As filed with the Securities and Exchange Commission on August 1, 2000
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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PINNACLE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
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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) 526-1600
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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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)
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Copies to:
Paul J. Hartnett, Jr., Esq.
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, MA 02111
(617) 856-8200
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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. [ ]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of
of Securities to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Share (1) Price (1) Fee
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Common Stock, no par value 944,213 shares $7.6406 $7,214,353.85 $1,904.59
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<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 July 28, 2000.
</FN>
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.
================================================================================
</TABLE>
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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.
Subject to completion, dated August 1, 2000
PROSPECTUS
PINNACLE SYSTEMS, INC.
944,213 Shares
COMMON STOCK
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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 Avid Sports, Inc.
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 3 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 July 31, 2000, the last sale price of a share of Pinnacle's
common stock was $7.6562.
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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.
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August __, 2000
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TABLE OF CONTENTS
Where to Find Additional Information About Pinnacle ........................ 2
Information Incorporated by Reference ...................................... 2
Forward Looking Information ................................................ 3
Summary Business Description of Pinnacle ................................... 4
Risk Factors ............................................................... 4
Use of Proceeds ............................................................ 12
Selling Shareholders ....................................................... 12
Plan of Distribution ....................................................... 14
Experts .................................................................... 15
Legal Matters .............................................................. 15
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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(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999, filed September 27, 1999 pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "1934 Act");
(2) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1999, filed November 15, 1999 pursuant to Section 13 of the
1934 Act;
(3) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1999, filed February 14, 2000 pursuant to Section 13 of the
1934 Act;
(4) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2000, filed May 15, 2000 pursuant to Section 13 of the 1934 Act;
(5) The Registrant's Current Report on Form 8-K filed August 13, 1999, as
amended by the Registrant's Current Report on Form 8-K/A filed October 15, 1999,
relating to the Registrant's acquisition of certain assets from Hewlett-Packard
Company;
(6) The Registrant's Current Report on Form 8-K filed April 13, 2000,
relating to its acquisitions of Puffin Designs, Inc., Digital Editing Services,
Inc. and Montage Group, Ltd.;
(7) The Registrant's Current Report on Form 8-K filed July 14, 2000,
relating to the Registrant's acquisition of Avid Sports, Inc.;
(8) The Registrant's Current Report on Form 8-K filed July 27, 2000,
relating to (i) the Registrant's announcement of preliminary sales and earnings
for the fourth quarter of Fiscal 2000, (ii) the Registrant's announcement that
it was denying allegations in a lawsuit, and (iii) the Registrant's announcement
of financial results for the fourth quarter of Fiscal 2000;
(9) The description of the Registrant's common stock contained in the
Registrant's Registration Statement on Form 8-A filed with the Commission on
September 9, 1994; and
(10) The description of Pinnacle's Preferred Share Purchase Rights contained
in its 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, 1999,
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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 Pinnacle's 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.
RISK FACTORS
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 1999 were
$159.1 million compared to $105.3 million in fiscal 1998, a 51% increase, and
net sales in the first nine months of fiscal 2000 were $174.3 million compared
with $111.6 million in the first nine months of fiscal 1999. 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 in March 2000, we acquired
Digital Editing Services, Inc. and Puffin Designs, Inc. In April 2000, we
acquired Montage Group, Ltd. Also, in 1999, we acquired the Video Communications
Division of the Hewlett-Packard Company and acquired Truevision, Inc. and
Shoreline Studios, Inc. We may in the near-or long-term pursue 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:
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- Distracting management from the day-to-day operations of our business
- Costs, delays and inefficiencies associated with integrating acquired
operations, products and personnel
- The potential to result in dilutive issuance of our equity securities
- Incurring debt and amortization expenses related to goodwill and other
intangible assets
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:
- Timing of significant orders from and shipments to major OEM customers
- Timing and market acceptance of new products
- Success in developing, introducing and shipping new products
- Dependence on distribution channels through which our products are sold
- Increased competition and pricing pressure
- Accuracy of our and our resellers' forecasts of end-user demand
- Accuracy of inventory forecasts
- Ability to obtain sufficient supplies from our subcontractors
- Timing and level of consumer product returns
- Foreign currency fluctuations
- Costs of integrating acquired operations
- 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.
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:
- Quarterly variations in results of operations
- Announcements of technological innovations or new products by us, our
customers or competitors
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- Changes in securities analysts' recommendations
- Announcements of acquisitions
- Changes in earnings estimates made by independent analysts
- 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 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. 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 28, 2000 through July 10, 2000. This complaint does not
specify damages. 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.
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.
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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:
- Loss of control over the manufacturing process
- Potential absence of adequate capacity
- Potential delays in lead times
- Unavailability of certain process technologies
- Reduced control over delivery schedules, manufacturing yields, quality and
costs
- 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 may fail to sell products in the consumer market.
We entered the consumer market with the acquisition of the VideoDirector
product line from Gold Disk in June 1996. We aim to continue to invest resources
to develop, market and sell products into the consumer market. In this endeavor,
we need to continue to develop and maintain the following capabilities:
- Marketing and selling products through the consumer distribution channels.
- Establishing relationships with distributors and retailers
- A fully developed infrastructure to support electronic retail stores and
telephone and Internet orders
Additionally, factors beyond our control could hurt consumer product sales
and consequently our financial condition. These factors include:
- Potential compatibility problems with other manufacturers' electronic
components
- The risk of obsolete inventory and inventory returns
- Difficulty in predicting the growth of the consumer video market
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
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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.
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:
- Product performance
- Breadth of product line
- Quality of service and support
- Market presence
- Price
- 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
Leitch Technology Corporation
Matsushita Electric Industrial Co. Ltd.
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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.
Avid Technology, Inc.
Digitel Processing Systems, Inc.
Fast Multimedia
Hauppauge Digital, Inc.
Matrox Electronics Systems, Ltd.
Media 100, Inc.
Quantel Ltd. (a division of Carlton Communications Plc)
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 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:
- Refuse to promote or pay for our products
- 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
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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:
- 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
- The distributors or retailers may not continue to stock and sell our
consumer products.
- Retailers and retail distributors often carry competing products
We must retain key employees to remain competitive.
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. Only one has an employment agreement and
none are the subject of key man life insurance. 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 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.
We may be adversely affected if we are sued by a third party or if we decide to
sue a third party.
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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:
- Divert management's attention away from the operation of our business
- Result in the loss of our proprietary rights
- Subject us to significant liabilities
- Force us to seek licenses from third parties
- 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 nine-month period ended March 31, 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. Although the dollar
amount of such foreign currency denominated sales was nominal during fiscal
1997, it increased substantially during fiscal 1998 and 1999, especially for
sales of consumer and desktop products into Europe. In fiscal 2000 and beyond,
we expect that a majority of our European sales will 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 selling 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:
- Unexpected changes in regulatory requirements
- Export license requirements
- Restrictions on the export of critical technology
- Political instability
- Trade restrictions
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- Changes in tariffs
- Difficulties in staffing and managing international operations
- 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.
Future Y2K problems could hurt our business.
As of the date of this prospectus, we have not incurred any business
disruptions or any significant product issues as a result of Year 2000 issues.
However, not all Year 2000 issues may be apparent yet, we cannot guarantee that
we will not be affected by future disruptions. Pinnacle will continue to monitor
the issue vigilantly and work to resolve any problems that arise. If we or our
customers or if third parties or suppliers experience Year 2000 problems, our
business may be materially harmed.
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 the 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 Avid Sports, Inc. 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 Pinnacle common stock
received by the former shareholders of Avid Sports, Inc. on the registration
statement of which this prospectus is part. None of the selling shareholders
owns more than 1% of the outstanding common stock of Pinnacle.
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<PAGE>
<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 Prior Number of Shares Being Beneficially Owned After
Shareholder to the Offering Offered the Offering
----------- --------------- ------- ------------
<S> <C> <C> <C>
Aeder, Karl 8,125 8,125 0
Avid Technology 232,122 232,122 0
Barkley, John 134,631 134,631 0
Bienvenu, Mark 6,268 6,268 0
Carpenter, Jeffrey 4,643 4,643 0
Clark, Mark 774 774 0
Colony Investments 1,730 1,730 0
Connell, Michael 774 774 0
Dapkus, Karen 10,523 10,523 0
Eccker, Randy 9,285 9,285 0
Fay, Eugene 4,643 4,643 0
Grandin, David 159,390 159,390 0
Intel Corporation 103,742 103,742 0
Keshian, Daniel 11,607 11,607 0
Lamaa, Fady 3,869 3,869 0
Maira, Ravi 465 465 0
Menon, Krishna 19,344 19,344 0
Moniz, Michael 6,964 6,964 0
Morrison, William 774 774 0
Murphy, David 7,738 7,738 0
O'Brien, Jennifer 774 774 0
Quinn, Steven 2,391 2,391 0
Racicot, Andrew 2,580 2,580 0
Rhinehart, Craig 8,357 8,357 0
Sauer, David 39 39 0
Simmons, Robert 131,536 131,536 0
Thomas, Alton 4,643 4,643 0
Thompson, Raymond 7,738 7,738 0
Vint, Frederick 833 833 0
Walsh, John, Jr. 15,475 15,475 0
Williams Communications 34,581 34,581 0
Wilson, David 7,738 7,738 0
Xifaras, George 117 117 0
</TABLE>
Pursuant to the terms of the Stock Acquisition and Exchange Agreement dated
as of June 29, 2000 (the "Agreement"), between Pinnacle and the selling
shareholders and Brendon Corp., Pinnacle undertook
13
<PAGE>
to use commercially reasonable efforts to register certain of the shares held by
the selling shareholders within 30 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.
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 60 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
14
<PAGE>
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
first anniversary of the effective date of the acquisition of Avid Sports, Inc.
by Pinnacle.
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.
EXPERTS
The consolidated financial statements and schedule of Pinnacle as of June
30, 1999 and 1998 and for each of the years in the three-year period ended June
30, 1999 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.
Brown, Rudnick, Freed and Gesmer, in issuing its opinion hereunder, has
relied upon an opinion of Wilson Sonsini Goodrich and Rosati, dated June 30,
2000.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been passed
upon for Pinnacle by Brown, Rudnick, Freed & Gesmer, Professional Corporation,
Boston, Massachusetts.
15
<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 the
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......................... $1,904.59
------------------------------------------------- -------------------
Nasdaq National market listing fee........... $9,442.13
------------------------------------------------- -------------------
Legal fees and expenses...................... $15,000.00*
------------------------------------------------- -------------------
Accounting fees and expenses ................ $10,000.00*
------------------------------------------------- -------------------
Miscellaneous expenses....................... $3,653.28*
------------------------------------------------- -------------------
Total........................................ $40,000.00
------------------------------------------------- -------------------
* Estimated
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
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<PAGE>
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 entered into between Pinnacle and the selling shareholders in
connection with the acquisition of Avid Sports, Inc. by Pinnacle provides that
Pinnacle will indemnify the selling shareholders against certain liabilities,
including liabilities under the Securities Act.
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
----------- -----------
5.1 Opinion of Brown, Rudnick, Freed & Gesmer.
23.1 Consent of KPMG LLP, independent certified public accountants.
23.2 Consent of Brown, Rudnick, Freed & Gesmer (included in Exhibit
5.1)
23.3 Consent of Wilson, Sonsini, Goodrich & Rosati.
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;
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<PAGE>
(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) 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.
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<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 this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California, on the 28th day
of July, 2000.
PINNACLE SYSTEMS, INC.
By: /s/ Mark L. Sanders
-------------------------------------
Mark L. Sanders
President and Chief Executive Officer
II-4
<PAGE>
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
462(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 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 July 28, 2000
----------------------------- Director (Principal Executive Officer)
(Mark L. Sanders)
/s/ Arthur D. Chadwick Vice President, Finance and July 28, 2000
----------------------------- Administration and Chief Financial
(Arthur D. Chadwick) Officer (Principal Financial and
Accounting Officer)
/s/ Ajay Chopra Chairman of the Board and Vice July 28, 2000
----------------------------- President, General Manager, Desktop
(Ajay Chopra) Products
/s/ Glenn E. Penisten Director July 28, 2000
-----------------------------
(Glenn E. Penisten)
/s/ Charles J. Vaughan Director July 28, 2000
-----------------------------
(Charles J. Vaughan)
/s/ John Lewis Director July 28, 2000
-----------------------------
(John Lewis)
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<PAGE>
/s/ L. Gregory Ballard Director July 28, 2000
-----------------------------
(L. Gregory Ballard)
/s/ L. William Krause Director July 28, 2000
-----------------------------
(L. William Krause)
</TABLE>
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description
------------- -----------
5.1 Opinion of Brown, Rudnick, Freed & Gesmer.
23.1 Consent of KPMG LLP, independent certified public accountants.
23.2 Consent of Brown, Rudnick, Freed & Gesmer (included in Exhibit
5.1).
23.3 Consent of Wilson Sonsini Goodrich & Rosati
24.1 Power of Attorney (included in the signature page to this
Registration Statement).
II-7
