UNITED STATES 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: November 25, 2000
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: 012182
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
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(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 November 25, 2000: 13,563,334
Number of pages in this Form 10-Q: 14
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except par value)
<TABLE>
<CAPTION>
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NOV. 25, FEB. 26,
2000 2000
(unaudited) (audited)
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ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,173 $ 3,074
Accounts receivable, net 16,582 16,038
Inventories 16,724 12,948
Deferred tax asset 8,842 8,487
Prepaid expenses and other current assets 553 685
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Total current assets 48,874 41,232
Property and equipment, at cost, net of
accumulated depreciation and amortization 11,037 9,731
Goodwill, net of accumulated amortization 3,625 3,827
Other assets 452 762
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$ 63,988 $ 55,552
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,280 $ 9,242
Accrued liabilities 7,513 13,099
Current portion of long-term obligations 424 4,973
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Total current liabilities 14,217 27,314
Long-term obligations, net of current portion 4,764 144
Minority interest share in net assets of
Micro Pulse, Inc. 558 342
Stockholders' equity:
Preferred stock, 3,000 shares authorized;
no shares outstanding --- ---
Common stock, $.01 par value; 30,000 shares authorized;
13,563 shares outstanding at November 25, 2000 and
12,658 shares outstanding at February 26, 2000 136 127
Additional paid-in capital 33,210 23,177
Accumulated other comprehensive income (223) (226)
Retained earnings 11,326 4,674
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Total stockholders' equity 44,449 27,752
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$ 63,988 $ 55,552
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</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
NOV. 25, NOV. 27, NOV. 25, NOV. 27,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Sales $32,634 $26,251 $98,950 $57,919
Cost of sales 24,556 19,531 74,957 42,042
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Gross profit 8,078 6,720 23,993 15,877
Research and development 1,691 1,385 5,036 3,915
Selling 1,096 1,377 3,588 3,714
General and administrative 1,625 1,354 4,444 3,587
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Income from operations 3,666 2,604 10,925 4,661
Interest and other, net (44) (60) (232) (99)
Minority interest share in income
of Micro Pulse (44) (67) (300) (118)
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Income before provision for income taxes 3,578 2,477 10,393 4,444
Provision for income taxes (1,288) (892) (3,741) (1,600)
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Net income $ 2,290 $ 1,585 $ 6,652 $ 2,844
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Net income per share Basic $ 0.17 $ 0.13 $ 0.50 $ 0.24
Diluted $ 0.16 $ 0.12 $ 0.47 $ 0.22
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Shares used in per share
calculations Basic 13,549 12,087 13,279 11,939
Diluted 14,298 13,638 14,237 13,147
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</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
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NOV. 25, NOV. 27,
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,652 $ 2,844
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Non-cash income tax provision (355) 626
Provision for doubtful accounts (35) 174
Depreciation and amortization 2,765 2,074
Loss on sale of property and equipment 23 9
Minority interest share in net income
of Micro Pulse, net of tax 216 106
Tax benefit from exercise of non-qualified
employee stock options 3,775 ---
Change in assets and liabilities,
net of effect of Gardiner
acquisition in fiscal year 2000:
Accounts receivable (509) (8,059)
Inventories (3,776) (5,823)
Prepaid expenses and other assets 442 106
Accounts payable (2,963) 6,343
Accrued liabilities (3,420) 236
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Net cash provided by (used in) operating activities: 2,815 (1,364)
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Cash flows from investing activities:
Purchase of property and equipment (3,892) (2,457)
Net assets acquired from Gardiner --- (4,185)
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Net cash used in investing activities: (3,892) (6,642)
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Cash flows from financing activities:
Debt borrowings 5,000 1,054
Debt repayments (2,697) ---
Issuances of common stock 1,870 1,963
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Net cash provided by financing activities: 4,173 3,017
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Effect of foreign exchange rates 3 (102)
Net increase (decrease) in cash and cash equivalents 3,099 (5,091)
Cash and cash equivalents at the beginning of period 3,074 9,312
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Cash and cash equivalents at end of period $ 6,173 $ 4,221
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</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<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 February 26,
2000. 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):
Nov. 25, 2000 Feb. 26, 2000
------------- -------------
Raw materials $12,723 $10,202
Work in process 707 1,073
Finished goods 3,294 1,673
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$16,724 $12,948
======= =========
3. NET INCOME PER SHARE - Basic income per share is computed by dividing
reported earnings available to common stockholders by weighted average shares
outstanding. Diluted income per share increases the weighted average shares
outstanding for the dilutive effect of stock options, warrants, and convertible
debt arrangements.
For the three and nine months ended November 25, 2000 there were 489,900 and
398,000 options, respectively, not considered in the diluted weighted average
shares calculation because their inclusion would be anti-dilutive, and for the
three and nine months ended November 27, 1999 there were 20,000 and 171,500
options, respectively.
<TABLE>
<CAPTION>
Three Months Ended (in 000's)
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Nov. 25, Nov. 27,
2000 1999
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<S> <C> <C>
Weighted average shares outstanding - Basic 13,549 12,087
Effect of dilutive securities
Options 621 1,026
Litigation settlement 128 ---
Convertible debt --- 525
-------------- -------------
Weighted average shares outstanding - Diluted 14,298 13,638
============== =============
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended (in 000's)
------------------------------------
Nov. 25, Nov. 27,
2000 1999
-------------- -------------
<S> <C> <C>
Weighted average shares outstanding - Basic 13,279 11,939
Effect of dilutive securities
Options 708 778
Litigation settlement 144 ---
Convertible debt 106 430
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Weighted average shares outstanding - Diluted 14,237 13,147
============== =============
</TABLE>
<PAGE>
4. COMPREHENSIVE INCOME - Comprehensive income is defined as the total of net
income and all non-owner changes in equity. The following table details the
components of comprehensive income for the three and nine months ended November
25, 2000 and November 27, 1999 (in 000's):
Quarter Ended
------------------------------------
Nov. 25, Nov. 27,
2000 1999
-------------- -------------
Net income $ 2,290 $ 1,585
Foreign currency translation adjustment (6) (27)
-------------- -------------
Comprehensive income $ 2,284 $ 1,558
============== =============
Nine Months Ended
------------------------------------
Nov. 25, Nov. 27,
2000 1999
-------------- -------------
Net income $ 6,652 $ 2,844
Foreign currency translation adjustment (3) (102)
-------------- -------------
Comprehensive income $ 6,649 $ 2,742
============== =============
5. CONCENTRATION OF RISK - The following table summarizes sales to customers
which accounted for greater than 10% of consolidated sales for each of the
following periods:
Three Months Ended Nine Months Ended
------------------- ------------------
Nov. 25, Nov. 27, Nov. 25, Nov. 27,
Customer 2000 1999 2000 1999
-------- ------- ------- ------- -------
A 22% 12% 22% *
B 17% 20% 23% *
C 12% * * *
D * 11% * 11%
The following table summarizes accounts receivable due from customers that are
greater than 10% of consolidated accounts receivable:
Balances as of:
-----------------------------------------
Customer Nov. 25, 2000 Feb. 26, 2000
-------- ---------------- ---------------
A 12% 15%
B 15% 28%
E * 10%
F 10% *
G 10% *
Customers A through E are Satellite Product customers, and customer F and G are
Wireless Access customers.
* Less than 10% of consolidated sales and/or accounts receivable.
6. STATEMENT OF CASH FLOWS - In fiscal year 2001, the Company issued 525,000
shares of its common stock for retirement of $2,231,000 of debt. These amounts
were excluded from the statement of cash flows.
In fiscal year 2000, the Company recorded goodwill of $3,827,000 in conjunction
with the acquisition of certain assets from Gardiner Communications and issued a
note payable for $3,100,000. These amounts were excluded from the statement of
cash flows.
<PAGE>
7. SEGMENTS - The Company currently manages its business under three
identifiable business segments, Satellite Products, Wireless Access Products and
Antenna Products. Segment information for the three and nine months ended
November 25, 2000 and November 27, 1999 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 25, 2000
------------------------------------
Satellite Wireless Antenna Corporate Total
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<S> <C> <C> <C> <C> <C>
Sales $ 20,679 $ 10,125 $ 1,830 $ --- $ 32,634
Gross Profit 3,240 4,123 715 --- 8,078
Gross Margin 15.7% 40.1% 39.1% --- 24.8%
Income (Loss) Before Taxes 2,489 2,524 91 (1,526) 3,578
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</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 27, 1999
------------------------------------
Satellite Wireless Antenna Corporate Total
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<S> <C> <C> <C> <C> <C>
Sales $ 18,973 $ 5,302 $ 1,976 $ --- $ 26,251
Gross Profit 4,821 1,209 690 --- 6,720
Gross Margin 25.4% 22.8% 34.9% --- 25.6%
Income (Loss) Before Taxes 3,655 (6) 168 (1,340) 2,477
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</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED NOVEMBER 25, 2000
-----------------------------------
Satellite Wireless Antenna Corporate Total
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<S> <C> <C> <C> <C> <C>
Sales $ 70,089 $ 22,869 $5,992 $ --- $ 98,950
Gross Profit 13,256 8,342 2,395 --- 23,993
Gross Margin 18.9% 36.5% 40.0% --- 24.2%
Income (Loss) Before Taxes 10,135 4,112 558 (4,412) 10,393
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</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED NOVEMBER 27, 1999
-----------------------------------
Satellite Wireless Antenna Corporate Total
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<S> <C> <C> <C> <C> <C>
Sales $ 39,004 $ 14,255 $4,660 $ --- $ 57,919
Gross Profit 10,819 3,364 1,694 --- 15,877
Gross Margin 27.7% 23.6% 36.4% --- 27.4%
Income (Loss) Before Taxes 7,452 128 294 (3,430) 4,444
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</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 25, 2000 AND NOVEMBER 27, 1999
SALES
Total sales increased by $6.4 million from $26.3 million for the three months
ended November 27, 1999 to $32.6 for the three months ended November 25, 2000.
Sales of Satellite Products increased $1.7 million from $19.0 million to $20.7
million. Sales of Wireless Access Products increased $4.8 million from $5.3
million to $10.1 million. Sales of Antenna Products by Micro Pulse decreased
$146,000 from $2.0 million to $1.8 million.
The 8.9% increase in Satellite Product sales is primarily attributable to a
sales mix change to higher priced units. Despite the year-over-year sales
growth, sequential growth has slowed considerably due to the flattening of
satellite subscriber additions in the United States. As a result, the Company is
experiencing a significant reduction in ordering patterns by customers as they
reduce inventory levels to accommodate slower subscriber growth.
The 91% increase in the sale of Wireless Access Products resulted from higher
unit shipments of two-way MMDS transceivers, primarily to North American
customers as they introduce Wireless Internet in certain cities. The Company's
ability to continue sequential sales growth in Wireless Access Products in the
fourth quarter, due to the order cancellations by Look Communications, is highly
dependent upon domestic operators' equipment requirements.
The decrease in the sale of Antenna Products by Micro Pulse resulted primarily
from product requirements from the Company's equipment customers slowing. The
impact, if any, of such slowing on future sales growth has not yet been
determined.
GROSS PROFITS AND GROSS MARGINS
Gross profits increased from $6.7 million to $8.1 million primarily from an
increase in sales offset by lower gross margins. Gross margins decreased from
25.6% to 24.8%. Satellite Product gross margins for the three months ended
November 25, 2000 decreased to 15.7% from 18.0% in the immediately preceding
quarter, and from 25.4% for the comparable three month period of the prior year.
The significant reduction in Satellite Product gross margins for both period
comparisons resulted from continued pricing pressures on Satellite Products
coupled with higher per unit operational costs associated with lower unit
volume. The significant reduction in gross margins relating to Satellite
Products was offset by a significant gross margin improvement in Wireless Access
Products. Wireless Access Product gross margins for the three months ended
November 25, 2000 were 40.1% as compared to 38.4% for the immediate preceding
quarter, and 22.8% for the comparable three month period of the prior year.
The Company is still experiencing significant pricing pressures in Satellite
Products and is currently developing lower cost designs to reverse the gross
margin decline, however, these cost reductions is not expected to be fully
implemented until midway through the fourth quarter because the volume of
inventory of older designs must first be depleted.
Gross margins in the fourth quarter is expected to be lower due to a
significantly lower volume of Satellite Products being manufactured while two
factories remain staffed for higher volume production. The Company is currently
addressing production and factory requirements for its fiscal year 2002
beginning March 4, 2001.
OPERATING EXPENSES
Research and development expenses increased from $1.4 million to $1.7 million.
The increase results from increased personnel, higher salaries and related
expenses, and higher development expenditures relating to new product design,
primarily fixed wireless products.
Selling expenses decreased from $1.4 million to $1.1 million. The decrease in
selling expense relates primarily to the timing of tradeshows and certain
discretionary marketing expenses.
General and administrative expenses increased from $1.4 million to $1.6 million.
The increase relates primarily to increased salaries and legal related expenses.
<PAGE>
INCOME FROM OPERATIONS
Income from operations, for the reasons noted above, increased by $1.1 million
from $2.6 million to $3.7 million.
MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE
The Company consolidates 100% of the sales and expenses of Micro Pulse. The
minority interest share in income of Micro Pulse eliminates the 49.5% of the
income of Micro Pulse relating to the minority stockholders' share in Micro
Pulse.
PROVISION FOR INCOME TAXES
The provision for income taxes for the three months ended November 25, 2000 is
based upon an estimated annualized tax rate of 36%, the same tax rate as fiscal
year 2000. This tax rate assumes savings from benefits allowed for export sales
through a foreign sales corporation and research and development tax credits.
NET INCOME
Net income, for reasons outlined above, increased by $705,000 from $1.6 million
for the three months ended November 27, 1999 to $2.3 million for the three
months ended November 25, 2000.
<PAGE>
NINE MONTHS ENDED NOVEMBER 25, 2000 AND NOVEMBER 27, 1999
SALES
Total sales increased by $41.0 million from $57.9 million for the nine months
ended November 27, 1999 to $99.0 million for the nine months ended November 25,
2000. Sales of Satellite Products increased $31.1 million from $39.0 million to
$70.1 million. Sales of Wireless Access Products increased $8.6 million from
$14.3 million to $22.9 million. Sales of Antenna Products by Micro Pulse
increased $1.3 million from $4.7 million to $6.0 million.
The 80% increase in sales of Satellite Products is primarily attributable to
significantly higher unit shipments of U.S. DBS products as a result of the
satellite service providers significant subscriber additions year-over-year, and
the Company's increase in market share since its acquisition of these products
in April 1999.
The increase in the sale of Wireless Access Products resulted from higher unit
shipments of two-way MMDS transceivers primarily to North American customers.
The increase in the sale of Antenna Products by Micro Pulse resulted primarily
from a broadening of the Company's products and customer base.
It should be noted that the year-over-year sales growth for Satellite and
Antenna Products occurred primarily in the Company's first and second quarters
of fiscal year 2001. In the Company's third fiscal quarter sales of Satellite
Products increased approximately 9% when compared to the prior year quarter, but
decreased 16% sequentially, while Antenna Products decreased nominally when
compared to the prior year quarter or the preceding quarter. Currently the
Company anticipates sales of both Satellite and Antenna Products to be lower in
the fourth quarter when compared to the preceding third quarter (see also
Results of Operations for the three months ended November 25, 2000 and November
27, 1999 included elsewhere herein).
GROSS PROFITS AND GROSS MARGINS
Gross profits increased by $8.1 million from $15.9 million to $24 million, while
gross margins decreased from 27.4% to 24.2%. The 51% increase in gross profits
resulted from a 71% increase in sales, offset by lower product gross margins in
Satellite Products. The reduction in gross margins resulted from a slightly
higher mix of Satellite Product sales but at significantly lower gross margins,
being offset by improved gross margins for Wireless Access Products. The
Company's Satellite Products gross margin for the nine-month period ended
November 25, 2000 was 18.9% as compared to 27.7% for the prior year period.
Wireless Access Products gross margins for the nine-month period ended November
25, 2000 were 36.5% as compared to 23.6% for the prior year period. The decline
in gross margins for Satellite Products relates to pricing pressures because of
the competitive environment, coupled with component shortages and manufacturing
inefficiencies. The improvement in gross margins for Wireless Access Products
relates to significantly higher volume shipments of the Company's two-way
transceiver products and higher levels of factory overhead absorption because of
higher volumes. (See also Gross Profit and Gross Margin for the three months
ended November 25, 2000 and November 27, 1999 included elsewhere herein.)
OPERATING EXPENSES
Research and development expenses increased $1.1 million from $3.9 million to
$5.0 million. The increase results from increased personnel, higher salaries and
related expenses, and higher development expenditures relating to new product
design, primarily fixed wireless products.
Selling expenses decreased $126,000 from $3.7 million to $3.6 million. The
decrease is primarily a result of monitoring certain discretionary marketing
spending.
General and Administrative expenses increased $857,000 from $3.6 million to $4.4
million. The increase relates primarily to increased salaries and related
expenses, increased legal and other miscellaneous corporate expenses.
<PAGE>
INCOME FROM OPERATIONS
Income from operations, for the reasons outlined above, increased $6.3 million
from $4.7 million for the nine months ended November 27, 1999 to $11.0 million
for the nine months ended November 25, 2000.
MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE
The Company consolidates 100% of the sales and expenses of Micro Pulse. The
minority interest share in income of Micro Pulse eliminates the 49.5% of the
income of Micro Pulse relating to the minority stockholders' share in Micro
Pulse.
PROVISION FOR INCOME TAXES
The provision for income taxes for the first nine months of fiscal 2001 is based
upon an estimated annualized tax rate of 36%, the same tax rate as fiscal year
2000. This tax rate assumes savings from benefits allowed for export sales
through a foreign sales corporation and research and development tax credits.
NET INCOME
Net income, for reasons outlined above, increased by $3.8 million from $2.8
million for the nine months ended November 27, 1999 to $6.7 million for the nine
months ended November 25, 2000.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has an $8.0 million working capital facility with U.S. Bank at the
bank's prime rate (9.5% at November 25, 2000). As of November 25, 2000, no
amounts were outstanding under the credit facility. The $8.0 million credit
facility with U.S. Bank expires in June 2001.
The Company believes that cash flow from operations, together with the funds
available under its credit facility, are sufficient to support operations and
capital equipment requirements over the next twelve months.
The Company believes that inflation and foreign currency exchange rates have not
had a material effect on its operations. The Company believes that the remainder
of fiscal year 2001 will not be impacted significantly by foreign exchange since
a significant portion of the Company's fiscal year 2001 projected sales are to
U.S. markets, or to international markets where its sales are negotiated in U.S.
dollars. Import tariffs in countries such as Brazil and China have made it more
difficult to compete with in-country manufacturers.
A significant percentage of the Company's sales are generated by a few number of
customers who order product under short-term purchase orders. A change in their
ordering pattern could adversely affect future sales.
SAFE HARBOR STATEMENT
Forward looking statements in this 10-Q which include, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions, projections and other information regarding future
performance, are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The words "believes," "anticipates,"
"expects," and similar expressions are intended to identify forward-looking
statements. These forward-looking statements reflect the Company's current views
with respect to future events and financial performance and are subject to
certain risks and uncertainties, including, without limitation, product demand,
market growth, new competition, competitive pricing and continued pricing
declines in the DBS market, supplier constraints, manufacturing yields, meeting
demand with multiple facilities, timing and market acceptance of new product
introductions, new technologies, and other risks and uncertainties that are
detailed from time to time in the Company's periodic reports filed with the
Securities and Exchange Commission, copies of which may be obtained from the
Company upon request. Such risks and uncertainties could cause actual results to
differ materially from historical results or those anticipated. Although the
Company believes the expectations reflected in such forward-looking statements
are based upon reasonable assumptions, it can give no assurance that its
expectations will be attained. The Company undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
NEW AUTHORATATIVE PRONOUNCEMENTS
In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Investments and Hedging Activities," and SFAS No. 137, which
delayed the effective date of SFAS No. 133. The Company will adopt the standard
in March 2001. Management does not expect the adoption of this standard to have
a material impact on the Company's financial position or results of operations.
In December 1999, the SEC staff released Staff Accounting Bulletin (SAB) No.
101, Revenue Recognition, to provide guidance on the recognition, presentation
and disclosure of revenue in financial statements. Changes in accounting to
apply the guidance in SAB No. 101 may be accounted for as a change in accounting
principle effective January 1, 2000. The application of SAB No. 101 has not had
a material effect on the Company's revenue recognition and results of
operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 11, 1997, the Company and certain of its directors and officers had
two legal actions filed against them, one in the United States District Court,
Central District of California, entitled Yourish v. California Amplifier, Inc.,
et al., Case No. 97-4293 CBM (Mcx), and the other in the Superior Court for the
State of California, County of Ventura, entitled Yourish v. California
Amplifier, Inc. et al., Case No. CIV 173569. On June 30, 1997, another legal
action was filed against the same defendants in the Superior Court for the State
of California, County of Ventura, entitled Burns, et al., v. California
Amplifier, Inc., et al., Case No. CIV 173981. All three actions were purported
class actions on behalf of purchasers of the common stock of the Company between
September 12, 1995 and August 8, 1996. The actions claimed that the defendants
engaged in a scheme to make false and misleading statements and omit to disclose
material adverse facts to the public concerning the Company, allegedly causing
the Company's stock price to artificially rise, and thereby allegedly allowing
the individual defendants to sell stock at inflated prices. Plaintiffs claimed
that the purported stockholder class was damaged when the price of the stock
declined upon disclosure of the alleged adverse facts. On September 21, 1998,
the Federal legal action was dismissed in the United States District Court. The
dismissal was upheld by the U.S. Court of Appeals for the Ninth Circuit on
October 8, 1999.
On March 27, 2000 the trial began for the lawsuit filed in the Superior Court
for the State of California, County of Ventura, entitled Yourish v. California
Amplifier, Inc., et al., Case No. CIV 173569. On March 29, 2000 the parties
reached a settlement. The terms of the settlement called for the issuance by the
Company of 187,500 shares of stock along with a cash payment of $3.5 million,
funded in part by insurance proceeds, for a total settlement of approximately
$11.0 million. Of the total settlement, $9.5 million was accrued in the
accompanying consolidated financial statements for the year ended February 26,
2000 and November 25, 2000. By Order dated September 14, 2000, the court
approved the terms of the settlement and dismissed the action with prejudice. As
of November 25, 2000, the Company had issued 65,625 of the 187,500 shares and
paid $2.5 million of the $3.5 million and one of its insurance carriers the
remaining $1.0 million.
In connection with the settlement of the Yourish action, the Company and certain
of its former and current officers and directors have filed a lawsuit
(California Amplifier, Inc., et al. v. RLI Insurance Company, et al., Ventura
County Superior Court Case No. CIV196258), against one of its insurance carriers
to recover $2.0 million of coverage the insurance carrier has stated was not
covered under its policy of insurance. The insurance carrier filed a Motion for
Judgment on the Pleadings seeking judgment on the basis, inter alia, that the
claims in the Yourish action for alleged violations of Sections 25400 and 25500
of the California Corporation Code were not insurable as a matter of law
pursuant to Insurance Code Section 533. The Plaintiffs opposed the motion and a
hearing was held on September 22, 2000. On October 18, 2000, the Court entered
an Order on granting the motion for judgment on the pleadings. Judgment was
entered on November 9, 2000, and Notice of Entry of Judgment given on November
15, 2000. Plaintiffs filed a Notice of Appeal on November 21, 2000 and intend to
pursue an appeal vigorously.
On March 7, 2000, the Company announced that it had received a complaint of
patent infringement from Andrew Corporation. The complaint, filed against
California Amplifier in the U.S. District Court for the Eastern District of
Texas, alleges that certain California Amplifier products infringe Andrew
Corporation's patent rights. The complaint was served with this initial pleading
on or about June 5, 2000. A first amended complaint was filed by Andrew
Corporation on June 28, 2000. On July 18, 2000, Andrew Corporation filed a
motion for a preliminary injunction seeking to enjoin the Company from selling
the products that Andrew Corporation alleges infringe its patent rights. The
Company has filed an opposition to this motion, but further briefing relating to
the preliminary injunction motion is currently on hold pending the Court's
decision on a related motion filed by Andrew. The Company believes that the
allegations of the first amended complaint lack merit and the Company intends to
vigorously defend the action.
<PAGE>
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended November 25,
2000.
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)
January 8, 2001 /s/ Michael R. Ferron
-----------------------------
Michael R. Ferron
Vice President, Finance and
Chief Accounting Officer
