<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-27246
ZORAN CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2794449
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
3112 SCOTT BOULEVARD, SANTA CLARA, CALIFORNIA 95054
(Address of principal executive offices) (Zip code)
(408) 919-4111
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant, based on the closing price of the
Registrant's Common Stock as quoted on the Nasdaq National Market on March 17,
2000, was $778,000,000. Shares of Common Stock held by each officer and
director and by each person who owns 10% or more of the outstanding Common
Stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.
The number of shares of the Registrant's Common Stock outstanding as of March
17, 2000, was 14,067,015.
<PAGE>
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
The undersigned registrant hereby amends Part III of its Annual Report on Form
10-K for the fiscal year ended December 31, 1999 to read in its entirety as
follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth, for the current directors of Zoran,
certain information with respect to age and background:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Levy Gerzberg 55 President and Chief Executive Officer 1981
of the Company
Uzia Galil 75 President and Chief Executive Officer, 1983
UZIA Initiatives and Management Ltd.
George T. Haber 48 President and Chief Executive Officer, 1996
GigaPixel Corporation
James D. Meindl 67 Professor of Microelectronics, Georgia 1986
Institute of Technology
Arthur B. Stabenow 61 Private Investor 1990
Philip M. Young 60 General Partner, U.S. Venture Partners 1986
</TABLE>
LEVY GERZBERG was a co-founder of Zoran in 1981 and has served as our
President and Chief Executive Officer since December 1988 and as a Director
since 1981. Dr. Gerzberg also served as our President from 1981 to 1984 and as
our Executive Vice President and Chief Technical Officer from 1985 to 1988.
Prior to co-founding Zoran, Dr. Gerzberg was Associate Director of Stanford
University's Electronics Laboratory. Dr. Gerzberg holds a Ph.D. in Electrical
Engineering from Stanford University and an M.S. in Medical Electronics and a
B.S. in Electrical Engineering from the Technion-Israel Institute of Technology
in Haifa, Israel
UZIA GALIL has been a director of Zoran since 1983 and has served as
Chairman of the Board of Directors since October 1993. Mr. Galil currently
serves as President and Chief Executive Officer of Uzia Initiative and
Management Ltd., a company specializing in the promotion and nurturing of new
businesses associated with electronic commerce and medical information media,
which he founded in November 1999. From 1962 until November 1999, Mr. Galil
served as President and Chief Executive Officer of Elron Electronic Industries
Ltd., an Israeli high technology holding company, where he also served as
Chairman of the Board. From January 1981 until leaving Elron, Mr.Galil also
served as Chairman of the Board of Directors of Elbit Ltd., an electronic
communication affiliate of Elron, and as a member of the Boards of Directors of
Elbit Systems Ltd., a defense electronics affiliate of Elron, and all other
private companies held in the Elron portfolio. Mr. Galil currently served as a
member of the Boards of Directors of Orobotech Ltd., NetManage Inc. and Partner
Communications Ltd. from 1980 to 1990, Mr. Galil served as Chairman of the
International Board of Governors of the Technion. Mr. Galil holds a M.S. in
Electrical Engineering from Purdue University and a B.S. from the Technion. Mr.
Galil has also been awarded an honorary doctorate in technical sciences by the
Technion in recognition of his contribution to the development of science-based
industries in Israel, an honorary doctorate in philosophy by the Weizmann
Institute of Science, an honorary doctorate in engineering by Polytechnic
University, New York, and an honorary doctorate from the Ben-Gurion University
of the Negev in Israel. Mr. Galil is also a recipient of the Israel Industry
Prize.
GEORGE T. HABER has been a director of Zoran since December 1996. Mr. Haber
also served as our Executive Vice President from December 1996 to August 1997.
Since August 1997, Mr. Haber has served as
2
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President and Chief Executive Officer of GigaPixel Corporation, a developer of
3-D graphics rendering systems. Mr. Haber was a founder of CompCore Multimedia,
Inc., a developer of multimedia software and semiconductor products, and served
as its President, Chief Executive Officer, Chief Financial Officer and as a
director from its founding in November 1993 until its acquisition by us in
December 1996. Prior to founding CompCore, Mr. Haber held engineering positions
at Toshiba/SGI from January 1993 to August 1993 and Sun Microsystems, Inc. from
1990 to January 1993. Mr. Haber holds a B.A. from the Technion.
JAMES D. MEINDL has been a director of Zoran since March 1986. Dr. Meindl
has been a professor of microelectronics at Georgia Institute of Technology
since November 1993. From September 1986 to November 1993, Dr. Meindl served as
Provost and Senior Vice President of Academic Affairs at Renssalaer Polytechnic
Institute. Prior thereto, Dr. Meindl was a professor of electrical engineering
and Director of the Stanford Electronics Laboratory and Center for Integrated
Systems at Stanford University. Dr. Meindl is also a director of SanDisk, Inc.
and Digital Microwave.
ARTHUR B. STABENOW has been a director of Zoran since November 1990. Mr.
Stabenow has been principally engaged as a private investor since January 1999.
From March 1986 to January 1999 Mr. Stabenow was employed as Chief Executive
Officer of Micro Linear Corporation, a semiconductor company. Mr. Stabenow
serves as a director of Applied Micro Circuits Corporation.
PHILIP M. YOUNG has been a director of Zoran since January 1986. Mr. Young
has been a general partner of U.S. Venture Partners, a venture capital
partnership, since April 1990. Mr. Young is also a director of The Immune
Response Corporation, Vicar Incorporated and 3Dfx Interactive, Inc.
The information required by this Item with respect to additional executive
officers of Zoran is incorporated by reference to Part I of this Report under
the heading "Executive Officers of the Registrant."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater-than-10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all reports they file under
Section 16(a).
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the year ended December 31, 1999, except that Dr. Gerzberg and Ron
Richter, the Company's former Vice President, Worldwide Sales, each filed a late
report with respect to one transaction.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered to the Company during the years ended December
31, 1997, 1998, and 1999 by the Chief Executive Officer of the Company and the
four other most highly compensated executive officers of the Company whose total
salary and bonus for such fiscal year exceeded $100,000 (collectively, the
"Named Executive Officers"):
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -----------------
COMPENSATION OPTIONS
-------------------------- GRANTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS (SHARES) COMPENSATION
------------------------------ -------- -------------- ----------- --------------- --------------------
<S> <C> <C> <C> <C> <C>
Levy Gerzberg, Ph.D. 1999 $300,011 $225,000 55,000(2) $237 (3)
President and Chief 1998 $294,270 -- 231,666 $154 (3)
Executive Officer 1997 $270,095 $100,000 75,000 $538 (3)
Paul R. Goldberg 1999 $159,723 $24,000 15,000(2) $157 (3)
Vice President, Audio Products 1998 $149,209 -- 55,000 $120 (3)
and Intellectual Properties 1997 $136,166 $58,750 10,000 $518 (3)
Isaac Shenberg, Ph.D. 1999 $155,167 $55,000 20,000(2) $36,117 (4)
Senior Vice President, 1998 $152,574 -- 55,000 $24,430 (4)
Business and Strategic 1997 $120,542 $50,000 40,000 $44,169 (4)
Development
Aharon Aharon (5) 1999 $205,584 $72,000 30,000(2) $28,238 (3)(4)
Senior Vice President 1998 $161,582 -- 110,000 $28,652 (4)
and Chief Operating Officer 1997 $122,653 $45,000 60,000 $34,053 (4)
Karl Schneider (6) 1999 $158,653 $50,000 15,000(2) $153 (3)
Vice President, Finance and 1998 $122,152 -- 50,000 $125 (3)
Chief Financial Officer
</TABLE>
- ---------------------------
(1) Includes amounts (if any) deferred under the Company's 401(k) Plan.
(2) Includes options granted to Dr. Gerzberg, Mr. Goldberg, Dr. Shenberg, Mr.
Aharon and Mr. Schneider with respect to 55,000 shares, 15,000 shares,
20,000 shares, 30,000 shares and 15,000 shares, respectively.
(3) Represents premiums paid by the Company with respect to term life insurance
for the benefit of Dr. Gerzberg and Messrs. Goldberg , Aharon and
Schneider.
(4) Consists of (i) premiums paid by the Company under an insurance policy that
covers certain severance and other benefits that may be payable to the
Named Executive Officer and (ii) contributions by the Company toward a
continuing education fund for his benefit. The Company paid insurance
premiums for the benefit of Dr. Shenberg and Mr. Aharon in the amounts of
24,507, and 24,695, in 1999 respectively, $21,080 and $25,300,
respectively, in 1998 and $19,086 and $17,580, respectively, in 1997. In
addition, the Company made continuing education contributions for the
benefit of Dr. Shenberg and Mr. Aharon in the amounts of 11,610 and 3,373,
respectively, in 1999, $3,350 and $3,352, respectively, in 1998 and $9,041
and $9,200, respectively, in 1997.
(5) Mr. Aharon joined the Company as an officer in February 1997.
(6) Mr. Schneider joined the Company as an employee in January 1998 and became
an executive officer in July 1998. The reported compensation for 1998
includes compensation earned by Mr. Schneider during the full fiscal year.
OPTION GRANTS
The following table sets forth information concerning grants of options
to purchase the Company's Common Stock made during the year ended December 31,
1999 to the Named Executive Officers:
4
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN FISCAL 1999
--------------------------------------------------
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL OR BASE EXPIRATION ------------------------------
NAME GRANTED YEAR(2) PRICE(3) DATE 5% 10%
- ----------------------------- ------------ ------------ ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Levy Gerzberg, Ph.D. 55,000(4) 7.9% $20.375 8/4/09 $704,755 $1,785,988
Paul R. Goldberg 15,000(4) 2.1% $20.375 8/4/09 $192,206 $487,087
Isaac Shenberg, Ph.D. 20,000(4) 2.9% $20.375 8/4/09 $256,274 $649,450
Aharon Aharon 30,000(4) 4.3% $20.375 8/4/09 $384,412 $974,175
Karl Schneider 15,000(4) 2.1% $20.375 8/4/09 $192,206 $487,087
</TABLE>
- -----------------------------
(1) Potential gains are net of exercise price, but before taxes associated with
the exercise. These amounts represent certain hypothetical gains based on
assumed rates of appreciation, based on the Securities and Exchange
Commission's rules, and do not represent the Company's estimate or
projection of future Common Stock prices. Actual gains, if any, on stock
option exercises are dependent on the future performance of the Company,
overall market conditions and the optionees' continued employment through
the vesting period. The amounts reflected in this table may not be
achieved.
(2) The Company granted options to purchase an aggregate of 698,803 shares of
Common Stock during the year.
(3) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant.
(4) The option is fully exercisable from the date of grant, subject to the
Company's right to repurchase any unvested shares at the original purchase
price upon the optionee's termination as an employee. The shares vests in
48 equal monthly installments from the date of grant.
5
<PAGE>
OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth information concerning the stock options
held as of December 31, 1999 by the Named Executive Officers:
AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT DECEMBER 31, 1999 OPTIONS AT DECEMBER 31, 1999 (1)
ACQUIRED ON VALUE -------------------------------- --------------------------------------
NAME EXERCISE REALIZED EXERCISABLE (2) UNEXERCISABLE EXERCISABLE (2) UNEXERCISABLE
- ------------------- --------------- ---------- ---------------------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Levy Gerzberg 145,000 $3,650,850 361,323 -- $17,635,838 --
Paul R. Goldberg 10,312 $156,882 56,250 -- $2,585,287 --
Isaac Shenberg 27,000 $806,638 95,785 -- $4,602,696 --
Aharon Aharon 33,500 $693,694 106,500 -- $4,871,715 --
Karl Schneider 8,000 $206,032 57,000 -- $2,622,645 --
</TABLE>
- -------------------------
(1) Based on the closing price of $55.75, as reported on the Nasdaq National
Market on December 31, 1999, less the exercise price.
(2) All options are fully exercisable, subject to the Company's right to
repurchase any unvested shares at the original exercise price in the event
of the optionee's termination. Options (or shares issued upon exercise
thereof) vest over a period of four years from the date of grant.
COMPENSATION OF DIRECTORS
Directors receive quarterly fees of $3,000 as compensation for their
services as members of the Board of Directors. In addition, directors receive
fees of $500 for each Board or committee meeting attended.
The Company's 1995 Outside Directors Stock Option Plan (the "Directors
Plan") provides for formula-based grants of options to non-employee directors.
Under the Directors Plan, each non-employee director of the Company is
automatically granted a nonstatutory stock option to purchase 20,000 shares of
Common Stock (an "Initial Option") on the date on which such person first
becomes a non-employee director of the Company. Thereafter, on the date
immediately following each annual stockholders' meeting, each non-employee
director who is reelected at the meeting to an additional term is granted an
additional option to purchase 4,800 shares of Common Stock (an "Annual Option")
if, on such date, he has served on the Board of Directors for at least six
months. The Directors Plan provides that each Initial Option shall become
exercisable in installments as to one-fourth of the total number shares subject
to the option on each of the first, second, third and fourth anniversaries of
the date of grant, and each Annual Option shall become exercisable in full one
year after the date of grant, subject to the director's continuous service. The
exercise price per share of all options granted under the Directors Plan shall
be equal to the fair market value of a share of the Company's Common Stock on
the date of grant. Options granted under the Directors Plan have a term of ten
years.
6
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
relating to the beneficial ownership of the Company's Common Stock, as of March
31, 2000, by: (i) each person who is known by the Company to be the beneficial
owner of more than 5% of the outstanding shares of Common Stock; (ii) each
executive officer named in the tables set forth under "Executive Compensation";
(iii) each director; and (iv) all executive officers and directors as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED (1) PERCENT (1)
- -------------------------------------------------------------- --------------------------- -------------------
<S> <C> <C>
Elron Electronic Industries Ltd. 713,965 5.1%
Advanced Technology Center
P.O. Box 1513
Haifa 31015, Israel
Levy Gerzberg, Ph.D. (2) 412,832 2.9%
Isaac Shenberg, Ph.D. (3) 95,020 *
Aharon Aharon (4) 89,533 *
Karl Schneider (5) 52,990 *
Paul R. Goldberg (6) 47,868 *
Uzia Galil (7) 50,649 *
James D. Meindl, Ph.D. (8) 40,547 *
Philip M. Young (9) 40,495 *
Arthur B. Stabenow (10) 29,781 *
George T. Haber (11) 14,800 *
All directors and executive officers as a group 1,063,657 7.6%
(14 persons) (12)
</TABLE>
- -----------------------------------
* Represents less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options or warrants held by that person
that are currently exercisable, or will become exercisable within 60 days
after March 31, 2000, are deemed outstanding. Such shares, however, are not
deemed outstanding for purposes of computing the percentage ownership of
any other person. In general, options granted under the 1993 Stock Option
Plan are fully exercisable from the date of grant, subject to the Company's
right to repurchase any unvested shares at the original exercise price in
the event of termination of the optionee's employment. Unless otherwise
indicated in the footnotes to this table, the persons and entities named in
the table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable.
(2) Includes 351,323 shares subject to stock options that are currently
exercisable.
(3) Includes 93,785 shares subject to stock options that are currently
exercisable.
(4) Includes 88,500 shares subject to stock options that are currently
exercisable.
(5) Includes 51,800 shares subject to stock options that are currently
exercisable.
(6) Includes 46,250 shares subject to stock options that are currently
exercisable.
7
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(7) Includes 3,008 shares held by Mr. Galil's spouse. Mr. Galil may be deemed
to be a beneficial owner of shares held by Ella Galil, although Mr. Galil
disclaims beneficial ownership of such shares. Also includes 34,400 shares
subject to stock options that are currently exercisable.
(8) Includes 222 shares held jointly with Dr. Meindl's spouse and 1,125 shares
held by James and Frederica Meindl as trustees of the Meindl Trust dated
February 4, 1972. Also includes 34,400 shares subject to stock options that
are currently exercisable.
(9) Includes 35,666 shares subject to stock options that are currently
exercisable.
(10) Includes 14,400 shares subject to stock options that are currently
exercisable.
(11) Includes 943,111 shares subject to stock options that are currently
exercisable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into the transactions and arrangements with Oren
Semiconductor, Inc. described below. Oren was a subsidiary of ours until January
1996, when it was spun off to our stockholders. Elron Electronics Industries
Ltd., our largest stockholder, and The Israel Corporation, which until recently
was a beneficial owner of more than 5% of our outstanding shares of common
stock, are each principal stockholders of Oren. Additionally, several of our
directors are stockholders of Oren and two of our directors, Levy Gerzberg and
Uzia Galil, are also members of Oren's board of directors.
EXPENSES INCURRED ON BEHALF OF OREN
From the time of the spin-off through September 1998, we advanced a
substantial portion of Oren's operating expenses related to its operations in
the United States, all of which were later reimbursed by Oren. These expenses
included payroll, employee benefits, professional fees and other operating
expenses. Until September 1997, we permitted Oren to occupy a portion of our
Santa Clara facility, for which Oren reimbursed us for a pro rata portion of our
monthly facility cost. Since October 1998, we have shared our facility in Japan
with Oren, in return for which Oren reimburses us for total operating cost
related to that facility. The expenses we incurred on Oren's behalf during the
years ended December 31, 1997, 1998 and 1999 were $405,000, $403,000 and
$146,000.
TECHNOLOGY LICENSE AGREEMENT
In March 1999, we entered into a technology license agreement with
Oren pursuant to which we granted Oren a worldwide nonexclusive license to
incorporate a Zoran video decoder core in products sold by Oren to end users,
resellers and original equipment manufacturers and to incorporate our core
into Oren's own cores for license to third parties. The license agreement
grants Oren similar rights to any updates to our core that we develop or
release within one year after the date of the agreement. In return for this
license, Oren agreed to pay us nonrefundable license and maintenance fees
totaling $400,000, of which $200,000 has been paid to date. Oren also agreed
to pay us royalties and maintenance fees, based on the number of units
incorporating our core that are sold by Oren or by licensees of its cores,
and additional royalties based on any nonrefundable fee paid to Oren for the
license of any core that incorporates the core we licensed to Oren. To date,
Oren has not paid any royalties or related maintenance fees. The initial term
of the license agreement is two years, and it will be automatically renewed
for three additional one-year terms unless either party elects otherwise at
least 30 days prior to a renewal date. The agreement may be terminated by
either party in the event of a material breach by the other party or by us in
the event of Oren's insolvency. The terms of the license agreement are
comparable to similar agreements that we have entered into with unrelated
third parties based on arm's-length negotiations.
8
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SHORT-TERM LOAN
In April 1999, we made a loan of $350,000 to Oren. The loan bore simple
interest at the rate of 7% per year and had a term of three months. The loan was
repaid in full in July 1999.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: May 1, 2000 ZORAN CORPORATION
By: /S/ Levy Gerzberg
-------------------------------------
Levy Gerzberg, President and
Chief Executive Officer
