<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-------------------
LATTICE SEMICONDUCTOR CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 93-0835214
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5555 NE MOORE COURT
HILLSBORO, OREGON 97124-6421
(503) 681-0118
(Address, including zip code and telephone number, including
area code, of Registrant's principal executive offices)
---------------------
CYRUS Y. TSUI
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
5555 NE MOORE COURT
HILLSBORO, OREGON 97124-6421
(503) 681-0118
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
---------------------
COPIES TO:
LARRY W. SONSINI, ESQ. WILLIAM D. SHERMAN, ESQ.
JOHN A. FORE, ESQ. C. JEFFREY CHAR, ESQ.
WILSON SONSINI GOODRICH & ROSATI, PC MORRISON & FOERSTER
650 PAGE MILL ROAD 755 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304 PALO ALTO, CALIFORNIA 94304
(415) 493-9300 (415) 813-5600
---------------------
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, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED (1) UNIT (2) PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value (3).................. 2,875,000 shares $35.625 $102,421,875 $35,319
<FN>
(1) Includes 375,000 shares issuable upon exercise of an option granted to the
Underwriters to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the
registration fee and based on the average of the high and low price of the
common stock of Lattice Semiconductor Corporation as reported on The Nasdaq
National Market on October 10, 1995 pursuant to Rule 457(c).
(3) Includes Rights to purchase Preferred Stock of the Company which, prior to
certain events, will not be exercisable or evidenced separately from the
Common Stock.
</TABLE>
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectuses: one to be
used in connection with an offering in the United States and the other to be
used in connection with a concurrent international offering (the "International
Prospectus"). The two prospectuses are identical except for the outside front
cover page. The alternate page for the International Prospectus is included
herein and labeled "Alternate Page For International Prospectus."
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED OCTOBER 17, 1995
2,500,000 SHARES
[LOGO]
COMMON STOCK
-----------------
OF THE 2,500,000 SHARES OF COMMON STOCK BEING OFFERED, 2,000,000 SHARES ARE
BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS AND 500,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF
THE UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. ALL OF
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE
COMPANY. THE COMPANY'S COMMON STOCK IS TRADED IN THE
OVER-THE-COUNTER MARKET UNDER THE NASDAQ NATIONAL MARKET SYMBOL
"LSCC." THE LAST SALE PRICE FOR THE COMMON STOCK ON OCTOBER
16, 1995, AS REPORTED ON THE NASDAQ NATIONAL MARKET, WAS
$36 3/4 PER SHARE. SEE "PRICE RANGE OF COMMON STOCK."
------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 6 HEREOF.
-------------------
THESE 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 UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSSIONS(1) COMPANY(2)
------------------- ------------------- -------------------
<S> <C> <C> <C>
PER SHARE........................................ $ $ $
TOTAL(3)......................................... $ $ $
</TABLE>
- ---------
(1) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITERS."
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .
(3) THE COMPANY HAS GRANTED TO THE U.S. UNDERWRITERS AN OPTION, EXERCISABLE
WITHIN 30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN AGGREGATE OF
375,000 ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING
DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF
ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL
PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO
COMPANY WILL BE $ , $ AND $ , RESPECTIVELY. SEE
"UNDERWRITERS."
------------------------
THE SHARES ARE OFFERED SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY MORRISON & FOERSTER, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT
DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT NOVEMBER , 1995 AT THE OFFICE
OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR
IN NEW YORK FUNDS.
-------------------
MORGAN STANLEY & CO.
INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PAINEWEBBER INCORPORATED
NEEDHAM & COMPANY, INC.
, 1995
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED OCTOBER 17, 1995
2,500,000 SHARES
[LOGO]
COMMON STOCK
-----------------
OF THE 2,500,000 SHARES OF COMMON STOCK BEING OFFERED, 500,000 SHARES ARE
BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS AND 2,000,000 SHARES ARE BEING OFFERED
INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS.
ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. THE COMPANY'S COMMON STOCK IS TRADED IN THE
OVER-THE-COUNTER MARKET UNDER THE NASDAQ NATIONAL MARKET
SYMBOL "LSCC." THE LAST SALE PRICE FOR THE COMMON
STOCK ON OCTOBER 16, 1995, AS REPORTED ON THE
NASDAQ NATIONAL MARKET, WAS $36 3/4 PER
SHARE. SEE "PRICE RANGE OF
COMMON STOCK."
------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
PAGE 6 HEREOF.
-------------------
THESE 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 UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSSIONS (1) COMPANY (2)
------------------- ------------------- -------------------
<S> <C> <C> <C>
PER SHARE........................................ $ $ $
TOTAL (3)........................................ $ $ $
</TABLE>
- ---------
(1) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITERS."
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .
(3) THE COMPANY HAS GRANTED TO THE U.S. UNDERWRITERS AN OPTION, EXERCISABLE
WITHIN 30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN AGGREGATE OF
375,000 ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING
DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF
ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL
PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO
COMPANY WILL BE $ , $ AND $ , RESPECTIVELY. SEE
"UNDERWRITERS."
------------------------
THE SHARES ARE OFFERED SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY MORRISON & FOERSTER, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT
DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT NOVEMBER , 1995 AT THE OFFICE
OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR
IN NEW YORK FUNDS.
-------------------
MORGAN STANLEY & CO.
INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PAINEWEBBER INTERNATIONAL
NEEDHAM & COMPANY, INC.
, 1995
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN
OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS AT ANY TIME
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY THE COMPANY OR BY
AN UNDERWRITER THAT WOULD PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR
POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION
FOR THAT PURPOSE IS REQUIRED, OTHER THAN IN THE UNITED STATES. PERSONS INTO
WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE COMPANY AND THE
UNDERWRITERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE ANY RESTRICTIONS AS TO,
THE OFFERING OF THE COMMON STOCK AND THE DISTRIBUTION OF THIS PROSPECTUS.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Incorporation of Certain Documents by Reference............................................................ 2
Prospectus Summary......................................................................................... 3
The Company................................................................................................ 4
Risk Factors............................................................................................... 6
Use of Proceeds............................................................................................ 11
Price Range of Common Stock................................................................................ 11
Dividend Policy............................................................................................ 11
Capitalization............................................................................................. 12
Selected Consolidated Financial Data....................................................................... 13
Business................................................................................................... 15
Description of Capital Stock............................................................................... 23
Certain United States Federal Tax Considerations for Non-U.S. Holders of Common Stock...................... 25
Underwriters............................................................................................... 27
Legal Matters.............................................................................................. 30
Experts.................................................................................................... 30
Available Information...................................................................................... 30
</TABLE>
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") are incorporated herein by
reference: (1) the Company's Annual Report on Form 10-K for the fiscal year
ended April 1, 1995; (2) the Company's Quarterly Report on Form 10-Q for the
quarter ended July 1, 1995; (3) the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995; (4) the Company's Current Report on Form
8-K dated October 2, 1995; (5) the description of the Common Stock contained in
the Company's Registration Statement on Form 8-A filed with the Commission on
September 27, 1989; and (6) the description of the preferred stock purchase
rights of the Company contained in the Company's Registration Statement on Form
8-A filed with the Commission on September 13, 1991.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock hereunder shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents. The Company will provide without charge,
to each person to whom this Prospectus is delivered, a copy of any or all of
such documents (exclusive of exhibits unless such exhibits are specifically
incorporated by reference herein), upon written or oral request to Rodney F.
Sloss, Vice President, Finance, Lattice Semiconductor Corporation, 5555 NE Moore
Court, Hillsboro, Oregon 97124, telephone (503) 681-0118.
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 that 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.
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITERS."
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS.
THE COMPANY
Lattice Semiconductor Corporation (the "Company") is the world's leading
supplier of in-system programmable ("ISP-TM-") logic devices and pioneered the
application of electrically erasable CMOS ("E(2)CMOS-Registered Trademark-")
technology to programmable logic. The Company designs, develops and markets both
high-and low-density, high performance E(2)CMOS programmable logic devices
("PLDs") and related development system software. PLDs are standard
semiconductor components that can be configured by the end customer as specific
logic circuits. PLDs enable the end customer to shorten design cycle times and
reduce development costs.
The Company's strategy has been to penetrate the rapidly growing
high-density complex programmable logic device ("CPLD") market with
differentiated products and technology while maintaining its leadership position
in the low-density market. The Company has pioneered the development of ISP, a
proprietary technology, which affords it a competitive advantage in the
high-density CPLD market. ISP can allow customers to reduce design cycle times,
accelerate time to market, reduce prototyping costs, reduce manufacturing costs,
lower inventory requirements and perform simplified and cost-effective field
upgrades. The Company seeks to maintain a relatively high margin low-density
product mix by differentiating its products through performance, proprietary
architectures and lower operating voltages. The Company's end customers are
primarily original equipment manufacturers ("OEMs") in the fields of
communications, computing, peripherals, instrumentation, industrial controls and
military systems.
THE OFFERING
<TABLE>
<S> <C>
U.S. Offering.......................... 2,000,000 Shares
International Offering................. 500,000 Shares
Total (1).............................. 2,500,000 Shares
Common Stock to be outstanding
after the offering.................... 22,002,914 Shares (1)(2)
Use of proceeds........................ For expansion and maintenance of the Company's
wafer supply and assembly capacity, including
funding a planned equity investment in an
advanced semiconductor manufacturing facility in
Taiwan, and other general corporate purposes,
including procurement of additional capital
equipment and facilities, development of new
products and possible acquisitions. See "Use of
Proceeds" and "Business -- Operations -- Wafer
Fabrication."
The Nasdaq National Market symbol...... LSCC
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA (3)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
--------------------------------------------------------- ----------------------
MARCH 30, MARCH 28, APRIL 3, APRIL 2, APRIL 1, OCT. 1, SEPT. 30,
1991 1992 1993 1994 1995 1994 1995
----------- ----------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue......................................... $ 64,539 $ 71,009 $ 103,391 $ 126,241 $ 144,083 $ 67,477 $ 93,621
Income from operations.......................... 12,115 13,315 22,746 30,040 37,268 17,339 26,502
Net income...................................... 10,297 10,855 17,399 22,490 26,966 12,418 18,624
Net income per share............................ $ 0.61 $ 0.61 $ 0.94 $ 1.19 $ 1.41 $ 0.65 $ 0.93
Weighted average common and common equivalent
shares outstanding............................ 16,770 17,834 18,458 18,946 19,164 19,073 20,117
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1995
-------------------------
ACTUAL AS ADJUSTED(4)
--------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.......................................................................... $ 138,050 $ 225,119
Total assets............................................................................. 225,768 312,837
Stockholders' equity..................................................................... 186,006 273,075
<FN>
- ------------
(1) Assumes the U.S. Underwriters' over-allotment option to purchase 375,000
shares is not exercised. See "Underwriters."
(2) Excludes (i) 2,063,126 shares of Common Stock subject to outstanding
options under the Company's 1988 Stock Incentive Plan with an average
exercise price of $19.75 per share and 693,560 shares available for future
grants of options thereunder as of September 30, 1995; (ii) 133,593 shares
of Common Stock reserved but unissued under the Company's Employee Stock
Purchase Plan; (iii) 94,125 shares of Common Stock subject to outstanding
options under the Company's 1993 Outside Directors Stock Option Plan with
an average exercise price of $20.49 per share and 148,500 shares available
for future grants of options thereunder as of September 30, 1995; and (iv)
123,625 shares of Common Stock subject to outstanding warrants owned by
Bain & Company with an average exercise price of $18.76 per share.
(3) All share and per share amounts have been adjusted to reflect the
three-for-two stock split effected in the form of a stock dividend which
was paid on July 6, 1993.
(4) Gives effect to the issuance and sale of 2,500,000 shares offered hereby by
the Company at an assumed per share offering price of $36.75, the last
reported sale price of the Common Stock on October 16, 1995.
</TABLE>
3
<PAGE>
THE COMPANY
Lattice Semiconductor Corporation (the "Company") is the world's leading
supplier of in-system programmable ("ISP-TM-") logic devices and pioneered the
application of electrically erasable CMOS ("E(2)CMOS-Registered Trademark-")
technology to programmable logic. The Company designs, develops and markets both
high-and low-density, high performance E(2)CMOS programmable logic devices
("PLDs") and related development system software. PLDs are standard
semiconductor components that can be configured by the end customer as specific
logic circuits, and enable the end customer to shorten design cycle times and
reduce development costs.
Manufacturers of electronic systems are increasingly challenged to bring
differentiated products to market quickly. These competitive pressures often
preclude the use of custom-designed application specific integrated circuits
("ASICs"), which generally entail significant design risks and time delay.
Standard logic products, an alternative to custom-designed ASICs, limit a
manufacturer's flexibility to adequately customize an end system. PLDs are
standard products that can be configured into a virtually unlimited number of
specific logic circuits by programming the device with electrical signals. PLDs
give system designers the ability to quickly create their own custom logic
circuits and to provide product differentiation and rapid time to market.
The Company offers a full product line in both the high-density complex
programmable logic device ("CPLD") market and the low-density CMOS PLD market.
The Company's strategy has been to penetrate the rapidly growing high-density
CPLD market with differentiated products and technology while maintaining its
leadership position in the low-density market. Since the Company introduced its
first high-density products in fiscal 1993, its percentage of total revenue
generated by sales of high-density products has grown to 21% for the fiscal year
ended April 1, 1995 and 33% for the six-month period ended September 30, 1995.
The Company has pioneered the development of ISP, a proprietary technology,
which affords it a competitive advantage in the high-density CPLD market. In
contrast to standard PLD programming technologies, ISP allows the system
designer to configure and reconfigure the PLD without removing the device from
the system board. ISP enhances the flexibility of PLD devices, providing a
number of important benefits to a system manufacturer across the full spectrum
of an electronic system product cycle. ISP can allow customers to reduce design
cycle times, accelerate time to market, reduce prototyping costs, reduce
manufacturing costs, lower inventory requirements and perform simplified and
cost-effective field upgrades.
Since the Company entered the high-density CPLD market in fiscal 1993, it
has introduced three high-density CPLD product families, the
ispLSI-Registered Trademark- 1000, ispLSI 2000 and ispLSI 3000. The ispLSI 1000,
the Company's first high-density CPLD product family, was the industry's first
PLD product family based on ISP technology. The ispLSI 1000 offers performance
of up to 110 MHz, with propagation delays (the time it takes an input signal to
propagate through the device to a designated output) as low as 10 nanoseconds
and densities of 2,000 to 8,000 gates. The ispLSI 2000 product family, first
introduced in fiscal 1994, offers CPLD performance leadership with performance
of up to 154 MHz, with propagation delays as low as 5.5 nanoseconds, and is
capable of supporting high speed communications and computing applications based
on advanced microprocessors, such as Pentium, PowerPC and other RISC-based
systems. The ispLSI 3000 product family, also introduced in fiscal 1994,
incorporates an enhanced logic architecture to target CPLD density leadership at
densities of 8,000 to 14,000 gates and performance of up to 100 MHz, with
propagation delays as low as 10 nanoseconds. The ispLSI 3000 family offers
additional architectural enhancements and boundary scan test to satisfy
sophisticated and complex customer applications.
The Company's high-density CPLD products with ISP technology can be quickly
and easily configured and reconfigured on the system board using the Company's
proprietary software development tools. These tools may be used on a stand-alone
basis or integrated with computer aided engineering ("CAE") design tools and
automatic test equipment provided by selected third party vendors. During the
twelve months ended September 30, 1995, the number of installed seats of the
Company's software development tools, as measured by the Company, has grown from
over 3,000 to over 7,000.
The high-density CPLD market, according to Dataquest Incorporated, a
semiconductor market research firm, amounted to $306 million in calendar year
1994 and is growing at a 37% annual rate. The Company's high-density CPLD
revenue mix by end-market for the first six months of fiscal 1996 was: 49%
4
<PAGE>
communications, 11% computing, 23% peripherals and 17% industrial and other
markets. The Company expects that in the future the communications market will
continue to account for a substantial portion of the Company's high-density
revenue and revenue growth.
The Company holds a leading position in the low-density CMOS PLD market. The
Company seeks to maintain a relatively high margin, low-density product mix by
differentiating its products through performance, proprietary architectures and
by offering lower operating voltages. In addition, the Company maintains
industry leading performance across its entire low-density CMOS PLD product
line.
The Company offers the industry's broadest line of low-density CMOS PLDs
based on its 16 families of GAL-Registered Trademark- ("Generic Array Logic")
products offered in over 150 speed, power, package and temperature range
combinations. GAL devices range in complexity from approximately 200 to 1,000
logic gates and are typically assembled in 20-, 24- and 28-pin standard dual
in-line packages ("DIPs") and in 20- and 28-pin standard plastic leaded chip
carrier ("PLCC") packages. The Company's low-density PLDs are offered in both
5-volt and 3.3-volt technologies with propagation delays as low as 3.5
nanoseconds, the highest performance in the industry. The Company is currently
selling the GAL16LV8D-3.5, the world's fastest PLD available in any technology
or operating voltage.
The Company sells its products directly to end customers through a network
of independent sales representatives and indirectly through a network of
distributors. The Company utilizes a direct sales management and field
applications engineering organization in combination with manufacturer's
representatives and distributors to reach a broad base of potential end
customers. The Company's end customers are primarily original equipment
manufacturers ("OEMs") in the fields of communications, computing, peripherals,
instrumentation, industrial controls and military systems. The Company believes
its distribution channels provide a cost-effective means for reaching end
customers.
The Company's current high- and low-density PLD offerings are based on the
Company's proprietary E(2)CMOS process technologies, termed
UltraMOS-Registered Trademark-. The Company's current production processes,
UltraMOS IV and UltraMOS V, are sub-micron CMOS technologies. The Company has
recently released to production UltraMOS VI, an advanced sub-micron process
technology designed to enhance product performance and densities.
The Company's manufacturing strategy has been to procure wafers for its
products from a leading manufacturer under current purchase orders and long-term
agreements, which has allowed the Company to avoid the cost of establishing its
own wafer fabrication facility. The Company currently obtains all of its wafer
supply from Seiko Epson Corporation ("Seiko Epson") through Seiko Epson's
affiliated United States distributor, S MOS Systems Inc. ("S MOS"). See
"Business -- Licenses and Agreements -- Seiko Epson/ S MOS." The Company intends
to expand existing sources and establish additional sources of wafer supply for
its products at such time as these arrangements are required to meet customer
demand. The Company entered into a series of agreements with United
Microelectronics Corporation ("UMC") in September 1995 pursuant to which the
Company has agreed to join UMC and several other companies to form a separate
Taiwanese company for the purpose of building and operating an advanced
semiconductor manufacturing facility in Taiwan, Republic of China. Under the
terms of the agreement, the Company will invest $60 million, payable in three
installments over the next two and a half years, for a 10% equity interest in
the venture and the right to receive a percentage of the facility's wafer
production at market prices. In a related agreement, UMC has committed to supply
the Company with sub-micron wafers beginning in the first calendar quarter of
1996 and continuing with phased increases for several years, until such capacity
is available from the new facility. See "Business -- Licenses and Agreements --
UMC."
The Company was incorporated in Oregon in 1983 and reincorporated in
Delaware in 1985. The Company's principal offices are located at 5555 NE Moore
Court, Hillsboro, Oregon 97124, and its telephone number is (503) 681-0118.
References to the Company shall mean Lattice Semiconductor Corporation and its
subsidiaries, unless the context requires otherwise.
"GAL", "ispLSI", "ispGAL", "E(2)CMOS", "UltraMOS", "pDS", "pDS+", "pLSI",
"ISP", "ISP", "In-System Programmable", "In-System Programmability", "LATTICE
SEMICONDUCTOR CORPORATION", "Silicon Forest" and "L LATTICE SEMICONDUCTOR
CORPORATION", including the design and the symbol "L" in the form appearing on
the cover page of this Prospectus, are trademarks of the Company. This
Prospectus also includes product names, trade names and trademarks of other
companies.
5
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION PROVIDED IN THIS PROSPECTUS AND IN THE
DOCUMENTS INCORPORATED BY REFERENCE HEREIN, THE FOLLOWING RISK FACTORS SHOULD BE
CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
PURCHASING THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
DEPENDENCE ON WAFER SUPPLIERS. The Company does not manufacture finished
silicon wafers. Its products, however, require wafers manufactured with
state-of-the-art fabrication equipment and techniques. Accordingly, the
Company's strategy has been to maintain relationships with large semiconductor
manufacturers for the production of its wafers. All of its silicon wafers are
currently manufactured by Seiko Epson in Japan and sold to the Company, through
Seiko Epson's affiliated U.S. distributor, S MOS. See "Business -- Licenses and
Agreements -- Seiko Epson/S MOS." In connection with a series of agreements
recently entered into with UMC providing for the formation of a separate
Taiwanese company for the purpose of building and operating an advanced
semiconductor manufacturing facility in Taiwan, Republic of China, UMC committed
to supply the Company with sub-micron wafers beginning in the first calendar
quarter of 1996 and continuing with phased increases for several years. See
"Business -- Licenses and Agreements -- UMC." A significant interruption in
supply from Seiko Epson through S MOS or from UMC would have a material adverse
effect on the Company's business.
Worldwide manufacturing capacity for silicon wafers is limited and
inelastic. Therefore, significant increases in demand or interruptions in supply
could adversely affect the Company. Through fiscal 1995, the Company has been
successful in obtaining adequate wafer capacity commitments and has not
experienced any material difficulties or delays in the supply of wafers.
Presently, demand on wafer suppliers for silicon wafers is growing and existing
capacity commitments may not be sufficient to permit the Company to satisfy all
of its customers' demand in future periods. The Company negotiates wafer prices
and certain wafer supply commitments with Seiko Epson and S MOS on an annual
basis, and, in some cases, as frequently as semiannually. Moreover, wafer prices
and commitments are subject to continuing review and revision by the parties.
Although current commitments are anticipated to be adequate through fiscal 1996,
Seiko Epson and S MOS advised the Company in July 1995 that, due to high levels
of demand and limited manufacturing capacity, there were significant
uncertainties as to whether they would be able to supply wafers to the Company
for the Company's fiscal 1997 at increased levels relative to fiscal 1996 or
even at historical levels. More recently, however, the Company received
indications from Seiko Epson and S MOS that they believe they will be able to
supply wafers to the Company in fiscal 1997 at levels moderately higher than in
fiscal 1996. In addition, the Company recently obtained a commitment from UMC to
supply the Company with sub-micron wafers beginning in the first calendar
quarter of 1996 and continuing with phased increases for several years. Wafer
prices and other purchase terms are expected to be negotiated prior to
initiating wafer production and will be subject to periodic adjustment. The
availability of wafers from UMC will depend on, among other things, UMC
successfully achieving volume production. There can be no assurance that UMC
will successfully achieve volume production of Company wafers or that Seiko
Epson, S MOS or UMC will not reduce their allocations of wafers or increase
prices to the Company in future periods or that any such reduction in supply
could be offset pursuant to arrangements with alternate sources of supply. If
any substantial reduction of supply or substantial price increase were to occur,
the Company's operating results would be materially adversely affected. The
Company's future revenue growth will depend in part on improving yields of die
per wafer through reductions in the die size of its products, shifting capacity
to a higher revenue per wafer product mix, successfully achieving production
volumes at UMC, increasing its wafer allocations from its suppliers or obtaining
additional wafer allocations from other suppliers. There can be no assurance
that the Company will be successful in improving yields, enhancing product mix,
achieving volume production at UMC or otherwise increasing wafer supply.
The Company's wafer purchases from Seiko Epson are denominated in Japanese
yen. During the first two calendar quarters of 1995, the dollar lost substantial
value with respect to the yen. Such loss was regained in the third calendar
quarter of 1995. There is no assurance that the value of the dollar with respect
to the yen will not again experience substantial deterioration or that any such
deterioration will not continue in the future. Any substantial continued
deterioration of dollar-yen exchange rates could have a material adverse effect
on the Company's results of operations.
6
<PAGE>
The Company depends upon wafer suppliers to produce wafers with acceptable
yields and to deliver them to the Company in a timely manner. Substantially all
of the Company's revenues are derived from products based on E(2)CMOS process
technology. Successful implementation of the Company's proprietary E(2)CMOS
process technology, UltraMOS, requires a high degree of coordination between the
Company and its wafer supplier. Therefore, significant lead time is required to
reach volume production at a new wafer supply location such as UMC. Accordingly,
there can be no assurance that volume production at UMC will be achieved in the
near term or at all. The manufacture of high performance E(2)CMOS semiconductor
wafers is a complex process that requires a high degree of technical skill,
state-of-the-art equipment and effective cooperation between the wafer supplier
and the circuit designer to produce acceptable yields. Minute impurities, errors
in any step of the fabrication process, defects in the masks used to print
circuits on a wafer and other factors can cause a substantial percentage of
wafers to be rejected or numerous die on each wafer to be non-functional. As is
common in the semiconductor industry, the Company has from time to time
experienced in the past and expects that it will experience in the future
production yield problems and delivery delays. Any prolonged inability to obtain
adequate yields or deliveries could adversely affect the Company's operating
results.
The Company expects that, as is customary in the semiconductor business, it
will in the future seek to convert its fabrication process technology to larger
wafer sizes, to smaller device geometries or to new or additional suppliers in
order to maintain or enhance its competitive position. Such conversions entail
inherent technological risks that could adversely affect yields and delivery
times and could have a material adverse impact on the Company's operating
results. To a considerable extent, the Company's ability to execute its
strategies will depend upon its ability to maintain and enhance its advanced
process technologies. As the Company does not presently operate its own wafer
fabrication or process development facility, the Company depends upon silicon
wafer manufacturers to provide the facilities and support for its process
development. In light of this dependency and the intensely competitive nature of
the semiconductor industry, there is no assurance that either process technology
development or timely product introduction can be sustained in the future.
In addition, other unanticipated changes in or disruptions of the Company's
wafer supply arrangements could reduce product availability, increase cost or
impair product quality and reliability. Many of the factors that could result in
such changes are beyond the Company's control. For example, a disruption of
operations at Seiko Epson's or UMC's manufacturing facilities as a result of a
work stoppage, fire, earthquake or other natural disaster, would cause delays in
shipments of the Company's products and could have a material adverse effect on
the Company's operating results.
DEPENDENCE ON ASSEMBLY CONTRACTORS. The Company's finished silicon wafers
are assembled and packaged by independent subcontractors located in the
Philippines and South Korea. Although the Company has not yet experienced
significant problems or interruptions in supply from its assembly contractors,
any prolonged work stoppages or other failure of these contractors to supply
finished products would have a material adverse effect on the Company's
operating results.
FLUCTUATIONS IN OPERATING RESULTS. The Company believes that its future
operating results will be subject to quarterly variations based upon a wide
variety of factors, including the cyclical nature of both the semiconductor
industry and the markets addressed by the Company's products, the timing of new
product introductions, price erosion, product obsolescence, substantial adverse
currency exchange rate movements, variations in product mix, scheduling,
rescheduling and cancellation of large orders, competitive factors, the
availability of manufacturing capacity and wafer supply, the ability to achieve
volume production at UMC, the ability to develop and implement new process
technologies, fluctuations in manufacturing yields, changes in effective tax
rates and litigation expenses. Due to these and other factors, the Company's
past results are a less useful predictor of future results than is the case in
more mature and less dynamic industries. The Company has increased its level of
operating expenses and investment in manufacturing capacity in anticipation of
future growth in revenues, primarily from increased sales of its high-density
products. To the extent that this revenue growth does not materialize, the
Company's operating results would be adversely affected.
7
<PAGE>
PRODUCT ENHANCEMENTS AND NEW PRODUCTS. Because of the rapid rate of
technological change in the semiconductor industry, the Company's success will
ultimately depend in large part on its ability to introduce new products on a
timely basis that meet a market need at a competitive price and with acceptable
margins as well as enhancing the performance of its existing products. The
success of new products, including the Company's high-density product families,
depends on a variety of factors, including product selection, timely and
efficient completion of product design, timely and efficient implementation of
manufacturing and assembly processes, product performance, quality and
reliability in the field and effective sales and marketing. Because new product
development commitments must be made well in advance of sales, new product
decisions must anticipate both future demand and the technology that will be
available to supply that demand. New and enhanced products are continually being
introduced into the Company's markets by others, and these products can be
expected to affect the competitive environment in the markets in which they are
introduced. There is no assurance that the Company will be successful in
enhancing its existing products or in selecting, developing, manufacturing,
marketing and selling new products.
The majority of the Company's revenue and gross margin percentage over the
past three fiscal years was due to revenues from low-density GAL products, many
of which are second sourced by other suppliers. Future revenue growth will be
largely dependent on market acceptance of the Company's new and proprietary
products, including its high-density product families, and market acceptance of
the Company's proprietary software development tools. There can be no assurance
that the Company's product and process development efforts will be successful or
that new products, including the Company's high-density products, will continue
to achieve market acceptance. If the Company were unable to successfully define,
develop and introduce competitive new products in a timely manner, its future
operating results would be adversely affected.
COMPETITION AND RAPID TECHNOLOGICAL CHANGE. The semiconductor industry is
intensely competitive and is characterized by rapid technological change, sudden
price fluctuations, general price erosion, rapid rates of product obsolescence,
periodic shortages of materials and manufacturing capacity and variations in
manufacturing costs and yields. The Company's competitive position is affected
by all of these factors and by industry competition for effective sales and
distribution channels. The Company's existing and potential competitors range
from established major domestic and international semiconductor companies to
emerging companies. Many of the Company's competitors have substantially greater
financial, technological, manufacturing, marketing and sales resources than the
Company. The Company faces direct competition from companies that have developed
or licensed similar technology and from licensees of the Company's products and
technology. The Company also faces indirect competition from a wide variety of
semiconductor companies offering products and solutions based on alternative
technologies. Although to date the Company has not experienced significant
competition from companies located outside the United States, such companies may
become a more significant competitive factor in the future. As the Company and
its current competitors seek to expand their markets, competition may increase,
which could have an adverse effect on the Company's operating results.
Development of new technologies that have price/performance characteristics
superior to the Company's technologies could adversely affect the Company's
results of operations. There can be no assurance that the Company will be able
to develop and market new products successfully or that the products introduced
by others will not render the Company's products or technologies non-competitive
or obsolete. See "-- Product Enhancements and New Products." The Company expects
that its markets will become more competitive in the future. See "Business --
Competition."
CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY. The semiconductor industry
is highly cyclical and has been subject to significant downturns at various
times that have been characterized by diminished product demand, production
overcapacity and accelerated erosion of average selling prices. The Company's
rate of growth in recent periods has been positively impacted by recent trends
in the semiconductor industry. Any material imbalance in industry-wide
production capacity relative to demand, shift in industry capacity toward
products competitive with the Company's products, reduced demand or reduced
growth in demand or other factors could result in a rapid decline in product
pricing and have a material adverse effect on the Company's operating results.
8
<PAGE>
FUTURE CAPITAL NEEDS. In an effort to secure additional wafer supply, the
Company may from time to time consider various arrangements, including joint
ventures with, minority investments in, advanced purchase payments to, loans to
or similar arrangements with independent wafer manufacturers in exchange for
committed production capacity. Such arrangements are becoming common within the
industry as independent wafer manufacturers increasingly seek to require their
customers to share a portion of the cost of capital intensive wafer fabrication
facilities. The Company entered into an advanced production payment arrangement
with Seiko Epson in 1994 pursuant to which it advanced a total of $42 million to
Seiko Epson. See "Business -- Licenses and Agreements -- Seiko Epson/S MOS." In
September 1995, the Company entered into an agreement with UMC to invest $60
million for a 10% equity interest in a separate Taiwanese company providing for
the formation of a joint venture with UMC and several other companies for the
purpose of building and operating an advanced semiconductor manufacturing
facility. See "Business -- Licenses and Agreements -- UMC." To the extent the
Company pursues any other such transactions with Seiko Epson, UMC or any other
wafer manufacturers, such transactions could entail even greater levels of
investment requiring the Company to seek additional equity or debt financing to
fund such activities. See "Use of Proceeds." There can be no assurance that any
such additional funding could be obtained when needed or, if available, on terms
acceptable to the Company.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY. The Company's success depends
in part on its proprietary technology. While the Company attempts to protect its
proprietary technology through patents, copyrights and trade secrets, it
believes that its success will depend more upon technological expertise,
continued development of new products, and successful market penetration of its
silicon and software products. There can be no assurance that the Company will
be able to protect its technology or that competitors will not be able to
develop similar technology independently. The Company currently has a number of
United States and foreign patents and patent applications. See "Business --
Patents." There can be no assurance that the claims allowed on any patents held
by the Company will be sufficiently broad to protect the Company's technology,
or that any patents will issue from any application pending or filed by the
Company. In addition, there can be no assurance that any patents issued to the
Company will not be challenged, invalidated or circumvented or that the rights
granted thereunder will provide competitive advantages to the Company.
The semiconductor industry is generally characterized by vigorous protection
and pursuit of intellectual property rights and positions, which have on
occasion resulted in protracted litigation that utilizes cash and management
resources, which can have a significant adverse effect on operating results. The
Company has received a letter from a semiconductor manufacturer stating that it
believes a number of its patents, related to product packaging, cover certain
products sold by the Company. While the manufacturer has offered to license
certain of such patents to the Company, there can be no assurance, on this or
any other claim which may be made against the Company, that the Company could
obtain a license on terms or under conditions that would be favorable to the
Company. In addition, there can be no assurance that other intellectual property
claims will not be made against the Company in the future or that the Company
will not be prohibited from using the technologies subject to such claims or be
required to obtain licenses and make corresponding royalty payments for past or
future use. See "Business -- Patents."
IMPORTANCE OF INTERNATIONAL REVENUES. International revenues accounted for
45%, 43%, 47% and 49% of the Company's revenues for fiscal years 1993, 1994,
1995 and the first six months of fiscal 1996, respectively. The Company believes
that international revenues will continue to represent a significant percentage
of revenues. International revenues and operations may be adversely affected by
the imposition of governmental controls, export license requirements,
restrictions on the export of technology, political instability, trade
restrictions, changes in tariffs and difficulties in staffing and managing
international operations. See "Business -- Marketing, Sales and Customers."
DEPENDENCE ON KEY PERSONNEL. The future success of the Company is
dependent, in part, on its ability to attract and retain highly qualified
technical and management personnel, particularly highly skilled engineers
involved in new product, both silicon and software, and process technology
development. Competition for such personnel is intense. There can be no
assurance that the Company will be able to retain its existing key
9
<PAGE>
technical and management personnel or attract additional qualified employees in
the future. The loss of key technical or management personnel could delay
product development cycles or otherwise have a material adverse effect on the
Company's business.
FOREIGN MANUFACTURING AND ASSEMBLY. The Company currently depends on Seiko
Epson, a Japanese company, for the manufacture of all of its finished silicon
wafers, and anticipates depending on UMC, a Taiwanese company, and a joint
venture formed with UMC and other semiconductor companies for the manufacture of
a portion of its finished silicon wafers. In addition, after wafer manufacturing
is completed and each wafer is tested, products are assembled by subcontractors
in South Korea and the Philippines. Although the Company's subcontractors have
not recently experienced any serious work stoppages, the social and political
situations in these countries can be volatile, and any prolonged work stoppages
or other disruptions in the Company's ability to manufacture and assemble its
products would have a material adverse effect on the Company's results of
operations. Furthermore, economic risks, such as changes in currency exchange
rates, tax laws, tariffs, or freight rates, or interruptions in air
transportation, could have a material adverse effect on the Company's results of
operations. See "Business -- Operations."
VOLATILITY OF COMMON STOCK PRICE. The market price of the Company's Common
Stock could be subject to significant fluctuations in response to variations in
quarterly operating results, shortfalls in revenues or earnings from levels
expected by securities analysts and other factors such as announcements of
technological innovations or new products by the Company or by the Company's
competitors, government regulations, developments in patent or other proprietary
rights, and developments in the Company's relationships with parties to
collaborative agreements. In addition, the stock market has recently experienced
significant price fluctuations. These fluctuations often have been unrelated to
the operating performance of the specific companies whose stocks are traded.
Broad market fluctuations, as well as economic conditions generally and in the
semiconductor industry specifically, may adversely affect the market price of
the Company's Common Stock. See "Price Range of Common Stock."
POTENTIAL ANTI-TAKEOVER EFFECTS. Certain provisions of the Company's
stockholder rights plan, its Certificate of Incorporation and Delaware law could
discourage potential acquisition proposals and could delay or prevent a change
in control of the Company. Such provisions could diminish the opportunities for
a stockholder to participate in tender offers, including tender offers at a
price above the then current market value of the Common Stock. Such provisions
may also inhibit increases in the market price of the Common Stock that could
result from takeover attempts. In addition, the Company's Board of Directors has
the authority to issue Preferred Stock without any further vote or action by the
stockholders. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the stockholders and could adversely affect the rights and powers,
including voting rights, of the holders of Common Stock. Such effects could
result in a decrease in the market price of the Company's Common Stock. See
"Description of Capital Stock."
10
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
2,500,000 shares of Common Stock offered by the Company hereby are estimated to
be approximately $87.1 million ($100.2 million if the U.S. Underwriters'
over-allotment option is exercised in full) assuming a public offering price of
$36.75 per share. The Company intends to use the proceeds of this offering
primarily for expansion and maintenance of its wafer supply and assembly
capacity, including funding a planned equity investment in an advanced
semiconductor manufacturing facility in Taiwan, and other general corporate
purposes, including procurement of additional capital equipment and facilities
to expand the Company's internal manufacturing capacity, development of new
products, and potential acquisitions of businesses, products, or technologies
that would complement the Company's businesses. See "Business -- Licenses and
Agreements -- UMC." In addition, the Company from time to time has discussions
with third parties regarding possible arrangements with respect to wafer supply
and assembly capacity, such as purchasing options for such capacity or making
investments in new or existing manufacturing facilities. Except as discussed
elsewhere in this Prospectus, there are no current understandings or agreements
involving purchasing options or making investments with respect to any material
wafer supply and assembly arrangements or with respect to business, product, or
technology acquisition transactions. Pending such applications, the net proceeds
from this offering will be invested in bank deposits and investment grade,
interest bearing securities.
PRICE RANGE OF COMMON STOCK
The following table sets forth the range of high and low sales prices of the
Company's Common Stock for the indicated periods, as reported by The Nasdaq
National Market. On October 16, 1995, the last reported sale price for the
Common Stock on The Nasdaq National Market was $36 3/4 per share. As of October
16, 1995, the Company had approximately 297 holders of record of the Common
Stock. All prices have been restated to reflect a three-for-two stock split
effected in the form of a stock dividend which was paid on July 6, 1993.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal year ended April 2, 1994:
First Quarter...................................................................... $20 13/16 $14 11/16
Second Quarter..................................................................... 26 3/4 14 3/4
Third Quarter...................................................................... 24 3/4 12 1/4
Fourth Quarter..................................................................... 19 3/8 14
Fiscal year ended April 1, 1995:
First Quarter...................................................................... 19 5/8 14 3/4
Second Quarter..................................................................... 20 1/8 16 1/4
Third Quarter...................................................................... 19 3/8 15 1/2
Fourth Quarter..................................................................... 27 1/8 16 3/8
Fiscal year ending March 30, 1996:
First Quarter...................................................................... 37 1/8 23
Second Quarter..................................................................... 43 28 7/8
Third Quarter (through October 16, 1995)........................................... 42 1/8 33
</TABLE>
DIVIDEND POLICY
To date the Company has not declared or paid cash dividends on its Common
Stock. The Board of Directors of the Company presently intends to retain all
earnings for use in the Company's business and therefore does not anticipate
declaring or paying any cash dividends on its Common Stock in the foreseeable
future.
11
<PAGE>
CAPITALIZATION
The following table sets forth, on an unaudited basis, the short-term debt
and capitalization of the Company at September 30, 1995, and as adjusted to
reflect the sale by the Company of the 2,500,000 shares of Common Stock offered
hereby at an assumed public offering price of $36.75 per share (after deducting
underwriting discounts and commissions and estimated offering expenses).
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1995
--------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Short-term debt.............................................................. $ -- $ --
Long-term debt............................................................... -- --
Stockholders' equity:
Preferred Stock, $.01 par value, 10,000,000 shares authorized; none issued
and outstanding........................................................... -- --
Common Stock, $.01 par value, 100,000,000 shares authorized; 19,502,914
shares issued and outstanding; 22,002,914 shares issued and outstanding as
adjusted(2)............................................................... 195 220
Paid-in capital............................................................ 92,381 179,425
Retained earnings.......................................................... 93,430 93,430
---------- --------------
Total stockholders' equity............................................. 186,006 273,075
---------- --------------
Total capitalization................................................. $ 186,006 $ 273,075
---------- --------------
---------- --------------
<FN>
- ---------
(1) Assumes the U.S. Underwriters' over-allotment option to purchase 375,000
shares from the Company is not exercised. See "Underwriters."
(2) Excludes (i) 2,063,126 shares of Common Stock subject to outstanding
options under the Company's 1988 Stock Incentive Plan with an average
exercise price of $19.75 per share and 693,560 shares available for future
grants of options thereunder as of September 30, 1995; (ii) 133,593 shares
of Common Stock reserved but unissued under the Company's Employee Stock
Purchase Plan; (iii) 94,125 shares of Common Stock subject to outstanding
options under the Company's 1993 Outside Directors Stock Option Plan with
an average exercise price of $20.49 per share and 148,500 shares available
for future grants of options thereunder as of September 30, 1995; and (iv)
123,625 shares of Common Stock subject to outstanding warrants owned by
Bain & Company with an average exercise price of $18.76 per share.
</TABLE>
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of April 2, 1994
and April 1, 1995, and for each of the years in the three-year period ended
April 1, 1995 have been derived from the consolidated financial statements of
the Company, which have been audited by Price Waterhouse LLP, independent
accountants, which financial statements are incorporated by reference herein.
The selected consolidated financial data presented below as of March 30, 1991,
March 28, 1992 and April 3, 1993, and for each of the years in the two-year
period ended March 28, 1992 have also been derived from audited consolidated
financial statements of the Company which are not incorporated by reference
herein. The selected consolidated financial data presented below as of October
1, 1994 and September 30, 1995, for the six months then ended, for the fiscal
quarters ended July 1, 1995 and September 30, 1995, and for each of the four
quarters of fiscal 1994 and fiscal 1995 have been derived from unaudited
consolidated financial statements of the Company. In the opinion of the
Company's management, such unaudited consolidated financial statements include
all adjustments, consisting of only normal recurring adjustments, necessary to
fairly state the information set forth therein. The following consolidated
financial data should be read in conjunction with the consolidated financial
statements, related notes and other financial information incorporated by
reference herein. See "Incorporation of Certain Documents by Reference." All
share and per share amounts have been adjusted to reflect the three-for-two
stock split effected in the form of a stock dividend which was paid on July 6,
1993.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
--------------------------------------------------------- ----------------------
MARCH 30, MARCH 28, APRIL 3, APRIL 2, APRIL 1, OCT. 1, SEPT. 30,
1991 1992 1993 1994 1995 1994 1995
----------- ----------- --------- --------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue..................................... $ 64,539 $ 71,009 $ 103,391 $ 126,241 $ 144,083 $ 67,477 $ 93,621
Costs and expenses:
Cost of products sold................... 29,919 31,015 43,650 53,266 58,936 27,416 38,959
Research and development................ 10,363 12,535 16,530 20,636 22,859 10,884 13,073
Selling, general and administrative..... 12,142 14,144 20,465 22,299 25,020 11,838 15,087
----------- ----------- --------- --------- --------- --------- -----------
Total costs and expenses............ 52,424 57,694 80,645 96,201 106,815 50,138 67,119
----------- ----------- --------- --------- --------- --------- -----------
Income from operations...................... 12,115 13,315 22,746 30,040 37,268 17,339 26,502
Interest and other income, net.............. 2,439 2,420 2,470 2,566 3,349 1,402 1,932
----------- ----------- --------- --------- --------- --------- -----------
Income before provision for income taxes.... 14,554 15,735 25,216 32,606 40,617 18,741 28,434
Provision for income taxes.................. 4,257 4,880 7,817 10,116 13,651 6,323 9,810
----------- ----------- --------- --------- --------- --------- -----------
Net income.................................. $ 10,297 $ 10,855 $ 17,399 $ 22,490 $ 26,966 $ 12,418 $ 18,624
----------- ----------- --------- --------- --------- --------- -----------
----------- ----------- --------- --------- --------- --------- -----------
Net income per share........................ $ 0.61 $ 0.61 $ 0.94 $ 1.19 $ 1.41 $ 0.65 $ 0.93
----------- ----------- --------- --------- --------- --------- -----------
----------- ----------- --------- --------- --------- --------- -----------
Weighted average common and common
equivalent shares outstanding............. 16,770 17,834 18,458 18,946 19,164 19,073 20,117
AS OF AS OF
--------------------------------------------------------- ----------------------
MARCH 30, MARCH 28, APRIL 3, APRIL 2, APRIL 1, SEPT. 30,
1991 1992 1993 1994 1995 1995
----------- ----------- --------- --------- --------- -----------
OCT. 1,
1994
---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital............................. $ 51,770 $ 64,297 $ 79,878 $ 105,007 $ 106,021 $ 102,317 $ 138,050
Total assets................................ 79,081 91,653 128,876 146,093 192,917 169,884 225,768
Long-term lease obligations, excluding
current portion........................... 566 205 -- -- -- -- --
Stockholders' equity........................ 63,230 75,643 98,481 125,068 157,797 140,013 186,006
</TABLE>
13
<PAGE>
The following table presents unaudited quarterly results in dollar amounts
and as a percentage of revenue for the Company's last ten fiscal quarters.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
FISCAL FISCAL
1994 1995
-------------------------------------------------- -------------------------------------
JULY 3, OCT. 2, JAN. 1, APR. 2, JULY 2, OCT. 1, DEC. 31,
1993 1993 1994 1994 1994 1994 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue...................... $ 33,345 $ 34,136 $ 28,573 $ 30,187 $ 32,913 $ 34,564 $ 36,288
Costs and expenses:
Cost of products sold.... 14,241 14,509 12,070 12,446 13,418 13,998 14,810
Research and
development............. 5,425 5,428 4,797 4,986 5,306 5,578 5,790
Selling, general and
administrative.......... 5,949 5,897 5,113 5,340 5,769 6,069 6,283
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total costs and
expenses............ 25,615 25,834 21,980 22,772 24,493 25,645 26,883
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income from operations....... 7,730 8,302 6,593 7,415 8,420 8,919 9,405
Interest and other income,
net........................ 608 663 668 627 669 733 895
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before provision for
income taxes............... 8,338 8,965 7,261 8,042 9,089 9,652 10,300
Provision for income taxes... 2,668 2,868 2,178 2,402 3,090 3,233 3,450
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income................... $ 5,670 $ 6,097 $ 5,083 $ 5,640 $ 5,999 $ 6,419 $ 6,850
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income per share......... $ 0.30 $ 0.32 $ 0.27 $ 0.30 $ 0.32 $ 0.34 $ 0.36
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Weighted average common and
common equivalent shares
outstanding................ 18,896 19,051 18,918 18,925 19,002 19,145 19,134
<CAPTION>
FISCAL
1996
------------------------
APR. 1, JULY 1, SEPT. 30,
1995 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue...................... $ 40,318 $ 45,013 $ 48,608
Costs and expenses:
Cost of products sold.... 16,710 18,769 20,190
Research and
development............. 6,185 6,383 6,690
Selling, general and
administrative.......... 6,899 7,371 7,716
----------- ----------- -----------
Total costs and
expenses............ 29,794 32,523 34,596
----------- ----------- -----------
Income from operations....... 10,524 12,490 14,012
Interest and other income,
net........................ 1,052 1,015 917
----------- ----------- -----------
Income before provision for
income taxes............... 11,576 13,505 14,929
Provision for income taxes... 3,878 4,659 5,151
----------- ----------- -----------
Net income................... $ 7,698 $ 8,846 $ 9,778
----------- ----------- -----------
----------- ----------- -----------
Net income per share......... $ 0.40 $ 0.45 $ 0.49
----------- ----------- -----------
----------- ----------- -----------
Weighted average common and
common equivalent shares
outstanding................ 19,467 19,811 20,119
</TABLE>
<TABLE>
<CAPTION>
AS A PERCENTAGE OF REVENUE
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of products sold... 42.7% 42.5% 42.2% 41.2% 40.8% 40.5% 40.8% 41.5% 41.7%
Research and
development............ 16.3% 15.9% 16.8% 16.5% 16.1% 16.1% 16.0% 15.3% 14.2%
Selling, general and
administrative......... 17.8% 17.3% 17.9% 17.7% 17.5% 17.6% 17.3% 17.1% 16.4%
--------- --------- --------- --------- --------- --------- ----------- --------- ---------
Total costs and
expenses........... 76.8% 75.7% 76.9% 75.4% 74.4% 74.2% 74.1% 73.9% 72.3%
--------- --------- --------- --------- --------- --------- ----------- --------- ---------
Income from operations...... 23.2% 24.3% 23.1% 24.6% 25.6% 25.8% 25.9% 26.1% 27.7%
Interest and other income,
net....................... 1.8% 2.0% 2.3% 2.1% 2.0% 2.1% 2.5% 2.6% 2.3%
--------- --------- --------- --------- --------- --------- ----------- --------- ---------
Income before provision for
income taxes.............. 25.0% 26.3% 25.4% 26.7% 27.6% 27.9% 28.4% 28.7% 30.0%
Provision for income
taxes..................... 8.0% 8.4% 7.6% 8.0% 9.4% 9.3% 9.5% 9.6% 10.3%
--------- --------- --------- --------- --------- --------- ----------- --------- ---------
Net income.................. 17.0% 17.9% 17.8% 18.7% 18.2% 18.6% 18.9% 19.1% 19.7%
--------- --------- --------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- --------- --------- ----------- --------- ---------
<CAPTION>
<S> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue..................... 100.0%
Costs and expenses:
Cost of products sold... 41.5%
Research and
development............ 13.8%
Selling, general and
administrative......... 15.9%
-----------
Total costs and
expenses........... 71.2%
-----------
Income from operations...... 28.8%
Interest and other income,
net....................... 1.9%
-----------
Income before provision for
income taxes.............. 30.7%
Provision for income
taxes..................... 10.6%
-----------
Net income.................. 20.1%
-----------
-----------
</TABLE>
14
<PAGE>
BUSINESS
GENERAL
Lattice Semiconductor Corporation (the "Company") is the world's leading
supplier of in-system programmable ("ISP") logic devices and pioneered the
application of electrically erasable CMOS ("E(2)CMOS") technology to
programmable logic. The Company designs, develops and markets both high-and
low-density, high performance E(2)CMOS programmable logic devices ("PLDs") and
related development system software. PLDs are standard semiconductor components
that can be configured by the end customer as specific logic circuits. PLDs
enable the end customer to shorten design cycle times and reduce development
costs.
PLD MARKET BACKGROUND
Three principal types of digital integrated circuits are used in most
electronic systems: microprocessors, memory and logic. Microprocessors are used
for control and computing tasks, memory is used to store programming
instructions and data, and logic is employed to manage the interchange and
manipulation of digital signals within a system. Logic circuits contain
interconnected groupings of simple logical "AND" and logical "OR" functions,
commonly described as "gates". Typically, complex combinations of individual
gates are required to implement the specialized logic circuits required for
systems applications. While system designers use a relatively small number of
standard architectures to meet their microprocessor and memory needs, they
require a wide variety of logic circuits in order to achieve end product
differentiation.
Logic circuits are found in a wide range of today's electronic systems
including communications equipment, computers, peripherals, instrumentation,
industrial control and military systems. According to Dataquest Incorporated, a
semiconductor market research firm, logic accounted for approximately 32% of the
estimated $79 billion worldwide digital integrated circuit market in 1994. The
logic market encompasses, among other segments, standard transistor-transistor
logic ("TTL"), custom-designed application specific integrated circuits
("ASICs", which include conventional gate-arrays, standard cells and full custom
logic circuits), and PLDs. Logic circuits are often classified by the number of
gates per circuit, with TTL circuits typically containing up to 100 gates, PLDs
offering up to 20,000 gates, and conventional gate arrays and custom logic
circuits reaching up to to several hundred thousand gates.
Manufacturers of electronic systems are increasingly challenged to bring
differentiated products to market quickly. These competitive pressures often
preclude the use of custom-designed ASICs, which generally entail significant
design risks and time delay. Standard logic products, an alternative to custom-
designed ASICs, limit a manufacturer's flexibility to adequately customize an
end system. Programmable logic addresses this inherent dilemma. PLDs are
standard products, purchased by systems manufacturers in a "blank" state, that
can be custom configured into a virtually unlimited number of specific logic
circuits by programming the device with electrical signals. PLDs give system
designers the ability to quickly create their own custom logic circuits to
provide product differentiation and rapid time to market. Certain PLD products,
including the Company's, are reprogrammable, which means that the logic
configuration can be modified, if needed, after the initial logic programming. A
recent technology development, in-system programmability, extends the
flexibility of standard reprogrammable PLDs by allowing the system designer to
configure and reconfigure the logic functions of the PLD with a standard 5-volt
power supply without removing the PLD from the system board.
Several common types of PLDs currently coexist in the marketplace, each
offering customers a particular set of benefits. These include low-density PLDs
(less than 1,000 gates) and high-density PLDs (greater than 1,000 gates).
High-density PLDs include both complex PLDs ("CPLDs," up to 14,000 gates) and
field programmable gate arrays ("FPGAs," up to 20,000 gates).
Low-density devices are typically based on industry standard architectures
and include the GAL ("Generic Array Logic") product family developed by the
Company. These architectures are familiar to most system designers and are
supported by standard widely available development tools. Offering the highest
absolute performance and lowest cost per device, these products are the most
effective PLD solution to support simple logic functions in all systems and
complex logic functions in systems with fast clock rates, such as those
supporting state-of-the-art microprocessors.
15
<PAGE>
High-density devices are typically based on proprietary architectures and
require support from sophisticated computer aided engineering ("CAE")
development tools. Due to their higher levels of logic integration, absolute
performance levels typically lag those of state-of-the-art low-density PLDs by
one or more technology generations. However, in situations requiring complex
logic functions, high-density PLDs can provide important advantages over the use
of a large cluster of low-density devices. These advantages include system
performance enhancement and power and cost savings.
CPLDs and FPGAs are the two primary types of high-density PLD architectures.
CPLD and FPGA architectures are generally optimal for different types of logic
functions, although many logic functions can be implemented with either
architecture. CPLDs are characterized by a regular building block structure of
wide-input logic cells, termed macrocells, and use of a centralized logic
interconnect scheme. CPLDs are optimal for control logic applications, such as
state machines, bus arbitration, encoders and decoders and sequencers. FPGAs are
characterized by a narrow-input logic cell and use a distributed interconnect
scheme. FPGAs are optimal for register intensive and data path logic
applications such as interface logic and arithmetic functions. The Company
believes that a substantial portion of high-density PLD customers utilize both
CPLD and FPGA architectures within a single system design, partitioning logic
functions across multiple devices to optimize overall system performance and
cost.
TECHNOLOGY
The Company believes that E(2)CMOS is the preferred process technology for
both high-density CPLDs and low-density PLDs due to its inherent performance,
reprogrammability and testability benefits. E(2)CMOS, through its fundamental
ability to be programmed and erased electronically, serves as the foundation for
the Company's ISP technology.
IN-SYSTEM PROGRAMMABLE (ISP) TECHNOLOGY
The Company has pioneered the development of ISP, a proprietary technology,
which affords it a competitive advantage in the high-density CPLD market. In
contrast to standard PLD programming technologies, ISP allows the system
designer to configure and reconfigure the PLD without removing the device from
the system board. Standard E(2)CMOS programmable logic devices require 12-volt
electrical signals and therefore must be removed from the printed circuit board
and programmed using stand alone, specialized hardware, while ISP devices can be
programmed with standard 5-volt electrical signals. ISP enhances the flexibility
of PLDs, providing a number of important benefits to a system manufacturer
across the full spectrum of an electronic system product cycle. ISP can allow
customers to reduce design cycle times, accelerate time to market, reduce
prototyping costs, reduce manufacturing costs and lower inventory requirements.
ISP can also provide customers the opportunity to perform simplified and
cost-effective field reconfiguration through a data file transferred by computer
disk or telephone line. All of the Company's high-density CPLDs are available
with ISP technology. The Company also offers its most popular low-density
architecture, the GAL22V10, with ISP technology.
E(2)CMOS PROCESS TECHNOLOGY
The Company's current high- and low-density PLD offerings are based on the
Company's proprietary E(2)CMOS manufacturing process technology, termed
UltraMOS-Registered Trademark-. The Company's current production processes,
UltraMOS IV and UltraMOS V, are sub-micron CMOS technologies. The Company has
recently released to production UltraMOS VI, an advanced sub-micron process
technology designed to enhance product performance and densities.
In comparison to bipolar technology, at one time the dominant technology for
low-density PLDs, E(2)CMOS technology consumes less power and generates less
heat while operating at comparable speed. Additionally, in contrast to
one-time-programmable bipolar PLDs, E(2)CMOS PLDs are fully erasable and
reprogrammable, providing greater end customer design flexibility and allowing
the PLD manufacturer to fully test all programmable elements in a device prior
to shipment. An alternative CMOS technology, Erasable Programmable Read Only
Memory ("EPROM"), provides the same low power consumption benefits as E(2)CMOS,
but requires ultraviolet light exposure for erasure, necessitating expensive
quartz windowed packages and limiting testability. Antifuse and Static Random
Access Memory ("SRAM") technologies, used primarily in the manufacture of
high-density FPGAs, offer certain advantages for very dense
16
<PAGE>
logic devices, but also have significant drawbacks when compared with E(2)CMOS.
Antifuse technology is non-erasable, non-reprogrammable and subject to lengthy
initial programming times that can hinder usage in volume production
applications. SRAM technology is volatile (erases when electrical power is
removed), and as such programmable SRAM FPGAs require additional non-volatile
memory, typically on a separate device, to store programming code. This adds
cost and printed circuit board area to a design, and results in the devices not
being completely functional at initial system power-up.
PRODUCTS
HIGH-DENSITY CPLDS
SILICON. In fiscal 1993, the Company entered the high-density PLD market by
releasing to production its ispLSI 1000 product family, consisting of eight
devices. The ispLSI 1000 product family, based on an innovative proprietary CPLD
architecture incorporating familiar GAL-like logic building blocks, offers
performance of up to 110 MHz, with propagation delays as low as 10 nanoseconds,
densities of 2,000 to 8,000 gates, and is available in surface mount packages
ranging from 44- to 128-pins. The Company is currently shipping over 60 speed,
package and temperature range combinations of the ispLSI 1000 family.
In fiscal 1994, the Company announced two new ispLSI families, the 2000 and
3000 series. The ispLSI 2000 family, containing eight devices, targets CPLD
performance leadership, providing performance of up to 154 MHz, with propagation
delays as low as 5.5 nanoseconds, densities of 1,000 to 4,000 gates, and 44- to
128-pin standard surface mount packages. It is the first high-density PLD
architecture capable of supporting advanced microprocessors operating at clock
speeds over 75 MHz, such as Pentium, PowerPC and other RISC-based systems. The
ispLSI 3000 family, initially containing six devices, incorporates an enhanced
logic architecture to target CPLD density leadership while retaining high
performance. It offers densities of 8,000 to 14,000 gates, and performance of up
to 100 MHz, with propagation delays as low as 10 nanoseconds. Available in 128-
to 208-pin surface mount packages, the 3000 family also incorporates boundary
scan test, an attractive feature that provides enhanced testing capabilities
important for complex systems. The Company is currently shipping over 30 speed,
package and temperature range combinations of the ispLSI 2000 and 3000 families.
The Company plans to continue to introduce new families of high-density
products, as well as improving the performance of existing product families, to
meet market needs.
SOFTWARE DEVELOPMENT TOOLS. All of the Company's high-density products are
supported by the Company's pDS-Registered Trademark- software development tools
and pDS+-TM- software development tools (referred to as "fitters"). First
introduced in fiscal 1992, pDS software allows a customer to enter and verify a
logic design, perform logic minimization, assign input/output ("I/O") pins and
critical speed paths, and execute automatic place and route tasks. Designed to
be a low cost, fully integrated development tool, pDS runs under the Microsoft
Windows operating system on a personal computer. First introduced in fiscal year
1994, pDS+ software supports most popular third party CAE development tool
environments running on IBM compatible personal computers as well as
workstations from Sun Microsystems and Hewlett-Packard. Designed to provide a
low cost method to incorporate the Company's high-density CPLD products into
standard development environments, pDS+ software leverages customers' existing
investment in third-party CAE tools. The Company also provides ispCODE-TM-
software, a product that supports in-system programming of the Company's ISP
devices.
During fiscal 1995, the Company released new versions of all its existing
pDS and pDS+ software development tools to enhance performance, functionality
and ease of use. The Company offers pDS+ products supporting common third party
CAE design tool environments, including Cadence, CUPL,
Data I/O ABEL, Data I/O Synario, Isdata, Mentor Graphics, OrCAD, Synopsys and
ViewLogic. The Company also enhanced its ISP programming support by releasing
ispTEST-TM- software, a product that enables ISP to be integrated into automatic
test equipment ("ATE") on the manufacturing floor. Currently ispTEST supports
ATE equipment from Genrad, Hewlett-Packard and Teradyne.
During the twelve months ended September 30, 1995, the number of installed
seats of the Company's software development tools, as measured by the Company,
has grown from over 3,000 to over 7,000. The Company plans to continue to
enhance and expand its development tool offerings during fiscal 1996.
17
<PAGE>
LOW-DENSITY PLDS
The Company offers the industry's broadest line of low-density CMOS PLDs
based on its 16 families of GAL products offered in over 150 speed, power,
package and temperature range combinations. GAL devices range in complexity from
approximately 200 to 1,000 logic gates and are typically assembled in 20-, 24-
and 28-pin standard dual in-line packages and in 20- and 28-pin standard plastic
leaded chip carrier packages. The Company offers the industry standard GAL16V8,
GAL20V8, GAL22V10, GAL20RA10 and GAL20XV10 architectures in a variety of speed
grades, with propagation delays as low as 5 nanoseconds, the highest performance
in the industry. The Company also offers several innovative proprietary
extension architectures, the ispGAL22V10, GAL26CV12, GAL18V10, GAL16VP8,
GAL20VP8, GAL6001/2, GAL16V8Z and GAL20V8Z, each of which is optimized for
specific applications. These product families offer industry leading performance
levels, typically with propagation delays as low as 7.5 nanoseconds.
Beginning in fiscal 1995, the Company extended its GAL line by introducing a
family of 3.3-volt industry standard architectures, the GAL16LV8, GAL20LV8 and
the GAL22LV10 in a variety of speed grades, with propagation delays as low as
3.5 nanoseconds, the highest performance in the industry. Offered with a range
of power consumption specifications, these devices are targeted towards emerging
high-growth, low-voltage system applications in the computing and communication
markets. The Company is currently selling the GAL16LV8D-3.5, the world's fastest
PLD available in any technology or operating voltage. The Company plans to
continue to maintain a broad offering of performance leadership, standard and
proprietary architecture low-density CMOS PLDs.
The Company's GAL products are supported by industry standard software and
hardware development tools marketed by independent manufacturers specifically
for PLD applications.
PRODUCT DEVELOPMENT
The Company places great emphasis on product development and believes that
continued investment in the development of new products that exploit market
trends is required to maintain its competitive position. The Company's product
development activities emphasize new high-density PLDs, improvements of its
proprietary E(2)CMOS processes and ISP technologies, performance enhancement and
cost reduction of existing products, and extension and enhancement of its
software development tools. Product development activities occur in the
Company's Hillsboro, Oregon headquarters, its Milpitas, California product
development center, and its Shanghai, China design center.
Research and development expenses were $16.5 million, $20.6 million, $22.9
million and $13.1 million in fiscal years 1993, 1994, 1995 and the first six
months of fiscal 1996, respectively. The Company expects to continue to make
significant investments in research and development in the future.
OPERATIONS
The Company does not manufacture its silicon wafers. The Company has
historically maintained strategic relationships with large semiconductor
manufacturers in order to source its finished silicon wafers, allowing the
Company to focus its internal resources on product, process and market
development. In addition, assembly is performed for the Company by outside
suppliers. The Company performs most test operations and all reliability and
quality assurance processes internally, as the Company believes it can add
significant customer value in these areas. In fiscal 1994, the Company became
the first domestic PLD company to achieve ISO 9001 quality registration, an
indication of the Company's high internal operational standards.
WAFER FABRICATION
All of the Company's silicon wafer requirements are currently supplied by
Seiko Epson in Japan pursuant to an agreement with S MOS, an affiliated U.S.
distributor of Seiko Epson. See "-- Licenses and Agreements -- Seiko Epson/S
MOS." The Company negotiates wafer volumes, prices and terms with Seiko Epson
and S MOS on a periodic basis. In addition, the Company entered into a series of
agreements with UMC in September 1995 pursuant to which the Company has agreed
to join UMC and several other companies to form a separate Taiwanese company for
the purpose of building and operating an advanced semiconductor manufacturing
facility in Taiwan, Republic of China. As a result of its equity ownership, the
Company will receive rights to purchase at market prices a percentage of the
facility's wafer production. In a
18
<PAGE>
related agreement, UMC has committed to supply the Company with sub-micron
wafers beginning in the first calendar quarter of 1996 and continuing with
phased increases for several years, until such capacity is available from the
new facility. Wafer prices and other terms are expected to be negotiated prior
to initiating wafer production and will be subject to periodic adjustment. See "
- -- Licenses and Agreements -- UMC." A significant interruption in supply from
Seiko Epson through S MOS or from UMC would have a material adverse effect on
the Company's business. See "Risk Factors -- Dependence on Wafer Suppliers."
ASSEMBLY
After wafer fabrication and initial testing, the Company ships wafers to
independent subcontractors for assembly. During assembly, wafers are separated
into individual die and encapsulated in plastic or ceramic packages. Presently,
the Company has qualified long term assembly partners in Hong Kong, the
Philippines, South Korea and the United States.
TESTING
The Company electrically tests the die on each wafer prior to shipment for
assembly. Following assembly, prior to customer shipment, each product undergoes
final testing using sophisticated test equipment, techniques and quality
assurance procedures developed by the Company. Final testing on certain products
is performed at independent contractors in the Philippines, South Korea and the
United States.
MARKETING, SALES AND CUSTOMERS
The Company sells its products directly to end customers through a network
of independent sales representatives and indirectly through a network of
distributors. The Company utilizes a direct sales management and field
applications engineering organization in combination with manufacturer's
representatives and distributors to reach a broad base of potential end
customers. The Company's end customers are primarily original equipment
manufacturers in the fields of communications, computing, peripherals,
instrumentation, industrial controls and military systems. The Company believes
its distribution channel is a cost-effective means of reaching end customers.
On September 30, 1995, the Company had 19 sales representatives and five
distributors in the United States and Canada. In North America, Arrow
Electronics, Inc., Hamilton Hallmark, Insight Electronics, Inc. and Marshall
Industries provide nationwide distribution, while Future Electronics provides
regional distribution coverage in Canada. The Company has established sales
channels in over 25 foreign countries through a network of over 30 sales
representatives and distributors. Approximately one-half of the Company's North
American sales and most of its foreign sales are made through distributors.
The Company protects each of its North American distributors and some of its
foreign distributors against reductions in published prices, and expects to
continue this policy in the foreseeable future. The Company also allows returns
from these distributors of unsold products under certain conditions. For these
reasons, the Company does not recognize revenue until products are resold by
these distributors.
The Company provides technical and marketing assistance to its end customers
and sales force with engineering staff based in the Company's offices in Oregon,
California and selected field sales offices. The Company maintains 17 domestic
and international sales offices where the Company's field sales managers and
applications engineers are based. These offices are located in the metropolitan
areas of Atlanta, Austin, Boston, Chicago, Dallas, Los Angeles, Minneapolis, New
York, Orlando, Portland, San Jose, Hong Kong, London, Munich, Paris, Seoul and
Tokyo.
International revenues, including those from Canada, accounted for 45%, 43%,
47% and 49% of the Company's revenues in fiscal 1993, 1994, 1995 and the first
six months of fiscal 1996, respectively. Revenues from Europe were $13.1
million, $16.1 million, $24.5 million and $17.8 million, and from Asia were
$32.7 million, $34.3 million, $40.6 million and $26.4 million, in fiscal 1993,
1994, 1995 and the first six months of fiscal 1996, respectively. Both
international and domestic revenues are generally invoiced in U.S. dollars with
the exception of sales in Japan which are invoiced in yen.
19
<PAGE>
The Company's products are sold to a large and diverse group of customers.
Two distributors accounted for approximately 11% each of revenue in fiscal 1993,
approximately 12% and 10% in fiscal 1994 and approximately 12% and 11% in fiscal
1995. No individual customer accounted for more than 5% of revenue in fiscal
1995.
The Company's sales are primarily executed against purchase orders for
standard products. Customers frequently revise quantities and delivery
schedules, without penalty. The Company therefore does not believe that backlog
as of any given date is indicative of future revenue.
COMPETITION
The semiconductor industry overall is intensely competitive and is
characterized by rapid technological change, rapid rates of product obsolescence
and price erosion. The Company's current and potential competitors include a
broad range of semiconductor companies, ranging from very large, established
companies to emerging companies, many of which have greater financial,
technical, manufacturing, marketing and sales resources than the Company.
The principal competitive factors in the CMOS PLD market include product
features, price, customer support, and sales, marketing and distribution
strength. In the high-density segment, the availability of competitive software
development tools is also critical. In addition to product features such as
speed, power consumption, reprogrammability, design flexibility and reliability,
competition in the PLD market occurs on the basis of price and market acceptance
of specific products and technology. The Company believes that it competes
favorably with respect to each of these factors. The Company intends to continue
to address these competitive factors by working to continually introduce product
enhancements and new products, by seeking to establish its products as industry
standards in their respective markets, and by working to reduce the
manufacturing cost of its products over their life cycle.
In the high-density PLD market, the Company competes directly primarily with
Advanced Micro Devices ("AMD") and Altera, both of which offer competing CPLD
products. The Company also competes indirectly with manufacturers of FPGA
devices such as Actel, AT&T, and Xilinx as well as other semiconductor companies
providing non-PLD based logic solutions. As the Company and these other
companies seek to expand their markets, competition may increase.
In the low-density PLD market, the Company competes primarily with AMD, a
licensee of the Company's GAL patents, which offers a full line of E(2)CMOS
GAL-compatible PLDs. Altera, Atmel and Cypress Semiconductor offer products
based on similar and competing CMOS technologies and architectures, however,
these companies do not offer full product lines.
Although to date the Company has not experienced significant competition
from companies located outside the United States, such companies may become a
more significant competitive factor in the future. As the Company and its
current competitors seek to expand their markets, competition may increase. Any
such increases in competition could have material adverse effect on the
Company's operating results.
PATENTS
The Company seeks to protect its products and wafer fabrication process
technology primarily through patents, trade secrecy measures, copyrights, mask
work protection, trademark registrations, licensing restrictions,
confidentiality agreements and other approaches designed to protect proprietary
information. There can be no assurance that others may not independently develop
competitive technology not covered by the Company's patents or that measures
taken by the Company to protect its technology will be effective.
The Company holds 32 domestic and European patents on its PLD products and
has a number of patent applications pending in the United States, Japan and
under the European Patent Convention. There can be no assurance that pending
patent applications or other applications that may be filed will result in
issued patents, or that any issued patents will survive challenges to their
validity. Although the Company believes that its patents have value, there can
be no assurance that the Company's patents, or any additional patents that may
be issued in the future, will provide meaningful protection from competition.
The Company believes its success will depend primarily upon the technical
expertise, experience, creativity and the sales and marketing abilities of its
personnel.
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Patent and other proprietary rights infringement claims are common in the
semiconductor industry. The Company has received a letter from a semiconductor
manufacturer stating that it believes a number of its patents, related to
product packaging, cover certain products sold by the Company. While the
manufacturer has offered to license certain of such patents to the Company,
there can be no assurance, on this or any other claim which may be made against
the Company, that the Company could obtain a license on terms or under
conditions that would be favorable to the Company.
LICENSES AND AGREEMENTS
SEIKO EPSON/S MOS
S MOS, an affiliated U.S. distributor of Seiko Epson, has agreed to provide
manufactured wafers to the Company in quantities based on six-month rolling
forecasts provided by the Company. The Company has committed to buy certain
minimum quantities of wafers per month. The Company's products are manufactured
in Japan at Seiko Epson's wafer fabrication facilities and delivered to the
Company by S MOS. Prices for the wafers obtained from S MOS are reviewed and
adjusted periodically and may be adjusted to reflect prevailing currency
exchange rates. See "Risk Factors -- Dependence on Wafer Suppliers." Daniel S.
Hauer, a member of the Company's Board of Directors, is Chairman of the Board of
Directors of S MOS.
In July 1994, the Company entered into an advance production payment
agreement with Seiko Epson and S MOS, under which it advanced to Seiko Epson $42
million during fiscal 1995 to be used by Seiko Epson to finance additional
sub-micron semiconductor wafer manufacturing capacity. Under the terms of the
agreement, the advances are to be repaid in the form of advanced technology
sub-micron semiconductor wafers. Subject to certain conditions set forth in the
agreement, Seiko Epson has agreed to supply, and the Company has agreed to
receive, such wafers at a price (in Japanese yen) and volume expected to achieve
full repayment of the advance over a three- to four-year period. In conjunction
with the advance production payment agreement, the Company also paid $2 million
during fiscal 1995 for the development of sub-micron process technology and the
fabrication of engineering wafers to be delivered over the same period. The
agreement calls for wafers to be supplied by Seiko Epson through S MOS pursuant
to a purchase agreement concluded with S MOS.
UMC
The Company entered into a series of agreements with UMC in September 1995
pursuant to which the Company has agreed to join UMC and several other companies
to form a separate Taiwanese company for the purpose of building and operating
an advanced semiconductor manufacturing facility in Taiwan, Republic of China.
Under the terms of the agreement, the Company will invest $60 million, payable
in three installments over the next two and a half years, for a 10% equity
interest in the venture. As a result of its equity ownership, the Company will
receive rights to purchase at market prices a percentage of the facility's wafer
production. The proposed facility is expected to commence production of
eight-inch sub-micron wafers during the second half of 1997. Formation of the
venture is subject to a number of conditions, including receipt of requisite
governmental approvals.
In a related agreement, UMC has committed to supply the Company with
sub-micron wafers beginning in the first calendar quarter of 1996 and continuing
with phased increases for several years, until such capacity is available from
the new facility. The Company is currently engaged in qualifying its process
technology with UMC in anticipation of starting volume wafer production. Wafer
prices, and other terms, are expected to be negotiated prior to initiating wafer
production and will be subject to periodic adjustment.
AMD
In November 1987, as part of the settlement of a patent infringement suit
against the Company, the Company and Monolithic Memories Inc. ("MMI",
subsequently merged with AMD) entered into an agreement cross-licensing each
other's patents covering programmable and reprogrammable logic devices based on
patent applications having a first filing date prior to November 1989. The
agreement was subsequently amended in May 1989 by the Company and AMD, the
successor to the rights and obligations of MMI in the original agreement. The
amendment covers those patents relating to PLD products which are based on
patent applications originally filed by the Company, MMI and AMD prior to
December 31, 1991. The license terminates, with respect to certain patents
asserted by AMD, to cover the Company's current
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principal products if the Company is acquired by a semiconductor manufacturer
with sales in excess of a stated amount or by certain types of companies
headquartered in designated Asian countries. No license has been granted to
either party for any copyright work, trademark or process technology and,
therefore, AMD has not been licensed to use the GAL trademark on its products.
EMPLOYEES
As of September 30, 1995, the Company had 452 full-time employees. The
Company believes that its future success will depend, in part, on its ability to
continue to attract and retain highly skilled technical, marketing and
management personnel.
None of the Company's employees is subject to a collective bargaining
agreement. The Company has never experienced a work stoppage and considers its
employee relations good.
PROPERTIES
The Company's corporate offices and testing and principal research and
design facilities are located in two adjacent buildings owned by the Company in
Hillsboro, Oregon comprising a total of 90,000 square feet. The Company's
executive, administrative, marketing and production activities are also located
at these facilities. The Company also leases a 41,000 square foot research and
design facility in Milpitas, California under a five-year lease which expires in
August 1998.
The Company leases space in various locations in the United States for its
domestic sales offices, and also leases space in Hong Kong, London, Munich,
Paris, Seoul and Tokyo for its foreign sales offices. The Company also owns a
13,000 square foot research and development facility and approximately 6,000
square feet of dormitory facilities in Shanghai.
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DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 shares of
common stock, $.01 par value (the "Common Stock"), and 10,000,000 shares of
preferred stock, $.01 par value (the "Preferred Stock"). As of September 30,
1995, there were 19,502,914 shares of Common Stock and no shares of Preferred
Stock outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences applicable
to any outstanding Preferred Stock, the holders of Common Stock are entitled to
receive ratably such dividends as may be declared from time to time by the Board
of Directors out of funds legally available therefor and in the event of
liquidation, dissolution, or winding up of the Company, the holders of Common
Stock are entitled to share in all assets remaining after payment of
liabilities. The Common Stock has no preemptive or conversion rights and is not
subject to further calls or assessments by the Company. There are no redemption
or sinking fund provisions applicable to the Common Stock. The Common Stock
currently outstanding is, and the Common Stock offered hereby will be, validly
issued, fully paid and non-assessable.
CERTAIN CHARTER PROVISIONS
The Company's Restated Certificate of Incorporation, as amended, and Bylaws,
as amended, contain certain procedural provisions that could have the effect of
delaying, deferring or preventing a change in control of the Company. These
include the following: (i) a provision classifying the Board of Directors into
three classes; and (ii) a provision requiring that the affirmative vote of
two-thirds (2/3) of the outstanding voting shares of capital stock of the
Company is required to approve certain business combinations.
PREFERRED STOCK
The Board of Directors of the Company has the authority to issue the
Preferred Stock in one or more series and to fix the rights, preferences and
privileges, including dividend rights, conversion rights, liquidation rights,
voting rights, and the number of shares constituting any series or the
designation of such series of Preferred Stock, without any further vote or
action by the stockholders. As of the date of this Prospectus, there are no
outstanding shares of Preferred Stock or options to purchase Preferred Stock
other than the Rights Agreement described below. Although it has no present
intention to do so, the Board of Directors of the Company may, without
stockholder approval, issue Preferred Stock with voting and conversion rights
which could adversely affect the voting power of the holders of Common Stock.
The issuance of Preferred Stock may have the effect of delaying, deferring, or
preventing a change of control of the Company.
RIGHTS AGREEMENT
Effective September 1991, the Board of Directors of the Company approved a
Preferred Shares Right Agreement and declared a dividend distribution payable
November 14, 1991 of one Preferred Share Purchase Right (the "Rights") for each
share of its Common Stock outstanding on November 14, 1991 and each share of its
Common Stock issued thereafter (subject to certain limitations).
Currently, the Rights trade with the shares of Common Stock. When the Rights
become exercisable, each Right will entitle the holder to buy one one-thousandth
of a share of Series A Participating Preferred Stock, $.01 par value, at an
exercise price of $60 per one one-thousandth of a share. The Rights will become
exercisable and will trade separately from the Common Stock (unless postponed by
action of the disinterested directors of the Company) on the earlier of (i) 10
days following a public announcement that a person or group has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
Company's outstanding Common Stock or (ii) 10 days following the commencement or
announcement of a tender offer or exchange offer which, if consummated, would
result in the beneficial ownership by a person or group of 20% or more of the
Company's outstanding Common Stock.
In general, if any person or group acquires 20% or more of the Company's
Common Stock without approval of the Company's Board of Directors, each Right
not held by the acquiring person will entitle its holder to purchase $120 worth
of the Company's Common Stock for an effective purchase price of $60. If, after
any person or group acquires 20% or more of the Company's Common Stock without
the approval of
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<PAGE>
the Board of Directors, the Company is acquired in a merger or other business
combination transaction, each Right not held by the acquiring person would
entitle its holder to purchase $120 worth of the Common Stock of the acquiring
company for $60. Under certain conditions, the Company may elect to redeem the
Rights for $.01 per Right or cause the exchange of each Right not held by the
acquiring person for one share of the Company's Common Stock. Additionally, the
exercise price, number of Rights, and number of shares of Series A Participating
Preferred or Common Stock that may be acquired for the exercise price are
subject to adjustment from time to time to prevent dilution. The Rights expire
on September 11, 2001, unless previously exchanged or redeemed as described
above, or terminated in connection with the acquisition of the Company by
consolidation or merger approved by the Board of Directors and satisfying
certain conditions.
The Rights are designed to protect and maximize the value of the outstanding
equity interests in the Company in the event of an unsolicited attempt by an
acquiror to take over the Company in a manner or on terms not approved by the
Board of Directors. Takeover attempts frequently include coercive tactics to
deprive a corporation's Board of Directors and its stockholders of any real
opportunity to determine the destiny of the corporation. The Rights have been
declared by the Board of Directors in order to deter such tactics, including a
gradual accumulation of shares in the open market of a 20% or greater position
to be followed by a merger or a partial or two-tier tender offer that does not
treat all stockholders equally.
The Rights are not intended to prevent a takeover of the Company and will
not do so. Nevertheless, the Rights may have the effect of rendering more
difficult or discouraging an acquisition of the Company deemed undesirable by
the Board of Directors. The Rights may cause substantial dilution to a person or
group that attempts to acquire the Company on terms or in a manner not approved
by the Company's Board of Directors, except pursuant to an offer conditioned
upon the negation, purchase or redemption of the Rights.
The description above is qualified in its entirety by reference to the
Preferred Shares Right Agreement dated as of September 11, 1991.
DELAWARE TAKEOVER STATUTE
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law, which prohibits a publicly-held Delaware corporation
from engaging in any "business combination" with an "interested stockholder" for
three years following the date that such stockholder became an interested
stockholder, unless (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding, those shares owned (a) by persons who are directors and also
officers and (b) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock not owned by the interested stockholder.
Generally, a "business combination" includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the stockholders. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior did own) 15% or more of the
corporation's voting stock.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is First Interstate
Bank.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following discussion concerns the material United States federal income,
gift and estate tax consequences of the ownership and disposition of shares of
Common Stock applicable to Non-U.S. Holders, as defined, of such shares of
Common Stock. In general, a "Non-U.S. Holder" is any holder other than (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in the United States or under the laws of the United States
or any State or (iii) an estate or trust whose income is includible in gross
income for United States federal income tax purposes regardless of its source.
The discussion is based on current law, which is subject to change retroactively
or prospectively, and is for general information only. The discussion does not
address all aspects of federal income and estate taxation and does not address
any aspects of state, local or foreign tax laws. The discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder (including the fact that in the case of a Non-U.S. Holder that
is a partnership, the United States tax consequences of holding and disposing of
shares of Common Stock may be affected by certain determinations made at the
partner level). Accordingly, prospective investors are urged to consult their
tax advisors regarding the United States federal, state, local and non-U.S.
income and other tax consequences of holding and disposing of shares of Common
Stock.
DIVIDENDS
Dividends, if any (see "Dividend Policy"), paid to a Non-U.S. Holder
generally will be subject to United States withholding tax at a 30% rate (or a
lower rate as may be prescribed by an applicable tax treaty) unless the
dividends are effectively connected with a trade or business of the Non-U.S.
Holder within the United States. Dividends effectively connected with such a
trade or business will generally not be subject to withholding (if the Non-U.S.
Holder properly files an executed IRS Form 4224 with the payor of the dividend)
and generally will be subject to United States federal income tax on a net
income basis at regular graduated rates. In the case of a Non-U.S. Holder which
is a corporation, such effectively connected income also may be subject to the
branch profits tax (which is generally imposed on a foreign corporation on the
repatriation from the United States of effectively connected earnings and
profits). The branch profits tax may not apply if the recipient is a qualified
resident of certain countries with which the United States has an income tax
treaty. To determine the applicability of a tax treaty providing for a lower
rate of withholding, dividends paid to an address in a foreign country are
presumed, under the current Internal Revenue Service position, to be paid to a
resident of that country, unless the payor had definite knowledge that such
presumption is not warranted or an applicable tax treaty (or United States
Treasury Regulations thereunder) requires some other method for determining a
Non-U.S. Holder's resident. The Company must report annually to the Internal
Revenue Service and to each Non-U.S. Holder the amount of dividends paid to, and
the tax withheld with respect to, each Non-U.S. Holder. These reporting
requirements apply regardless of whether withholding was reduced or eliminated
by an applicable tax treaty. Copies of these information returns also may be
made available under the provisions of a specific treaty or agreement to the tax
authorities in the country in which the Non-U.S. Holder resides.
SALE OF COMMON STOCK
Generally, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the disposition of such holder's shares of
Common Stock unless (i) the gain is effectively connected with a trade or
business carried on by the Non-U.S. Holder within the United States (in which
case the branch profits tax may apply); (ii) the Non-U.S. Holder is an
individual who holds the shares of Common Stock as a capital asset and is
present in the United States for 183 days or more in the taxable year of the
disposition and to whom such gain is United States source; (iii) the Non-U.S.
Holder is subject to tax pursuant to the provisions of U.S. tax law applicable
to certain former United States citizens or residents; or (iv) the Company is or
has been a "U.S. real property holding corporation" for federal income tax
purposes (which the Company does not believe that it is or is likely to become)
at any time during the five year period ending on the date of disposition (or
such shorter period that such shares were held) and, subject to certain
exceptions, the Non-U.S. Holder held, directly or indirectly, more than 5% of
the Common Stock.
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GIFT TAX
Generally, an individual who is not a citizen or resident (as specially
defined for United States federal estate and gift tax purposes) of the United
States at the time of a gift will not be subject to United States federal gift
tax on the lifetime transfer of shares of Common Stock by gift unless the
individual is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain former United States citizens.
ESTATE TAX
Shares of Common Stock owned or treated as owned by an individual who is not
a citizen or resident (as specially defined for United States federal estate and
gift tax purposes) of the United States at the time of death will be includible
in the individual's gross estate for United States federal estate tax purposes,
unless an applicable tax treaty provides otherwise, and may be subject to United
States federal estate tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, backup withholding tax
(which generally is a withholding tax imposed at the rate of 31 percent on
certain payments to persons that fail to furnish certain required information)
and information reporting apply to payments of dividends (actual and
constructive) made to certain non-corporate United States persons. The United
States backup withholding tax requirements will generally not apply to dividends
paid on Common Stock to a Non-U.S. Holder at an address outside the United
States.
The payment of the proceeds from the disposition of shares of Common Stock
through the United States office of a broker will be subject to information
reporting and backup withholding unless the holder, under penalties of perjury,
certifies, among other things, its status as a Non-U.S. Holder, or otherwise,
establishes an exemption. Generally, the payment of the proceeds from the
disposition of shares of Common Stock to or through a non-U.S. office of a
broker will not be subject to backup withholding and will not be subject to
information reporting. In the case of the payment of proceeds from the
disposition of shares of Common Stock through a non-U.S. office of a broker that
is a U.S. person or a "U.S.-related person", as defined below, existing
regulations require information reporting (but not backup withholding) on the
payment unless the broker receives a statement from the owner, signed under
penalties of perjury, certifying, among other things, its status as a Non-U.S.
Holder, or the broker has documentary evidence in its files that the owner is a
Non-U.S. Holder and the broker has no actual knowledge to the contrary. For this
purpose, a "U.S.-related person" is (i) a "controlled foreign corporation" for
the United States federal income tax purposes or (ii) a foreign person 50% or
more of whose gross income from all sources for the three year period ending
with the close of its taxable year preceding the payment (or for such part of
the period that the broker has been in existence) is derived from activities
that are effectively connected with the conduct of a United States trade or
business.
Any amounts withheld from a payment to a Non-U.S. Holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided that the required information is furnished to the United States
Internal Revenue Service. Non-U.S. Holders should consult their tax advisors
regarding the application of these rules to their particular situations, the
availability of an exemption therefrom and the procedure for obtaining such an
exemption, if available.
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UNDERWRITERS
Under the terms and subject to conditions contained in an Underwriting
Agreement dated the date hereof, the U.S. Underwriters named below, for whom
Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, PaineWebber Incorporated and Needham & Company, Inc. are serving as
U.S. Representatives, have severally agreed to purchase, and the Company has
agreed to sell, 2,000,000 shares of the Company's Common Stock, and the
International Underwriters named below (collectively with the U.S.
Representatives, the "Representatives"), have severally agreed to purchase, and
the Company has agreed to sell, 500,000 shares of the Company's Common Stock,
which in the aggregate equals the number of shares set forth opposite the name
of such Underwriters below.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- ------------------------------------------------------------------------------------------- ----------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated........................................................
Donaldson, Lufkin & Jenrette Securities Corporation......................................
PaineWebber Incorporated.................................................................
Needham & Company, Inc...................................................................
----------
Subtotal........................................................................... 2,000,000
International Underwriters:
Morgan Stanley & Co. International Limited...............................................
Donaldson, Lufkin & Jenrette Securities Corporation......................................
PaineWebber International (U.K.) Ltd.....................................................
Needham & Company, Inc...................................................................
----------
Subtotal........................................................................... 500,000
----------
Total.............................................................................. 2,500,000
----------
----------
</TABLE>
The U.S. Underwriters and the International Underwriters are collectively
referred to as the "Underwriters." The Underwriting Agreement provides that the
obligations of the several Underwriters to pay for and accept delivery of the
shares of Common Stock offered hereby are subject to the approval of certain
legal matters by counsel and to certain other conditions. The Underwriters are
obligated to take and pay for all of the shares of Common Stock offered hereby
(other than those covered by the over-allotment option described below) if any
are taken.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions set
forth below, (a) it is not purchasing any U.S. Shares (as defined below) for the
account of anyone other than a United States or Canadian Person (as defined
below) and (b) it has not offered or sold, and will not offer or sell, directly
or indirectly, any U.S. Shares or distribute this Prospectus outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions set forth below, (a) it is not purchasing any International Shares
(as defined below) for the account of any United States or Canadian Person and
(b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any International Shares or distribute this Prospectus within the
United States or Canada or to any United States or Canadian Person. The
foregoing limitations do not apply to stabilization transactions or to certain
other transactions
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<PAGE>
specified in the Agreement Between U.S. and International Underwriters. With
respect to each of Donaldson, Lufkin & Jenrette Securities Corporation and
Needham & Company, Inc., the foregoing representations or agreements (i) made by
it in its capacity as a U.S. Underwriter shall apply only to shares of Common
Stock purchased by it in its capacity as a U.S. Underwriter, (ii) made by it in
its capacity as an International Underwriter shall apply only to shares of
Common Stock purchased by it in its capacity as an International Underwriter and
(iii) shall not restrict its ability to distribute this Prospectus to any
person. As used herein, "United States or Canadian Person" means any national or
resident of the United States or Canada or any corporation, pension,
profit-sharing or other trust or other entity organized under the laws of the
United States or Canada or of any political subdivision thereof (other than a
branch located outside of the United States and Canada of any United States or
Canadian Person) and includes any United States or Canadian branch of a person
who is not otherwise a United States or Canadian Person, and "United States"
means the United States of America, its territories, its possessions and all
areas subject to this jurisdiction. All shares of Common Stock to be offered by
the U.S. Underwriters and International Underwriters under the Underwriting
Agreement are referred to herein as the "U.S. Shares" and the "International
Shares," respectively.
Pursuant to the Agreement Between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and the International Underwriters of
any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price and
currency settlement of any shares of Common Stock so sold shall be the public
offering price set forth on the cover page hereof, in United States dollars,
less an amount not greater than the per share amount of the concession to
dealers set forth below.
Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any shares of Common Stock, directly or indirectly, in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of such shares in Canada
will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each U.S. Underwriter has further agreed to send to any dealer who purchases
from it any shares of Common Stock a notice stating in substance that, by
purchasing such shares, such dealer represents and agrees that it has not
offered or sold, and will not offer or sell, directly or indirectly, any of such
shares in Canada in contravention of the securities laws of Canada or any
province or territory thereof and that any offer of shares of Common Stock in
Canada will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made,
and that such dealer will deliver to any other dealer to whom it sells any of
such shares a notice to the foregoing effect.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented that (i) it has not offered or sold
and will not offer or sell any shares of Common Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which are not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 (the
"Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act of 1986 and the Regulations with
respect to anything done by it in relation to such shares in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on to any person in the United Kingdom any document received
by it in connection with the issue of such shares, if that person is of a kind
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1995, or is a person to whom such document
may otherwise lawfully be issued or passed on.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, in Japan or to or for
the account of any resident thereof, any shares of Common Stock acquired in
connection with this offering, except for offers or sales to Japanese
International Underwriters or dealers and except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan. Each
International Underwriter has further agreed to send to any dealer who purchases
from
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<PAGE>
it any of such shares of Common Stock a notice stating in substance that such
dealer may not offer or sell any of such shares, directly or indirectly, in
Japan or to or for the account of any resident thereof, except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
of Japan, and that such dealer will send to any other dealer to whom it sells
any of such shares a notice to the foregoing effect.
The Underwriters propose to offer part of the shares of Common Stock offered
hereby directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price which represents a
concession not in excess of $ per share under the public offering price.
The Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per share to other Underwriters or to certain other dealers.
After the initial offering of the Common Stock, the offering price and other
selling terms may from time to time be varied by the Representatives.
Pursuant to the Underwriting Agreement, the Company has granted to the U.S.
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an additional 375,000 shares of Common Stock at
the public offering price set forth on the cover page hereof, less underwriting
discounts and commissions. The U.S. Underwriters may exercise such option to
purchase solely for the purpose of covering over-allotments, if any, incurred in
the sale of the shares of Common Stock offered hereby. To the extent such option
is exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set forth next to such U.S. Underwriters' name in the
preceding table bears to the total number of shares of Common Stock offered
hereby to the U.S. Underwriters.
The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
Each of the executive officers and directors of the Company has agreed not
to offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock, or any securities convertible into or
exercisable or exchangeable for Common Stock, or enter into any swap or similar
agreement that transfers, in whole or in part, the economic risk of ownership of
the Common Stock, for a period of 90 days from the date of this Prospectus,
without the prior written consent of Morgan Stanley & Co. Incorporated, other
than an aggregate of 100,000 shares by all such executive officers and
directors, which shall include no more than 50,000 shares by any such
individual. The Company has agreed in the Underwriting Agreement that it will
not, directly or indirectly, without the prior written consent of Morgan Stanley
& Co. Incorporated, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, for a period of 90 days after the date of this Prospectus,
subject to certain limited exceptions.
In connection with this offering, certain Underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on The Nasdaq National Market, may engage in passive market making
transactions in the Common Stock on The Nasdaq National Market in accordance
with Rule 10b-6A under the Exchange Act during the two-business-day period
before commencement of offers or sales of the Common Stock. The passive market
making transactions must comply with applicable volume and price limits and be
identified as such. In general, a passive market maker may display its bid at a
price not in excess of the highest independent bid for the security; if all
independent bids are lowered below the passive market maker's bid, however, such
bid must then be lowered when certain purchase limits are exceeded. Passive
market making may stabilize the market price of the Common Stock at a level
above that which might otherwise prevail and, if commenced, may be discontinued
at any time.
29
<PAGE>
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California. Larry W. Sonsini, a member of
such firm, is a director of the Company and holds options to purchase 26,625
shares of Common Stock. Certain legal matters in connection with the offering,
will be passed upon for the Underwriters by Morrison & Foerster, Palo Alto,
California.
EXPERTS
The consolidated financial statements incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended April 1, 1995, which
Form 10-K has been incorporated by reference in this Prospectus, have been
incorporated by reference in this Prospectus in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (referred to herein, together with all amendments and exhibits, as the
"Registration Statement") under the Securities Act, with respect to the
securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract or other
document referred to herein are not necessarily complete and, in each instance
in which a copy of such contract is filed as an exhibit to the Registration
Statement, reference is made to such copy and each such statement shall be
deemed qualified in all respects by such reference. Copies of the Registration
Statement may be inspected, without charge, at the offices of the Commission, or
obtained at prescribed rates from the Public Reference Section of the Commission
at the address set forth below.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Commission located at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549 and at the Commission's regional
offices at Seven World Trade Center, 13th Floor, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material also can be obtained from the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
quoted for trading on The Nasdaq National Market and reports, proxy statements
and other information concerning the Company may be inspected at the offices of
the National Association of Securities Dealers, Inc., 9513 Key West Avenue,
Rockville, Maryland 20850.
30
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
TO BE PAID
BY THE
REGISTRANT
----------
<S> <C>
Securities and Exchange Commission registration fee..................................... $ 35,319
NASD filing fee......................................................................... 10,743
The Nasdaq National Market listing fee.................................................. 17,500
Accounting fees and expenses............................................................ 45,000
Printing expenses....................................................................... 45,000
Transfer agent and registrar fees....................................................... 4,000
Blue Sky fees and expenses.............................................................. 12,000
Legal fees and expenses................................................................. 125,000
Miscellaneous expenses.................................................................. 55,438
----------
Total............................................................................. $ 350,000
----------
----------
</TABLE>
All of the amounts shown other than the SEC, NASD and Nasdaq fees are
estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation, as amended, limits the
personal liability of directors for monetary damages for their conduct as a
director. The Company's Bylaws provide that the Company shall indemnify its
officers and directors and may indemnify its employees and other agents to the
fullest extent permitted by the Delaware General Corporation Law ("Delaware
Law").
Section 145 of the Delaware Law provides that a corporation may indemnify a
director, officer, employee or agent made a party to an action by reason of the
fact that he was a director, officer, employee or agent of the corporation or
was serving at the request of the corporation against expenses actually and
reasonably incurred by him in connection with such action if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation and with respect to any criminal action, had
no reasonable cause to believe his conduct was unlawful.
Delaware Law does not permit a corporation to eliminate a director's duty of
care, and the provisions of the Company's Restated Certificate of Incorporation
have no effect on the availability of equitable remedies such as injunction or
rescission, based upon a director's breach of the duty of care. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act"), may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission (the "Commission") such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to Registrant, as to the
legality of the shares of common stock being registered
23.1 Consent of Price Waterhouse LLP, independent public accountants
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
</TABLE>
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the Delaware Law,
the Underwriting Agreement, the Registrant's Certificate of Incorporation and
Bylaws, or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. 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 hereunder, 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 of 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(3) For the purposes of determining liability under the Securities Act
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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hillsboro, State of Oregon, on the 17th of October,
1995.
LATTICE SEMICONDUCTOR CORPORATION
By: ________/s/_RODNEY F. SLOSS_______
Rodney F. Sloss,
VICE PRESIDENT, FINANCE
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Cyrus Y. Tsui and Rodney F. Sloss, jointly and
severally, 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
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
<C> <S> <C>
President, Chief Executive Officer
/s/CYRUS Y. TSUI and Chairman of the Board October 17, 1995
Cyrus Y. Tsui (Principal Executive Officer)
/s/RODNEY F. SLOSS Vice President, Finance (Principal
Rodney F. Sloss Financial and Accounting Officer) October 17, 1995
/s/DANIEL S. HAUER
Daniel S. Hauer Director October 17, 1995
/s/HARRY A. MERLO
Harry A. Merlo Director October 17, 1995
/s/LARRY W. SONSINI
Larry W. Sonsini Director October 17, 1995
/s/DOUGLAS C. STRAIN
Douglas C. Strain Director October 17, 1995
</TABLE>
II-3
<PAGE>
2,500,000 SHARES
LATTICE SEMICONDUCTOR CORPORATION
COMMON STOCK ($0.01 PER SHARE PAR VALUE)
UNDERWRITING AGREEMENT
October ____, 1995
<PAGE>
October ___, 1995
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
PaineWebber Incorporated
Needham & Company, Inc.
as Representatives of the several U.S. Underwriters
named in Schedule I herein
c/o Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Morgan Stanley & Co. International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
PaineWebber International (U.K.) Ltd.
Needham & Company, Inc.
as Representatives of the several International
Underwriters named in Schedule II herein
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs:
Lattice Semiconductor Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters (as defined
below) an aggregate of 2,500,000 shares of the Common Stock ($0.01 per share
par value) of the Company (the "Firm Shares").
It is understood that, subject to the conditions hereinafter stated,
2,000,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 500,000 Firm Shares (the "International Shares") will be sold to the several
International Underwriters named in Schedule II hereto (the "International
Underwriters") in connection with the offering and sale of such International
Shares outside the United States and Canada to persons other than United States
and Canadian Persons. Morgan Stanley & Co. Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, PaineWebber Incorporated and Needham & Company,
Inc. shall act as representatives (the "U.S. Representatives") of the several
U.S. Underwriters, and Morgan Stanley & Co. International Limited, Donaldson,
Lufkin & Jenrette Securities Corporation, PaineWebber International (U.K.) Ltd.
and Needham & Company, Inc.
<PAGE>
shall act as representatives (the "International Representatives") of the
several International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the Underwriters.
The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional 375,000 shares of its Common Stock
($0.01 per share par value) (the "Additional Shares") if and to the extent that
the U.S. Representatives shall have determined to exercise, on behalf of the
U.S. Underwriters, the right to purchase such shares of common stock granted to
the U.S. Underwriters in Article II hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the Shares. The shares of
Common Stock ($0.01 per share par value) of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the Common Stock.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement contains two prospectuses to be used in
connection with the offering and sales of the Shares: the U.S. prospectus, to
be used in connection with the offering and sale of Shares in the United States
and Canada to United States and Canadian Persons, and the international
prospectus, to be used in connection with the offering and sale of Shares
outside the United States and Canada to persons other than United States and
Canadian Persons. The international prospectus is identical to the U.S.
prospectus except for the outside and inside front cover pages. The
registration statement as amended at the time it becomes effective, including
the information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as
amended (the "Securities Act"), is hereinafter referred to as the Registration
Statement; the U.S. prospectus and the international prospectus in the
respective forms first used to confirm sales of Shares are hereinafter
collectively referred to as the Prospectus (including, in the case of all
references to the Registration Statement and the Prospectus, documents
incorporated therein by reference). If the Company files a registration
statement to register a portion of the Shares and relies on Rule 462(b) for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to the "Registration
Statement" shall be deemed to include the Rule 462 Registration Statement as
amended from time to time.
I.
The Company represents and warrants to each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the best knowledge of the
Company, threatened by the Commission.
(b) The Company has filed in a timely manner each document or report
required to be filed by it pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder within
the twelve (12) month period preceding the date hereof, (ii) each such
document complied or will comply when so filed in all material respects
2
<PAGE>
with the Exchange Act and the applicable rules and regulations thereunder, (iii)
each part of the Registration Statement, when such part became effective, did
not contain and each such part, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (iv) the Registration Statement and the Prospectus comply and,
as amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder and (v) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Paragraph 1(b)
do not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole. There is no "significant subsidiary" of the
Company (as such term is defined under Rule 405 under the Securities Act).
(e) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(f) The shares of Common Stock outstanding prior to the issuance of
the Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable. Except as disclosed in the
Prospectus, or as issued pursuant to any employee or director stock option or
purchase plan or the Sales Representative Warrant Plan disclosed therein, the
Company does not have outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations. All outstanding shares of capital stock and
options and other rights to acquire capital stock have been issued in
compliance with the registration and qualification provisions of all
applicable securities
3
<PAGE>
laws and were not issued in contraction of any preemptive rights, rights of
first refusal or other similar rights. No holders of Common Stock or other
securities of the Company have registration rights with respect to such
securities which are triggered by this offering, except for registration rights
which have been waived with respect to this offering.
(g) The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive rights, rights of first refusal or
other similar rights.
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
(i) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the certificate of incorporation or by-laws of
the Company or any agreement or other instrument binding upon the Company or any
of its subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of or qualification with any governmental body
or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus.
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) Each of the Company and its subsidiaries has all necessary consents,
authorizations, approvals, orders, certificates and permits of and from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts and
other tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except to the
extent that the failure to obtain or file would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
4
<PAGE>
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 or Rule 462 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder.
(n) The Company is not, and after giving effect to the issuance and sale
of the Shares by the Company will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(o) The Company and its subsidiaries are (i) in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(p) The Company has reasonably concluded that costs and liabilities
associated with Environmental Laws would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(q) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(r) The consolidated financial statements of the Company, together
with related schedules and notes set forth in the Registration Statement and
the Prospectus, fairly present in all material respects the consolidated
financial condition of the Company as of the dates indicated and the results
of operations and changes in financial position for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
disclosed therein).
(s) Each of the Company and its subsidiaries owns or possesses adequate
licenses or other rights to use (or could obtain such ownership or possession on
terms not materially adverse to the Company and its subsidiaries taken as a
whole) all patents, patent rights, trademarks, trade names, service marks,
service names, copyrights, license rights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other intellectual property rights necessary to carry
on its business in all material respects as presently conducted and, except as
disclosed in the Prospectus, neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others that could reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business or
operations of the Company or any of its subsidiaries, taken as a whole.
5
<PAGE>
(t) The Company and its subsidiaries have filed all tax returns required
to be filed and are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto, other
than any which the Company or any such subsidiary is contesting in good faith
and other than where any such failures or defaults, taken in the aggregate,
would not have a material adverse effect on the business or financial condition
of the Company and its subsidiaries taken as a whole.
(u) The accountants who have certified or shall certify the financial
statements filed or to be filed with the Commission as parts of the Registration
Statement and the Prospectus are independent public accountants as required by
the Securities Act.
(v) The Company has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prospectus or other
materials, if any, permitted by the Securities Act.
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) material transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to material assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountability for material assets is compared with existing
material assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) Neither the Company nor any of its subsidiaries nor any employee or
agent of the Company or any of its subsidiaries has made any payment of funds of
the Company or any subsidiary or received or retained any funds in violation of
any law, rule or regulation, which payment, receipt or retention of funds is of
a character required to be disclosed in the Prospectus.
(y) No material labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers or
contractors that could result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole.
(z) Each of the Company and its subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the business in which it is engaged;
and neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a whole.
6
<PAGE>
II.
The Company hereby agrees to sell to the several Underwriters, and
each Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from the Company at $______ a share (the purchase
price) the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by the Company as the aggregate number of Firm
Shares set forth in Schedules I and II hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to all of the
Additional Shares at the purchase price. Additional Shares may be purchased as
provided in Article IV hereof solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares. If any Additional
Shares are to be purchased, each U.S. Underwriter agrees, severally and not
jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
U.S. Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated, it will not offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of any shares of Common Stock of the Company or any securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of ninety (90) days after the date of the public offering of the Shares, other
than (i) the Shares to be sold hereunder and (ii) any shares of such Common
Stock which may be sold by the Company upon the exercise of an option or warrant
or the conversion of a security in any such case only to the extent such
security was outstanding on the date hereof, (iii) any shares of Common Stock
issued by the Company or options to purchase Common Stock (or any shares of
Common Stock issued by the Company upon the exercise of such options) granted
under any of the Company's existing employee or director stock option or
purchase plans, and (iv) any rights issuable pursuant to the Company's Preferred
Shares Right Agreement, the shares of preferred stock issuable pursuant to such
rights, and the shares of Common Stock issuable upon conversion of such shares
of preferred stock.
The Company has furnished or will furnish to you "lock-up" letters in
form and substance satisfactory to you, signed by each of its current officers
and directors.
III.
The Company is advised by you that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after the
Registration Statement and
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this Agreement have become effective as in your judgment is advisable. The
Company is further advised by you that the Shares are to be offered to the
public initially at $_____________ a share (the public offering price) and to
certain dealers selected by you at a price that represents a concession not in
excess of $______ a share under the public offering price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of $_____ a share, to any Underwriter or to certain other dealers.
Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the fifth
and sixth paragraphs of Article III of the Agreement Between U.S. and
International Underwriters of even date herewith. Each International
Underwriter hereby makes to and with the Company the representations and
agreements of such International Underwriter contained in the seventh, eighth,
ninth and tenth paragraphs of Article III of such Agreement. Copes of such
fifth, sixth, seventh, eighth, ninth and tenth paragraphs of Article III of the
Agreement Between U.S. and International Underwriters are attached hereto as
Schedule III.
IV.
Payment for the Firm Shares to be sold by the Company shall be made
by certified or official bank check or checks payable to the order of the
Company in New York Clearing House funds at the office of Wilson, Sonsini,
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304-1050, at
7:00 A.M., local time, on November __, 1995, or at such other time on the same
or such other date, not later than ____________, 1995, as shall be designated in
writing by you. The time and date of each such payment are hereinafter referred
to as the Closing Date.
Payment for any Additional Shares shall be made by certified or
official bank check or checks payable to the order of the Company in New York
Clearing House funds at the office of Wilson, Sonsini, Goodrich & Rosati, 650
Page Mill Road, Palo Alto, California 94304-1050, at 7:00 A.M., local time, on
such date (which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor later than ten (10) business days after the
giving of the notice hereinafter referred to) as shall be designated in a
written notice from you to the Company of your determination, on behalf of the
Underwriters, to purchase a number, specified in said notice, of Additional
Shares, or on such other date, in any event not later than _______________,
1995, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the Option Closing Date. The notice of
the determination to exercise the option to purchase Additional Shares and of
the Option Closing Date may be given at any time within thirty (30) days after
the date of this Agreement.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two (2) full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the
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transfer of the Shares to the Underwriters duly paid, against payment of the
purchase price therefor.
V.
The obligations of the Company and the several obligations of the
Underwriters hereunder are subject to the condition that the Registration
Statement shall have become effective not later than the date hereof.
The several obligations of the Underwriters hereunder are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date,
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations,
of the Company and its subsidiaries, taken as a whole, from that set
forth in the Registration Statement, that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by the Company's Chief
Executive Officer and Chief Financial Officer to the effect set forth in
clause (a)(i) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed
or satisfied hereunder on or before the Closing Date. The officers signing
and delivering such certificate may rely upon the best of their knowledge
as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of
Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct
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of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) there is no "significant subsidiary" of the Company (as
such term is defined under Rule 405 under the Securities Act);
(iii) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus and the shares of Common Stock outstanding prior to the
issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, non-assessable, and, to the
knowledge of such counsel, fully paid;
(iv) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject
to any preemptive right or, to such counsel's knowledge, rights of
first refusal or other similar rights under any of the Reviewed
Agreements;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or, to the
best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, and filed as
an exhibit to the Registration Statement or any document incorporated
by reference therein (the "Reviewed Agreements"), or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or
order of or qualification with any governmental body or agency is
required for the performance by the Company of its obligations under
this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and
sale of the Shares;
(vii) the statements (1) in the Prospectus under the captions
"Business--Licenses and Agreements" (other than the first paragraph
of the sub-caption "Seiko Epson/S MOS" and the sub-caption "AMD"),
"Description of Capital Stock" and "Underwriters" (to the extent of
the description of this Agreement) and (2) in the Registration
Statement in Item 15, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present in all material respects the
information called for with respect to such legal matters, documents
and proceedings and fairly summarize in all material respects the
matters referred to therein;
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(viii) to such counsel's knowledge, there is no legal or
governmental proceeding pending or threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that is required
to be described in the Registration Statement or the Prospectus and
is not so described and, to such counsel's knowledge, there is no
statute, regulation, contract or other document that is required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that is not
described or filed as required;
(ix) the Company is not, and after giving effect to the
issuance and sale of the Shares by the Company will not be, an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended;
(x) such counsel (1) is of the opinion that each document,
if any, filed pursuant to the Exchange Act and incorporated by
reference in the Registration Statement and the Prospectus (except
for financial statements and schedules and other financial data
derived therefrom included therein as to which such counsel need not
express any opinion) complied when so filed as to form in all
material respects with the Exchange Act, and the applicable rules and
regulations of the Commission thereunder, (2) is of the opinion that
the Registration Statement and Prospectus (except for financial
statements and schedules and other financial data derived therefrom
included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the rules and regulations of the Commission
thereunder, (3) believes that (except for financial statements and
schedules and other financial data derived therefrom included therein
as to which such counsel need not express any belief) the
Registration Statement and the prospectus included therein at the
time the Registration Statement became effective did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (4) believes that (except for financial
statements and schedules and other financial data derived therefrom
included therein as to which such counsel need not express any
belief) the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading; and
(xi) to such counsel's knowledge, no holders of Common Stock
or other securities of the Company have registration rights with
respect to such securities which are triggered by this offering,
except for registration rights which have been waived with respect to
this offering.
(d) You shall have received on the Closing Date an opinion of
Morrison & Foerster, counsel for the Underwriters, dated the Closing Date,
covering the matters
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referred to in subparagraphs (v), (ix) (but only as to the statements in
the Prospectus under the caption "Underwriters") and clauses (3) and (4) of
(x) of paragraph (c) above.
With respect to subparagraph (x) of paragraph (c) above, Wilson,
Sonsini, Goodrich & Rosati and Morrison & Foerster may make such statement
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (other
than the documents incorporated by reference) and upon review and
discussion of the contents thereof, but are without independent check or
verification except as specified.
The opinion of Wilson, Sonsini, Goodrich & Rosati described in
paragraph (c) above shall be rendered to you at the request of the Company
and shall so state therein.
(e) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to you, from Price
Waterhouse LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in, or incorporated by reference
into, the Registration Statement and the Prospectus.
(f) The "lock-up" agreements between you and each of the current
officers and directors of the Company relating to sales of shares of common
stock of the Company or any securities convertible into or exercisable or
exchangeable for such common stock, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(g) The Company shall have complied with the provisions of
Section VI.(a) hereof with respect to the furnishing of Prospectuses on the
business day next succeeding the date of this Agreement.
The several obligations of the U.S. Underwriters to purchase Additional Shares
hereunder are subject to the delivery to the U.S. Representatives on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares, other matters related to the issuance of the Additional
Shares and an opinion of counsel in form and substance satisfactory to counsel
for the Underwriters.
VI.
In further consideration of the agreements of the Underwriters herein
contained, the Company covenants as follows:
(a) To furnish you, without charge, seven (7) signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated by reference therein) and to each other Underwriter a
confirmed copy of the Registration Statement (without
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exhibits thereto but including documents incorporated by reference therein)
and, during the period mentioned in paragraph (c) below, as many copies of
the Prospectus and documents incorporated by reference therein, and any
supplements and amendments thereto or to the Registration Statement as you
may reasonably request. The terms "supplement" and "amendment" or "amend"
as used in this Agreement shall include all documents subsequently filed by
the Company with the Commission pursuant to the Exchange Act, that are
deemed to be incorporated by reference in the Prospectus. In the case of
the Prospectus, to furnish copies of the Prospectus in New York City, prior
to 5:00 pm., on the business day next succeeding the date of this
Agreement, in such quantities as you reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and to file no such proposed amendment or supplement to which
you reasonably object.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of your counsel the Prospectus is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if, in the opinion of your
counsel, it is necessary to amend or supplement the Prospectus to comply
with law, forthwith to prepare, file with the Commission and furnish, at
its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To use reasonable efforts to qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 1996 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) To pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation and filing
of the Registration Statement and the Prospectus and all amendments and
supplements thereto, (ii) the preparation, issuance and delivery of the
Shares, including any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the
qualification of the Shares under state securities or Blue Sky laws in
accordance with the provisions of paragraph (d) above,
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including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation
of any Blue Sky or Legal Investment Memoranda, (v) the printing and
delivery to the Underwriters, in quantities as hereinabove stated, copies
of the Registration Statement and all amendments and exhibits thereto and
of each preliminary prospectus and the Prospectus and any amendments or
supplements thereto, (vi) the printing and delivery to the Underwriters of
copies of any Blue Sky or Legal Investment Memoranda, (vii) the filing fees
and expenses, including fees and disbursements of counsel, incurred with
respect to any filing and review with the National Association of
Securities Dealers, Inc., made in connection with the offering of the
Shares, (viii) any expenses incurred by the Company in connection with a
"road show" presentation to potential investors and (ix) the listing of the
Common Stock on The Nasdaq National Market.
VII.
The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein, provided, further, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages, or liabilities purchased
Shares, or any person controlling, controlled by or under common control with
such Underwriter, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in
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the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to any of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (b) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters and such
control persons of Underwriters, such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated. In the case of any such separate firm for
the Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than thirty (30)
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the
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prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first or second paragraph
of this Article VII is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate public offering
price of the Shares. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Article VII are several in proportion to the respective number
of Shares they have purchased hereunder, and not joint.
The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Article VII were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article VII, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of
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such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Article VII are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
The indemnity and contribution provisions contained in this Article
VII and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
VIII.
This Agreement shall be subject to termination by notice given by you
to the Company, if (a) after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities, or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event singly or together with any other such
event makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
IX.
This Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedules I and II
bears to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Article II be increased pursuant
17
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to this Article IX by an amount in excess of one-ninth of such number of
Shares without the written consent of such Underwriter. If, on the Closing
Date or the Option Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Shares and the aggregate number
of Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to you and the Company for the purchase of such Shares are not
made within thirty-six (36) hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter, or
the Company. In any such case, either you or the Company shall have the
right to postpone the Closing Date or the Option Closing Date, as the case
may be, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus
or in any other documents or arrangements may be effected. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, for all out-of-pocket
expenses (including the fees and disbursements of their counsel) reasonably
incurred by such Underwriters in connection with this Agreement or the offering
contemplated hereunder.
This Agreement may be signed in two or more counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
Very truly yours,
LATTICE SEMICONDUCTOR CORPORATION
By___________________________
Title________________________
Accepted, October __, 1995
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
PaineWebber Incorporated
Needham & Company, Inc.
Acting severally on behalf of themselves and
the several U.S. Underwriters named in
Schedule I herein.
By Morgan Stanley & Co. Incorporated
By_______________________________________
Morgan Stanley & Co. International Limited
Donaldson, Lufkin & Jenrette
Securities Corporation
PaineWebber International (U.K.) Ltd.
Needham & Company, Inc.
Acting severally on behalf of themselves and
the several International Underwriters named
in Schedule II herein.
By Morgan Stanley & Co. International Limited
By_______________________________________
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SCHEDULE I
U.S. UNDERWRITERS
Number of
U.S. Firm Shares
Underwriter To Be Purchased
----------- ---------------
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
PaineWebber Incorporated
Needham & Company, Inc.
-------------
Total U.S. Firm Shares.......................... 2,000,000
------------
------------
20
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SCHEDULE II
INTERNATIONAL UNDERWRITERS
Number of
International Shares
Underwriter To Be Purchased
----------- --------------------
Morgan Stanley & Co. International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
PaineWebber International (U.K.) Ltd.
Needham & Company, Inc.
-------------
Total International Shares...................... 500,000
------------
------------
21
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SCHEDULE III
COPIES OF PARAGRAPHS 5-10 OF ARTICLE III OF THE
AGREEMENT BETWEEN U.S. AND INTERNATIONAL UNDERWRITERS
Each U.S. Underwriter represents that it has not offered or sold, and
agrees not to offer or sell, any Shares, directly or indirectly, in any province
or territory of Canada in contravention of the securities laws thereof and,
without limiting the generality of the foregoing, represents that any offer of
Shares in Canada will be made only pursuant to an exemption from the requirement
to file a prospectus in the province or territory of Canada in which such offer
is made. Each U.S. Underwriter further agrees to send to any dealer who
purchases from it any of the Shares a notice stating in substance that, by
purchasing such Shares, such dealer represents and agrees that it has not
offered or sold, and will not offer or sell, directly or indirectly, any of such
Shares in any province or territory of Canada or to, or for the benefit of, any
resident of any province or territory of Canada in contravention of the
securities laws thereof and that any offer of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made, and that such
dealer will deliver to any other dealer to whom it sells any of such Shares a
notice containing substantially the same statement as is contained in this
sentence.
The Underwriters understand that no action has been or will be taken
in any jurisdiction by the Underwriters or the Company that would permit a
public offering of the Shares, or possession or distribution of the Prospectus
(as defined in the Underwriting Agreement), in preliminary or final form, in any
jurisdiction where, or in any circumstances in which, action for that purpose is
required, other than the United States.
Each International Underwriter agrees that it will comply with all
applicable laws and regulations, and make or obtain all necessary filings,
consents or approvals, in each jurisdiction in which it purchases, offers, sells
or delivers Shares (including, without limitation, any applicable requirements
relating to the delivery of the international prospectus, in preliminary or
final form), in each case at its own expense. In connection with sales of and
offers to sell Shares made by it, such International Underwriter will either
furnish to each person to whom any such sale or offer is made a copy of the then
current international prospectus (in preliminary or final form and as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or inform such person that such international prospectus,
in preliminary or final form, will be made available upon request.
Each International Underwriter further represents that it has not
offered or sold, and agrees not to offer or sell, directly or indirectly, in
Japan or to or for the account of any resident thereof, any of the Shares
acquired in connection with the distribution contemplated hereby, except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law of Japan. Each International Underwriter further agrees to
send to any dealer who purchases from it any of the Shares a notice stating in
substance that, by purchasing such Shares, such dealer represents and agrees
that it has not offered or sold, and will not offer or sell, any of such
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<PAGE>
Shares, directly or indirectly, in Japan or to or for the account of any
resident thereof except pursuant to any exemption from the registration
requirements of the Securities and Exchange Law of Japan, and that such dealer
will send to any other dealer to whom it sells any of such Shares a notice
containing substantially the same statement as is contained in this sentence.
Each International Underwriter further represents and agrees that
(i) it has not offered or sold and will not offer or sell any Shares to persons
in the United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on and will only
issue or pass on to any person in the United Kingdom any document received by it
in connection with the issue of the Shares, if that person is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995, or is a person to whom such document
may otherwise lawfully be issued or passed on.
Each International Underwriter agrees to indemnify and hold harmless
each Underwriter and each person controlling any Underwriter from and against
any and all losses, claims, damages and liabilities (including fees and
disbursements of counsel) arising from any breach by it of any of the provisions
of paragraphs seven, eight and nine of this Article III.
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EXHIBIT 5.1
October 16, 1995
Lattice Semiconductor Corporation
5555 N.E. Moore Court
Hillsboro, OR 97124-6421
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
Lattice Semiconductor Corporation (the "Company") with the Securities and
Exchange Commission (the "Commission") on October 17, 1995, as thereafter
amended or supplemented, (the "Registration Statement"), in connection with
the registration under the Securities Act of 1933, as amended, of 2,875,000
shares (including an option granted by the Company to the underwriters to
purchase up to 375,000 shares to cover over-allotments, if any) of the common
stock of the Company (the "Shares"). The Shares are to be sold to the
underwriters for resale to the public as described in the Registration
Statement and pursuant to the Underwriting Agreement being filed as an
exhibit thereto. As your legal counsel in connection with this transaction,
we have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of the
Shares.
It is our opinion that, upon conclusion of the proceedings being taken or
contemplated to be taken prior to the issuance of the Shares, the Shares, when
issued and sold in the manner described in the Registration Statement, will be
legally and validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in
the Registration Statement, including any Prospectus constituting a part
thereof, and any amendments thereto.
Very truly yours,
/s/ Wilson, Sonsini, Goodrich & Rosati
--------------------------------------
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated April 20, 1995 which appears on page 24 of the 1995 Annual Report to
Shareholders of Lattice Semiconductor Corporation, which is incorporated by
reference in Lattice Semiconductor Corporation's Annual Report on Form 10-K
for the year ended April 1, 1995. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which appears on
page S-1 of such Annual Report on Form 10-K. We also consent to the references
to us under the headings "Experts" and "Selected Financial Data" in such
Prospectus. However, it should be noted that Price Waterhouse LLP has not
prepared or certified such "Selected Financial Data."
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Portland, Oregon
October 16, 1995
