11-K 1 form-11k_123104.txt MICREL, INC. 401(K) FORM 11-K 12-31-2004 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, 2004. [ ] 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. -------- Report of Independent Registered Public Accounting Firm 3 Statements of Net Assets Available for Benefits 4 Statement of Changes in Net Assets Available for Benefits 5 Notes to Financial Statements 6 - 11 Supplemental Schedule Schedule H, Part IV, Item 4i - Schedule of Assets (Held At End of Year) 12 2. Exhibits Exhibit 23 - Independent Reqistered Public Accounting Firm Consent 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 29, 2005 By: /s/ Richard D. Crowley Jr. -------------------------- Richard D. Crowley Jr. Vice President, Finance and Chief Financial Officer -2- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- 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, 2004 and 2003, and the related statement of changes in net assets available for benefits for the year ended December 31, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, 2004 and 2003, and the changes in net assets available for benefits for the year ended December 31, 2004 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 audit 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. ARMANINO McKENNA LLP San Ramon, California June 14, 2005 -3-
MICREL, INC. 401(k) PLAN Statements of Net Assets Available for Benefits December 31, 2004 and 2003 __________________________ ASSETS ------ 2004 2003 ----------- ----------- Cash $ 21,247 $ 112,173 Investments at fair value Registered investment companies 27,508,632 23,507,469 Employer common stock 512,584 452,007 ----------- ----------- Total investments at fair value 28,021,216 23,959,476 ----------- ----------- Investments at contract value Guaranteed investment contract 3,206,196 2,952,361 ----------- ----------- Total investments 31,227,412 26,911,837 ----------- ----------- Participant loans 844,920 837,555 Employer contribution receivable 617,000 - ----------- ----------- Net assets available for benefits $32,710,579 $27,861,565 =========== ===========
The accompanying notes are an integral part of these financial statements. -4-
MICREL, INC. 401(k) PLAN Statement of Changes in Net Assets Available for Benefits For the Year Ended December 31, 2004 __________________________ Additions to net assets Contributions Participant contributions $ 3,137,409 Employer contributions 617,000 Rollovers 59,774 ----------- Total contributions 3,814,183 Interest and dividends 62,834 Net appreciation in fair value of investments 3,314,586 ----------- Total additions 7,191,603 ----------- Deductions from net assets Benefits paid to participants 2,280,407 Investment and administrative fees 62,182 ----------- Total deductions 2,342,589 ----------- Net increase in net assets 4,849,014 Net assets available for benefits at December 31, 2003 27,861,565 ----------- Net assets available for benefits at December 31, 2004 $32,710,579 ===========
-5- MICREL, INC. 401(k) Plan Notes to Financial Statements December 31, 2004 and 2003 __________________________ 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 and summary plan description 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. 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"). During the year ended December 31, 2003, the Plan was amended to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") and the provisions of certain other acts collectively referred to as "GUST". Participants should refer to the Plan documents for further details on the amendments. 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 investment assets and execution of investment transactions was provided by The Charles Schwab Trust Company ("Charles Schwab") during 2004. Custodianship of investment assets and investment transaction services were provided by Security Trust Company, N.A. ("Security Trust") and Charles Schwab during 2003. Recordkeeping services are provided by Invesmart. All participant-directed and non-participant directed investments were transferred from Security Trust to Charles Schwab on November 20, 2003. Additionally, during 2003 the Company sold all non-employer common stock and moved the assets into pooled mutual funds. Certain administrative fees of the plan, including audit fees, were paid directly by the Company for the year ended December 31, 2004. Eligibility ----------- All non-excluded employees, as defined by the Plan, become eligible to participate 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, as defined, are eligible to receive discretionary contributions from the Company based on the provisions of the Plan. Participants should refer to the Plan document for further detail on the Plan's eligibility provisions. -6- MICREL, INC. 401(k) Plan Notes to Financial Statements December 31, 2004 and 2003 __________________________ 1. Description of the Plan (continued) --------------------------------------- Contributions ------------- Annually, participants may elect to make salary deferral contributions up to 100% 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. Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers a guaranteed investment contract, money market funds, registered investment companies (i.e., mutual funds), and employer common stock as investment options for participants. 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 charged with an allocation of administrative expenses, 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 as defined by the Plan. 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 account balances of less than $5,000 are distributed by lump-sum payment. -7- MICREL, INC. 401(k) Plan Notes to Financial Statements December 31, 2004 and 2003 __________________________ 1. Description of the Plan (continued) --------------------------------------- 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 6.0% 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. These accounts will be used to reduce future employer contributions and/or administrative expenses. At December 31, 2004 and 2003, there was $238,902 and $240,913 in forfeited nonvested accounts, respectively. There were no forfeitures applied during the Plan year ended December 31, 2004. 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 ------------------------------------------- Shares of registered investment companies (i.e., mutual funds) are valued at quoted market prices as reported by the Custodian, 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 the Custodian. Participant loans are valued at cost which approximates fair value. The guaranteed investment contract is reported at contract value, which approximates fair value, as reported to the Plan by Metropolitan Life Insurance Company ("MetLife") (see Note 3). 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. -8- MICREL, INC. 401(k) Plan Notes to Financial Statements December 31, 2004 and 2003 __________________________ 2. Summary of Significant Accounting Policies (continued) ---------------------------------------------------------- Risks and uncertainties ----------------------- The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the statement of net assets available for benefits. Investment fees, which may vary according to the individual funds selected, are paid out of the assets of the Plan. Participants should refer to the prospectuses of the individual investment funds 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. Guaranteed Investment Contract ---------------------------------- The Plan invests in a fully benefit-responsive guaranteed investment contract with MetLife. The investment contract is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The investment contract is included in the financial statements at contract value as reported to the Plan by MetLife. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses and approximates fair value. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investments at contract value. There are no reserves against contract value for credit risk of the contract issuer or otherwise. The average yield and crediting interest rates were approximately 4.40% and 4.35% for the years ended December 31, 2004 and 2003, respectively. The crediting interest rate is based on an agreed-upon formula with the issuer, but may not be less than 0% percent. Such interest rates are reviewed and reset, as applicable, on a quarterly basis. -9- MICREL, INC. 401(k) Plan Notes to Financial Statements December 31, 2004 and 2003 __________________________ 4. Investments ---------------- The following presents investments that represent 5 percent or more of the Plan's net assets at December 31: 2004 2003 ---------- ---------- MetLife GIC $3,206,196 $2,952,361 Dreyfus Midcap Index Fund $2,943,740 N/A Dreyfus S&P 500 Index Fund $2,937,042 $2,574,414 Gabelli Value Fund N/A $2,559,962 Hotchkis & Wiley Mid-Cap Value Fund Class A $2,107,884 N/A Weitz Partners Value Fund N/A $2,029,245 Selected American Fund $2,118,544 $1,764,413 Royce Premier Fund $1,973,810 N/A Artisian Midcap Fund $1,823,660 $1,458,132 Columbia Intermediate Bond Fund $2,235,958 $2,130,464 Growth Funds of America R4 $1,676,083 $1,414,930 Managers Special Equity Fund $2,063,210 $1,601,323
During 2004, the Plan's investments appreciated in value by $3,314,586 (including gains and losses on investments bought and sold, as well as held during the year) as follows: Registered investment companies $3,199,620 Guaranteed investment contract 253,835 Employer common stock (138,869) ---------- $3,314,586 ==========
5. 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: Net assets Registered investment companies (mutual funds) $4,952,356 $4,880,722 Changes in net assets Interest and dividends $ 65,260 Net appreciation in fair value of investments 457,259 Benefits paid to participants (418,647) Administrative expenses (32,238) ---------- $ 71,634 ==========
-10- MICREL, INC. 401(k) Plan Notes to Financial Statements December 31, 2004 and 2003 __________________________ 6. Tax Status ---------- The Plan has adopted the Invesmart basic prototype plan. The Internal Revenue Service has determined and informed Invesmart by a letter dated November 19, 2001, that its prototype plan is designed in accordance with applicable sections of the Internal Revenue Service Code (the "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 designed and is currently being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7. Party in Interest and Related Party Transactions ---------------------------------------------------- Plan investments are held by Schwab. Schwab is the custodian as defined by the Plan and therefore, these transactions qualify as party-in-interest transactions specifically exempted from the prohibited transaction rules of ERISA. 8. 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. -11- SUPPLEMENTAL SCHEDULE
MICREL, INC. 401(k) PLAN Schedule H, Part IV, Item 4i - Schedule of Assets (Held At End of Year) EIN: 94-2526744; Plan No. 001 December 31, 2004 ____________________ (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 --- ---------------------------------- ----------------------------------- ----------- ----------- * Micrel Inc. Common Stock $ 632,110 $ 512,584 Artisan Midcap Fund Mutual Fund $ 1,410,260 $ 1,823,660 Buffalo Small Cap Fund Mutual Fund $ 834,974 $ 1,095,224 Calvert Income Fund Mutual Fund $ 393,256 $ 387,743 Columbia Intermediate Bond Fund Mutual Fund $ 2,228,581 $ 2,235,958 Dodge & Cox Stock Fund Mutual Fund $ 469,494 $ 646,503 Dreyfus Bond Market Index Investor Fund Mutual Fund $ 497,393 $ 492,721 Dreyfus Midcap Index Fund Mutual Fund $ 2,574,686 $ 2,943,740 Dreyfus S&P 500 Index Fund Mutual Fund $ 2,695,360 $ 2,937,042 EuroPacific Growth Fund R4 Mutual Fund $ 1,311,689 $ 1,601,628 Growth Funds of America R4 Mutual Fund $ 1,474,790 $ 1,676,083 Hotchkis & Wiley Mid-Cap Value Fund Class A Mutual Fund $ 1,813,086 $ 2,107,884 Managers Special Equity Fund Mutual Fund $ 1,503,597 $ 2,063,210 Metlife GIC Guaranteed Investment Contract $ 2,868,808 $ 3,206,196 Royce Premier Fund Mutual Fund $ 1,731,130 $ 1,973,810 * Schwab International Index Fund Mutual Fund $ 1,083,713 $ 1,346,474 Selected American Fund Mutual Fund $ 1,828,400 $ 2,118,544 SIT US Government Securities Fund Mutual Fund $ 480,120 $ 479,796 T Rowe Price Mid Cap Value Fund Mutual Fund $ 237,782 $ 256,632 Van Kampen Growth & Income Fund Mutual Fund $ 137,823 $ 162,259 Vanguard 500 Index Fund Admiral Shares Mutual Fund $ 266,182 $ 285,731 Wilshire Target Large Company Growth Investment Fund Mutual Fund $ 434,882 $ 538,634 * Schwab Government Money Fund Money Market $ 4,975 $ 4,975 * Schwab Retirement Advantage Money Fund Money Market $ 327,332 $ 327,332 * Schwab U.S. Treasury Money Market Fund Money Market $ 3,049 $ 3,049 * Cash Cash $ 21,247 $ 21,247 * Participant Loans Interest Rates 6.0-11.5% N/A $ 844,920
*Indicates a party-in-interest. -12-