<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: August 31, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 0-12182
CALIFORNIA AMPLIFIER, INC.
(Exact name of registrant's specified in its charter)
Delaware 95-3647070
------------------------------- -------------------
(State or Other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
460 Calle San Pablo
Camarillo, California 93012
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(805) 987-9000
---------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Common Stock Outstanding as of August 31, 1996: 11,690,000
Number of pages in this Form 10-Q: 12
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
Aug. 31, Mar. 2,
1996 1996
-------- -------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,901 $11,637
Accounts receivable 7,410 4,645
Inventories 7,668 6,744
Deferred tax asset 1,200 1,200
Prepaid expenses and other current assets 406 399
------- -------
Total current assets 20,585 24,625
Property and equipment - at cost, net
of depreciation and amortization 8,146 6,160
Investment in non-consolidated subsidiary 1,000 852
Other assets 1,155 936
------- -------
$30,886 $32,573
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,263 $ 3,230
Accrued liabilities 2,844 4,659
Current portion of long-term debt 841 993
------- -------
Total current liabilities 5,948 8,882
Long-term debt 400 767
Commitments -- --
Stockholders' equity:
Preferred stock, 3,000 shares
authorized; no shares outstanding -- --
Common stock, $.01 par value;
15,000 shares authorized;
11,690 shares outstanding in
August 1996 and 11,519 in March 1996 117 115
Additional paid-in capital 13,472 13,274
Retained earnings 10,949 9,535
------- -------
Total stockholders' equity 24,538 22,924
------- -------
$30,886 $32,573
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
Aug. 31, Sept. 2, Aug. 31, Sept. 2,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $11,463 $14,505 $28,738 $27,170
Cost of sales 8,033 9,629 19,265 18,090
------- ------- ------- -------
Gross profit 3,430 4,876 9,473 9,080
Research and development 1,819 1,059 3,292 2,022
Selling 1,219 1,160 2,552 2,212
General and administrative 807 991 1,691 1,925
------- ------- ------- -------
Income (loss) from operations (415) 1,666 1,938 2,921
Interest and other income (expense), net 127 (20) 266 37
------- ------- ------- -------
Income (loss) before taxes (288) 1,646 2,204 2,958
(Provision) benefit for income taxes 79 (575) (790) (1,035)
Net income (loss) $ (209) $ 1,071 $ 1,414 $ 1,923
Net income (loss) per share $ (.02) $ .09 $ .11 $ .16
Weighted average number of
shares outstanding 11,607 11,908 12,665 11,780
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended
----------------
Aug. 31, Sept. 2,
1996 1995
-------- --------
Cash flows from operating activities:
Net income (loss) $ 1,414 $1,923
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 1,385 1,319
Loss on disposal of equipment -- 23
(Increase) decrease in:
Accounts receivable (2,765) 2,477
Inventories (924) (741)
Prepaid expenses and other assets (226) (86)
Increase (decrease) in
Accounts payable (967) (234)
Accrued liabilities (1,815) 1,696
------- ------
Cash provided by operating activities: (3,898) 6,377
------- ------
Cash flows used in investing activities:
Purchases of property and equipment (3,371) (2,278)
Investments in non-consolidated subsidiary (148) (35)
------- ------
Cash used in investing activities: (3,519) (2,313)
------- ------
Cash flows from financing activities:
Short-term debt borrowings -- 1,304
Term debt repayments (519) (804)
Issuances of common stock 200 765
------- ------
Cash provided (used) by financing activities: (319) 1,265
------- ------
Net increase (decrease) in cash and cash equivalents (7,736) 5,329
Cash and cash equivalents at the beginning of period 11,637 1,654
------- ------
Cash and cash equivalents at end of period $ 3,901 $6,983
<PAGE>
CALIFORNIA AMPLIFIER, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION - The accompanying unaudited consolidated financial
statements have been prepared in accordance with the requirements of Form
10-Q and, therefore, do not include all information and footnotes which would
be presented were such financial statements prepared in accordance with
generally accepted accounting principles. These statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
March 2, 1996. In the opinion of management, these interim financial
statements reflect all adjustments necessary for a fair presentation of the
financial position and results of operations for each of the periods
presented. The results of operations and cash flows for such periods are not
necessarily indicative of results to be expected for the full fiscal year.
2. INVENTORIES - Inventories include the cost of material, labor and
manufacturing overhead and are stated at the lower of cost (first-in,
first-out) or market and consist of the following (in 000's):
Aug. 31, 1996 March 2, 1996
------------- -------------
Raw material $2,184 $2,480
Work in process 1,558 562
Finished goods 3,926 3,702
------ ------
$7,668 $6,744
------ ------
3. NET INCOME PER SHARE - Net income per share is based upon the weighted
average number of shares outstanding during each of the respective years,
including the dilutive effects of stock options and warrants using the
treasury stock method. The weighted average number of shares used in the
computation of net income per share for the six months ended August 31, 1996,
the three and six months ended and September 2, 1995 were increased by
1,058,000, 824,000, and 736,000 respectively, for the dilutive effects of
stock options. There was no share adjustment for the three months ended
August 31, 1996, since the Company incurred a net operating loss and the
effect of stock options would, therefore, be anti-dilutive.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1996 AND SEPTEMBER 2, 1995
SALES
Sales decreased by $3.0 million, or 21%, from $14.5 million for the three
months ended September 2, 1995 to $11.5 million for the three months ended
August 31, 1996. The sales decrease resulted from decreases in both Wireless
Cable product sales and Satellite Television product sales. Sales of
Wireless Cable products decreased $2.9 million, or 28%, from $10.4 million to
$7.5 million. Sales of Satellite Television products decreased $142,000, or
3.5%, from $4.1 million to $3.9 million. The decrease in Wireless Cable
sales resulted primarily from decreased international shipments of Wireless
Cable reception products and MultiCipher, the Company's broadband scrambling
system. The decrease in MultiCipher was further affected by delays in the
introduction of MultiCipher Plus-TM-. The decrease in Satellite Television
product sales resulted from continued softness in the domestic C-Band market
relating to the competition from the introduction of the Ku-DBS system and
price competition in certain foreign markets, primarily Latin America.
The Company's sales growth during the remainder of fiscal year 1997 is
dependent on renewed growth in the Wireless Cable market, both in the U.S.
and internationally, and the acceptance of MultiCipher Plus, which is
currently in a limited number of installations, some still under evaluation.
GROSS PROFITS AND GROSS MARGINS
Gross profits decreased by $1.4 million, or 30%, from $4.9 million to $3.4
million. Gross margins decreased from 33.6% to 29.9%. The 30% decrease in
gross profits is the result of a 21% decrease in sales, and lower gross
margins on those lower sales. The decrease in gross margins is primarily a
result of lower volumes resulting in an underabsorption of factory costs, and
production start-up costs relating to new product introductions, primarily
MultiCipher Plus.
OPERATING EXPENSES
Research and development expenses increased by $760,000 from $1.1 million to
$1.8 million. The increase was due to personnel additions, increased
consulting services, increased equipment depreciation and higher purchases of
research and development materials as the Company expands its product lines
and continues its development of MultiCipher products, including MultiCipher
Plus. Currently the Company expects research and development expenses to be
lower in the third and fourth quarters than the second quarter amount due to,
among other things, lower consulting services.
Selling expenses increased by $59,000 from $1.16 million to $1.2 million.
The increase was due primarily to personnel additions to support anticipated
higher sales volumes, offset by lower discretionary spending in certain
marketing areas.
General and administrative expenses decreased by $184,000 from $991,000 to
$807,000. The decrease was due primarily to the elimination of incentive
bonuses in fiscal year 1997 due to current operating performance.
INCOME (LOSS) FROM OPERATIONS
Income (loss) from operations, for the reasons noted above, decreased by $2.1
million or 50% from $1.7 million to a loss of $(415,000).
INTEREST AND OTHER INCOME (EXPENSE), NET
<PAGE>
Interest and other income (expense), net increased by $147,000 to $127,000
income, net, from $(20,000) expense, net. The primary reasons for the change
is increased interest income, cash discounts and income relating to Micro
Pulse, a 50% equity investment.
PROVISION FOR TAXES
The provision for taxes for the second quarter of fiscal 1997 is based upon
an annualized tax rate of 35%, the same tax rate as fiscal year 1996. This
tax rate assumes savings from benefits allowed for export sales through a
foreign sales corporation formed in March 1993 and research and development
tax credits.
NET INCOME (LOSS)
Net income (loss), for reasons outlined above, decreased by $1.3 million, or
29% from $1 million to $(209,000).
SIX MONTHS ENDED AUGUST 31, 1996 AND SEPTEMBER 2, 1995
SALES
Sales increased by $1.6 million, or 6%, from $27.2 million for the six months
ended September 2, 1995 to $28.7 million for the six months ended August 31,
1996. Sales of Wireless Cable products increased $2.6 million, or 15%, from
$17.8 million to $20.4 million. Sales of Satellite Television products
decreased $935,000, or 10%, from $9.2 million to $8.2 million. The increases
in Wireless Cable sales resulted primarily from higher first quarter sales of
MultiCipher, the Company's broadband scrambling system, offset by lower sales
of Wireless Cable reception products. The decreases in Satellite Television
product sales is a result of continual softness in the domestic C-Band market
relating to competition from the introduction of the Ku-DBS system and
competition and pricing in certain international markets.
GROSS PROFITS AND GROSS MARGINS
Gross profits increased $393,000, or 4%, from $9.1 million to $9.5 million,
and gross margins decreased from 33.4% to 33%. The 4% increase in gross
profits resulted from a 6% increase in sales offset by a .4% reduction in
gross margins. Gross margins declined primarily as a result of lower sales
volumes in the second quarter resulting in an underabsorption of factory
costs, and production start-up costs relating to new product introductions,
primarily MultiCipher Plus.
OPERATING EXPENSES
Research and development expenses increased $1.3 million from $2.0 million to
$3.3 million. The increase resulted from personnel additions, salary
increases, increased equipment depreciation, higher research and development,
material purchases as the Company expands its product lines and continues the
development of MultiCipher products and increased consulting services.
Selling expenses increases $340,000 from $2.2 million to $2.6 million. The
increase is primarily a result of increased salaries and personnel additions.
General and Administrative expenses decreased $234,000 from $1.9 million to
$1.7 million. The decrease is due primarily to increases salaries and
additional personnel, offset by a decrease in incentive bonuses due to
operating performance.
<PAGE>
INCOME FROM OPERATIONS
Income from operations decreased $983,000, or 37%, from $2.9 million to $1.9
million. The decrease is a result of decreased sales, lower gross margins
and increased research and development expenses as noted above.
INTEREST AND OTHER (INCOME) EXPENSE, NET
Interest and other income, net increased by $229,000 to $266,000 from
$37,000. The primary reasons for the increase is increased interest income,
cash discounts and income relating to MicroPulse, a 50% equity investment.
PROVISIONS OF INCOME TAXES
The provision for taxes for fiscal year 1997 and fiscal year 1996 were based
upon an annualized 35% tax rate. The rate is less than the Federal and State
combined rate because of tax benefits due to export sales and research and
development tax credits.
NET INCOME
For the reasons outline above, net income decreased $509,000, or 26%, from
$1.9 million to $1.4 million.
LIQUIDITY AND CAPITAL RESOURCES
Currently the Company has a $6.0 million working capital facility with
California United Bank and a $2.0 million capital equipment facility with
NationsBank. In addition, California Amplifier s.a.r.l., its foreign
subsidiary, has an informal arrangement with a French bank to borrow up to
$600,000. As of August 31, 1996, no amounts were outstanding under any of
these arrangements except term debt totaling $1.2 million due to NationsBank
borrowed under prior arrangements. The working capital facility expires in
August 1997, and the equipment facility in December 1996.
The Company believes that cash flow from operations, together with the funds
available under its credit facilities, are sufficient to support operations
and capital equipment requirements over the next twelve months. The Company
has received verbal commitments from its current banks and other banks that
the Company current borrowing amounts will be renewed at similar terms.
The Company believes that inflation has not had a material effect on its
operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of California Amplifier, Inc. was held
July 19, 1996.
At the annual meeting of stockholders proposals were considered for the
election of Ira Coron, David R. Nichols, William E. McKenna and Arthur H.
Hausman as directors to serve until the 1997 annual meeting of stockholders.
Other matters voted upon at the meeting included (i) the approval of an
amendment to the Company's Certificate of Incorporation to increase the
number of shares of common stock authorized from 15,000,000 to 30,000,000,
(ii) approval of an amendment to the California Amplifier, Inc. 1989 Key
Employee Stock Option Plan to increase the number of shares of common stock
issuable from 2,600,000 to 3,400,000. The director-nominees were elected and
all proposals were approved.
The voting results were as follows:
Proposal
1) Election of directors:
For Against Withheld
--------- ------- --------
Ira Coron 9,347,774 0 431,519
David R. Nichols 9,348,974 0 430,319
William E. McKenna 9,343,674 0 435,619
Arthur H. Hausman 9,341,954 0 437,339
On August 26, 1996, Thomas Ringer was appointed to the Board of Directors.
On August 31, 1996, David R. Nichols resigned from the Board of Directors
and as an officer of the Company.
2) Approval of amendment to the Company's Certificate of Incorporation
received 9,097,648 votes for, 645,577 votes against, 32,568 votes withheld
and 3,500 broker non-votes.
3) Approval of an amendment to the California Amplifier, Inc. 1989 Key
Employee Stock Option Plan received 3,446,487 votes for, 2,830,819 votes
against, 61,307 votes withheld and 3,440,680 broker non-votes.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See exhibit index attached hereto which is incorporated herein by this
reference.
(b) No reports on Form 8-K were filed during the quarter ended
August 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
California Amplifier, Inc.
(Registrant)
October 8, 1996 /s/ Michael R. Ferron
Michael R. Ferron
Vice President, Finance and
Chief Accounting Officer
<PAGE>
INDEX TO EXHIBITS
*3.1 Certificate of Incorporation of the Registrant, as amended, filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form S-1
(33-59702) and by this reference is incorporated herein and made a
part hereof.
*3.1.1 Amendment to Certificate of Incorporation of the Registrant, as
filed with the Delaware Secretary of State on September 19, 1996.
3.2 Bylaws of the Registrant, as amended, filed as Exhibit 3.2 to the
Registrant's Form 8-K dated February 27, 1992 and by this reference is
incorporated herein and made a part hereof.
10.1 1984 Key Employee Stock Option Plan filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.2 Form of Incentive Stock Option Agreement filed as Exhibit 10.2 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.3 Form of Nonqualified Stock Option Agreement filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.4 1989 Key Employee Stock Option Plan filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.4.1 Amendment No. 1 to the 1989 Key Employee Stock Option Plan
filed as Exhibit 4.7 to the Registrant's Registration Statement on
Form S-8 (33-36944) and by this reference is incorporated herein and
made a part hereof.
10.4.2 Amendment No. 2 to the 1989 Key Employee Stock Option Plan filed as
Exhibit 4.8 to the Registrant's Registration Statement on
Form S-8 (33-72704) and by this reference is incorporated herein
and made a part hereof.
10.4.3 Amendment No. 3 to the 1989 Key Employee Stock Option Plan
filed as Exhibit 4.10 to the Registrant's Registration Statement on
Form S-8 (33-60879) and by this reference is incorporated herein and
made a part hereof.
10.5 Form of Incentive Stock Option Agreement filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.6 Form of Nonqualified Stock Option Agreement filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.7 Form of Option Agreement for Non-Employee Directors filed as Exhibit 4.9
to the Registrant's Registration Statement on Form S-8 (33-36944) and
by this reference is incorporated herein and made a part hereof.
10.8 Letter Agreements regarding sale of the building dated July 18, 1988,
filed as an exhibit to Form 8-K, dated February 27, 1989, filed as an
exhibit to the Registrant's Annual Report on Form 10-K for the fiscal
year ended February 28, 1989 and by this reference is incorporated
herein and made a part hereof.
10.9 Building Lease and Rider on building between the Registrant and Calle
San Pablo Property Co. dated January 31, 1989, filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
February 28, 1989 and by this reference is incorporated herein and made
a part hereof.
<PAGE>
10.9.1 Amendment of Lease on building between the Registrant and Calle
San Pablo Property Co. dated February 9, 1995, filed as an exhibit to
this Annual Report on Form 10-K for the fiscal year ended
March 4, 1995.
10.10 Form of Indemnity Agreement filed as an exhibit to the Registrant's
Annual Report on Form 10-K for the fiscal year ended February 29, 1988
and by this reference is incorporated herein and made a part hereof.
10.11 Stockholder Rights Plan filed as an exhibit to the Registrant's
Form 8-K dated September 5, 1991 and by this reference is incorporated
herein and made a part hereof.
10.12 Distribution Agreement between Registrant and Pan Asian Systems, Ltd.,
dated July 3, 1992 filed as Exhibit 10.17 to the Company's Registration
Statement on Form S-1 (33-59702) and by this reference is incorporated
herein and made a part hereof.
10.13 Stock Purchase Agreement dated December 31, 1992 by and among
Registrant, Peter J. Connolly, Steven G. Ow and Toni Ow, and
The Peter J. Connolly Charitable Remainder Unitrust dated
June 15, 1992 filed as Exhibit 10.20 to the Company's Registration
Statement on Form S-1 (33-59702) and by this reference is incorporated
herein and made a part hereof.
10.14 8% Convertible Subordinated Note dated January 20, 1993 by Registrant
payable to The Peter J. Connolly Charitable Remainder Unitrust dated
June 15, 1992 filed as Exhibit 10.21 to the Registrant's Registration
Statement on Form S-1 (33-59702) and by this reference is incorporated
herein and made a part hereof.
10.15 8% Convertible Subordinated Note dated January 20, 1993 by Registrant
payable to Steven G. Ow and Toni Ow dated June 15, 1992 filed as
Exhibit 10.22 to the Registrant's Registration Statement on Form S-1
(33-59702) and by this reference is incorporated herein and made a
part hereof.
10.16 Promissory Note dated January 20, 1993 by Micro Pulse
Incorporated, payable to Registrant filed as Exhibit 10.23 to the
Registrant's Registration statement on Form S-1 (33-59702) and by this
reference is incorporated herein and made a part hereof.
10.17 Option Agreement entered into as of February 4, 1993 by and
among CAMP Acquisition Corp., Mr. Charles W. Ergen and the Registrant
filed as Exhibit 10.24 to the Registrant's Registration Statement on
Form S-1 (33-59702) and by this reference is incorporated herein and
made a part hereof.
10.18 Promissory Note Agreement between Registrant and California United Bank
dated April 5, 1993, filed as Exhibit 10.18 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended February 27, 1993
and by this reference is incorporated herein and made part hereof.
10.19 Change in Terms Agreement between Registrant and California United Bank,
dated July 22, 1994, and filed as an exhibit to this Annual Report on
Form 10-K for the fiscal year ended March 4, 1995.
10.20 First Amendment to Business Loan Agreement between Registrant and
California United Bank, dated July 22, 1994, filed as an exhibit to
this Annual Report on Form 10-K for the fiscal year ended March 4, 1995.
10.21 Second Amendment to Business Loan Agreement between Registrant and
California United Bank, dated September 13, 1994, filed as an exhibit
to this Annual Report on Form 10-K for the fiscal year ended
March 4, 1995.
10.22 Business Loan Agreement between Registrant and California United Bank,
dated July 26, 1995.
10.23 Promissory Note between Registrant and California United Bank dated
July 26, 1995.
10.24 Commercial Security Agreement between Registrant and California
United Bank dated July 26, 1995.
<PAGE>
10.25 First Amendment to Business Loan Agreement between Registrant and
California United Bank, dated July 26, 1995.
*27 Financial Data Schedule
*Filed herewith.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CALIFORNIA AMPLIFIER, INC.
a Delaware Corporation
ARTICLE I
A. The name of the corporation is
CALIFORNIA AMPLIFIER, INC.
B. The name and mailing address of the incorporator is as follows:
Name Address
---- -------
Thomas M. Zirnite 460 Calle San Pablo
Camarillo, California 93010
C. The corporation shall have a perpetual existence.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 15 North Street, Dover, Delaware 19901 in the County of Kent.
The name of its registered agent at that address is Parasec Incorporated.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of the
State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
ARTICLE IV
The Corporation is authorized to issue two classes of capital stock,
designated Common Stock and Preferred Stock. The amount of total authorized
capital stock of the Corporation is 18,000,000 shares, divided into
15,000,000 shares of Common Stock, par value $0.01 per share, and 3,000,000
shares of Preferred Stock, par value $0.01 per share.
The Preferred Stock may be issued in one or more series. The Board of
Directors is hereby authorized to issue the shares of Preferred Stock in such
series and to fix from time to time before issuance the number of shares to
be included in any series and the designation, relative powers,
<PAGE>
preferences and rights and qualifications, limitations or restrictions of all
shares of such series. The authority of the Board of Directors with respect
to each series shall include, without limiting the generality of the
foregoing, the determination of any or all of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of
that series;
(c) Whether that series shall have voting rights, in addition to the voting
rights provided by law, and if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate upon the happening of certain specified
events;
(e) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption including the date or
dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Company, and the
relative rights of priority, if any, of payment on shares of that series;
and
(h) Such other designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions thereof as it may deem advisable;
all as shall be determined from time to time by the Board of Directors and
shall be stated in a resolution or resolutions providing for the issuance of
such Preferred Stock (a "Preferred Stock Designation").
The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares then outstanding) by the
affirmative vote of the holders of a majority of the capital stock of the
Corporation entitled to vote, with all such holders voting as a single class.
ARTICLE V
A. Each holder of Common Stock of the Corporation entitled to vote
shall have one vote for each share thereof held.
<PAGE>
B. Except as may be provided by the Board of Directors in a Preferred
Stock Designation or by law, the holders of Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes, and holders of Preferred Stock shall not be entitled to receive
notice of any meeting of stockholders at which they are not entitled to vote
or consent.
C. The Corporation shall be entitled to treat the person in whose name
any shares of its capital stock is registered as the owner thereof, for all
purposes, and shall not be bound to recognize any equitable or other claim
to, or interest in, such shares on the part of any other person, whether or
not the Corporation shall have notice thereof, except as expressly provided
by applicable law.
D. No vote at any meeting of stockholders need be by written ballot
unless the Board of Directors, in its discretion, or the officer of the
Corporation presiding at the meeting, in his discretion, specifically directs
the use of a written ballot.
E. Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the Board of Directors, the
Chairman of the Board of Directors, the President or the holders of 10% or
more of the combined voting power of all classes of the Corporation's capital
stock.
ARTICLE VI
A. The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of no fewer than four
and no more than seven directors. The exact number of directors of the
Corporation shall be fixed from time to time, within the limits specified,
solely by resolution of the Board. At each annual meeting of shareholders
the directors shall be elected to hold office until the next annual meeting.
Each director shall hold office after the annual meeting at which his term is
scheduled to end until his successor shall be elected and shall qualify,
subject to prior death, resignation, disqualification, or removal from
office. Any director elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same term as the remaining
term of his predecessor. In no case may a decrease in the number of
directors shorten the term of any incumbent director. Any newly-created
directorship resulting from an increase in the number of directors may be
filled by a majority of the Board of Directors then in office, provided that
a quorum is present, and any other vacancy on the Board of Directors may be
filled by a majority of the directors then in office, even if less than a
quorum, or by a sole remaining director.
Notwithstanding anything to the contrary, the holders of a majority of the
shares then entitled to vote at an election of directors may remove any
director with or without cause.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of the
<PAGE>
Preferred Stock Designation applicable thereto, and such directors so elected
shall be in addition to the number of directors provided by this Certificate
of Incorporation.
B. The directors shall have the power to adopt, amend or repeal the
Bylaws of the Corporation.
ARTICLE VII
A. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person for whom he or she is the legal representative, is or was a director
or officer of the Corporation or of California Amplifier, Inc., a California
corporation ("CalAmp-California"), or is or was serving at the request of the
Corporation or CalAmp-California as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise (including service with respect to employee benefit plans),
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
GCL against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection therewith; and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; PROVIDED,
HOWEVER, that except as provided in Paragraph B of this Article VI, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) which is initiated by such
person only if such proceeding (or part thereof) was authorized by the Board
of Directors. The right to indemnification conferred in this Article VII
shall be a contract right and shall include the right to have paid by the
Corporation the expenses incurred in defending any such proceeding in advance
of its final disposition; PROVIDED, HOWEVER, that, if the GCL so requires,
the payment of such expense incurred by a director of officer in his or her
capacity as a director or officer in advance of the final disposition of a
proceeding, shall be made upon delivery to the Corporation of an undertaking,
by or on behalf of such director or officer, to repay all amounts so advanced
if it shall ultimately be determined that such director of officer is not
entitled to be indemnified under this Article VII or otherwise. The
Corporation may, by action of the Board of Directors, provide indemnification
to employees and agents of the Corporation with the same scope and effect as
the foregoing indemnification of directors and officers.
B. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Paragraph A of
this Article VII is not paid in full by the Corporation within 30 days after
a written claim has been received by the Corporation, the Claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the Claimant
shall also be entitled to have paid the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action brought to
enforce a advance of its final disposition where the required undertaking, if
any is required, has been tendered to the Corporation) that the Claimant
<PAGE>
has not met the standards of conduct which make it permissible under the GCL
for the Corporation to indemnify the Claimant for the amount claimed, but the
burden of providing such defense shall be on the Corporation. Neither the
failure of the Corporation (including the Board of Directors, independent
legal counsel or the stockholders) to have made a determination prior to the
commencement of such action that indemnification of the Claimant is proper in
the circumstances because he or she has met the applicable standard of
conduct set forth in the GCL, nor an actual determination by the Corporation
(including the Board of Directors, independent legal counsel or the
stockholders) that the Claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Claimant has not met the applicable standard of conduct.
C. INSURANCE. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the GCL.
ARTICLE VIII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except that this Article VIII shall not eliminate or
limit a director's liability (i) for any breach of such director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the GCL, or (iv) for any
transaction from which such director derived an improper personal benefit.
Any repeal or modification of this Article VIII shall not increase the
personal liability of any director of the Corporation for any act or
occurrence taking place prior to such repeal or modification, or otherwise
adversely affect any right to protection of a director of the Corporation
existing at the time of such repeal or modification.
The provisions of this Article VIII shall not be deemed to limit or preclude
indemnification of a director by the Corporation for any liability of a
director which has not been eliminated by the provisions of this Article VIII.
ARTICLE IX
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE X
Meetings of stockholders may be held within or without the State of Delaware,
as the Bylaws of the Corporation may provide. The books of the Corporation
may be kept (subject to any
<PAGE>
provisions contained in applicable law) outside the State of Delaware at such
place as may be designated from time to time by the Board of Directors or the
Bylaws of the Corporation.
IN WITNESS WHEREOF, the undersigned, being the incorporated named herein, has
executed this Certificate of Incorporation this 4th day of September, 1987.
/s/ Thomas M. Zirnite
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CALIFORNIA AMPLIFIER, INC.
California Amplifier, Inc. a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That a meeting of the Board of Directors on May 16, 1996,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and submitting the proposed amendment to the stockholders of
said corporation for consideration and approval thereof at the annual meeting
of stockholders. The resolution setting forth the proposed amendment is as
follows:
"RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the first paragraph of the Article thereof numbered "IV"
so that, as amended the first paragraph of said article shall be and read in
its entirety as follows:
ARTICLE IV
The Corporation is authorized to issue two classes of capital stock,
designated Common Stock and Preferred Stock. The amount of total authorized
capital stock of the Corporation is 33,000,000 shares, divided into
30,000,000 shares of Common Stock, par value $0.01 per share, and 3,000,000
shares of Preferred Stock, par value $0.01 per share."
SECOND: That on July 19, 1996, pursuant to a resolution of its Board of
Directors, and upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, the annual meeting of the
stockholders of said corporation was duly called and held, at which meeting
the necessary number of shares as required by statute were voted in favor of
the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said CALIFORNIA AMPLIFIER, INC. has caused this
<PAGE>
certificate to be signed by Ira Coron, its Chief Executive Officer, and
Michael R. Ferron, its Secretary, this 18th day of September, 1996.
CALIFORNIA AMPLIFIER, INC. a
Delaware corporation
By: /s/ Ira Coron
-------------
Ira Coron, Chief Executive Officer
ATTEST: /s/ Michael R. Ferron
---------------------
Michael R. Ferron, Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET ON PAGE 2 AND THE CONSOLIDATED STATEMENTS OF
INCOME ON PAGE 3 OF THE COMPANY'S FORM 10-Q FOR THE SIX MONTHS ENDED
AUG. 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-01-1997
<PERIOD-START> MAR-03-1996
<PERIOD-END> AUG-31-1996
<CASH> 3901
<SECURITIES> 0
<RECEIVABLES> 7810
<ALLOWANCES> 400
<INVENTORY> 7668
<CURRENT-ASSETS> 20585
<PP&E> 17818
<DEPRECIATION> 9672
<TOTAL-ASSETS> 30886
<CURRENT-LIABILITIES> 5948
<BONDS> 0
0
0
<COMMON> 13589
<OTHER-SE> 10949
<TOTAL-LIABILITY-AND-EQUITY> 30886
<SALES> 28738
<TOTAL-REVENUES> 28738
<CGS> 19265
<TOTAL-COSTS> 7535
<OTHER-EXPENSES> (266)
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 2204
<INCOME-TAX> 790
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</TABLE>
