11-K 1 form-11k_123102.txt MICREL, INC. 401(K) FORM 11-K 12-31-2002 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002. [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 0-25236 A. Full title of the plan and address of the plan, if different from that of the issuer named below: MICREL, INC. 401(k) PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principle executive office: MICREL, INCORPORATED 2180 Fortune Drive San Jose, CA 95131 REQUIRED INFORMATION 1. Financial Statements and Schedule The following documents are filed as part of this report on the pages indicated: Page No. -------- Independent Auditors' Report 3 Statements of Net Assets Available for Benefits 4 Statement of Changes in Net Assets Available for Benefits 5 Notes to Financial Statements 6 Supplemental Schedule Schedule H, Part IV Item 4i - Schedule of Assets (Held At End of Year) 10 2. Exhibits Exhibit 23 - Independent Auditors' Consent 12 Exhibit 99 - Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 13 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. MICREL, INC. 401(k) PLAN Date: June 30, 2003 By: /s/ Richard D. Crowley Jr. Vice President, Finance and Chief Financial Officer -2- INDEPENDENT AUDITORS' REPORT ---------------------------- To the Administrative Committee Micrel, Inc. 401(k) Plan San Jose, California We have audited the accompanying statements of net assets available for benefits of Micrel, Inc. 401(k) Plan as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended December 31, 2002. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Micrel, Inc. 401(k) Plan as of December 31, 2002 and 2001, and the changes in net assets available for benefits for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held at year end is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Armanino McKenna LLP --------------------------- ARMANINO McKENNA LLP San Ramon, CA June 20, 2003 -3-
MICREL, INC. 401(k) PLAN Statements of Net Assets Available for Benefits December 31, 2002 and 2001 __________________________ ASSETS ------ 2002 2001 ----------- ----------- Cash in bank and short-term funds $ 2,320,706 $20,404,714 Investments at fair value Registered investment companies 17,756,165 2,899,077 Common stocks 729,033 847,956 Employer common stock 176,834 165,957 ----------- ----------- Total investments 18,662,032 3,912,990 ----------- ----------- Participant loans 798,641 456,963 Employee contribution receivable 477 - ----------- ----------- Net assets available for benefits $21,781,856 $24,774,667 =========== =========== The accompanying notes are an integral part of these financial statements.
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MICREL, INC. 401(k) PLAN Statement of Changes in Net Assets Available for Benefits For the Year Ended December 31, 2002 __________________________ Additions to net assets Contributions Participant contributions $ 3,263,745 Rollovers 286,833 ----------- Total contributions 3,550,578 Interest and dividends 107,816 ----------- Total additions 3,658,394 =========== Deductions from net assets Net depreciation in fair value of investments 4,257,762 Benefits paid to participants and others 2,286,137 Investment and administrative fees 107,306 ----------- Total deductions 6,651,205 ----------- Net decrease in net assets (2,992,811) Net assets available for benefits at December 31, 2001 24,774,667 ----------- Net assets available for benefits at December 31, 2002 $21,781,856 =========== The accompanying notes are an integral part of these financial statements.
-5- MICREL, INC. 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 ________________________ 1. Description of the Plan The following description of the Micrel, Inc. 401(k) Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General ------- The Plan, a defined contribution plan sponsored by Micrel, Inc. (the "Company" or "Employer"), intended to qualify under Section 401(a) and related provisions of the Internal Revenue Code, was established effective January 1, 1980, and amended in 1997. The Plan is designed to provide participants with a means to defer a portion of their compensation for retirement. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Plan merger ----------- In 2001, the Company merged with another company. All of the assets of the other company's qualified defined contribution plan were transferred to the Plan. Plan administration ------------------- The Company is the administrator of the Plan and, as such, carries out the duties imposed by ERISA. The Company has delegated certain responsibilities for the operation and administration of the Plan. Custodianship of the assets and investment transactions are provided by Security Trust Company, N.A. ("Security Trust"). Recordkeeping services are provided by Investmart. Effective January 2002, the Plan replaced Charles Schwab & Company, Inc. with Security Trust as custodian of the Plan's investments. All participant-directed investments were converted to cash on December 27, 2001 to facilitate the transfer of funds to Security Trust on January 2, 2002. In March 2002, the nonparticipant-directed funds were also transferred from Charles Schwab & Company, Inc. to Security Trust. Certain administrative fees of the Plan were paid directly by the Company for the year ended December 31, 2002. Eligibility ----------- All employees become eligible to participant in the Plan on the first day of the month following their employment commencement date. Participants of the Plan who have more than six months of service are eligible to receive discretionary contributions from the Company. Contributions ------------- Annually, participants may elect to make salary deferral contributions up to 15% of their pretax eligible compensation, as defined in the Plan, subject to certain IRS limitations. A participant may also contribute cash to the Plan in the form of a "rollover contribution" from another qualified employer-sponsored retirement plan. Employer contributions may be contributed at the discretion of the Company's board of directors and are invested in a portfolio of investments as directed by the Company. The Company did not make a contribution to the Plan for the year ended December 31, 2002. Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers money market funds, registered investment companies (i.e., mutual funds), and Employer common stock as investment options for participants. The non- employer common stocks held by the Plan are not investment alternatives for participants. -6- MICREL, INC. 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 ________________________ 1. Description of the Plan (continued) ----------------------------------- Participant accounts -------------------- Each participant's account is credited with the participant's contribution and earnings thereon and an allocation of (a) the Company's contribution and earnings thereon, and (b) forfeitures of terminated participants' non-vested accounts. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting ------- Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Vesting in the Company discretionary contributions portion of their accounts plus actual earnings thereon is based on years of continuous service. A participant is 100% vested after 6 years of credited service. Payment of benefits ------------------- Distributions and withdrawals are payable upon termination, financial hardship, disability, death, or retirement. The participant (or his/her beneficiary), may elect to receive either a lump-sum amount equal to the vested value of his or her account, or installments over a period of years not to exceed the life expectancy of the participant. Participant loans ----------------- Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms range from 1 to 5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the remaining balance in the participant's account and bear interest at rates that range from 6.25% to 11.5%, which are commensurate with local prevailing rates as determined by the Plan administrator. Principal and interest is paid ratably through monthly payroll deductions. Forfeitures ----------- Forfeitures shall be allocated to all participants eligible to share in the allocations in the same proportion that each participant's compensation for the year bears to the compensation of all participants for such year. At December 31, 2002, there were $188,875 in forfeited nonvested accounts. -7- MICREL, INC. 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 ________________________ 2. Summary of Significant Accounting Policies ------------------------------------------ Basis of accounting ------------------- The financial statements of the Plan are prepared under the accrual basis of accounting. Payment of benefits ------------------- Benefits are recorded when paid. Investment valuation and income recognition ------------------------------------------- The Plan's investments are stated at fair value. Shares of registered investment companies (i.e., mutual funds) are valued at quoted market prices as reported by Security Trust, which represent the net asset value of shares held by the Plan at year-end. Common stocks are valued at quoted market prices as reported by Security Trust. Participant loans are valued at cost which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Investment valuation and return is subject to fluctuations in the market performance of the underlying investment alternatives provided by the Plan. Accordingly, investment returns may vary from period to period depending on the performance of the underlying investments and these variations could be significant. Investment fees which may vary according to the individual fund selected are paid out of the assets of the Plan. Participants should refer to the prospectus of the individual investment fund for further details on individual investment fees. Estimates --------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. 3. Investments ----------- The following presents investments that represent 5 percent or more of the Plan's net assets: 2002 2001 ----------- ----------- Cash N/A $18,315,615 MetLife Stable Value Fund $ 2,933,702 N/A Strong Government Sector Fund $ 2,247,287 N/A Schwab Institutional Advantage Money Market Fund $ 2,174,044 $ 1,782,548 Dreyfus S&P 500 Index Fund $ 1,889,373 N/A Gabelli Value Fund $ 1,883,840 N/A Weitz Partners Value Fund $ 1,541,437 N/A Selected American Shares Inc. Fund $ 1,179,812 N/A Gabelli Growth Fund $ 1,095,193 N/A
During 2002, the Plan's investments depreciated in value by $4,257,762 (including gains and losses on investments bought and sold, as well as held during the year) as follows: Registered investment companies $ 4,240,790 Common stock (50,934) Employer common stock 67,906 ----------- $ 4,257,762 ===========
-8- MICREL, INC. 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 ________________________ 4. Nonparticipant-Directed Investments ----------------------------------- Information about the net assets and significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows: 2002 2001 ----------- ----------- Net assets Cash in bank and short-term funds $ 2,243,827 $ 2,089,074 Registered investment companies (mutual funds) 1,526,323 2,899,077 Non-employer common stocks 729,034 847,956 ----------- ----------- $ 4,499,184 $ 5,836,107 =========== =========== Changes in net assets Interest and dividends $ 49,048 Net depreciation of investments (1,199,772) Benefits paid to participants (170,097) Administrative expenses (16,102) ----------- $(1,336,923) ===========
5. Tax Status ---------- The Plan obtained its latest determination letter on September 1, 1993, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the plan administrator and the plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 6. Plan Termination ---------------- Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, the full value of each participant's account shall become fully vested and nonforfeitable. -9- SUPPLEMENTAL SCHEDULE
MICREL, INC. 401(k) PLAN Schedule H, Part4, Item 4i - Schedule of Assets (Held At End of Year) EIN: 94-2526744; Plan No. 001 December 31, 2002 ____________________ (c) (b) Description of Investment including (e) Identity of Issue, Maturity Date, Rate of interest, (d) Current (a) Borrower, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Value --- ---------------------------------- ----------------------------------- ----------- ----------- Allete Inc. Common Stock $ 24,112 $ 25,402 Apognent Technologies Inc. Common Stock $ 26,832 $ 30,160 Axcelis Technologies Inc. Common Stock $ 18,293 $ 18,285 Barra Inc. Common Stock $ 18,211 $ 20,321 Belden Incorporated Common Stock $ 15,152 $ 16,894 Ceridian Corp. Common Stock $ 22,094 $ 22,928 Cognex Corp. Common Stock $ 14,761 $ 18,061 CommscopeInc. Common Stock $ 23,559 $ 27,018 Concord Camera Corp. Common Stock $ 27,009 $ 28,670 Consellation Brand Common Stock $ 21,664 $ 21,339 Corn Products Int'l Inc. Common Stock $ 22,534 $ 23,501 Henry Jack Assoc. Inc. Common Stock $ 17,081 $ 23,598 Hooper Holmes Inc. Common Stock $ 20,006 $ 17,806 Interactive Data Corp. Common Stock $ 22,191 $ 24,750 Investment Teck Grp Common Stock $ 25,185 $ 19,453 Iron Mountain Inc. Common Stock $ 18,266 $ 21,126 Kaydon Corporation Common Stock $ 21,308 $ 22,907 Korn/Ferry International Common Stock $ 7,354 $ 7,181 Mcg Capital Corp. Common Stock $ 19,866 $ 16,540 N C O Group Inc. Common Stock $ 25,281 $ 31,262 New Century Financial Common Stock $ 17,583 $ 15,488 North Fork Bancorp Inc. Common Stock $ 21,275 $ 16,195 Plantronics Inc. Common Stock $ 26,381 $ 24,964 Rayovac Corp. Common Stock $ 18,534 $ 19,329 Ruby Tuesday Inc Georgia Common Stock $ 16,398 $ 15,561 Sola International Inc. Common Stock $ 27,073 $ 33,540 Sourcecorp Common Stock $ 25,420 $ 22,494 Spartech Corp. Common Stock $ 16,363 $ 15,885 Stage Stores Inc. Common Stock $ 14,550 $ 16,832 Startek Inc. Common Stock $ 18,873 $ 22,080 Tech Data Corp. Common Stock $ 15,176 $ 14,828 Teletech Holdings Inc. Common Stock $ 15,181 $ 17,787 Viad Corp. Common Stock $ 28,949 $ 33,078 Wiley John & Son Common Stock $ 21,938 $ 23,770 * Micrel Inc. Common Stock $ 231,204 $ 176,834 Dreyfus S&P 500 Index Fund Mutual Fund $ 2,429,820 $ 1,889,373 Gabelli Growth Fund Mutual Fund $ 1,730,933 $ 1,095,193 Gabelli Value Fund Mutual Fund $ 2,210,130 $ 1,883,840 Invesco Dynamic Fund Mutual Fund $ 1,044,489 $ 721,188 Janus World Wide Fund Mutual Fund $ 1,489,214 $ 1,037,265 MetLife Stable Value Fund Mutual Fund $ 2,819,162 $ 2,933,702 Muhlenkamp Fund Mutual Fund $ 13,173 $ 12,055 Nations Small Cap Index Fund Mutual Fund $ 1,016,511 $ 854,991 One Group International Equity Index Fund Mutual Fund $ 767,136 $ 641,790 RS Emerging Growth Fund Mutual Fund $ 1,447,611 $ 930,884 Schwab S&P 500 Fund Mutual Fund $ 1,254,996 $ 787,348 Selected American Shares Inc. Fund Mutual Fund $ 1,426,542 $ 1,179,812 Strong Government Sector Fund Mutual Fund $ 2,204,705 $ 2,247,287 Weitz Partners Value Fund Mutual Fund $ 1,804,425 $ 1,541,437 Schwab Institutional Advantage Money Market Fund Mutual Fund $ 2,174,044 $ 2,174,044 Cash Cash $ 146,662 $ 146,662 * Participant Loans Interest Rates 6.25-11.5% N/A $ 798,641 *Indicates a party-in-interest.
-10- EXHIBIT INDEX Exhibit Number Description -------------- ----------- 23 Independent Auditors' Consent. 99 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* ____________________________ * The information in Exhibit 99 is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Exhibit 99 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. -11- EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-105862 of Micrel, Incorporated on Form S-8 of our report dated June 20, 2003, appearing in this Annual Report on Form 11-K of Micrel, Inc. 401(k) Plan for the year ended December 31, 2002. /s/ Armanino McKenna LLP ------------------------ ARMANINO McKENNA LLP San Ramon, California June 27, 2003 -12- EXHIBIT 99 MICREL, INC. 401(k) PLAN CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Micrel, Incorporated hereby certify, to such officers' knowledge, that: (i) the accompanying Annual Report for the Micrel, Inc. 401(k) Plan on Form 11-K for the year ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Micrel, Inc. 401(k) Plan. June 30, 2003 /s/ Raymond D. Zinn --------------------------- Raymond D. Zinn Chairman of the Board and Chief Executive Officer June 30, 2003 /s/ Richard D. Crowley, Jr. --------------------------- Richard D. Crowley Jr. Vice President, Finance and Chief Financial Officer - 13 -