UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 2, 2001
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 012182
CALIFORNIA AMPLIFIER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3647070
- -------------------------------- -------------------------
(State or Other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
460 Calle San Pablo
CAMARILLO, CALIFORNIA 93012
- -------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
(805) 987-9000
----------------------
(Registrant's telephone number including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Common Stock Outstanding as of June 2, 2001 13,600,701
Number of pages in this Form 10-Q 14
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
JUNE 2, MAR. 3,
2001 2001
(unaudited) (audited)
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 12,242 $ 10,009
Accounts receivable, net of allowances of $380
at June 2, 2001 and $467 at March 3, 2001 13,687 12,370
Inventories 9,602 10,373
Deferred tax asset 2,225 2,256
Prepaid expenses and other current assets 674 515
---------- ----------
Total current assets 38,430 35,523
Property and equipment, at cost, net of
accumulated depreciation and amortization 9,671 10,231
Goodwill, net of accumulated amortization of $568
at June 2, 2001 and $495 at March 3, 2001 3,484 3,557
Other assets 675 501
---------- ----------
$ 52,260 $ 49,812
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,632 $ 5,677
Accrued liabilities 9,280 8,711
Short-term debt and current portion of long-term debt 851 644
---------- ----------
Total current liabilities 17,763 15,032
Long-term debt 4,250 4,500
Minority interest share in net assets of
Micro Pulse, Inc. 636 656
Commitments and contingencies
Stockholders' equity:
Preferred stock, 3,000 shares authorized;
no shares issued and outstanding --- ---
Common stock, $.01 par value; 30,000 shares authorized;
13,601 shares issued and outstanding at
June 2, 2001 and March 3, 2001 136 136
Additional paid-in capital 23,975 23,975
Accumulated other comprehensive loss (783) (699)
Retained earnings 6,283 6,212
---------- ----------
Total stockholders' equity 29,611 29,624
---------- ----------
$ 52,260 $ 49,812
========== ==========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
2
CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in thousands, except per share data)
THREE MONTHS ENDED
-------------------------------
JUNE 2, MAY 27,
2001 2000
----------- ----------
Sales $ 22,133 $ 31,953
Cost of sales 16,842 25,166
----------- ----------
Gross profit 5,291 6,787
Research and development 1,890 1,682
Selling 813 1,037
General and administrative 2,500 1,439
----------- ----------
Income from operations 88 2,629
Other income (expense), net 3 (73)
Minority interest share in (income) loss of
Micro Pulse, Inc. 20 (151)
----------- ----------
Income before provision for income taxes 111 2,405
Provision for income taxes (40) (865)
----------- ----------
Net income $ 71 $ 1,540
=========== ==========
Net income per share
Basic $ .01 $ .12
Diluted $ .01 $ .11
----------- ----------
Shares used in per share calculations
Basic 13,601 12,955
Diluted 13,999 14,086
=========== ==========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
THREE MONTHS ENDED
-------------------------------
JUNE 2, MAY 27,
2001 2000
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71 $ 1,540
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for doubtful accounts 71 19
Depreciation and amortization 1,026 897
(Gain) loss on sale of property and equipment (5) 1
Minority interest share in net income
(loss) of Micro Pulse, Inc., net of tax (20) 100
Deferred tax asset 31 673
Change in assets and liabilities:
Accounts receivable (1,388) (180)
Inventories 771 (589)
Prepaid expenses and other assets (347) 444
Accounts payable 1,955 (2,107)
Accrued liabilities 569 (434)
----------- -----------
Net cash provided by operating activities 2,734 364
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (386) (1,026)
Proceeds from sale of property and equipment 12 ---
----------- -----------
Net cash used in investing activities (374) (1,026)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings --- 5,000
Debt repayments (43) (2,506)
Issuances of common stock --- 291
----------- -----------
Net cash (used in) provided by financing activities (43) 2,785
Effect of foreign exchange rates (84) (27)
Net increase in cash and cash equivalents 2,233 2,096
Cash and cash equivalents at the beginning of period 10,009 2,791
----------- -----------
Cash and cash equivalents at end of period $ 12,242 $ 4,887
=========== ============
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4
CALIFORNIA AMPLIFIER, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION - The accompanying unaudited consolidated financial
statements have been prepared in accordance with the requirements of Form 10-Q
and, therefore, do not include all information and footnotes which would be
presented were such financial statements prepared in accordance with accounting
principles generally accepted in the United States. These statements should be
read in conjunction with the Company's Annual Report on Form 10-K for the year
ended March 3, 2001. In the opinion of management, these interim financial
statements reflect all adjustments necessary for a fair presentation of the
financial position and results of operations for each of the periods presented.
The results of operations and cash flows for such periods are not necessarily
indicative of results to be expected for the full fiscal year.
2. INVENTORIES - Inventories include the cost of material, labor and
manufacturing overhead and are stated at the lower of cost (first-in, first-out)
or market and consist of the following (in 000's):
June 2, 2001 Mar. 3, 2001
------------ ------------
Raw materials $ 7,580 $ 7,174
Work in process 94 251
Finished goods 1,928 2,948
--------- --------
$ 9,602 $ 10,373
========= =========
3. NET INCOME PER SHARE - Basic income per share is computed by dividing
reported earnings available to common stockholders by weighted average shares
outstanding. Diluted income per share increases the weighted average shares
outstanding for the dilutive effect of stock options, warrants, and convertible
debt arrangements.
Three Months Ended
---------------------------
June 2, May 27,
2001 2000
------- ------
Weighted average shares outstanding - Basic 13,601 12,955
Effect of dilutive securities
Options 276 715
Litigation settlement 122 124
Convertible debt --- 292
------- ------
Weighted average shares outstanding - Diluted 13,999 14,086
======= ======
4. COMPREHENSIVE INCOME (LOSS) - Comprehensive income (loss) is defined as the
total of net income and all non-owner changes in equity. The following table
details the components of comprehensive income for the three months ended June
2, 2001 and May 27, 2000 (in thousands):
Three Months Ended
---------------------------
June 2, May 27,
2001 2000
------- --------
Net income $ 71 $ 1,540
Foreign currency translation adjustment,
net of tax (84) (27)
------- --------
Comprehensive income (loss) $ (13) $ 1,513
======= ========
5
5. CONCENTRATION OF RISK - A significant percentage of consolidated sales and
consolidated accounts receivable relate to approximately four customers. The
following tables summarize the percentage (greater than 10%) by customer:
Sales:
Three Months Ended
-----------------------------------
Customer June 2, 2001 May 27, 2000
-------- ------------ ------------
A 33.1% 28.9%
B 20.4% *
C 15.9% *
D * 17.9%
Accounts Receivable:
Balances as of
-----------------------------------
Customer June 2, 2001 March 3, 2001
-------- ------------ ------------
A 28.4% 17.9%
B 22.8% 19.2%
C 13.7% 20.6%
D 10.5% *
- ---------
* less than 10%.
Customers A, C and D are Satellite Products customers, and B is a Wireless
Access Products customer.
6. STATEMENT OF CASH FLOWS - In the first quarter of fiscal year 2001, the
Company issued 525,000 shares of its common stock for retirement of $2,231,250
of debt. These amounts were excluded from the statement of cash flows.
7. SEGMENTS - The Company currently manages its business under three
identifiable business segments, Satellite Products, Wireless Access Products and
Antenna Products.
Segment information for the three months ended June 2, 2001 and May 27, 2000 is
as follows (in thousands):
Three Months Ended June 2, 2001
--------------------------------------------------------------------------------
Satellite Wireless Access Antenna Corporate Total
- ------------------------------------------------------------------------------------------------------------------
Sales $ 14,285 $ 6,517 $ 1,331 $ --- $22,133
Gross Profit 2,340 2,439 512 --- 5,291
Product Gross Margins 16.4% 37.4% 38.5% --- 23.9%
Income (Loss) Before Tax 1,474 1,011 (20) (2,354) 111
==================================================================================================================
Three Months Ended May 27, 2000
--------------------------------------------------------------------------------
Satellite Wireless Access Antenna Corporate Total
- ------------------------------------------------------------------------------------------------------------------
Sales $ 24,455 $ 5,411 $ 2,087 $ --- $31,953
Gross Profit 3,956 1,890 941 --- 6,787
Product Gross Margins 16.2% 34.9% 45.1% --- 21.2%
Income (Loss) Before Tax 2,919 637 131 (1,282) 2,405
==================================================================================================================
6
8. FINANCIAL STATEMENT RESTATEMENT
On March 29, 2001, the Company announced that during preparation for the
Company's fiscal 2001 audit, its corporate controller had abruptly resigned and
advised management by letter that he had made certain improper adjustments to
the Company's accounting records that caused a reduction in recorded expenses.
The results of the internal investigation revealed that the controller had
reduced expenses through the posting of improper adjustments, and irregularities
in the consolidation of its Hong Kong procurement subsidiary. The effect of such
irregularities (and certain other less significant items uncovered as part of
the restatement) was to understate the net loss for the year ended February 26,
2000 by approximately $3.7 million, and overstate net income for the nine months
ended November 25, 2000 by approximately $1.8 million. The results of operations
for fiscal year 2000 and the thee interim periods in the period ended November
25, 2000 included in these financial statements reflect the restated financial
statements. In connection with the restatement, the Company reassessed the
realizability of the deferred tax asset. The Company concluded that the deferred
tax asset, specifically as it relates to the future tax deductibility for the
exercise of non-qualified stock options, should be reduced for amounts
previously recognized in fiscal years 2000 and 2001. Accordingly, deferred taxes
and stockholders' equity were reduced by $5,800,000 in fiscal year 2000 and by
an additional $3,775,000 for the nine months ended November 25, 2000.
The amended Annual Report on Form 10-K/A for the year ended February 26, 2000,
and the quarterly reports on Form 10-Q/A for the periods May 29, 1999 through
November 25, 2000 were filed with the Securities and Exchange Commission on May
23, 2001. The accompanying financial statement information for the three months
ended May 27, 2000 reflects restated amounts.
9. LEGAL
The Company is currently involved in various litigation: a patent infringement
action, an insurance reimbursement action, a wrongful termination action, and
certain securities class actions. At this time it is not possible to determine
the outcome of such actions. See also Item 1 - Legal Proceedings included
elsewhere herein.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 2, 2001 AND MAY 27, 2000
SALES
Sales decreased $9.8 million, or 30.7%, from $31.9 million for the three months
ended May 27, 2000 to $22.1 million for the three months ended June 2, 2001.
Sales of Satellite products decreased $10.2 million, or 41.6%, from $24.5
million to $14.3 million. Sales of Wireless Access products increased $1.1
million, or 20.4%, from $5.4 million to $6.5 million. Sales of Antenna products
by Micro Pulse decreased $756,000, or 36.2%, from $2.1 million to $1.3 million.
The decrease in sales of Satellite products resulted from a slowdown in
subscriber additions as compared to the prior year period, and continued efforts
by operators to control inventory levels. In addition, in the prior year
operators maintained higher ordering patterns to ensure against product
shortages if electronic components affected manufacturers' production.
The increase in the sales of Wireless Access products is a result of increases
in the Company's sales of two-way transceiver products, offset by unit shipments
of the Company's Wireless Cable video products. The Company does not anticipate
further growth in sales of two-way transceiver products until the development of
second generation non-line of sight is completed.
The decrease in sales of Antenna products resulted primarily from lower demand
by customers for certain wireless products antenna assemblies.
GROSS PROFITS AND GROSS MARGINS
Gross profits decreased by $1.5 million, or 22.0%, from $6.8 million for the
three months ended May 27, 2000 to $5.3 million for the three months ended June
2, 2001. Gross margins increased to 23.9% from 21.3% . The 22.0% decrease in
gross profits resulted from the 30.7% decrease in sales, offset by higher gross
margins. The increase in gross margins resulted primarily from higher gross
margins for both Satellite and Wireless Access products. See also Note 7
"Segments," included in Notes to Unaudited Consolidated Financial Statements
included elsewhere herein for additional operating data for separate business
units.
OPERATING EXPENSES
Research and development expenses increased by $208,000 from $1.7 million to
$1.9 million. The increase related to additional engineering and design
personnel, higher salaries to remain competitive with industry compensation
trends, and higher material costs relating to new product design.
Selling expenses decreased by $224,000 from $1.0 million to $813,000. The
decrease relates primarily to decreases in discretionary marketing spending.
General and administrative expenses increased by $1.0 million from $1.4 million
to $2.5 million. Included in the increase is $950,000 of costs incurred in
connection with the restatement of fiscal year 2000 and fiscal year 2001 interim
financial statements.
8
INCOME FROM OPERATIONS
Income from operations, for the reasons noted above, decreased by $2.5 million,
to 88,000 from $2.6 million in the comparable prior year period.
MINORITY INTEREST SHARE IN INCOME (LOSS) OF MICRO PULSE, INC.
The Company consolidates 100% of the sales and expenses of Micro Pulse. The
minority interest share in income of Micro Pulse eliminates the 49.5% of the
income (loss) of Micro Pulse.
PROVISION FOR INCOME TAXES
The provision for taxes for the first quarter of fiscal 2002 is based upon an
annualized tax rate of 36%, the same tax rate as fiscal year 2001.
NET INCOME
Net income, for reasons outlined above, decreased by $1.5 million to $71,000
from $1.5 million in the comparable prior year period.
9
LIQUIDITY AND CAPITAL RESOURCES
The Company has an $8.0 million working capital line with U.S. Bank. At June 2,
2001 no amounts were outstanding under the borrowing arrangement. The Company
believes that cash flow generated from operations together with the funds
available under its credit facility, are sufficient to support operations and
capital equipment requirements over the next twelve months. For the three months
ended June 2, 2001, the Company generated cash from operating activities of $2.7
million and outlaid $386,000 on capital expenditures increasing cash by $2.2
million to $12.2 million at June 2, 2001. See also accompanying statement of
cash flows included elsewhere herein.
The Company believes that inflation and foreign currency exchange rates have not
had a material effect on its operations. The Company believes that fiscal year
2002 will not be impacted significantly by foreign exchange since a significant
portion of the Company's fiscal year 2002 projected sales are to U.S. markets,
or to international markets where its sales are negotiated in U.S. dollars.
Import tariffs in countries such as Brazil and China make it more difficult to
compete with in-country manufacturers.
NEW AUTHORITATIVE PRONOUNCEMENTS
In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities," and SFAS No. 137, which
delayed the effective date of SFAS No. 133. Adoption of this standard in the
first quarter of fiscal year 2002 did not have a material impact on the
Company's financial position or results of operations.
In December 1999, the SEC staff released Staff Accounting Bulletin (SAB) No.
101, "Revenue Recognition in Financial Statements," to provide guidance on the
recognition, presentation and disclosure of revenue in financial statements. The
adoption of SAB No. 101 did not have a material impact on the Company's revenue
recognition and results of operations.
In May 2001, the FASB reached a consensus on portions of its Business
Combination Project. Under the terms of the consensus, the Company will stop
amortizing goodwill at the close of fiscal 2002.
SAFE HARBOR STATEMENT
Forward looking statements in this 10-Q which include, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions, projections and other information regarding future
performance, are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The words "believes," "anticipates,"
"expects," and similar expressions are intended to identify forward-looking
statements. These forward-looking statements reflect the Company's current views
with respect to future events and financial performance and are subject to
certain risks and uncertainties, including, without limitation, product demand,
market growth, new competition, competitive pricing and continued pricing
declines in the DBS market, supplier constraints, manufacturing yields, timing
and market acceptance of new product introductions, new technologies, litigation
and related matters and other risks and uncertainties that are detailed from
time to time in the Company's periodic reports filed with the Securities and
Exchange Commission, copies of which may be obtained from the Company upon
request. Such risks and uncertainties could cause actual results to differ
materially from historical results or those anticipated. Although the Company
believes the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its expectations will
be attained. The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
YOURISH CLASS ACTION AND RLI INSURANCE COMPANY LITIGATION
On June 11, 1997, the Company and certain of its directors and officers had two
legal actions filed against them, one in the United States District Court,
Central District of California, entitled YOURISH V. CALIFORNIA AMPLIFIER, INC.,
ET AL., Case No. 97-4293 CBM (Mcx), and the other in the Superior Court for the
State of California, County of Ventura, entitled YOURISH V. CALIFORNIA
AMPLIFIER, INC. ET AL., Case No. CIV 173569. On June 30, 1997, another legal
action was filed against the same defendants in the Superior Court for the State
of California, County of Ventura, entitled BURNS, ET AL., V. CALIFORNIA
AMPLIFIER, INC., ET AL., Case No. CIV 173981. All three actions are purported
class actions on behalf of purchasers of the common stock of the Company between
September 12, 1995 and August 8, 1996. The actions claim that the defendants
engaged in a scheme to make false and misleading statements and omitted
disclosure of material adverse facts to the public concerning the Company,
allegedly causing the Company's stock price to artificially rise, and thereby
allegedly allowing the individual defendants to sell stock at inflated prices.
Plaintiffs claim that the purported stockholder class was damaged when the price
of the stock declined upon disclosure of the alleged adverse facts. On September
21, 1998, the Federal legal action was dismissed in the United States District
Court. The dismissal was upheld by the U.S. Court of Appeals for the Ninth
Circuit on October 8, 1999.
On March 27, 2000 the trial began for the lawsuit filed in the Superior Court
for the State of California, County of Ventura, entitled YOURISH V. CALIFORNIA
AMPLIFIER, INC., ET AL., Case No. CIV 173569. On March 29, 2000 the parties
reached a settlement. The terms of the settlement called for the issuance by the
Company of 187,500 shares of stock along with a cash payment of $3.5 million,
funded in part by insurance proceeds, for a total settlement of approximately
$11.0 million. Of the total settlement, $9.5 million was accrued in the
consolidated financial statements for the year ended February 26, 2000. By Order
dated September 14, 2000, the court approved the terms of the settlement and
dismissed the action with prejudice. As of March 3, 2001, the Company had issued
65,625 of the 187,500 shares and paid $2.5 million of the $3.5 million with one
of its insurance carriers paying the remaining $1.0 million. As of June 2, 2001
$4.8 million was accrued in the consolidated financial statements primarily
related to the remaining 121,875 shares still to be issued under the settlement
agreement.
In connection with the settlement of the YOURISH action, the Company and certain
of its former and current officers and directors have filed a lawsuit
(CALIFORNIA AMPLIFIER, INC., ET AL. V. RLI INSURANCE COMPANY, ET AL., Ventura
County Superior Court Case No. CIV196258), against one of its insurance carriers
to recover $2.0 million of coverage the insurance carrier has stated was not
covered under its policy of insurance. The insurance carrier filed a Motion for
Judgment on the Pleadings seeking judgment on the basis, INTER ALIA, that the
claims in the YOURISH action for alleged violations of Sections 25400 and 25500
of the California Corporation Code were not insurable as a matter of law
pursuant to Insurance Code Section 533. The Plaintiffs opposed the motion and a
hearing was held on September 22, 2000. On October 18, 2000, the Court entered
an Order on granting the motion for judgment on the pleadings. Judgment was
entered on November 9, 2000, and Notice of Entry of Judgment given on November
15, 2000. California Amplifier filed a Notice of Appeal on November 21, 2000 and
the appeal has been fully briefed by both parties. A hearing date is expected
for September 2001 to argue the appeal.
ANDREW CORPORATION LITIGATION
On March 7, 2000, the Company announced that it had received a complaint of
patent infringement from Andrew Corporation (Andrew). The complaint, filed
against California Amplifier in U.S. District Court for the Eastern District of
Texas, alleges that certain California Amplifier products infringe Andrew's
patent rights. The complaint was served with this initial pleading on or about
June 5, 2000. A first amended complaint was filed by Andrew on June 28, 2000. On
July 18, 2000, Andrew filed a motion for preliminary injunction seeking to
enjoin the Company from selling the products that Andrew claims infringe its
patent rights. During the briefing period regarding the preliminary injunction,
Andrew filed a motion to strike the Company's preliminary injunction opposition
brief. Also during this briefing period, the Company secured an exclusive
license, with enforcement rights, to a certain patent that the Company believes
both invalidates Andrew's '052 patent and applies to Andrew's competing
products. The Company has commenced patent litigation against Andrew in the
United States District Court for the Central District of California under this
patent, in an action styled CALIFORNIA AMPLIFIER, INC. AND NEC CORPORATION V.
ANDREW CORPORATION, Case No. CV-01-01391 AHM (RZx) ("The California Action").
11
California Amplifier successfully defeated the motion to strike, and Andrew's
reply relating to the preliminary injunction brief was filed on March 16, 2001.
The preliminary injunction hearing was scheduled for April 12-13, 2001, but the
hearing was removed from the Court's schedule due to ongoing settlement
negotiations between the parties. The Company believes that the litigation will
be resolved in the near future. If it is not, then the Company will continue to
defend itself vigorously.
2001 SECURITIES LITIGATION
Following the announcement by the Company on March 29, 2001 of the resignation
of its controller and the possible over-statement of net income for the fiscal
year ended February 26, 2000 and the subsequent restatement of the Company's
financial statements for fiscal year 2000 and the interim periods of fiscal
years 2000 and 2001, the Company and certain officers were named as defendants
in twenty putative actions in Federal Court. Caption information for each of the
lawsuits is set forth in Item 3 of the Company's Form 10-K for the fiscal year
ended March 3, 2001.
Sixteen of the class actions seek to represent a class of purchasers of the
Company's common stock for the period between April 6 or 7, 2000 to March 28,
2001. Four of the class actions seek to represent a class of purchasers of the
Company's common stock for the period between June 10 or 11, 1999 to March 28 or
29, 2001. All of the complaints cite to the Company's March 29, 2001
announcement regarding the resignation of the Company's corporate controller and
statement that net income for the fiscal year ended February 26, 2000 may have
been overstated by as much as $2.2 million. The complaints generally allege that
the defendants artificially inflated the price of the Company's stock during the
class period by allegedly making false representations about the Company's
financial results or failing to disclose adverse facts about its financial
results. The complaints also allege without specific facts that the individual
defendants knew or were reckless in making the alleged false statements about
the Company's financial results.
The twenty actions have been consolidated into a single action pursuant to
stipulation of the parties, and lead plaintiffs' counsel has been appointed. The
Company expects to move to dismiss the complaints after a consolidated amended
complaint is filed within the next 60 days, and intends to defend the actions
vigorously. At this time it is not possible to determine the outcome of these
actions.
CHARLES MEDALIE V. IRA CORON, FRED STURM, RICHARD B. GOLD, ARTHUR HAUSMAN, FRANK
PERNA, JR., THOMAS RINGER, CALIFORNIA AMPLIFIER, INC. (NOMINAL DEFENDANT)
On July 13, 2001, all of the current directors of the Company were named as
defendants in the above-entitled shareholder derivative lawsuit filed in Los
Angeles Superior Court, assigned case number BC254123. The Company was named as
a nominal defendant. The complaint is brought by some of the same counsel who
have sued the Company for violation of the Federal Securities laws. The
Complaint alleges claims against the directors for breach of fiduciary duty,
abuse of control and gross mismanagement, arising out of the Company's recent
restatement of earnings for fiscal year 2000 and portions of fiscal year 2001.
The complaint alleges that the directors failed to implement an adequate
accounting control system, and thereby allegedly caused the Company to violate
Generally Accepted Accounting Principles and reporting standards. The Complaint
further alleges that these alleged breaches of duty have resulted in the
lawsuits brought against the Company under the Federal Securities laws, as well
as investigative and other costs. No pre-lawsuit demand was made on the Board of
Directors of the Company. The complaint seeks compensatory and punitive damages,
as well as attorney's fees.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Current Reports on Form 8-K dated March 30, 2001, April 4, 2001, May
4, 2001, May 4, 2001, May 23, 2001, May 31, 2001, June 8, 2001 and June 12, 2001
(date of event March 29, 2001) reporting Item 5 "Other Events."
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
California Amplifier, Inc.
---------------------------
(Registrant)
July 17, 2001 /s/ Michael R. Ferron
---------------------------
Michael R. Ferron
Vice President, Finance and
Chief Accounting Officer
14