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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 2000
REGISTRATION NO. 333-____________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
ZORAN CORPORATION
(Exact name of registrant as specified in its charter)
----------------------
DELAWARE 94-2794449
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3112 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
(408) 919-4111
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------------
LEVY GERZBERG
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ZORAN CORPORATION
3112 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
(408) 919-4111
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
KARL SCHNEIDER DENNIS C. SULLIVAN, ESQ.
Vice President of Finance PAUL A. BLUMENSTEIN, ESQ.
and Chief Financial Officer Gray Cary Ware & Freidenrich LLP
Zoran Corporation 400 Hamilton Avenue
3112 Scott Boulevard Palo Alto, California 94301-1825
Santa Clara, California 95054 (650) 833-2000
(408) 919-4111
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _______________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / / _______________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
Title of Each Class of AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
Securities to be Registered REGISTERED SHARE (1) PRICE (1)
<S> <C> <C> <C> <C>
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Common Stock, $0.001 par value 334,682 shares $44.63 $14,936,857.66 $3,944.00
====================================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rules 457(c) and 457(g) of the Securities Act of
1933, and based on the average of the high and low sales prices of
the common stock, as reported on the Nasdaq National Market on
July 26, 2000.
----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.
===============================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 28, 2000
PRELIMINARY PROSPECTUS
337,500 SHARES
ZORAN CORPORATION
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of shares of the common stock of Zoran Corporation. The shares of
Zoran common stock may be offered by any of the selling stockholders named in
this prospectus. The selling stockholders received their shares or the right to
their shares when we acquired PixelCam, Inc. We will receive no part of the
proceeds of any sales made under this prospectus. All expenses of registration
incurred in connection with this offering are being borne by us, but all selling
and other expenses incurred by the selling stockholders will be borne by such
selling stockholders. None of the shares offered pursuant to this prospectus
have been registered prior to the filing of the registration statement of which
this prospectus is a part.
The common stock offered in this prospectus may be offered and sold by
the selling stockholders directly or through broker-dealers or underwriters
acting solely as agents. In addition, the broker-dealers and underwriters may
acquire the common stock as principals. The distribution of the common stock may
be effected in one or more transactions. These transactions may take place
through (1) the Nasdaq National Market, (2) privately negotiated transactions,
(3) underwritten public offerings, or (4) a combination of any such methods of
sale. These transactions may be made at (1) market prices prevailing at the time
of sale, (2) prices related to such prevailing market prices or (3) negotiated
prices. Usual and customary or specially negotiated brokerage fees or
commissions may be paid by the selling stockholders in connection with these
sales.
Zoran's common stock is traded on the Nasdaq National Market under the
symbol "ZRAN." On July 26, 2000 the last reported sales price for the common
stock was $43.25 per share.
INVESTING IN THE COMMON STOCK OFFERED IN THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
----------------------
Each selling stockholder and any broker executing selling orders on
behalf of the selling stockholders may be deemed to be an "underwriter" within
the meaning of the Securities Act of 1933. Commissions received by any broker
executing selling orders may be deemed to be underwriting commissions under the
Securities Act.
----------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 28, 2000.
1
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TABLE OF CONTENTS
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Page
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<S> <C>
Where You Can Find More Information.......................................3
Information Incorporated By Reference.....................................3
Forward Looking Information...............................................4
The Company...............................................................4
Risk Factors..............................................................5
Selling Stockholders.....................................................17
Plan Of Distribution.....................................................18
Legal Matters............................................................18
Experts..................................................................19
</TABLE>
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WHERE YOU CAN FIND ADDITIONAL INFORMATION ABOUT ZORAN
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file with
the SEC at the SEC's public reference room at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
SEC located at Seven World Trade Center, 13th Floor, New York, New York 10048
and the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You can request copies of these documents upon payment
of a duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our SEC filings, including the registration statement, will also be
available to you on the SEC's Web site. The address of this site is
http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information 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 made by us with the
SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 until the sale of all of the shares of common stock that are part of this
offering. The documents we are incorporating by reference are as follows:
- our Annual Report on Form 10-K for the year ended December 31,
1999, as amended by Form 10-K/A Amendment No. 1 to Form 10-K filed
on May 1, 2000;
- our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
- our Current Reports on Form 8-K filed on June 26, 2000; and
- the description of our common stock contained in our registration
statement on Form 8-A (Registration No. 33-98630-LA) declared
effective by the SEC on December 14, 1995, including any
amendments or reports filed for the purpose of updating that
description.
Any statement contained in a document that is incorporated by reference
will be modified or superseded for all purposes to the extent that a statement
contained in this prospectus (or in any other document that is subsequently
filed with the SEC and incorporated by reference) modifies or is contrary to
that previous statement. Any statement so modified or superseded will not be
deemed a part of this prospectus except as so modified or superseded.
You may request a copy of these filings at no cost by writing or
telephoning our investor relations department at the following address and
telephone number:
Zoran Corporation
3112 Scott Boulevard
Santa Clara, California 95054
(408) 919-4111
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FORWARD LOOKING INFORMATION
Some of the information in this prospectus contains forward-looking
statements within the meaning of the federal securities laws. These
forward-looking statements include, among others, statements regarding our
product development plans, use of proceeds, projected capital expenditures,
liquidity and business strategy. These statements may be found under the caption
"Risk Factors." Forward-looking statements typically are identified by use of
terms such as "may," "will," "expect," "anticipate," "estimate" and similar
words, although some forward-looking statements are expressed differently. You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including the matters discussed under "Risk Factors" and in other sections of
this prospectus, which address various factors that could cause our actual
results to differ from those set forth in the forward-looking statements.
THE COMPANY
Our principal executive offices are located at 3112 Scott Boulevard,
Santa Clara, California 95054. Our telephone number is (408) 919-4111.
4
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RISK FACTORS
Our future business operating results and financial condition are
subject to various risks and uncertainties, including those described below:
OUR QUARTERLY REVENUES AND OPERATING RESULTS FLUCTUATE DUE TO A VARIETY OF
FACTORS, WHICH MAY RESULT IN VOLATILITY OR A DECLINE IN THE PRICE OF OUR STOCK.
Our quarterly operating results have varied significantly due to a
number of factors, including:
- fluctuation in demand for our products;
- the timing of new product introductions by us and our competitors;
- the level of market acceptance of new and enhanced versions of our
products and our customers' products;
- the timing of large customer orders;
- the length and variability of the sales cycle for our products;
- the cyclical nature of the semiconductor industry;
- the availability of development funding and the timing of development
revenue;
- changes in the mix of products sold;
- seasonality in demand for our products;
- competitive pricing pressures; and
- the evolving and unpredictable nature of the markets for products
incorporating our integrated circuits and embedded software.
We expect that our operating results will continue to fluctuate in the
future as a result of these factors and a variety of other factors, including:
- the cost and availability of adequate foundry capacity;
- fluctuations in manufacturing yields;
- the emergence of new industry standards;
- product obsolescence; and
- the amount of research and development expenses associated with new
product introductions.
Our operating results could also be harmed by:
- economic conditions generally or in various geographic areas where we
or our customers do business;
- other conditions affecting the timing of customer orders; or
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- a downturn in the markets for our customers' products, particularly
the consumer electronics market.
These factors are difficult or impossible to forecast. We place orders
to purchase our products from independent foundries several months in advance of
the scheduled delivery date, often in advance of receiving non-cancelable orders
from our customers. If anticipated shipments in any quarter are canceled or do
not occur as quickly as expected, expense and inventory levels could be
disproportionately high. If anticipated license revenues in any quarter are
canceled or do not occur, gross margins may be reduced. A significant portion of
our expenses are relatively fixed, and the timing of increases in expenses is
based in large part on our forecast of future revenues. As a result, if revenues
do not meet our expectations we may be unable to quickly adjust expenses to
levels appropriate to actual revenues, which could harm our operating results.
As a result of these factors, our operating results may vary
significantly from quarter to quarter. Any shortfall in revenues or net income
from levels expected by securities analysts could cause a decline in the trading
price of our stock.
OUR SUCCESS FOR THE FORESEEABLE FUTURE WILL BE DEPENDENT ON GROWTH IN DEMAND FOR
INTEGRATED CIRCUITS FOR DIGITAL VERSATILE DISC, OR DVD, SUPER VIDEO CD, DIGITAL
AUDIO, VIDEO EDITING AND FILMLESS DIGITAL CAMERA APPLICATIONS AND OUR ABILITY TO
MARKET AND SELL OUR PRODUCTS TO MANUFACTURERS WHO INCORPORATE THOSE TYPES OF
INTEGRATED CIRCUITS INTO THEIR PRODUCTS.
In 1999 and the six months ended June 30, 2000, we derived a majority
of our product revenues from the sale of integrated circuits for DVD and Super
Video CD applications. We expect that sales of our products for DVD and Super
Video CD applications, digital audio applications and video editing applications
will continue to account for a significant portion of our revenues for the near
future. Our ability to sell our recently introduced products for filmless
digital camera applications will also have a significant impact on our financial
performance for the foreseeable future. If the markets for these products and
applications decline or fail to develop as expected, or we are not successful in
our efforts to market and sell our products to manufacturers who incorporate
integrated circuits into these products, our financial results will be harmed.
OUR CUSTOMERS EXPERIENCE FLUCTUATING PRODUCT CYCLES AND SEASONALITY, WHICH
CAUSES OUR SALES TO FLUCTUATE.
Because the markets our customers serve are characterized by numerous
new product introductions and rapid product enhancements, our operating results
may vary significantly from quarter to quarter. During the final production of a
mature product, our customers typically exhaust their existing inventory of our
products. Consequently, orders for our products may decline in those
circumstances, even if our products are incorporated into both mature products
and replacement products. A delay in the customer's transition to commercial
production of a replacement product would delay our ability to recover the lost
sales from the discontinuation of the related mature product. Our customers also
experience significant seasonality in the sales of their consumer products,
which affects their orders of our products. Typically, the fourth calendar
quarter represents a disproportionate percentage of sales for our customers due
to the holiday period, and therefore a disproportionate percentage of our sales.
We expect these sales fluctuations to continue for the foreseeable future.
PRODUCT SUPPLY AND DEMAND IN THE SEMICONDUCTOR INDUSTRY IS SUBJECT TO CYCLICAL
VARIATIONS.
The semiconductor industry is subject to cyclical variations in product
supply and demand. Downturns in the industry often occur in connection with, or
anticipation of, maturing product cycles for both semiconductor companies and
their customers and declines in general economic conditions. These downturns
have been characterized by abrupt fluctuations in product demand, production
over-capacity and accelerated decline of average selling prices. In some cases,
these downturns have lasted more than one year. A downturn in the semiconductor
industry could harm our sales and revenues if demand drops or our gross margins
if average selling prices decline.
THE DEVELOPMENT AND EVOLUTION OF MARKETS FOR OUR INTEGRATED CIRCUITS IS
DEPENDENT ON FACTORS SUCH AS INDUSTRY STANDARDS, OVER WHICH WE HAVE NO CONTROL;
FOR EXAMPLE, IF MANUFACTURERS ADOPT NEW OR COMPETING INDUSTRY
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STANDARDS WITH WHICH OUR PRODUCTS ARE NOT COMPATIBLE, OUR EXISTING PRODUCTS
WOULD BECOME LESS DESIRABLE TO THE MANUFACTURERS AND OUR SALES WOULD SUFFER.
The emergence of markets for our products is affected by a variety of
factors beyond our control. In particular, our products are designed to conform
to current specific industry standards. Manufacturers may not continue to follow
these standards, which would make our products less desirable to manufacturers
and reduce our sales. Also, competing standards may emerge that are preferred by
manufacturers, which could also reduce our sales and require us to make
significant expenditures to develop new products. The emergence of new markets
for our products is also dependent in part upon third parties developing and
marketing content in a format compatible with commercial and consumer products
that incorporate our products. If content compatible with commercial and
consumer products that incorporate our products is not available, manufacturers
may not be able to sell products incorporating our integrated circuits, and our
sales to manufacturers would suffer.
WE RELY ON INDEPENDENT FOUNDRIES AND CONTRACTORS FOR THE MANUFACTURE, ASSEMBLY
AND TESTING OF OUR INTEGRATED CIRCUITS, AND THE FAILURE OF ANY OF THESE THIRD
PARTIES TO DELIVER PRODUCTS OR OTHERWISE PERFORM AS REQUESTED COULD DAMAGE OUR
RELATIONSHIPS WITH OUR CUSTOMERS AND HARM OUR SALES AND FINANCIAL RESULTS.
We do not operate any manufacturing facilities, and we rely on
independent foundries to manufacture substantially all of our products. These
independent foundries fabricate products for other companies and may also
produce products of their own design. From time to time there are manufacturing
capacity shortages in the semiconductor industry. We do not have long-term
supply contracts with any of our suppliers, including our principal supplier,
Taiwan Semiconductor Manufacturing Company, or TSMC. Therefore, TSMC is not
obligated to manufacture products for us for any specific period, in any
specific quantity or at any specified price, except as may be provided in a
particular purchase order.
Our reliance on independent foundries involves a number of risks,
including:
- the inability to obtain adequate manufacturing capacity;
- the unavailability of or interruption in access to certain process
technologies necessary for manufacture of our products;
- reduced control over delivery schedules;
- reduced control over quality assurance;
- reduced control over manufacturing yields and cost; and
- potential misappropriation of our intellectual property.
In addition, TSMC and some of our other foundries are located in areas
of the world which are subject to natural disasters such as earthquakes. While
the recent earthquake in Taiwan did not have a material impact on our
independent foundries, a similar event centered near TSMC's facility could
severely reduce TSMC's ability to manufacture our integrated circuits. The loss
of any of our manufacturers as a supplier, our inability to expand the supply of
our products in response to increased demand, or our inability to obtain timely
and adequate deliveries from our current or future suppliers due to a natural
disaster or any other reason could delay or reduce shipments of our products.
Any of these circumstances could damage our relationships with current and
prospective customers and harm our sales and financial results.
We also rely on independent contractors for the assembly and testing of
our products. At present, all of our semiconductor products are assembled by one
of three independent contractors: ASE, Amkor or ASAT. Our semiconductor products
are tested by these contractors or other independent contractors. Our reliance
on independent assembly and testing houses limits our control over delivery
schedules, quality assurance and product cost. Disruptions in the services
provided by our assembly or testing houses or other circumstances that would
require us to seek alternative sources of assembly or testing could lead to
supply constraints or delays in the delivery
7
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of our products. These constraints or delays could damage our relationships
with current and prospective customers and harm our sales and financial
results.
BECAUSE FOUNDRY CAPACITY IS LIMITED WE MAY BE REQUIRED TO ENTER INTO COSTLY
LONG-TERM SUPPLY ARRANGEMENTS TO SECURE FOUNDRY CAPACITY.
If we are not able to obtain additional foundry capacity as required,
our relationships with our customers would be harmed and our sales would likely
be reduced. In order to secure additional foundry capacity, we have considered
and will continue to consider various arrangements with suppliers, which could
include, among others:
- option payments or other prepayments to a foundry;
- nonrefundable deposits with or loans to foundries in exchange for
capacity commitments;
- contracts that commit us to purchase specified quantities of silicon
wafers over extended periods;
- issuance of our equity securities to a foundry;
- investment in a foundry;
- joint ventures; or
- other partnership relationships with foundries.
We may not be able to make any such arrangement in a timely fashion or
at all, and such arrangements, if any, may not be on terms favorable to us.
Moreover, if we are able to secure foundry capacity, we may be obligated to
utilize all of that capacity or incur penalties. Such penalties may be expensive
and could harm our financial results.
IF OUR INDEPENDENT FOUNDRIES DO NOT ACHIEVE SATISFACTORY YIELDS, OUR
RELATIONSHIPS WITH OUR CUSTOMERS MAY BE HARMED.
The fabrication of silicon wafers is a complex process. Minute levels
of contaminants in the manufacturing environment, defects in photomasks used to
print circuits on a wafer, difficulties in the fabrication process or other
factors can cause a substantial portion of the integrated circuits on a wafer to
be non-functional. Many of these problems are difficult to detect at an early
stage of the manufacturing process and may be time consuming and expensive to
correct. As a result, foundries often experience problems achieving acceptable
yields, which are represented by the number of good integrated circuits as a
proportion of the number of total integrated circuits on any particular wafer.
Poor yields from our independent foundries would reduce our ability to deliver
our products to customers, harm our relationships with our customers, and harm
our business.
TO BE SUCCESSFUL, WE MUST EFFICIENTLY DEVELOP NEW AND ENHANCED PRODUCTS TO MEET
RAPIDLY CHANGING CUSTOMER REQUIREMENTS AND INDUSTRY STANDARDS.
The markets for our products are characterized by:
- rapidly changing technologies;
- evolving industry standards;
- frequent new product introductions; and
- short product life cycles.
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We expect to increase our product development expenses, and our future
success will depend to a substantial degree upon our ability to develop and
introduce, on a timely and cost-effective basis, new and enhanced products that
meet rapidly changing customer requirements and industry standards. We may not
successfully develop, introduce or manage the transition to new products. Delays
in the introduction or shipment of new or enhanced products, lack of market
acceptance for such products or problems associated with new product transitions
could harm our sales and financial results.
WE FACE COMPETITION OR POTENTIAL COMPETITION FROM COMPANIES WITH GREATER
RESOURCES THAN OURS, AND IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH THESE
COMPANIES, OUR MARKET SHARE MAY DECLINE AND OUR BUSINESS COULD BE HARMED.
Competition in the compression technology market has historically been
dominated by large companies such as STMicroelectronics and companies that
develop and use their own integrated circuits, such as Sony. As this market
continues to develop, we face competition from other large semiconductor
vendors, including:
- C-Cube Microsystems;
- LSI Logic;
- Cirrus Logic (Crystal Semiconductor);
- Fujitsu; and
- Motorola.
For example, in the markets for JPEG-based products for use in filmless
digital cameras, LSI Logic and Ricoh are providing system-on-a-chip solutions to
third parties. We also face competition from internally-developed solutions
developed and used by major Japanese original equipment manufacturers, who may
also be our customers.
Many of our existing and potential competitors have substantially
greater resources than ours in many areas, including:
- finances;
- manufacturing;
- technology;
- marketing; and
- distribution.
Many of our competitors have broader product lines and longer standing
relationships with customers than we do. Moreover, our competitors may foresee
the course of market developments more accurately than we do and could in the
future develop new technologies that compete with our products or even render
our products obsolete. In addition, a number of private companies have announced
plans for new products to address the same digital multimedia compression
problems that our products address. If we are unable to compete successfully
against our current and future competitors, we could experience price
reductions, order cancellations and reduced gross margins, any one of which
could harm our business.
The DVD market is just emerging, and additional competitors are
expected to enter the market for DVD players and software. We believe that
several large Japanese consumer electronics companies may be planning to enter
this market and may, accordingly, attempt to develop MPEG 2 hardware or software
that may be competitive with our products. Some of these potential competitors
may develop captive implementations for use only with their own PC and consumer
electronics products. It is also possible that application software vendors,
such as Microsoft,
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may attempt to enter the DVD application market in the future. This increased
competition may result in price reductions, reduced profit margins and loss
of market share.
OUR PRODUCTS ARE CHARACTERIZED BY AVERAGE SELLING PRICES THAT DECLINE OVER
RELATIVELY SHORT TIME PERIODS; IF WE ARE UNABLE TO REDUCE OUR COSTS OR INTRODUCE
NEW PRODUCTS WITH HIGHER AVERAGE SELLING PRICES, OUR FINANCIAL RESULTS WOULD
SUFFER.
Average selling prices for our products decline over relatively short
time periods. Many of our manufacturing costs are fixed. When our average
selling prices decline, our revenues decline unless we sell more units, and our
gross margins decline unless we are able to reduce our manufacturing costs by a
commensurate amount. Our operating results suffer when gross margins decline. We
may experience these problems in the future and cannot predict when they may
occur or their severity.
WE DERIVE MOST OF OUR REVENUE FROM SALES TO A SMALL NUMBER OF LARGE CUSTOMERS,
AND IF WE ARE NOT ABLE TO RETAIN THESE CUSTOMERS, OR THEY RESCHEDULE, REDUCE OR
CANCEL ORDERS, OUR REVENUES WOULD BE REDUCED AND OUR FINANCIAL RESULTS WOULD
SUFFER.
Our largest customers account for a substantial percentage of our
revenues. During the six months ended June 30, 2000, sales to Fujifilm accounted
for 30.2% of our total revenues and 33.6% of our product sales. In 1999, sales
to Fujifilm accounted for 37.3% of our total revenues and 41.0% of our product
sales. Our four largest customers in 1999 accounted for approximately 56.9% of
our total revenues. During 1998, our four largest customers accounted for
approximately 45.7% of our revenues with Fujifilm accounting for 22.7% and
Pinnacle 14.3%. Sales to these large customers have varied significantly from
year to year and will continue to fluctuate in the future. These sales also may
fluctuate significantly from quarter to quarter. We may not be able to retain
our key customers or these customers may cancel purchase orders or reschedule or
decrease their level of purchases from us. Any substantial decrease or delay in
sales to one or more of our key customers could harm our sales and financial
results. In addition, any difficulty in collecting amounts due from one or more
key customers could harm our financial results.
WE ARE DEPENDENT ON OUR RELATIONSHIP WITH FUJIFILM FOR A SIGNIFICANT PERCENTAGE
OF OUR PRODUCT SALES, AND IF THIS RELATIONSHIP WERE TERMINATED, OUR BUSINESS
WOULD BE HARMED.
Fujifilm has been our largest customer in three of the last five years.
Fujifilm purchases our products primarily as a distributor. Under our
arrangement with Fujifilm, Fujifilm acts as the primary distributor in Japan of
products developed by us under development contracts with Fujifilm. Fujifilm
also sells some of these products in Japan under its own name. We may sell these
products directly in Japan only to specified customers and must first buy the
products from Fujifilm. Fujifilm provides more sales and marketing support than
our other distributors. Fujifilm also has a nonexclusive license to distribute
most of our products outside of Japan. Fujifilm has provided wafer manufacturing
services on a most-favored terms basis to us since 1993 and has also provided
funding to support our development efforts. If our relationship with Fujifilm
were terminated, our business would be harmed.
OUR PRODUCTS GENERALLY HAVE LONG SALES CYCLES AND IMPLEMENTATION PERIODS, WHICH
INCREASES OUR COSTS IN OBTAINING ORDERS AND REDUCES THE PREDICTABILITY OF OUR
EARNINGS.
Our products are technologically complex. Prospective customers
generally must make a significant commitment of resources to test and evaluate
our products and to integrate them into larger systems. As a result, our sales
process is often subject to delays associated with lengthy approval processes
that typically accompany the design and testing of new products. The sales
cycles of our products often last for many months or even years. Longer sales
cycles require us to invest significant resources in attempting to make sales
and delay the generation of revenue.
Long sales cycles also subject us to other risks, including customers'
budgetary constraints, internal acceptance reviews and cancellations. In
addition, orders expected in one quarter could shift to another because of the
timing of customers' purchase decisions. The time required for our customers to
incorporate our products into
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their own can vary significantly with the needs of our customers and
generally exceeds several months, which further complicates our planning
processes and reduces the predictability of our operating results.
WE ARE NOT PROTECTED BY LONG-TERM CONTRACTS WITH OUR CUSTOMERS.
We generally do not enter into long-term purchase contracts with our
customers, and we cannot be certain as to future order levels from our
customers. When we do enter into a long-term contract, the contract is generally
terminable at the convenience of the customer. In the event of an early
termination by one of our major customers, it is unlikely that we will be able
to rapidly replace that revenue source, which would harm our financial results.
WE ARE DEPENDENT UPON OUR INTERNATIONAL SALES AND OPERATIONS; ECONOMIC,
POLITICAL OR MILITARY EVENTS IN A COUNTRY WHERE WE MAKE SIGNIFICANT SALES OR
HAVE SIGNIFICANT OPERATIONS COULD INTERFERE WITH OUR SUCCESS OR OPERATIONS THERE
AND HARM OUR BUSINESS.
During the first six months of 2000, 84.4% of our total revenues were
derived from international sales. During 1999, 79.5% of our total revenues were
derived from international sales. We anticipate that international sales will
continue to represent a significant portion of our total revenues for the
foreseeable future. In addition, substantially all of our semiconductor products
are manufactured, assembled and tested outside of the United States by
independent foundries and subcontractors.
We are subject to the risks inherent in doing business internationally,
including:
- unexpected changes in regulatory requirements;
- fluctuations in exchange rates;
- political and economic instability;
- imposition of tariffs and other barriers and restrictions; and
- the burdens of complying with a variety of foreign laws.
The majority of our research and development personnel and facilities
and a significant portion of our sales personnel are located in Israel.
Political, economic and military conditions in Israel directly affect our
operations. Some of our officers and employees in Israel are obligated to
perform up to 39 days of military reserve duty annually. The absence of these
employees for significant periods during the work week may cause us to operate
inefficiently during these periods.
During 1998, we opened an office in Shenzhen, China. Our operations in
China will be subject to the economic and political uncertainties affecting that
country. For example, the Chinese economy has experienced significant growth in
the past decade, but such growth has been uneven across geographic and economic
sectors and has recently been slowing. This growth may continue to decrease and
any slowdown may have a negative effect on our business. The Chinese economy is
also experiencing deflation which may continue in the future. This deflation
could result in devaluation of the Chinese Yuan, which could reduce our sales to
the Chinese market.
THE PRICES OF OUR PRODUCTS MAY BECOME LESS COMPETITIVE DUE TO FOREIGN EXCHANGE
FLUCTUATIONS.
Foreign currency fluctuations may affect the prices of our products.
Prices for our products are currently denominated in U.S. dollars for sales to
our customers throughout the world. If there is a significant devaluation of the
currency in a specific country, the prices of our products will increase
relative to that country's currency and our products may be less competitive in
that country. Also, we cannot be sure that our international customers will
continue to be willing to place orders denominated in U.S. dollars. If they do
not, our revenue and operating results will be subject to foreign exchange
fluctuations.
11
<PAGE>
OUR ABILITY TO COMPETE COULD BE JEOPARDIZED IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS FROM CHALLENGES BY THIRD PARTIES.
Our success and ability to compete depend in large part upon protecting
our proprietary technology. We rely on a combination of patent, trade secret,
copyright and trademark laws, non-disclosure and other contractual agreements
and technical measures to protect our proprietary rights. These agreements and
measures may not be sufficient to protect our technology from third-party
infringement, or to protect us from the claims of others. Monitoring
unauthorized use of our products is difficult and we cannot be certain that the
steps we have taken will prevent unauthorized use of our technology,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the United States. The laws of certain foreign countries
in which our products are or may be developed, manufactured or sold, including
various countries in Asia, may not protect our products or intellectual property
rights to the same extent as do the laws of the United States and thus make the
possibility of piracy of our technology and products more likely in these
countries. If competitors are able to use our technology, our ability to compete
effectively could be harmed.
WE COULD BECOME SUBJECT TO CLAIMS AND LITIGATION REGARDING INTELLECTUAL PROPERTY
RIGHTS, WHICH COULD SERIOUSLY HARM OUR BUSINESS AND REQUIRE US TO INCUR
SIGNIFICANT COSTS.
In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. In the past, we
have been subject to claims and litigation regarding alleged infringement of
other parties' intellectual property rights. We could become subject to
litigation in the future either to protect our intellectual property or as a
result of allegations that we infringe others' intellectual property rights.
Claims that our products infringe proprietary rights would force us to defend
ourselves and possibly our customers or manufacturers against the alleged
infringement. These claims and any resulting lawsuit, if successful, could
subject us to significant liability for damages and invalidation of our
proprietary rights. These lawsuits, regardless of their success, would likely be
time-consuming and expensive to resolve and would divert management time and
attention. Any potential intellectual property litigation could force us to do
one or more of the following:
- stop selling our products that incorporate the challenged intellectual
property;
- obtain from the owner of the infringed intellectual property right a
license to sell or use the relevant technology, which license may not
be available on reasonable terms or at all;
- pay damages; or
- redesign those products that use such technology.
If we are forced to take any of the foregoing actions, our business
could be severely harmed.
IF NECESSARY LICENSES OF THIRD-PARTY TECHNOLOGY ARE NOT AVAILABLE TO US OR ARE
VERY EXPENSIVE, OUR PRODUCTS COULD BECOME OBSOLETE.
From time to time we may be required to license technology from third
parties to develop new products or product enhancements. Third party licenses
may not be available to us on commercially reasonable terms, if at all. If we
are unable to obtain any third-party license required to develop new products
and product enhancements, we may have to obtain substitute technology of lower
quality or performance standards or at greater cost, either of which could
seriously harm the competitiveness of our products.
IF WE ARE NOT ABLE TO APPLY OUR NET OPERATING LOSSES AGAINST TAXABLE INCOME IN
FUTURE PERIODS, OUR FINANCIAL RESULTS WILL BE HARMED.
Our future net income and cash flow will be affected by our ability to
apply our net operating losses, which totaled approximately $48.0 million for
federal tax reporting purposes as of December 31, 1999, against taxable income
in future periods. Our net operating losses incurred prior to the consummation
of our initial public offering in 1995 that we can use to reduce future taxable
income for federal tax purposes are limited to approximately $3.0
12
<PAGE>
million per year. Changes in tax laws in the United States may further limit
our ability to utilize our net operating losses. Any further limitation on
our ability to utilize our net operating losses could harm our financial
condition. See Note 9 of Notes to Consolidated Financial Statements.
ANY ACQUISITIONS WE MAKE COULD DISRUPT OUR BUSINESS AND SEVERELY HARM OUR
FINANCIAL CONDITION.
We have made and intend to consider investments in or acquisitions of
complementary companies, products or technologies. In addition to our recent
acquisition of PixelCam, while we have no current agreements to do so, we may
acquire businesses, products or technologies in the future. In the event of any
future acquisitions, we could:
- issue stock that would dilute our current stockholders' percentage
ownership;
- incur debt;
- assume liabilities;
- incur amortization expenses related to goodwill and other intangible
assets; or
- incur large and immediate write-offs.
- Our operation of any acquired business will also involve numerous
risks, including:
- problems combining the purchased operations, technologies or products;
- unanticipated costs;
- diversion of management's attention from our core business;
- adverse effects on existing business relationships with customers;
- risks associated with entering markets in which we have no or limited
prior experience; and
- potential loss of key employees, particularly those of the purchased
organizations.
We may not be able to successfully integrate the business, products or
technologies of PixelCam or any businesses, products or technologies or
personnel that we might acquire in the future, and any failure to do so could
disrupt our business and seriously harm our financial condition.
OUR PRODUCTS COULD CONTAIN DEFECTS, WHICH COULD REDUCE SALES OF THOSE PRODUCTS
OR RESULT IN CLAIMS AGAINST US.
We develop complex and evolving products. Despite testing by us and our
customers, errors may be found in existing or new products. This could result
in, among other things, a delay in recognition or loss of revenues, loss of
market share or failure to achieve market acceptance. These defects may cause us
to incur significant warranty, support and repair costs, divert the attention of
our engineering personnel from our product development efforts and harm our
relationships with our customers. The occurrence of these problems could result
in the delay or loss of market acceptance of our products and would likely harm
our business. Defects, integration issues or other performance problems in our
products could result in financial or other damages to our customers or could
damage market acceptance of our products. Our customers could also seek damages
from us for their losses. A product liability claim brought against us, even if
unsuccessful, would likely be time consuming and costly to defend.
IF WE DO NOT MAINTAIN OUR CURRENT DEVELOPMENT CONTRACTS OR ARE UNABLE TO ENTER
INTO NEW DEVELOPMENT CONTRACTS, OUR BUSINESS COULD BE HARMED.
13
<PAGE>
We historically have generated a significant percentage of our total
revenues from development contracts, primarily with key customers. These
development contracts have provided us with partial funding for the development
of some of our products. Under these contracts, we receive payments upon
reaching certain development milestones. If we fail to achieve the milestones
specified in our existing development contracts, if our existing contracts are
terminated or we are unable to secure future development contracts, our ability
to cost-effectively develop new products would be reduced and our business would
be harmed.
WE MAY NEED ADDITIONAL FUNDS TO EXECUTE OUR BUSINESS PLAN, AND IF WE ARE UNABLE
TO OBTAIN SUCH FUNDS, WE WILL NOT BE ABLE TO EXPAND OUR BUSINESS AS PLANNED.
We may require substantial additional capital to finance our future
growth, secure additional foundry capacity and fund our ongoing research and
development activities beyond 2000. Our capital requirements will depend on many
factors, including:
- acceptance of and demand for our products;
- the types of arrangements that we may enter into with our independent
foundries; and
- the extent to which we invest in new technology and research and
development projects.
To the extent that our existing sources of liquidity and cash flow from
operations are insufficient to fund our activities, we may need to raise
additional funds. If we raise additional funds through the issuance of equity
securities, the percentage ownership of our existing stockholders would be
reduced. Further, such equity securities may have rights, preferences or
privileges senior to those of our common stock. Additional financing may not be
available to us when needed or, if available, it may not be available on terms
favorable to us.
IF WE FAIL TO MANAGE OUR FUTURE GROWTH, IF ANY, OUR BUSINESS WOULD BE HARMED.
We anticipate that our future growth, if any, will require us to
recruit and hire a substantial number of new engineering, managerial, sales and
marketing personnel. Our ability to manage our growth successfully will also
require us to expand and improve our administrative, operational, management and
financial systems and controls. Many of our key operations, including the major
portion of our research and development operations and a significant portion of
our sales and administrative operations, are located in Israel. A majority of
our sales and marketing and certain of our research and development and
administrative personnel, including our President and Chief Executive Officer
and other officers, are based in the United States. The geographic separation of
these operations places additional strain on our resources and our ability to
effectively manage our growth. If we are unable to manage growth effectively,
our business would be harmed.
WE RELY ON THE SERVICES OF OUR EXECUTIVE OFFICERS AND OTHER KEY PERSONNEL, WHOSE
KNOWLEDGE OF OUR BUSINESS AND INDUSTRY WOULD BE EXTREMELY DIFFICULT TO REPLACE.
Our success depends to a significant degree upon the continuing
contributions of our senior management. The loss of key management personnel
could delay product development cycles or otherwise harm our business. We may
not be able to retain the services of any of our key employees. We believe that
our future success will also depend in large part on our ability to attract,
integrate and retain highly-skilled engineering, managerial, sales and marketing
personnel, both in the United States and in Israel. Competition for such
personnel is intense, and we may not be successful in attracting, integrating
and retaining such personnel. Failure to attract, integrate and retain key
personnel could harm our ability to carry out our business strategy and compete
with other companies.
THE ISRAELI RATE OF INFLATION MAY NEGATIVELY IMPACT OUR COSTS IF IT EXCEEDS THE
RATE OF DEVALUATION OF THE NEW ISRAELI SHEKEL AGAINST THE U.S. DOLLAR.
A portion of the cost of our operations, relating mainly to our
personnel and facilities in Israel, is incurred in New Israeli Shekels. As a
result, we bear the risk that the rate of inflation in Israel will exceed the
rate of devaluation of the New Israeli Shekel in relation to the dollar, which
will increase our costs as expressed in dollars.
14
<PAGE>
To date, we have not engaged in hedging transactions. In the future, we may
enter into currency hedging transactions to decrease the risk of financial
exposure from fluctuations in the exchange rate of the U.S. dollar against
the New Israeli Shekel. These measures may not adequately protect us from the
impact of inflation in Israel.
THE GOVERNMENT PROGRAMS WE PARTICIPATE IN AND TAX BENEFITS WE RECEIVE REQUIRE US
TO MEET SEVERAL CONDITIONS AND MAY BE TERMINATED OR REDUCED IN THE FUTURE, WHICH
WOULD INCREASE OUR COSTS.
In the year ended December 31, 1999 and the six month ended June 30,
2000, we received an aggregate of $484,000 and $158,000, respectively, in grants
for research and development from the Chief Scientist in Israel's Ministry of
Industry and Trade. To continue to be eligible for these grants, our development
projects must be approved by the Chief Scientist on a case-by-case basis. If our
development projects are not approved by the Chief Scientist, we will not
receive grants to fund these projects, which would increase our research and
development costs. We also receive tax benefits, in particular exemptions and
reductions as a result of the "Approved Enterprise" status of our existing
operations in Israel. To be eligible for these tax benefits, we must maintain
our Approved Enterprise status by meeting conditions, including making specified
investments in fixed assets located in Israel and investing additional equity in
our Israeli subsidiary. If we fail to meet these conditions in the future, the
tax benefits would be canceled and we could be required to refund the tax
benefits already received. These tax benefits may not be continued in the future
at their current levels or at any level. Israeli governmental authorities have
indicated that the government may reduce or eliminate these benefits in the
future, which would harm our business.
WE HAVE ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND THERE ARE
PROVISIONS OF DELAWARE LAW THAT COULD PREVENT OR DELAY A CHANGE IN CONTROL OF
OUR COMPANY.
Our certificate of incorporation, our bylaws and Delaware law contain
provisions that could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders. These include
provisions:
- prohibiting a merger with a party that has acquired control of 15% or
more of our outstanding common stock, such as a party that has
completed a successful tender offer, until three years after that
party acquired control of 15% of our outstanding common stock;
- authorizing the issuance of up to 3,000,000 shares of "blank check"
preferred stock;
- eliminating stockholders' rights to call a special meeting of
stockholders; and
- requiring advance notice of any stockholder nominations of candidates
for election to our board of directors.
OUR STOCK PRICE HAS FLUCTUATED AND MAY CONTINUE TO FLUCTUATE WIDELY.
The market price of our common stock has fluctuated significantly since
our initial public offering in 1995. Between January 1, 1999 and December 31,
1999, the sale price of our common stock, as reported on the Nasdaq National
Market, ranged from a low of $8.875 to a high of $55.75. The market price of our
common stock is subject to significant fluctuations in the future in response to
a variety of factors, including:
- announcements concerning our business or that of our competitors or
customers;
- quarterly variations in operating results;
- announcements of technological innovations;
- the introduction of new products or changes in product pricing
policies by us or our competitors;
- proprietary rights or other litigation;
15
<PAGE>
- changes in analysts' earnings estimates;
- general conditions in the semiconductor industry; and
- developments in the financial markets.
In addition, the stock market has, from time to time, experienced
extreme price and volume fluctuations that have particularly affected the market
prices for semiconductor companies or technology companies generally and which
have been unrelated to the operating performance of the affected companies.
Broad market fluctuations of this type may reduce the future market price of our
common stock.
We are exposed to financial market risks including changes in interest
rates and foreign currency exchange rates.
The fair value of our investment portfolio or related income would not
be significantly impacted by either a 10% increase or decrease in interest rates
due mainly to the short-term nature of the major portion of our investment
portfolio.
A majority of our revenue and capital spending is transacted in U.S.
dollars, although a portion of the cost of our operations, relating mainly to
our personnel and facilities in Israel, is incurred in New Israeli Shekels. We
have not engaged in hedging transactions to reduce our exposure to fluctuations
that may arise from changes in foreign exchange rates. Based on our overall
currency rate exposure at June 30, 2000, a near-term 10% appreciation or
depreciation of the New Israeli Shekel would have an immaterial affect on our
financial condition.
16
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of
the Selling Stockholders. None of the Selling Stockholders has had a material
relationship with Zoran within the past three years other than as a result of
the ownership of the shares or other securities of Zoran. None of the Selling
Stockholders is the beneficial owner of 1% or more of Zoran's common stock. No
estimate can be given as to the amount of shares that will be held by the
Selling Stockholders after completion of this offering because the Selling
Stockholders may offer all or some of the shares and because there currently are
no agreements, arrangements or understandings with respect to the sale of any of
the shares. The shares offered by this prospectus may be offered from time to
time by the Selling Shareholders named below.
<TABLE>
<CAPTION>
SHARES OWNED
BEFORE SHARES TO BE SHARES OWNED
NAME OF SELLING STOCKHOLDERS OFFERING OFFERED(1) AFTER OFFERING
---------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Shawn Mark Hailey and Jan Elizabeth Crawford TTEE, Hailey Living 114,920 103,428 11,492
Trust U/A DTD 5/23/87
Kim Hailey TTEE, Kim Hailey Revocable Living Trust U/A DTD 114,920 103,428 11,492
12/29/93
Kevin E. Brehmer, and as Trustee of the Kevin E. Brehmer Living Trust 75,239 67,715 7,524
Rudolf Wiedemann 33,000 29,700 3,300
Brannon Harris 11,000 9,900 1,100
Jacob Dayan 10,560 9,504 1,056
Mark Sieders 7,480 6,732 748
Geoffrey Brehmer, Trustee of the Kevin E. Brehmer Children's Trust 1,760 1,584 176
Jason Huang 880 792 88
Sean Ogle 870 783 87
Terrence Lee Van Ausdall 595 536 59
Jin Liu 440 396 44
Christoffersen Family 176 158 18
Charlie Sodini 29 26 3
</TABLE>
(1) This registration statement also shall cover any additional shares of
common stock which become issuable in connection with the shares
registered for sale hereby by reason of any stock divided, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of Zoran's
outstanding shares of common stock.
17
<PAGE>
PLAN OF DISTRIBUTION
We have been advised by the selling stockholders that they may sell all
or a portion of their shares of common stock. The selling stockholders plan to
sell on the Nasdaq National Market, or otherwise. The selling stockholders may
sell their shares (1) at prices and on terms prevailing at the time of sale, (2)
at prices related to the then current market price, or (3) in negotiated
transactions. The selling stockholders may sell one or more of the following
methods:
- Block trades in which the broker or dealer so engaged will attempt to
sell the Shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction,
- Purchases by a broker or dealer as principal and resale by such broker
or dealer for its own account pursuant to this prospectus,
- On over-the-counter distribution in accordance with the rules of the
Nasdaq National Market,
- Ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
- Privately negotiated transactions.
There is no assurance that selling stockholders will offer or sell any
or all of their shares of common stock registered under this prospectus. An
escrow agent holds in escrow 37,187 of the shares of stock owned by the selling
stockholders. This escrow lasts until June 29, 2001, which is one year after the
closing of the acquisition of PixelCam. The escrow fund will secure
indemnification obligations in connection with the acquisition. Accordingly,
shares held in escrow are not available for sale at this time.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from the selling stockholders in
amounts to be negotiated prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales. We will pay all
expenses incident to the offering and sale to the public of shares by the
selling stockholders. We will not pay (1) underwriting commissions or similar
charges and (2) legal fees and disbursements of counsel for the selling
stockholders.
We agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of:
- Such time as each of the selling stockholders may sell all of the
shares held by him, her or it without registration pursuant to Rule 144
under the Securities Act within a three-month period;
- Such time as all of the shares have been sold by the selling
stockholders, or
- June 29, 2001, (one year following the date that we closed the
acquisition of PixelCam, Inc.).
We intend to de-register any of the shares not sold by the selling
stockholders at the end of such period. At such time, however, any unsold shares
may be freely tradable subject to compliance with Rule 144 of the Securities
Act.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
us by Gray Cary Ware & Freidenrich LLP, Palo Alto, California.
18
<PAGE>
EXPERTS
The financial statements incorporated in this prospectus by reference
to Annual Report on Form 10-K for the year ended December 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting. As of the date of this prospectus, partners of Gray
Cary Ware & Freidenrich LLP beneficially own an aggregate of 1,100 shares of our
common stock.
19
<PAGE>
-----------------------------------------------------
ZORAN CORPORATION
334,682 SHARES
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
July 28, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection
with the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and Nasdaq
filing fee.
<TABLE>
<CAPTION>
To be Paid
by the Registrant
-------------------
<S> <C>
SEC Registration Fee........................................................................ $ 89
Nasdaq filing fee........................................................................... $ 3,347
Accounting fees and expenses................................................................ $ 10,000
Legal fees and expenses..................................................................... $ 10,000
Transfer agent fees......................................................................... $
Miscellaneous expenses...................................................................... $
Total.............................................................................. $
</TABLE>
-------------------------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
permits indemnification of officers, directors and other corporate agents under
certain circumstances and subject to certain limitations. The Registrant's
Certificate of Incorporation and Bylaws provide that the Registrant shall
indemnify its directors, officers, employees and agents to the full extent
permitted by the DGCL, including in circumstances in which indemnification is
otherwise discretionary under such law. In addition, with the approval of the
Board of Directors and the stockholders, the Registrant has entered into
separate indemnification agreements with its directors, officers and certain
employees which require the Registrant, among other things, to indemnify them
against certain liabilities which may arise by reason of their status or service
(other than liabilities arising from willful misconduct of a culpable nature)
and to obtain directors' and officers' insurance, if available on reasonable
terms.
These indemnification provisions may be sufficiently broad to permit
indemnification of the Registrant's officers, directors and other corporate
agents for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act of 1933.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
The Registrant has obtained liability insurance for the benefit of its
directors and officers.
II-1
<PAGE>
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
------------- ------------------------------------------------------------------------------------------
<S> <C>
5.1 Opinion of Gray Cary Ware & Freidenrich LLP
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in the Signature Page contained in Part II of the Registration
Statement)
</TABLE>
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (the
"Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by
those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of
II-2
<PAGE>
the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom
the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to
provide such interim financial information.
D. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted
by such director, officer, or controlling person in connection with
the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
the registration statement as of the time it was declared
effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Santa Clara, State of California on July 28, 2000.
ZORAN CORPORATION
By: /s/ Levy Gerzberg
------------------------------------
Levy Gerzberg
President and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Levy Gerzberg and Karl Schneider, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-facts
and agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Levy Gerzberg President and Chief Executive Officer July 28, 2000
--------------------------------------- (Principal Executive Officer)
Levy Gerzberg
--------------------------------------- Chairman of the Board July __, 2000
Uzia Galil
/s/ Karl Schneider Vice President Finance and Chief July 28, 2000
--------------------------------------- Financial Officer (Principal Financial
Karl Schneider and Accounting Officer)
/s/ James D. Meindl
--------------------------------------- Director July 28, 2000
James D. Meindl
/s/ Arthur B. Stabenow
--------------------------------------- Director July 28, 2000
Arthur B. Stabenow
--------------------------------------- Director July ___, 2000
Philip M. Young
</TABLE>
II-4
