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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
APPLIED MICRO CIRCUITS CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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APPLIED MICRO CIRCUITS CORPORATION
Notice of Annual Meeting of Stockholders
To Be Held August 3, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of Applied Micro
Circuits Corporation, a Delaware corporation (the "Company"), will be held at
the principal executive offices of the Company, located at 6290 Sequence
Drive, San Diego, CA 92121 on Tuesday, August 3, 1999, at 10:00 a.m., local
time, for the following purposes:
1. To elect seven (7) directors of the Company to serve until the next
Annual Meeting of Stockholders or until their respective successors are
elected and qualified (Proposal No. 1);
2. To ratify and approve amendments to increase the number of shares
available for issuance under the Company's 1992 Stock Option Plan, as
amended (Proposal No. 2);
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending March 31, 2000
(Proposal No. 3); and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors, are
more fully described in the Proxy Statement which is attached and made a part
of this Notice.
The Board of Directors has fixed the close of business on June 8, 1999 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you expect to attend the Annual Meeting in
person, you are urged to mark, date, sign and return the enclosed proxy card
as promptly as possible in the postage-prepaid envelope provided to ensure
your representation and the presence of a quorum at the Annual Meeting. If you
send in your proxy card and then decide to attend the Annual Meeting to vote
your shares in person, you may still do so. Your proxy is revocable in
accordance with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ William E. Bendush
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William E. Bendush
Secretary
San Diego, California
June 21, 1999
IMPORTANT
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED
EXPENSE OF RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND
SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
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APPLIED MICRO CIRCUITS CORPORATION
6290 SEQUENCE DRIVE
SAN DIEGO, CA 92121
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Applied Micro Circuits Corporation a
Delaware corporation (the "Company"), of proxies in the enclosed form for use
in voting at the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at the principal executive offices of the Company, located at 6290
Sequence Drive, San Diego, CA 92121 Tuesday, August 3, 1999, at 10:00 a.m.,
local time, and any adjournment or postponement thereof.
This Proxy Statement, the enclosed proxy card, the Company's Annual Report
to Stockholders for the fiscal year ended March 31, 1999, including financial
statements, and the Company's Annual Report on Form 10-K were first mailed to
stockholders entitled to vote at the meeting on or about June 25, 1999.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
William E. Bendush) a written notice of revocation or a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
Record Date; Voting Securities
The close of business on June 8, 1999 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock of the
Company entitled to notice of and to vote at the Annual Meeting. At the close
of business on the Record Date, the Company had approximately 26,741,948
shares of Common Stock outstanding and held of record by approximately 704
stockholders.
Voting and Solicitation
Each outstanding share of Common Stock on the Record Date is entitled to one
vote on all matters. Shares of Common Stock may not be voted cumulatively.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of the
Company's transfer agent. The Inspector will also determine whether or not a
quorum is present. The nominees for election as directors at the Annual
Meeting will be elected by a plurality of the votes of the shares of Common
Stock present in person or represented by proxy at the meeting. All other
matters submitted to the stockholders will require the affirmative vote of a
majority of shares present in person or represented by proxy at a duly held
meeting at which a quorum is present as required under Delaware law for
approval of proposals presented to stockholders. In general, Delaware law also
provides that a quorum consists of a majority of the shares entitled to vote
and present in person or represented by proxy. The Inspector will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and as negative votes for purposes of
determining the approval of any matter submitted to the stockholders for a
vote. Any proxy which is returned using the form of proxy enclosed and which
is not marked as to a particular item will be voted FOR the proposals set
forth in the Notice of Meeting, and as the proxy holders deem advisable on
other matters that may come before the meeting, as the case may be with
respect to the item not marked. If a broker indicates on the enclosed proxy or
its substitute that it does not have discretionary authority as to certain
shares to vote on a particular matter ("broker non-votes"), those shares will
not be considered as present with respect to that matter. The Company believes
that the tabulation procedures to be followed by the Inspector are consistent
with the general statutory requirements in Delaware concerning voting of
shares and determination of a quorum.
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The solicitation of proxies will be conducted by mail and the Company will
bear all attendant costs. These costs will include the expense of preparing
and mailing proxy solicitation materials for the Annual Meeting and
reimbursements paid to brokerage firms and others for their expenses incurred
in forwarding solicitation materials regarding the Annual Meeting to
beneficial owners of the Company's Common Stock. The Company may conduct
further solicitation personally, telephonically or by facsimile through its
officers, directors and employees, none of whom will receive additional
compensation for assisting with the solicitation.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, the stockholders will elect seven directors to serve
until the next Annual Meeting of Stockholders or until their respective
successors are elected and qualified. In the event any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the
proxies may be voted for the balance of those nominees named and for any
substitute nominee designated by the present Board or the proxy holders to
fill such vacancy, or for the balance of the nominees named without nomination
of a substitute, or the size of the Board may be reduced in accordance with
the Bylaws of the Company. The Board has no reason to believe that any of the
persons named below will be unable or unwilling to serve as a nominee or as a
director if elected.
Assuming a quorum is present, the seven nominees receiving the highest
number of affirmative votes of shares entitled to be voted for them will be
elected as directors of the Company for the ensuing year. Unless marked
otherwise, proxies received will be voted FOR the election of each of the
seven nominees named below. In the event that additional persons are nominated
for election as directors, the proxy holders intend to vote all proxies
received by them in such a manner as will ensure the election of as many of
the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders.
The names of the nominees, their ages as of March 31, 1999 and certain other
information about them are set forth below:
<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupation Director Since
- --------------- --- ----------------------------------------------- --------------
<S> <C> <C> <C>
David M. Rickey......... 43 President, Chief Executive Officer and Director 1996
William K. Bowes, Jr.
(1).................... 72 Director 1980
R. Clive Ghest (2)...... 61 Director 1997
Franklin P. Johnson, Jr.
(1)(2)................. 70 Director 1980
Roger A. Smullen, Sr.
(1).................... 63 Chairman of the Board of Directors 1982
Arthur B. Stabenow (2).. 60 Director 1988
Harvey P. White......... 65 Director 1999
</TABLE>
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(1) Member of Audit Committee
(2) Member of Compensation Committee
There are no family relationships among any of the directors or executive
officers of the Company.
David M. Rickey has served as President, Chief Executive Officer and
Director since February 1996. From August 1993 to May 1995, Mr. Rickey served
as the Company's Vice President of Operations. From May 1995 to February 1996,
Mr. Rickey served as Vice President of Operations at NexGen, a semiconductor
company. Previously, for eight years, Mr. Rickey was employed by Northern
Telecom United, a telecommunications manufacturer, where he led the wafer fab
engineering and manufacturing operations in both Ottawa, Canada and San Diego,
California. Mr. Rickey has earned B.S. degrees from both Marrietta College
(summa cum laude) and Columbia University. In addition, Mr. Rickey received an
M.S. in Material Science and Engineering from Stanford University.
William K. Bowes, Jr. has served as a director of the Company since April
1980. He has been a general partner of U.S. Venture Partners, a venture
capital investment entity, since July 1981. Mr. Bowes serves as a director of
Amgen, Inc., XOMA Corporation, Lynx Therapeutics, Inc. and one privately-held
U.S. Venture
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Partners portfolio company. Mr. Bowes holds a B.A. from Stanford University
and an M.B.A. from Harvard Business School.
R. Clive Ghest has served as a director of the Company since July 1997.
Since January 1997, Mr. Ghest has been a principal of Ghest Associates
Consulting. Mr. Ghest was the Vice President of Business Development at
Advanced Micro Devices Inc. from February 1986 to December 1996. He has more
than 35 years of experience in various capacities in the computer,
communications and semiconductor industries. Mr. Ghest holds an M.S.E.E. from
the University of Santa Clara and an Hons. B.Sc. from the University of
London.
Franklin P. Johnson, Jr. has served as a director of the Company since April
1980. He is the proprietor of Asset Management Company, a venture capital
management company. Mr. Johnson has been a private venture capital investor
for more than five years. Mr. Johnson is also a director of Amgen, Inc. and
IDEC Pharmaceuticals Corporation. Mr. Johnson holds a B.S. from Stanford
University and an M.B.A. from Harvard Business School.
Roger A. Smullen has served as the Chairman of the Company's Board of
Directors since October 1982. Mr. Smullen served as Acting Vice President,
Operations of the Company from August 1997 through October 1997. From April
1983 until April 1987, Mr. Smullen served as the Company's Chief Executive
Officer. Previously, he was Senior Vice President of Operations of Intersil
Inc.'s semiconductor division. In 1967, Mr. Smullen co-founded National
Semiconductor Corporation, a manufacturer of integrated circuits. Prior to
that, he was director of integrated circuits at Fairchild Semiconductor
Corporation, a manufacturer of integrated circuits. Mr. Smullen is currently a
director of Micro Linear Corporation, a manufacturer of integrated circuits.
He holds a B.S. in mechanical engineering from the University of Minnesota.
Arthur B. Stabenow has served as a director of the Company since July 1988.
Mr. Stabenow was Chairman, President and Chief Executive Officer of Micro
Linear Corporation, a manufacturer of integrated circuits, from April 1986
until his retirement in January 1999. Mr. Stabenow has over 35 years of
experience in the semiconductor industry. From January 1979 to March 1986, he
was employed as a vice president and general manager at National Semiconductor
Corporation. Mr. Stabenow is currently a director of Zoran, Inc. Mr. Stabenow
holds an M.B.A. from the University of New Haven.
Harvey P. White has served as a director of the Company since April 1999.
Since September 1998, Mr. White has been Chairman, Chief Executive Officer and
President of Leap Wireless International, an operator of wireless telephone
systems in the U.S., Chile, Russia and Mexico. Mr. White is one of the
founders of QUALCOMM and served as President from May 1992 through June 1998.
Prior to May 1992, he served as Executive Vice President and Chief Operating
Officer and was on the Board of Directors of Qualcomm since it began
operations in July 1985 until September 1998. From March 1978 to June 1985,
Mr. White served in various positions for Linkabit (M/A-COM Linkabit after
August 1980), including Chief Financial Officer, Vice President, Senior Vice
President, Executive Vice President and Director. His earlier experience
included Group Vice President of Industrial Systems at Rohr Industries Inc.,
ownership of distribution firms and financial, operations and systems
positions at Raytheon, Whittaker and TRW. Mr. White holds a B.A. in economics
from Marshall University.
Meetings and Committees of the Board of Directors
During the period from April 1, 1998 through March 31, 1999 (the "last
fiscal year"), the Board met eleven (11) times. No director attended fewer
than 75% of the aggregate number of meetings of the Board and meetings of the
committees of the Board on which he serves. The Board has an Audit Committee
and a Compensation Committee. The Board does not have a nominating committee
or a committee performing the functions of a nominating committee. Although
there are no formal procedures for stockholders to nominate persons to serve
as directors, the Board will consider nominations from stockholders, which
should be addressed to William E. Bendush at the Company's address set forth
above.
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The Audit Committee consists of directors Smullen, Bowes and Johnson, three
of the Company's non-employee directors, and held four (4) meetings during the
last fiscal year. The Audit Committee recommends the engagement of the firm of
certified public accountants to audit the financial statements of the Company
and monitors the effectiveness of the audit effort, the Company's financial
and accounting organization and its system of internal accounting controls.
The Compensation Committee consists of directors Johnson, Stabenow and
Ghest, and held three (3) meetings during the last fiscal year. Its functions
are to establish and administer the Company's policies regarding annual
executive salaries and cash incentives and long-term equity incentives. The
Compensation Committee administers the Company's 1982 Stock Option Plan, the
1992 Stock Option Plan, the 1997 Directors' Stock Option Plan, the 1997
Employee Stock Purchase Plan, the 1998 Employee Stock Purchase Plan, and, as a
result of the merger with Cimaron Communications Corporation, the 1998 Stock
Incentive Plan.
Compensation of Directors
Nonemployee directors of the Company receive a $12,000 annual fee and fees
of $500 per meeting attended. Directors are also reimbursed for customary and
usual travel expenses incurred in connection with attendance at meetings of
the Board.
The Company's 1997 Directors' Stock Option Plan (the "Directors' Plan")
provides that each person who becomes a nonemployee director of the Company
will be granted a nonstatutory stock option to purchase 12,500 shares of
Common Stock on the date on which the optionee first becomes a nonemployee
director of the Company. Thereafter, on April 1 each year (starting in 2000
for nonemployee directors who were serving as of the date of the closing of
the initial public offering, which was declared effective on November 24,
1997), each nonemployee director will be granted an option to purchase 12,500
shares of Common Stock if on such date, he or she has served on the Company's
Board of Directors for at least six months.
Recommendation of the Board:
THE BOARD RECOMMENDS A VOTE FOR
THE ELECTION OF ALL NOMINEES NAMED ABOVE.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO 1992 STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders are being asked to approve
an amendment to the Company's 1992 Stock Option Plan (the "1992 Plan") to
increase the number of shares authorized for issuance thereunder by 3,800,000
shares to an aggregate of 9,827,304 shares. The following is a summary of
principal features of the 1992 Plan. The summary, however, does not purport to
be a complete description of all the provisions of the 1992 Plan. Any
stockholder of the Company who wishes to obtain a copy of the actual plan
document may do so upon written request to the Vice President of Finance at
the Company's principal offices in San Diego, California.
General
The Board approved the 1992 Plan in July 1992 and the 1992 Plan was approved
by the stockholders in September 1992 and subsequently amended. The purpose of
the 1992 Plan is to provide incentives to attract, retain and motivate
qualified employees, consultants, independent contractors and advisors whose
present and potential contributions are important to the success of the
Company, by offering them an opportunity to participate in the Company's
future performance through awards of stock options, restricted stock and stock
bonuses.
Shares Subject to the 1992 Plan
Prior to April 15, 1999 an aggregate of 6,027,304 shares of the Common Stock
of the Company were reserved by the Board for issuance under the 1992 Plan. In
April, 1999, the Board of Directors approved an amendment to the 1992 Plan to
increase the number of shares reserved for issuance thereunder by 3,800,000
shares to a total of 9,827,304 shares, which amendment is the subject of this
proposal.
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If any option granted pursuant to the 1992 Plan expires or terminates for
any reason without being exercised in whole or in part, or any award
terminates without being issued, or any award is forfeited or repurchased by
the Company at the original purchase price, the shares released from such
option will again become available for grant and purchase under the 1992 Plan.
This number of shares is subject to proportional adjustment to reflect stock
splits, stock dividends and other similar events.
As of May 17, 1999 options to purchase 3,416,747 shares of Common Stock were
outstanding and unexercised under the 1992 Plan, options to purchase 2,425,987
shares of common stock had been exercised and options to purchase 204,449
shares remained available for grant. Stockholders are being asked to approve
to the reservation of Common Stock for issuance under the 1992 Plan at the
Annual Meeting.
Administration
The 1992 Plan is administered by the Compensation Committee (the
"Committee"), the members of which are appointed by the Board. The Committee
currently consists of Messrs Ghest, Johnson and Stabenow, each of whom are
"non-employee directors", as that term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and "outside
directors", as that term is defined pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
Subject to the terms of the 1992 Plan, the Committee determines the persons
who are to receive awards, the number of shares subject to each such award and
the terms and conditions of each such award. The Committee has the authority
to construe and interpret any of the provisions of the 1992 Plan or any awards
granted thereunder.
Eligibility
Employees, officers, directors, consultants, independent contractors and
advisors of the Company (and of any subsidiaries and affiliates) are eligible
to receive awards under the 1992 Plan (the "Participants"). No Participant is
eligible to receive more than 1,000,000 shares of Common Stock in any fiscal
year under the 1992 Plan. As of May 1999, approximately 365 persons were
eligible to participate in the 1992 Plan.
Stock Options
The 1992 Plan permits the granting of options that are intended to qualify
either as Incentive Stock Options ("ISOs") or Nonqualified Stock Options
("NQSOs"). ISOs may be granted only to employees (including officers and
directors who are also employees) of the Company or any parent or subsidiary
of the Company.
The option exercise price for each ISO share must be no less than 100% of
the "fair market value" (as defined in the 1992 Plan) of a share of Common
Stock at the time the ISO is granted. In the case of an ISO granted to a 10%
stockholder, the exercise price for each such ISO share must be no less than
110% of the fair market value of a share of Common Stock at the time the ISO
is granted. The option exercise price for each NQSO share must be no less than
85% of the fair market value of a share of Common Stock at the time of grant.
To date, the Company has not granted options under the Incentive plan at less
than fair market value.
The exercise price of options granted under the 1992 Plan may be paid as
approved by the Committee at the time of grant: (1) in cash; (2) by check; (3)
by tender of a full recourse promissory note; (4) by surrender of shares of
the Company's Common Stock owned by the Participant for at least six months
and having a fair market value on the date of surrender equal to the aggregate
exercise price of the option; (5) by a "same-day sale" commitment from the
Participant and a National Association of Securities Dealers, Inc. ("NASD")
broker or by a "margin" commitment from the Participant and a NASD broker; (6)
by delivering an irrevocable subscription agreement which obligates the option
holder to take and pay for the shares not more than twelve months after the
date of delivery of the subscription agreement; (7) by any combination of the
foregoing; or (8) by such other consideration and method of payment for the
issuance of shares to the extent permitted under applicable laws.
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Termination of Options
Options are generally exercisable for a period of 10 years. Options granted
under the 1992 Plan terminate thirty days (or such shorter or longer period as
determined by the Committee) after the Participant ceases to be employed or
retained by the Company unless the termination of employment or retention is
due to permanent and total disability or death, in which case the option may
be exercised at any time within 12 months of termination to the extent the
option was exercisable to the date of termination. In no event will an option
be exercisable after the expiration date of the option.
Mergers, Consolidations, Change of Control
In the event of a merger, consolidation, dissolution or liquidation of the
Company, the sale of substantially all the assets of the Company or any other
similar corporate transaction in which the Company is not the surviving
corporation, the vesting under outstanding options will be accelerated so that
the number of shares that would otherwise be vested one year after such event
shall be deemed vested as of the date of such event. In addition, the
successor corporation may assume, replace or substitute equivalent options in
exchange for those granted under the 1992 Plan or provide substantially
similar consideration, shares or other property as was provided to
Stockholders of the Company (after taking into account provisions of the
awards) under the 1992 Plan unless, in its sole discretion, the Committee
determines to have additional accelerated vesting of shares under the options
in lieu of such assumption or substitution. In the event that the successor
corporation, if any, does not assume or substitute the options awarded, such
options shall expire upon the closing of such transaction at the time and upon
the conditions as the Board determines.
Amendment of the 1992 Plan
The Board may at any time amend or terminate the 1992 Plan, including
amendment of any form of award agreement or instrument to be executed pursuant
to the 1992 Plan. However, the Board may not amend the 1992 Plan in any manner
that requires stockholder approval pursuant to the Code or the regulations
promulgated thereunder, or the Exchange Act or Rule 16b-3 (or its successor)
promulgated thereunder.
Term of the 1992 Plan
Unless terminated earlier as provided in the 1992 Plan, the 1992 Plan will
terminate in July 2002, ten (10) years from the date the 1992 Plan was adopted
by the Board.
Federal Income Tax Information
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF
THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE
INCENTIVE PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE AND
LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR HER
INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN, AND IS, ENCOURAGED TO
SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF
PARTICIPATION IN THE INCENTIVE PLAN.
Incentive Stock Options. A Participant will not recognize income upon grant
of an ISO and will not incur tax on its exercise (unless the Participant is
subject to the alternative minimum tax described below). If the Participant
holds the stock acquired upon exercise of an ISO (the "ISO Shares") for one
year after the date the option was exercised and for two years after the date
the option was granted, the Participant generally will realize long-term
capital gain or loss (rather than ordinary income or loss) upon disposition of
the ISO Shares. This gain or loss will be equal to the difference between the
amount realized upon such disposition and the amount paid for the ISO shares.
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If the Participant disposes of ISO Shares prior to the expiration of either
required holding period (a "disqualifying disposition"), then gain realized
upon such disposition, up to the difference between the fair market value of
the ISO Shares on the date of exercise (or, if less, the amount realized on a
sale of such shares) and the option exercise price, generally will be treated
as ordinary income. Any additional gain will be long-term or short-term
capital gain, depending upon the amount of time the ISO Shares were held by
the Participant.
Alternative Minimum Tax. The difference between the fair market value of the
ISO shares on the date of exercise and the exercise price is an adjustment to
income for purposes of the alternative minimum tax (the "AMT"). The AMT
(imposed to the extent it exceeds the taxpayer's regular tax) is 26% of an
individual taxpayer's alternative minimum taxable income (28% in the case of
alternative minimum taxable income in excess of $175,000, or $87,500 for
married taxpayers filing separately). Alternative minimum taxable income is
determined by adjusting regular taxable income for certain items, increasing
that income by certain tax preference items (including the difference between
the fair market value of the ISO shares on the date of exercise and the
exercise price) and reducing this amount by the applicable exemption amount
($45,000 in the case of a
joint return and $33,750 for individual returns, subject to reduction under
certain circumstances). If a disqualifying disposition of the ISO Shares
occurs in the same calendar year as exercise of the ISO, there is no AMT
adjustment with respect to those shares. Because the alternative minimum tax
calculation may be complex, any optionee who upon exercising an incentive
stock option would recognize (together with other alternative minimum taxable
income preference and adjustment items for the year) alternative minimum
taxable income in excess of the exclusion amount noted above should consult
his or her own tax advisor prior to exercising the incentive stock option. If
an optionee pays alternative minimum tax, the amount of such tax may be
carried forward as a credit against any subsequent year's regular tax in
excess of the alternative minimum tax for such year.
Nonqualified Stock Options. A Participant will not recognize any taxable
income at the time a NQSO is granted. However, upon exercise of a NQSO the
Participant will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount will be treated as
ordinary income by the Participant and may be subject to income tax and FICA
withholding by the Company (either by payment in cash or withholding out of
the Participant's salary). Upon resale of the shares by the Participant, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss. Special rules apply where all or a portion of
the exercise price is paid by tendering shares of Common Stock.
Tax Treatment of the Company. The Company will be entitled to a deduction in
connection with the exercise of a NQSO by a Participant or the receipt of
restricted stock or stock bonuses by a Participant to the extent that the
Participant recognizes ordinary income and the Company withholds tax. The
Company will be entitled to a deduction in connection with the disposition of
ISO Shares only to the extent that the Participant recognizes ordinary income
on a disqualifying disposition of the ISO Shares.
ERISA
The 1992 Plan is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") and is not qualified under
Section 401(a) of the Code.
Required Vote
The approval of the amendment to the 1992 Stock Option Plan and the
reservation of 3,800,000 shares of Common Stock for issuance thereunder
requires the affirmative vote of the holders of a majority of the shares of
the Company's Common Stock present at the Annual Meeting in person or by proxy
and entitled to vote.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE 1992 STOCK
OPTION PLAN.
7
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP has served as the Company's independent auditors since
1980 and has been appointed by the Board to continue as the Company's
independent auditors for the fiscal year ending March 31, 2000. In the event
that ratification of this selection of auditors is not approved by a majority
of the shares of Common Stock voting at the Annual Meeting in person or by
proxy, the Board will reconsider its selection of auditors.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting. This representative will have an opportunity to make a
statement and will be available to respond to appropriate questions.
Recommendation of the Board:
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 2000.
8
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information that has been provided to the
Company with respect to beneficial ownership of shares of the Company's Common
Stock as of May 17, 1999 for (i) each person who is known by the Company to
own beneficially more than five percent of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) each of the executive officers
named in the Summary Compensation Table of this proxy statement (the "Named
Executive Officers"), and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Beneficial Percent of Common
Name and Address Ownership(1) Stock(1)(2)
---------------- -------------------- -----------------
<S> <C> <C>
David M. Rickey (3)..................... 538,541 2.01
Roger A. Smullen (4).................... 480,776 1.79
Franklin P. Johnson, Jr. (5)............ 216,066 *
Thomas L. Tullie (6).................... 119,982 *
Joel O. Holliday (7).................... 111,405 *
William K. Bowes, Jr. (8)............... 48,546 *
Arthur B. Stabenow (9).................. 41,633 *
Laszlo V. Gal (10)...................... 37,899 *
R. Clive Ghest (11)..................... 25,000 *
Kenneth L. Clark (12)................... 7,971 *
Harvey P. White (13).................... 5,125 *
Pilgrim Baxter & Associates............. 1,793,292 6.71
Putnam Investment Management, Inc. (14). 1,382,163 5.17
All directors and executive officers as
a group (14 persons) (15).............. 2,190,423 8.11%
--------- ----
</TABLE>
- --------
*Less than 1%.
(1) The persons named in this table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and except as
indicated in the other footnotes to this table.
(2) In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options or warrants held by that person that are exercisable within 60
days after May 17, 1999 are deemed outstanding. Such shares, however, are
not deemed outstanding for the purpose of computing the percentage
ownership of any other person. Applicable percentages are based on
26,718,039 shares of Common Stock outstanding on May 17, 1999 together
with applicable options for such stockholders.
(3) Includes 2,400 shares owned by Mr. Rickey's children. Includes 147,222
shares of Common Stock that are subject to repurchase by the Company and
35,000 shares issuable upon the exercise of vested options.
(4) Includes 22,916 shares of Common Stock that are subject to repurchase by
the Company. Includes 7,500 shares of Common Stock issuable upon the
exercise of vested options that are exercisable within 60 days after May
17, 1999.
(5) Includes 63,334 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days after May 17, 1999, of which
12,502 shares are subject to repurchase rights in favor of the Company.
Also includes 73,916 shares held by Mr. Johnson's wife. Mr. Johnson
disclaims beneficial ownership with respect to the shares held by his
wife.
(6) Includes 48,611 shares that are subject to repurchase by the Company.
Includes 14,375 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days after May 17, 1999.
(7) Includes 43,474 shares held in the name of Joel O. Holliday and Rosanne R.
Holliday, Co-Trustees of the Joel O. Holliday Family Trust dated April 1,
1985 and 64,931 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days after May 17, 1999 of which
23,611 are subject to repurchase rights in favor of the Company.
9
<PAGE>
(8) Includes 5,700 shares of Common Stock owned by the William K. Bowes, Jr.
foundation. Includes 36,945 shares of Common Stock issuable upon the
exercise of options that are exercisable within 60 days after May 17,
1999, of which 12,502 shares are subject to repurchase rights in favor of
the Company.
(9) Includes 13,089 shares which, although issued, are subject to repurchase
rights in favor of the Company.
(10) Includes 500 shares owned by Mr. Gal's son and 300 shares owned by Mr.
Gal's wife for the benefit of their daughter.
(11) Includes 22,222 shares issuable upon the exercise of options that are
exercisable within 60 days after May 17, 1999, of which 18,056 shares are
subject to repurchase rights in favor of the Company.
(12) Includes 7,292 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days after May 17, 1999.
(13) Includes 3,125 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after May 17, 1999.
(14) Based on information dated as of March 31, 1999.
(15) Includes 287,245 shares issuable upon the exercise of options that are
exercisable within 60 days after May 17, 1999, of which 75,559 shares are
subject to repurchase rights in favor of the Company. Also includes
346,645 shares which, although issued, are subject to repurchase rights
in favor of the Company.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation earned by (a) the individual who
served as the Company's Chief Executive Officer during the fiscal year ended
March 31, 1999, (b) the four other most highly compensated individuals who
served as an executive officer of the Company during the fiscal year ended
March 31, 1999; and (c) the compensation received by each such individual for
the Company's two preceding fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
----------------------- ------------
Securities
Other Annual Underlying All Other
Name & Principal Fiscal Salary Compensation Options Compensation
Position Year ($)(1) Bonus ($) ($)(2) (#)(3) ($)
---------------- ------ ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David M. Rickey......... 1999 315,453 110,000(4) -- -- 3,120(5)
President and Chief
Executive 1998 300,014 212,900(6) -- 146,666 3,120(5)
Officer 1997 277,215 61,500(7) 131,358(8) -- 3,120(5)
Thomas L. Tullie........ 1999 249,199(9) 25,000(4) -- -- --
Vice President, Sales 1998 219,556(10) 52,000(6) -- 73,333 --
1997 124,934(11) 60,500(12) 38,863(13) 133,333 --
Joel O. Holliday........ 1999 179,276 40,000(4) -- -- --
Vice President, Finance
and 1998 170,204 77,000(6) -- 63,333 --
Administration,
Treasurer, Chief 1997 162,208 41,500(7) -- 33,333 --
Financial Officer and
Secretary
Kenneth L. Clark........ 1999 181,770 35,000(4) 31,385(14) -- --
Vice President, 1998 64,211(15) 26,000(6) -- 130,000 --
Operations 1997 -- -- -- -- --
Laszlo V. Gal 1999 200,361 -- -- -- --
Vice President, 1998 184,007 52,000(6) -- 41,666 --
Engineering (16) 1997 22,885(17) 46,500(12) -- 206,666 --
</TABLE>
- --------
(1) Includes pre-tax contributions to the AMCC 401(k) Plan.
(2) Excludes annual compensation which, for any named executive officer, did
not in aggregate exceed the lesser of $50,000 or 10 percent of such named
executive officer's total annual salary and bonus for that year.
(3) Options granted in a given fiscal year may include grants based on the
officer's performance in the prior fiscal year. See "Option Grants in
Last Fiscal Year" and "Compensation Committee Report on Executive
Compensation."
(4) Includes Fiscal Year 1999 bonus paid in April 1999 (Fiscal 2000).
(5) Includes annual premiums in the amount of $3,120 paid by the Company on a
term life insurance policy.
(6) Includes Fiscal Year 1998 bonus paid in April 1998 (Fiscal 1999).
(7) Includes Fiscal Year 1997 bonus paid in April 1997 (Fiscal 1998).
(8) Includes $73,024 paid to Mr. Rickey in the form of relocation expenses
and a matching contribution in the amount of $2,652 that the Company made
on Mr. Rickey's behalf to the AMCC 401(k).
(9) Includes commissions earned by Mr. Tullie in the amount of $91,714, of
which $66,630 was paid to Mr. Tullie in fiscal 1999 and $25,084 was paid
to Mr. Tullie in fiscal 2000.
(10) Includes commissions earned by Mr. Tullie in the amount of $71,639, of
which $63,914 was paid to Mr. Tullie in fiscal 1998 and $7,725 was paid
to Mr. Tullie in fiscal 1999. Also includes a referral bonus in the
amount of $2,000.
(11) Includes commissions earned by Mr. Tullie in the amount of $38,396, of
which $25,191 was paid to Mr. Tullie in fiscal 1997 and $13,205 was paid
to Mr. Tullie in fiscal 1998.
(12) Includes a sign-on bonus and Fiscal Year 1997 bonus paid in April 1997
(Fiscal 1998).
(13) Includes a matching contribution in the amount of $565 that the Company
made on Mr. Tullie's behalf to the AMCC 401(k) Plan and $38,298 paid to
Mr. Tullie for relocation expenses.
(14) Includes $27,985 paid to Mr. Clark in the form of relocation expenses and
a matching contribution in the amount of $3,390 that the Company made on
Mr. Clark's behalf to the AMCC 401(k) Plan.
(15) Mr. Clark joined the Company in November 1997, and his annualized base
salary for the fiscal year ended March 31, 1998 was $175,000.
(16) Mr. Gal resigned as Vice President, Engineering when his employment with
the Company terminated on April 3, 1999.
(17) Mr. Gal joined the Company in January 1997, and his annualized base
salary for the fiscal year ended March 31, 1997 was $175,000.
11
<PAGE>
EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS
In January 1996, the Company entered into a letter agreement with David M.
Rickey, the Company's President and Chief Executive Officer. This agreement
entitles Mr. Rickey to a salary of $275,000 per year and term life insurance
purchased by the Company for the benefit of Mr. Rickey's estate. Pursuant to
the terms of the agreement, if the Company enters into certain change-of-
control transactions, the vesting of Mr. Rickey's options to purchase shares
of the Company's Common Stock will accelerate. In addition, the agreement
provides that if the Company is acquired and the per share value of the
Company's Common Stock is less than $3.00 per share, the Company will
compensate Mr. Rickey for the difference between $3.00 per share and the per
share merger or sale price determined by the Company's Board of Directors. The
letter agreement provides that Mr. Rickey's employment is at will and
terminable by the Company or Mr. Rickey for any reason, with or without cause,
and with or without notice.
OPTION GRANTS IN LAST FISCAL YEAR
There were no stock options granted to the Named Executive Officers in the
last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to stock
options exercised by the Named Executive Officers during the fiscal year ended
March 31, 1999. In addition, the table sets forth the number of shares covered
by stock options as of the fiscal year ended March 31, 1999, and the value of
"in-the-money" stock options, which represents the positive spread between the
exercise price of a stock option and the market price of the shares subject to
such option at the end of the fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Options at Fiscal In-the-Money
Shares Year End (#) Options at
Acquired on Value Exercisable/ Fiscal Year End ($)
Name Exercise (#) Realized($)(1) Unexercisable(2)(3) Exercisable/Unexercisable(4)
---- ----------- -------------- ------------------- ----------------------------
<S> <C> <C> <C> <C>
David M. Rickey......... 0 0 20,000 / 60,000 $ 382,500 / $1,147,500
Thomas L. Tullie........ 0 0 10,000 / 30,000 $ 191,250 / $ 573,750
Kenneth L. Clark........ 36,875 $ 659,359 8,125 / 85,000 $ 253,047 / $2,602,187
Joel O. Holliday........ 0 0 63,056 / 22,500 $2,345,853 / $ 430,313
Laszlo V. Gal........... 119,444 $3,324,443 8,750 / 120,138 $ 167,344 / $4,466,452
</TABLE>
- --------
(1) This value has been calculated based on the fair market value of the
Company's Common Stock as of the date of exercise as determined by the
closing price of the Company's stock on the Nasdaq National Market as of
the date of exercise minus the applicable per share exercise price.
(2) No stock appreciation rights (SARs) were outstanding during fiscal 1998.
(3) Options granted prior to March 27, 1998 under the 1992 Plan are generally
immediately exercisable, but subject to a right of repurchase pursuant to
the vesting schedule of each such grant. Options granted on or after March
27, 1998 are exercisable only as to those shares that are vested.
Accordingly, the table reflects those options that are exercisable, not
those options that are vested.
(4) Based on the $42.75 per share closing price of the Company's Common Stock
on The Nasdaq National Market on March 31, 1999, less the exercise price
of the options.
12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of
1934 that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the Stock Performance Graph which
follows shall not be deemed to be incorporated by reference into any such
filings.
The following is a report of the Compensation Committee of the Board of
Directors (the "Committee") describing the compensation policies applicable to
the Company's executive officers during the fiscal year ended March 31, 1999.
The Committee is responsible for establishing and monitoring the general
compensation policies and compensation plans of the Company, as well as the
specific compensation levels for executive officers. It also makes
recommendations to the Board of Directors concerning the granting of options
or grants options under the Company's 1992 Stock Option Plan. Executive
officers who are also directors have not participated in deliberations or
decisions involving their own compensation.
General Compensation Policy
Under the supervision of the Board of Directors, the Company's compensation
policy is designed to attract, motivate and retain qualified key executives
critical to the Company's growth and long-term success. It is the objective of
the Board of Directors to have a portion of each executive's compensation
contingent upon the Company's performance as well as upon the individual's
personal performance. Accordingly, each executive officer's compensation
package is comprised of three elements: (i) base salary which reflects
individual performance and expertise, (ii) variable bonus payable in cash and
tied to the achievement of certain annual performance goals and (iii) stock
options which are designed to align the long-term interests of the executive
officers with the Company's stockholders.
The summary below describes in more detail the factors which the Board of
Directors considers in establishing each of the three primary components of
the compensation package provided to the executive officers.
Base Salary
Base salary ranges are established based on benchmark data from high-tech
companies which compete with the Company for business and executive talent.
The level of base salary within the ranges is established primarily on the
basis of the individual's qualifications and relevant experience, the
strategic goals for which he or she has responsibility, and the compensation
levels of executives at similarly situated companies. Base salary is generally
adjusted once each year based on individual performance and position within
the salary range.
Variable Bonus
Cash bonuses are awarded on an annual basis to executive officers on the
basis of their success in achieving designated individual goals and the
Company's success in achieving specific company-wide goals, such as revenue
growth and earnings growth.
Stock Options
The Company has utilized its stock option plans to provide executives and
other key employees with incentives to maximize long-term stockholder values.
Stock options are designed to give the recipient an equity stake in the
Company and thereby closely align his or her interests with those of the
Company's stockholders. Factors considered in making such executive officer
awards include the individual's position and responsibilities with the
Company, his or her performance and accomplishments against annual goals, his
or her length of service, and his or her existing holdings of unvested option
shares.
Each option grant allows the executive officer to acquire shares of Common
Stock at a fixed price per share (the fair market value on the date of grant)
over a specified period of time (up to 10 years from the date of
13
<PAGE>
grant). The options typically vest in periodic installments over a four year
period, contingent upon the executive officer's continued employment with the
Company. Accordingly, the option will provide a return to the executive
officer only if he or she remains in the Company's service, and then only if
the market price of the Common Stock appreciates over the option term.
Compensation of the Chief Executive Officer
David M. Rickey has served as the Company's President and Chief Executive
Officer since February 1996. His base salary for the period February 1998 to
February 1999 was $312,000. On February 12, 1999, Mr. Rickey's salary was
increased to $350,000.
The factors discussed above in "Base Salaries," "Variable Bonus," and "Stock
Options" were also applied in establishing the amount of Mr. Rickey's salary
and stock option grant. Significant factors in establishing Mr. Rickey's
compensation upon hire were his seventeen years in the semiconductor industry
and his previous experience as vice president of operations with AMCC from
June 1993 to May 1995. Subsequent increases in base salary have been based on
his performance and contributions to Company growth and success.
Deductibility of Executive Compensation
The Committee has considered the impact of Section 162(m) of the Internal
Revenue Code adopted under the Omnibus Budget Reconciliation Act of 1993,
which section disallows a deduction for any publicly held corporation for
individual compensation exceeding $1 million in any taxable year for the CEO
and four other most highly compensated executive officers, respectively,
unless such compensation meets the requirements for the "performance-based"
exception to Section 162(m). As the cash compensation paid by the Company to
each of its executive officers is expected to be below $1 million and the
Committee believes that options granted under the Company's 1992 Stock Option
Plan to such officers will meet the requirements for qualifying as
performance-based, the Committee believes that Section 162(m) will not affect
the tax deductions available to the Company with respect to the compensation
of its executive officers. It is the Committee's policy to qualify, to the
extent reasonable, its executive officers' compensation for deductibility
under applicable tax law. However, the Company may from time to time pay
compensation to its executive officers that may not be deductible.
COMPENSATION COMMITTEE:
Franklin P. Johnson
Arthur B. Stabenow
R. Clive Ghest
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists of
Messrs. Johnson, Stabenow and Ghest. None of these directors has at any time
been an officer or employee of the Company or any subsidiary of the Company.
Arthur B. Stabenow, served as Chairman, President and Chief Executive Officer
of Micro Linear Corporation until January 1999 and also served as a member of
the Compensation Committee of the Board of Directors of AMCC during fiscal
1999, and continues to serve on such Committee. Roger A. Smullen was a member
of the Board of Directors of Micro Linear Corporation during Fiscal 1999, and
continues to serve on such Board. No other interlocking relationship exists
between the Company's Board of Directors or Compensation Committee and the
board of directors or compensation committee of any other company, nor has
such an interlocking relationship existed in the past.
TRANSACTIONS WITH MANAGEMENT
In January 1996, the Company entered into a letter agreement with David M.
Rickey, the Company's President and Chief Executive Officer, relating to Mr.
Rickey's employment and benefits in connection with certain change-of-control
transactions. See "Employment, Severance and Change of Control Agreements."
14
<PAGE>
In February 1996, the Company entered into a loan arrangement with Mr.
Rickey, pursuant to which the Company loaned to Mr. Rickey $150,000 ("Note No.
1") and $53,000 ("Note No. 2") at an annual interest rate of 5.32%. Note No. 1
was a full recourse, unsecured real estate bridge loan with accrued interest
and principal payable upon the earlier of February 12, 1999 or the sale of the
house in which Mr. Rickey lived prior to relocating to San Diego to accept
employment as the Company's President and Chief Executive Officer. Note No. 2
was the reinstatement of a loan which had been made previously to Mr. Rickey
in connection with the exercise of incentive stock options while serving as
Vice President, Manufacturing for the Company. Note No. 2 was a full recourse,
unsecured promissory note with accrued interest and principal payable no later
than February 12, 1999. Note No. 1 and Note No. 2 may be declared payable in
full by the Company in the event that Mr. Rickey ceases to be employed by the
Company. In May 1996, the Company entered into a loan agreement with Mr.
Rickey pursuant to which the Company loaned $750,000 ("Note No. 3") to Mr.
Rickey at an interest rate of 5.76% per annum compounded annually. The
proceeds of the loan were used to exercise options granted by Mr. Rickey's
former employer, which were expiring as a result of Mr. Rickey's termination
of employment with the former employer in order to join the Company. The loan
is evidenced by a non-recourse promissory note, which is secured by 46,500
shares of Common Stock of Advanced Micro Devices, Inc. The principal and
accrued interest on Note No. 3 were due and payable in full on May 1, 1999,
unless accelerated in whole or in part in the event of (i) a default under the
loan agreement or pledge agreement for Note No. 3, (ii) a default in payment
under Note No. 3 or any other promissory note issued to the Company by Mr.
Rickey, (iii) the voluntary or involuntary termination of Mr. Rickey's
employment with the Company or (iv) the sale of any portion of the Common
Stock securing Note No. 3. Each of Note No. 1, Note No. 2 and Note No. 3 were
approved by the Board of Directors of the Company pursuant to the approval of
Mr. Rickey's offer of employment with the Company. In September 1996, Mr.
Rickey repaid approximately $142,000 of the principal on Note No. 1, and in
April 1997, Mr. Rickey delivered a full recourse, unsecured promissory note
with a principal amount of $12,392 and an interest rate of 5.91% per annum in
payment of the balance of the amount owing under Note No. 1. In January 1999,
the Board of Directors extended the due dates on the notes by one year, as
these notes became due. The current aggregate principal balance outstanding
under each note is as follows:
<TABLE>
<CAPTION>
Date of Extended Current
Principal Original Maturity Interest
Amount Note Date Rate
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Note No. 1............................ $ 12,392 4/1/1997 3/31/2000 5.70%
Note No. 2............................ $ 53,000 2/12/1996 2/12/2000 4.62%
Note No. 3............................ $750,000 5/1/1996 5/1/2000 5.76%
</TABLE>
In July 1997, Mr. Rickey exercised stock options granted under the 1992
Plan. In payment of the purchase price for the exercised shares, Mr. Rickey
delivered full recourse promissory notes in principal amounts of approximately
$400,000, $20,000 and $35,000 bearing interest at rates of 5.98%, 5.98% and
6.54%, respectively. The notes and accrued interest thereon are payable in
full in February 2000, February 2000 and April 2001, respectively.
The Company has entered into indemnification agreements with its officers
and directors containing provisions that may require the Company, among other
things, to indemnify its officers and directors against certain liabilities
that may arise by reason of their status or service as officers or directors
(other than liabilities arising from willful misconduct of a culpable nature)
and to advance their expenses incurred as a result of any proceeding against
them as to which they could be indemnified.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors, principal stockholders and affiliates
will be approved by a majority of the Board of Directors, including a majority
of the independent and disinterested outside directors on the Board of
Directors, and will be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return data for
the Company's stock since November 25, 1997 (the date on which the Company's
stock was first registered under Section 12 of the Securities Exchange Act of
1934, as amended) to the cumulative return over such period of (i) The Nasdaq
National Market Composite Index and (ii) the Nasdaq Electronic Components Stock
Index. The graph assumes that $100 was invested in the Common Stock of the
Company and in each of the comparative indices on November 25, 1997, the date
on which the Company completed the initial public offering of its Common Stock.
The graph further assumes that such amount was initially invested in the Common
Stock of the Company at a per share price of $8.00, the price to which such
stock was first offered to the public by the Company on the date of its initial
public offering, and reinvestment of any dividends. The stock price performance
on the following graph is not necessarily indicative of future stock price
performance.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
11/25/97 3/31/98 3/31/99
-------- ------- -------
<S> <C> <C> <C>
Applied Micro Circuits Corporation............... 100 281 534
Nasdaq Electronic Components..................... 100 99 146
Nasdaq Market.................................... 100 115 156
</TABLE>
16
<PAGE>
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 2000
Annual Meeting of Stockholders must be received by William E. Bendush, Applied
Micro Circuits Corporation, 6290 Sequence Drive, San Diego, California 92121,
no later than February 16, 2000 in order that they may be considered in the
proxy statement and form of proxy relating to that meeting.
Also, if a stockholder does not notify the Company on or before May 7, 2000
of a proposal for the Company's 2000 Annual Meeting of Stockholders,
management intends to use its discretionary authority to vote on such matters
even if the matter is not discussed in the proxy statement for the 2000 Annual
Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and changes in
ownership of the Company's Common Stock. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports
they file. To the Company's knowledge, based solely on its review of the
copies of such reports received or written representations from certain
Reporting Persons that no other reports were required, the Company believes
that during its fiscal year ended March 31, 1999, all Reporting Persons
complied with all applicable filing requirements except that Mr. Gal failed to
timely report certain purchases and sales of the Company's common stock made
by members of his immediate family in September 1998, which transactions have
since been reported in an amended Form 4 and Mr. Bowes failed to timely report
a sale made by BHMS in June 1998. Mr. Bowes is a general partner of BHMS and
disclaims beneficial interest in such shares except to the pecuniary interest
arising from his interest in BHMS. The transaction has since been reported on
a Form 5.
AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN
This Proxy Statement refers to certain documents of the Company that are not
presented herein or delivered herewith. Such documents are available to any
person, including any beneficial owner, to whom this Proxy Statement is
delivered, upon oral or written request, without charge, directed to William
E. Bendush, Applied Micro Circuits Corporation, 6290 Sequence Drive, San
Diego, California 92121, telephone number (858) 450-9333. In order to ensure
timely delivery of the documents, such requests should be made by July 15,
1999.
17
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business that will be presented to
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, proxies in the enclosed form will be voted in respect thereof as the
proxy holders deem advisable.
It is important that the proxies be returned promptly and that your shares be
represented. Stockholders are urged to mark, date, execute and promptly return
the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ William E. Bendush
----------------------------------
William E. Bendush
Secretary
June 21, 1999
San Diego, California
18
<PAGE>
PROXY PROXY
APPLIED MICRO CIRCUITS CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD ON AUGUST 3, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David M. Rickey and William E. Bendush, or
either of them, as proxies, each with the power to appoint his substitute, to
represent and to vote all the shares of common stock of Applied Micro Circuits
Corporation ("AMCC"), which the undersigned would be entitled to vote, at the
Annual Meeting of Stockholders of AMCC to be held on August 3, 1999 and at any
adjournments thereof, subject to the directions indicated on the reverse side
hereof.
In their discretion, the Proxies are authorized to vote upon any other
matter that may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE, BUT IF
NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
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NOMINEES AND FOR THE PROPOSALS LISTED ON THE REVERSE SIDE.
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IMPORTANT-This Proxy must be signed and dated on the reverse side.
- --------------------------------------------------------------------------------
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders
of Applied Micro Circuits Corporation to be held at 10:00 a.m. local time on
Tuesday, August 3, 1999 at 6290 Sequence Drive, San Diego, California 92121.
Please read the proxy statement which describes the proposals and
presents other important information, and complete, sign and return your proxy
promptly in the enclosed envelope.
Directions from the San Diego Airport
[MAP APPEARS HERE]
1. Take Interstate 5 North
2. Merge onto 52 East
3. Merge onto 805 North
4. Exit Mira Mesa Blvd., turn right
5. Turn left on Sequence Drive
6. AMCC is on the left side.
<PAGE>
APPLIED MICRO CIRCUITS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1-3
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
For All
1. Election of Directors - For Withhold Except 2. Proposal to increase the number of shares For Against Abstain
Nominees: William K. Bowes, Jr., [ ] [ ] [ ] available for issuance under the company's [ ] [ ] [ ]
R. Clive Ghest, Franklin P. 1992 Stock Option Plan.
Johnson, Jr., David M. Rickey,
Roger M. Smullen, Sr., Arthur
B. Stabenow, Harvey P. White
3. Proposal to ratify Ernst & Young LLP as For Against Abstain
independent auditors. [ ] [ ] [ ]
________________________________
(Except nominee(s) written above)
If you plan to attend the Annual Meeting
please mark this box [ ]
Dated:______________________________________, 1999
Signature _________________________________________________________
Name (printed) ____________________________________________________
Title _____________________________________________________________
Important: Please sign exactly as name appears on this proxy. When
signing as attorney, executor, trustee, guardian, corporate officer,
etc., please indicate full title.
</TABLE>
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FOLD AND DETACH HERE
