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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1998
REGISTRATION NO. 333-68617
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DSP COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 77-0389180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20300 STEVENS CREEK BOULEVARD
CUPERTINO, CALIFORNIA 95014
(408) 777-2700
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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DAVIDI GILO, CHAIRMAN OF THE BOARD
DSP COMMUNICATIONS, INC.
20300 STEVENS CREEK BOULEVARD
CUPERTINO, CALIFORNIA 95014
(408) 777-2700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
Bruce P. Johnson, Esq.
VENTURE COUNSEL ASSOCIATES, LLP
1999 Harrison Street, Suite 1300
Oakland, California 94612
(510) 273-8750
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 31, 1998
DSP COMMUNICATIONS, INC.
__________ SHARES OF COMMON STOCK
This is a public offering of up to ____________ shares of common stock of
DSP Communications, Inc. The selling stockholders identified in this prospectus
will offer to sell all of these shares. DSP Communications will not receive any
proceeds from the sale of the shares in this offering. The selling stockholders
may sell the shares from time to time on the New York Stock Exchange at their
prevailing prices, or in negotiated transactions. This offering is not being
underwritten.
DSP Communications' common stock is traded on the New York Stock Exchange
under the symbol "DSP." On December 30, 1998, the New York Stock Exchange
reported that the closing price per share was $15.00.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1998.
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DSP COMMUNICATIONS
DSP Communications' principal executive office is located at 20300 Stevens
Creek Boulevard, Suite 465, Cupertino, California 95014, and our telephone
number is (408) 777-2700. Our web site on the Internet is at www.dspc.com.
Information contained in our web site is not a part of this prospectus.
RISK FACTORS
THE SECURITIES WHICH ARE OFFERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE
OF RISK. YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS AND OTHER
INFORMATION IN THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN SHARES OF COMMON
STOCK.
IF ANY OF THE RISKS DESCRIBED BELOW ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY AND ADVERSELY AFFECTED.
IN THAT EVENT, THE TRADING PRICE OF OUR COMMON STOCK COULD FALL, AND YOU COULD
LOSE ALL OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS CONTAIN FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS AND EVENTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED BY US AND DESCRIBED IN THIS PROSPECTUS, AS A RESULT OF MANY FACTORS,
INCLUDING THOSE SET FORTH BELOW AND ELSEWHERE IN THIS PROSPECTUS.
WE RELY ON A LIMITED NUMBER OF CHIP SET PRODUCTS USED IN DIGITAL WIRELESS
TELEPHONES; WE MUST MAINTAIN AND INCREASE SALES OF EACH OF OUR PRODUCTS AND
DEVELOP NEXT-GENERATIONS OF OUR PRODUCTS TO BE SUCCESSFUL
Unlike companies that sell a large number of products, substantially all of
our sales are from only three chip set products used in cellular telephones.
Because we sell so few products, a decrease or slowdown in sales of any single
product could have a material adverse effect on our results and financial
condition. Our success will also depend on our ability to develop and market
successive generations of these products. To succeed in the future, we may also
need to develop and market new products. If we are not successful in
developing, manufacturing and marketing next-generation products or any new
products, our business and results of operations could be materially and
adversely affected.
WE COULD BE ADVERSELY AFFECTED BY ANY DECREASE IN THE GROWTH OF THE WORLDWIDE
DIGITAL CELLULAR MARKETS IN WHICH WE SELL OUR PRODUCTS
Our increasing sales of chip set products have resulted to date largely
from the rapid growth of the global digital wireless telephone markets in which
we sell our chip set products. A slowdown in the growth of any of these markets
could have a material adverse effect on our business.
WE SELL TO A SMALL NUMBER OF CUSTOMERS; THE LOSS OF EITHER OF OUR DISTRIBUTORS
OR ANY OF OUR CUSTOMERS COULD HAVE ADVERSE CONSEQUENCES
We sell substantially all of our baseband chip sets for digital cellular
telephones to Tomen Electronics Corp., our distributor in Japan, and to Tomen
Electronics America Inc., our distributor in the United States. These
distributors sell our products to a small number of cellular telephone
manufacturer customers. During the first nine months of 1998, seven cellular
telephone manufacturer customers accounted for substantially all of the sales of
our personal digital cellular, or PDC, baseband chip sets, while two cellular
telephone manufacturers accounted for all sales of our time division multiple
access, or TDMA, chip sets, and two customers accounted for all sales of our
code division multiple access, or
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CDMA, chip sets. The loss of either of our distributors or the loss of or
significant reduction in the distributors' sales to any of these cellular
telephone manufacturers could have a material adverse effect on our business,
financial condition and results of operations.
Because a small number of large corporations dominate the worldwide
cellular telephone equipment industry, we expect that we will continue to sell
most of our products to a limited number of cellular telephone manufacturers.
We also believe that the manufacture of subscriber equipment for new
telecommunications services, such as personal communications services, will be
concentrated in a limited number of cellular telephone manufacturers. As a
result, our business is likely to continue to depend on large orders from a
small number of distributors and cellular telephone manufacturers, and our
success will depend largely on gaining additional cellular telephone
manufacturer customers both in our current markets and in new markets. We could
suffer a material adverse effect on our business, financial condition and
results of operations if we lose any existing cellular telephone manufacturer
customer, if any existing customer significantly reduces its purchases of our
products, or if we fail to gain additional customers.
IF OUR CELLULAR TELEPHONE MANUFACTURER CUSTOMERS DO NOT SUCCEED, WE WILL NOT
SUCCEED
Sales of our PDC, TDMA and CDMA chip sets will depend on the success of our
cellular telephone manufacturer customers in developing, introducing and
marketing competitive handsets using these chip sets, and in successfully
competing in their intensely competitive wireless personal communications
markets. In addition, our subsidiary, CTP Systems, will depend on the success
of its manufacturer customers in the market for intra-office wireless
communications systems, known as private branch exchange, or PBX, systems, for
sales of CTP Systems' wireless PBX systems. We will not be successful if our
customers are not successful.
WE COMPETE IN DIGITAL WIRELESS TELEPHONE CHIP SET MARKETS AGAINST COMPANIES WITH
GREATER RESOURCES
The digital wireless telephone chip set market is intensely competitive.
Many of our competitors have entrenched market positions, established patents,
copyrights, tradenames, trademarks and other intellectual property rights and
substantial technological capabilities. Our current and potential competitors
in the digital cellular market include:
- - other manufacturers and suppliers of digital signal processing-based chip
sets,
- - cellular telephone manufacturers that develop chip set solutions
internally, and
- - smaller companies offering design solutions.
Many of these competitors have significantly greater financial, technical,
manufacturing, marketing, sales and distribution resources and management
expertise than we do. We believe that we will rely on our ability to compete
successfully based on price, quality, availability, performance and features of
our products, timing of our new product introductions, and customer service and
technical support. Other factors outside our control will also affect our
ability to compete, such as pricing by our competitors, and the timing and
quality of their new product introductions. We may not have the financial
resources, technical expertise, intellectual property, or marketing, sales,
distribution and customer service and technical support capabilities to compete
successfully.
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DECLINING SALES PRICES OF CHIP SETS COULD ADVERSELY IMPACT OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Prices of wireless personal communications equipment have declined, and
we expect this decline to continue. As a result, prices for our chip set
products have declined and will likely continue to decline. In addition,
pricing competition among handset manufacturers and component suppliers has
increased. If we are unable to offset these price decreases with either
increases in unit volume, changes in our terms of trade, or reductions in per
unit costs, our gross profit would be adversely affected. Since cellular
telephone manufacturers often negotiate supply arrangements well in advance of
delivery dates, we must often commit to price reductions for our products before
we are aware of how, or if, adequate cost reductions can be obtained. If we are
unable to lower costs in response to these price reduction commitments, our
business, financial condition and results of operations could be materially and
adversely affected. In addition, our inability to respond to increased price
competition would have a material adverse effect on our business, financial
condition and results of operations.
RISKS RELATED TO NEW MARKETS FOR OUR TDMA, CDMA AND WIRELESS PBX PRODUCTS
Our success in marketing our TDMA-based and CDMA-based chip sets will
depend on, among other things, the success of the relatively new TDMA and CDMA
standards and growth of these markets worldwide. These standards may not be
widely adopted, and our TDMA or CDMA chip sets or successive generations of
these products may not be successful in the marketplace. In addition, increased
sales of CTP Systems' wireless PBX systems will depend on, among other things,
growth in the market for PBX systems and other low-mobility wireless
communications applications. This market has to date not grown as fast as
previously anticipated, and may not become large enough to support significant
sales of CTP Systems' products.
OUR SUCCESS DEPENDS IN LARGE PART ON OUR SUCCESS IN THE JAPANESE MARKET
Our future performance will depend, in large part, upon our ability to
continue to compete successfully in the Japanese market. A number of factors
could adversely impact our ability to do so, including any deterioration of
existing trade relations between Japan, Israel and the United States, the
imposition of tariffs in the wireless personal communications industry, or any
adverse changes in Japanese political conditions, trade policy or
telecommunications regulations. To remain competitive in Japan, we must also
continue to develop products that meet the technical requirements of our
Japanese customers and maintain satisfactory relationships with our Japanese
customers and distributors. Our inability to compete in Japan for any reason
could have a material adverse effect on our business, financial condition and
results of operations.
DECLINE IN JAPANESE AND OTHER ECONOMIES COULD HAVE ADVERSE CONSEQUENCES
Since we sell a large percentage of our products in Japan, the current
difficulties in the Japanese economy may materially affect our revenues. If the
Japanese economy remains weak or declines further, our business, financial
condition and results of operations could be materially and adversely affected.
An increasing amount of our sales are made to cellular telephone
manufacturers for sale outside of Japan. The economies of other global regions
in which we or our customers do business, such as North and South America and
South Korea, may also be negatively affected by the current economic
difficulties in Japan and Asia and other causes. Deterioration of economic
conditions in these regions could have a material negative impact on our
business, financial condition and results of operations.
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FLUCTUATION OF EXCHANGE RATES BETWEEN US DOLLAR AND JAPANESE YEN COULD HAVE
ADVERSE EFFECTS
While virtually all of our sales to our Japanese customers are
denominated in United States dollars, a material portion of the sales prices for
certain products we sell to these customers are quoted in dollars linked to
Japanese yen-based prices. Fluctuations in the exchange rate for the United
States dollar in relation to the yen could materially affect the price of our
products in Japan and could have a material adverse effect on our sales and
results of operations. In addition, an increasing number of the components used
in our products are quoted in or linked to yen based prices, and an increase in
the value of yen relative to the United States dollar could materially increase
the cost of these materials. This increase could have a material adverse effect
on our results of operations and financial condition.
RISKS OF INTERNATIONAL OPERATIONS, PARTICULARLY IN ISRAEL
We market and sell our products internationally and have offices and
operations in Israel and Japan in addition to our offices in the United States.
We are therefore subject to the many risks of doing business internationally and
in maintaining international operations, including:
- - unexpected changes in regulatory requirements,
- - fluctuations in the exchange rate for the United States dollar,
- - the impact of recessions in economies outside the United States,
- - the imposition of tariffs and other barriers and restrictions,
- - the burdens of complying with a variety of foreign laws,
- - global political and economic instability, and
- - changes in diplomatic and trade relationships.
Our principal research and development facilities are located in Israel,
and over 90% of our employees are located in Israel, including a substantial
portion of our senior management and all of our research and development
personnel. Israel's political, economic and military conditions therefore
directly affect us. In addition, we pay many of our expenses in Israel with
Israeli currency, and we are subject to foreign currency fluctuations and to
economic pressures resulting from Israel's generally high rate of inflation.
While our functional currency is the United States dollar, a portion of our
expenses, including Israeli based employee salaries, are denominated in Israeli
shekels. In addition, we also have certain Israeli shekel-based liabilities and
assets. As a result, fluctuations in the value of Israeli currency in
comparison to the United States dollar and inflationary pressures on the Israeli
shekel could increase the cost of technology development, research and
development expenses, general and administrative expenses and our effective
income tax rate. Currency fluctuations, changes in the rate of inflation in
Israel or any of the other factors noted above may have a material adverse
effect on our business, financial condition and results of operations.
RISK OF INCREASED INCOME TAXES IN ISRAEL AND THE UNITED STATES
DSPC Israel Ltd. and CTP Systems, two of our Israeli subsidiaries,
operate as "Approved Enterprises" under Israel's Law for the Encouragement of
Capital Investments, 1959. An Approved Enterprise is eligible for significant
income tax rate reductions for several years following the first year in which
it has income subject to taxation in Israel, after consideration of tax losses
carried forward. This favorable tax treatment may not continue, and any change
in this tax treatment could have a material adverse effect on our net income and
results of operations. We are not currently aware of any circumstances that
might cause us to lose our favorable tax treatment. If Israel's tax incentives
or rates applicable to DSPC Israel or CTP Systems are rescinded or changed,
their income taxes could increase and their results of operations and cash flow
would be adversely affected. In addition, our income tax rate would increase if
any of the earnings of our Israeli subsidiaries were to become subject to United
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States federal and state income tax as a result of actual or deemed dividends or
through operation of United States tax rules applicable to "controlled foreign
corporations."
The effective income tax rate of DSPC Israel and CTP Systems is sensitive
to the relationship between the rate of inflation in Israel and to the change in
the rate of exchange between the US dollar and the Israeli shekel. As a result,
fluctuations in this rate of exchange in relation to the rate of inflation in
Israel could increase our effective income tax rate and as a result have a
material adverse effect on our net income and results of operations.
SHORT VISIBILITY FOR FUTURE PRODUCT ORDERS COULD ADVERSELY AFFECT QUARTERLY
OPERATING RESULTS
The market for our chip sets is characterized by short-term order and
shipment schedules. Accordingly, since our revenue expectations and planned
operating expenses are in large part based on estimates rather than on firm
customer orders, our quarterly operating results could be materially adversely
affected if orders and revenues do not meet expectations.
THE FAILURE OF THIRD PARTIES ON WHICH WE RELY TO MANUFACTURE OUR INTEGRATED
CIRCUIT PRODUCTS COULD ADVERSELY AFFECT FUTURE OPERATIONS
All of our integrated circuit products and certain of the components
included in CTP Systems' products are currently made by independent third
parties, and we intend to continue using independent foundries in the future.
Accordingly, we are and will remain dependent on independent foundries to
achieve acceptable manufacturing yields, to allocate to us a sufficient amount
of foundry capacity to meet our needs and to offer us competitive pricing.
Although we have not had any material quality, allocation or pricing problems to
date, if we do have any problems in the future, they would have a material
adverse effect on our business, financial condition and results of operations.
YEAR 2000 COMPUTER PROBLEMS COULD ADVERSELY IMPACT FUTURE OPERATIONS AND RESULTS
Many currently installed computer systems and software products
experience problems handling dates beyond the year 1999 and will need to be
modified before the year 2000 in order to remain functional. As a result,
before the year 2000, computer systems and/or software products and applications
used by many companies may need to be upgraded to comply with such year 2000
requirements.
We are currently expending resources to review our internal systems,
products and the readiness of third parties with whom we have business
relationships, and we have assigned a dedicated task force to develop and
implement a year 2000 plan which is designed to cover all of our activities.
This plan is reviewed regularly by senior management and includes the evaluation
of both Information Technology and non-IT systems. This plan consists of five
steps.
Step one involves increasing awareness by educating and involving all
appropriate levels of management regarding the need to address year 2000 issues.
Step two consists of identifying all of our systems, products and relationships
that may be impacted by year 2000. Step three involves determining our current
state of year 2000 readiness for those areas identified in step two and
prioritizing areas that need to be fixed. Step four will consist of developing
a plan for those areas identified as needing correction. Step five will be the
implementation and execution of our plan and completing the steps identified to
attain year 2000 readiness. We have completed step one and are currently
completing step two. Based on our assessment to date, we have determined that it
is unlikely that we have any exposure to contingencies related to the year 2000
issue for the products that we have sold, that all of our products that are
currently being sold are year 2000 compliant, and that we expect to complete
implementation of our plan, including completing any necessary modifications or
replacements of our internal IT and non-IT systems, by the middle of 1999.
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The costs of implementing our plan to date have not been material, and we
do not believe that the costs of completing the plan will be material. We are
currently evaluating modification or replacement of certain of our internal IT
systems in connection with our growth, and the majority of the costs associated
with the plan for the year 2000 are expected to represent resources used in this
related expansion effort. We believe that modifications deemed necessary will
be made on a timely basis and do not believe that the cost of such modifications
will have a material effect on our operating results. In addition, we are in
the process of evaluating the need for contingency plans with respect to year
2000 requirements. The necessity of any contingency plan must be evaluated on a
case-by-case basis and may vary considerably in nature depending on the year
2000 issue it may address.
Despite the measures we have already taken and intend to take to remedy
the year 2000 problem, unexpected delays or problems, including the failure to
ensure year 2000 compliance of systems or products supplied to us by third
parties, could occur and could have a material adverse effect on our financial
performance and results of operations. In addition, we cannot predict the
effect of the year 2000 issues on our customers or the resulting effect on us.
As a result, if our customers do not take preventative and/or corrective actions
in a timely manner, the year 2000 issue could have an adverse effect on their
operations and accordingly have a material adverse effect on our business,
financial condition and results of operations. Furthermore, our current
understanding of expected costs may change as the project progresses and does
not include the cost of internal software and hardware replaced in the normal
course of business whose installation otherwise may be accelerated to provide
solutions to year 2000 compliance issues.
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE HIGHLY VOLATILE
The price of our common stock has been particularly volatile and will
likely continue to fluctuate in the future. Certain of the factors which may
cause the price of our common stock and our quarterly operating results to
fluctuate include:
- - the timing of our new product introductions and of new product
introductions by our cellular telephone manufacturer customers,
- - the timing of product introduction by our competitors and our customers'
competitors,
- - changes in general economic conditions, particularly in Japan, South
Korea, other countries in the Far East and North and South America,
- - the timing of adoption of new cellular technologies and standards,
- - the mix of products sold,
- - the quality and availability of chip sets manufactured for us by third
parties,
- - acquisitions of other businesses,
- - the timing of sales of wireless subscriber equipment by our customers,
and
- - fluctuations in the exchange rates of the currencies in which we do
business.
It is possible that in some future quarter, our operating results may be
below public market analyst and investor expectations. If that occurs, the
price of our stock may fall. In addition, in recent years the stock market in
general, and the market for shares of technology stocks such as ours in
particular, have experienced extreme price fluctuations, which have often been
unrelated to the operating performance of affected companies. Such fluctuations
could have a material adverse effect on the market price of our common stock.
RISK OF SECURITIES LITIGATION
In the past, we have been the object of securities class action
litigation in connection with the volatility of the market price of our common
stock. If we were the object of additional securities class action litigation
in the future, it could result in substantial costs and a diversion of
management's attention and resources.
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USE OF PROCEEDS
The selling stockholders will receive all proceeds from any sale of
shares of common stock offered by this prospectus, and DSP Communications will
not receive any of the proceeds.
SELLING STOCKHOLDERS
DSP Communications issued the shares being offered in this prospectus in
connection with its purchase of the assets of Isotel Research Ltd. We issued
the shares pursuant to an exemption from the registration requirements provided
by Section 4(2) of the Securities Act of 1933. DSP Communications is required
to register the shares pursuant to the terms of its agreement with Isotel.
The following table sets forth the beneficial ownership of DSP
Communications' common stock by the selling stockholders as of the date of this
prospectus. None of the selling stockholders has had a material relationship
with DSP Communications within the past three years other than the ownership of
the shares of common stock being offered by this prospectus. We cannot estimate
the amount of shares of common stock that will be held by the selling
stockholders after completion of this offering because the selling stockholders
may offer all or some of their shares, and because there currently are no
agreements, arrangements or understandings with respect to the sale of any of
the shares. The selling stockholders named below may offer the shares from time
to time.
We originally issued the shares to Isotel. The individual selling
stockholders listed below are the shareholders of Isotel. The number of shares
shown below as being held by such individuals is based upon each such
individual's percentage ownership in Isotel. Isotel may sell the shares
directly, or in the event that Isotel is liquidated or otherwise distributes the
shares to its shareholders, the shares may be distributed to the individual
shareholders of Isotel who may then sell the shares.
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NUMBER OF
NUMBER OF SHARES PERCENT OF SHARES
BENEFICIALLY OUTSTANDING REGISTERED
NAME OF SELLING STOCKHOLDER OWNED SHARES FOR SALE (1)
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Isotel Research Ltd.
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Janette Sharman(2)
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Duane Sharman(2)
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Jose Guterman
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Steve Pye
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</TABLE>
(1) This prospectus also shall cover any additional shares of common
stock which become issuable in connection with the shares registered for sale
hereby by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which results
in an increase in the number of DSP Communications' outstanding shares of common
stock.
(2) Janette Sharman and Duane Sharman are married and together own
__________ shares, or ___% of the outstanding common stock, based upon their
total ownership interest in Isotel.
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PLAN OF DISTRIBUTION
We are registering all ______________ of the shares of common stock
offered by this prospectus on behalf of the selling stockholders, and will
receive no proceeds from this offering. The selling stockholders, or pledgees,
donees, transferees or other successors-in-interest selling shares received from
a selling stockholder as a gift or other non-sale related transfer after the
date of this prospectus are free to sell the shares from time to time. The
selling stockholders will act independently of DSP Communications in making
decisions with respect to any sales. The sales may be made on the New York
Stock Exchange or otherwise, at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
selling stockholders may effect such transactions by selling the shares to or
through broker-dealers. The shares may be sold by one or more of, or a
combination of, the following:
- - ordinary brokerage transactions in which the broker acts as agent for the
selling stockholder and solicits purchasers on behalf of the selling
stockholder, which may include long or short sales and block trades;
- - purchases of shares by a broker-dealer on its own behalf and resale of
the shares by the broker-dealer as principal pursuant to this prospectus;
- - in privately negotiated transactions; and
- - through transactions in options, swaps or other derivatives, whether
exchange listed or not.
In effecting sales, broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell
the shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. Brokers-dealers or agents and any other participating broker-dealers
or the selling stockholders may be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act, in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because the
selling stockholders may be deemed to be underwriters within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. The selling stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of the shares; nor is any
underwriter or coordinating broker acting in connection with the proposed sale
of the shares by the selling stockholders.
9
<PAGE>
Each selling stockholder will be subject to applicable provisions of the
Exchange Act of 1934 and the rules and regulations under the Exchange Act,
including Regulation M, which may limit the timing of purchases and sales of
shares of DSP Communications common stock by the selling stockholders. In
addition, under Regulation M, persons engaged in a distribution of securities
may not simultaneously engage in market-making and certain other activities with
respect to these securities for a specified period of time prior to the
commencement of such distribution. These limitations and rules may affect the
marketability of the shares offered by this prospectus.
DSP Communications will make copies of this prospectus available to the
selling stockholders and has informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the shares.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed to keep a registration statement of which this prospectus
is a part effective until the earlier to occur of December 31, 1999, or the
earlier disposition of the shares offered by this prospectus. After this date,
if we choose not to maintain the effectiveness of the registration statement,
the shares may not be sold or otherwise transferred or assigned, except in a
transaction which is exempt under the Securities Act or pursuant to an effective
registration statement under the Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 we have
filed with the Securities and Exchange Commission under the Securities Act with
respect to the common stock offered by this prospectus. This prospectus does
not contain all of the information set forth in the registration statement,
certain parts of which are omitted in accordance with the rules and regulations
of the SEC. For further information regarding DSP Communications and the common
stock offered by this prospectus, you may refer to the registration statement,
including its exhibits and schedules. The registration statement may be
inspected at the public reference facilities maintained by the SEC at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part of
the registration statement may be obtained from the SEC upon payment of the
prescribed fees.
We also file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional offices located at 75 Park Place, New York,
New York 10007, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. You may also obtain copies of such material by mail from the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. You may also examine our SEC filings through the
SEC's web site at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or
10
<PAGE>
15(d) of the Securities Exchange Act of 1934 until the selling stockholders have
sold all the shares offered by this prospectus.
1. DSP Communications' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, filed with the SEC on March 19, 1998, including
certain information in DSP Communications' definitive Proxy Statement in
connection with its 1998 Annual Meeting of Stockholders, filed with the
SEC on March 27, 1998.
2. DSP Communications' Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, filed with the SEC on May 14, 1998.
3. DSP Communications' Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998, filed with the SEC on August 13, 1998.
4. DSP Communications' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, filed with the SEC on November 12, 1998.
5. The description of DSP Communications' common stock contained in the
Registration Statement on Form 8-A filed with the SEC on March 1, 1995,
together with all amendments or reports filed for the purpose of updating
such description.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Arnon Kohavi, Vice President of Business Development
DSP Communications, Inc.
20300 Stevens Creek Boulevard, Suite 465
Cupertino, California 95014
Telephone: 408-777-2700
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
the shares of common stock in any jurisdiction where the offer is not permitted.
You should not assume that the information in his prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be
passed upon for DSP Communications by Venture Counsel Associates, LLP, Oakland,
California. Certain members of Venture Counsel Associates, LLP, own a total of
3,850 shares of DSP Communications' common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements (and schedule) included in our Annual Report on Form 10-K
for the year ended December 31, 1997, as set forth in their report, which is
incorporated in this registration statement by reference. Our consolidated
financial statements are incorporated by reference in reliance on their report,
given on their authority as experts in accounting and auditing.
11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospective investors may rely only on the information contained in this
prospectus. Neither DSP Communications nor the selling stockholders have
authorized anyone to provide prospective investors with information different
from that contained in this prospectus. This prospectus is not an offer to sell
nor is it seeking an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DSP Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Where You Can Find More Information. . . . . . . . . . . . . . . . . . . . . .10
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . .10
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
______________ shares
of
Common Stock
offered by
Selling Stockholders
DSP COMMUNICATIONS, INC.
PROSPECTUS
____________, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses payable in connection with the distribution of the securities
being registered (estimated except for the registration fee), all of which will
be borne by the Registrant, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee. . . . . . . . . . . . . . . . . . $ 2,780
Legal Fees and Expenses . . . . . . . . . . . . . . . . . .20,000
Accounting Fees and Expenses. . . . . . . . . . . . . . . .10,000
Miscellaneous Expenses. . . . . . . . . . . . . . . . . . . 2,000
-----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $34,780
-------
-------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides in relevant part that "a corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful." With respect to
derivative actions, Section 145(b) of the DGCL provides in relevant part that
"[a] corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor. . . . [by
reason of his service in one of the capacities specified in the preceding
sentence] against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interest of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper."
The Registrant's Certificate of Incorporation provides that each person who
is or was or who had agreed to become a director or officer of the Registrant or
who had agreed at the request of the Registrant's Board of Directors or an
officer of the Registrant to serve as an employee or agent of the Registrant or
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the Registrant
to the fullest extent permitted by the DGCL, or any other applicable laws. Such
Certificate of Incorporation also provides that the Registrant may enter into
one or more agreements with any person which provides for indemnification
greater or different than that provided in such Certificate, and that no
amendment or repeal of such Certificate shall apply to or have any effect on the
right to indemnification permitted or authorized thereunder for or with respect
to claims asserted before or after such amendment or repeal arising from acts or
omissions occurring in whole or in part before the effective date of such
amendment or repeal.
II-1
<PAGE>
The Registrant's Bylaws provide that the Registrant shall indemnify to the
fullest extent authorized by law any person made or threatened to be made a
party to an action or a proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he, his testator or intestate was or
is a director, officer or employee of the Registrant or any predecessor of the
Registrant or serves or served any other enterprise as a director, officer or
employee at the request of the Registrant or any predecessor of the Registrant.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers.
The Registrant has purchased and maintains insurance on behalf of any
person who is or was a director or officer against any loss arising from any
claim asserted against him and incurred by him in any such capacity, subject to
certain exclusions.
See also the undertakings of the Registrant contained in Item 17 herein.
ITEM 16. EXHIBITS.
The exhibits are listed in the Exhibit Index commencing at page II-5 hereof.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment to this
Registration Statement any of the securities being registered which
remain unsold at the termination of the offering.
II-2
<PAGE>
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
issuer's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 15, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Cupertino, State of California, on December 31, 1998.
DSP COMMUNICATIONS, INC.
By: /s/ Davidi Gilo
----------------------------
Davidi Gilo
Chairman of the Board
Pursuant to the requirements of the Securities act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Davidi Gilo Chairman of the Board December 31, 1998
- ---------------------------
Davidi Gilo
/s/ Joseph Perl * President, Chief Executive
- --------------------------- Officer and Director December 31, 1998
Joseph Perl
/s/ David Aber * Chief Financial Officer
- --------------------------- (Principal Financial and
David Aber Accounting Officer) December 31, 1998
/s/ Lewis Broad * Director December 31, 1998
- ---------------------------
Lewis Broad
/s/ Neill Brownstein * Director December 31, 1998
- ---------------------------
Neill Brownstein
/s/ Gerald Dogon * Director December 31, 1998
- ---------------------------
Gerald Dogon
/s/ Avraham Fischer * Director December 31, 1998
- ---------------------------
Avraham Fischer
/s/ Shigeru Iwamoto * Director December 31, 1998
- ---------------------------
Shigeru Iwamoto
/s/ Andrew Schonzeit * Director December 31, 1998
- ---------------------------
Andrew Schonzeit
* By: /s/ Davidi Gilo December 31, 1998
- ---------------------------
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
*5.1 Opinion of Venture Counsel Associates, LLP.
*23.1 Consent of Venture Counsel Associates, LLP, included in Exhibit 5.1.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
*24.1 Power of Attorney (See Page II-4 of this Registration Statement)
</TABLE>
- ------------------
* Previously filed.
II-5
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Amendment No. 2 to Registration Statement (Form S-3 No. 333-68617) and
related prospectus of DSP Communications, Inc. for the registration of its
common stock, and to the incorporation by reference therein of our reports
dated January 13, 1998 (except for Note 13, as to which the date is
February 9, 1998), with respect to the consolidated financial statements
and schedule of DSP Communications, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1997, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
December 31, 1998
