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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 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):
[X] 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:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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APPLIED MICRO CIRCUITS CORPORATION
Notice of Annual Meeting of Stockholders
To Be Held August 29, 2000
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, California 92121 on Tuesday, August 29, 2000, at 10:00 a.m.,
local time, for the following purposes:
1. To elect eight directors of the Company to serve until the next Annual
Meeting of Stockholders or until their respective successors are elected
and qualified;
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the authorized number of shares
of Common Stock by 450,000,000 shares, to a total of 630,000,000 shares;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending March 31, 2001; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business, including the nominees for election as
directors, are more fully described in the Proxy Statement which is attached
to and made a part of this Notice.
The Board of Directors has fixed the close of business on June 30, 2000 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at 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
William E. Bendush
Secretary
San Diego, California
July 10, 2000
IMPORTANT
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. PLEASE NOTE,
HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER, A PROXY ISSUED IN YOUR NAME.
THANK YOU FOR ACTING PROMPTLY.
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APPLIED MICRO CIRCUITS CORPORATION
6290 SEQUENCE DRIVE
SAN DIEGO, CALIFORNIA 92121
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 2000
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, California 92121, on Tuesday, August 29, 2000, at
10:00 a.m., local time, and at 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, 2000, including financial
statements, and the Company's Annual Report on Form 10-K were first mailed to
stockholders entitled to vote at the Annual Meeting on or about July 10, 2000.
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 Secretary of the
Company (Attention: William E. Bendush, Applied Micro Circuits Corporation,
6290 Sequence Drive, San Diego, California 92121) a written notice of
revocation or a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will
not, by itself, revoke a proxy.
Record Date; Voting Securities
The close of business on June 30, 2000 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, 124,624,285 shares of Common Stock were
outstanding and entitled to vote.
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 also will 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 Annual Meeting. The
proposal to amend the Company's Amended and Restated Certificate of
Incorporation to increase the authorized number of shares of Common Stock will
require the affirmative vote of a majority of shares outstanding on the Record
Date for approval. 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 if present in person or represented
by proxy at the meeting. 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
1
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using the form of proxy enclosed and which is not marked as to a particular
item will be voted with respect to any such item FOR each of the named
nominees for election as directors and FOR each of 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. If a broker indicates on the
enclosed proxy or its substitute that such broker 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.
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 solicitation of proxies
also may be supplemented by personal solicitation by directors, officers or
other regular employees, or at the Company's request, by Corporate Investor
Communications, Inc. No additional compensation will be paid to directors,
officers or other regular employees for these services, but Corporate Investor
Communications, Inc. will be paid its customary fee, estimated to be
approximately $10,000, if it renders solicitation services.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of stockholders that are intended to be presented at the Company's
2001 Annual Meeting of Stockholders pursuant to Rule 14a-8 of the Securities
and Exchange Commission (the "SEC") must be received by the Company no later
than March 12, 2001, in order to be included in the proxy statement relating
to that annual meeting. The deadline for submitting a nomination for director
or proposal that is not to be included in that proxy statement and proxy is
not earlier than the close of business on May 1, 2001, nor later than the
close of business on May 31, 2001. Stockholders are advised to review the
Company's Amended and Restated Bylaws, which contain additional requirements
with respect to advance notice of stockholder proposals and director
nominations.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, the stockholders will elect eight directors to serve
until the next Annual Meeting of Stockholders such director's successor is
elected and qualified or until such director's earlier death, resignation or
removal. 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. Each
person nominated for election has agreed to serve if elected and the Board has
no reason to believe that any of the persons named below will be unable or
unwilling to serve as a director if elected.
Assuming a quorum is present, the directors will be elected by a plurality
of the votes of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote on the election of directors. Unless
marked otherwise, proxies received will be voted FOR the election of each of
the eight nominees named below.
The names of the nominees, their ages and certain other information about
them are set forth below:
<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupation Director Since
--------------- --- -------------------------- --------------
<C> <C> <S> <C>
David M. Rickey.............. 44 President and Chief 1996
Executive Officer of the
Company
William K. Bowes, Jr. (1).... 73 General Partner of U.S. 1980
Venture Partners
R. Clive Ghest (2)........... 62 Principal of Ghest 1997
Associates Consulting
Franklin P. Johnson, Jr. (1). 71 General Partner of Asset 1980
Management Company
S. Atiq Raza................. 50 President and Chief 1999
Executive Officer of Raza
Foundries, Inc.
Roger A. Smullen, Sr. (1).... 64 Chairman of the Board of 1982
Directors of the Company
Arthur B. Stabenow (2)....... 61 Retired executive officer 1988
Harvey P. White (2).......... 66 Chairman of the Board, 1999
President and Chief
Executive Officer of Leap
Wireless International
</TABLE>
--------
(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 of the Company 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,
Inc., 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 limited partnership, since July 1981. Mr. Bowes serves as a director
of Amgen, Inc., XOMA Corporation and Lynx Therapeutics, Inc. Mr. Bowes holds a
B.A. from Stanford University and an M.B.A. from Harvard Business School.
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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 general partner of Asset Management Company, a venture capital
limited partnership. Mr. Johnson has been a private venture capital investor
for more than five years. Mr. Johnson also is 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.
S. Atiq Raza has served as a director of the Company since September 1999.
Mr. Raza is President and Chief Executive Officer of Raza Foundries, Inc., a
company that builds and operates broadband networking and communications
companies, which he founded in October 1999. Mr. Raza was the President and
Chief Operating Officer of Advanced Micro Devices, a semiconductor company,
from January 1996 to March 1999. From October 1988 to January 1996, he was
with NexGen, where he held the positions of Chairman, Chief Executive Officer
and President. Prior to joining NexGen, Mr. Raza spent 15 years in various
engineering and management positions, including Vice President Technology
Centers at VLSI Technology Inc. Mr. Raza holds a bachelor's degree from the
University of London, and a master's degree from Stanford University. He also
is a director of Procket Networks, Inc., Nishan Systems and Mellanox
Technologies, Ltd.
Roger A. Smullen, Sr. has served as the Chairman of the Board of Directors
of the Company 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 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 and Chief Executive Officer
of Leap Wireless International, an operator of wireless telephone systems. Mr.
White was one of the founders of QUALCOMM Incorporated and served as its
President from May 1992 through June 1998. Prior to May 1992, he served as
Executive Vice President and Chief Operating Officer of QUALCOMM and was on
its Board of Directors since it began operations in July 1985 until September
1998. Mr. White holds a B.A. in economics from Marshall University.
Recommendation of the Board:
THE BOARD RECOMMENDS A VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.
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Meetings and Committees of the Board of Directors
During the period from April 1, 1999 through March 31, 2000 (the "last
fiscal year"), the Board met eight 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 served. The Board has an Audit Committee,
a Compensation Committee and a Stock Option 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.
The Audit Committee consisting of directors Smullen, Bowes and Johnson held
five 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 Audit Committee has reviewed and discussed the
audited financial statements with management and the Company's certified
public accountants.
The Compensation Committee consisting of directors Stabenow, White and
Ghest, three of the Company's non-employee directors, held four 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, the 1998 Stock Incentive Plan and the 2000
Equity Incentive Plan.
The Stock Option Committee consisting of directors Rickey and Smullen has
not met, but took action by unanimous written consent numerous times during
the last fiscal year. The Stock Option Committee has authority to grant under
the 1992 Stock Option Plan and the 2000 Equity Incentive Plan stock options to
purchase up to 30,000 shares of the Company's Common Stock to individuals not
subject to Section 16 of the Securities Exchange Act of 1934, as amended.
Compensation of Directors
Non-employee directors of the Company receive a $12,000 annual fee and fees
of $500 per meeting attended. Directors also are 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 non-employee director of the Company
will be granted a stock option to purchase 50,000 shares of Common Stock on
the date on which the optionee first becomes a non-employee director.
Thereafter, on April 1 of each year (starting in 2000 for non-employee
directors who were serving as of November 24, 1997), each non-employee
director is granted an option to purchase 50,000 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. The exercise price of each stock option granted under the
Directors' Plan is equal to the fair market value of one share of Common Stock
on the date of grant. Options granted under the Directors' Plan become
exercisable or "vest" in 12 equal monthly installments following the date of
grant. In the event of the dissolution or liquidation of the Company, a sale
of the Company or substantially all of the assets of the Company, the merger
of the Company with or into another corporation or other change-in-control
transaction involving the Company, the vesting of each option will accelerate,
and the option will terminate unless the option is assumed by the successor
corporation.
During the last fiscal year, Mr. White received an option grant under the
Directors' Plan of 50,000 shares at an exercise price of $12.28 upon his
election to the Board. Mr. Raza received an option grant under the Directors'
Plan of 50,000 shares at an exercise price of $27.19 per share upon his
election to the Board. There were no other options granted under the
Directors' Plan during the last fiscal year.
The Company has agreed to indemnify each director and officer against
certain claims and expenses for which the director might be held liable in
connection with past or future services to the Company and its subsidiaries.
In addition, the Company maintains an insurance policy insuring its officers
and directors against such liabilities.
5
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PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
In April 2000, the Board of Directors approved an amendment to the Company's
Amended and Restated Certificate of Incorporation to increase the authorized
number of shares of Common Stock, $0.01 par value per share, of the Company
from 180,000,000 to 630,000,000 (the "Amendment").
The additional shares of Common Stock to be authorized by adoption of the
Amendment would have rights identical to the currently outstanding shares of
Common Stock of the Company. Adoption of the Amendment would not affect the
rights of the holders of currently outstanding Common Stock of the Company,
except to the extent additional shares are actually issued, which may have
certain effects, including dilution of the earnings per share and voting
rights of current holders of Common Stock. If the Amendment is adopted, it
will become effective upon filing of a Certificate of Amendment of the
Company's Amended and Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware.
On each of September 9, 1999 and March 23, 2000, the Company effected a two-
for-one stock split in the form of a 100% stock dividend for stockholders of
record on September 2, 1999 and March 15, 2000, respectively. At March 31,
2000, 121,844,760 shares of Common Stock were outstanding (including shares
reserved for the acquisitions of YuniNetworks, Inc., pBaud Logic, Inc. and
Chameleon Technologies, Inc., which were closed after March 31, 2000), and
35,052,977 shares of Common Stock were reserved for options, employee equity
plans and other purposes. This leaves the Company with approximately
28,000,000 authorized shares available.
Purpose and Effect of the Amendment
The principal purpose of the Amendment is to provide the Company with the
flexibility to issue shares of Common Stock for proper corporate purposes,
which may be identified in the future, such as to raise equity capital,
declare stock dividends, make acquisitions through the use of stock, or
reserve additional shares for issuance under equity incentive plans. The Board
of Directors has not authorized or taken any action with respect to the
issuance of, and has no present agreement, arrangement or intention to issue
any of, the additional shares that would be available if the Amendment is
approved by the stockholders.
In January 2000, the Company was able to raise approximately $815 million
from the sale of Common Stock, in a public offering. Because the Company had
an adequate number of authorized shares of Common Stock available to it at the
time, the Company was able to move quickly to take advantage of favorable
conditions in the public capital markets. If the Company had not had a
sufficient number of authorized shares available at the time, the offering
would have been delayed while the Company sought stockholder approval. Delay
in completing the public offering could have resulted in the Company raising
funds on less favorable terms or failing to raise any capital if market
conditions had deteriorated. Although the Board of Directors has no current
plans to raise additional capital by selling equity securities, it is
important that a sufficient number of shares be authorized to ensure that the
Board and the Company may act quickly when the need arises or opportunities
present themselves.
From time to time, the Board of Directors may wish to split the outstanding
shares of Common Stock to shift the trading range of the Common Stock to a
level that will facilitate increased trading activity and encourage round lot
trading. By doing so, the Board would expect to increase the liquidity and
broaden the marketability of the Common Stock. During fiscal 2000, the Board
effected two two-for-one stock splits through 100% stock dividends: one in
September 1999 and the other in March 2000. Under Delaware law, the Board of
Directors may split the Company's stock without stockholder approval by means
of a stock dividend but only if there are a sufficient number of authorized
shares. In connection with the September 1999 stock dividend, the Company
first had to seek approval of an amendment to its Certificate of Incorporation
to increase the authorized number of shares of Common Stock, which delayed the
stock dividend by approximately one month. If the Amendment is not approved,
the Board would be unable to declare any significant stock dividends without
similar delays. Although the Board has no present intention of approving a
stock dividend, it is important that a sufficient number of shares be
authorized to ensure that the Board has the flexibility to act quickly.
6
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The increased reserve of shares available for issuance also may be used in
connection with potential acquisitions. The Company has acquired other
businesses using its stock as consideration, such as the acquisitions of
Cimaron Communications, Yuni Networks, Inc., pBaud Logic and Chameleon
Technologies. The ability to use its stock as consideration provides the
Company with negotiation benefits and increases its ability to execute its
growth strategy which may include the acquisition of other businesses or
technologies.
In addition, the increased reserve of shares available for issuance may be
used for the Company's equity incentive plans for grants to its employees,
consultants and directors. Such equity incentive plans will be used to attract
and retain employees or in connection with potential acquisitions as the
Company grants options to the employees of the acquired companies.
The flexibility of the Board of Directors to issue additional shares of
Common Stock could enhance the Board's ability to negotiate on behalf of the
stockholders in a takeover situation. The authorized but unissued shares of
Common Stock (as well as the authorized but unissued shares of Preferred
Stock) could be used by the Board of Directors to discourage, delay or make
more difficult a change in the control of the Company. For example, such
shares could be privately placed with purchasers who might align themselves
with the Board of Directors in opposing a hostile takeover bid. The issuance
of additional shares could serve to dilute the stock ownership of persons
seeking to obtain control and thereby increase the cost of acquiring a given
percentage of the outstanding stock. Although this proposal to increase the
authorized number of shares of Common Stock has been prompted by business and
financial considerations and not by the threat of any hostile takeover attempt
(nor is the Board currently aware of any such attempts directed at the
Company), stockholders should be aware that approval of the Amendment could
facilitate future efforts by the Company to deter or prevent changes in
control of the Company, including transactions in which the stockholders might
otherwise receive a premium for their shares over then current market prices.
The Company has previously adopted certain measures that may have the effect
of delaying or preventing an unsolicited takeover attempt, including
provisions of the Certificate authorizing the Board to issue up to 2,000,000
shares of Preferred Stock with terms, provisions and rights fixed by the
Board.
The availability of additional shares of Common Stock is particularly
important in the event that the Board of Directors needs to undertake any of
the foregoing actions on an expedited basis and therefore needs to avoid the
time (and expense) of seeking stockholder approval in connection with the
contemplated action. If the Amendment is approved by the stockholders, the
Board of Directors does not intend to solicit further stockholder approval
prior to the issuance of any additional shares of Common Stock, except as may
be required by applicable law or rules. For example, under Nasdaq rules,
stockholder approval is required for any issuance of 20% or more of the
Company's outstanding shares in connection with acquisitions. The Company
reserves the right to seek a further increase in the authorized number of
shares from time to time as considered appropriate by the Board of Directors.
The Company's audited consolidated financial statements, managements'
discussion and analysis of financial condition and results of operations, and
certain supplemental financial information are incorporated by reference to
pages 12 through 36 of the Company's Annual Report to Stockholders for the
year ended March 31, 2000.
Vote Required
The affirmative vote of the holders of a majority of the outstanding shares
of the Common Stock is required to approve the Amendment. As a result,
abstentions and broker non-votes will have the same effect as negative votes.
Recommendation of the Board:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
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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, 2001. Stockholder
ratification of the selection of Ernst & Young LLP as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of Ernst & Young LLP to the
stockholders as a matter of good corporate practice. 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, 2001.
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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 March 31, 2000 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(1) Ownership(2) Stock(2)(3)
------------------- -------------------- -----------------
<S> <C> <C>
Morgan Stanley Dean Witter.............. 6,179,612 5.1%
1221 Avenue of the Americas
New York, NY 10020
Roger A. Smullen (4).................... 1,528,520 *
David M. Rickey (5)..................... 980,634 *
Franklin P. Johnson, Jr.(6)............. 858,423 *
Thomas L. Tullie (7).................... 442,420 *
Brent E. Little (8)..................... 259,879 *
William K. Bowes, Jr. (9)............... 157,535 *
William E. Bendush (10)................. 138,546 *
Arthur B. Stabenow (11)................. 130,819 *
R. Clive Ghest (12)..................... 68,167 *
Kenneth L. Clark (13)................... 46,840 *
Harvey P. White (14).................... 62,167 *
S. Atiq Raza (15)....................... 29,166 *
All directors and executive officers as
a group (17 persons) (16).............. 6,636,864 5.0%
</TABLE>
--------
* Less than 1%.
(1) The address for the executive officers and directors of the Company is:
c/o AMCC, 6290 Sequence Drive, San Diego, CA 92121.
(2) The persons named in this table have sole voting and investment power
with respect to all shares of AMCC 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. This table is
based upon information supplied by officers, directors and principal
stockholders and Schedules 13G filed with the Securities and Exchange
Commission (the "SEC").
(3) 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 March 31, 2000 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
121,844,760 shares of Common Stock outstanding on March 31, 2000 together
with applicable options for such stockholders.
(4) Includes 36,110 shares of Common Stock that are subject to repurchase by
the Company and 65,416 shares issuable upon the exercise of options that
are exercisable within 60 days of March 31, 2000.
(5) Includes 66,666 shares of Common Stock that are subject to repurchase by
the Company and 376,666 shares issuable upon the exercise of options that
are exercisable within 60 days of March 31, 2000.
(6) Includes 257,495 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000. Also
includes 285,664 shares held by Mr. Johnson's wife. Mr. Johnson disclaims
beneficial ownership with respect to the shares held by his wife.
(7) Includes 55,555 shares of Common Stock that are subject to repurchase by
the Company and 94,980 shares issuable upon the exercise of options that
are exercisable within 60 days of March 31, 2000.
9
<PAGE>
(8) Includes 236,915 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000, of which
16,109 are subject to repurchase rights in favor of the Company.
(9) Includes 22,800 shares of Common Stock owned by the William K. Bowes, Jr.
foundation. Includes 107,495 shares of Common Stock issuable upon the
exercise of options that are exercisable within 60 days of March 31,
2000.
(10) Includes 138,546 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000.
(11) Includes 4,167 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000.
(12) Includes 57,055 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000, of which
11,111 are subject to repurchase rights in favor of the Company.
(13) Includes 46,840 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000.
(14) Includes 54,167 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000.
(15) Includes 29,166 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000.
(16) Includes 273,135 shares of Common Stock that are subject to repurchase by
the Company. Includes 1,775,870 shares issuable upon the exercise of
options that are exercisable within 60 days of March 31, 2000, of which
27,220 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 Company's Chief
Executive Officer during the fiscal year ended March 31, 2000, (b) the four
other most highly compensated individuals who served as executive officers of
the Company during the fiscal year ended March 31, 2000; and (c) the
compensation received by each such officer 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
Fiscal Salary Compensation Options Compensation
Name & Principal Position Year ($)(1) Bonus ($) ($)(2) (#)(3) ($)
------------------------- ------ ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Dave Rickey................ 2000 348,550 350,000(4) -- 2,640,000 3,120(5)
President and Chief 1999 315,453 110,000(6) -- -- 3,120(5)
Executive Officer 1998 300,014 212,900(8) -- 586,664 3,120(5)
Thomas L. Tullie........... 2000 268,473(8) 35,000(4) -- 270,000 --
Vice President, Sales 1999 249,199(9) 25,000(6) -- -- --
1998 219,556(10) 52,000(7) -- 293,332 --
William E. Bendush......... 2000 199,288(11) 100,000(4) -- 650,000 --
Vice President and Chief 1999 -- -- -- -- --
Financial Officer 1998 -- -- -- -- --
Kenneth L. Clark........... 2000 188,070 100,000(4) -- 270,000 --
Vice President, Operations 1999 181,770 35,000(6) 31,385(12) -- --
1998 64,211(13) 26,000(7) -- 520,000 --
Brent E. Little............ 2000 163,231 100,000(4) -- 400,000 --
Vice President, Marketing 1999 126,933 30,000(6) -- 300,000 --
1998 125,465 37,000(7) -- 89,328 --
</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 given fiscal year may include grants based on the
officer's performance in the prior fiscal year and have been adjusted to
reflect the September 1999 and March 2000 two-for-one stock splits.
(4) Includes fiscal 2000 bonus paid in May 2000 (fiscal 2001).
(5) Includes annual premiums in the amount of $3,120 paid by the Company on a
term life insurance policy.
(6) Includes fiscal 1999 bonus paid in April 1999 (fiscal 2000).
(7) Includes fiscal 1998 bonus paid in April 1998 (fiscal 1999).
(8) Includes commissions earned by Mr. Tullie in the amount of $107,521.
(9) Includes commissions earned by Mr. Tullie in the amount of $91,714, of
which $66,630 were paid to Mr. Tullie in fiscal 1999 and $25,084 were
paid to Mr. Tullie in fiscal 2000.
(10) Includes commissions earned by Mr. Tullie in the amount of $71,639, of
which $63,914 were paid to Mr. Tullie in fiscal 1998 and $7,725 were paid
to Mr. Tullie is fiscal 1999. Also includes a referral bonus in the
amount of $2,000.
(11) Includes a sign-on bonus in the amount of $25,000.
(12) Includes $27,985 paid to Mr. Clark to reimburse 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.
(13) Mr. Clark joined the Company in November 1997, and his annualized base
salary for the fiscal 1998 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. The agreement
provides that if the Company is acquired and the per share value of the
Company's Common Stock is less than $0.75 per share, the Company will
compensate Mr. Rickey for the difference between $0.75 per share and the per
share merger or sale price determined by the Company's Board of Directors. The
letter agreement provides that Mr. Rickey's employment is at will and
terminable by the Company or Mr. Rickey for any reason, with or without cause,
and with or without notice.
In accordance with the terms of the Company's 1992 Stock Option Plan (the
"1992 Plan"), if the Company enters into certain change-of-control
transactions, any option granted under the 1992 Plan to purchase shares of
Common Stock shall vest and become immediately exercisable for the number of
shares that would otherwise be vested and exercisable under the terms of the
option one year after the date of the change-of-control transaction. This
would apply to options granted under the 1992 Plan to any of the Named
Executive Officers.
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted to the Named Executive Officers in the last fiscal year. In
addition, as required by SEC rules, the table sets forth the hypothetical gains
that would exist for the options based on assumed rates of annual compound
stock price appreciation during the option term.
<TABLE>
<CAPTION>
Individual Grants (1)
----------------------------
Potential Realizable
Value at Assumed
Number of Percent of Total Annual Rates of Stock
Securities Options Granted Price Appreciation For
Underlying to Employees in Exercise of Option Term (2)
Options Fiscal Year Base Price Expiration ----------------------
Name Granted (#) (%) (3) ($/sh) (4) Date 5% ($) 10% ($)
---- ---------- ---------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
David M. Rickey......... 640,000(5) 4.67 12.97 04/23/09 5,219,846 13,228,113
2,000,000 14.60 71.97 01/19/10 90,521,835 229,400,102
Thomas L. Tullie........ 120,000(5) 0.88 12.97 04/23/09 978,721 2,480,271
150,000 1.10 140.87 03/08/10 13,289,330 33,677,770
William E. Bendush...... 33,148 0.24 12.06 04/20/09 251,462 637,254
466,852 3.41 12.06 04/20/09 3,541,559 8,975,005
150,000 1.10 140.87 03/08/10 13,289,330 33,677,770
Kenneth L. Clark........ 120,000(5) 0.88 12.97 04/23/09 978,721 2,480,271
150,000 1.10 140.87 03/08/10 13,289,330 33,677,770
Brent E. Little......... 40,000(5) 0.29 12.97 04/23/09 326,240 826,757
160,000 1.17 20.37 08/03/09 2,048,067 5,188,979
200,000 1.46 140.87 03/08/10 17,719,106 44,903,694
</TABLE>
--------
(1) Consists of options granted pursuant to the 1992 Plan. Options granted
under the 1992 Plan to new hires generally become exercisable over four
years from the date of grant with one-fourth of the shares becoming
exercisable one year from the date of grant and the remaining shares
becoming exercisable on a monthly basis thereafter for the remaining 36
months. Options granted under the 1992 Plan to current employees generally
become exercisable on a monthly basis over a period of 48 months from the
date of grant. All figures have been adjusted to reflect the Company's
September 1999 and March 2000 two-for-one stock splits.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the SEC. There can be no assurance that the
actual stock price appreciation over the ten-year option term will be at
the assumed 5% or 10% levels or at any other defined level. Unless the
market price of the Common Stock appreciates over the option term, no value
will be realized from the option grants made to the Named Executive
Officers.
(3) An aggregate of 13,797,938 options to purchase shares of Common Stock of
the Company were granted during fiscal 2000, of which 13,697,938 shares
were granted to employees.
(4) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of shares that are already owned or by offset of the
underlying shares, subject to certain conditions.
(5) Option granted in April 1999 in connection with the Named Executive
Officer's performance in fiscal 1999.
13
<PAGE>
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 last fiscal year.
In addition, the table sets forth the number of shares covered by stock
options as of March 31, 2000, 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 March 31,
2000.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised Options In-the-Money Options at
Acquired Value at Fiscal Year End (#) Fiscal Year End ($)
Name on Exercise (#) Realized ($) (1) Exercisable/Unexercisable(2)(3) Exercisable/Unexercisable(4)
---- -------------- ---------------- ------------------------------- ----------------------------
<S> <C> <C> <C> <C>
David M. Rickey......... 130,000 2,897,742 315,000 / 2,515,000 36,939,648 / 235,296,538
Thomas L. Tullie........ 23,978 541,752 86,022 / 320,000 12,188,773 / 25,249,214
William E. Bendush...... -- -- 125,004 / 524,996 17,250,615 / 53,127,836
Kenneth L. Clark........ 165,834 5,290,176 26,666 / 450,000 3,873,872 / 44,575,530
Brent E. Little......... 37,000 834,163 204,362 / 613,970 28,960,363 / 58,454,369
</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 Common Stock on the Nasdaq National Market as of the
date of exercise minus the applicable per share exercise price or, in the
case of same-day-sale, by the actual sale price of the stock minus the
applicable per share exercise price.
(2) No stock appreciation rights ("SARs") were outstanding during fiscal 2000.
(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 $150.063 per share closing price of the Company's Common
Stock on The Nasdaq National Market on March 31, 2000, less the exercise
price of the options.
14
<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 is not soliciting material, is not deemed filed with the SEC and 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, 2000.
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 equity incentive plans. Executive
officers who also are directors have not participated in deliberations or
decisions involving their own compensation.
General Compensation Policy
Under the supervision of the Committee, the Company's compensation policy is
designed to attract, motivate and retain qualified key executives critical to
the Company's growth. It is the objective of the Company to have a portion of
each executive's compensation dependent upon the Company's performance as well
as upon the executive's individual 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 officer with those of the Company's stockholders.
The Committee considers the total compensation of each executive officer in
establishing each element of compensation. All incentive compensation plans
are reviewed at least annually to assure they meet the current strategies and
needs of the Company.
The summary below describes in more detail the factors, that the Committee
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 nationally
recognized surveys of similar high-technology companies that compete with the
Company for executive officers. Each executive officer's base salary is within
the range, is established on the basis of the individual's qualifications and
relevant experience and benchmarked annually against the compensation levels
of executives at similar high-technology companies. Base salary is generally
adjusted once each year based on the individual executive's contribution and
performance over the previous year and his or her current salary in relation
to the midpoint of the salary range.
Variable Bonus
The Executive Bonus Plan rewards achievement of specified levels of
corporate profitability. A pre-determined formula, which takes into account
profitability against the annual plan approved by the Board of Directors, is
used to determine the bonus pool. The individual executive officer's share of
the bonus pool is based upon discretionary assessment of each officer's
performance during the prior fiscal year and is benchmarked against bonus
practices of surveyed high-technology companies.
Stock Options
In March 2000, the Company expanded its stock option plan to include all
employees (including non-exempt employees who were previously ineligible). In
March 2000, all non-exempt employees received options
15
<PAGE>
to incentivize them to help maximize long-term stockholder value. Factors
considered in granting stock options to executive officers include the
individual's position and responsibilities with the Company, his or her
performance and contribution, number of options vested over the prior twelve
months and market practices.
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 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 options 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. In fiscal 2000 he led the Company to a 64%
increase in revenue and a 184% increase in net income over fiscal year 1999.
In accordance with the policies noted above, the Committee set Mr. Rickey's
base salary for the period February 1999 to February 2000 at $350,000. On
February 12, 2000, the Committee increased Mr. Rickey's base salary to
$400,000. In consideration of his leadership during fiscal 2000 and the
Company's financial performance, the Committee awarded Mr. Rickey a $350,000
bonus and granted a stock option to purchase 2,000,000 shares of Common Stock
at an exercise price of $71.969 per share (as adjusted for the March 2000 two-
for-one stock split).
Deductibility of Executive Compensation
The Committee has considered the impact of Section 162(m) of the Internal
Revenue Code, which 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 unless such
compensation meets the requirements for the "performance-based compensation".
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 compensation, 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 quality to the extent reasonable,
its executive officer 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
Arthur B. Stabenow
R. Clive Ghest
Harvey P. White
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists of
Messrs. Stabenow, Ghest, and White. None of these directors has at any time
been an officer or employee of the Company or any subsidiary of the Company.
During the last fiscal year, no interlocking relationship existed between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company.
TRANSACTIONS WITH MANAGEMENT
In February 1996, the Company entered into a loan arrangement with Mr.
Rickey, the Company's President and CEO, 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 and April 2000, the Board of Directors extended
the due dates on the notes by one year, as these notes became due. In August
1999, Mr. Rickey repaid the $750,000 principal balance of Note No. 3 plus
accrued interest of approximately $150,000 in full. The current aggregate
principal balance outstanding under each remaining 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 3/31/2002 6.42%
Note No. 2............................ $53,000 2/12/1996 2/12/2002 6.42%
</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 were payable in
full in February 2000, February 2000 and April 2001, respectively. In January
2000, the Board of Directors extended the maturity dates of the first two
notes to February 2002 and the maturity date of the third note to April 2003.
In May 2000, Mr. Rickey repaid the $400,000, $20,000 and $35,000 balances of
each of these notes, respectively, plus accrued interest in an aggregate
amount of approximately $85,000.
17
<PAGE>
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.
18
<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 $2.00, the
price to which such stock was first offered to the public by the Company on
the date of its initial public offering (adjusted to reflect the September
1999 and March 2000 two-for-one stock splits) and reinvestment of any
dividends. The stock price performance on the following graph is not
necessarily indicative of future stock price performance.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
11/25/97 3/31/98 3/31/99 3/31/00
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Applied Micro Circuits Corporation....... 100 281 534 7,503
Nasdaq Electronic Components............. 100 99 146 427
Nasdaq National Market................... 100 115 156 288
</TABLE>
19
<PAGE>
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 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,
2000, all Reporting Persons complied with all applicable filing requirements.
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, including the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2000,
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 August 1, 2000.
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
July 10, 2000
San Diego, California
20
<PAGE>
PROXY PROXY
APPLIED MICRO CIRCUITS CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD ON AUGUST 29, 2000
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 29, 2000 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.
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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 29, 2000 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 approve an amendment to the For Against Abstain
Nominees: William K. Bowes, Jr., [ ] [ ] [ ] Company's Amended and Restated [ ] [ ] [ ]
R. Clive Ghest, Franklin P. Certificate of Incorporation to increase
Johnson, Jr., S. Atiq Raza, the Company's authorized number of shares
David M. Rickey, Roger A. of Common Stock by 450,000,000 shares to
Smullen, Sr., Arthur B. a total of 630,000,000 shares.
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:______________________________________, 2000
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
