As filed with the Securities and Exchange Commission on December 4, 2000
Registration 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
PINNACLE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
California 94-3003809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
280 North Bernardo Ave.
Mountain View, California 94043
(650) 626-1600
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Arthur D. Chadwick
Vice President, Finance and Administration,
Pinnacle Systems, Inc.
280 North Bernardo Avenue
Mountain View, California 94043
(650) 526-1600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
CHRIS F. FENNELL, ESQ.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304-1050
(650) 493-9300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement. If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
========================================= ========================= ====================== ====================== ==================
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to to be Price Offering Registration
be Registered(2) Registered Per Share Price(1) Fee
----------------------------------------- ------------------------- ---------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock
no par value........................ 62,612 shares $9.625 $602,640.50 $159.10
========================================= ========================= ====================== ====================== ==================
<FN>
(1) Estimated solely for the purpose of computing the amount of the
registration fee. The estimate is made pursuant to Rule 457(c) of the
Securities Act of 1933, as amended, based on the average of the high and
low prices on November 27, 2000.
(2) Includes Preferred Share Purchase Rights, which, prior to the occurrence
of certain events, will not be exercisable or evidenced separately from
the Common Stock.
</FN>
</TABLE>
<PAGE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a) may
determine.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN FILED AND IS DECLARED EFFECTIVE BY THE SECURITIES AND
EXCHANGE COMMISSION. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE IN WHICH
THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
Dated December 4, 2000
PINNACLE SYSTEMS, INC.
62,612 Shares
COMMON STOCK
These shares may be offered and sold from time to time by certain shareholders
of Pinnacle Systems, Inc., a California corporation ("Pinnacle" or the
"Registrant") identified in this prospectus. See "Selling Shareholders." The
selling shareholders acquired the shares in connection with the acquisition by
Pinnacle of Montage Group, Ltd.
The selling shareholders will receive all of the net proceeds from the sale of
the shares and will pay all underwriting discounts and selling commissions, if
any, applicable to the sale of the shares. Pinnacle will not receive any of the
proceeds from the sale of the shares.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 OF THIS
PROSPECTUS BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED HEREBY.
Pinnacle's common stock is traded on the Nasdaq National Market under the symbol
"PCLE." On November 27, 2000, the last sale price of a share of our common stock
was $9.00.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
December 4, 2000.
<PAGE>
TABLE OF CONTENTS
Where to Find Additional Information About Pinnacle..................... 4
Information Incorporated by Reference................................... 4
Forward Looking Information............................................. 5
Summary Business Description of Pinnacle................................ 5
Risk Factors............................................................ 5
Use of Proceeds......................................................... 11
Selling Shareholders.................................................... 11
Plan of Distribution.................................................... 13
Experts................................................................. 13
Legal Matters........................................................... 14
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The selling shareholders are offering to
sell, and seeking offers to buy, shares of Pinnacle common stock only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of the shares.
In this prospectus, "Pinnacle," "we," "us," and "our" refer to Pinnacle
and its subsidiaries.
WHERE TO FIND ADDITIONAL INFORMATION ABOUT PINNACLE
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, referred to as
the SEC. You may read and copy any document we file at the SEC's public
reference facilities in Room 1034, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional offices at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below, and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, until the selling shareholders sell all the shares. The
documents we incorporate by reference are:
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<PAGE>
(1) Our Quarterly Report on Form 10-Q for the quarter ended September
30, 2000, filed November 14, 2000 pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "1934 Act");
(2) Our Annual Report on Form 10-K for the fiscal year ended June 30,
2000, filed September 28, 2000 pursuant to Section 13 of the 1934 Act;
(3) Our Current Report on Form 8-K filed July 27, 2000, relating to (i)
our announcement of preliminary sales and earnings for the fourth quarter of
Fiscal 2000, (ii) our announcement that we were denying allegations in a
lawsuit, and (iii) our announcement of financial results for the fourth quarter
of Fiscal 2000;
(4) Our Current Report on Form 8-K filed July 14, 2000, relating to our
acquisition of Avid Sports, Inc.;
(5) The description of our common stock contained in our Registration
Statement on Form 8-A filed with the Commission on September 9, 1994; and
(6) The description of our Preferred Share Purchase Rights contained in
our Registration Statement on Form 8-A as filed with the Commission on December
19, 1996, as amended May 19, 1998.
You may request a copy of these filings, at no cost, by written or oral
request to the following address: Chief Financial Officer, Pinnacle Systems,
Inc., 280 North Bernardo Avenue, Mountain View, California 94043; telephone
number (650) 526-1600.
FORWARD LOOKING INFORMATION
This Prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934. Actual results could differ materially
from those projected in the forward-looking statements as a result of the risk
factors set forth below. Reference is made in particular to the discussion set
forth under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Annual Report on Form 10-K for the fiscal year
ended June 30, 2000, incorporated herein by reference. In connection with
forward-looking statements that appear in these disclosures, prospective
purchasers of the common stock offered hereby should carefully consider the
factors set forth in this Prospectus under "Risk Factors."
SUMMARY BUSINESS DESCRIPTION OF PINNACLE
We design, manufacture, market and support video post-production tools
for high quality real time video processing. Our products combine computer based
and specialized video processing technologies which perform a variety of video
post-production functions such as the addition of special effects, graphics and
titles to multiple streams of live or previously recorded video material. We
have sold over 10,000 post-production systems since our inception in 1986 to
customers in more than 60 countries. Our products address needs in the
broadcast, desktop and consumer video post-production markets.
We were incorporated in California in 1986. We maintain our executive
offices at 280 North Bernardo Avenue, Mountain View, California 94043, and our
telephone number is (650) 526-1600.
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<PAGE>
RISK FACTORS
There are various factors which may cause our net revenues and operating results
to fluctuate.
Our quarterly and annual operating results have varied significantly in
the past and may continue to fluctuate because of a number of factors, many of
which are outside our control. These factors include:
o Increased competition and pricing pressure
o Timing of significant orders from and shipments to major customers,
including OEM's and our large broadcast accounts
o Timing and market acceptance of new products
o Success in developing, introducing and shipping new products
o Dependence on distribution channels through which our products are
sold
o Accuracy of our and our resellers' forecasts of end-user demand
o Accuracy of inventory forecasts
o Ability to obtain sufficient supplies from our subcontractors
o Timing and level of consumer product returns
o Foreign currency fluctuations
o Costs of integrating acquired operations
o General domestic and international economic conditions, such as the
recent economic downturns in Asia and Latin America
We also experience significant fluctuations in orders and sales due to
seasonal fluctuations, the timing of major trade shows and the sale of consumer
products in anticipation of the holiday season. Sales usually slow down during
the summer months of July and August, especially in Europe. Also, we attend a
number of annual trade shows which can influence the order pattern of products,
including CEBIT in March, the NAB convention held in April and the IBC
convention held in September. Our operating expense levels are based, in part,
on our expectations of future revenue and, as a result, net income would be
disproportionately affected by a shortfall in net sales. Due to these factors,
we believe that quarter-to-quarter comparisons of our results of operations are
not necessarily meaningful and should not be relied upon as indicators of future
performance.
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<PAGE>
We are dependent on contract manufacturers and single or limited source
suppliers for our components. If these manufacturers and suppliers do not meet
our demand either in volume or quality, then we could be materially harmed.
We rely on subcontractors to manufacture our desktop and consumer
products and the major subassemblies of our broadcast products. We and our
manufacturing subcontractors are dependent upon single or limited source
suppliers for a number of components and parts used in our products, including
certain key integrated circuits. Our strategy to rely on subcontractors and
single or limited source suppliers involves a number of significant risks,
including:
o Loss of control over the manufacturing process
o Potential absence of adequate capacity
o Potential delays in lead times
o Unavailability of certain process technologies
o Reduced control over delivery schedules, manufacturing yields,
quality and costs
o Unexpected increases in component costs
If any significant subcontractor or single or limited source supplier
becomes unable or unwilling to continue to manufacture these subassemblies or
provide critical components in required volumes, we will have to identify and
qualify acceptable replacements or redesign our products with different
components. Additional sources may not be available and product redesign may not
be feasible on a timely basis. This could materially harm our business. Any
extended interruption in the supply of or increase in the cost of the products,
subassemblies or components manufactured by third party subcontractors or
suppliers could materially harm our business.
We must retain key employees to remain competitive.
If certain of our key employees leave or are no longer able to perform
services for us, it could have a material adverse effect on our business. We may
not be able to attract and retain a sufficient number of managerial personnel
and technical employees to compete successfully. We believe that the efforts and
abilities of our senior management and key technical personnel are very
important to our continued success. Our success is dependent upon our ability to
attract and retain qualified technical and managerial personnel. There are not
enough engineers, technical support, software services and managers available to
meet the current demands of the computer industry. We may not be able to retain
our key technical and managerial employees or attract, assimilate and retain
such other highly qualified technical and managerial personnel as are required
in the future. Also, employees may leave our employ and subsequently compete
against us, or contractors may perform services for competitors of ours. If we
are unable to retain key personnel, our business could be materially harmed.
We have grown rapidly and expect to continue to grow rapidly. If we fail to
effectively manage this growth, our financial results could suffer.
We have experienced rapid growth and anticipate that we will continue
to grow at a rapid pace in the future. For example, net sales in fiscal 2000
were $238.0 million compared to $159.1 million in fiscal 1999, a 49.6% increase.
In the three month period ended September 30, 2000, net sales increased 24.4%
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<PAGE>
over the same period last year. As a result of internal growth and recent
acquisitions, we have increased the number of employees significantly over the
last two fiscal years and many are geographically dispersed, primarily
throughout North America and Europe. This growth places increasing demands on
our management, financial and other resources. We have built resources and
systems to account for such growth, but continued or accelerated growth may
require us to increase our investment in such systems, or to reorganize our
management team. Such changes, should they occur, could cause an interruption or
diversion of focus from our core business activities and have an adverse effect
on financial results.
Any failure to successfully integrate the businesses we have acquired could
negatively impact us.
In June 2000, we acquired Avid Sports, Inc. and Propel Ahead, Inc., and
in April 2000, we acquired Montage Group, Ltd. In January 2000, we acquired
Synergy, Inc. In March 2000, we acquired Digital Editing Services, Inc. and
Puffin Designs, Inc. Also, in 1999, we acquired the Video Communications
Division of the Hewlett-Packard Company, Truevision, Inc. and Shoreline Studios,
Inc. We may in the near- or long-term pursue additional acquisitions of
complementary businesses, products or technologies. Integrating acquired
operations is a complex, time-consuming and potentially expensive process. All
acquisitions involve risks that could materially and adversely affect our
business and operating results. These risks include:
o Distracting management from the day-to-day operations of our
business
o Costs, delays and inefficiencies associated with integrating
acquired operations, products and personnel
o The potential to result in dilutive issuance of our equity
securities
o Incurring debt and amortization expenses related to goodwill and
other intangible assets
Our stock price may be volatile.
The trading price of our common stock has in the past and could in the
future fluctuate significantly. The fluctuations have been or could be in
response to numerous factors including:
o Quarterly variations in results of operations
o Announcements of technological innovations or new products by us,
our customers or competitors
o Changes in securities analysts' recommendations
o Announcements of acquisitions
o Changes in earnings estimates made by independent analysts
o General fluctuations in the stock market
Our revenues and results of operations may be below the expectations of
public market securities analysts or investors. This could result in a sharp
decline in the market price of our common stock. In July 2000, we announced that
financial results for the fourth quarter of fiscal 2000, which ended June 30,
2000, would be lower than the then current analyst consensus estimates regarding
Pinnacle's quarterly results. In
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<PAGE>
the day following this announcement, our share price lost more than 59% of its
value and our shares continue to trade in a price range significantly lower than
the range held by our shares before this announcement.
With the advent of the Internet, new avenues have been created for the
dissemination of information. Pinnacle has no control over the information that
is distributed and discussed on electronic bulletin boards and investment chat
rooms. The motives of the people or organizations that distribute such
information may not be in the best interest of Pinnacle and its shareholders.
This, in addition to other forms of investment information including newsletters
and research publications, could result in a sharp decline in the market price
of our common stock.
In addition, stock markets have from time to time experienced extreme
price and volume fluctuations. The market prices for high technology companies
have been particularly affected by these market fluctuations and such effects
have often been unrelated to the operating performance of such companies. These
broad market fluctuations may cause a decline in the market price of our common
stock.
In the past, following periods of volatility in the market price of a
company's stock, securities class action litigation has been brought against the
issuing company. On July 18, 2000, a lawsuit entitled Jiminez v. Pinnacle
Systems, Inc., et al. , No. 00-CV-2596 was filed in the United States District
Court for the Northern District of California against Pinnacle and certain
officer and director defendants.
We have publicly announced that we intend to defend the case
vigorously. It is possible that additional similar litigation could be brought
against us in the future. The securities class action lawsuit described above
and any similar litigation which may be brought against Pinnacle could result in
substantial costs and will likely divert management's attention and resources.
Any adverse determination in such litigation could also subject us to
significant liabilities.
If our products do not keep pace with the technological developments in the
rapidly changing video post-production equipment industry, then we may be
adversely affected.
The video post-production equipment industry is characterized by
rapidly changing technology, evolving industry standards and frequent new
product introductions. The introduction of products embodying new technologies
or the emergence of new industry standards can render existing products obsolete
or unmarketable. Delays in the introduction or shipment of new or enhanced
products, our inability to timely develop and introduce such new products, the
failure of such products to gain significant market acceptance or problems
associated with new product transitions could materially harm our business,
particularly on a quarterly basis.
We are critically dependent on the successful introduction, market
acceptance, manufacture and sale of new products that offer our customers
additional features and enhanced performance at competitive prices. Once a new
product is developed, we must rapidly commence volume production. This process
requires accurate forecasting of customer requirements and attainment of
acceptable manufacturing costs. The introduction of new or enhanced products
also requires us to manage the transition from older, displaced products in
order to minimize disruption in customer ordering patterns, avoid excessive
levels of older product inventories and ensure that adequate supplies of new
products can be delivered to meet customer demand. In addition, as is typical
with any new product introduction, quality and reliability problems may arise.
Any such problems could result in reduced bookings, manufacturing rework costs,
delays in collecting accounts receivable, additional service warranty costs and
a limitation on market acceptance of the product.
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If we do not effectively compete, our business will be harmed.
The market for our products is highly competitive. We compete in the
broadcast, desktop and consumer video production markets. We anticipate
increased competition in each of the broadcast, desktop and consumer video
production markets, particularly since the industry is undergoing a period of
technological change and consolidation. Competition for our broadcast, consumer
and video products is generally based on:
o Product performance
o Breadth of product line
o Quality of service and support
o Market presence
o Price
o Ability of competitors to develop new, higher performance, lower
cost consumer video products
Certain competitors in the broadcast, desktop and consumer video
markets have larger financial, technical, marketing, sales and customer support
resources, greater name recognition and larger installed customer bases than we
do. In addition, some competitors have established relationships with current
and potential customers of ours and offer a wide variety of video equipment that
can be bundled in certain large system sales.
Principal competitors in the broadcast market include:
Accom, Inc.
Chyron Corporation
Grass Valley Group
Leitch Technology Corporation
Matsushita Electric Industrial Co. Ltd.
Quantel Ltd. (a division of Carlton Communications Plc)
SeaChange Corporation
Sony Corporation
Tektronix, Inc.
Principal competitors in the desktop and consumer markets are:
Accom, Inc.
Adobe Systems, Inc.
Apple Computer
Avid Technology, Inc.
Dazzle Multimedia
Digitel Processing Systems, Inc.
Fast Multimedia
Hauppauge Digital, Inc.
Matrox Electronics Systems, Ltd.
Media 100, Inc.
Sony Corporation
These lists are not all-inclusive.
The consumer market in which certain of our products compete is an
emerging market and the sources of competition are not yet well defined. There
are several established video companies that are currently offering products or
solutions that compete directly or indirectly with our consumer products by
providing some or all of the same features and video editing capabilities. In
addition, we expect that existing manufacturers and new market entrants will
develop new, higher performance, lower cost consumer video products that may
compete directly with our consumer products. We expect that potential
competition in this
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market is likely to come from existing video editing companies, software
application companies, or new entrants into the market, many of which have the
financial resources, marketing and technical ability to develop products for the
consumer video market. Increased competition in any of these markets could
result in price reductions, reduced margins and loss of market share. Any of
these effects could materially harm our business.
We rely heavily on dealers and OEMs to market, sell and distribute our products.
In turn, we depend heavily on the success of these resellers. If these resellers
do not succeed in effectively distributing our products, then our financial
performance will be negatively affected.
These resellers may not effectively promote or market our products or
they may experience financial difficulties and even close operations. Our
dealers and retailers are not contractually obligated to sell our products.
Therefore, they may, at any time:
o Refuse to promote or pay for our products
o Discontinue our products in favor of a competitor's product
Also, with these distribution channels standing between us and the
actual market, we may not be able to accurately gauge current demand for
products and anticipate demand for newly introduced products. For example,
dealers may place large initial orders for a new product just to keep their
stores stocked with the newest products and not because there is a significant
demand for them.
As to consumer products offerings, we have expanded our distribution
network to include several consumer channels, including large distributors of
products to computer software and hardware retailers, which in turn sell
products to end users. We also sell our consumer products directly to certain
retailers. Rapid change and financial difficulties of distributors have
characterized distribution channels for consumer retail products. These
arrangements have exposed us to the following risks, some of which are out of
our control:
o We are obligated to provide price protection to such retailers and
distributors and, while the agreements limit the conditions under
which product can be returned to us, we may be faced with product
returns or price protection obligations
o The distributors or retailers may not continue to stock and sell
our consumer products.
o Retailers and retail distributors often carry competing products
We may be unable to protect our proprietary information and procedures
effectively.
We must protect our proprietary technology and operate without
infringing the intellectual property rights of others. We rely on a combination
of patent, copyright, trademark and trade secret laws and other intellectual
property protection methods to protect our proprietary technology. In addition,
we generally enter into confidentiality and nondisclosure agreements with our
employees and OEM customers and limit access to and distribution of our
proprietary technology. These steps may not protect our proprietary information
nor give us any competitive advantage. Others may independently develop
substantially equivalent intellectual property or otherwise gain access to our
trade secrets or intellectual property, or disclose such intellectual property
or trade secrets. If we are unable to protect our intellectual property, our
business could be materially harmed.
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<PAGE>
We may be adversely affected if we are sued by a third party or if we decide to
sue a third party.
There has been substantial litigation regarding patent, trademark and
other intellectual property rights involving technology companies. In the
future, litigation may be necessary to enforce any patents issued to us, to
protect our trade secrets, trademarks and other intellectual property rights
owned by us, or to defend us against claimed infringement. We are also exposed
to litigation arising from disputes in the ordinary course of business. This
litigation may:
o Divert management's attention away from the operation of our
business
o Result in the loss of our proprietary rights
o Subject us to significant liabilities
o Force us to seek licenses from third parties
o Prevent us from manufacturing or selling products
Any of these results could materially harm our business.
In the course of business, we have in the past received communications
asserting that our products infringe patents or other intellectual property
rights of third parties. We investigated the factual basis of such
communications and negotiated licenses where appropriate. It is likely that in
the course of our business, we will receive similar communications in the
future. While it may be necessary or desirable in the future to obtain licenses
relating to one or more of our products, or relating to current or future
technologies, we may not be able to do so on commercially reasonable terms, or
at all. These disputes may not be settled on commercially reasonable terms and
may result in long and costly litigation.
Because we sell products internationally, we are subject to additional risks.
Sales of our products outside of North America represented
approximately 55% of net sales in the period ended June 30, 2000 and 61% of net
sales in the year ended June 30, 1999. We expect that international sales will
continue to represent a significant portion of our net sales. We make foreign
currency denominated sales in many, primarily European, countries. This exposes
us to risks associated with currency exchange fluctuations. In fiscal 2001 and
beyond, we expect that a majority of our European sales will continue to be
denominated in local foreign currency, including the Euro. Pinnacle has
developed natural hedges for some of this risk in that most of the European
operating expenses are also denominated in local currency.
In addition to foreign currency risks, international sales and
operations may also be subject to the following risks:
o Unexpected changes in regulatory requirements
o Export license requirements
o Restrictions on the export of critical technology
o Political instability
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o Trade restrictions
o Changes in tariffs
o Difficulties in staffing and managing international operations
o Potential insolvency of international dealers and difficulty in
collecting accounts
We are also subject to the risks of generally poor economic conditions
in certain areas of the world, most notably Asia. These risks may harm our
future international sales and, consequently, our business.
USE OF PROCEEDS
Pinnacle will not receive any proceeds from the sale of the shares by
the selling shareholders. All proceeds from the sale of Pinnacle's common stock
will go to the shareholders who offer and sell their shares.
SELLING SHAREHOLDERS
The following table sets forth information with respect to the number
of shares of common stock owned by the selling shareholders named below and as
adjusted to give effect to the sale of the shares offered hereby. The
information in the table below is current as of the date of this prospectus. The
shares are being registered to permit public secondary trading of the shares,
and the selling shareholders may offer the shares for resale from time to time.
The shares being offered by the selling shareholders were acquired in
connection with our acquisition of Montage Group, Ltd. In the acquisition, the
shares of common stock were issued pursuant to an exemption from the
registration requirements of the Securities Act. In connection with the
acquisition, we agreed to register certain shares of our common stock received
by the former shareholders of Montage Group, Ltd. on the registration statement
of which this prospectus is part. None of the selling shareholders owns more
than 1% of our outstanding common stock. An asterisk (*) following a particular
shareholder's name indicates that the shareholder is an employee of Montage
Group, Ltd., a wholly-owned subsidiary of ours.
<TABLE>
The shares offered by this prospectus may be offered from time to time
by the selling shareholders named below:
<CAPTION>
Number of Shares Number of Shares
Name of Selling Beneficially Owned Number of Shares Beneficially Owned
Shareholder Prior to the Offering Being Offered After the Offering
----------- --------------------- ------------- ------------------
<S> <C> <C> <C>
Engelke, David* 31,306 15,653 15,653
Haberman, Seth M. 43,828 21,914 21,914
Haberman, Simon V. 50,090 25,045 25,045
</TABLE>
Pursuant to the terms of the Registration Rights Agreement dated as of
April 6, 2000 (the "Agreement"), between Pinnacle, the selling shareholders, and
Montage Group Ltd., Pinnacle undertook to use commercially reasonable efforts to
register certain of the shares held by the selling shareholders within 180 days
of the date of issuance of shares in connection with the closing of the
acquisition. The Agreement also includes certain indemnification arrangements
with the selling shareholders.
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PLAN OF DISTRIBUTION
The shares may be sold from time to time by the selling shareholders or
by pledgees, donees, transferees or other successors in interest. Such sales may
be made in any one or more transactions (which may involve block transactions)
on the Nasdaq National Market, or any exchange on which the common stock of
Pinnacle may then be listed, in the over-the-counter market or otherwise in
negotiated transactions or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The selling shareholders may effect such
transactions by selling shares to or through broker-dealers, and such
broker-dealers may sell the shares as agent or may purchase such shares as
principal and resell them for their own account pursuant to this prospectus.
Such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling shareholders and/or
purchasers the shares, for whom they may act as agent (which compensation may be
in excess of customary commissions).
The aggregate proceeds to the selling shareholders from the sale of the
shares will be the purchase price of the common stock sold less the aggregate
agents' commissions if any, and other expenses of issuance and distribution not
borne by Pinnacle. The selling shareholders and any dealers or agents that
participate in the distribution of the shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any profit on the sale of the
shares by them and any commissions received by any such dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
To the extent required, the specific shares of common stock to be sold,
the names of the selling shareholders, purchase price, public offering price,
the names of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offering will be set forth
in an accompanying prospectus supplement.
We have agreed to bear certain expenses of registration of the common
stock under the federal and state securities laws and of any offering and sale
hereunder not including certain expenses, such as commissions of dealers or
agents, and fees attributable to the sale of the shares.
The Agreement provides that we will indemnify the selling shareholders
against certain liabilities, including liabilities under the Securities Act.
We may suspend the use of this prospectus for a discrete period of
time, not exceeding 30 days, if, in the good faith determination of our board of
directors, Pinnacle possesses material non-public information the disclosure of
which at that point in time in Pinnacle's reasonable judgment would have a
material adverse effect on Pinnacle and its subsidiaries. We may not exercise
this delay right more than once. We are obligated in the event of such
suspension to increase the time period for which such Registration Statement is
effective for a period equal to the lesser of: (i) such suspension period plus
any period for which the effectiveness of the Registration Statement shall be
extended pursuant to the Agreement or (ii) the period prior to which the shares
registered hereunder are eligible for sale pursuant to Rule 144(k). This
offering will terminate on the earlier of (a) the first anniversary of the
effective date of the acquisition of Montage Group, Ltd. by Pinnacle or (b) the
date on which all shares offered hereby have been sold by the selling
shareholders.
Any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this prospectus.
There can be no assurance that the selling shareholders will sell any
or all of the shares of Pinnacle common stock offered by them hereunder.
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<PAGE>
EXPERTS
The consolidated financial statements and schedule of Pinnacle as of
June 30, 2000 and 1999 and for each of the years in the three-year period ended
June 30, 2000 have been incorporated by reference in this prospectus and in the
Registration Statement, in reliance upon the reports of KPMG LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been
passed upon for Pinnacle by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, payable by
Pinnacle in connection with the sale of common stock being registered. All
amounts are estimates except the SEC registration fee and Nasdaq National Market
listing fee.
Amount
to be Paid
----------
SEC registration fee................................... $ 159.10
Nasdaq National market listing fee..................... $ 2,000.00
Printing expenses...................................... $ 10,000.00
Legal fees and expenses................................ $ 25,000.00
Accounting fees and expenses........................... $ 10,000.00
Miscellaneous expenses................................. $ 4,715.90
-------------
Total................................................... $ 51,875.00
=============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 204(a) of the California General Corporation
Law, the Registrant's Articles of Incorporation eliminate a director's personal
liability for monetary damages to the Registrant and its shareholders arising
from a breach or alleged breach of the director's fiduciary duty, except for
liability arising under Sections 310 and 316 of the California General
Corporation Law or liability for (i) acts or omissions that involve intentional
misconduct or knowing and culpable violation of law, (ii) acts or omissions that
a director believes to be contrary to the best interests of the Registrant or
its shareholders or that involve the absence of good faith on the part of the
director, (iii) any transaction from which a director derived an improper
personal benefit, (iv) acts or omissions that show a reckless disregard for the
director's duty to the Registrant or its shareholders in circumstances in which
the director was aware, or should have been aware, in the ordinary course of
performing a director's duties, of a risk of serious injury to the Registrant or
its shareholders, (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
Registrant or its shareholders, (vi) interested transactions between the
corporation and a director in which a director has a material financial
interest, and (vii) liability for improper distributions, loans or guarantees.
This provision does not eliminate the directors' duty of care, and in
appropriate circumstances equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under California law.
Sections 204(a) and 317 of the California General Corporation Law
authorize a corporation to indemnify its directors, officers, employees and
other agents in terms sufficiently broad to permit indemnification (including
reimbursement for expenses) under certain circumstances for liabilities arising
under the Securities Act. The Registrant's Articles of Incorporation and Bylaws
contain provisions covering indemnification to the maximum extent permitted by
the California General Corporation Law of corporate directors, officers and
other agents against certain liabilities and expenses incurred as a result of
proceedings involving such persons in their capacities as directors, officers
employees or agents, including proceedings under the Securities Act or the
Securities Exchange Act of 1934. Pinnacle has entered into Indemnification
Agreements with its directors and executive officers.
The Agreement provides that Pinnacle will indemnify the selling
shareholders against certain liabilities, including liabilities under the
Securities Act.
II-1
<PAGE>
On July 18, 2000, a lawsuit entitled Jiminez v. Pinnacle Systems, Inc.,
et al., No. 00-CV-2596 was filed in the United States District Court for the
Northern District of California against Pinnacle and certain officer and
director defendants. The action is a putative class action and alleges that
defendants violated the federal securities laws by making false and misleading
statements concerning Pinnacle's business prospects during an alleged class
period of April 18, 2000 through July 10, 2000. The complaint does not specify
damages. We have publicly announced that we intend to defend the case
vigorously. It is possible that the officer and director defendants named in
this lawsuit may seek indemnification from Pinnacle with respect to this claim.
ITEM 16. EXHIBITS
Exhibit No. Description
----------- -----------
4.1 Registration Rights Agreement dated as of April 6, 2000 by and
among Pinnacle Systems, Inc., Montage Group, Ltd., David
Engelke, Seth M. Haberman and Simon V. Haberman.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
23.1 Consent of independent auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included in the signature page to this
Registration Statement).
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) 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;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that paragraphs (a) and (b) above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by Pinnacle pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended
(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.
The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a)
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<PAGE>
or Section 15(d) of the Exchange Act, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Registration
Statement No. 333-_______ to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, State of California, on
the ____ day of November, 2000.
PINNACLE SYSTEMS, INC.
By: /s/ Mark L. Sanders
---------------------------------------
Mark L. Sanders
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Mark L.
Sanders and Arthur D. Chadwick his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-3 (including post-effective amendments), to
sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
426(b) promulgated under the Securities Act of 1933, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, thereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutions, may do or
cause to be done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement No. 333-_______ has been signed by the following
persons in the capacities and on the dates indicated:
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Mark L. Sanders President, Chief Executive Officer and Director November __, 2000
-------------------------------------- (Principal Executive Officer)
(Mark L. Sanders)
/s/ Arthur D. Chadwick Vice President, Finance and Administration and Chief November __, 2000
-------------------------------------- Financial Officer (Principal Financial and Accounting
(Arthur D. Chadwick) Officer)
/s/ Ajay Chopra Chairman of the Board and Vice President, General November __, 2000
-------------------------------------- Manager, Desktop Products
(Ajay Chopra)
/s/ Glenn E. Penisten Director November __, 2000
--------------------------------------
(Glenn E. Penisten)
/s/ Charles J. Vaughan Director November __, 2000
--------------------------------------
(Charles J. Vaughan)
/s/ John Lewis Director November __, 2000
--------------------------------------
(John Lewis)
/s/ L. Gregory Ballard Director November __, 2000
--------------------------------------
(L. Gregory Ballard)
/s/ L. William Krause Director November __, 2000
--------------------------------------
(L. William Krause)
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
4.1 Registration Rights Agreement dated as of April 6, 2000 by and
among Pinnacle Systems, Inc., Montage Group, Ltd., David
Engelke, Seth M. Haberman and Simon V. Haberman.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
23.1 Consent of independent auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included in the signature page to this
Registration Statement).
II-5
