10-Q 1 p14639-10q.txt FORM 10-Q 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 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements.
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 ======== ======== *Derived from audited financial statements. The accompanying notes are an integral part of these financial statements.
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 $ -- $ -- The accompanying notes are an integral part of these financial statements.
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 13 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. 14 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 15