly in your name with the Company’s transfer agent, Computershare Investor Services, you are considered, with respect to those shares, thestockholder of record,and these proxy materials are being sent directly to you by the Company. As thestockholder of record,you have the right to vote by proxy or to vote in person at the meeting. We have enclosed a proxy card for you to use. | ||
Beneficial Owner | ||
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered thebeneficial ownerof shares heldin street name, and these proxy materials are being forwarded to you by your broker or nominee that is considered, with respect to those shares, thestockholder of record. As the beneficial owner, you have the right to direct your broker how to vote and are also invited to attend the meeting. However, since you are not thestockholder of record, you may not vote these shares by proxy or in person at the meeting. Your broker or nominee has |
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enclosed a voting instruction card for you to use in directing the broker or nominee how to vote your shares. |
Q: | How can I vote my shares in person at the meeting? | |
A: | Shares held directly in your name as thestockholder of recordmay be voted in person at the annual meeting. If you choose to do so, please bring the enclosed proxy card or proof of identification. | |
Even if you currently plan to attend the annual meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the meeting. Shares held in street name may be voted in person by you only if you obtain a signed proxy from the record holder giving you the right to vote the shares. | ||
Q: | How can I vote my shares without attending the meeting? | |
A: | Whether you hold shares directly as thestockholder of recordor beneficially in street name, you may direct your vote without attending the meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your stockbroker or other nominee. In most instances, you will be able to do this over the Internet, by telephone or by mail. If you are the stockholder of record, please refer to the summary instructions below and those included on your proxy card. If you hold shares in street name, you should refer to the voting instruction card included by your broker or nominee. | |
BY INTERNET—If you have Internet access, you may submit your proxy from any location in the world by following the “Vote by Internet” instructions on the proxy card. | ||
BY TELEPHONE—If you live in the United States or Canada, you may submit your proxy by following the “Vote by Phone” instructions on the proxy card. | ||
BY MAIL—You may vote by mail by signing your proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee, and mailing it in the enclosed, postage prepaid and addressed envelope. If you provide specific voting instructions, your shares will be voted as you instruct. If you sign but do not provide instructions, your shares will be voted as described below in “How Are Votes Counted?” | ||
Q: | Can I change my vote? | |
A: | You may revoke your proxy instructions at any time prior to the vote at the annual meeting. For shares held directly in your name, you may revoke your proxy instructions by granting a new proxy bearing a later date (that automatically revokes the earlier proxy) or by attending the annual meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically request it to be revoked. For shares held beneficially by you, you may revoke your proxy instructions by submitting new voting instructions to your broker or nominee. | |
Q: | What is the quorum requirement for the meeting? | |
A: | The quorum requirement for holding the meeting and transacting business is the presence, either in person or represented by proxy, of the holders of a majority of the outstanding shares entitled to be voted and present in person or represented by proxy. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. | |
Q: | How are votes counted? | |
A: | In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees. For the other |
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proposals, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote “AGAINST.” If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board (“FOR” all of the Company’s nominees to the Board, “FOR” the ratification and approval of the Cirrus Logic, Inc. 2006 Stock Incentive Plan, and “FOR” the ratification of Ernst & Young to serve as our independent registered public accounting firm). | ||
Q: | What is the voting requirement to approve each of the proposals? | |
A: | A director must receive the affirmative “FOR” vote of a majority of those shares entitled to vote and present in person or represented by proxy in order to be re-elected. The ratification and approval of the Cirrus Logic, Inc. 2006 Stock Incentive Plan and the ratification of our independent registered public accounting firm requires the affirmative “FOR” vote of a majority of those shares present in person or represented by proxy. If you are abeneficial ownerand do not provide thestockholder of recordwith voting instructions, your shares may constitutebroker non-votes,as described in “How are abstentions and broker non-votes counted?” below. In tabulating the voting results for any particular proposal, shares that constitutebroker non-votesare not considered entitled to vote on that proposal. | |
Q: | How are abstentions and broker non-votes counted? | |
A: | Abstentions are counted as shares present and entitled to be voted for the purposes of calculating whether a proposal receives “FOR” votes from a majority of the shares present and entitled to vote. As a result, abstentions will have the same effect as a vote cast AGAINST a proposal. | |
However, for the purposes of calculating whether such proposal receives “FOR” votes from a majority of the shares present and entitled to vote, broker non-votes are not counted as shares present and entitled to be voted with respect to the matter on which the broker has expressly not voted. Thus, broker non-votes will not affect the outcome of any of the matters being voted upon at the meeting. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because the broker has not received voting instructions from the beneficial owner and the broker lacks discretionary voting power to vote the shares. | ||
Q: | What does it mean if I receive more than one proxy or voting instruction card? | |
A: | It means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive. | |
Q: | How can I obtain an admission ticket for the meeting? | |
A: | Two cut-out admission tickets are included on the back of this proxy statement. A limited number of tickets are available for additional joint owners. To request additional tickets, please contact the Company’s Corporate Secretary at our headquarters. If you forget to bring an admission ticket, you will be admitted to the meeting only if you are listed as astockholder of recordas of the close of business on the Record Date, and bring proof of identification. If you hold your shares through a stockbroker or other nominee and fail to bring an admission ticket, you will need to provide proof of ownership by bringing either a copy of the voting instruction card provided by your broker or a copy of a brokerage statement showing your share ownership as of the Record Date. |
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Q: | Where can I find the voting results of the meeting? | |
A: | We will announce preliminary voting results at the meeting and will publish final results no later than our quarterly report on Form 10-Q for the second fiscal quarter ending September 23, 2006. | |
Q: | What happens if additional proposals are presented at the meeting? | |
A: | Other than the three proposals described in this proxy statement, we do not expect any matters to be presented for a vote at the annual meeting. If you grant a proxy, the persons named as proxy holders, Scott Thomas and John Kurtzweil, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote your shares for such other candidate or candidates as may be nominated by the Board. | |
Q: | What classes of shares are entitled to be voted? | |
A: | Each share of our common stock outstanding as of the Record Date is entitled to one vote on each item being voted upon at the annual meeting. On the Record Date, we had approximately 87.5 million shares of common stock outstanding. | |
Q: | Is cumulative voting permitted for the election of directors? | |
A: | No. | |
Q: | Who will count the votes? | |
A: | A representative of Automatic Data Processing, Inc. will tabulate the votes. A representative of the Company will act as the inspector of the election. | |
Q: | Is my vote confidential? | |
A: | Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties except (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, or (3) to facilitate a successful proxy solicitation by our Board. Occasionally, stockholders provide written comments on their proxy card, which are then forwarded to our management for review and consideration. | |
Q: | Who will bear the cost of soliciting votes for the meeting? | |
A: | The Company will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. If you choose to access the proxy materials and/or submit your proxy over the Internet or by telephone, however, you are responsible for Internet access or telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for the solicitation activities. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders. | |
Q: | May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as directors? | |
A: | You may submit proposals for consideration at future stockholder meetings. | |
Stockholder Proposals: In order for a stockholder proposal to be considered for inclusion in the Company’s proxy statement for next year’s annual meeting, the written proposal must be received by the Company no later than February 17, 2007. These |
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proposals also will need to comply with Securities and Exchange Commission regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Similarly, in order for a stockholder proposal to be raised from the floor during next year’s annual meeting, written notice must be received by the Company no later than February 17, 2007, and shall contain the information required by our Bylaws. | ||
Copy of Bylaw Provisions: You may contact the Company’s Corporate Secretary at our headquarters for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. |
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Governance and | ||||||||
Name of Director | Independent | Audit | Compensation | Nominating | ||||
D. James Guzy | Yes | X | X | |||||
Michael L. Hackworth | Yes | |||||||
Walden C. Rhines | Yes | X | X | Chair | ||||
William D. Sherman | Yes | Chair | X | |||||
Robert H. Smith | Yes | Chair | X | X | ||||
Suhas S. Patil | No | |||||||
David D. French | No | |||||||
Number of Meetings Held in Fiscal Year Ended March 25, 2006 | 9 | 4 | 3 |
• | reviewing the Company’s auditing, accounting, financial reporting, and internal control functions; |
• | selecting the Company’s independent registered public accounting firm and overseeing their independence, qualifications and performance; |
• | pre-approving all audit and non-audit services performed by the independent auditors; |
• | meeting separately with the independent auditors and the Company’s senior management and providing a line of communication between the independent auditors, management and the Board; |
• | ensuring that procedures are available for the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters; and |
• | reviewing the general scope of the Company’s accounting, financial reporting, annual audit and matters relating to internal control systems, as well as the results of the annual audit. |
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c/o Corporate Secretary
Cirrus Logic, Inc.
2901 Via Fortuna
Austin, Texas 78746
• | A majority of the members of the Board must be independent directors as defined by applicable Nasdaq listing standards and rules of the Securities and Exchange Commission. |
• | The positions of Chairman of the Board and Chief Executive Officer shall be held by separate individuals, and the Chief Executive Officer shall be the only member of the Board who is an executive officer of the Company. |
• | If the Chairman of the Board is not an independent director, an independent director may be designated by the Board as the “lead independent director.” |
• | Directors shall retire at the age of 75. |
• | The Board will have an Audit, Compensation, and Governance and Nominating Committee, each of which shall consist solely of independent directors. |
• | The independent directors shall meet in executive session either before or after each regularly scheduled Board meeting. |
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Director Compensation for Fiscal Year Ended March 25, 2006 | ||||
Quarterly Director Retainer | $ | 6,250 | ||
Audit Chair Quarterly Retainer | $ | 2,500 | ||
Board Meeting Attendance Fees (per meeting) | $ | 2,000 | ||
Special Telephonic Board Meeting Attendance Fees (per meeting) | $ | 500 | ||
Audit Committee Meeting Attendance Fees (per meeting) | $ | 500 | ||
Compensation Committee Meeting Attendance Fees (per meeting) | $ | 250 | ||
Nominating and Governance Committee Meeting Attendance Fees (per meeting) | $ | 250 |
Director Compensation (Beginning Fiscal Year 2007) | ||||
Quarterly Director Retainer | $ | 12,500 | ||
Board Chairman Quarterly Retainer | $ | 3,750 | ||
Audit Chair Quarterly Retainer | $ | 5,000 | ||
Audit Committee Member Quarterly Retainer | $ | 2,000 | ||
Compensation Committee Chair Quarterly Retainer | $ | 2,000 | ||
Compensation Committee Member Quarterly Retainer | $ | 1,000 | ||
Nominating and Governance Committee Chair Quarterly Retainer | $ | 1,500 | ||
Nominating and Governance Committee Quarterly Retainer | $ | 750 |
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Director since 1985
Director since 1999
Director since 1984
Director since 1984
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Director since 1995
Director since 2001
Director since 1990
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• | discretionary grants to our employees and to the employees of our subsidiary corporations of stock options that constitute incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), (“Incentive Stock Options”); and | ||
• | discretionary grants to employees, consultants, and directors of the Company and its affiliates of (a) stock options that do not constitute Incentive Stock Options (“Nonstatutory Stock Options”), (b) shares of Common Stock that are subject to restrictions on disposition and forfeiture to the Company under certain circumstances (“Restricted Stock”), (c) shares of Common Stock, cash payments, or a combination thereof that may be earned based on the satisfaction of various performance measures (“Performance Awards”), (d) shares of Common Stock, cash payments or a combination thereof which vest over a period of time (“Phantom Stock Awards”), and (e) awards of unrestricted shares of the Common Stock that need not be subject to performance criteria or to forfeiture (“Bonus Stock Awards”). |
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Shares | ||||||||
Beneficially Owned | ||||||||
Beneficial Owner | Number | Percent(1) | ||||||
Legg Mason Inc. (2) | 8,544,926 | 9.8 | ||||||
Alfred S. Teo(3) | 8,376,099 | 9.6 | ||||||
FMR Corp(4) | 4,570,000 | 5.3 | ||||||
David D. French, Chief Executive Officer and Director(5) | 1,676,543 | 1.9 | ||||||
Craig H. Ensley, former Sr. Vice President, General Manager(6) | 634,881 | * | ||||||
Suhas S. Patil, Chairman Emeritus and Director(7) | 606,178 | * | ||||||
Gerald R. Gray, Senior Vice President, Worldwide Operations(8) | 286,656 | * | ||||||
D. James Guzy, Director(9) | 237,782 | * | ||||||
Michael L. Hackworth, Chairman of the Board(10) | 172,450 | * | ||||||
Robert A. Kromer, Vice President, Sales(11) | 170,111 | * | ||||||
John Kurtzweil, Senior Vice President, Chief Financial Officer(12) | 143,831 | * | ||||||
Walden C. Rhines, Director(13) | 96,000 | * | ||||||
William D. Sherman, Director(14) | 65,405 | * | ||||||
Robert H. Smith, Director(15) | 56,042 | * | ||||||
All executive officers and directors as a group (19 persons)(16) | 5,035,917 | 5.8 |
* | Less than 1% of the outstanding common stock | |
(1) | Percentage ownership is based on approximately 86,816,165 shares of common stock issued and outstanding on March 25, 2006. Shares of common stock, issuable under stock options that are currently exercisable or will become exercisable within 60 days after March 25, 2006, are deemed outstanding for computing the percentage of the person or group holding such options, but are not deemed outstanding for computing the percentage of any other person or group. | |
(2) | Pursuant to a 13F filed with the Securities and Exchange Commission on May 15, 2006, Legg Mason Inc. reported that as of March 31, 2006, it beneficially owned 8,544,926 shares. The filing indicates that Legg Mason has sole voting authority for 7,581,218 shares and no voting authority for 963,708 shares, and its address is 100 Light Street, Baltimore, MD 21202. Batterymarch Financial Management, Inc., TIMCO Asset Management, Inc., CAM North America, LLC, Salomon Brothers Asset Management Inc. and Smith Barney Fund Management LLC are among the institutional managers included in the filed report. The filing indicates that Batterymarch Financial Management, Inc. has sole voting authority over 1,301,150 shares and no voting authority over 134,800 shares; that Salomon Brothers Asset Management, Inc. has sole voting authority over 6,500 shares; that Smith Barney Fund Management, LLC has sole voting authority over 4,059,300 shares; that TIMCO Asset Management, Inc. has sole voting authority over 166,600 shares; and that CAM North America, LLC has sole voting authority over 2,047,668 shares and no voting authority over 828,908 shares. | |
(3) | Pursuant to a Schedule 13D filed with the Securities and Exchange Commission on September 27, 2004, Alfred Teo reported that as of September 17, 2004, he individually beneficially owns 277,800 shares, or less than one percent of the Company’s common stock; Alfred Teo and Annie Teo as joint tenants with right of survivorship beneficially own 5,817,675 shares or 6.7% of the Company’s common stock; Alfred Teo is the trustee for the Alpha Industries, Inc. Retirement Plan, which beneficially owns 134,700 shares, or less than one percent of the Company’s common stock; Alfred Teo is the Alfred S. Teo of Alfred S. Teo IRA Rollover, which beneficially owns 143,100 shares, or less than one percent of the Company’s |
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common stock; Alfred Teo holds the controlling interest in Lambda Financial Service Corp., which owns 265,000 shares or less than one percent of the Company’s common stock; Annie Teo is the sole stockholder of Great Eastern Acquisition, which beneficially owns 673,924 shares, or less than one percent of the Company’s common stock; the M.A.A.A Trust FBO Mark, Andrew, Alan, & Alfred Teo, Jr., Teren Seto Handelman, Trustee, beneficially owns 1,063,900 shares, or 1.2% of the Company’s common stock. The address for Alfred S. Teo is 783 West Shore Drive, Kinnelon, New Jersey 07405. | ||
(4) | Pursuant to a 13F filed with the Securities and Exchange Commission on May 22, 2006, FMR Corp reported that as of March 31, 2006, it beneficially owned 4,570,000 shares. Pursuant to a Schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2006, FMR Corp. reported that power to vote the shares beneficially owned by FMR Corp. resides with the Board of Trustees of the Fidelity Growth Company Fund. The address for FMR Corp. and Fidelity Growth Company Fund is 82 Devonshire Street, Boston, MA 02109. | |
(5) | Includes 1,656,043 shares issuable upon exercise of options held by Mr. French. | |
(6) | Includes 547,081 shares issuable upon exercise of options held by Mr. Ensley, and 1,000 shares held by Mr. Ensley’s daughter for which Mr. Ensley disclaims beneficial ownership. | |
(7) | Includes 272,500 shares issuable upon exercise of options held by Dr. Patil, 263,278 shares held by Dr. Patil directly, and 70,400 shares held by family members and trusts for the benefit of family members, with respect to which Dr. Patil does not have voting and investment power and disclaims beneficial ownership. | |
(8) | Includes 286,190 shares issuable upon exercise of options held by Mr. Gray, 416 shares held by Mr. Gray directly, and 50 shares held by Mr. Gray’s spouse for which he disclaims beneficial ownership. | |
(9) | Includes 75,000 shares issuable upon exercise of options held by Mr. Guzy, 30,000 shares held by Mr. Guzy directly, and 132,782 shares held by Arbor Company, of which Mr. Guzy is President. | |
(10) | Includes 50,000 shares issuable upon exercise of options held by Mr. Hackworth, 7,088 shares held by Mr. Hackworth directly, and 115,362 shares held by Mr. Hackworth as Trustee UTD dated August 1, 1988, for which Mr. Hackworth disclaims beneficial ownership. | |
(11) | Includes 170,111 shares issuable upon exercise of options held by Mr. Kromer. | |
(12) | Includes 139,373 shares issuable upon exercise of options held by Mr. Kurtzweil. | |
(13) | Includes 70,000 shares issuable upon exercise of options held by Dr. Rhines, 20,000 shares held by Dr. Rhines directly, and 6,000 shares held by Dr. Rhines’ spouse for which he claims beneficial ownership. | |
(14) | Includes 65,000 shares issuable upon exercise of options held by Mr. Sherman. | |
(15) | Includes 56,042 shares issuable upon exercise of options held by Mr. Smith. | |
(16) | Includes 3,633,950 shares issuable upon exercise of options held by all current executive officers and directors as a group. The total shares reported for the group also include 87,800 shares and 547,081 options to purchase shares held by Mr. Ensley, whose employment terminated in September 2005. |
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Long-Term | ||||||||||||||||||||||||
Compensation Awards | ||||||||||||||||||||||||
Name and | Annual Compensation | Restricted | Securities | All Other | ||||||||||||||||||||
Principal Position | Year | Salary | Bonus | Stock Awards | Underlying Options | Compensation(4) | ||||||||||||||||||
David D. French | 2006 | $ | 460,800 | $ | 256,960 | (6) | — | 225,000 | $ | — | ||||||||||||||
President and Chief | 2005 | 454,985 | 112,250 | (1) | — | 290,000 | 229 | |||||||||||||||||
Executive Officer | 2004 | 450,000 | 112,260 | (1) | — | 359,375 | 86 | |||||||||||||||||
Craig H. Ensley(7) Senior Vice President, | 2006 | $ | 355,627 | (8) | $ | 36,256 | (9) | — | — | $ | — | |||||||||||||
General Manager, | 2005 | 284,263 | 33,756 | (1) | — | 60,000 | 5,394 | |||||||||||||||||
Embedded Products | 2004 | 270,045 | 32,013 | (1) | — | 100,000 | 4,540 | |||||||||||||||||
Gerald R. Gray | 2006 | $ | 268,383 | $ | 73,329 | (10) | — | 30,000 | $ | 388 | ||||||||||||||
Senior Vice President, | 2005 | 263,646 | 31,260 | (1) | — | 30,000 | 138 | |||||||||||||||||
Worldwide Operations | 2004 | 250,080 | 30,073 | (1) | — | 40,000 | 219 | |||||||||||||||||
Robert A. Kromer(3) | 2006 | $ | 256,615 | $ | 193,589 | (2) | — | 30,000 | $ | — | ||||||||||||||
Vice President, | 2005 | 247,504 | 156,504 | (2) | — | 60,000 | 212 | |||||||||||||||||
Worldwide Sales | 2004 | — | — | — | — | — | ||||||||||||||||||
John T. Kurtzweil(11) | 2006 | $ | 297,232 | $ | 46,591 | (12) | — | 30,000 | $ | — | ||||||||||||||
Senior Vice President, | 2005 | 280,864 | 5,000 | — | 285,000 | $ | 46,988 | (14) | ||||||||||||||||
Chief Financial Officer | 2004 | 10,576 | 50,000 | — | — | $ | — | |||||||||||||||||
Terry M. Leeder | 2006 | $ | 305,774 | $ | 84,802 | (13) | — | 30,000 | $ | — | ||||||||||||||
Senior Vice President, | 2005 | 300,375 | 36,872 | (1) | — | 50,000 | 2,508 | |||||||||||||||||
Business Development | 2004 | 294,975 | 56,651 | (5) | — | — | 4,740 |
(1) | The bonuses were paid under the Company’s Executive Incentive Plan. | |
(2) | This amount reflects commissions received under the Company’s Sales Incentive Plan. | |
(3) | Mr. Kromer became the Company’s Vice President, Worldwide Sales in December 2004 and was not a Named Officer in fiscal years 2004. The amounts shown include all compensation paid to Mr. Kromer in fiscal year 2005. | |
(4) | These amounts reflect reimbursements during the fiscal year for the payment of taxes. | |
(5) | This amount reflects $20,930 paid under the Company’s Sales Incentive Plan and $35,721 paid under the Company’s Executive Incentive Plan. | |
(6) | This amount reflects $112,500 paid under the Company’s Executive Incentive Plan, and $144,460 paid under the Company’s Variable Compensation Plan. | |
(7) | As of September 23, 2005, Mr. Ensley was no longer an employee of the Company. | |
(8) | Includes payments made under the Company’s 1999 Executive Severance Plan. | |
(9) | This amount includes $33,756 paid under the Company’s Variable Compensation Plan. | |
(10) | This amount reflects $31,260 paid under the Company’s Executive Incentive Plan, and $42,069 paid under the Company’s Variable Compensation Plan. | |
(11) | Mr. Kurtzweil became Senior Vice President, Chief Financial Officer on March 15, 2004. | |
(12) | The bonus was paid under the Company’s Variable Compensation Plan. | |
(13) | This amount reflects $36,872 paid under the Company’s Executive Incentive Plan, and $47,930 paid under the Company’s Variable Compensation Plan. | |
(14) | This amount reflects reimbursement for relocation expenses incurred during 2004. |
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Individual Grants | ||||||||||||||||||||||||
Number of | % of Total Options | Potential Realizable Value at Assumed | ||||||||||||||||||||||
Securities | Granted to | Annual Rates of Stock Price Appreciation | ||||||||||||||||||||||
Underlying Options | Employees in Fiscal | Exercise Price | for Option Term | |||||||||||||||||||||
Name | Granted | Year(1) | ($/Sh)(2) | Expiration Date | 5%(4) | 10%(4) | ||||||||||||||||||
D. French | 225,000 | 9.39 | $ | 8.06 | 3/1/16 | (3) | $ | 1,140,750 | $ | 2,893,500 | ||||||||||||||
C. Ensley(5) | 0 | 0 | n/a | n/a | n/a | n/a | ||||||||||||||||||
G. Gray | 30,000 | 1.25 | $ | 8.06 | 3/1/16 | (3) | $ | 152,100 | $ | 385,800 | ||||||||||||||
R. Kromer | 30,000 | 1.25 | $ | 8.06 | 3/1/16 | (3) | $ | 152,100 | $ | 385,800 | ||||||||||||||
J. Kurtzweil | 30,000 | 1.25 | $ | 8.06 | 3/1/16 | (3) | $ | 152,100 | $ | 385,800 | ||||||||||||||
T. Leeder | 30,000 | 1.25 | $ | 8.06 | 3/1/16 | (3) | $ | 152,100 | $ | 385,800 |
(1) | Based on 2,395,350 shares underlying options granted to all employees during the fiscal year ended March 25, 2006, from the 1996 Option Plan and the 2002 Stock Option Plan. | |
(2) | The exercise price may be paid in cash or in shares of common stock valued at fair market value on the exercise date, or through a cashless exercise procedure pursuant to which the optionee provides irrevocable instructions to a brokerage firm to sell the purchased shares and to remit to the Company, out of the sale proceeds, an amount equal to the exercise price plus all applicable withholding taxes. | |
(3) | All options granted become exercisable for 25% of the shares upon the optionee’s completion of one year of service measured from the grant date and will become exercisable for the balance of the shares in 36 successive equal monthly installments upon his completion of each additional month of service thereafter. | |
(4) | We cannot assure that the actual stock price appreciation over the 10-year option term will be at the assumed 5% and 10% levels or at any other defined level. Unless the market price of the common stock appreciates over the option term, no value will be realized from those option grants that were made to the Named Officers with an exercise price equal to the fair market value of the option shares on the grant date. | |
(5) | As of September 23, 2005, Mr. Ensley was no longer an employee of the Company. |
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Number of Securities | ||||||||||||||||||||||||
Underlying | Value of Unexercised In-The- | |||||||||||||||||||||||
Shares | Value | Unexercised Options | Money Options | |||||||||||||||||||||
acquired on | Realized | at Fiscal Year End | at Fiscal Year End(2) | |||||||||||||||||||||
Exercise | ($)(1) | Vested | Unvested | Vested | Unvested | |||||||||||||||||||
D. French | 238,339 | $ | 1,216,944 | 1,465,835 | 788,951 | $ | 1,001,220 | $ | 1,565,224 | |||||||||||||||
C. Ensley(3) | 0 | 0 | 550,206 | 0 | $ | 797,498 | $ | 0 | ||||||||||||||||
G. Gray | 10,000 | $ | 50,953 | 279,731 | 84,483 | $ | 401,478 | $ | 225,562 | |||||||||||||||
R. Kromer | 10,000 | $ | 51,000 | 153,390 | 124,611 | $ | 742,544 | $ | 430,091 | |||||||||||||||
J. Kurtzweil | 0 | 0 | 127,498 | 187,502 | $ | 109,949 | $ | 247,351 | ||||||||||||||||
T. Leeder | 0 | 0 | 414,788 | 90,212 | $ | 578,203 | $ | 297,497 |
(1) | Based upon the market value of the purchased shares on the exercise date less the option exercise price paid for those shares. | |
(2) | Based upon the market value of the Company’s common stock of $8.61 per share on March 24, 2006 (the last trading day of the fiscal year), less the exercise price. | |
(3) | As of September 23, 2005, Mr. Ensley was no longer an employee of the Company. |
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(A) | (B) | (C) | |||||||||||
Securities to be | Weighted-average | Securities remaining | |||||||||||
issued upon exercise | exercise price of | available for future issuance | |||||||||||
of outstanding | outstanding | under equity compensation | |||||||||||
options, warrants, | options, warrants, | plans (except securities in | |||||||||||
and rights | and rights | column (A)) | |||||||||||
Equity compensation plans approved by security holders(1) | 6,915 | $ | 11.21 | 8,020 | (2) | ||||||||
Equity compensation plans not approved by security holders(3) | 5,045 | $ | 5.82 | 9,961 | |||||||||
Total | 11,960 | $ | 8.93 | 17,981 | (4) |
(1) | The Company’s stockholders have approved the Company’s 1987 Stock Option Plan, the 1989 Employee Stock Purchase Plan, the 1990 Directors’ Stock Option Plan, and 1996 Stock Plan. The following plans were assumed by the Company at the time of acquisition, and Cirrus Logic stockholder approval was not required for these plans or their respective outstanding grants, as they were approved by the acquired Companies’ shareholders: the Audio Logic 1992 Plan, the Peak Audio, Inc. 2001 Stock Plan, the LuxSonor Semiconductors, Inc. 1995 Stock Option Plan, the ShareWave, Inc. 1996 Flexible Stock Incentive Plan, the Stream Machine Company 1996 Stock Plan, the Stream Machine 2001 Stock Plan, and the Stream Machine Company non-statutory stock option grants made outside of a plan. | |
(2) | In addition to shares available for issuance under our 1996 Stock Plan and 2002 Stock Option Plan, the number reported includes (i) 926,056 shares available for issuance under the Company’s |
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1989 Employee Stock Purchase Plan and (ii) 82,296 shares available for issuance under the Company’s 1990 Directors’ Stock Option Plan, under which only members of the Company’s Board of Directors can receive option grants. Our Board of Directors discontinued all future grants under the option plans we assumed in connection with our past acquisitions, including the Audio Logic 1992 Plan, the Peak Audio, Inc. 2001 Stock Plan, the LuxSonor Semiconductors, Inc. 1995 Stock Option Plan, the ShareWave, Inc. 1996 Flexible Stock Incentive Plan, the Stream Machine Company 1996 Stock Plan, and the Stream Machine 2001 Stock Plan, so shares under these plans have not been included in the total. | ||
(3) | In August 2002, the Board of Directors approved the 2002 Stock Option Plan, which permits awards of fair market value stock options to non-executive employees. This plan contains an evergreen provision such that on the first business day of each fiscal year beginning with March 31, 2003, the plan shall be increased by a number equal to 4 percent of the number of shares outstanding as of the last business day of the immediately preceding fiscal year. | |
(4) | As of the company’s fiscal month ended May 20, 2006 there were a total of 11,283,845 options outstanding, with a weighted average exercise price of $9.13 and a weighted average term of 6.86 years. If the stockholders approve the Company’s 2006 Stock Incentive Plan proposal described in Proposal No. 2 to this Proxy Statement, the only continuing plans, in addition to the 2006 Stock Incentive Plan, that will carry forward after the stockholders’ meeting will be the Company’s 1989 Employee Stock Purchase Plan and the 1990 Directors’ Stock Option Plan, which as of May 20, 2006 had a combined total of approximately 1,008,000 options available for issuance. |
OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
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Walden C. Rhines
Robert H. Smith
OF THE BOARD OF DIRECTORS
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D. James Guzy
Walden C. Rhines
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2006 | 2005 | |||||||
Audit Fees | $ | 670,000 | $ | 904,000 | ||||
Audit-Related Fees | 47,000 | 128,000 | ||||||
Tax Fees | 86,000 | 133,000 | ||||||
All Other Fees | 0 | 0 | ||||||
TOTAL | $ | 803,000 | $ | 1,165,000 |
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AMONG CIRRUS LOGIC, INC., THE S & P 500 INDEX
AND THE S & P SEMICONDUCTORS INDEX
Fiscal year ending March 31.
Cumulative Total Return | ||||||||||||||||||||||||
3/01 | 3/02 | 3/03 | 3/04 | 3/05 | 3/06 | |||||||||||||||||||
CIRRUS LOGIC, INC. | 100.00 | 126.33 | 13.46 | 50.74 | 30.26 | 56.77 | ||||||||||||||||||
S & P 500 | 100.00 | 100.24 | 75.42 | 101.91 | 108.73 | 121.48 | ||||||||||||||||||
S & P SEMICONDUCTORS | 100.00 | 108.75 | 56.07 | 96.19 | 81.53 | 88.31 |
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c/o Corporate Secretary
Cirrus Logic, Inc.
2901 Via Fortuna
Austin, Texas 78746
Attention: Investor Relations
2901 Via Fortuna
Austin, TX 78746
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President and Chief Executive Officer
June 2, 2006
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of the Board of Directors
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5.1.1 | Having the sole authority and responsibility to select (subject to stockholder ratification), retain, compensate, oversee, evaluate and, where appropriate, terminate the Company’s independent auditors, and the independent auditors must report directly to the Committee. | ||
5.1.2 | Having the responsibility for resolving any disagreements between management and the independent auditors regarding financial reporting. | ||
5.1.3 | Adopting and implementing pre-approval policies and procedures for audit and non-audit services to be rendered by the independent auditors. The Committee may delegate to one or more of its members the authority to pre-approve non-audit services to be provided by the independent auditors, provided that any such pre-approval by one or more members of the Committee shall be reported to the full Committee at its next scheduled meeting. | ||
5.1.4 | At least annually, obtaining and reviewing with the independent auditors a written statement as required by Independence Standards Board (ISB) Standard No. 1, as may be modified or supplemented. The Committee shall discuss with the independent auditors relationships or services that in the view of the Committee may impact the objectivity or independence of the Company’s independent auditors and shall take, or recommend that the full Board take, appropriate action to oversee the independence of the independent auditors. | ||
5.1.5 | Obtaining from the independent auditor assurance that it has complied with Section 10A of the Securities Exchange Act of 1934. |
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5.2.1 | Reviewing with the independent auditors their audit plan, including the scope, procedures and timing, prior to such audit. | ||
5.2.2 | Reviewing with the independent auditors and management the accounting and reporting principles and practices applied by the Company in preparing its financial statements. | ||
5.2.3 | Reviewing with management and the independent auditors the financial information and the Management’s Discussion and Analysis proposed to be included in each of the Company’s Quarterly Reports on Form 10-Q prior to their filing. The Chair may represent the Committee for purposes of this review. | ||
5.2.4 | Reviewing before release the unaudited interim financial results in the Company’s quarterly earnings release. | ||
5.2.5 | Reviewing with management and the independent auditors, at the completion of the annual audit, the audited financial statements and the Management’s Discussion and Analysis proposed to be included in the Company’s Annual Report on Form 10-K prior to its filing and provide or review judgments about the quality, not only the acceptability, of accounting principles, such other matters required to be discussed with the independent auditors under generally accepted auditing standards. Based on such review and discussions, the Committee will consider whether it will recommend to the Board of Directors that the financial statements be included in the Company’s Annual Report on Form 10-K. | ||
5.2.6 | Reviewing and approving, if appropriate, material changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditors or management. | ||
5.2.7 | Establishing procedures for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. | ||
5.2.8 | Evaluating the professional competency of the financial staff and the internal auditors, as well as the quality of their performance in discharging their respective responsibilities. |
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of the Board of Directors
• | The Compensation Committee shall consist of three or more directors, as determined by the Board. | ||
• | Each member of the Compensation Committee shall satisfy the applicable independence requirements of the National Association of Securities Dealers, Inc. (the “NASD”). | ||
• | Each member of the Compensation Committee shall qualify as an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. |
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1. | Review and recommend for approval by the directors of the Board of Directors who satisfy the independence requirements of the NASD (the “Independent Directors”) the corporate goals and objectives relevant to the compensation of the Chief Executive Officer and other Executive Officers of the Company. | ||
2. | Review and approve for the Chief Executive and other Executive Officers of the Company the following: (a) compensation policies; (b) annual base salary compensation; (c) bonus or incentive plan(s), (d) perquisites; (e) employment agreements, severance arrangements and change in control agreements/provisions; and (f) any other special or supplemental benefits or compensation applicable to the Chief Executive Officer and other Executive Officers to ensure that such items are aligned with the Company’s objectives and stockholder interests. | ||
3. | Review and approve the Company’s general compensation policies and programs applicable to non-executive employees of the Company. | ||
4. | Review annually the Company’s bonus, incentive and other benefit plans. Review and recommend for approval by the Independent Directors any new plans, and amendments and modifications to any existing plan, subject to applicable stockholder approval requirements. | ||
5. | Administer the Company’s various stock option plans, and review and approve option, restricted stock, stock appreciation right and other equity-based grants to employees, the Chief Executive Officer, and other Executive Officers. | ||
6. | Review the compensation and benefits for the Company’s non-employee directors, and recommend for approval by the Independent Directors any changes in the compensation and benefits. | ||
7. | Establish rules and regulations and perform all other administrative or management duties required of the Board of Directors or the Compensation Committee by the provisions of any compensation or benefit plan maintained by the Company. | ||
8. | Have prepared a Report to the Board on the compensation policies applicable to the Company’s Chief Executive Officer and other Executive Officers during the last completed fiscal year in accordance with the compensation reporting requirements of the Securities and Exchange Commission, and oversee compliance with these requirements. | ||
9. | Perform any other activities consistent with this Charter and applicable law as the Compensation Committee or the Board of Directors may deem appropriate. |
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of the Board of Directors
a. | the term of office for directors; | ||
b. | the size of the Board; | ||
c. | changes to the format of Board meetings; and | ||
d. | matters for consideration by the Board and committees. |
a. | the charters, duties and powers of Board committees according to existing and planned Company objectives; and | ||
b. | the term of office for committee members. |
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a. | establishing Company policies relating to recruiting directors; | ||
b. | evaluating potential candidates for election as directors and for service on each Board committee, including conducting the appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates; and | ||
c. | recommending to the Board the names of qualified persons to be nominated for election or re-election as directors and considering suggestions for Board membership submitted by stockholders. |
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CIRRUS LOGIC, INC.
2901 VIA FORTUNA
AUSTIN, TEXAS 78746
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Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Cirrus Logic, Inc., c/o ADP,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | CIRLG1 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY | ||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
CIRRUS LOGIC, INC. | ||||||||||||||||||||||||||||||||||
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, IT WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS 2 AND 3. | ||||||||||||||||||||||||||||||||||
For All | Withhold All | For All Except | To withhold authority to vote, mark “For All Except” and write the nominee’s number on the line below. | |||||||||||||||||||||||||||||||
1. | Election of Directors. | |||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the listed nominees. | o | o | o | |||||||||||||||||||||||||||||||
Nominees: (01) Michael L. Hackworth (02) David D. French (03) D. James Guzy (04) Suhas S. Patil | (05) Walden C. Rhines (06) William D. Sherman (07) Robert H. Smith | |||||||||||||||||||||||||||||||||
For | Against | Abstain | ||||||||||||||||||||||||||||||||
Vote On Proposals | ||||||||||||||||||||||||||||||||||
The Board of directors recommends a vote FOR the following proposals. | ||||||||||||||||||||||||||||||||||
2. | Ratification and Approval of the Company’s 2006 Stock Incentive Plan. | o | o | o | ||||||||||||||||||||||||||||||
3. | Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2007. | o | o | o | ||||||||||||||||||||||||||||||
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. | ||||||||||||||||||||||||||||||||||
This Proxy is revocable at any time before it is exercised. | ||||||||||||||||||||||||||||||||||
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HOUSEHOLDING ELECTION- Please indicate if you consent to receive certain future investor communications in a single package per household | o | o |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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PROXY
CIRRUS LOGIC, INC.
PROXY FOR 2006 ANNUAL MEETING OF STOCKHOLDERS
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