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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1999
REGISTRATION NO. 333-67629
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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
--------------------------
AVANT! CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C>
DELAWARE 94-3133226
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Number)
Organization)
</TABLE>
46871 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
(510) 413-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
GERALD C. HSU
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
AVANT! CORPORATION
46871 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
(510) 413-8000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
ROBERT V. GUNDERSON, JR., ESQ.
STEVEN M. SPURLOCK, ESQ.
ANTHONY J. MCCUSKER, ESQ.
GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP
155 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 321-2400
--------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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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SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1999
1,256,005 SHARES
AVANT! CORPORATION
COMMON STOCK
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The selling stockholders of Avant! Corporation listed on pages 14-17 of this
prospectus are offering and selling 1,256,005 shares of Avant! common stock
under this prospectus.
The selling stockholders may offer their Avant! stock through public or
private transactions, on or off The Nasdaq National Market, at prevailing market
prices, or at privately negotiated prices.
The common stock is traded on The Nasdaq National Market under the symbol
"AVNT." On February 11, 1999, the closing bid price of the common stock on The
Nasdaq National Market was $18.375 per share.
------------------------
The shares of Avant! common stock offered or sold under this prospectus have not
been approved by the SEC or any state securities commission, nor have these
organizations determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
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The date of this prospectus is February , 1999
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TABLE OF CONTENTS
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PAGE
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Business of Avant!......................................................................................... 3
Risk Factors............................................................................................... 4
Forward Looking Statements................................................................................. 13
Use of Proceeds............................................................................................ 13
Selling Stockholders....................................................................................... 14
Plan of Distribution....................................................................................... 18
Description of Capital Stock............................................................................... 18
Legal Matters.............................................................................................. 20
Experts.................................................................................................... 20
Where You Can Find More Information........................................................................ 21
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THE BUSINESS OF AVANT!
At Avant!, we develop, market and support computer software for integrated
circuit design automation--also known as electronic design automation. This
software is used for the design of integrated circuits, particularly integrated
circuits that are extremely small, or with "submicron"-sized (smaller than 1
micron) and "deep submicron"-sized features (smaller than 0.5 micron). Our
products are used in the design of a variety of integrated circuits, including
microprocessors, memory chips and application-specific integrated circuits.
Compared to previous generations of integrated circuit design automation
software, our products offer improved time to market, reduced development and
manufacturing costs and enhanced integrated circuit performance. End users of
our products include a number of leading electronics companies, such as
Matsushita, Motorola, National Semiconductor, Fujitsu, Toshiba, Mitsubishi,
Hitachi, Samsung and Sony.
Our principal executive offices are located at 46871 Bayside Parkway,
Fremont, California 94538, and our telephone number is (510) 413-8000.
------------------------
This prospectus includes trademarks of Avant! and other corporations.
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RISK FACTORS
WE ARE INVOLVED IN SEVERAL LITIGATION MATTERS THAT COULD SERIOUSLY HARM OUR
BUSINESS
Avant! and its subsidiaries are engaged in various litigation matters,
including: a civil action brought by Cadence Design Systems, Inc.; the criminal
indictment of Avant! and certain of its employees, officers and directors;
securities class action and defamation claims stemming from the Cadence
litigation and the criminal indictment; civil actions brought by Silvaco Data
Systems, Inc.; a civil action brought by Katherine Ngai Pesic and Ivan Pesic; a
civil action brought by Microunity Systems Engineering, Inc.; and a civil action
brought by Eric Nequist. The pending litigation against Avant! and any future
litigation against Avant! or its employees, regardless of the outcome, may
result in substantial costs and expenses and significant diversion of effort by
Avant!'s management. These various matters could seriously harm Avant!'s
business, financial condition and results of operations.
- CADENCE LITIGATION.
On December 6, 1995, Cadence filed an action against Avant! and certain of
its officers in the United States District Court for the Northern District of
California alleging copyright infringement, unfair competition, misappropriation
of trade secrets, conspiracy, breach of contract, inducing breach of contract
and false advertising. The essence of the complaint is that certain of Avant!'s
employees who were formerly Cadence employees allegedly misappropriated and
improperly copied source code for certain important functions of Avant!'s place
and route products from Cadence, and that Avant! has allegedly competed unfairly
by making false statements concerning Cadence and its products. The action also
alleges that Avant! induced certain individual defendants to breach their
agreements of employment and confidentiality with Cadence. Trial has been
scheduled for October 12, 1999.
In addition to actual and punitive damages, which have not been quantified
by Cadence, Cadence is seeking to enjoin the sale of Avant!'s place and route
products pending trial of the action. On December 19, 1997, the District Court
entered an injunction against continued sales or licensing of any product or
work copied or derived from Cadence's Design Framework II, specifically
including, but not limited to, Avant!'s ArcCell products. The injunction also
barred Avant! from possessing or using any copies or any portion of the source
code or object code for ArcCell or any other product, to the extent that portion
is copied or derived from Cadence's Design Framework II. (Avant! had stopped
selling or licensing ArcCell products or code in mid 1996.) On December 7, 1998,
the District Court entered an injunction against Avant! prohibiting Avant! from
directly or indirectly marketing, selling, leasing, licensing, copywriting or
transferring the Aquarius, Aquarius XO and Aquarius BV products. The injunction
also prohibits Avant! from marketing, selling, leasing, licensing, copying or
transferring any translation code for an Aquarius product that infringes any
protected right of Cadence. With certain exceptions related to the pending
litigation, beginning February 5, 1999, the injunction prohibits Avant! from
possessing or using any copies of any portion of the source code or object code
for the Aquarius products to the extent that such portion is copied or derived
from the Design Framework II product of Cadence. The injunction further includes
certain notice and reporting requirements to be fulfilled by Avant!. The
preliminary injunction against Avant!'s Aquarius products could seriously harm
Avant!'s business, financial condition and results of operations.
On January 16, 1996, Avant! filed a counterclaim against Cadence alleging
antitrust violations, racketeering, false advertising, defamation, trade libel,
unfair competition, unfair trade practices, negligent and intentional
interference with prospective economic advantage and intentional interference
with contractual relations. On December 19, 1997, Avant! stipulated to
temporarily dismissing its counterclaim in order to file more detailed
allegations. Avant! refiled its counterclaim on January 29, 1998.
Avant! believes it has defenses to all of Cadence's claims and intends to
defend itself vigorously. If, however, Avant!'s defenses are unsuccessful,
Avant! may ultimately be permanently enjoined from selling
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certain place and route products and may be required to pay monetary damages to
Cadence. In addition, upon further consideration by the District Court, Avant!
could be preliminarily enjoined from selling its Apollo place and route
products. In addition, it is likely that an adverse judgment against Avant!
would result in a steep decline in the market price of Avant!'s common stock.
Accordingly, an adverse judgement, if granted on any claim, would seriously harm
Avant!'s business, financial position and results of operations. Furthermore, it
is possible that Avant!'s relationships with its customers and/or partners will
be seriously harmed in the future as a result of the Cadence litigation.
- CRIMINAL INDICTMENT.
On December 16, 1998, after a grand jury investigation, the Santa Clara
County District Attorney's office filed a criminal indictment alleging felony
level offenses related to the allegations of misappropriation of trade secrets
set forth in Cadence's lawsuit against, among others, Avant! and the following
current or former employees and/or directors of Avant!:
- Gerald C. Hsu, President, Chief Executive Officer and Chairman of the
board of directors;
- Y. Eric Cho, a former officer and former member of Avant!'s board of
directors;
- Y. Z. Liao, Corporate Fellow;
- Stephen Wuu, CEO Staff Operations;
- Leigh Huang, former marketing manager;
- Eric Cheng, Research and Development Manager; and
- Mike Tsai, a former officer and former member of Avant!'s board of
directors.
The indictment charges the defendants listed above with conspiring to commit
trade secret theft, trade secret theft, inducing the theft of a trade secret,
conspiracy to commit fraudulent practices in connection with the offer or sale
of a security and fraudulent practices in connection with the offer or sale of a
security. The criminal indictment could result in additional defense costs and
criminal fines against Avant!, as well as the potential incarceration of certain
members of its management team and board of directors. Such outcomes would
seriously harm Avant!'s business, financial condition and results of operations
and may also result in canceled or postponed orders, increased future
expenditures, the loss of management and other key personnel, additional
stockholder litigation and loss of goodwill.
- SILVACO LITIGATION.
In March 1993, Meta Software Inc., which Avant! acquired in October 1996 and
which is now a wholly owned subsidiary of Avant!, filed a complaint in the
Superior Court of California for Santa Clara County against Silvaco Data
Systems, Inc. seeking monetary damages and injunctive relief. In August 1995,
Silvaco filed a cross-complaint against Meta and Shawn Hailey, then the
President and Chief Executive Officer of Meta, alleging, among other things,
that Meta owed Silvaco royalties and license fees pursuant to a product
development and marketing program and unpaid commissions related to Silvaco's
sale of Meta's products and services under such program. In November 1997, a
judgment in the aggregate amount of $31.4 million was entered against Avant!.
Avant! filed appeals on its own behalf and on behalf of Mr. Hailey. If Avant!'s
appeal is unsuccessful, Avant! will be required to pay substantial monetary
damages to Silvaco. Payment of the damages previously awarded, and damages which
may be awarded in the future, would seriously harm Avant!'s business, financial
condition and results of operations.
On March 31, 1998, Silvaco filed an additional lawsuit, against Avant! and
Roy Jewell, Avant!'s CEO Staff, Corporate Development, in the Superior Court of
California for Santa Clara County. The lawsuit alleges causes of action for
defamation, negligent and intentional interference with economic advantage,
unfair competition, Lanham Act violations and consumer fraud. Silvaco is seeking
$20 million in compensatory damages, punitive damages and an injunction. Avant!
believes it has defenses to these claims and
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intends to defend itself vigorously. In the event Avant!'s defenses are
unsuccessful, Avant! may be required to pay damages to Silvaco, and such a
judgment would seriously harm Avant!'s business, financial condition and results
of operations.
- PESIC LITIGATION.
In September 1996, Katherine Ngai Pesic and Ivan Pesic commenced an action
in the Superior Court of California for Santa Clara County naming as defendants
Avant! (as successor in interest to Meta), Shawn Hailey, Meta's former President
and Chief Executive Officer, and Thomas N. White, Jr. and George S. Cole, both
of whom were Meta's former counsel in the Meta v. Silvaco matter discussed
above. The action asserts claims for invasion of privacy under California common
law and the California Constitution and seeks compensatory and punitive damages.
Avant! believes it has defenses to these claims and intends to defend itself
vigorously. In the event that Avant!'s defenses are unsuccessful, Avant! may be
required to pay damages to the plaintiffs, and such a judgment could seriously
harm Avant!'s business, financial condition and results of operations.
- MICROUNITY LITIGATION.
On October 14, 1997, Microunity Systems Engineering, Inc. filed in the
United States District Court for the Northern District of California a complaint
against Precim Corporation. Precim was a wholly owned subsidiary of Technology
Modeling Associates, Inc. which was acquired by Avant! in January 1998. This
lawsuit alleges liability for patent infringement, unfair competition and
tortious interference with prospective economic advantage. The action requests
unspecified monetary damages and an injunction against Precim. Precim has
answered the complaint and filed counterclaims against Microunity seeking a
declaration that the patents at issue are invalid and that Precim does not
infringe. Trial has been scheduled for September 20, 1999. Avant! believes it
has defenses to these claims and intends to defend itself vigorously. In the
event Avant!'s defenses are unsuccessful, Avant! may be required to pay damages
to Microunity, and such a judgment could seriously harm Avant!'s business,
financial condition and results of operations. The parties have engaged in
substantial settlement discussions and have reached a confidential agreement in
principal to resolve the pending actions.
- SECURITIES CLASS ACTION CLAIMS.
On December 15, 1995, Paul Margetis and Helen Margetis filed in the United
States District Court for the Northern District of California a securities fraud
class action complaint against Avant!. This lawsuit alleges certain securities
law violations, including omissions and/or misrepresentation of material facts.
The alleged omissions and/or misrepresentations are largely consistent with
those outlined in the Cadence claim, described above. In addition, on May 30,
1997, Joanne Hoffman filed in the United States District Court for the Northern
District of California a class action lawsuit alleging securities claims on
behalf of purchasers of Avant!'s stock between March 29, 1996 and April 11,
1997, the date of the filing of a criminal complaint against Avant! and six of
its employees and/or officers. Plaintiff alleges that Avant! and its officers
misled the market as to the likelihood of criminal charges being filed and as to
the validity of the Cadence allegations. The District Court has granted Avant!'s
motion to coordinate the Hoffman action for pretrial purposes with the
earlier-filed Margetis action. Avant! believes it has defenses to these
securities class action claims, and intends to defend itself vigorously. In the
event Avant!'s defenses are unsuccessful, Avant! may be required to pay damages
to the securities class action plaintiffs, and such a judgment would seriously
harm Avant!'s business, financial condition and results of operations.
- NEQUIST LITIGATION.
On July 15, 1998, Eric Nequist filed in the Santa Clara County Superior
Court a complaint against Avant!. The complaint alleges causes of action for
defamation, intentional infliction of emotional distress, negligent and
intentional interference with economic advantage, abuse of process and
violations of California Business and Profession Code section 17200. No trial
date has been set, and the parties have been ordered to mediation, which has
been scheduled for April 15, 1999. On March 4, 1999, Avant! intends
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to move for a stay of this lawsuit pending resolution of the criminal action.
Avant! believes it has defenses to Mr. Nequist's claims and intends to defend
itself vigorously. In the event Avant!'s defenses are unsuccessful, Avant! may
be required to pay damages to Mr. Nequist, and such a judgment could seriously
harm Avant!'s business, financial condition and results of operation.
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE OUR OPERATIONS AND PRODUCT LINES WITH
THOSE OF INTERHDL AND ACEO
We have recently acquired interHDL, Inc. and ACEO Technology, Inc. The
integration of interHDL's and ACEO's business and personnel presents difficult
challenges for Avant!'s management. While Avant!'s management believes that the
combination of Avant!, interHDL and ACEO can be effected in a manner that will
realize the value of the combined entities, it is possible that Avant!'s
management will not effectively manage these business combinations to realize
the anticipated synergies.
Avant! acquired interHDL and ACEO, among other reasons, to acquire the
existing technology of these companies, including technology under development.
Avant! and its newly acquired companies each have different systems and
procedures in various operational areas that must be integrated. Avant! may not
be successful in completing such integration effectively, expeditiously or
efficiently. The difficulties of such integration may be increased by the
necessity of coordinating geographically separated divisions, integrating
personnel with disparate business backgrounds and combining different corporate
cultures. The integration of certain operations will require the dedication of
management resources, temporarily distracting attention from Avant!'s day-to-day
business. The business of the combined company may also be disrupted by employee
uncertainty and lack of focus during the integration process. Accordingly,
Avant! may not be able to retain all of its key technical, sales and other key
personnel. Avant!'s failure to effectively integrate its operations with its
newly acquired companies could seriously harm Avant!'s business, financial
condition and results of operations.
WE NEED TO SUCCESSFULLY MANAGE OUR EXPANDING OPERATIONS
Avant! has experienced periods of rapid growth and significant expansion of
its operations that have placed a significant strain upon its management systems
and resources. In addition, Avant! has recently hired a significant number of
employees, and plans to further increase its total headcount. Avant! also plans
to expand the geographic scope of its customer base and operations. This
expansion has resulted and will continue to result in substantial demands on
Avant!'s management resources. Avant!'s ability to compete effectively and to
manage future expansion of its operations, if any, will require Avant! to
continue to improve its financial and management controls, reporting systems and
procedures on a timely basis and expand, train and manage its employee work
force. Avant! may not be successful in addressing such risks, and the failure to
do so would seriously harm Avant!'s business, financial condition and results of
operations.
WE MAY BE UNABLE TO ATTRACT AND RETAIN THE KEY MANAGEMENT AND TECHNICAL
PERSONNEL THAT WE NEED TO SUCCEED
Avant!'s future operating results depend in significant part upon the
continued service of key management and technical personnel. Several of Avant!'s
key personnel have been criminally indicted on charges relating to the matters
underlying the pending litigation between Avant! and Cadence. If any of the
individuals criminally indicted are found guilty and incarcerated or are
otherwise unable to continue to provide services to Avant!, its business,
financial condition and results of operations could be seriously harmed. In
addition, few of Avant!'s employees are bound by employment or non-competition
agreements, and due to the intense competition for such personnel, as well as
the uncertainty caused by the integration of Avant!'s businesses and pending
litigation, it is possible that Avant! will fail to retain such key technical
and managerial personnel. Moreover, there are only a limited number of qualified
integrated circuit design automation engineers, and competition for these
individuals is intense. If Avant! is unable to attract, hire
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and retain qualified personnel in the future, the development of new products
and the management of Avant!'s increasingly complex business would be impaired.
This would seriously harm Avant!'s business, operating results and financial
condition. See "--Litigation Risk."
WE MAY BE UNABLE TO SUCCESSFULLY COMPETE IN THE HIGHLY COMPETITIVE INTEGRATED
CIRCUIT DESIGN AUTOMATION SOFTWARE MARKET
The integrated circuit design automation software market in which Avant!
competes is intensely competitive and subject to rapid change. Avant! currently
faces competition from major integrated circuit design automation vendors,
including Cadence, which currently holds a dominant share of the market for
integrated circuit physical design software, Synopsys, Inc. and Mentor Graphics
Corporation. Avant! may not be able to maintain a competitive position against
these competitors. This is particularly true because each of these companies has
a longer operating history, significantly greater financial, technical and
marketing resources, greater name recognition and a larger installed customer
base than Avant!. In addition, each of these competitors will likely be able to
respond more quickly to new or emerging technologies and changes in customer
requirements, and to devote greater resources to the development, promotion and
sale of their products than Avant!. These competitors also have established
relationships with current and potential customers of Avant!, and they can
devote substantial resources aimed at preventing Avant! from enhancing
relationships with existing customers or establishing relationships with
potential customers.
Moreover, the integrated circuit design automation software industry is
undergoing a trend toward consolidation that is expected to result in large,
more financially flexible competitors with a broad range of product offerings.
Alliances among competitors could present particularly formidable competition to
Avant!. Furthermore, because there are relatively low barriers to entry in the
software industry, Avant! expects additional competition from other established
and emerging companies. Avant! also competes with the internal integrated
circuit design automation development groups of its existing and potential
customers, many of whom design and develop customized design tools for their
particular needs and therefore may be reluctant to purchase products offered by
independent vendors, such as Avant!. Avant!'s current or potential competitors
may develop products comparable or superior to those developed by Avant! or
adapt more quickly than Avant! to new technologies, evolving industry trends or
changing customer requirements. Increased competition could result in price
reductions, reduced margins or loss of market share, any of which could
seriously harm Avant!'s business, operating results or financial condition.
Avant! may be unable to compete successfully against current and future
competitors, and competitive pressures faced by Avant! could seriously harm
Avant!'s business, operating results and financial condition.
OUR QUARTERLY OPERATING RESULTS ARE DIFFICULT TO PREDICT
We are unable to accurately forecast our future revenues primarily because
of the emerging nature of the market in which we compete and because of the
unpredictability of the various litigation matters to which we are a party. Our
revenues and operating results generally depend on the size, timing and
structure of significant licenses. These factors have historically been, and are
likely to continue to be, difficult to forecast. In particular, we have adopted
a flexible pricing strategy pursuant to which we offer both perpetual and
time-based software licenses to customers, depending on customer requirements
and financial constraints. Because each time-based license may have a different
structure and could be subject to cancellation, future revenue received under
these licenses is unpredictable. In addition, our current and future expense
levels are based largely on our operating plans and estimates of future revenues
and are, to a large extent, fixed. We may be unable to adjust spending
sufficiently quickly to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall in revenues in relation to our planned
expenditures would seriously harm our business, financial condition and results
of operations. Such shortfalls in our revenue or operating results from levels
expected by public market analysts and investors could seriously harm the
trading price of our common stock. Additionally, we may not learn of such
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revenue shortfalls, earnings shortfalls or other failure to meet market
expectations until late in a fiscal quarter, which could result in an even more
immediate and serious harm to the trading price of our common stock.
Our quarterly operating results have varied, and it is anticipated that our
quarterly operating results will vary, substantially from period to period
depending on various factors, many of which are outside our control. In addition
to the factors discussed in the previous paragraph, other factors that could
affect our quarterly operating results include:
- Increased competition;
- The length of our sales cycle;
- The timing of new or enhanced product announcements, introductions, or
delays in the introductions of new or enhanced versions of products by us
or our competitors;
- Market acceptance of new and enhanced versions of our products;
- Changes in pricing policies by us or our competitors;
- Conditions in the semiconductor and electronics industries;
- Cancellation of time-based licenses or maintenance agreements;
- The unavailability of technology of third parties;
- The mix of direct and indirect sales;
- Changes in operating expenses;
- Economic conditions in the Asian and other markets;
- Our ability to continue to market our products in Asian and other markets;
- Foreign currency exchange rates; and
- General economic factors.
Due to the foregoing factors, we cannot predict with any significant degree
of certainty our quarterly revenue and operating results. Further, we believe
that period-to-period comparisons of our operating results are not necessarily a
meaningful indication of future performance.
OUR STOCK PRICE IS EXTREMELY VOLATILE
The trading price of our common stock has fluctuated significantly in the
past, and the trading price of our common stock is likely to be highly volatile
and could be subject to wide fluctuations in price in response to such factors
as:
- The outcome of the various litigation matters to which we are a party;
- Actual or anticipated fluctuations in our operating results;
- Announcements of technological innovations and new products by us or our
competitors;
- New contractual relationships with strategic partners by us or our
competitors;
- Proposed acquisitions by us or our competitors; and
- Financial results that fail to meet public market analyst expectations of
performance.
In addition, the stock market in general, and The Nasdaq National Market and
the market for technology companies in particular has experienced extreme price
and volume fluctuations that have often
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been related or disproportionate to the operating performance of such companies.
These broad market and industry factors may seriously harm the market price of
our common stock in future periods.
WE HAVE RELIED AND EXPECT TO CONTINUE TO RELY ON A LIMITED NUMBER OF PRODUCTS
FOR SUBSTANTIALLY ALL OF OUR REVENUE
Historically, we have derived substantially all of our total revenue from
the licensing and support of the following products:
- Aquarius (our cell-based place and route software product);
- Apollo (our successor product to Aquarius);
- Hercules (our hierarchical physical verification software product);
- Star-Hspice (our circuit simulator);
- Star-Sim (our high-capacity circuit simulation and high-accuracy timing
analysis software); and
- Polaris (our Verilog simulation product).
Absent any adverse results from existing litigation, we currently expect
that these products will continue to account for a significant portion of our
revenue for the foreseeable future. As a result, our business, operating results
and financial condition are significantly dependent upon the continued market
acceptance of these products and upon our ability to continue to sell, license
and support each of these products.
WE DEPEND ON INTERNATIONAL SALES FOR A SIGNIFICANT PERCENTAGE OF OUR REVENUE
International revenue, principally from Asian customers, accounted for
approximately 32%, 34%, 44% and 31% of our total revenue in 1995, 1996, 1997 and
1998, respectively. We expect that international license and service revenue,
particularly in Asia, will continue to account for a significant portion of our
total revenue. Our international business activities are subject to a variety of
potential risks, including:
- The impact of recessionary environments in foreign economies;
- Longer receivables collection periods and greater difficulty in accounts
receivable collection;
- Difficulties in staffing and managing foreign operations;
- Political and economic instability;
- Unexpected changes in regulatory requirements;
- Reduced protection of intellectual property rights in some countries; and
- Tariffs and other trade barriers.
Currency exchange fluctuations in countries in which we license our products
could also seriously harm our business, financial condition and results of
operations by resulting in pricing that is not competitive with products priced
in local currencies. Furthermore, we may not be able to continue to price our
products and services internationally in U.S. dollars because of changing
sovereign restrictions on importation and exportation of foreign currencies as
well as other practical considerations. In addition, the laws of certain
countries do not protect our products and intellectual property rights to the
same extent as do the laws of the United States. Moreover, it is possible that
we may fail to sustain or increase revenue derived from international licensing
and service or that the foregoing factors will seriously harm our future
international license and service revenue, and, consequently, seriously harm our
business, financial condition and results of operations.
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WE DEPEND UPON THIRD PARTY DISTRIBUTORS AND MANUFACTURER'S REPRESENTATIVES TO
LICENSE AND SUPPORT OUR PRODUCTS IN ASIA
We rely on distributors and manufacturer's representatives for the licensing
and support of our products in Asia. A substantial portion of our international
license and service revenue is generated from a limited number of these
representatives, although we had no individual customer representing over 10% of
revenue in any of the years 1994-1998. In 1997, we consolidated our Japanese
sales channel by forming MainGate, a distributor owned by Avant!, Gerald C. Hsu,
Avant!'s Chairman of the Board, President and Chief Executive Officer, and other
parties (including other Avant! employees and former employees of Avant!'s third
party distributors). Our reliance on distributors and manufacturer's
representatives subjects us to a number of risks. For example, our current
distributors, manufacturer's representatives or MainGate may not choose to or be
able to market, service or support our products effectively, economic conditions
or industry demand may seriously harm these or other distributors and
manufacturer's representatives or these distributors, manufacturer's
representatives or MainGate may devote greater resources to marketing and
supporting products of our competitors. Additionally, because our products are
used by highly skilled professional engineers, a distributor or manufacturer's
representative must possess sufficient technical, marketing and sales resources
in order to be effective and must devote these resources to a lengthy sales
cycle, customer training and product service and support. Only a limited number
of distributors or manufacturer's representatives possess such resources.
Accordingly, the loss of, or a significant reduction in revenue from, one of our
distributors, manufacturer's representatives or MainGate or any other
distributor or manufacturer's representative on which our revenues may, in the
future, become dependent, could seriously harm our business, financial condition
and results of operations.
OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO KEEP PACE WITH THE RAPIDLY
EVOLVING TECHNOLOGY STANDARDS OF OUR INDUSTRY
Because the semiconductor industry has made significant technological
advances recently, integrated circuit design automation companies, such as
Avant!, that license software to semiconductor companies have been required to
continuously develop new products and enhancements for existing products to keep
pace with the evolving industry standards and rapidly changing customer
requirements. The evolving nature of the integrated circuit design automation
industry could render our existing products and services obsolete. Our success
will depend, in part, on our ability to:
- Enhance our existing products and services;
- Develop and introduce new products and services on a timely and
cost-effective basis that will keep pace with technological developments
and evolving industry standards; and
- Address the increasingly sophisticated needs of our customers.
If we are unable, for technical, legal, financial or other reasons, to
respond in a timely manner to changing market conditions or customer
requirements, our business, financial condition and results of operations could
be seriously harmed.
WE DEPEND ON THE GROWTH OF THE SEMICONDUCTOR AND ELECTRONICS INDUSTRIES
Avant! is dependent upon the semiconductor industry and, more generally, the
electronics industry. Both of these industries are characterized by rapid
technological change, short product life cycles, fluctuations in manufacturing
capacity and pricing and gross margin pressures. Segments of these industries
have from time to time experienced significant economic downturns characterized
by decreased product demand, production over-capacity, price erosion, work
slowdowns and layoffs. While these industries have experienced an extended
period of significant economic growth over the past few years, such economic
growth may not continue, and if it does not, any downturn could be especially
severe on Avant!. During such downturns, the number of new integrated circuit
design projects often decreases.
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Because acquisitions of new licenses from Avant! are largely dependent upon the
commencement of new design projects, any slowdown in these industries could
seriously harm Avant!'s business, financial condition and results of operations.
WE RELY HEAVILY ON OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
We rely on a combination of patents, trade secrets, copyrights, trademarks
and contractual commitments to protect our proprietary rights in our software
products. We generally enter into confidentiality or license agreements with our
employees, distributors and customers, and limit access to and distribution of
our software, documentation and other proprietary information. Despite these
precautions, a third party may still copy or otherwise obtain and use our
products or technology without authorization, or develop similar technology
independently. In addition, effective patent, copyright and trade secret
protection may be unavailable or limited in certain foreign countries. We expect
that software companies will increasingly be subject to infringement claims as
the number of products and competitors in the integrated circuit design
automation industry grows and the functionality of products in different
industry segments overlaps. In particular, our current litigation with Cadence
involves such infringement claims. Responding to such claims, regardless of
merit, could consume valuable time, result in costly litigation, cause product
shipment delays or require us to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if available, may not be available on
terms acceptable to us. A forced license could seriously harm our business,
financial condition and results of operations.
ERRORS IN OUR SOFTWARE PRODUCTS COULD RESULT IN LOSS OF MARKET SHARE OR FAILURE
TO ACHIEVE MARKET ACCEPTANCE
Software products as complex as those offered by Avant! may contain defects
or failures when introduced or when new versions are released. Avant! has in the
past discovered software defects in certain of its products and may experience
delays or lost revenue to correct such defects in the future. Despite testing by
Avant!, errors may still be found in new products or releases after commencement
of commercial shipments, resulting in loss of market share or failure to achieve
market acceptance. Any such occurrence could seriously harm Avant!'s business,
financial condition and results of operations.
OUR BUSINESS COULD BE AFFECTED BY YEAR 2000 ISSUES
- STATE OF READINESS
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. This could result in system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities. As a result, many companies' software and
computer systems may need to be upgraded or replaced in order to comply with
such "Year 2000" requirements. During 1998, Avant! undertook an evaluation of
its currently supported products to determine if they are Year 2000 compliant.
The results of this evaluation revealed that most currently supported products
are Year 2000 compliant. Avant! intends to upgrade or replace the currently
supported products not currently Year 2000 compliant with fix patch or upgrade.
Any failure by Avant! to make its products Year 2000 compliant could result in:
- A decrease in sales of our products;
- An increase in the allocation of resources to address the Year 2000
problems of our customers without additional revenue commensurate with
such dedication of resources; and
- An increase in litigation costs relating to losses suffered by our
customers due to such Year 2000 problems.
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<PAGE>
During 1998, Avant! conducted a preliminary review of our internal computer
systems to identify the systems that could be affected by the Year 2000 issue
and to develop a plan to resolve the issue. Avant! has adopted SAP R/3 software
as an enterprise system managing its financial and logistical operations in the
United States. SAP R/3 software has been certified by SAP as Year 2000
compliant. Some other third party software systems and applications currently
used by Avant!, however, are not Year 2000 compliant. Avant! intends to stop
using these software products or upgrade or replace them as part of Avant!'s
growth plans. Avant! only performs Year 2000 compliance testing on its critical
internal support systems. Inoperability related to Year 2000 problems of
internal systems that are certified Year 2000 compliant by the vendor and not
tested by Avant! could seriously harm Avant!'s operational efficiency. Avant! is
also currently engaged in setting up a plan to make our European accounting
system, currently not on SAP, Year 2000 compliant. Our failure to complete such
work prior to December 31, 1999 could seriously harm our business, financial
condition and results of operations. Furthermore, the purchasing patterns of
customers or potential customers may be affected by Year 2000 issues as
companies expend significant resources to correct their current systems for Year
2000 compliance. These expenditures may result in reduced funds available to
purchase products and services such as those offered by Avant!, which could
seriously harm Avant!'s business, operating results and financial condition.
- COSTS
Avant! does not have a project tracking system that tracks the cost and time
that its own internal employees spend on the Year 2000 project. Based on
Avant!'s assessment, the costs incurred to date have had no material impact on
Avant!'s results of operations. Avant! expects that costs directly related to
Year 2000 compliance in excess of normal upgrade and maintenance costs will not
exceed approximately $250,000 for both costs incurred to date and future costs.
- CONTINGENCY PLANS
Avant! does not presently have a contingency plan for handling Year 2000
problems that are not detected and corrected prior to their occurrences. Upon
completion of testing and implementation activities, Avant! will be able to
assess the areas requiring contingency planning and expects to develop
appropriate planning at that time. Any failure of Avant! to address any
unforeseen Year 2000 problems would seriously harm Avant!'s business, financial
condition and results of operations.
FORWARD LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference herein,
contains forward-looking statements. Statements contained in this prospectus or
incorporated by reference herein that are not purely historical are
forward-looking statements within the meaning of Section 27 of the Securities
Act and Section 21 of the Exchange Act, including without limitation statements
regarding Avant!'s expectations, beliefs, intentions or strategies regarding the
future. Avant! believes that all forward looking statements included in this
document comply with the requirements of the Securities Act and the Exchange
Act. All forward-looking statements included in this document are based on
information available to Avant! on the date hereof, and Avant! assumes no
obligation to update any such forward-looking statements. A forward-looking
statement involves a prediction, the accuracy of which is subject to risks and
uncertainties. Avant!'s actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including, but not limited to, those set forth in this prospectus under "Risk
Factors." You should carefully consider the risks described in the "Risk
Factors" section, in addition to the other information set forth in this
prospectus and incorporated by reference herein, before making an investment
decision.
USE OF PROCEEDS
All net proceeds from the sale of the Avant! common stock will go to the
stockholders who offer and sell their shares. Accordingly, Avant! will not
receive any proceeds from the sale of the shares by the selling stockholders.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information, as of January 12, 1999,
with respect to the number of shares of common stock owned by the selling
stockholders named below and as adjusted to give effect to the sale of the
shares offered hereby. The shares are being registered to permit public
secondary trading of the shares, and the selling stockholders may offer the
shares for resale from time to time. Based upon 33,230,232 shares of common
stock outstanding on February 10, 1999, Eliezer Sternheim is the only selling
stockholder that owns more than 1% of the outstanding stock of Avant!. See "Plan
of Distribution."
The shares being offered by the selling stockholders were acquired from
Avant! in Avant!'s acquisition of interHDL, Inc. pursuant to an agreement and
plan of reorganization dated November 4, 1998, as amended on November 12, 1998.
The shares of common stock were issued pursuant to an exemption from the
registration requirements of the Securities Act. The selling stockholders
represented to Avant! that they were acquiring the shares for investment and
with no present intention of distributing the shares.
Avant! has filed with the SEC, under the Securities Act, a registration
statement on Form S-3, of which this prospectus forms a part, with respect to
the resale of the shares from time to time on The Nasdaq National Market or in
privately-negotiated transactions. Avant! has agreed to use its best efforts to
keep such Registration Statement effective until November 13, 1999 or, if
earlier, the date that all shares have been sold.
The shares offered by this prospectus may be offered from time to time by
the selling stockholders named below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
IRA ABRAMOV ...................................... 1,907 1,907 0
575 South Rengstorff Avenue #176
Mountain View, California 94040
OFER ACHLER ...................................... 572 572 0
3168 South Court
Palo Alto, California 94306
RENEE ANDERSON ................................... 5,085 5,085 0
707 Continental Circle #311
Mountain View, California 94040
SANJAY BAJAJ ..................................... 8,104 8,104 0
548 Firloch Avenue #1
Sunnyvale, California 94086
SUDHINDAR BALAKRISHNA ............................ 3,016 3,016 0
175 Calvert Drive #R-202
Cupertino, California 95014
RICHARD ALLAN & SANDRA RAE BOSENKO LIVING 145,765 145,765 0
TRUST ..........................................
701 SE Columbia Shores Blvd. #320
Vancouver, Washington 98661
JUSTINE W. CHEN .................................. 1,033 1,033 0
6618 Mt. Holly Drive
San Jose, California 95120
LILI A. CLAY ..................................... 516 516 0
510 Walker Drive #7
Mountain View, California 94043
PAUL COLWILL ..................................... 2,582 2,582 0
1550 Majorca Drive
Morgan Hill, California 95037
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
ALAIN DARGELAS ................................... 5,681 5,681 0
1957 California Street #23
Mountain View, California 94040
DENNIS DECOSTE ................................... 47,675 47,675 0
220 Wavecrest Avenue
Santa Cruz, California 95060
RODNEY SCOTT DIXON ............................... 9,455 9,455 0
22465 Linda Ann Court
Cupertino, California 95014
WILLIAM A. DUKE .................................. 9,026 9,026 0
1711 Santa Lucia Avenue
San Bruno, California 94066
BRUCE EASTMAN .................................... 45,768 45,768 0
1070 Bryant Avenue
Mountain View, California 94040
ANTHONY H. FRANCOIS .............................. 2,244 2,244 0
1081 Sargent Drive
Sunnyvale, California 94087
DILIP GANPULE .................................... 6,674 6,674 0
1655 Alexander Court
Los Altos, California 94024
SAEID GHAFOURI ................................... 146,839 146,839 0
1304 Tiffany Canyon Court
San Jose, California 95120
CLAUDE B. HAGOPIAN ............................... 834 834 0
505 Cypress Point Drive #301
Mountain View, California 94043
TYEE HARPSTER .................................... 178 178 0
680 Manzanita Way
Woodside, California 94062
ANLING HSU ....................................... 953 953 0
1275 Portland Avenue
Los Altos, California 94024
JYH-HUEI HUANG ................................... 381 381 0
281 West Meadow Drive
Palo Alto, California 94306
LAURIE ISAACSON .................................. 15,256 15,256 0
P.O. Box 20670
Castro Valley, California 94546
KEVIN JORGENSEN .................................. 23,837 23,837 0
6587 Winterset Way
San Jose, California 95120
DANIEL J. KOCHER ................................. 9,535 9,535 0
1272 Sharon Park Drive
Menlo Park, California 94025
MEIR LEVINGER .................................... 5,721 5,721 0
575 South Rengstorff Avenue Apt. #113
Mountain View, California 94040
YAN LIN .......................................... 1,907 1,907 0
427 Acalanes Drive Apt. 6
Sunnyvale, California 94086
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
RUBEN MAGANAS .................................... 953 953 0
550 Piercy Road
San Jose, California 94306
MEIRAV NITZAN .................................... 3,814 3,814 0
575 South Rengstorff Avenue #148
Mountain View, California 94040
DAN Z. PERI ...................................... 7,469 7,469 0
3418 South Court
Palo Alto, California 94306
ARUN RAMACHANDRAN ................................ 41,163 41,163 0
7525 Heatherwood Drive
Cupertino, California 95014
MARISSA REIS ..................................... 3,814 3,814 0
676 Bellflower #38
Sunnyvale, California 94086
BEN RENDEL ....................................... 2,860 2,860 0
22 Tel Chai Str
Ranana 43405
Israel
RONALD A. ROHRER ................................. 19,070 19,070 0
2310 Vintage Hill Drive
Durham, North Carolina 27712
MICHELLE ROSENBERG ............................... 1,787 1,787 0
1039L El Monte Avenue #232
Mountain View, California 94040
STEVEN E. SCHER .................................. 1,986 1,986 0
137 Dartmouth Drive #4
San Mateo, California 94402
BEN SHELEF ....................................... 953 953 0
19046 Laurel Drive
Los Gatos, California 95033
RAJVIR SINGH ..................................... 157,407 157,407 0
1055 Fremont Avenue
Los Altos, California 94024
SWADESH SINGH .................................... 47 47 0
1055 Fremont Avenue
Los Altos, California 94024
DANIEL C. SKILKEN ................................ 1,907 1,907 0
17960 Andrews Street
Monte Sereno, California 95030
JEFFREY L. SOBIERAJ .............................. 5,244 5,244 0
36 Via Di Nola
Laguna Niguel, California 92677
WARREN STAPLETON ................................. 31,465 31,465 0
15935 Camino Del Cerro
Los Gatos, California 95032
WARREN STAPLETON AND PAMELA STAPLETON ............ 7,866 7,866 0
15935 Camino Del Cerro
Los Gatos, California 95032
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
ELIEZER STERNHEIM ................................ 345,326 345,326 0
3489 South Court Street
Palo Alto, California 94306
YONA STERNHEIM ................................... 47 47 0
3489 South Court Street
Palo Alto, California 94306
LEK TAYLOR ....................................... 2,065 2,065 0
2305 Old Post Way
San Jose, California 95132
PETER S. TESHIMA ................................. 41,080 41,080 0
2947 Shannon Court
Santa Clara, California 95051
ASHWATH THIRUMALAI ............................... 2,065 2,065 0
100 North Whisman Road, #230
Mountain View, California 94043
TRICONT ASSOCIATES, LTD. ......................... 68,652 68,652 0
P.O. Box 3412
Jerusalem, Israel 91033
JEFFREY M. WEINBERG .............................. 4,628 4,628 0
1239 Sabal Drive
San Jose, California 95132
JEFFREY M. WEINBERG & MELINDA L. WEINBERG ........ 2,840 2,840 0
1239 Sabal Drive
San Jose, California 95132
VANCE WILLIAM .................................... 953 953 0
1402 East San Fernando Street
San Jose, California 95116
--------- ------------- -
TOTALS.......................................... 1,256,005 1,256,005 0
--------- ------------- -
--------- ------------- -
</TABLE>
17
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereby may be sold by the selling stockholders at various
times in one or more of the following transactions:
- in the over-the-counter market;
- on The Nasdaq National Market;
- in privately negotiated transactions; or
- in a combination of any of the above transactions.
The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
The selling stockholders may use broker-dealers to sell their shares. If
this happens, broker-dealers will either receive discounts or commissions from
the selling stockholders, or they will receive commissions from purchasers of
shares for whom they acted as agents.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Avant! consists of 75,000,000 shares of
common stock, and 5,000,000 shares of preferred stock, $.0001 par value. As of
February 10, 1999, there were 33,230,232 shares of common stock issued and
outstanding and no shares of preferred stock issued and outstanding.
COMMON STOCK
Holders of shares of Avant! common stock are entitled to one vote per share
on all matters to be voted on by stockholders. Subject to the preferences that
may be applicable to any outstanding preferred stock, holders of Avant! common
stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Avant! board of directors out of funds legally
available therefor. In the event of a liquidation, dissolution, or winding up of
Avant!, holders of Avant! common stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of the preferred stock, if any, then outstanding. Holders of Avant!
common stock have no preemptive or conversion rights or other subscription
rights. No redemption or sinking fund provisions apply to the common stock. All
outstanding shares of Avant! common stock are fully paid and nonassessable.
PREFERRED STOCK
Avant!'s certificate of incorporation authorizes 5,000,000 shares of
preferred stock. The Avant! board of directors has the authority to cause Avant!
to issue the preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences
and the number of shares constituting any series or the designation of such
series, without any further vote or action by the stockholders. In connection
with the rights agreement (described below), Avant! has authorized a series of
75,000 shares of preferred stock designated Series A Junior Participating
Preferred Stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of Avant! without further
action by the stockholders and could adversely affect the rights and powers,
including voting rights, of the holders of Avant! common stock. In certain
circumstances, this could have the effect of decreasing the market price of the
Avant! common stock. At present, Avant! has no plans to issue any of the
preferred stock. For a description of the terms of the Series A Junior
Participating Preferred Stock, see "--Antitakeover Effects of Rights Plan,
Provisions of the Certificate of Incorporation, Bylaws and Delaware Law;
Preferred Stock Rights Plan."
18
<PAGE>
ANTITAKEOVER EFFECTS OF RIGHTS PLAN, PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE LAW
PREFERRED STOCK RIGHTS PLAN
On September 4, 1998, our board of directors declared a dividend of one
preferred share purchase right for each share of common stock outstanding on
October 2, 1998. Each preferred share purchase right entitles the registered
holder to purchase from Avant! one one-thousandth of a share of Series A Junior
Participating Preferred Stock of Avant! at a price of $100.00 per one
one-thousandth of a preferred share. The description and terms of the preferred
share purchase rights are set forth in full in a rights agreement between Avant!
and Harris Trust Company of California.
Until the public announcement or disclosure that a person or group of
affiliated or associated persons has acquired certain beneficial ownership of
Avant! or, unless our board of directors determines otherwise, the commencement
of, or announcement of an intention to make, a tender or exchange offer for more
than 15% (or in the case of certain persons, a greater percent) of Avant! common
stock, the preferred share purchase rights will be transferred with and only
with the common stock. As soon as practicable after one of these events,
separate certificates evidencing the preferred share purchase rights will be
mailed to holders of record of the common stock as of the close of business on
the date of the event that triggered the distribution of the preferred share
purchase rights.
Upon the acquisition of more than 15% (or in the case of certain persons, a
greater percent) of Avant! common stock, the preferred share purchase rights
owned by a person or group of affiliated or associated persons whose ownership
is in excess of such percentage shall immediately become void. However, after
the occurrence of such aquisition, all other holders of a preferred share
purchase right will thereafter have the right to receive upon exercise of the
right that number of shares of common stock having a market value of two times
the exercise price of the preferred share purchase right. If Avant! does not
have a sufficient number of shares of common stock to satisfy the obligation to
issue common stock, or if the board of directors so elects, Avant! shall deliver
upon payment of the exercise price of a preferred share purchase right an amount
of cash or securities equivalent in value to the common stock issuable upon
exercise of a preferred share purchase right.
In the event that, at any time after the purchase of sufficient shares to
trigger the bargain purchase right described in the previous paragraph, Avant!
is acquired in a merger or other business combination transaction or 50% or more
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a preferred share purchase right will thereafter
have the right to receive, upon the exercise of the right at the then current
exercise price of the preferred share purchase right, that number of shares of
common stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the preferred share
purchase right.
At any time after the purchase of sufficient shares to trigger the bargain
purchase right described above and prior to the acquisition by any person or
group of a majority of the outstanding shares of common stock, the board of
directors of Avant! may exchange the preferred share purchase rights (other than
preferred share purchase rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one share of common stock
per preferred share purchase right (subject to adjustment).
The preferred share purchase rights are not exercisable until the occurrence
of one of the events described above that triggers the distribution of the
rights. The preferred share purchase rights will expire on September 4, 2008,
unless the expiration date is extended or unless the preferred share purchase
rights are earlier redeemed by Avant!. Until a preferred share purchase right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
Avant!.
The preferred share purchase rights have certain anti-takeover effects. The
preferred share purchase rights will cause substantial dilution to a person or
group that attempts to acquire Avant! without
19
<PAGE>
conditioning the offer on the preferred share purchase rights being redeemed.
However, the preferred share purchase rights should not interfere with any
tender offer or merger approved by Avant! because the preferred share purchase
rights may be redeemed by the board of directors at any time prior to the
purchase of more than 15% (or in the case of certain persons, a greater percent)
of Avant! common stock.
CERTIFICATE OF INCORPORATION AND BYLAWS
Avant!'s certificate of incorporation provides that all stockholder action
must be effected at a duly called meeting and not by a consent in writing. In
addition, Avant!'s amended and restated bylaws do not permit stockholders of
Avant! to call a special meeting of stockholders and also require stockholders
to give timely prior notice for director nominations or other business that a
stockholder wishes to properly bring before a meeting of stockholders. These
provisions of the certificate of incorporation and bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of Avant!. Such provisions are intended to enhance the likelihood of continuity
and stability in the composition of the Avant! board of directors and in the
policies formulated by the Avant! board of directors and to discourage certain
types of transactions that may involve an actual or threatened change of control
of Avant!. In addition, these provisions are designed to reduce the
vulnerability of Avant! to an unsolicited acquisition proposal and are intended
to discourage certain tactics that may be used in proxy fights. However, such
provisions could have the effect of discouraging others from making tender
offers for Avant!'s shares and, as a consequence, they also may inhibit
fluctuations in the market price of Avant!'s shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of Avant!.
DELAWARE ANTITAKEOVER STATUTE
Because we are incorporated in Delaware, we are subject to Section 203 of
the Delaware General Corporation Law. These provisions prohibit certain large
stockholders, in particular those owning 15% or more of our outstanding voting
stock, from consummating a merger or business combination with Avant!, unless
(a) 66 2/3% of the shares of voting stock not owned by this large stockholder
approve the merger or business combination or (b) our board of directors
approves the merger or business combination or the transaction that resulted in
the large stockholder owning 15% or more of our outstanding voting stock.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for Avant!
by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Menlo Park,
California.
EXPERTS
The consolidated balance sheets of Avant! and its subsidiaries as of
December 31, 1997 and 1996 and the consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three year
period ended December 31, 1997 incorporated in this prospectus by reference from
Avant!'s June 11, 1998 Current Report on Form 8-K/A are incorporated herein by
reference in reliance upon the reports of KPMG LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Technology Modeling Associates,
Inc. as of December 31, 1996 incorporated in this prospectus by reference from
Avant!'s June 11, 1998 Current Report on Form 8-K/A have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference in reliance upon the
authority of said firm as experts in giving said reports.
20
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We 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 rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at "http://www.sec.gov."
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 information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
2. Quarterly Report on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
3. Current Reports on Form 8-K dated January 30, 1998, September 18, 1998,
November 19, 1998 and December 22, 1998;
4. Current Report on Form 8-K/A dated June 11, 1998; and
5. The description of Avant!'s Common Stock contained in its Registration
Statement on Form 8-A as filed with the Commission on April 12, 1995.
You may request a copy of these filings, at no cost, by writing to us at the
following address:
Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538
Attn: Investor Relations
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
21
<PAGE>
1,256,005 SHARES
AVANT! CORPORATION
COMMON STOCK
------------------
FEBRUARY , 1999
------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............ $ 6,023.17
Legal Fees and Expenses........................................ 150,000.00
Accounting Fees and Expenses................................... 50,000.00
Transfer Agent and Registrar Fees.............................. 2,500.00
Miscellaneous.................................................. 1,476.83
----------
Total........................................................ $210,000.00
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than action by or in the right of such corporation), by reason of the fact that
such person was an officer or director of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided that such officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe his
conduct was illegal. A Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation in the
performance of his duty. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.
In accordance with the DGCL, Avant!'s Certificate of Incorporation
("Certificate") contains a provision to limit the personal liability of the
directors of Avant! for violations of their fiduciary duty as a director. This
provision eliminates each director's liability to Avant! or its stockholders for
monetary damages except (i) for any breach of the director's duty of loyalty to
Avant! or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL providing for liability of directors for unlawful
payment of dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
Article XI of Avant!'s Certificate and Article VII, Section 6 of Avant!'s
Bylaws provide for indemnification of the officers and directors of Avant! to
the fullest extent permitted by applicable law.
Avant! has entered into indemnification agreements with each director and
executive officer which provide indemnification to such directors and executive
officers under certain circumstances for acts or omissions which may not be
covered by directors' and officers' liability insurance.
II-1
<PAGE>
ITEM 16. EXHIBITS.
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and of Reorganization dated November 4, 1998, as amended on November 12, 1998, by and among
the Company, Artemis Merger Corporation and interHDL, Inc. (1)
3.1* Amended and Restated Certificate of Incorporation, as amended to date.
3.2 Amended and Restated Bylaws. (2)
3.3 Certificate of Designation. (3)
4.1* Registration Rights Agreement, dated November 13, 1998.
4.2 Specimen Common Stock Certificate. (4)
4.3 Rights Agreement, dated September 4, 1998 between the Company and Harris Trust Company of California.
(3)
5.1* Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
23.1 Consent of KPMG LLP.
23.2* Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP (included in the opinion filed
as Exhibit 5.1).
23.3 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (reference is made to the signature page of this Registration Statement).
</TABLE>
- ------------------------
* Previously filed
(1) Incorporated by reference from the Company's Registration Statement on Form
8-K filed with the SEC on November 19, 1998.
(2) Incorporated by reference from the Company's Registration Statement on Form
8-K filed with the SEC on September 18, 1998.
(3) Incorporated by reference from the Company's Registration Statement on Form
8-A filed with the SEC on September 18, 1998.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1 (File No. 33-91128) as declared effective on June 6, 1995.
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; (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 the 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.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the 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
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 1934 Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
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 Fremont, State of California, on this 12th day of
February, 1999.
AVANT! CORPORATION
By: /s/ GERALD C. HSU
------------------------------
Gerald C. Hsu
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
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>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- --------------------
<C> <S> <C>
/s/ GERALD C. HSU Chairman of the Board,
- ------------------------------ President and Chief February 12, 1999
Gerald C. Hsu Executive Officer
Head of Finance and
* Administration (Principal
- ------------------------------ Financial and Accounting February 12, 1999
Peter Teshima Officer)
*
- ------------------------------ Director February 12, 1999
Eric A. Brill
*
- ------------------------------ Director February 12, 1999
Charles L. St. Clair
*
- ------------------------------ Director February 12, 1999
Monyuki Chimura
*
- ------------------------------ Director February 12, 1999
Dan Taylor
</TABLE>
<TABLE>
<S> <C> <C>
*By: /s/ GERALD C. HSU
-------------------------
Gerald C. Hsu
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Avant! Corporation
We consent to incorporation by reference herein of our reports dated May 22,
1998, relating to the consolidated balance sheets of Avant! Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1997, and the related schedule,
which reports appear in the June 11, 1998 current report on Form 8-K/A of Avant!
Corporation, and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
Mountain View, California
February 12, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated January
24, 1997 on the December 31, 1996 consolidated financial statements of
Technology Modeling Associates, Inc. included in Avant! Corporation's Form 8-K/A
filed with the Securities Exchange Commission on June 11, 1998, and to all
references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
San Jose, California
February 10, 1999
