United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
Act Of 1934 For the Period Ended September 30, 2001
or
[ ] Transition Report Pursuant To Section 10 Or 15(d) Of The Securities Exchange
Act Of 1934 For The Transition Period From ____________ To ___________
Commission File Number 0-15449
CALIFORNIA MICRO DEVICES CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2672609
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 Topaz Street, Milpitas, California 95035-5430
- -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(408) 263-3214
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
-------------------------------------------------------
(Former name, former address, and former fiscal year if
changed since last report)
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 ___
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of September 30, 2001, there were outstanding 11,614,100 shares of Issuer's
Common Stock.
0
CALIFORNIA MICRO DEVICES CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Page Number
-----------
Item 1. Financial Statements
Statements of Operations
Three and Six Months Ended September 30, 2001 and 2000 2
Balance Sheets
September 30, 2001 and March 31, 2001 3
Statements of Cash Flows
Six Months Ended September 30, 2001 and 2000 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure About Market Risk 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
1
ITEM 1. Financial Statements.
CALIFORNIA MICRO DEVICES CORPORATION
STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
--------------------------- ---------------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $ 8,638 $ 16,112 $ 14,743 $ 30,988
Cost and expenses:
Cost of sales 8,986 10,725 15,644 20,325
Research and development 1,027 900 1,925 1,710
Selling, marketing and administrative 2,463 2,857 5,177 5,663
Special charges 4,110 -- 4,110 --
-------- -------- -------- --------
Total costs and expenses 16,586 14,482 26,856 27,698
-------- -------- -------- --------
Operating income (loss) (7,948) 1,630 (12,113) 3,290
Other expense, net 313 380 439 543
-------- -------- -------- --------
Income (loss) before income taxes (8,261) 1,250 (12,552) 2,747
Provision for income taxes
-- 25 -- 55
-------- -------- -------- --------
Net income (loss) $ (8,261) $ 1,225 $(12,552) $ 2,692
======== ======== ======== ========
Net earnings/(loss) per share - basic $ (0.71) $ 0.11 $ (1.09) $ 0.24
======== ======== ======== ========
Net earnings/(loss) per share - diluted $ (0.71) $ 0.10 $ (1.09) $ 0.21
======== ======== ======== ========
Weighted average common shares and
share equivalents outstanding - basic 11,575 11,213 11,525 11,166
======== ======== ======== ========
Weighted average common shares and
share equivalents outstanding - diluted 11,575 12,578 11,525 12,548
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
2
CALIFORNIA MICRO DEVICES CORPORATION
BALANCE SHEETS
(Amounts in Thousands, Except Share Data)
September 30, March 31,
2001 2001*
-------- --------
(Unaudited)
ASSETS:
Current assets:
Cash and short-term securities $ 1,361 $ 2,309
Short-term investments 3,120 4,288
Accounts receivable, less allowance for doubtful
accounts of $220 and $219 4,631 8,068
Inventories 9,025 11,716
Prepaid expenses and other assets 1,350 1,451
-------- --------
Total current assets 19,487 27,832
Property, plant & equipment, net 10,538 14,372
Restricted cash 983 914
Other long term assets 1,082 1,151
-------- --------
Total assets $ 32,090 $ 44,269
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,369 $ 3,471
Accrued salaries and benefits 1,061 1,135
Other accrued liabilities 1,119 657
Deferred margin on shipments to distributors 519 772
Current maturities of long-term debt and capital
lease obligations 1,496 1,594
-------- --------
Total current liabilities 7,564 7,629
Long-term debt, less current maturities 8,692 8,947
Capital lease obligations, less current maturities 486 533
-------- --------
Total liabilities 16,742 17,109
Shareholders' equity:
Common stock - no par value; authorized 25,000,000;
issued and outstanding September 30 and March 31, 2001:
11,614,100 and 11,459,503, respectively 59,260 58,509
Accumulated deficit (43,901) (31,349)
Accumulated other comprehensive loss (11) --
-------- --------
Total shareholders' equity 15,348 27,160
-------- --------
Total liabilities and shareholders' equity $ 32,090 $ 44,269
======== ========
<FN>
*Derived from audited financial statements.
The accompanying notes are an integral part of these financial statements.
</FN>
3
CALIFORNIA MICRO DEVICES CORPORATION
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Six Months Ended
September 30,
--------------------------
2001 2000
-------- --------
Cash flows from operating activities:
Net income (loss) $(12,552) $ 2,692
Adjustments to reconcile net income (loss)
to net cash provided by/(used in) operating activities:
Non-cash portion of special charges 3,395 --
Write-off of discontinued inventory 511 --
Depreciation and amortization 1,627 1,468
Net decrease/(increase) in inventories 2,180 (502)
Net decrease in accounts receivable 3,437 201
Net decrease/(increase) in prepaid expenses and other current assets 101 (69)
Net increase/(decrease) in trade accounts payable and other current liabilities 286 (300)
Net decrease in other long term assets 14 10
Net (decrease)/increase in deferred margin on distributor sales (253) --
-------- --------
Net cash (used in)/provided by operating activities (1,254) 3,500
-------- --------
Cash flows from investing activities:
Short-term investment purchases (4,772) (5,453)
Short-term investment sales 5,929 4,348
Capital expenditures (1,180) (3,157)
Net change in restricted cash (69) (83)
-------- --------
Net cash used in investing activities (92) (4,345)
-------- --------
Cash flows from financing activities:
Repayments of capital lease obligations (165) (204)
Repayments of long-term debt (687) (127)
Borrowing of long-term debt 499 1,003
Proceeds from issuance of common stock 751 932
-------- --------
Net cash provided by financing activities 398 1,604
-------- --------
Net (decrease)/increase in cash and cash equivalents (948) 759
Cash and cash equivalents at beginning of period 2,309 1,490
-------- --------
Cash and cash equivalents at end of period $ 1,361 $ 2,249
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 463 $ 483
Income taxes paid $ -- $ --
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
4
CALIFORNIA MICRO DEVICES CORPORATION
Notes to Financial Statements
1. Basis of Presentation
In the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments necessary to present fairly California Micro
Devices Corporation's (the "Company") financial position as of September 30,
2001, results of operations for the three and six month periods ended September
30, 2001 and 2000, and cash flows for the six-month periods ended September 30,
2001 and 2000. Results for the quarter are not necessarily indicative of fiscal
year results.
The condensed financial statements should be read in conjunction with the
financial statements included with the Company's annual report on Form 10-K for
the fiscal year ended March 31, 2001.
2. 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.
3. Inventories
The components of inventory consist of the following (amounts in thousands):
September 30, March 31,
2001 2001
------- -------
Raw materials $ 667 $ 574
Work-in-process 5,009 6,337
Finished goods 3,349 4,805
------- -------
$ 9,025 $11,716
======= =======
4. Litigation
We are a party to lawsuits, claims, investigations, and proceedings, including
commercial and employment matters, which are being handled and defended in the
ordinary course of business. We are not aware of any pending or threatened legal
proceedings against the Company that, individually or in the aggregate, would
have a material adverse effect on our business, operating results, or financial
condition.
5
5. Earnings (Loss) Per Share
The following table sets forth the computation of basic and diluted income
(loss) per share: (In thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30 September 30
------------------------- -------------------------
2001 2000 2001 2000
-------- -------- -------- --------
Numerator:
Numerator for basic and diluted net income per
share - net income (loss) $ (8,261) $ 1,225 $(12,552) $ 2,692
Denominator for basic net income (loss) per share:
Weighted average common shares used in
computing basic net income (loss) per share 11,575 11,213 11,525 11,166
-------- -------- -------- --------
Basic net income (loss) per share $ (0.71) $ 0.11 $ (1.09) $ 0.24
-------- -------- -------- --------
Denominator for diluted net income per share:
Weighted average common shares 11,575 11,213 11,525 11,166
Employee stock options to purchase common stock -- 1,365 -- 1,382
-------- -------- -------- --------
Shares used in computing diluted net income per
share 11,575 12,578 11,525 12,548
-------- -------- -------- --------
Diluted net income (loss) per share $ (0.71) $ 0.10 $ (1.09) $ 0.21
-------- -------- -------- --------
Options to purchase 1,672,716 and 1,550,732 shares of common stock were
outstanding during the three and six month periods ended September 30, 2001, but
were not included in the computation of diluted net income per share because the
Company incurred a net loss. Options to purchase 249,679 and 142,788 shares of
common stock were outstanding during the three and six months ended September
30, 2000 but were not included in the computation of diluted net income per
share because the options' exercise price was greater than the average market
price of the common stock and, therefore, the effect would be antidilutive.
6. Comprehensive Income
Comprehensive (loss) income for the three and six months ended September 30,
2001 was $(8,267,000) and $(12,563,000), respectively and the three and six
months ended September 30, 2000 was $1,213,000 and $2,680,000, respectively.
7. Income Taxes
For the three months and six months ended September 30, 2001 there was no
provision for income taxes due to the net loss for the period. For the three and
six months ended September 30, 2000, the Company recorded provisions for income
taxes of $25,000 and $55,000, respectively, based on the projected effective
annual tax rate of 2%, substantially below the federal statutory rate of 35% due
to the utilization of federal and state tax loss and credit carryforwards. The
fiscal 2001 tax provisions consisted of federal and state alternative minimum
taxes.
8. Restructuring & Impairment Charges
In September 2001, the Company's board of directors approved a detailed plan for
the implementation of our previously announced strategy to outsource a
significant portion of our wafer manufacturing. The plan calls
6
for the consolidation of most of our remaining internal wafer fabrication
activities into our Tempe, AZ facility with selected high-value backend
manufacturing operations continuing at our Milpitas headquarters. As a result of
the plan, the Company recorded restructuring and impairment charges of $4.6
million. Of the $4.6 million charge, $0.5 million was recorded in cost of goods
sold and $4.1 million was included in operating expenses under the caption
"Special Charges".
The following table describes the nature of the restructuring charges:
Provided and as at September 30, 2001, amounts in thousands:
Remaining at
Cash Non-Cash September 30,
Provision Payments Charges 2001
------ ----- ------ ------
Severance & benefits $ 424 $-- $ -- $ 424
Facilities and equipment 3,686 -- 3,395 291
------ ----- ------ ------
Special charges $4,110 $-- $3,395 $ 715
Discontinued Inventory $ 511 -- 511 --
Severance and benefits: this charge relates to the salary and fringe benefit
expense for manufacturing employees who will be terminated as the outsourcing
plan is implemented. Approximately 65 employees will be affected in fiscal 2002.
Prior to the date of the financial statements, management with the proper level
of authority, approved and committed the Company to the plan of termination,
determined the benefits the terminated employees would receive and communicated
the benefit package to employees in enough detail that they could determine
their type and amount of benefit. No employees had been terminated as of
September 30, 2001. Management anticipates that the termination of the impacted
employees will be completed by June 30, 2002.
Facilities and equipment: the plan calls for the Company to relocate its
Milpitas facility after the consolidation of manufacturing to its owned Tempe
facility. The facilities charge includes $291,000 in estimated renovation costs
to restore the current Milpitas facility to its pre-lease condition. The
equipment charge of $3,395,000 is related to the write-down of equipment that
will be located in Tempe and continue to be used to produce approximately 25% of
the Company's products. The plan calls for a decrease in the number and volume
of products generated with this asset pool and as a result, management
determined that these assets were impaired. The Company wrote-down the assets to
their fair value. Fair value was estimated as the amounts for which the assets
could be purchased in an arms-length transaction. The Company used a consultant
to assist it in determining the fair value of the affected assets.
Discontinued Inventory: the Company discontinued certain older products and
wrote-off the related discontinued manufacturing inventory. The $511,000 charge
related to the write-off of the inventory has been classified as a part of cost
of goods sold in the statement of operation.
7
ITEM 2. Management's Discussion And Analysis of Financial Condition and Results
of Operations.
Results of Operations
Product sales for the quarter ended September 30, 2001, decreased by $7,474,000
or 46%, compared to the quarter ended September 30, 2000, with the largest
component of the decrease being in products for the communications
infrastructure market followed by lower sales into the computer market. These
declines were partially offset by higher sales into the medical/other area
primarily due to increased sales into a lighting application. Unit shipments
decreased 44% to 20.1 million units in the September 30, 2001 quarter compared
to 35.9 million units in the year-earlier quarter.
Product sales for the six months ended September 30, 2001, decreased by
$16,245,000 or 52%, compared to the six months ended September 30, 2000, with
the largest component of the decrease being in products for the communications
infrastructure market followed by lower sales into the computer market. These
declines were partially offset by higher sales into the medical/other area
primarily due to increased sales into a lighting application. Unit shipments
decreased 39% to 39.9 million units in the six months ended September 30, 2001
compared to 64.8 million units in the year-earlier period.
Gross margins decreased to a negative 4.0% in the September 30, 2001 quarter
compared to positive 33.4% in the year-earlier period and to a negative 6.1% for
the six months ended September 30, 2001 compared to positive 34.4% in the
year-earlier period, in each case primarily due to decreased sales and decreased
manufacturing efficiencies. Additionally, cost of goods sold in the three and
six months ended September 30, 2001 included a $0.5 million charge related to
our previously announced strategy to outsource a significant portion of our
wafer manufacturing.
Research and development (R&D) expense was $1,027,000 and $901,000 for the
quarters ended September 30, 2001 and 2000, respectively. The increase in
research and development expense was due to increased personnel costs, including
the cost of opening a new design center in Austin, Texas. R&D expense for the
six months ended September 30, 2001 and 2000 was $1,925,000 and $1,710,000,
respectively, also due to increased personnel costs.
Selling, marketing and administrative expenses were $2,463,000 and $2,857,000
for the quarters ended September 30, 2001 and 2000, respectively and $5,177,000
and $5,663,000 for the six months ended September 30, 2001 and 2000,
respectively. The decreases in the fiscal 2002 periods are primarily due to
decreased commissions expense, decreased personnel costs and decreased
advertising, partially offset by increased legal costs.
For the three and six months ended September 30, 2001, we recorded restructuring
and other charges totaling $4.6 million related to our previously announced
strategy to outsource a significant portion of our wafer manufacturing. As part
of this strategy, we plan to consolidate all of our remaining internal wafer
fabrication activities into our Tempe, AZ facility with selected high-value
backend manufacturing operations continuing at our Milpitas, CA headquarters. Of
the $4.6 million charge, $0.5 million was recorded in cost of goods sold and
$4.1 million was included in operating expenses as "Special Charges". The
Company noted that $3.9 million of the charges are non-cash in nature and the
cash impact of the remaining $0.7 million will be felt in the first half of
calendar 2002.
8
The following table describes the nature of the restructuring charges:
Provided and as at September 30, 2001, amounts in thousands:
Remaining at
Cash Non-Cash September 30,
Provision Payments Charges 2001
------ ----- ------ ------
Severance & benefits $ 424 $-- $ -- $ 424
Facilities and equipment 3,686 -- 3,395 291
------ ----- ------ ------
Special charges $4,110 $-- $3,395 $ 715
Discontinued Inventory $ 511 -- 511 --
As a result of the factors discussed above, operating loss for the quarter ended
September 30, 2001, was $7,948,000 compared to operating income of $1,630,000 in
the year-earlier quarter and operating loss for the six months ended September
30, 2001 was $12,113,000 compared to operating income of $3,290,000 for the
year-earlier period.
Other expense, net, for the quarter ended September 30, 2001 and 2000, was
$313,000 and $380,000, respectively, and for the six months ended September 30,
2001 and 2000, was $439,000 and $543,000, respectively. The decreases in the
fiscal 2002 periods were primarily due to reduced interest income.
For the three months and six months ended September 30, 2001 there was no
provision for income taxes due to the net loss for the period. For the three and
six months ended September 30, 2000, the Company recorded provisions for income
taxes of $25,000 and $55,000, respectively, based on the projected effective
annual tax rate of 2%, substantially below the federal statutory rate of 35% due
to the utilization of federal and state tax loss and credit carryforwards. The
fiscal 2000 tax provisions consisted of federal and state alternative minimum
taxes.
Liquidity and Capital Resources
Total cash, short-term securities and investments as of September 30, 2001, was
$4.5 million compared to $6.6 million on March 31, 2001. Receivables decreased
to $4.6 million at September 30, 2001 compared to $8.1 million six months
earlier. Receivables days sales outstanding were 48 days as of September 30,
2001 as compared to 49 days at March 31, 2001. Inventories decreased from the
March quarter, with inventory turns at 3.7 compared to 3.4 at March 31, 2001.
Capital expenditures for the six months ended September 30, 2001, totaled $1.2
million, reflecting primarily our investment in new equipment to support our
production of chip scale products, which are expected to ramp up later this
year.
We have a $3.0 million revolving secured line of credit agreement that expires
on June 30, 2002. Under the terms of the line of credit, we can borrow at prime
plus one-half percent, collateralized by eligible receivables. We have made no
borrowings against this line. During fiscal 1999, we borrowed $650,000 under a
credit agreement, due June 14, 2002, collateralized by certain of our equipment.
The agreement extends for 42 months, carries an interest rate of 9.9%, and has a
prepayment option. During fiscal 2001, we entered into an additional agreement
with the same provider for $975,000 credit agreement collateralized by certain
of our equipment at a 9.6% interest rate for a period of 48 months. This
agreement expires on March 31, 2005. During fiscal 2000, we entered into two
capital equipment financing facilities for $1.0 million and $500,000. The terms
of these facilities allow us to borrow at prime plus 0.75% and expire on July 31
and August 31, 2003, respectfully. During fiscal 2000 and 2001, we borrowed the
full amounts available under these facilities. At March 31, 2001, no additional
funds were available under these two facilities. In July 2000, we secured an
additional $2.0 million equipment financing facility that expires on December
25, 2003. Under the terms of this facility we can borrow at prime plus 0.5%.
During fiscal 2001 we borrowed $997,000 against this $2.0 million facility.
During fiscal 2002, we entered into a capital equipment financing facility for
$500,000 collateralized by certain of our equipment. The terms of this facility
allows us to borrow at prime plus 0.75% and expires on August 31, 2001. During
the second quarter of fiscal 2002, we borrowed $499,000 under this facility. We
are in compliance with our financial covenants.
9
We expect to use a significant portion of our cash when and if our revenues
increase and for the manufacturing transition described above. There are certain
scenarios for calendar 2002 in which we would require additional cash to fund
our operations from sources other than our existing cash balances, bank
borrowings, and equipment lease and loan financing arrangements. Therefore,
depending on capital market conditions and the cash requirements of our
operations, we plan to pursue other sources of liquidity such as a private
equity or debt financing. There can be no assurance that we will be able to
raise such financing if and when we desire and, if we are unable to raise such
financing, we may need to scale our operations based upon the cash we have on
hand.
Restructuring. In the second quarter of fiscal 2002 we announced and began to
implement a restructuring program aimed at bringing our expenses more in line
with the current revenue levels and restoring long-term profitability to the
Company. These actions resulted in aggregate charges of $4.6 million. The fiscal
2002 restructuring action resulted in the planned elimination of approximately
65 positions, writing down certain operating assets, a plan to vacate a leased
facility and relocate to a smaller facility. In first quarter fiscal 2003, an
additional 27 positions will be eliminated primarily in manufacturing.
Fiscal 2002 restructuring and impairment actions were comprised of operating
asset write downs of $3.4 million for fixed assets, $ 0.5 million for
discontinued inventory and $ 0.7 million for severance and related expenses. We
plan to vacate approximately 39,000 square feet of combined manufacturing and
administration facility and relocate to a smaller facility at the end of fiscal
2002. The lease on the current facility expires on June 30, 2002. We estimate
this will require in exit costs, including costs to restore the facility and
relocate to a new facility of $0.3 million.
Fiscal 2002 restructuring actions will resulted in the elimination of
approximately 65 positions, across all levels and functions, of which 50
positions have been eliminated as of September 30, 2001. Severance payments and
related charges of $424K consist primarily of salary and expected payroll taxes,
extended medical benefits, and statutory legal obligations. In first quarter
fiscal 2003, additional restructuring actions will result in the elimination of
approximately 27 positions primarily in manufacturing.
Impairment. As a result of the fiscal 2002 restructuring activities described
above, we wrote down approximately $ 3.4 million of fixed assets primarily
associated with production equipment no longer fully utilized.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
No material changes have occurred from the Company's report on Form 10-K for the
period ending March 31, 2001.
10
Cautionary Statement
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Act of 1934, as amended. Such forward-looking statements are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward looking statements are not
historical facts and are based on current expectations, estimates, and
projections about our industry; our beliefs and assumptions; and our goals
and objectives, Words such as "anticipates", "expects", "intends", "plans
"believes",, "seeks", and "estimates", and variations of these words and
similar expressions are intended to identify forward-looking statements.
Examples of the kinds of forward-looking statements in this report include
statements regarding the following (1) our expectation that our production
of chip scale products will ramp up later this year, (2) our plan to fund
our future liquidity needs through a private equity or debt financing to
supplement existing cash balances, cash flows from operations, bank
borrowings, and equipment lease and loan financing arrangements, (3) our
expectation that the Company will utilize a significant portion of our cash
if and when its revenues increase and for restructuring its manufacturing
operations, and (4) our plan to outsource a significant portion of our
wafer manufacturing and to consolidate all of our remaining internal wafer
fabrication activities into our Tempe, AZ facility, with selected
high-value backend manufacturing operations continuing at our Milpitas, CA
headquarters. These statements are only predictions, are not guarantees of
future performance, and are subject to risks, uncertainties, and other
factors, some of which are beyond our control, are difficult to predict,
and could cause actual results to differ materially from those expressed or
forecasted in the forward-looking statements. These risks and uncertainties
include those set forth in this report and in the Company's other SEC
filings, in particular its annual report on Form 10-K for fiscal 2001 ended
March 31, 2001. Also, due to plans to outsource a significant portion of
its wafer manufacturing to one or more third parties, additional risks are
encountered due to such factors as potential inability to secure adequate
and cost-effective capacity during periods when demand outstrips capacity,
reduced control over delivery schedules and quality, dependence upon one,
or possibly more, contractors to supply us with wafers, potential
misappropriation of our intellectual property, and exposure to political
and economic instability in the country or countries where our third party
fabrication facilities are located Except as required by law, we undertake
no obligation to update any forward-looking statement, whether as a result
of new information, future events, or otherwise.
11
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
We are a party to lawsuits, claims, investigations, and proceedings, including
commercial and employment matters, which are being handled and defended in the
ordinary course of business. We are not aware of any pending or threatened legal
proceedings against the Company that, individually or in the aggregate, would
have a material adverse effect on our business, operating results, or financial
condition.
ITEM 2. Changes in Securities.
On September 21, 2001, the Company's Board of Directors adopted a shareholder
rights plan, pursuant to which one preferred stock purchase right (a "Right")
was distributed for each share of Common Stock held as of October 12, 2001. Each
Right, when exercisable, will entitle the holder to purchase from the Company
one one-thousandth of a share of the Company's Series A Participating Preferred
Stock at a price of $50.00 (the "Purchase Price"), subject to anti-dilution
adjustments.
In general, if a person or group (an "Acquiring Person") acquires beneficial
ownership of 15% or more of the outstanding shares of Common Stock, then each
Right (other than those held by an Acquiring Person) will entitle the holder to
receive, upon exercise, shares of Common Stock (or, under certain circumstances,
a combination of securities or other assets) having a value of twice the
Purchase Price. In addition, if following the announcement of the existence of
an Acquiring Person the Company is involved in a business combination or sale of
50% or more of its assets or earning power, each Right (other than those held by
an Acquiring Person) will entitle the holder to receive, upon exercise, shares
of common stock of the acquiring entity having a value of twice the Purchase
Price. When the foregoing rights arise, any Rights owned by an Acquiring Person
will immediately become void. The Board of Directors will also have the right,
after there is an Acquiring Person, to cause each Right (except those that have
become void) to be exchanged for Common Stock or substitute consideration.
The Company may redeem the Rights at a price of $0.001 per Right before the
existence of an Acquiring Person is announced. The Rights expire on September
24, 2011.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which was filed
as an exhibit to the Company's Registration Statement on Form 8-A filed on
September 25, 2001.
12
ITEM 4. Submission of Matters to a Vote of Security Holders.
The Company's annual meeting of shareholders, at which the proposals described
below were submitted to shareholders, was held on August 7, 2001.
Proposal No. 1 Election of Directors. The following individuals, who received
the votes indicated, were elected as directors:
NAME FOR WITHHELD
---- --- --------
Robert V. Dickinson 8,629,401 942,118
Jeffrey Kalb 8,699,667 871,852
J. Daniel McCranie 6,731,958 2,839,561
Wade Meyercord 8,479,816 1,091,703
Dr. John L. Sprague 8,625,233 946,286
Donald L. Waite 8,547,933 1,023,586
Proposal No. 2 The proposal to ratify the appointment of Ernst & Young LLP, as
the Company's independent auditors for the current fiscal year was approved. The
results of the voting was as follows:
FOR AGAINST WITHHELD
----------- ------- --------
9,537,294 22,662 11,563
Proposal No. 3 The proposal to approve the amendment of the 1995 Employee Stock
Option Plan was approved. The results of the voting was as follows:
FOR AGAINST WITHHELD
------------ ------- --------
6,190,683 3,299,082 81,754
Proposal No. 4 The proposal to approve the Amendment of the 1995 Non-Employee
Directors' Stock Option Plan was approved. The results of the voting was as
follows:
FOR AGAINST WITHHELD
------------ ------- --------
7,903,455 1,589,696 78,368
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ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 1995 Employee Stock Option Plan amended as of July 26, 1996,
amended as of July 18, 1997, amended as of August 7, 1998,
amended as of August 1, 2000 and amended as of August 7, 2001.
4.2 1995 Non-Employee Directors' Stock Option Plan, amended as of
July 26, 1996, amended as of July 18, 1997, amended as of
August 7, 1998, amended as of August 1, 2000 and amended as of
August 7, 2001.
10.11 Amended Commitment Letter from Comerica Bank
(b) Form 8-K On August 14, 2001, the Company filed a Form 8-K, under Item
5, reporting the selection of a new vice president of
marketing.
On September 26, 2001, the Company filed a Form 8-K, under
Item 5 reporting on the adoption of the Rights Plan described
in Part II, above.
On November 5, 2001, the Company filed a Form 8-K, under Item
5, reporting the selection of a new vice president of sales.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CALIFORNIA MICRO DEVICES CORPORATION
(Registrant)
Date: November 14, 2001 /s/John E. Trewin
------------------------------------------
John E. Trewin
Vice President and Chief Financial Officer
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