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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1998
REGISTRATION NO. 333-68617
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
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 18, 1998
DSP COMMUNICATIONS, INC.
__________ SHARES OF COMMON STOCK
This is a public offering of up to ____________ shares of common stock of
DSP Communications, Inc. All of these shares are being offered by the selling
stockholders identified in this prospectus. 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 17, 1998, the New York Stock Exchange
reported that the closing price per share was $14.375.
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.
References in this prospectus to "DSP Communications," "we," "our" and
"us" refer to DSP Communications, Inc. and its consolidated subsidiaries.
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
Substantially all of our sales are from three wireless telephone chip set
products:
- - our Personal Digital Cellular, or PDC, baseband chip set for use in
Japan,
- - our Time Division Multiple Access, or TDMA, chip set for use outside of
Japan, and
- - our Code Division Multiple Access, or CDMA, chip set for use in the United
States, Japan, South Korea and other parts of the world.
Because we sell only a limited number of products, a decrease or slowdown in
sales of any one of these products 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. We may not be
successful in developing or marketing next-generation products or any new
products. We have also depended on the rapid growth of the global digital
wireless telephone markets in which we sell our chip set products, and a
slowdown in the growth of any of these markets could have a material adverse
effect on our business. Our business and results of operations could be
materially and adversely affected if we are unable to develop and manufacture in
a timely manner new product generations and new products and to market and sell
them successfully.
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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 DSP-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 also expect new competitors to enter the chip set
manufacturing market as the wireless communications markets expand. 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.
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.
WE SELL TO A SMALL NUMBER OF CUSTOMERS; THE LOSS OF EITHER OF OUR DISTRIBUTORS
OR ANY OF OUR CUSTOMERS COULD HAVE ADVERSE CONSEQUENCES
Substantially all of our sales of baseband chip sets for digital cellular
telephones are 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 Original Equipment
Manufacturer, or OEM, customers. During the first nine months of 1998, seven
OEM customers accounted for substantially all of the sales of our PDC baseband
chip sets, while two OEM customers accounted for all sales of our TDMA chip
sets, and two OEM customers accounted for all sales of our 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 OEMs could have a material adverse
effect on our business, financial condition and results of operations.
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Because the worldwide cellular telephone equipment industry is dominated by
a small number of large corporations, we expect that we will continue to sell
most of our products to a limited number of OEMs. 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
OEMs. As a result, our business is likely to continue to depend on large orders
from a small number of distributors and OEMs, and our success will depend
largely on gaining additional OEM 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 OEM
customer, if any existing customer significantly reduces its purchases of our
products, or if we fail to gain additional OEM customers.
IF OUR OEM CUSTOMERS DO NOT SUCCEED, WE WILL NOT SUCCEED
Sales of our PDC, TDMA and CDMA chip sets will depend on the success of our
OEM 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 OEM customers in the
wireless Private Branch Exchange market for sales of CTP Systems' wireless PBX
systems. We will not be successful if our OEM customers are not successful.
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.
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 OEMs for sale outside of
Japan. The economies of other global regions in which we or our OEM 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.
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
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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 distributor. Our inability to compete in Japan
for any reason could have a material adverse effect on our business, financial
condition and results of operations.
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.
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.
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 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."
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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.
FUTURE ACQUISITIONS MAY HAVE ADVERSE CONSEQUENCES
Our strategy includes obtaining additional technologies and may involve
acquisitions of products, technologies or businesses from third parties.
Identifying and negotiating these acquisitions may divert substantial management
resources. An acquisition could use substantial cash, could require us to incur
or assume debt obligations, or could involve the issuance of additional common
or preferred stock. The issuance of additional stock would dilute existing
stockholders and could represent an interest senior to the rights of our then
outstanding common stock. An acquisition that is accounted for as a purchase
could involve significant one-time, non-cash write-offs, or could involve the
amortization of goodwill and other intangibles over a number of years, which
would adversely affect earnings in those years. Public market analysts may view
acquisitions outside the digital communications area as a diversion of our focus
on digital communications. For these and other reasons, the market for our
stock may react negatively to the announcement of any acquisition. An
acquisition will continue to require attention from our management to integrate
the acquired entity into our operations and may require us to develop expertise
in fields outside our current area of focus. Management of the acquired entity
may leave after the purchase. An acquired entity may have unknown liabilities,
and its business may not achieve the results anticipated at the time of the
acquisition.
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 as of September 30, 1998, 176 of our 190 employees were located in Israel,
including a substantial portion of our senior management and all of our research
and development personnel. We are therefore directly affected by the political,
economic and military conditions to which that country is subject. In addition,
many of our expenses in Israel are paid in Israeli currency, and we are subject
to foreign currency fluctuations and to economic pressures resulting from
Israel's generally high rate of inflation. The rate of inflation in Israel for
1996, 1997 and the first nine months of 1998 was 10.6%, 7.0% and 4.0%,
respectively. While our functional currency is the United States dollar, a
portion of our expenses are denominated in Israeli shekels. The primary expense
paid in Israeli currency is Israeli-based employee salaries. 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
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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.
OUR GROWTH MAY STRAIN MANAGEMENT RESOURCES AND OPERATIONS
The growth and development in our business has placed, and is expected to
continue to place, a significant strain on our management and operations. To
manage our growth and development, we must continue to implement and improve our
operational, financial and management information systems and expand, train and
manage our employees. The anticipated increase in product development, general
and administrative, and marketing and sales expenses coupled with our reliance
on OEMs to successfully market and develop products that use our products could
have an adverse effect on our performance. Our failure to manage growth
effectively and efficiently could 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.
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
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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.
NO INTENT TO PAY DIVIDENDS ON OUR CAPITAL STOCK
We have never paid dividends on our capital stock. We currently intend to
retain any future earnings for funding growth and do not expect to pay any
dividends in the foreseeable future.
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE HIGHLY VOLATILE
The price of our common stock has fluctuated in the past and will likely
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 volume and timing of product orders received and delivered during the
quarter,
- - the timing of our new product introductions and of new product
introductions by our OEM customers,
- - the introduction of new products by our competitors and our OEMs'
competitors,
- - market acceptance of new products,
- - changes in general economic conditions, particularly in Japan, South Korea,
other countries in the Far East and North and South America,
- - adoption of new technologies and standards,
- - relative prices of our products,
- - the cost and availability of components,
- - the mix of products sold,
- - the quality and availability of chip sets manufactured for us by third
parties,
- - acquisitions of other businesses,
- - changes in our distribution arrangements,
- - sales of wireless subscriber equipment by our OEMs, 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.
In the past, we have been the object of securities class action
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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.
USE OF PROCEEDS
All proceeds from any sale of shares of common stock offered by the selling
stockholders will be received by the selling stockholders, not by DSP
Communications.
SELLING STOCKHOLDERS
The shares being offered by this prospectus were issued by DSP
Communications in connection with its purchase of the assets of Isotel Research
Ltd. The shares were issued 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. No estimate can be
given as to 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 shares offered by this prospectus may be offered from
time to time by the selling stockholders named below:
<TABLE>
<CAPTION>
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PERCENT OF NUMBER OF SHARES
NUMBER OF SHARES OUTSTANDING REGISTERED FOR
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED SHARES SALE (1)
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<S> <C> <C> <C>
Isotel Research Ltd.(2)
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Janette Sharman(2)(3)
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Duane Sharman(2)(3)
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Jose Guterman(2)
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Steve Pye(2)
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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) The shares were originally issued by DSP Communications to
Isotel. The individual selling stockholders listed above are the shareholders
of Isotel, and the number of shares shown above 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.
(3) 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 the timing, manner and size of each sale. 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:
- - block trade in which the broker-dealer so engaged will attempt to sell the
shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
- - purchases by a broker-dealer as principal and resale by such broker-dealer
for its account pursuant to this prospectus;
- - an exchange distribution in accordance with the rules of such exchange;
- - ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- - in privately negotiated transactions.
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
10
<PAGE>
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.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirements is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in the distribution of the shares may not
simultaneously engage in market-making activities with respect to our common
stock for a period of two business days prior to the commencement of such
distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of DSP Communications common
stock by the selling stockholders. 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 __, 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
11
<PAGE>
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 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.
12
<PAGE>
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.
13
<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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Where You Can Find More Information. . . . . . . . . . . . . . . . . . . . 11
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . 12
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
______________ shares
of
Common Stock
offered by
Selling Stockholders
DSP COMMUNICATIONS, INC.
PROSPECTUS
____________, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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
II-1
<PAGE>
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.
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
II-2
<PAGE>
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.
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 18, 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:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Davidi Gilo Chairman of the Board December 18, 1998
- ---------------------------
Davidi Gilo
/s/ Joseph Perl * President, Chief Executive
- --------------------------- Officer and Director December 18, 1998
Joseph Perl
/s/ David Aber * Chief Financial Officer
- --------------------------- (Principal Financial and
David Aber Accounting Officer) December 18, 1998
/s/ Lewis Broad * Director December 18, 1998
- ---------------------------
Lewis Broad
/s/ Neill Brownstein * Director December 18, 1998
- ---------------------------
Neill Brownstein
/s/ Gerald Dogon * Director December 18, 1998
- ---------------------------
Gerald Dogon
/s/ Avraham Fischer * Director December 18, 1998
- ---------------------------
Avraham Fischer
/s/ Shigeru Iwamoto * Director December 18, 1998
- ---------------------------
Shigeru Iwamoto
/s/ Andrew Schonzeit * Director December 18, 1998
- ---------------------------
Andrew Schonzeit
* By: /s/ Davidi Gilo December 18, 1998
----------------------
Attorney-in-Fact
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. 1 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 18, 1998
