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Prospectus
Issued December 20, 2000
1,295,000 SHARES
[LOGO]
COMMON STOCK
Photon Dynamics, Inc. may issue from time to time up to 1,295,000 shares of
common stock in exchange for exchangeable shares (the "Exchangeable Shares") of
Image Processing Systems Inc. ("IPS"), a corporation existing under the laws of
the Province of Ontario. Image Processing Systems will issue the Exchangeable
Shares to its shareholders who choose to receive the Exchangeable Shares in
connection with the acquisition by Photon Dynamics of Image Processing Systems
pursuant to the Acquisition Agreement for Plan of Arrangement, dated
September 27, 2000 (the "Acquisition Agreement"). These shareholders may
exchange the Exchangeable Shares for our common stock at any time. We will
redeem any Exchangeable Shares that remain outstanding for common stock on
December 19, 2005. We will redeem the Exchangeable Shares for our common stock
before December 19, 2005 if there are 10% or fewer Exchangeable Shares
outstanding that are not owned by us or our affiliates. We also will redeem the
Exchangeable Shares for our common stock before December 19, 2005 if certain
other events occur.
Our common stock is traded on the Nasdaq National Market under the symbol
"PHTN." The last reported sale price of our common stock on the Nasdaq National
Market on December 19, 2000 was $19.94 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This Prospectus is dated December 20, 2000.
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TABLE OF CONTENTS
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WHERE YOU CAN FIND MORE INFORMATION......................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 4
USE OF PROCEEDS............................................. 4
MARKET PRICES AND DIVIDEND POLICY........................... 5
THE EXCHANGEABLE SHARES..................................... 6
DESCRIPTION OF PHOTON CAPITAL STOCK......................... 6
PLAN OF DISTRIBUTION........................................ 8
LEGAL MATTERS............................................... 8
EXPERTS..................................................... 8
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You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with information that is
different. We are offering to sell, and seeking offers to buy, shares of common
stock only in jurisdictions where offers and sales are permitted. This
prospectus may only be used where it is legal to sell these securities. The
information in this document may only be accurate on the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of our equity shares.
Information contained in our web site does not constitute part of this
document.
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WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission, or the SEC. You may read and copy such materials at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may also obtain copies of such material from the SEC
at prescribed rates for the cost of copying by writing to the Public Reference
Section of the SEC at the same address. You may call the SEC at 1-800-SEC-0330
for more information on the public reference rooms. You can also find our SEC
filings at the SEC's web site at www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
- Annual Report on Form 10-K filed November 7, 2000; and
- The description of the common stock contained in our registration
statement on Form 8-A filed November 14, 1995.
You may request a copy of these filings at no cost by writing or telephoning
us at the following address:
Photon Dynamics, Inc.
6325 San Ignacio Avenue
San Jose, California 95119-1202
(408) 226-9900
USE OF PROCEEDS
Because the common stock will be issued upon the exchange of the
Exchangeable Shares, we will receive no cash proceeds from this offering.
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MARKET PRICES AND DIVIDEND POLICY
Our common stock has been traded on the Nasdaq National Market under the
symbol "PHTN" since November 15, 1995. The following table sets forth for the
period indicated the high and low sale prices for our common stock, as reported
by the Nasdaq National Market.
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HIGH LOW
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Fiscal year ended September 30, 1999
First Quarter............................................... $ 5.63 $ 2.25
Second Quarter.............................................. 8.25 3.94
Third Quarter............................................... 12.38 7.00
Fourth Quarter.............................................. 25.75 10.63
Fiscal year ended September 30, 2000
First Quarter............................................... $43.25 $20.50
Second Quarter.............................................. 94.38 32.38
Third Quarter............................................... 78.38 43.75
Fourth Quarter.............................................. 87.94 35.00
Fiscal year ended September 30, 2001
First Quarter (through December 19, 2000)................... $44.00 $19.81
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On December 19, 2000 the last reported sale price of our common stock on the
Nasdaq National Market was $19.94. As of December 20, 2000 there were 11,829,476
shares of our common stock outstanding, held by approximately 123 holders of
record.
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain earnings, if any, to support the development of our
business and do not anticipate paying cash dividends for the foreseeable future.
Payment of future dividends, if any, will be at the discretion of our board of
directors after taking into account various factors, including our financial
condition, operating results and current and anticipated cash needs.
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THE EXCHANGEABLE SHARES
The rights of holders of Exchangeable Shares, including exchange rights, are
described in the Acquisition Agreement with IPS, which is included as an exhibit
to the Registration Statement.
DESCRIPTION OF PHOTON CAPITAL STOCK
The following description sets forth the general terms of our capital stock.
The descriptions set forth below do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, our Restated Articles
of Incorporation, as amended, which are filed as an exhibit to the Registration
Statement.
GENERAL
Our authorized capital stock consists of 20,000,000 shares of common stock,
no par value, and 5,000,000 shares of preferred stock, no par value, issuable in
series. As of October 1, 2000, there were 11,819,740 shares of our common stock
outstanding and no shares of preferred stock outstanding.
COMMON STOCK
The common stock to be issued in this offering will be, when issued, fully
paid and nonassessable. Our common stock does not carry any preemptive rights
enabling a holder to subscribe for or receive any additional securities that may
be issued from time to time by us. The rights of holders of common stock will be
subject to the rights of holders of any preferred stock that may be issued in
the future, which may adversely affect the rights of holders of common stock.
Our board of directors may issue additional shares of common stock or preferred
stock to obtain additional financing, in connection with acquisitions, to our
and our subsidiary's officers, directors and employees pursuant to benefit plans
or otherwise and for other proper corporate purposes. No preemptive rights,
conversion rights, redemption rights or sinking fund provisions are applicable
to our common stock, and there are no dividends in arrears or default.
Boston Equiserve, LP is the principal transfer agent for our common stock.
DIVIDENDS. The holders of our common stock are entitled to receive such
dividends as may be declared by our board of directors out of funds legally
available for distribution. The rights of holders of common stock are subject to
the rights of the holders of any class of our capital stock having any
preference or priority over the common stock.
LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation,
dissolution, or winding-up of Photon Dynamics, the holders of common stock will
be entitled to receive ratably, after payment of all of our debts and
liabilities and of all sums to which holders of any preferred stock may be
entitled, all of our remaining assets.
VOTING RIGHTS. The holders of common stock currently possess exclusive
voting rights on all matters submitted to the Shareholders. However, in
connection with our acquisition of IPS, we expect to issue to a trustee for the
benefit of the holders of the Exchangeable Shares a share of Special Voting
Stock (described below) carrying voting rights equal to the number of then
outstanding Exchangeable Shares not owned by us or our affiliates. Our board of
directors may also specify voting rights with respect to any preferred stock
that may be issued in the future. Each holder of common stock is entitled to one
vote per share with respect to all matters. With respect to the election of
directors, shareholders may exercise cumulative voting rights. Under cumulative
voting, for each share held, a holder of common stock will be entitled to cast a
number of votes equal to the total number of directors to be elected at that
time. Each shareholder may give one candidate, who has been nominated
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prior to voting, all the votes such shareholder is entitled to cast or may
distribute such votes among as many such candidates as such shareholder chooses.
BOARD OF DIRECTORS. Our board of directors is currently comprised of seven
(7) directors. The directors elected at each annual election hold office till
the next annual meetings of shareholders.
SPECIAL VOTING STOCK
Our board of directors has authorized the issuance of one share of preferred
stock (the "Special Voting Stock"). The holder of the share of Special Voting
Stock is entitled to cast a number of votes equal to the number of then
outstanding Exchangeable Shares not owned by us or our affiliates. Under the
terms of the Voting and Exchange Trust Agreement described below, the holder of
the share of Special Voting Stock must receive timely notice from holders of the
Exchangeable Shares in order to cast those votes corresponding to the
Exchangeable Shares then outstanding. The holders of common stock and the holder
of the share of Special Voting Stock will vote together as a single class on all
matters, except as otherwise required by law. In the event of any liquidation,
dissolution or winding-up of Photon Dynamics, the holder of the share of Special
Voting Stock will give notice to the holders of Exchangeable Shares of such
liquidation, dissolution or winding-up and subsequently the Exchangeable Shares
will be automatically exchanged for shares of common stock. No dividends are
payable on the share of Special Voting Stock. The Special Voting Stock will be
issued to a Canadian trustee (the "Trustee") under the Voting and Exchange Trust
Agreement, which will be entered into by us and the Trustee. The Special Voting
Stock, and the Exchangeable Shares, may be redeemed on the earlier of, among
other dates, December 19, 2005, or when there are 10% or fewer Exchangeable
Shares outstanding not owned by us or our affiliates.
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PLAN OF DISTRIBUTION
The common stock covered hereby will be issued in exchange for Exchangeable
Shares, and no broker, dealer or underwriter has been engaged in connection
therewith.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby will be
passed upon for us by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Photon Dynamics, Inc. appearing in
Photon Dynamics, Inc.'s Annual Report on Form 10-KSB for the year ended
September 30, 1999, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such financial statements are incorporated by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of CR Technology, Inc. appearing in
Photon Dynamics, Inc.'s Current Report on Form 8-K dated December 15, 1999, have
been audited by the Cacciamatta Accountancy Corporation, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
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