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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 2000
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CONEXANT SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 25-1799439
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4311 JAMBOREE ROAD
NEWPORT BEACH, CALIFORNIA 92660-3095
(949) 483-4600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
DENNIS E. O'REILLY, ESQ.
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
CONEXANT SYSTEMS, INC.
4311 JAMBOREE ROAD
NEWPORT BEACH, CALIFORNIA 92660-3095
(949) 483-4600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
CHARLES K. RUCK
LATHAM & WATKINS
650 TOWN CENTER DRIVE, 20TH FLOOR
COSTA MESA, CALIFORNIA 92626-1925
(714) 540-1235
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.
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, as amended (the "Securities Act"), 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
<TABLE>
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PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) PRICE PER SHARE(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $1 per
share (including the associated
Preferred Share Purchase Rights) 7,651,414 shares $33.31 $254,868,600.34 $67,285.31
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(1) The shares of common stock set forth in the Calculation of Registration Fee
Table, and which may be offered pursuant to this registration statement,
include, pursuant to Rule 416 under the Securities Act, such additional
number of shares of the registrant's common stock as may be issuable as a
result of any stock splits, stock dividends or similar events.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c), based on the average of the high and low prices of
the registrant's common stock as reported on the Nasdaq National Market on
July 24, 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS INCOMPLETE AND MAY BE CHANGED. THE SELLING
SECURITYHOLDERS 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.
SUBJECT TO COMPLETION, DATED JULY 28, 2000
PROSPECTUS
CONEXANT SYSTEMS, INC.
7,651,414 SHARES
OF
COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
In connection with the acquisition of all outstanding shares of
HotRail, Inc., on June 29, 2000 we issued 6,515,207 shares of our common stock
and options to purchase 14,678 shares of our common stock to the shareholders of
HotRail. In connection with the acquisition of all outstanding shares of Sierra
Imaging, Inc., on June 13, 2000 we issued 1,000,285 shares of our common stock
to the shareholders of Sierra. In connection with the acquisition of all
outstanding shares of Applied Telecom, Inc. on April 5, 2000, we issued 121,244
shares of our common stock to the shareholders of Applied Telecom. This
prospectus may be used by former shareholders of HotRail, Sierra and Applied
Telecom to resell the common stock received by them in the HotRail acquisition
transaction, the Sierra acquisition transaction and the Applied Telecom
acquisition transaction.
Our common stock is traded on the Nasdaq National Market under the
symbol "CNXT". On July 24, 2000, the last reported sale price for our common
stock on the Nasdaq National Market was $36.50 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE
CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2000.
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TABLE OF CONTENTS
PAGE
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 4
RISK FACTORS................................................... 5
INCORPORATION BY REFERENCE..................................... 17
USE OF PROCEEDS................................................ 18
PRICE RANGE OF COMMON STOCK.................................... 18
DIVIDEND POLICY................................................ 18
DESCRIPTION OF CAPITAL STOCK................................... 18
SELLING SECURITYHOLDERS........................................ 23
PLAN OF DISTRIBUTION........................................... 27
LEGAL MATTERS.................................................. 28
EXPERTS........................................................ 29
HOW TO OBTAIN MORE INFORMATION................................. 29
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CONEXANT SYSTEMS, INC.
Conexant Systems, Inc. (which may be referred to as Conexant, we, us
or our) is the world's largest independent company focused exclusively on
providing semiconductor products for communications electronics. With more than
30 years of experience in developing communications products, we draw upon our
expertise in mixed-signal processing to deliver integrated systems and
semiconductor products for a broad range of communications applications. These
products facilitate communications worldwide through wireline voice and data
communications networks, cordless and cellular wireless telephony systems,
personal imaging devices and equipment, and emerging cable and wireless
broadband communications networks.
Before December 31, 1998, we were a wholly-owned subsidiary of Rockwell
International Corporation and, together with certain other subsidiaries and
divisions of Rockwell, operated Rockwell's semiconductor systems business
("Semiconductor Systems"). On December 31, 1998, we became an independent,
public company by means of a tax-free spin-off from Rockwell. Our principal
offices are located at 4311 Jamboree Road, Newport Beach, California 92660-3095.
Unless the context otherwise indicates, as used in this prospectus, all
references to Conexant, we, us and our are to Semiconductor Systems for periods
prior to our spin-off from Rockwell and to Conexant Systems, Inc. and its
subsidiaries for periods following the spin-off.
The Conexant logo is a trademark of Conexant Systems, Inc. Other
brands, names and trademarks contained in this prospectus are the property of
their respective owners.
ACQUISITION OF HOTRAIL, INC.
On June 29, 2000, we completed the acquisition of all outstanding
capital stock of HotRail, Inc., an Internet infrastructure provider located in
San Jose, California, in a stock-for-stock merger transaction. The merger
consideration consisted of 6,515,207 shares of our common stock delivered to the
shareholders of HotRail (of which approximately 651,000 shares were placed in
escrow to pay any contingent indemnification obligations), options to purchase
1,336,619 shares of our common stock to the option holders of HotRail and
warrants to purchase 26,246 shares of our common stock to certain warrant
holders of HotRail. The aggregate value of the consideration was approximately
$349.8 million.
Under the Registration Rights Agreement dated as of June 27, 2000,
among Gordon Campbell and Donald R. Shriner, as agents for HotRail shareholders,
and Conexant, we have agreed to register the resale of shares of our common
stock issued at the closing of the HotRail acquisition transaction. The
6,529,885 shares of our common stock that are registered on this registration
statement in connection with the HotRail acquisition include (i) 6,515,207
shares of our common stock issued in exchange for all outstanding shares of
HotRail common stock and (ii) options to purchase 14,678 shares of our common
stock.
ACQUISITION OF SIERRA IMAGING, INC.
On June 13, 2000, we completed the acquisition of all outstanding
capital stock of Sierra Imaging, Inc., a leading supplier of digital camera
image-processing solutions located in Scotts Valley, California, in a
stock-for-stock merger transaction. The merger consideration consisted of
1,000,285 shares of our common stock delivered to the shareholders of Sierra (of
which approximately 100,000 shares were placed in escrow to pay any contingent
indemnification obligations) and options to purchase 225,169 shares of our
common stock to the option holders of Sierra. The aggregate value of the
consideration was approximately $39.2 million.
Under the Agreement and Plan of Merger dated as of May 23, 2000 among
Conexant and the shareholders of Sierra, we have agreed to register the resale
of shares of our common stock issued at the closing of the Sierra acquisition
transaction. We have also agreed to register the resale of shares of our common
stock issued into escrow as part of the indemnification holdback.
ACQUISITION OF APPLIED TELECOM, INC.
On April 13, 2000, we completed the acquisition of all outstanding
capital stock of Applied Telecom, Inc., a leading supplier of telecommunications
software and hardware products to the industry's top communications equipment
companies located in Lisle, Illinois, in a stock-for-stock merger transaction.
The merger consideration consisted of approximately $4.3 million in cash and
121,244 shares of our common stock delivered to the shareholders of Applied
Telecom and options to purchase 37,464 shares of our common stock delivered to
the option holders of Applied Telecom. The aggregate value of the consideration
was approximately $15.1 million. In addition, Applied Telecom shareholders may
be entitled to a performance earn-out payment of up to $4.0 million and
technology earn-out payments of up to an aggregate of $11.0 million payable upon
reaching certain technology milestones. Each of the performance earn-out payment
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and the technology earn-out payments is payable to Applied Telecom (i)
stockholders 60% in cash and 40% in stock and (ii) to option holders in cash.
Under the Registration Rights Agreement dated as of April 5, 2000 among
Conexant and the shareholders of Applied Telecom, we have agreed to register the
resale of shares of our common stock issued at the closing of the Applied
Telecom acquisition transaction.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains
statements relating to our future results. These statements include certain
projections and business trends which are "forward looking" within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are made only as of the date of this prospectus. We do not undertake
to update or revise the forward-looking statements, whether as a result of new
information, future events or otherwise.
Our actual results may differ materially from projected results as a
result of certain risks and uncertainties. These risks and uncertainties
include, without limitation, those described in under "Risk Factors" as well as
those set forth below and those detailed from time to time in our filings with
the SEC:
o global and market conditions, including, without limitation, the
cyclical nature of the semiconductor industry and the markets
related to our products and those of our customers;
o demand for and market acceptance of new and existing products;
o successful development of new products;
o timing of new product introductions;
o successful integration of HotRail, Sierra Imaging and Applied
Telecom as well as the successful integration of our other recent
acquisitions, including Maker Communications, Inc.;
o availability and extent of use of manufacturing capacity;
o pricing pressures and other competitive factors;
o changes in product mix;
o fluctuations in manufacturing yields;
o product obsolescence;
o our ability to develop and implement new technologies and to obtain
protection of the related intellectual property;
o the successful implementation of our diversification strategy;
o our labor relations and those of our customers and suppliers;
o uncertainties of litigation; and
o other risks and uncertainties.
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RISK FACTORS
Our business faces significant risks. The risks described below may not
be the only risks we face. Additional risks that we do not yet know of or that
we currently think are immaterial may also impair our business operations. If
any of the events or circumstances described in the following risks actually
occurs, our business, financial condition or results of operations could be
materially adversely affected and the trading price of our common stock could
decline. You should carefully consider and evaluate all of the information in
this prospectus, including the risk factors listed below.
OUR FUTURE SUCCESS DEPENDS LARGELY ON THE CONTINUED GROWTH OF OUR EXPANSION
PLATFORMS.
Our recent revenue growth is principally a result of our plan, begun in
1995, to diversify our business and expand into the following selected related
product platforms:
o Network Access;
o Wireless Communications;
o Digital Infotainment;
o Personal Imaging; and
o Personal Computing.
These product platforms represented 64 percent of our total revenues
for the first six months of fiscal 2000, compared to 51 percent for the first
six months of fiscal 1999. We believe that these platforms continue to offer
higher growth prospects than our dial-up PC modem business. Our future financial
performance and overall success, particularly in the long term, will depend
largely on the rate of sales growth and margin contribution of our expansion
platforms and whether these platforms will continue to increase their relative
contribution to our financial performance.
There are numerous risks inherent in our diversification and expansion
strategy, many of which are beyond our control. In certain product lines within
these expansion platforms, we currently have minimal market presence relative to
other more established competitors. Moreover, continued growth of these
expansion platforms depends, in part, on the ability of our customers to develop
new and enhanced products and to successfully introduce and market those
products to end users. We cannot assure you that we will be able to sustain the
recent growth of our expansion platforms or that our diversification and
expansion program will be successful. A failure of this program would have a
material adverse effect on our business, financial condition and results of
operations.
WE MUST INCUR SUBSTANTIAL RESEARCH AND DEVELOPMENT EXPENSES.
The semiconductor industry requires substantial investment in research
and development. In order to remain competitive, we must continue to make
substantial investments in research and development to develop new and enhanced
products. We cannot assure you that we will have sufficient resources to develop
new and enhanced technologies and competitive products. Our failure to continue
to make sufficient investments in research and development programs could have a
material adverse effect on our business, financial condition and results of
operations.
OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO TIMELY DEVELOP NEW PRODUCTS AND
REDUCE COSTS.
Our operating results will depend largely on our ability to continue to
introduce new and enhanced semiconductor products on a timely basis. Successful
product development and introduction depends on numerous factors, including,
among others:
o our ability to anticipate customer and market requirements and
changes in technology and industry standards;
o our ability to accurately define new products;
o our ability to timely complete new products and introduce our
products to the market;
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o our ability to differentiate our products from offerings of our
competitors; and
o market acceptance of our products.
Furthermore, we are required to continually evaluate expenditures for
planned product development and to choose among alternative technologies based
upon our expectations of future market growth. We cannot assure you that we will
be able to develop and introduce new or enhanced products in a timely and
cost-effective manner, that our products will satisfy customer requirements or
achieve market acceptance, or that we will be able to anticipate new industry
standards and technological changes. We also cannot assure you that we will be
able to respond successfully to new product announcements and introductions by
competitors.
In addition, prices of established products may decline, sometimes
significantly, over time. We believe that in order to remain competitive we must
continue to reduce the cost of producing and delivering existing products at the
same time that we develop and introduce new or enhanced products. We cannot
assure you that we will be able to continue to reduce the cost of our products
to remain competitive.
WE MUST INCUR SIGNIFICANT CAPITAL EXPENDITURES FOR MANUFACTURING TECHNOLOGY AND
EQUIPMENT TO REMAIN COMPETITIVE.
The semiconductor industry is highly capital intensive. Semiconductor
manufacturing requires a constant upgrading of process technology to remain
competitive, as new and enhanced semiconductor processes are developed which
permit smaller, more efficient and more powerful semiconductor devices. We
maintain our own manufacturing, assembly and test facilities which have required
and will continue to require significant investments in manufacturing technology
and equipment.
We expect fiscal 2000 capital expenditures to be in excess of $300
million, compared to $214 million spent on capital expenditures during fiscal
1999. There can be no assurance that we will have sufficient capital resources
to make necessary investments in manufacturing technology and equipment.
WE FACE A RISK THAT CAPITAL NEEDED FOR OUR BUSINESS WILL NOT BE AVAILABLE WHEN
WE NEED IT.
We believe that cash flows from operations, existing cash reserves, and
available borrowings under our three-year $350 million secured revolving credit
facility will be sufficient to satisfy our future research and development,
capital expenditure, working capital and other financing requirements. However,
we cannot assure you that this will be the case or that we will have access to
alternative sources of capital on favorable terms or at all.
In addition, we have and will continue to review on an ongoing basis
strategic investments and acquisitions which will help us grow our business.
These investments and acquisitions may require additional capital resources. We
cannot assure you that the capital required to fund these investments and
acquisitions will be available in the future.
OUR OPERATING RESULTS MAY BE IMPACTED BY SUBSTANTIAL QUARTERLY AND ANNUAL
FLUCTUATIONS AND MARKET DOWNTURNS.
These fluctuations are due to a number of factors, many of which are
beyond our control. These factors include, among others:
o the effects of competitive pricing pressures;
o decreases in average selling prices of our products;
o production capacity levels and fluctuations in manufacturing yields;
o availability and cost of products from our suppliers;
o the gain or loss of significant customers;
o our ability to develop, introduce and market new products and
technologies on a timely basis;
o new product and technology introductions by competitors;
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o changes in the mix of products produced and sold;
o market acceptance of our products and our customers' products;
o intellectual property disputes;
o seasonal customer demand;
o the timing of significant orders; and
o the timing and extent of product development costs.
General economic or other conditions causing a downturn in the market
for semiconductor products, affecting the timing of customer orders or causing
order cancellations or rescheduling of orders, could also adversely affect our
operating results. Moreover, our customers may change delivery schedules or
cancel or reduce orders without significant penalty and generally are not
subject to minimum purchase requirements.
The foregoing factors are difficult to forecast, and these, as well as
other factors, could materially adversely affect our quarterly or annual
operating results. If our operating results fail to meet the expectations of
analysts or investors, it could materially and adversely affect the price of our
common stock.
WE FACE A RISK THAT WE WILL BE UNABLE TO INTEGRATE COMPANIES WE ACQUIRE.
In addition to the acquisition of HotRail, Sierra Imaging and Applied
Telecom we have recently completed several acquisitions, including the
acquisitions of Maker Communications, Inc., Philsar Semiconductor Inc.,
Microcosm Communications Limited, the wireless broadband business of Oak
Technology, Inc., and Istari Design, Inc. On an ongoing basis, we evaluate
acquisitions and may make additional acquisitions in the future. Integrating
acquired organizations and their products and services may be expensive,
time-consuming and a strain on our resources. Risks we could face with respect
to acquisitions include:
o the difficulty of integrating acquired technology into our product
offerings;
o the failure successfully to integrate acquired technology, resulting
in the impairment of amounts currently capitalized as intangible
assets;
o the impairment of relationships with employees and customers;
o the difficulty of coordinating and integrating
geographically-dispersed operations;
o the difficulty of coordinating and integrating overall business
strategies and sales and marketing and research and development
efforts;
o the potential disruption of our ongoing business and distraction of
management;
o the maintenance of brand recognition of acquired businesses;
o the maintenance of corporate cultures, controls, procedures and
policies; and
o the potential unknown liabilities associated with acquired
businesses.
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Our inability to address any of these risks successfully could harm our
business.
We may have difficulty in integrating any future acquisitions with our
current organization, technology and product and services offerings, and any
acquired features, functions, products or services may not achieve market
acceptance.
WE MAY NOT BE ABLE TO SUSTAIN OUR OPERATING PROFITABILITY AND MAY INCUR FURTHER
LOSSES AS A RESULT OF ACQUISITION-RELATED AMORTIZATION AND IN-PROCESS RESEARCH
AND DEVELOPMENT EXPENSES.
In September 1998, we announced a comprehensive plan to restructure our
business to position us for future profitability. This plan resulted in fourth
quarter fiscal 1998 special charges of approximately $147 million and included
workforce reductions, facility closures and other actions. Our fiscal 1998
full-year net loss was approximately $262 million, including inventory
write-offs of approximately $66 million, a charge for intellectual property
matters of approximately $43 million and the fourth quarter special charges.
Although we returned to profitability in fiscal 1999, for the first six months
of fiscal 2000 we incurred a net loss of $132 million, due primarily to $145.9
million of in-process research and development expense arising out of our recent
acquisitions. Also as a result of our recent acquisitions, we expect to record
amortization expenses related to goodwill and intangible assets of approximately
$200 million annually for five years. There can be no assurance that we will not
incur further losses as a result of these types of write-offs, which are not
uncommon in acquisitions of technology companies, as we make additional
acquisitions or that we will be able to return to profitability in the near
future.
OUR CREDIT FACILITY MAY RESTRICT OUR OPERATING AND FINANCIAL FLEXIBILITY.
We entered into a three-year $350 million secured revolving credit
facility in December 1998. This credit facility is guaranteed by each of our
domestic subsidiaries and includes covenants that may restrict our operating and
financial flexibility in the future. Substantially all of our assets and the
assets of our domestic subsidiaries and the stock of our subsidiaries, subject
to certain exceptions, have been pledged as collateral to secure repayment of
this credit facility. The credit facility includes restrictions on capital
expenditures, indebtedness, acquisitions, mergers, asset sales and liens on
assets that apply to us and our subsidiaries. We also must meet certain
financial tests and maintain certain financial ratios. Although we believe that
we will be able to comply with these requirements, compliance with these
requirements may restrict our operating and financial flexibility. We cannot
assure you that we will in fact be able to satisfy all of the requirements in
the credit facility. If we do not satisfy the financial ratios or comply with
the other covenants included in the credit facility, the lenders under the
credit facility could declare all amounts owed to them due and payable and
proceed against their collateral. Such a foreclosure on the collateral would
have a material adverse effect on our business, financial condition and results
of operations.
WE ENGAGE IN LITIGATION TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND TO
DEFEND OURSELVES AGAINST CLAIMS OF INFRINGEMENT BY OTHERS.
Our business faces risks of intellectual property infringement and
litigation. The semiconductor industry is characterized by vigorous protection
and pursuit of intellectual property rights. In the past, we have found it
necessary to engage in litigation to enforce our intellectual property rights,
to protect our trade secrets or to determine the validity and scope of
proprietary rights of others, including our customers. We expect future
litigation on similar grounds.
We have received, and may continue to receive in the future, claims of
infringement of intellectual property rights of others. We are a party to
certain pending proceedings involving such claims. We cannot assure you that:
o we will prevail in pending actions;
o other actions alleging infringement by us of third-party patents or
invalidity of our patents will not be asserted or prosecuted against
us; or
o any assertions of infringement or actions seeking to establish the
invalidity of our patents will not materially and adversely affect
our business, financial condition and results of operations.
Even if we are successful in such matters, the attempted enforcement of
intellectual property rights by or against us could result in significant costs
and diversion of our resources. It could also have a material adverse effect on
our business, financial condition and results of operations. If claims or
actions are asserted or commenced against us, in certain situations we may seek
to obtain licenses under a third party's intellectual property rights to avert
or resolve a controversy. We cannot assure you that under such circumstances a
license would be available on commercially reasonable terms, if at all.
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WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS.
We rely primarily on patent, copyright, trademark and trade secret
laws, as well as nondisclosure and confidentiality agreements and other methods,
to protect our proprietary technologies and processes. In addition, we often
incorporate the intellectual property of our customers into our designs, and
have certain obligations with respect to the non-use and non-disclosure of their
intellectual property. We cannot assure you that:
o the steps we take to prevent misappropriation or infringement of our
intellectual property or the intellectual property of our customers
will be successful;
o any existing or future patents will not be challenged, invalidated
or circumvented; or
o any of the measures described above would provide meaningful
protection.
Despite these precautions, it may be possible for a third party to copy
or otherwise obtain and use our technology without authorization, develop
similar technology independently or design around our patents. If any of our
patents fails to protect our technology it would make it easier for our
competitors to offer similar products. In addition, effective copyright,
trademark and trade secret protection may be unavailable or limited in certain
countries.
OUR INTELLECTUAL PROPERTY INDEMNIFICATION PRACTICE MAY ADVERSELY IMPACT OUR
BUSINESS.
We have historically indemnified our customers for certain costs and
damages of patent infringement in circumstances where our product is the factor
creating the customer's infringement exposure. This practice generally excludes
coverage in circumstances where infringement arises out of the combination of
our products with products of others. This indemnification practice could have a
material adverse effect on our business, financial condition and results of
operations, particularly in situations where our products are designed for use
in devices manufactured by our customers that comply with international
standards. These international standards are often covered by patent rights held
by our competitors or our customers. The combined costs of obtaining licenses
from all holders of patent rights essential to such standards could be high and
could have a material adverse effect on our business, financial condition and
results of operations.
WE OPERATE IN THE HIGHLY CYCLICAL SEMICONDUCTOR INDUSTRY.
The semiconductor industry is highly cyclical and is characterized by
constant and rapid technological change, rapid product obsolescence and price
erosion, evolving standards, short product life cycles and wide fluctuations in
product supply and demand.
The industry has experienced significant downturns, often in connection
with, or in anticipation of, maturing product cycles (of both semiconductor
companies' and their customers' products) and declines in general economic
conditions. These downturns have been characterized by diminished product
demand, production overcapacity, high inventory levels and accelerated erosion
of average selling prices.
We have, in the recent past, experienced these conditions in our
dial-up PC modem chipset business and may experience such downturns in this and
other product platforms in the future. For example, in fiscal 1998, average
selling prices for our Personal Computing products fell by approximately 50
percent, the annual growth rate for such products fell to approximately 20
percent and in the fourth quarter, we made a provision for excess and obsolete
inventories of approximately $66 million due to lower than anticipated demand,
price declines and obsolescence of certain products. Any future downturns of
this nature could have a material adverse effect on our business, financial
condition and results of operations. From time to time the semiconductor
industry also has experienced periods of increased demand and production
capacity constraints. We may experience substantial changes in future operating
results due to general semiconductor industry conditions, general economic
conditions and other factors.
WE ARE SUBJECT TO INTENSE COMPETITION AND COULD LOSE BUSINESS TO OUR
COMPETITORS.
The semiconductor industry in general and the markets in which we
compete in particular are intensely competitive. We compete worldwide with a
number of United States and international semiconductor manufacturers that are
both larger and smaller than us in terms of resources and market share. We
currently face significant competition in our markets and expect that intense
price and product competition will continue. This competition has resulted and
is expected to continue to result in declining average selling
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prices for our products. We also anticipate that additional competitors will
enter our markets as a result of growth opportunities in communications
electronics, the trend toward global expansion by foreign and domestic
competitors, technological and public policy changes and relatively low barriers
to entry in certain markets of the industry.
We currently enjoy substantial market share in our V.90 and facsimile
modem chipset product lines. However, as we continue our diversification
strategy and develop our expansion platforms, we are and will be competing in
certain new markets in which we have lesser market shares and existing
competitors have dominant market positions. Moreover, as with many companies in
the semiconductor industry, customers for certain of our products offer other
products that compete with similar products offered by us.
We believe that the principal competitive factors for integrated
circuit ("IC") providers to our addressed markets are:
o product performance;
o level of integration;
o quality;
o compliance with industry standards;
o price;
o time-to-market;
o system cost;
o design and engineering capabilities;
o new product innovation; and
o customer support.
The specific bases on which we compete vary by product platform. Many
of our current and potential competitors have certain advantages, including:
o longer operating histories and presence in key markets;
o greater name recognition;
o access to larger customer bases; and
o significantly greater financial, sales and marketing, manufacturing,
distribution, technical and other resources than we have.
As a result, such competitors may be able to adapt more quickly to new or
emerging technologies and changes in customer requirements or may be able to
devote greater resources to the development, promotion and sale of their
products than Conexant.
Current and potential competitors also have established or may
establish financial or strategic relationships among themselves or with our
existing or potential customers, resellers or other third parties. These
relationships may affect customers' purchasing decisions. Accordingly, it is
possible that new competitors or alliances among competitors could emerge and
rapidly acquire significant market share. We cannot assure you that we will be
able to compete successfully against current and potential competitors. We also
cannot assure you that competition will not have a material adverse effect on
our business, financial condition and results of operations.
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Many of our competitors have combined with each other and consolidated
their businesses, including the consolidation of competitors with our customers.
This is attributable to a number of factors, including the high-growth nature of
the communications electronic industry and the time-to-market pressures on
suppliers to decrease the time required for product conception, research and
development, sampling and production launch before a product reaches the market.
This consolidation trend is expected to continue, since investments, alliances
and acquisitions may enable semiconductor suppliers, including Conexant and our
competitors, to augment technical capabilities or to achieve faster
time-to-market for their products than would be possible solely through internal
development.
Consolidations by industry participants, including in some cases,
acquisitions of certain of our customers by our competitors, are creating
entities with increased market share, customer base, technology and marketing
expertise in markets in which we compete. These developments may significantly
and adversely affect our current markets, the markets we are seeking to serve
and our ability to compete successfully in those markets.
WE MAY NOT BE ABLE TO KEEP ABREAST OF THE RAPID TECHNOLOGICAL CHANGES IN OUR
MARKETS.
The demand for our products can change quickly and in ways we may not
anticipate because our markets generally exhibit the following characteristics:
o rapid technological developments;
o evolving industry standards;
o changes in customer requirements;
o frequent new product introductions and enhancements; and
o short product life cycles with declining prices over the life cycle
of the product.
Our products could become obsolete sooner than anticipated because of a
faster than anticipated change in one or more of the technologies related to our
products or in market demand for products based on a particular technology,
particularly due to the introduction of new technology that represents a
substantial advance over current technology. Such an event could have a material
adverse effect on our business, financial condition and results of operations.
For example, increased market demand for sub-$1,000 PCs is causing PC OEMs to
require less expensive modem devices, such as software modems, which require
fewer semiconductor components than our traditional modem chipsets. As a result,
these devices may render obsolete the traditional hardware upgrade path for our
modem products. Currently accepted industry standards are also subject to
change, which may contribute to the obsolescence of our products.
OUR MANUFACTURING PROCESS IS EXTREMELY COMPLEX AND SPECIALIZED.
Our manufacturing operations are complex and subject to disruption due
to causes beyond our control. The fabrication of integrated circuits is an
extremely complex and precise process consisting of hundreds of separate steps.
It requires production in a highly controlled, clean environment. Minute
impurities, errors in any step of the fabrication process, defects in the masks
used to print circuits on a wafer or a number of other factors can cause a
substantial percentage of wafers to be rejected or numerous die on each wafer
not to function.
Our operating results are highly dependent upon our ability to produce
large volumes of integrated circuits at acceptable manufacturing yields. Our
operations may be affected by lengthy or recurring disruptions of operations at
any of our production facilities or those of our subcontractors. These
disruptions may include labor strikes, work stoppages, fire, earthquake,
flooding or other natural disasters. These disruptions could cause significant
delays in shipments until we could shift the products from an affected facility
or subcontractor to another facility or subcontractor.
In the event of these types of delays, we cannot assure you that the
required alternate capacity, particularly wafer production capacity, would be
available on a timely basis or at all. Even if alternate wafer production
capacity is available, we may not be able to obtain it on favorable terms, which
would result in a loss of customers. Any inability to obtain sufficient
manufacturing capacities to meet demand, either at our own facilities or through
foundry or similar arrangements with others, could have a material adverse
effect on our business, financial condition and results of operations. Certain
of our manufacturing facilities are located near major
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earthquake fault lines, including our California and Mexico facilities. We
maintain only minimal earthquake insurance coverage on these facilities.
Due to the highly specialized nature of the gallium arsenide
semiconductor manufacturing process, in the event of a disruption at our Newbury
Park, California wafer fabrication facility, alternate gallium arsenide
production capacity would not be readily available from third party sources.
Although we recently entered into a multi-year agreement with a foundry that
guarantees us access to additional gallium arsenide wafer production capacity
beginning in the fourth quarter of calendar year 2000, a disruption of
operations at our Newbury Park wafer fabrication facility or the interruption in
the supply of epitaxial wafers used in our gallium arsenide process could have a
material adverse effect on our business, financial condition and results of
operations, particularly with respect to our Wireless Communications products.
Our ability to sustain our revenue growth is also dependent on our
ability to secure adequate additional manufacturing capacity, including wafer
production capacity. We have recently entered into agreements with outside
foundries to secure additional wafer manufacturing capacity, including
additional gallium arsenide wafer production capacity. In addition, we continue
to explore wafer manufacturing alternatives, which may include increased use of
outside foundries, entering into new or expanded business relationships with
respect to wafer manufacturing or other actions related to our wafer
manufacturing facilities. We cannot assure you that we will be successful in
securing adequate additional manufacturing capacity, and our inability to do so
could result in delays in customer shipments.
WE MAY NOT BE ABLE TO ACHIEVE MANUFACTURING YIELDS TO MAINTAIN OUR
PROFITABILITY.
Minor deviations in the manufacturing process can cause substantial
manufacturing yield loss, and in some cases, cause production to be suspended.
Manufacturing yields for new products initially tend to be lower as we complete
product development and commence volume manufacturing, and will typically
increase as we ramp to full production. Our forward product pricing includes
this assumption of improving manufacturing yields and, as a result, material
variances between projected and actual manufacturing yields have a direct effect
on our gross margin and profitability. The difficulty of forecasting
manufacturing yields accurately and maintaining cost competitiveness through
improving manufacturing yields will continue to be magnified by the ever
increasing process complexity of manufacturing integrated circuit products. Our
manufacturing operations also face pressures arising from the compression of
product life cycles which requires us to bring new products on line faster and
for shorter periods while maintaining acceptable manufacturing yields and
quality without, in many cases, reaching the longer-term, high volume
manufacturing conducive to higher manufacturing yields and declining costs.
WE ARE DEPENDENT UPON THIRD PARTIES FOR THE SUPPLY OF RAW MATERIALS AND
COMPONENTS.
We believe we have adequate sources for the supply of raw materials and
components for our manufacturing needs with suppliers located around the world.
Although we currently purchase wafers used in the production of our CMOS
products from one major supplier, such wafers are available from several other
suppliers. We are currently dependent on two suppliers for epitaxial wafers used
in the gallium arsenide semiconductor manufacturing processes at our Newbury
Park, California facility and we are in the process of arranging another
supplier for epitaxial wafers. The number of qualified alternative suppliers for
wafers is limited and the process of qualifying a new wafer supplier could
require a substantial leadtime. Although we historically have not experienced
any significant difficulties in obtaining an adequate supply of raw materials
and components necessary for our manufacturing operations, the loss of a
significant supplier or the inability of a supplier to meet performance and
quality specifications or delivery schedules could have a material adverse
effect on our business, financial condition and results of operations.
UNCERTAINTIES INVOLVING THE ORDERING AND SHIPMENT OF OUR PRODUCTS COULD
ADVERSELY AFFECT OUR BUSINESS.
Our sales are typically made pursuant to individual purchase orders and
we generally do not have long-term supply arrangements with our customers. Our
customers may cancel orders until 30 days prior to the shipping date. In
addition, we sell a portion of our products through distributors who have
certain rights to return unsold products to us. Moreover, semiconductor
companies, including Conexant, routinely manufacture or purchase inventory based
on estimates of customer demand for their products, which is difficult to
predict. The cancellation or deferral of product orders, the return of
previously sold products or overproduction due to the failure of anticipated
orders to materialize could result in our holding excess or obsolete inventory
which could have a material adverse effect on our business, financial condition
and results of operations.
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WE ARE SUBJECT TO THE RISKS OF DOING BUSINESS INTERNATIONALLY.
For the six months ended March 31, 2000, approximately 69 percent of
our total sales were to customers located outside the United States, primarily
in the Asia-Pacific and European countries. In addition, we have facilities and
suppliers located outside the United States, including our assembly and test
facility in Mexicali, Mexico and third-party foundries located in the
Asia-Pacific region. Our international sales and operations are subject to a
number of risks inherent in selling and operating abroad. These include, but are
not limited to, risks regarding:
o currency exchange rate fluctuations;
o local economic and political conditions;
o disruptions of capital and trading markets;
o restrictive governmental actions (such as restrictions on transfer
of funds and trade protection measures, including export duties and
quotas and customs duties and tariffs);
o changes in legal or regulatory requirements;
o import or export licensing requirements;
o limitations on the repatriation of funds;
o difficulty in obtaining distribution and support;
o nationalization;
o the laws and policies of the United States affecting trade, foreign
investment and loans;
o tax laws; and
o limitations on our ability under local laws to protect our
intellectual property.
Because most of our international sales, other than sales to Japan
(which are denominated principally in Japanese yen), are currently denominated
in U.S. dollars, our products could become less competitive in international
markets if the value of the U.S. dollar increases relative to foreign
currencies.
Moreover, we may be competitively disadvantaged relative to our
competitors located outside the United States who may benefit from a devaluation
of their local currency. We cannot assure you that the factors described above
will not have a material adverse effect on our ability to increase or maintain
our foreign sales or on our business, financial condition and results of
operations.
Our past operating performance has been impacted by adverse economic
conditions in the Asia-Pacific region, which have increased the uncertainty with
respect to the long-term viability of certain of our customers and suppliers in
the region. Sales to customers in Japan and other countries in the Asia-Pacific
region, principally Taiwan, South Korea and Hong Kong, represented approximately
58 percent of total revenues in the first six months of fiscal 2000.
We enter into foreign currency forward exchange contracts, principally
for the Japanese yen, to minimize risk of loss from currency exchange rate
fluctuations for foreign currency commitments entered into in the ordinary
course of business. We have not experienced nor do we anticipate any material
adverse effect on our results of operations or financial condition related to
these foreign currency forward exchange contracts. We have not entered into
foreign currency forward exchange contracts for other purposes and our financial
condition and results of operations could be affected (negatively or positively)
by currency fluctuations.
OUR SUCCESS DEPENDS ON OUR ABILITY TO EFFECT SUITABLE INVESTMENTS, ALLIANCES OR
ACQUISITIONS.
Although we invest significant resources in research and development
activities, the complexity and rapidity of technological changes make it
impractical for us to pursue development of all technological solutions on our
own. As part of our goal to provide advanced semiconductor product systems, we
have and will continue to review on an ongoing basis investment, alliance and
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<PAGE> 15
acquisition prospects that would complement our existing product offerings,
augment our market coverage or enhance our technological capabilities. However,
we cannot assure you that we will be able to identify and consummate suitable
investment, alliance or acquisition transactions in the future.
Moreover, if we consummate such transactions, they could result in:
o the diversion of management resources;
o dilutive issuances of equity securities;
o large one-time write-offs;
o the incurrence of debt and contingent liabilities;
o amortization expenses related to goodwill and other intangible
assets; and
o other acquisition related costs.
Any of these events could materially adversely affect our business,
financial condition and results of operations and the price of our common stock.
For example, as a result of our fiscal 2000 acquisitions, we recorded charges of
$196.4 million for purchased in-process research and development and we expect
to record amortization expense related to goodwill and intangible assets in
excess of $300 million annually for five years.
The ultimate success of any such investments, alliances or acquisitions
in achieving the purposes for which they are undertaken will depend on our
ability to integrate successfully any acquired business and to retain key
personnel, as well as a variety of other factors.
OUR SUCCESS COULD BE NEGATIVELY AFFECTED IF KEY PERSONNEL LEAVE.
Our future success depends largely upon the continued service of our
executive officers and other key management and technical personnel. Our success
also depends on our ability to continue to attract, retain and motivate
qualified personnel. We are dependent on key technical personnel. They represent
a significant asset, as the source of our technological and product innovations.
The competition for such personnel is intense in the semiconductor industry. We
cannot assure you that we will be able to continue to attract and retain
qualified management and other personnel necessary for the design, development,
manufacture and sale of our products.
We may have difficulty attracting and retaining key personnel during
periods of poor operating performance. The loss of the services of one or more
of our key employees or our inability to attract, retain and motivate qualified
personnel could have a material adverse effect on our business, financial
condition and results of operations. In particular, the loss of the services of
Dwight W. Decker, our Chairman and Chief Executive Officer, or certain key
design and technical personnel could materially and adversely affect us.
OUR MANAGEMENT TEAM MAY BE SUBJECT TO A VARIETY OF DEMANDS FOR ITS ATTENTION.
Our management currently faces a variety of challenges. These include
implementing our ongoing diversification and expansion strategy and continuing
to expand the infrastructure and systems necessary for us to operate as an
independent public company and to integrate our recent acquisitions. While we
believe that we have sufficient management resources to execute each of these
initiatives, we cannot assure you that we will have these resources or that our
initiatives will be successfully implemented. Failure to implement these
initiatives successfully could have a material adverse effect on our business,
financial condition and results of operations.
WE MAY BE LIABLE FOR PENALTIES UNDER ENVIRONMENTAL LAWS, RULES AND REGULATIONS,
WHICH COULD NEGATIVELY AFFECT OUR SUCCESS.
We use a variety of chemicals in our manufacturing operations and are
subject to a wide range of environmental protection regulations in the United
States, Mexico and Canada. While we have not experienced any material adverse
effect on our operations as
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a result of such regulations, we cannot assure you that current or future
regulations would not have a material adverse effect on our business, financial
condition and results of operations.
In the United States, environmental regulations often require parties
to fund remedial action regardless of fault. Consequently, it is often difficult
to estimate the future impact of environmental matters, including potential
liabilities. We cannot assure you that the amount of expense and capital
expenditures that might be required to complete remedial actions and to continue
to comply with applicable environmental laws will not have a material adverse
effect on our business, financial condition and results of operations.
We have been designated as a potentially responsible party at one
Superfund site located at a former silicon wafer manufacturing facility and
steel fabrication plant in Parker Ford, Pennsylvania formerly occupied by
Semiconductor Systems. The site was also formerly occupied by Recticon
Corporation and Allied Steel Products Corporation, each of whom has been named
as a potentially responsible party and each of whom is insolvent. We have
accrued approximately $4 million at March 31, 2000 for the cost of groundwater
remediation, including installation of a public water supply line and
groundwater pump and treatment system, as well as routine groundwater sampling.
In addition, we are engaged in two other remediations of groundwater
contamination at our Newport Beach and Newbury Park, California facilities for
which we have accrued approximately $3 million for the costs of remediation at
March 31, 2000. Pursuant to our agreement with Rockwell, we have assumed
liabilities in respect of environmental matters related to current and former
operations of Conexant.
WE HAVE A LIMITED HISTORY AS AN INDEPENDENT COMPANY.
We have a limited operating history as an independent company.
Accordingly, the financial information incorporated into this prospectus for
periods prior to January 1, 1999 may not necessarily reflect the results of the
operations, financial position and cash flows we would have achieved if we had
operated independently during the periods presented. We cannot assure you that
we will be profitable on an ongoing basis as a stand-alone company. Prior to the
spin-off, we relied on Rockwell for cash investments and various financial and
administrative services.
THE VALUE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY.
The trading price of our common stock fluctuates significantly. Since
our common stock began trading publicly, the reported sale price of our common
stock on the Nasdaq National Market has been as high as $132-1/2 and as low as
$6-27/32 per share. This price may be influenced by many factors, including:
o our performance and prospects;
o the depth and liquidity of the market for our common stock;
o investor perception of Conexant and the industry in which it
operates;
o changes in earnings estimates or buy/sell recommendations by
analysts;
o general financial and other market conditions; and
o domestic and international economic conditions.
In addition, public stock markets have experienced, and are currently
experiencing, extreme price and trading volume volatility, particularly in high
technology sectors of the market. This volatility has significantly affected the
market prices of securities of many technology companies for reasons frequently
unrelated to or disproportionately impacted by the operating performance of
these companies. These broad market fluctuations may adversely affect the market
price of our common stock.
CERTAIN PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS AND RIGHTS AGREEMENT AND
DELAWARE LAW MAY MAKE IT DIFFICULT FOR SOMEONE TO ACQUIRE CONTROL OF CONEXANT.
We have established certain anti-takeover measures that may affect our
common stock and convertible notes. Our restated certificate of incorporation,
our by-laws, our rights agreement with ChaseMellon Shareholder Services, L.L.C.,
as rights agent, dated
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as of November 30, 1998, as amended, and the Delaware General Corporation Law
contain several provisions that would make more difficult an acquisition of
control of Conexant in a transaction not approved by our board of directors. Our
restated certificate of incorporation and by-laws include provisions such as:
o the ability of our board of directors to issue shares of our
preferred stock in one or more series without further authorization
of our shareowners;
o a fair price provision;
o a prohibition on shareowner action by written consent;
o a requirement that shareowners provide advance notice of any
shareowner nominations of directors or any proposal of new business
to be considered at any meeting of shareowners;
o a requirement that a supermajority vote be obtained to remove a
director for cause or to amend or repeal certain provisions of our
restated certificate of incorporation or by-laws;
o elimination of the right of shareowners to call a special meeting of
shareowners; and
o the division of our board of directors into three classes to be
elected on a staggered basis, one class each year.
We also have a rights agreement which gives our shareowners certain rights that
would substantially increase the cost of acquiring us in a transaction not
approved by our board of directors.
In addition to the rights agreement and the provisions in our restated
certificate of incorporation and by-laws, Section 203 of the Delaware General
Corporation Law provides that, subject to certain exceptions, a corporation
shall not engage in any business combination with any interested shareowner
during the three-year period following the time that such shareowner becomes an
interested shareowner. The restrictions of Section 203 of the Delaware General
Corporation Law, in certain circumstances, make it more difficult for a person
who would be an interested shareowner to effect various business combinations
with a corporation during this three-year period. The provisions of Section 203
of the Delaware General Corporation Law provide that the shareowner approval
requirement may be avoided if a majority of the directors then in office
approved either the business combination or the transaction that resulted in the
shareowner becoming an interested shareowner.
WE MAY BE RESPONSIBLE FOR CERTAIN FEDERAL INCOME TAX LIABILITIES THAT RELATE TO
OUR SPIN-OFF FROM ROCKWELL.
In connection with our spin-off from Rockwell, the Internal Revenue
Service issued a tax ruling to Rockwell stating that the spin-off would qualify
as a tax-free reorganization within the meaning of Section 368(a)(1)(D) of the
Internal Revenue Code of 1986, as amended. While the tax ruling generally is
binding on the Internal Revenue Service, the continuing validity of the tax
ruling is subject to certain factual representations and assumptions. We are not
aware of any facts or circumstances that would cause such representations and
assumptions to be untrue.
The Tax Allocation Agreement dated as of December 31, 1998 between
Conexant and Rockwell provides that we will be responsible for any taxes imposed
on Rockwell, Conexant or Rockwell shareowners as a result of either:
o the failure of the spin-off from Rockwell to qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(D) of the
Internal Revenue Code or
o the subsequent disqualification of the spin-off from Rockwell as a
tax-free transaction to Rockwell under Section 361(c)(2) of the
Internal Revenue Code,
if the failure or disqualification is attributable to certain post-spin-off
actions by or in respect of Conexant (including our subsidiaries) or our
shareowners, such as our acquisition by a third party at a time and in a manner
that would cause such failure or disqualification.
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The Tax Allocation Agreement also provides, among other things, that
neither Rockwell nor Conexant is to take any action inconsistent with, nor fail
to take any action required by, the request for the tax ruling or the tax ruling
unless:
o required to do so by law;
o the other party has given its prior written consent; or
o in certain circumstances, a supplemental ruling permitting such
action is obtained.
Rockwell and Conexant have indemnified each other for any tax liability
resulting from each entity's failure to comply with these provisions.
In addition, we effected certain tax-free intragroup spin-offs as a
result of Rockwell's spin-off of Meritor Automotive, Inc. on September 30, 1997.
The Tax Allocation Agreement provides that we will be responsible for any taxes
imposed on Rockwell, Conexant or Rockwell shareowners in respect of those
intragroup spin-offs if such taxes are attributable to certain actions taken
after the spin-off from Rockwell by or in respect of Conexant (including our
subsidiaries) or our shareowners, such as our acquisition by a third party at a
time and in a manner that would cause the taxes to be incurred.
If we were required to pay any of the taxes described above, such
payment would have a material adverse effect on our financial position, results
of operations and cash flow.
INCORPORATION BY REFERENCE
The SEC's rules allow us to "incorporate by reference" into this
prospectus the information we file with the SEC. This means that we can disclose
important information to you by referring you to those filings. This information
we incorporate by reference is considered a part of this prospectus, and
subsequent information that we file with the SEC will automatically update and
supersede this information. Any such information so modified or superseded will
not constitute a part of this prospectus, except as so modified or superseded.
We incorporate by reference the following documents and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
until the selling securityholders sell all of the notes or the shares of common
stock offered by this prospectus:
(a) Our Annual Report on Form 10-K for the fiscal year ended September
30, 1999 (including the portions of the Proxy Statement for our
2000 Annual Meeting of Shareowners that are incorporated therein
by reference);
(b) Our Quarterly Report on Form 10-Q for the quarter ended December
31, 1999;
(c) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
(d) Our Current Report on Form 8-K filed January 4, 2000, as amended
by our Current Report on Form 8-K/A filed January 11, 2000;
(e) Our Current Report on Form 8-K filed February 16, 2000;
(f) Our Current Report on Form 8-K filed March 17, 2000;
(g) Our Current Report on Form 8-K filed April 3, 2000;
(h) Our Current Report on Form 8-K filed April 14, 2000;
(i) Our Current Report on Form 8-K filed May 17, 2000;
(j) Our Current Report on Form 8-K filed May 26, 2000;
(k) Our Current Report on Form 8-K filed June 13, 2000;
(l) Our Current Report on Form 8-K filed June 15, 2000;
(m) Our Current Report on Form 8-K filed June 29, 2000;
(n) Our Current Report on Form 8-K filed July 24, 2000; and
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(o) The descriptions of our common stock and the preferred share
purchase rights contained on pages 78 and 85-87 in our
Registration Statement on Form 10, as amended (File No.
000-24923), dated December 1, 1998, as amended by Part II, Item 2
of our Quarterly Report on Form 10-Q for the quarter ended
December 31, 1999.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated herein by reference
and be a part hereof from the date of filing of such documents. Any statement
herein or contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes that statement. Any such
statement so modified or superseded shall not constitute a part of this
Registration Statement, except as so modified or superseded. For example, the
risks and uncertainties under the heading "Risk Factors" above may change or be
modified by future filings, from time to time, as our business develops or
changes and you should read those updated risk factors.
Upon written or oral request, we will provide you with a copy of any of
the incorporated documents without charge (not including exhibits to the
documents unless the exhibits are specifically incorporated by reference into
the documents). You may submit such a request for this material to Office of the
Secretary, Conexant Systems, Inc., 4311 Jamboree Road, Newport Beach, California
92660-3095 (telephone number (949) 483-4600).
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sales of common stock by them pursuant to this prospectus. We will not receive
any proceeds from these sales of our common stock. We will receive nominal cash
amounts equal to the exercise price payable on exercise of the options issued in
connection with the HotRail acquisition which we will use for general corporate
purposes.
PRICE RANGE OF COMMON STOCK
Our common stock began trading on the Nasdaq National Market under the
symbol "CNXT" on January 4, 1999. The following table lists the high and low per
share sale prices for our common stock as reported by the Nasdaq National Market
for the periods indicated. These per share sale prices reflect the 2-for-1 stock
split effected in the form of a stock dividend on October 29, 1999.
HIGH LOW
---------- ---------
Fiscal year ended September 30, 1999:
Second quarter $ 13 27/32 $ 6 27/32
Third quarter $ 31 15/16 $ 13 3/16
Fourth quarter $ 41 17/32 $ 27 5/8
Fiscal year ending September 30, 2000
First quarter $ 76 3/16 $ 30 7/8
Second quarter $132 1/2 $ 53
Third quarter $ 79 $ 31 1/4
On July 24, 2000 the last bid price of the common stock as reported on
the Nasdaq National Market was $37.00 per share. As of June 30, 2000 there were
approximately 51,000 holders of record of our common stock.
DIVIDEND POLICY
We have never paid cash dividends on our common stock and do not
anticipate paying any cash dividends in the foreseeable future. In addition, our
existing bank credit facility limits our ability to declare and pay dividends.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock, as amended or
superseded by any applicable prospectus supplement, includes a summary of
certain provisions of our restated certificate of incorporation and our by-laws.
This description is subject to the detailed provisions of, and is qualified by
reference to, our certificate of incorporation and our by-laws, copies of which
have been filed as exhibits to the registration statement of which this
prospectus is a part.
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We are authorized to issue (1) 1,000,000,000 shares of common stock, of
which 218,614,904 shares of common stock were outstanding as of June 30, 2000,
and (2) 25,000,000 shares of preferred stock, without par value, of which our
board of directors has designated 1,500,000 shares as Series A Junior
Participating Preferred Stock for issuance in connection with the exercise of
our preferred share purchase rights. For a more detailed discussion of our
preferred share purchase rights and how they relate to our common stock, see
"Conexant Rights Plan". The authorized shares of common stock and preferred
stock will be available for issuance without further action by our shareowners,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which our securities may be listed or
traded. If the approval of our shareowners is not so required, our board of
directors may determine not to seek shareowner approval.
Certain of the provisions described under this section entitled
"Description of Capital Stock" could have the effect of discouraging
transactions that might lead to a change of control of Conexant.
Our restated certificate of incorporation and by-laws:
- establish a classified board of directors,
- require shareowners to provide advance notice of any shareowner
nominations of directors or any proposal of new business to be
considered at any meeting of shareowners,
- require a supermajority vote to remove a director or to amend or
repeal certain provisions of our restated certificate of
incorporation or by-laws, and
- preclude shareowners from calling a special meeting of shareowners.
COMMON STOCK
Holders of common stock are entitled to such dividends as may be
declared by our board of directors out of funds legally available therefor.
Dividends may not be paid on common stock unless all accrued dividends on
preferred stock, if any, have been paid or set aside. In the event of our
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share pro rata in the assets remaining after payment to creditors
and after payment of the liquidation preference plus any unpaid dividends to
holders of any outstanding preferred stock. See "Dividend Policy".
Each holder of common stock will be entitled to one vote for each such
share outstanding in such holder's name. No holder of common stock will be
entitled to cumulate votes in voting for directors. Our certificate provides
that, unless otherwise determined by our board of directors, no holder of common
stock will have any right to purchase or subscribe for any stock of any class
which we may issue or sell.
ChaseMellon Shareholder Services, L.L.C. is the transfer agent and
registrar for our common stock.
PREFERRED STOCK
Our restated certificate of incorporation authorizes our board of
directors to establish one or more series of preferred stock of up to an
aggregate of 25,000,000 shares and to determine, with respect to any series of
our preferred stock, the terms and rights of the series. Although our board of
directors has no intention at the present time of doing so, it could issue a
series of preferred stock that could, depending on the terms of such series,
impede the completion of a merger, tender offer or other takeover attempt.
CERTAIN PROVISIONS IN OUR RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS
Our certificate and by-laws contain various provisions intended to (1)
promote the stability of our shareowner base and (2) render more difficult
certain unsolicited or hostile attempts to take us over which could disrupt us,
divert the attention of our directors, officers and employees and adversely
affect the independence and integrity of our business.
Pursuant to our certificate, the number of directors is fixed by our
board of directors. Other than directors elected by the holders of any series of
preferred stock or any other series or class of stock except common stock, our
directors are divided into three classes, each class to consist as nearly as
possible of one-third of the directors. Directors elected by shareowners at an
annual meeting
19
<PAGE> 21
of shareowners will be elected by a plurality of all votes cast. Currently, the
terms of office of the three classes of directors expire, respectively, at our
annual meetings in 2001, 2002 and 2003. The term of the successors of each such
class of directors expires three years from the year of election.
Our restated certificate of incorporation contains a fair price
provision pursuant to which a Business Combination (as defined in our restated
certificate of incorporation) between us or one of our subsidiaries and an
Interested Shareowner (as defined in our restated certificate of incorporation)
requires approval by the affirmative vote of the holders of not less than 80
percent of the voting power of all of our outstanding capital stock entitled to
vote generally in the election of directors, voting together as a single class,
unless the Business Combination is approved by at least two-thirds of the
Continuing Directors (as defined in our restated certificate of incorporation)
or certain fair price criteria and procedural requirements specified in the fair
price provision are met. If either the requisite approval of our board of
directors or the fair price criteria and procedural requirements were met, the
Business Combination would be subject to the voting requirements otherwise
applicable under the Delaware General Corporation Law, which for most types of
Business Combinations currently would be the affirmative vote of the holders of
a majority of all of our outstanding shares of stock entitled to vote thereon.
Any amendment or repeal of the fair price provision, or the adoption of
provisions inconsistent therewith, must be approved by the affirmative vote of
the holders of not less than 80 percent of the voting power of all of our
outstanding capital stock entitled to vote generally in the election of
directors, voting together as a single class, unless such amendment, repeal or
adoption were approved by at least two-thirds of the Continuing Directors, in
which case the provisions of the Delaware General Corporation Law would require
the affirmative vote of the holders of a majority of the outstanding shares of
our capital stock entitled to vote thereon.
Our restated certificate of incorporation and by-laws provide that a
special meeting of shareowners may be called only by a resolution adopted by a
majority of the entire board of directors. Shareowners are not permitted to
call, or to require that the board of directors call, a special meeting of
shareowners. Moreover, the business permitted to be conducted at an special
meeting of shareowners is limited to the business brought before the meeting
pursuant to the notice of the meeting given by us. In addition, our certificate
provides that any action taken by our shareowners must be effected at an annual
or special meeting of shareowners and may not be taken by written consent in
lieu of a meeting. Our by-laws establish an advance notice procedure for
shareowners to nominate candidates for election as directors or to bring other
business before meetings of our shareowners.
Our restated certificate of incorporation provides that the affirmative
vote of at least 80 percent of the voting power of all of our outstanding
capital stock entitled to vote generally in the election of directors, voting
together as a single class, would be required to:
- amend or repeal the provisions of our certificate with respect to
(a) the election of directors, (b) the right to call a special
shareowners' meeting or (c) the right to act by written consent,
- adopt any provision inconsistent with such provisions, or
- amend or repeal the provisions of our restated certificate of
incorporation with respect to amendments to our restated certificate
of incorporation or by-laws.
In addition, our restated certificate of incorporation provides that our board
of directors may make, alter, amend and repeal our by-laws and that the
amendment or repeal by shareowners of any of our by-laws would require the
affirmative vote of at least 80 percent of the voting power described above,
voting together as a single class.
20
<PAGE> 22
CONEXANT RIGHTS PLAN
Each outstanding share of common stock also evidences one preferred
share purchase right. Each preferred share purchase right entitles the
registered holder to purchase from us one two-hundredth of a share of Series A
Junior Participating Preferred Stock, at $300, subject to adjustment. The
description and terms of the preferred share purchase rights are set forth in
the rights agreement dated as of November 30, 1998, as amended as of December 9,
1999.
Until the earlier to occur of (1) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 20 percent or more of
the outstanding common stock or (2) 10 business days, or such later date as may
be determined by our board of directors prior to such time as any person or
group becomes an Acquiring Person, following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20 percent or more of the outstanding common stock, preferred share
purchase rights will be attached to common stock and will be owned by the
registered owners of common stock.
The rights agreement provides that, until the preferred share purchase
rights are no longer attached to the common stock, or until the earlier
redemption or expiration of the preferred share purchase rights:
- the preferred share purchase rights will be transferred with and
only with common stock,
- certificates representing common stock and statements in respect of
shares of common stock registered in book-entry or uncertificated
form will contain a notation incorporating the terms of the
preferred share purchase rights by reference, and
- the transfer of any shares of common stock will also constitute the
transfer of the associated preferred share purchase rights.
As soon as practicable following the date the preferred share purchase rights
are no longer attached to the common stock (the "Distribution Date"), separate
certificates evidencing preferred share purchase rights will be mailed to
holders of record of common stock as of the close of business on the date the
preferred share purchase rights are no longer attached to the common stock and
the separate certificates alone will evidence preferred share purchase rights.
In addition, the rights agreement provides that in connection with the
issuance or sale of our common stock following the Distribution Date and prior
to the earlier of (1) the date the preferred share purchase rights are redeemed
and (2) the date the preferred share purchase rights expire, (a) we will, with
respect to common stock issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement in existence prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities, notes or
debentures (pursuant to the terms thereof) issued by us and in existence prior
to the Distribution Date, and (b) we may, in any other case, if deemed necessary
or appropriate by the board of directors, issue certificates representing the
appropriate number of preferred share purchase rights in connection with such
issuance or sale. We will not be obligated to issue any of these certificates
if, and to the extent that, we are advised by counsel that the issuance of those
certificates would create a significant risk of material adverse tax
consequences to us or the person to whom such certificate would be issued or
would create a significant risk that the stock options or employee plans or
arrangements would fail to qualify for otherwise available special tax
treatment. In addition, no certificate will be issued if, and to the extent
that, appropriate adjustments otherwise have been made in lieu of the issuance
thereof.
Preferred share purchase rights will not be exercisable until the
Distribution Date. Preferred share purchase rights will expire on December 31,
2008, unless this expiration date is extended or unless preferred share purchase
rights are earlier redeemed by us, in each case, as described below.
The purchase price payable, and the number of shares of Series A junior
preferred stock or other securities or property issuable, upon exercise of the
preferred share purchase rights will be subject to adjustment from time to time
to prevent dilution upon the occurrence of the following events:
- in the event of a stock dividend on, or a subdivision, combination
or reclassification of, Series A junior preferred stock,
21
<PAGE> 23
- upon the grant to holders of shares of Series A junior preferred
stock of certain rights or warrants to subscribe for or purchase
shares of Series A junior preferred stock at a price, or securities
convertible into shares of Series A junior preferred stock with a
conversion price, less than the then current market price of the
shares of Series A junior preferred stock, or
- upon the distribution to holders of shares of Series A junior
preferred stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends or dividends payable in shares of
Series A junior preferred stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding preferred share purchase rights and the
number of one one-hundredths of a share of Series A junior preferred stock
issuable upon exercise of each preferred share purchase right will also be
subject to adjustment in the event of a stock split of common stock or a stock
dividend on common stock payable in common stock or subdivisions, consolidations
or combinations of common stock occurring, in any such case, prior to the date
the preferred share purchase rights are no longer attached to the common stock.
We cannot redeem shares of Series A junior preferred stock purchasable
upon exercise of preferred share purchase rights. Each share of Series A junior
preferred stock will be entitled to a minimum preferential quarterly dividend
payment of $1 per share but will be entitled to an aggregate dividend of 100
times the dividend declared per share of common stock whenever such dividend is
declared. In the event of liquidation, the holders of Services A junior
preferred stock will be entitled to a minimum preferential liquidation payment
of $100 per share but will be entitled to an aggregate payment of 100 times the
payment made per share of common stock. Each share of Series A junior preferred
stock will have 100 votes, voting together with common stock. In the event of
any merger, consolidation or other transaction in which shares of common stock
are exchanged, each share of Series A junior preferred stock will be entitled to
receive 100 times the amount received per share of common stock. These rights
will be protected by customary antidilution provisions.
Because of the nature of the Series A junior preferred stock's
dividend, liquidation and voting rights, the value of the one two-hundredth
interest in a share of Series A junior preferred stock purchasable upon exercise
of each preferred share purchase right should approximate the value of one share
of common stock.
In the event that, at any time after a person has become an Acquiring
Person, we are acquired in a merger or other business combination transaction or
50 percent or more of our consolidated assets or earning power is sold, proper
provision will be made so that each holder of a preferred share purchase right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of a preferred share purchase right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of a
preferred share purchase right. In the event that any person becomes an
Acquiring Person, proper provision shall be made so that each holder of a
preferred share purchase right, other than preferred share purchase rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise, in lieu of shares of Series
A junior preferred stock, that number of shares of common stock having a market
value of two times the exercise price of a preferred share purchase right.
At any time after any person or group of affiliated or associated
persons becomes an Acquiring Person, and prior to the acquisition by such person
or group of 50 percent or more of the outstanding shares of common stock, our
board of directors may exchange preferred share purchase rights (other than
preferred share purchase rights owned by such person or group, which will have
become void after such person became an Acquiring Person) for common stock or
Series A junior preferred stock, in whole or in part, at an exchange ratio of
one share of common stock, or two hundredths of a share of Series A junior
preferred stock (or of a share of another series of preferred stock having
equivalent rights, preferences and privileges), per preferred share purchase
right (subject to adjustment).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least one
percent. No fractional shares of Series A junior preferred stock will be issued,
other than fractions which are integral multiples of one two-hundredth of a
share of Series A junior preferred stock, which may, at our election, be
evidenced by depository receipts. Instead, an adjustment in cash will be made
based on the market price of Series A junior preferred stock on the last trading
day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 20 percent or more of the
outstanding shares of common stock, our board of directors may redeem preferred
share purchase rights in whole, but not in part, at a price of $.0l per
preferred share purchase right. The redemption of preferred share purchase
rights may be
22
<PAGE> 24
made effective at such time, on such basis and with such conditions as our board
of directors may determine, in its sole discretion. Immediately upon any
redemption of preferred share purchase rights, the right to exercise preferred
share purchase rights will terminate and the only right of the holders of
preferred share purchase rights will be to receive the redemption price.
The terms of preferred share purchase rights may be amended by our
board of directors without the consent of the holders of preferred share
purchase rights, including an amendment to decrease the threshold at which a
person becomes an Acquiring Person from 20 percent to not less than 10 percent,
except that from and after such time as any person becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of preferred
share purchase rights.
Until a preferred share purchase right is exercised, the holder
thereof, as such, will have no rights as a shareowner of Conexant, including,
without limitation, the right to vote or to receive dividends.
The foregoing summary of the material terms of preferred share purchase
rights is qualified by reference to the rights agreement, a copy of which has
been filed as an exhibit to the registration statement of which this prospectus
is a part.
SELLING SECURITYHOLDERS
The shares which may be resold hereunder by the selling securityholders
are shares issued by us in connection with the acquisition of all of the
outstanding shares of (i) HotRail at the closing of the HotRail acquisition
transaction, (ii) Sierra at the closing of the Sierra acquisition transaction,
and (iii) Applied Telecom at the closing of the Applied Telecom acquisition
transaction.
The shares originally issued at the closing of the HotRail acquisition
transaction, the Sierra acquisition transaction and the Applied Telecom
acquisition transaction were issued in a transaction exempt from the
registration requirements of the Securities Act. Selling securityholders,
including their transferees, pledgees or donees or their successors, may from
time to time offer and sell pursuant to this prospectus any or all of their
shares of our common stock.
The following table sets forth information, as of July 27, 2000, with
respect to the selling securityholders and the shares of our common stock
beneficially owned by each selling securityholder that may be offered pursuant
to this prospectus. The information is based on information provided by or on
behalf of the selling securityholders. The selling securityholders may offer
all, some or none of the shares of common stock. Because the selling
securityholders may offer all or some portion of the common stock, we cannot
estimate the amount of the common stock that will be held by the selling
securityholders upon termination of any of these sales. In addition, the selling
securityholders identified below may have sold, transferred or otherwise
disposed of all or a portion of their shares of common stock since the date on
which they provided the information regarding their shares in transactions
exempt from the registration requirements of the Securities Act. No selling
securityholder named in the table below beneficially owns one percent or more of
our common stock based on [202,571,118] shares of common stock outstanding on
July ___, 2000.
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK OWNED PRIOR OFFERED
NAME TO THE OFFERING HEREBY
---- ------------------------ ------------
<S> <C> <C>
HOTRAIL ACQUISITION:
Alpine Venture Fund, LP 205,856 205,856
American Pacific Ventures, Inc. 7,854 7,854
Bean, Brian 4,678 4,678
Beans Plus LLC - Finance 3,087* 3,087
Beans Plus LLC - SM 2,329* 2,329
Bliessener, Merrylee 1,543 1,543
Bumgarner, Donna S. 20 20
Carlsen, Dan 1,029 1,029
Charter Ventures II, L.P. 343,766 343,766
Chase Venture Capital Associates, L.P. 1,209,663 1,209,663
Comerica Bank 5,892 5,892
Costa, Fran 1,543 1,543
Delmon, Edmond S. 4,323 4,323
Dorris, Stephanie 10,292 10,292
</TABLE>
23
<PAGE> 25
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK OWNED PRIOR OFFERED
NAME TO THE OFFERING HEREBY
---- ------------------------ ------------
<S> <C> <C>
Eberts, Donald 74,440 74,440
Egan, Richard 23,158 23,158
F&W Investments 1996-II 6,175 6,175
F&W Investments 2000 9,357 9,357
First Formosa II Technology Investment Corp. 331,429 331,429
First Formosa Technology Investment Holding Company Limited 107,293 107,293
Fu, Kevin J. Irrevocable Trust 2,058 2,058
Fu, Shuiti 1,029 1,029
Fu-Jing Trust created on November 23, 1999 564,161 564,161
Gandhi, Gunavati 4,318 4,318
Gorman, William S. 5,146 5,146
Greene, Natalie F. 20 20
GVC Cayman Corporation 28,608 28,608
Hartman, Greg 1,029 1,029
Hoang, Tuong 1,482 1,482
Hoover, Mark 3,087 3,087
Hsieh, H.L. 28,608 28,608
Innovatech Associates 14,408** 14,408
Jiang, Guoqing "James" 2,599 2,599
Jing, Wen 411 411
Joerger, Tricia 20 20
Kawamura, Eiji 3,880 3,880
Kaye, Eric 4,678 4,678
Kufis, James C. Kufis & Carolyn M. Kufis 1988 Trust 2,058 2,058
Kufis, Andrew C. 2,058 2,058
Kufis, James C. 127,248 127,248
Lee, Liang Chen 21,467 21,467
Long, Junsheng 1,860 1,860
Marazita, Frank 18,054 18,504
Nason, Norman A. 5,146 5,146
Needham Capital Partners II (Bermuda), L.P. 11,832 11,832
Needham Capital Partners II, L.P. 108,314 108,314
Ontario Teachers' Pension Plan Board 974,898 974,898
Pasternoster, Paul 3,911 3,911
Phoenix Leasing Incorporated 7,071 7,071
Positioning Strategies 3,430 3,430
Race, Stephen M. 41 41
Ready, Matt 1,029 1,029
Rees/Souce Ventures #13, LLC 27,814 27,814
Ridley, Judy L. 2,058 2,058
Schweichler Associates 2,058* 2,058
Selby Venture Partners, L.P. 251,604 251,604
Sener, Valerie 2,210 2,210
Shetler, Joy 205 205
Shriner, Donald R. 5,146 5,146
Smith, Walstein Bennett III 2,058 2,058
Techfarm II, L.P. 177,037 177,037
Techfund Capital II, L.P. 187,249 187,249
Techfund Capital Management II, LLC 8,401 8,401
</TABLE>
24
<PAGE> 26
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK OWNED PRIOR OFFERED
NAME TO THE OFFERING HEREBY
---- ------------------------ ------------
<S> <C> <C>
Techfund Capital Management, LLC 16,983 16,983
Techfund Capital, L.P. 185,271 185,271
Tomita, Lane 2,187 2,187
Veerappan, Armachalam 3,742 3,742
Venture Lending & Leasing II, Inc. 18,278 18,278
Venture Lending & Leasing, Inc. 7,833 7,833
Wah, Wong Ying 68,962 68,962
Wang, Manzhen 1,029 1,029
Wasserstein Adelson Ventures, L.P. 271,356 271,356
Woodside Fund III SBIC, L.P. 502,725 502,725
Woodside Fund IV L.P. 421,050 421,050
WPEP Ventures, LLC 9,357 9,357
Wu, Kuo-Yong 7,163 7,163
Wu, Yung-Fnng 28,608 28,608
Yeah, Solomon 7,163 7,163
Zuckerman, Matthew 4,652 4,652
TOTAL 6,529,885 6,529,885
</TABLE>
------------
* Options to purchase our common stock held prior to the offering.
** 50% of these shares represent options to purchase our commom stock held prior
to the offering.
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK OWNED PRIOR OFFERED
NAME TO THE OFFERING HEREBY
---- ------------------------ ------------
<S> <C> <C>
SIERRA ACQUISITION:
Atsatt, Sean 6,515 6,515
Balc, Wendell 81,450 81,450
Barry, Hank 723 723
Boczek, Louie 5,791 5,791
Brooks, Suzanne 288 288
Campbell, Stacey 5,047 5,047
Chinatrust Venture Capital Co., Ltd. 14,737 14,737
Chiu, Hung Jui-Hsia 74,933 74,933
Chung Ho Spinning Co., Ltd. 77,373 77,373
Ciutura, Vasilica 18,100 18,100
CMC Magnetics Corporation 63,422 63,422
Collias, James 1,810 1,810
CSK Venture Capital Co., Ltd. 22,105 22,105
Diane Walker 5,398 5,398
Dimitrov, Bisser 10,860 10,860
Direct International Ltd. 32,176 32,176
Fan, Liang-Shein 10,425 10,425
Fang, Chi-San 36,200 36,200
Fernandez, Dolores 130 130
Garg, Sanjiv 216 216
He, Kai 1,230 1,230
Hsu, Hang-Chien 26,063 26,063
Jacobs, Duncan & Kathleen 5,736 5,736
Jacobs, William 6,907 6,907
Karolchik, Donna 2,171 2,171
Lin, Fen-Rong 6,515 6,515
Liu, Hung I. 4,343 4,343
Marsh, Laura 216 216
Medwick, Robert 1,085 1,085
Microtek International, Inc. 107,794 107,794
Milburn, Arthur R. 144 144
Pacific Venture Capital Co., Ltd. 14,737 14,737
Pan, Frank 3,178 3,178
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK OWNED PRIOR OFFERED
NAME TO THE OFFERING HEREBY
---- ------------------------ ------------
<S> <C> <C>
Pisces Associates (BVI) Inc. 2,714 2,714
Primus Holdings (BV*) Inc. 6,631 6,631
Primus Technology Fund 22,443 22,443
Robinson, Susan 4,705 4,705
Rush, Allen 81,450 81,450
Shihodo, Hisato 54,300 54,300
Shugart, Allen 8,687 8,687
Sun, Wen-Mei 4,524 4,524
Taylor, Robert G. 39,095 39,095
Taylor, Stephanie A. 7,240 7,240
Taylor-Healy, Angela E. 7,240 7,240
TKS Venture Capital Co. Ltd. 14,737 14,737
Tsuk, Robert 1,085 1,085
Vate Technology Co., Ltd. 8,687 8,687
W.T.T. & Company, S.A. 28,737 28,737
Wang, Jeremy 27,150 27,150
WS Investment Company 98A 6,515 6,515
Yen, Wen-Pin 26,527 26,527
TOTAL 1,000,285 1,000,285
APPLIED TELECOM ACQUISITION:
Beatty, James D. 30,311 30,311
Erlenborn, Mark 30,311 30,311
Gale, Roger J. 30,311 30,311
Jeffries, Myron 30,311 30,311
TOTAL 121,244 121,244
</TABLE>
Selling securityholders set forth under the heading "Sierra
Acquisition" in the table above owning an aggregate of approximately 94% of
Sierra common stock are parties to the Agreement and Plan of Merger dated as of
May 23, 2000 with Conexant.
Each of the selling securityholders set forth under the heading
"Applied Telecom Acquisition" is a party to the Agreement and Plan of Merger
dated as of April 5, 2000 with Conexant.
Each of the following individuals, prior to the acquisition of HotRail
on June 29, 2000, held the following position with HotRail: Donald R. Shriner,
President, Chief Executive Officer, Chief Financial Officer, Secretary and
Director; Daniel Fu, Chief Technical Officer; Richard Egan, Vice President of
Marketing and Sales; and James C. Kufis, Director.
Each of the following individuals, prior to the acquisition of Sierra
on June 13, 2000, held the following position with Sierra: Wendell Balc, Chief
Executive Officer; Robert G. Taylor, Chief Technology Officer; Hank Barry,
Director; and Allen Shugard, Director.
Each of the following individuals, prior to the acquisition of Applied
Telecom on April 5, 2000, held the following position with Applied Telecom:
James D. Beatty, President and Director; Mark Erlenborn, Vice President -
Systems Development and Director; Roger J. Gale, Director; and Myron Jeffries,
Vice President - Business Operations and Director.
All of the shares received by the selling securityholders at the
closing of the Hot Rail acquisition transaction, the Sierra acquisition
transaction and the Applied Telecom acquisition transaction were "restricted
securities" under the Securities Act prior to this registration.
26
<PAGE> 28
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which term includes
their transferees, pledgees or donees or their successors, may sell the common
stock directly to purchasers or through underwriters, broker-dealers or agents,
who may receive compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers. These discounts,
concessions or commissions as to any particular underwriter, broker-dealer or
agent may be in excess of those customary in the types of transactions involved.
The common stock may be sold in one or more transactions at:
- fixed prices,
- prevailing market prices at the time of sale,
- prices related to the prevailing market prices,
- varying prices determined at the time of sale, or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which
our common stock may be listed or quoted at the time of sale,
including the Nasdaq National Market,
- in the over-the-counter market,
- otherwise than on such exchanges or services or in the
over-the-counter market,
- through the writing of options, whether the options are listed on an
options exchange or otherwise, or
- through the settlement of short sales.
These transactions may include block transactions or transactions in which the
same broker acts as agent on both sides of the trade.
In connection with the sale of the common stock or otherwise, the
selling securityholders may enter into hedging transactions with broker-dealers
or other financial institutions. These broker-dealers or financial institutions
may in turn engage in short sales of the common stock in the course of hedging
the positions they assume with selling securityholders. The selling
securityholders may also sell the common stock short and deliver these
securities to close out such short positions, or loan or pledge the common stock
to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale of
the common stock offered by them hereby will be the purchase price of the common
stock less discounts and commissions, if any. Each of the selling
securityholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of
common stock to be made directly or through agents. We will not receive any of
the proceeds from the offering of shares by the selling securityholders.
Our outstanding common stock is listed for trading on the Nasdaq
National Market.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers.
The selling securityholders and any broker-dealers or agents that
participate in the sale of the common stock may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Profits on the sale
of the common stock by selling securityholders and any discounts, commissions or
concessions received by any broker-dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. Selling
securityholders who are deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act.
27
<PAGE> 29
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may limit
the timing of purchases and sales of any of the securities by the selling
securityholders and any other person. In addition, Regulation M may restrict the
ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
The selling securityholders have acknowledged that they understand their
obligations to comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulation, particularly Regulation M, and have
agreed that they will not engage in any transaction in violation of such
provisions.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholder and any underwriter,
broker-dealer or agent regarding the sale of the common stock by the selling
securityholders.
A selling securityholder may decide not to sell any common stock
described in this prospectus. We cannot assure you that any selling
securityholder will use this prospectus to sell any or all of the common stock.
Any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 of the Securities Act may be sold under Rule 144 rather than pursuant
to this prospectus. In addition, a selling securityholder may transfer, devise
or gift the common stock by other means not described in this prospectus.
With respect to a particular offering of the common stock, to the
extent required, an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part will be prepared and will set forth the following information:
- the specific shares of common stock to be offered and sold,
- the names of the selling securityholders,
- the respective purchase prices and public offering prices and other
material terms of the offering,
- the names of any participating agents, broker-dealers or
underwriters, and
- any applicable commissions, discounts, concessions and other items
constituting, compensation from the selling securityholders.
Under the Registration Rights Agreement dated as of June 27, 2000 among
Gordon Campbell and Donald R. Shriner, as agents for HotRail shareholders, and
Conexant, the holders of the shares of common stock received at the closing of
the HotRail acquisition transaction have a right to have their shares of common
stock registered on this registration statement. Under the Agreement and Plan of
Merger among Conexant, Sierra and certain of their shareholders, the holders of
the shares of common stock received at the closing of the Sierra acquisition
transaction have a right to have their shares of common stock registered under
applicable federal and state securities laws. Under the Registration Rights
Agreement dated as of April 5, 2000 among Conexant and the shareholders of
Applied Telecom, the holders of the shares of common stock received at the
closing of the Applied Telecom acquisition transaction have a right to have
their shares of common stock registered on this registration statement.
The HotRail, Sierra and Applied Telecom registration rights provide
that the HotRail selling securityholders, the Sierra selling securityholders and
the Applied Telecom selling securityholders, respectively, and Conexant will
indemnify each other and their respective directors, officers, employees,
stockholders, agents and controlling persons against specific liabilities in
connection with the offer and sale of the common stock, including liabilities
under the Securities Act, or will be entitled to contribution in connection with
those liabilities. We will pay all of our expenses and specified expenses
incurred by the HotRail selling securityholders, the Sierra selling
securityholders and the Applied Telecom selling securityholders incidental to
the registration, offering and sale of the common stock to the public, but each
HotRail selling securityholder, Sierra selling securityholder and Applied
Telecom selling securityholder will be responsible for payment of commissions,
concessions, fees and discounts of underwriters, broker-dealers and agents, if
any.
LEGAL MATTERS
The validity of the issuance of the common stock will be passed upon
for us by Dennis E. O'Reilly, Senior Vice President, General Counsel and
Secretary of Conexant.
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EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from the
Conexant Systems, Inc. Annual Report on Form 10-K for the fiscal year ended
September 30, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements of Maker Communications, Inc.
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated herein in reliance upon the authority of
said form as experts in giving said reports.
HOW TO OBTAIN MORE INFORMATION
In accordance with the Exchange Act, we file reports, proxy and
information statements and other information with the Securities and Exchange
Commission. You may read and copy these reports, proxy and information
statements and other information that we file at the SEC's public reference room
at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an internet site that contains reports, proxy and
information statements and other information regarding registrants (including
Conexant) that file electronically with the SEC (http://www.sec.gov). Our
internet site is http://www.conexant.com.
You also may inspect reports, proxy statements and other information
about Conexant at the offices of The Nasdaq Stock Market, Inc. National Market
System, 1735 K Street, N.W., Washington, D.C. 20006-1500.
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act. This prospectus does not contain all of the information in
the registration statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's public
reference room or internet site. Our statements in this prospectus about the
contents of any contract or other document are not necessarily complete. You
should refer to the copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
29
<PAGE> 31
CONEXANT SYSTEMS, INC.
COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE OF THIS PROSPECTUS. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES
IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
30
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Conexant will pay all expenses incident to the offer and sale to the
public of the common stock being registered, other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes.
AMOUNT
--------
Commission Registration Fee $ 67,300
Nasdaq National Market additional listing fee $ 10,000
*Costs of Printing $ 5,000
*Legal Fees and Expenses $ 50,000
*Accounting Fees and Expenses $ 10,000
*Miscellaneous Expenses $ 5,000
--------
*Total $147,300
----------
* Estimated
ITEM 15. LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law permits Delaware corporations to
eliminate or limit the monetary liability of directors for breach of their
fiduciary duty of care, subject to certain limitations. Our restated certificate
of incorporation provides that our directors are not liable to the Conexant or
its shareowners for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to
Conexant or its shareowners, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) for
willful or negligent violation of the laws governing the payment of dividends or
the purchase or redemption of stock or (4) for any transaction from which a
director derived an improper personal benefit.
The Delaware General Corporation Law provides for indemnification of
directors, officers, employees and agents subject to certain limitations. Our
by-laws and the appendix thereto provide for the indemnification of our
directors, officers, employees and agents to the extent permitted by Delaware
law. Our directors and officers are insured against certain liabilities for
actions taken in such capacities, including liabilities under the Securities
Act.
ITEM 16. INDEX TO EXHIBITS.
See Exhibit Index.
ITEM 17. UNDERTAKINGS
A. The Company 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;
(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
increase or decrease in volume of securities offered would not exceed
that which was registered) and any deviation from the low or high of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price, set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
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<PAGE> 33
(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 clauses (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those clauses is
contained in periodic reports filed with or furnished to the Commission by the
Company pursuant to Section 13 or 15(d) of the Exchange Act 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.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act 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.
B. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions described above, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company 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.
32
<PAGE> 34
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 Newport Beach, State of California, on the 28th day
of July, 2000.
CONEXANT SYSTEMS, INC.
By /s/ Dwight W. Decker
-----------------------------------
(Dwight W. Decker, Chairman and
Chief Executive Officer)
33
<PAGE> 35
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below on this Registration Statement hereby constitutes and appoints
Dwight W. Decker, Balakrishnan S. Iyer and Dennis E. O'Reilly, their true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for them and in their name, place and stead, in any and all
capacities (unless revoked in writing) to sign any and all amendments to this
Registration Statement to which this power of attorney is attached, including
any post-effective amendments as well as any related registration statement (or
amendment thereto) filed in reliance upon Rule 462(b) under the Securities Act
of 1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in connection therewith, as fully to all intents and purposes as they
might and could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on July 28, 2000.
Signature Title
/s/ DWIGHT W. DECKER Chairman, Chief Executive Officer and
------------------------------- Director (Principal Executive Officer)
Dwight W. Decker
/s/ BALAKRISHNAN S. IYER Senior Vice President and Chief Financial
------------------------------- Officer (Principal Financial Officer)
Balakrishnan S. Iyer
/s/ STEPHEN M. THOMPSON Vice President and Controller
------------------------------- (Principal Accounting Officer)
Stephen M. Thompson
/s/ DONALD R. BEALL Director
-------------------------------
Donald R. Beall
/s/ JERRE L. STEAD Director
-------------------------------
Jerre L. Stead
Director
-------------------------------
F. Craig Farrill
/s/ RICHARD M. BRESSLER Director
-------------------------------
Richard M. Bressler
34
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
------
<C> <S>
+4.1 Registration Rights Agreement, dated as of June 27, 2000, by and among Conexant Systems, Inc., Gordon Campbell
and Donald R. Shriner as agents for HotRail, Inc. shareholders.
+4.2 Registration Rights Agreement, dated as of May 23, 2000, by and among Conexant Systems, Inc. and certain
shareholders of Sierra Imaging, Inc.
4.3 Restated Certificate of Incorporation of Conexant Systems, Inc., filed as Exhibit 4.1 to Conexant's Registration
Statement on Form S-8 (Registration No. 333-68755), and Amendment to Restated Certificate of Incorporation, filed
as Exhibit 4.a.2 to Conexant's Registration Statement on Form S-3 (Registration No. 333-30596) are incorporated
herein by reference.
4.4 Amended By-Laws of Conexant, filed as Exhibit 4.2 to Conexant's Registration Statement on Form S-8 (Registration
No. 333-68755), is incorporated herein by reference.
4.5 Indenture, dated as of February 1, 2000, between Conexant and Bank One, N.A. as trustee, including the form of 4%
Convertible Subordinated Notes Due 2007, filed as Exhibit 4.1 to Conexant's Registration Statement on Form S-3
(Registration No. 333-32468 ), is incorporated herein by reference.
4.6 Rights Agreement, dated as of November 30, 1998, by and between Conexant Systems, Inc. and ChaseMellon
Shareholder Services, L.L.C. as rights agent, filed as Exhibit 4.4 to Conexant's Registration Statement on Form
S-8 (Registration No. 333-68755) is incorporated herein by reference.
+5.1 Opinion of Dennis E. O'Reilly, Esq., Senior Vice President, General Counsel and Secretary of Conexant.
+23.1 Consent of Deloitte & Touche LLP, independent auditors.
+23.2 Consent of Arthur Andersen LLP, independent public accountants.
23.3 Consent of Dennis E. O'Reilly, Esq., contained in his opinion filed as Exhibit 5.1 to this Registration
Statement.
24 Power of Attorney authorizing certain persons to sign this Registration Statement on behalf of certain directors
and officers of Conexant (included on signature page).
</TABLE>
--------
+ Filed herewith.
