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Rule 424(b)(3)
Reg. No. 333-59311
PROSPECTUS
226,211 SHARES
WIND RIVER SYSTEMS, INC.
COMMON STOCK
This Prospectus covers the resale from time to time by the holders (the
"Selling Stockholders") of up to 226,211 shares (the "Shares") of Common
Stock, par value $.001 ("Common Stock"), of Wind River Systems, Inc., a
Delaware corporation ("Wind River" or the "Company"). The Selling
Stockholders acquired the Shares on May 18, 1998 in connection with the
Company's acquisition of Zinc Software Incorporated, in a transaction exempt
from registration under the Securities Act of 1933, as amended (the
"Securities Act").
The Selling Stockholders, directly or through agents, broker-dealers or
underwriters, may sell the Shares offered hereby from time to time on terms
to be determined at the time of sale in transactions on the Nasdaq National
Market or in privately negotiated transactions or in a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions
or commissions from the Selling Stockholders or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principal or both (which compensation to a particular broker-dealer may be in
excess of customary commissions). The Company will not receive any proceeds
from the sale of Common Stock by the Selling Stockholders. The aggregate
proceeds to the Selling Stockholders from the Common Stock will be the price
of the Common Stock sold less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. See "Selling Stockholders" and "Plan
of Distribution."
The Common Stock is quoted on the Nasdaq National Market under the
symbol "WIND." The last reported sale price of the Common Stock on the Nasdaq
National Market on August 20, 1998 was $34.81 per share.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS
IN EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, SEE "RISK
FACTORS" COMMENCING ON PAGE 4.
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THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Expenses of preparing and filing the Registration Statement of which
this Prospectus is a part and all post-effective amendments will be borne by
the Company. No underwriting commissions or discounts will be paid by the
Company in connection with this offering. Estimated expenses payable by the
Company in connection with this offering are approximately $26,000. The
Company has agreed to indemnify the Selling Stockholders, and the Selling
Stockholders have agreed to indemnify the Company, against certain
liabilities, including liabilities under the Securities Act.
The Selling Stockholders and any agents, broker-dealers or underwriters
that participate in the distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Common Stock may be
deemed to be underwriting discounts or commissions under the Securities Act.
August 20, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices located at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. Reports, proxy statements and other information filed electronically
by the Company with the Commission are available at the Commission's
worldwide web site at http://www.sec.gov. The Company's Common Stock is
listed for trading on the Nasdaq National Market and reports, proxy
statements and other information concerning the Company may also be inspected
at the offices of the National Association of Securities Dealers, 1735 K
Street, N.W., Washington, D.C. 20006.
ADDITIONAL INFORMATION
A registration statement on Form S-3 with respect to the Shares offered
hereby (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") has been filed with the Commission under the
Securities Act. This Prospectus does not contain all of the information
contained in such Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. For further
information with respect to the Company and the Shares offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus regarding the contents of any contract or any other documents are
not necessarily complete and, in each instance, reference is hereby made to
the copy of such contract or document filed as an exhibit to the Registration
Statement. The Registration Statement may be inspected without charge at the
Securities and Exchange Commission's principal office in Washington, D.C.,
and copies of all or any part thereof may be obtained from the Public
Reference Section, Securities and Exchange Commission, Washington, D.C.
20549, upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 30, 1998; and
3. The description of the Company's Common Stock set forth in its
Registration Statement on Form 8-A filed with the Commission on
March 12, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the request of
such person, a copy of any or all of the documents incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for
such documents should be directed to Wind River Systems, Inc., Attention:
Chief Financial Officer, 1010 Atlantic Avenue, Alameda, California 94501,
telephone (510) 748-4100.
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FORWARD LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. WHEN USED IN THIS PROSPECTUS, THE WORDS "ANTICIPATE,"
"BELIEVE," "ESTIMATE," AND "EXPECT" AND SIMILAR EXPRESSIONS AS THEY RELATE TO
THE COMPANY OR ITS MANAGEMENT ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. THE COMPANY'S ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS COULD
DIFFER MATERIALLY FROM THE RESULTS EXPRESSED IN, OR IMPLIED BY, THESE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE THOSE DISCUSSED BELOW UNDER THE CAPTION "RISK FACTORS"
AND IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
THE COMPANY
Wind River Systems, Inc. ("Wind River" or the "Company") develops,
markets and supports advanced software operating systems and development
tools that allow customers to create complex, robust, real-time software
applications for embedded computers. An embedded computer is a microprocessor
that is incorporated into a larger device and is dedicated to responding to
external events by performing specific tasks quickly, predictably and
reliably. Some examples of such devices are telecommunications products such
as PABX, routers, central office switches and call processing systems; office
products such as fax machines, laser printers and photocopiers; vehicle
anti-lock brakes and navigation systems; consumer products such as
camcorders, video games and set-top boxes; medical instrumentation and
imaging systems; industrial automation equipment such as robots; and
aerospace devices such as NASA's Mars probe, Pathfinder. Wind River's
flagship product, Tornado-TM-, enables customers to enhance product
performance, standardize designs across projects, reduce research and
development costs and shorten product development cycles. The Company's
principal offices are located at 1010 Atlantic Avenue, Alameda, California
94501 and its telephone number is (510) 748-4100.
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN
EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
FLUCTUATIONS IN OPERATING RESULTS
The Company has experienced from time to time significant
period-to-period fluctuations in revenues and operating results and
anticipates that such fluctuations will occur in the future. These
fluctuations may be attributable to a number of factors, including the volume
and timing of orders received during the quarter, the timing and acceptance
of new products and product enhancements by the Company or its competitors,
unanticipated sales and buyouts of run-time licenses, stages of product life
cycles, purchasing patterns of customers and distributors, market acceptance
of products sold by the Company's customers, competitive conditions in the
industry, business cycles affecting the markets in which the Company's
products are sold, extraordinary events, such as acquisitions, including
related charges, and economic conditions generally or in specific geographic
areas. The future operating results of the Company may fluctuate as a result
of these and other factors, including the Company's ability to continue to
develop innovative and competitive products. In addition, the Company
generally does not enter into long-term agreements with its customers, and
the timing of license fees is difficult to predict. The procurement process
of the Company's customers is often several months or longer from initial
inquiry to order and may involve competing considerations. Further, as
licensing of the Company's products increasingly becomes a more strategic
decision made at higher management levels, there can be no assurance that
sales cycles for the Company's product will not lengthen. Product revenue in
any quarter depends primarily on the volume and timing of orders received in
that quarter. The Company has at times recognized a substantial portion of
its total revenue from sales booked and shipped in the latter part of the
quarter; thus, the magnitude of quarterly fluctuations may not become evident
until late in a particular quarter. Because the Company's staffing and
operating expenses are based on anticipated total revenue levels, and a high
percentage of the Company's costs are fixed in the short term, small
variations between
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anticipated orders and actual orders, as well as non-recurring or large
orders, could cause disproportionate variations in the Company's operating
results from quarter to quarter. Revenues also are typically higher in the
fourth quarter than in other quarters of the fiscal year, which ends on
January 31, primarily as a result of purchases by customers prior to the
calendar year end, as well as by customers who purchase at the commencement
of a new calendar year. These trends are expected to continue.
Because the software industry is intensely competitive, software vendors
have from time to time experienced price erosion on their products. As is
typical in the software industry, the Company's fixed costs as a percentage
of revenues are high, and significant price erosion could have a material
adverse effect on the Company's revenues and operating results. A number of
additional factors may in the future cause the Company's revenues and
operating results to vary significantly from period to period. These factors
include: software "bugs" or other product quality problems; changes in
operating expenses; changes in Company strategy; personnel changes; foreign
currency exchange rates; and mix of products sold. Although the Company has
been profitable for the last several years on an annual basis, there can be
no assurance that the Company will be able to continue its growth in revenue
or sustain its profitability on a quarterly or annual basis. Due to all of
the foregoing factors, the Company believes that period-to-period comparisons
of its results of operations are not necessarily meaningful and should not be
relied upon as an indication of future performance. It is possible that, in
some future quarters, the Company's operating results will be below the
expectations of stock market analysts and investors. In such event, the price
of the Common Stock could be materially and adversely affected.
RELIANCE ON CORE FAMILY OF PRODUCTS
Revenue from sales of the Tornado-TM- and VxWorks-Registered
Trademark- family of products and services accounted for a significant
majority of the Company's revenues in the fiscal year ended January 31, 1998,
and the three months ended April 30, 1998, respectively. The Company's future
results depend heavily on continued market acceptance of these products in
the Company's current markets and successful application in new markets. Any
factor adversely affecting the market for the Tornado and VxWorks family of
products and services could have a material adverse affect on the Company's
business, financial condition and results of operations. The Company
typically charges a one-time fee for a development license and a run-time
license fee for each copy of the Company's operating system embedded in the
customer's products. A key component of the Company's strategy is to increase
revenue through run-time license fees. Any increase in the percentage of
revenues attributable to run-time licenses will depend on the Company's
successful negotiation of run-time license agreements and on the successful
commercialization by the Company's customers of the underlying products. To
the extent that such customers are not successful, the Company may not be
able to meet its objectives, and its business, financial condition and
results of operations could be materially and adversely affected.
COMPETITION
The embedded real-time software industry is highly competitive and is
characterized by rapidly advancing technology. In order to maintain or
improve its position in the industry, the Company must continue to enhance
its current products and rapidly develop new products and product extensions.
The Company believes that its principal competition comes from companies that
develop real-time embedded software development systems in-house rather than
purchasing such systems from independent software vendors such as the
Company. Many of these organizations have substantial internal programming
resources with the capability to develop specific products for their needs.
The Company also competes with other independent software vendors, including
Integrated Systems, Inc., Mentor Graphics, Inc. (through its acquisition of
Microtec/Ready Systems), Microware Systems Corporation, and Microsoft
Corporation. In addition, hardware or other software vendors could seek to
expand their product offerings by designing and selling products that
directly compete with or adversely affect sales of the Company's products.
Many of the Company's existing and potential competitors have substantially
greater financial, technical, marketing and sales resources than the Company.
As a result, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the development, promotion, sale and support of their products
than the Company. Furthermore, current and potential competitors have
established or may establish cooperative relationships among themselves or
with third parties. Accordingly, it
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is possible that new competitors or alliances among competitors may emerge
and rapidly acquire significant market share. In addition, the Company is
aware of ongoing efforts by competitors to emulate the performance and
features of the Company's products, and there can be no assurance that
competitors will not develop equivalent or superior technology to that of the
Company. Because a substantial percentage of the Company's revenues has been
derived from sales of the Tornado and VxWorks family of products and
services, the effects of competition could be more adverse than would be the
case if the Company had a broader product offering. In addition, competitive
pressures could cause the Company to reduce the prices of its products, which
would result in reduced profit margins. There can be no assurance that the
Company will be able to compete effectively against its current and future
competitors. If the Company is unable to compete successfully, its business,
financial condition and results of operations would be materially and
adversely affected.
RISKS ASSOCIATED WITH NEW AND CHANGING MARKETS
The Company is continuously engaged in product development for new or
changing markets. In particular, the Company has invested significant time
and effort, together with a consortium of industry participants, in the
development of I(2)O, a new specification that is intended to create an open
standard set of interface specifications for high performance I/O systems.
The specification is intended to be used by system, network and peripheral
interface card and operating systems vendors to simplify the task of building
and maintaining high-performance I/O subsystems. The Company also has
developed IxWorks, a real-time operating system for use in conjunction with
the I(2)O specification. The success of the I(2)O specification and the
IxWorks product line depends heavily on its adoption by a broad segment of
the industry. The Company also has expended, and continues to expend,
substantial time and financial resources to develop embedded operating
software and development tools for Internet applications. The commercial
Internet market has only recently begun to develop, is rapidly changing and
is characterized by an increasing number of new entrants with competitive
products. Moreover, there is an increasing number of new Internet protocols
to which the Company's products must be ported. It is unclear which of these
competing protocols ultimately will achieve market acceptance. If the
protocols upon which the Company's Internet products are based ultimately
fail to be widely adopted, the Company's business, financial condition and
results of operations may be materially and adversely affected. It is
difficult to predict with any assurance whether demand for any of these
products will develop or increase in the future. If these markets, or any
other new market targeted by the Company in the future, fail to develop,
develop more slowly than anticipated or become saturated with competitors, if
the Company's products are not developed in a timely manner, or if the
Company's products and services do not achieve or sustain market acceptance,
the Company's business, financial condition and results of operations would
be materially and adversely affected.
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS
The embedded real-time software industry faces a fragmented market
characterized by ongoing technological developments, evolving industry
standards and rapid changes in customer requirements. The introduction of
products embodying new technologies and the emergence of new industry
standards could render the Company's existing products obsolete and
unmarketable. The Company's success depends and will continue to depend upon
its ability to continue to develop and introduce in a timely manner new
products, including new releases, applications and enhancements, that take
advantage of technological advances, to identify and adhere to emerging
standards, to continue to improve the functionality of its Tornado
development environment and the scalability and functionality of the VxWorks
operating system, to offer its products across a spectrum of microprocessor
families used in the embedded systems market and to respond promptly to
customers' requirements. The Company has from time to time experienced delays
in the development of new products and the enhancement of existing products.
Such delays are commonplace in the software industry. There can be no
assurance that the Company will be successful in developing and marketing, on
a timely basis or at all, competitive products, product enhancements and new
products that respond to technological change, changes in customer
requirements and emerging industry standards, or that the Company's enhanced
or new products will adequately address the changing needs of the
marketplace. The inability of the Company, due to resource constraints or
technological or other reasons, to develop and introduce new products or
product enhancements in a timely manner could have a material adverse effect
on the Company's business, financial condition or results of operations.
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From time to time, the Company or its competitors may announce new
products, capabilities or technologies that have the potential to replace or
shorten the life cycles of the Company's existing products. There can be no
assurance that announcements of currently planned or other new products by
the Company or others will not cause customers to defer purchasing existing
Company products. Any failure by the Company to anticipate or respond
adequately to changing market conditions, or any significant delays in
product development or introduction, would have a material adverse effect on
the Company's business, financial condition and results of operations.
DEPENDENCE ON VME MARKET
A significant amount of the Company's revenues historically has been
derived from sales of systems built to the VME (versabus module eurocard)
standard. These systems typically are used in high cost, low volume
applications, including military, telecommunications, space and research
applications. Although the Company believes that revenues from sales of
products designed for embedded systems applications will account for an
increasing percentage of the Company's revenues in the future, the Company
expects revenues from the VME market to continue to be significant for the
foreseeable future. Academic institutions and defense industry participants,
which generate a significant portion of the Company's VME revenues, are
dependent on government funding, the continued availability of which is
uncertain. Although the Company's VME customers typically have received
government funding prior to placing its product orders with Wind River, any
unanticipated future termination of government funding of VME customers could
have a material adverse effect on the Company's business, financial condition
and results of operations.
MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL
PERSONNEL
The Company has experienced, and expects to continue to experience,
significant growth in the number of employees, the scope and complexity of
its operations and financial systems and the geographic area of its
operations. The Company's continued success will depend significantly on its
ability to integrate new operations and new personnel. The Company's ability
to manage future expansion of its operations, if any, will require the
Company to continue to improve its financial and management controls,
reporting systems and procedures on a timely basis and expand, train and
manage its employee work force efficiently. There can be no assurance that
the Company will be able to do so successfully. The Company's failure to do
so could have a material adverse effect on the Company's business, operating
results and financial condition. In addition, the Company anticipates the
need to relocate its management, product development, marketing, sales,
customer support and operations functions to a new facility within the next
year. During fiscal 1998, the Company purchased real property in the City of
Alameda, California for $11.4 million. The property is being developed to
construct the Company's new headquarters facility. There can be no assurance
that any such relocation will be accomplished efficiently, or that the
Company's operations will not be materially and adversely affected by such
relocation. The Company's future performance depends to a significant degree
upon the continued contributions of its key management, product development,
marketing, sales, customer support and operations personnel, several of whom
have joined the Company only recently. In addition, the Company believes its
future success will depend in large part upon its ability to attract and
retain highly-skilled managerial, product development, marketing, sales,
customer support and operations personnel, many of whom are in great demand.
Competition for such personnel is particularly intense in the San Francisco
Bay Area, where the Company is headquartered, and there can be no assurance
that the Company will be successful in attracting and retaining such
personnel. The failure of the Company to attract, integrate and retain the
necessary personnel could have a material adverse effect on the Company's
business, financial condition and results of operations.
RISKS ASSOCIATED WITH ACQUISITIONS
As part of its business strategy, the Company has recently completed the
acquisitions of Objective Software Technology, Ltd. and Zinc Software
Incorporated, has acquired equity interests in Emultek, Ltd. and 3Soft GmbH
and has also licensed certain technologies from Network Computer, Inc. The
Company expects to make additional acquisitions of, or significant
investments in, businesses that offer complementary products, services and
technologies. Any acquisitions or investments will be accompanied by the
risks commonly encountered in
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acquisitions of businesses and technologies including, among other things,
the difficulty of assimilating the operations and personnel of the acquired
businesses, the potential disruption of the Company's ongoing business, the
inability to integrate acquired technologies into new and existing products,
the inability of management to maximize the financial and strategic position
of the Company, the maintenance of uniform standards, controls, procedures
and policies and the impairment of relationships with employees and customers
as a result of any integration of new management personnel. These factors
could have a material adverse effect on the Company's business, results of
operations or financial condition. Consideration paid for future
acquisitions, if any, could be in the form of cash, stock, debt, rights to
purchase stock or a combination thereof. Dilution to existing stockholders
and to earnings per share may result to the extent that shares of stock or
other rights to purchase stock are issued in connection with any such future
acquisitions.
RISKS OF PRODUCT DEFECTS; PRODUCT AND OTHER LIABILITY
As a result of their complexity, software products may contain
undetected errors or compatibility issues, particularly when first introduced
or as new versions are released. There can be no assurance that, despite
testing by the Company and testing and use by current and potential
customers, errors will not be found in new products after commencement of
commercial shipments. The occurrence of such errors could result in loss of
or delay in market acceptance of the Company's products, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. The increasing use of the Company's products for
applications in systems that interact directly with the general public,
particularly applications in transportation, medical systems and other
markets where the failure of the embedded system could cause substantial
property damage or personal injury, could expose the Company to significant
product liability claims. In addition, the Company's products may be used for
applications in mission-critical business systems where the failure of the
embedded system could be linked to substantial economic loss. Although the
Company has not experienced material adverse effects resulting from any such
errors to date, there can be no assurance that, despite testing by the
Company and testing and use by current and potential customers, errors will
not be found in new products after commencement of commercial shipments,
resulting in loss of or delay in market acceptance, which could have a
material adverse effect upon the Company's business, operating results and
financial condition. Although the Company's license and other agreements with
its customers typically contain provisions designed to limit the Company's
exposure to potential product liability and other claims, these provisions
may not be effective in all circumstances and in all jurisdictions. Although
the Company has not experienced any product liability or economic loss claims
to date, the sale and support of the Company's products entails the risk of
such claims. The Company carries insurance against product liability risks
and errors or omissions coverage, although there can be no assurance that
such insurance will continue to be available to the Company on commercially
reasonable terms or at all. A product liability claim or claim for economic
loss brought against the Company in excess of or outside the limits of its
insurance coverage, or a product recall involving the Company's software,
could have a material adverse effect on the Company's business, financial
condition and results of operations.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
During the fiscal years ended January 31, 1996, 1997 and 1998, the
Company derived approximately 37%, 34%, and 29%, respectively, of its total
revenue from sales outside of North America. The Company expects that
international sales will continue to generate a significant percentage of its
total revenue in the foreseeable future. The Company also expects to make
substantial investments to expand further its international operations and to
increase its direct sales force in Europe and Asia. There can be no assurance
that these investments will result in commensurate increases in the Company's
international sales. International operations are subject to certain risks,
including foreign government regulation; more prevalent software piracy;
longer payment cycles; unexpected changes in, or imposition of, regulatory
requirements, tariffs, import and export restrictions and other barriers and
restrictions; greater difficulty in accounts receivable collection;
potentially adverse tax consequences including restrictions on repatriation
of earnings; the burdens of complying with a variety of foreign laws;
staffing and managing foreign operations; political and economic instability;
changes in diplomatic and trade relationships; possible recessionary
environments in economies outside the United States; and other factors beyond
the control of the Company. There can be no assurance that such factors will
not have a material adverse effect on the Company's
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international sales and consequently, the Company's business, operating
results and financial condition. Sales by the Company's foreign subsidiaries
are denominated in the local currency, and an increase in the relative value
of the dollar against such currencies would reduce the Company's revenues in
dollar terms or make the Company's products more expensive and, therefore,
potentially less competitive in foreign markets. There can be no assurance
that the Company's future results of operations will not be adversely
affected by currency fluctuations. The Company relies on distributors for
sales of its products in certain foreign countries and, accordingly, is
dependent on their ability to promote and support the Company's products and,
in some cases, to translate them into foreign languages. The Company's
international distributors generally offer products of several different
companies, including in some cases products that are competitive with the
Company's products, and such distributors are not subject to any minimum
purchase or resale requirements. There can be no assurance that the Company's
international distributors will continue to purchase the Company's products
or provide them with adequate levels of support. Any changes in the
relationships the Company has with its international distributors may have a
material adverse effect on the Company's business, operating results and
financial condition.
LIMITED PROTECTION OF PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT
The Company's success is heavily dependent upon its proprietary
technology. To protect its proprietary rights, the Company relies on a
combination of copyright, trade secret, patent and trademark laws,
nondisclosure and other contractual restrictions on copying, distribution and
technical measures. The Company seeks to protect its software, documentation
and other written materials through trade secret and copyright laws, which
provide only limited protection. In addition, the Company has two United
States patent applications pending. There can be no assurance that patents
will issue from the Company's pending applications or that any claims allowed
will be of sufficient scope or strength (or be issued in all countries where
the Company's products can be sold) to provide meaningful protection or any
commercial advantage to the Company. As a part of its confidentiality
procedures, the Company generally enters into nondisclosure agreements with
its employees, consultants, distributors and corporate partners and limits
access to and distribution of its software, documentation and other
proprietary information. End user licenses of the Company's software are
frequently in the form of shrink wrap license agreements, which are not
signed by licensees, and therefore may be unenforceable under the laws of
many jurisdictions. Despite the Company's efforts to protect its proprietary
rights, it may be possible for unauthorized third parties to copy the
Company's products or to reverse engineer or obtain and use information that
the Company regards as proprietary. There can be no assurance that the
Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technologies. Policing
unauthorized use of the Company's products is difficult, and while the
Company is unable to determine the extent to which software piracy of its
products exists, software piracy can be expected to be a persistent problem.
In addition, effective protection of intellectual property rights may be
unavailable or limited in certain countries. The status of U.S. patent
protection in the software industry is not well defined and is likely to
evolve as the U.S. Patent and Trademark Office grants additional patents.
Patents have been granted on fundamental technologies in software, and
patents may issue in the future that relate to fundamental technologies
incorporated into the Company's products.
As the number of patents, copyrights, trademarks, trade secrets and
other intellectual property rights in the Company's industry increases,
products based on the Company's technology may increasingly become the
subject of infringement claims. The Company has received in the past and may
receive in the future letters from third parties asserting infringement
claims against the Company. There can be no assurance that third parties will
not assert infringement claims against the Company in the future. Any such
claims, whether with or without merit, could be time consuming, result in
costly litigation, cause product shipment delays or require the Company to
enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company, or at all, which could have a material adverse effect on the
Company's business, financial condition and results of operations. In
addition, the Company may initiate claims or litigation against third parties
for infringement of the Company's proprietary rights or to establish the
validity of the Company's proprietary rights. Litigation to determine the
validity of any claims, whether or not such litigation is determined in favor
of the Company, could result in significant expense to the Company and divert
the efforts of the Company's technical and management personnel from
productive tasks. In the event of an adverse ruling in any such litigation,
the Company
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<PAGE>
might be required to pay substantial damages, discontinue the use and sale of
infringing products, expend significant resources to develop non-infringing
technology or obtain licenses to infringing technology.
LEVERAGE
In connection with the sale of Convertible Subordinated Notes in fiscal
1998, the Company incurred $140 million in debt which resulted in an increase
in its ratio of long-term debt to total capitalization. As a result of this
additional indebtedness, the Company's principal and interest obligations
have increased substantially. The degree to which the Company will be
leveraged could materially and adversely affect the Company's ability to
obtain financing for working capital, acquisitions or other purposes and
could make it more vulnerable to industry downturns and competitive
pressures. The Company's ability to meet its debt service obligations will be
dependent upon the Company's future performance, which will be subject to
financial, business and other factors affecting operations of the Company,
many of which are beyond its control.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has fluctuated in the
past, and is likely to fluctuate in the future. The Company believes that
various factors, including quarterly fluctuations in results of operations,
announcements of new products by the Company or by its competitors, and
changes in the software industry in general may significantly affect the
market price of the Common Stock. In addition, in recent years the stock
market in general, and the shares of technology companies in particular, have
experienced extreme price fluctuations. This volatility has had a substantial
effect on the market prices of securities issued by the Company and other
high technology companies, often for reasons unrelated to the operating
performance of the specific companies. The market prices of many high
technology companies' stocks are at or near their historical highs and
reflect price/earning ratios substantially above historical norms. There can
be no assurance that the market price of the Common Stock will remain at or
near its current level. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation
has often been instituted against that company. Such litigation, if
instituted against the Company, could result in substantial costs and a
diversion of management attention and resources, which would have a material
adverse effect on the Company's business, financial condition and results of
operation, even if the Company is successful in such suits. These market
fluctuations, as well as general economic, political and market conditions
such as recessions, may adversely affect the market price of the Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders in the offering.
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SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders and
the number of shares of Common Stock owned by each of them as of August 20,
1998 which may be offered pursuant to this Prospectus. This information is
based upon information provided by Selling Stockholders. Because the Selling
Stockholders may offer all, some or none of their Common Stock, no definitive
estimate as to the number of shares thereof that will be held by the Selling
Stockholders after such offering can be provided.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) AFTER OFFERING
-------------------- SHARES BEING -------------------------
NAME NUMBER PERCENT(2) OFFERED NUMBER PERCENT
- ------------ ------ ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Joseph Bishop 3,798 * 3,798 -0- -
Robert Bishop 95,795 * 95,795 -0- -
Steve Bishop 22,792 * 22,792 -0- -
John Christensen (3) 8,782 * 8,782 -0- -
Laird Foshay 6,353 * 6,353 -0- -
Leonard Grover 7,596 * 7,596 -0- -
Mark Hurst 7,596 * 7,596 -0- -
Paul Leathers 13,173 * 13,173 -0- -
Larry Macfarlane (4) 26,127 * 26,127 -0- -
Bruce Miller 8,782 * 8,782 -0- -
Richard Paulsen 20,419 * 20,419 -0- -
Michael Redd 4,998 * 4,998 -0- -
</TABLE>
- --------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the Rules of
the SEC and generally includes voting or investment power with respect to
securities. Except as otherwise indicated by footnote, and subject to
community property laws where applicable, the persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Based on 26,367,497 shares of Common Stock outstanding net of
treasury shares on August 20, 1998.
(3) By Karen P. Christensen, Administrator in Intestacy.
(4) Mr. Macfarlane is President and a director of Zinc Software
Incorporated, a wholly-owned subsidiary of the Company.
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<PAGE>
PLAN OF DISTRIBUTION
The shares of Common Stock offered by the Selling Stockholders may be
sold from time to time to purchasers directly by each of the Selling
Stockholders acting as principal for its own account or through underwriters,
dealers or agents who may receive compensation in the form of underwriting
discounts, commissions or concessions from the Selling Stockholders and/or
the purchasers of shares for whom they may act as agent. Sales may be made
on the Nasdaq National Market or in private transactions or in a combination
of such methods of sale, at fixed prices that may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. In addition to sales of Common Stock
pursuant to the Registration Statement of which this Prospectus is a part,
the Selling Stockholders may sell such Common Stock in compliance with Rule
144 promulgated under the Securities Act.
The Selling Stockholders and any underwriters, dealers or agents that
participate in the distribution of the Common Stock offered hereby may be
deemed to be underwriters within the meaning of the Act and any discounts,
commissions or concessions received by them and any provided pursuant to the
sale of shares by them might be deemed to be underwriting discounts and
commissions under the Act.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states
the Common Stock may not be sold unless it has been registered or qualified
for sale or an exemption from registration or qualification requirements is
available and is complied with.
The Shares were originally issued to the Selling Stockholders pursuant
to an exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof. The Company agreed to register the Shares
under the Securities Act and to indemnify and hold the Selling Stockholders
harmless against certain liabilities under the Securities Act that could
arise in connection with the sale by the Selling Stockholders of the Shares.
The Company has agreed to pay all reasonable fees and expenses incident to
the filing of this Registration Statement.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Cooley
Godward LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Wind River Systems, Inc. for
the year ended January 31, 1998, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such other information and representations
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer or solicitation by anyone in any
state in which such offer or solicitation is not authorized, or in which the
person making such offer or solicitation is not qualified to do so, or to any
person to whom it is unlawful to make such offer or solicitation. The
delivery of this Prospectus at any time does not imply that the information
herein is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
12
