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WINTEGRA INC
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S-1/A
Jul 9, 5:10 PM ET
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WINTEGRA INC S-1/A
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284
Registration No. 333-166650
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
AMENDMENT NO. 2TOFORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WINTEGRA, INC.
6850 Austin Center Blvd., Suite 215Austin, TX 78731(512) 345-3808
Jacob (Kobi) Ben-Zvi President and Chief Executive Officer 6850 Austin Center Blvd., Suite 215Austin, TX 78731(512) 345-3808
Subject to Completion, dated July 9, 2010.
PROSPECTUS
Wintegra, Inc.
WINTEGRA, INC.
TABLE OF CONTENTS
PROSPECTUS SUMMARY
Our Company
Our Industry
Our Competitive Strengths
Our Growth Strategies
Risk Factors
Company Information
THE OFFERING
SUMMARY CONSOLIDATED FINANCIAL DATA
RISK FACTORS
Risks Related to Our Business
The demand for our solutions depends in large part on continued capital spending by communications service providers on infrastructure to provide high-capacity wireless and wireline communications services.
Sales of solutions to the mobile backhaul market have represented a significant portion of our revenue from 2008 to date, and any deterioration in demand for mobile backhaul solutions would adversely affect our results of operations and future prospects.
Our efforts to expand our sales to other communications infrastructure markets may not result in significant revenue and may cause our profit margins to decline.
We rely on Taiwan Semiconductor Manufacturing Company, Ltd., or TSMC, and on Texas Instruments, Incorporated, or TI, to manufacture and Advanced Semiconductor Engineering, Inc., or ASE, to assemble and test our current solutions. If we fail to secure and maintain sufficient capacity with these subcontractors and fail to secure alternative sources, we may be unable to meet our customers’ demand on a timely basis, which would negatively impact our market share and operating results.
We incurred operating losses in the past and may not sustain or increase our profitability.
Because we depend on a relatively small number of customers for a substantial portion of our revenue, a significant decline in these customers’ demand for our solutions or loss of a key customer or our failure to attract new significant customers could adversely impact our revenue and harm our business.
Due to the cyclical nature of the semiconductor industry, our operating results may fluctuate significantly, which could adversely affect our business and the market price of our common stock.
Our sales are subject to a competitive selection process that can be lengthy and requires us to incur significant expense, and we ultimately may not be selected.
Even after we achieve a design win, a customer may decide to cancel or change its product plans, or may fail to commercialize its products, either of which could cause us to fail to generate sales from a particular solution and adversely affect our results of operations.
We base our orders for inventory on our forecasts of our customers’ demand. If our forecasts are inaccurate, our financial condition and results of operations will suffer.
The average selling prices for our network processor solutions have historically declined and will likely continue to do so in the future, which could harm our revenue and gross profits.
We face intense competition in the semiconductor industry, which could negatively impact our revenue.
We have experienced rapid growth since the fourth quarter of 2009, and if we cannot adequately manage our growth, our results of operations will suffer.
If we fail to secure or protect our intellectual property rights, other persons or entities may be able to use our technologies, which could weaken our competitive position, reduce our revenue or increase our costs.
We have a limited patent portfolio and may be exposed to competitors who independently develop the same or similar technology or gain access to our knowledge.
We may be subject to claims of infringement, misappropriation or misuse of third party intellectual property rights or demands that we license third party technology or claims for indemnification that, regardless of merit, could result in significant expense and loss of our intellectual property rights.
If we fail to keep pace with technological advances in our industry or if we pursue technologies that do not become commercially accepted, our business, financial condition and results of operations may be adversely affected.
Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business, fluctuations in currency exchange rates and other factors related to our international operations.
The facilities that manufacture, assemble and test our products, and many of our customers and their service provider customers, are located in regions that are subject to earthquakes and other natural disasters.
We rely on third party sales representatives to assist in selling our solutions, and the failure of these representatives to perform successfully could reduce our future sales.
Because many of our current and planned solutions are highly complex, they may contain defects or errors that are detected only after deployment in commercial applications. Moreover, our customers may bundle our solutions with the products of other providers that contain defects that are wholly unrelated to our solutions. In either instance, if this occurs, it could harm our reputation and result in reduced revenue or increased expenses.
We may be unable to attract, retain and motivate key senior management and technical personnel, which could harm our development of technology and ability to be competitive.
Unanticipated changes to our tax rates or exposure to additional income and other tax liabilities could affect our future operating results.
Under current U.S. and Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of our former employees.
We may acquire complementary businesses or technologies or engage in joint ventures or other transactions that may expand our business. These transactions could divert our resources, cause dilution to our stockholders and adversely affect our results of operations.
Risks Related to Our Operations in Israel
Potential political, economic and military instability in Israel, where the majority of our senior management and our research and development facilities are located, may adversely affect our results of operations.
Our operations may be disrupted by the obligations of our personnel to perform military service.
Because substantially all of our revenue and a majority of our cost of revenue are denominated in U.S. dollars, but a substantial portion of our operating expenses are incurred in NIS, our results of operations may be seriously harmed by currency fluctuations.
The Israeli tax benefits to which we are currently entitled require us to meet several conditions and may be terminated or reduced in the future, which would increase our taxes.
You may have difficulties pursuing an action in the United States or enforcing a U.S. judgment, including actions or judgments based upon the civil liability provisions of the U.S. federal securities laws, against us, our executive officers and directors and the experts named in this prospectus, or asserting U.S. securities laws claims in Israel.
Risks Related to This Offering
Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.
Substantial future sales of our common stock in the public market could cause our stock price to fall.
Because of their significant stock ownership, our officers, directors and principal stockholders will be able to exert significant influence over our future direction.
We may apply the proceeds of this offering to uses that do not improve our operating results or increase the value of your investment.
Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.
Because we have no plans to pay dividends on our common stock, investors must look solely to stock appreciation for a return on their investment in us.
We will incur increased costs as a result of being a public company.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and investors’ views of us.
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
SELECTED CONSOLIDATED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Application of Critical Accounting Policies and Estimates
Revenue Recognition
Allowance for Doubtful Accounts
Deferred Taxes
Long-lived Assets
Inventory Valuations
Accounting for Stock-Based Compensation
Results of Operations
Comparison of Three Months Ended March 31, 2010 to Three Months Ended March 31, 2009
Comparison of Year Ended December 31, 2009 to Year Ended December 31, 2008
Comparison of Year Ended December 31, 2008 to Year Ended December 31, 2007
Quarterly Results of Operations
Liquidity and Capital Resources
Operating Activities
Investing Activities
Financing Activities
Off-Balance Sheet Arrangements
Contractual Commitments
Recent Accounting Pronouncements
Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Risk
Interest Rate Sensitivity
BUSINESS
Industry Background
Mobile Data and Video Trends in the Communications Industry
Trends in Networking
Challenges Faced by Communications Infrastructure OEMs
Our Competitive Strengths
Our Growth Strategies
Our Products
Technology
Proprietary Network Processor Architecture
Software
Customers
Sales and Marketing
Customer Service and Technical Support
Research and Development
Intellectual Property
Manufacturing
Competition
Employees
Facilities
Legal Proceedings
MANAGEMENT
Executive Officers and Directors
Board of Directors
Board Committees
Compensation Committee Interlocks and Insider Participation
Director Compensation
2009 Director Compensation
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Objectives
Informal Review of Competitive Market Practices
Framework for Determining Executive Compensation
Assessment of Individual Performance
Jacob (Kobi) Ben-Zvi—President and Chief Executive Officer
Shai Shahar—Chief Financial Officer
Robert O’Dell—Executive Vice President of Marketing and Sales
Yoram Yeivin—Senior Vice President of Engineering
Ricardo Berger—Vice President and Chief Technology Officer
Elements of Compensation
Base Salary
Annual Discretionary Cash Bonus Program
Equity Awards
Other Compensation
Defined Contribution Plans
Change of Control Severance Arrangements
Perquisites and Other Benefits
Policies with Respect to Equity Compensation Awards
EXECUTIVE COMPENSATION TABLES
2009 Summary Compensation Table
2009 Grants of Plan-Based Awards
Outstanding Equity Awards at December 31, 2009
Employment Agreements; Change in Control Arrangements; and Potential Payments Upon Termination or Change in Control
Employee Benefit and Stock Plans
2000 Share Option Plan
2003 Share Option Plan
2006 Equity Incentive Plan
401(k) Plan
Israeli Managers’ Insurance Disclosure
Limitations of Liability and Indemnification Matters
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Transactions with Tenaya Capital and Texas Instruments
2008 Stock Option Exchange Program
Registration Rights
Demand registration rights
Piggyback registration rights
Cutback
Expenses
Director and Officer Indemnification and Insurance
Policies and Procedures Regarding Related Party Transactions
PRINCIPAL AND SELLING STOCKHOLDERS
DESCRIPTION OF CAPITAL STOCK
Common Stock
Preferred Stock
Warrants
Registration Rights
Anti-Takeover Effects of Provisions of Our Amended and Restated Certificate of Incorporation, Our Amended and Restated Bylaws and Delaware Law
Certificate of Incorporation and Bylaws
The Delaware General Corporation Law
Transfer Agent and Registrar
Exchange Listing
SHARES ELIGIBLE FOR FUTURE SALE
Lock-up Agreements
Rule 144
Rule 701
Stock Plans
Registration Rights
MATERIAL U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS
Dividends
Sale of Common Stock
Dividends or Gain Effectively Connected With a U.S. Trade or Business
U.S. Federal Estate Tax
Backup Withholding and Information Reporting
New Legislation Relating to Foreign Accounts
UNDERWRITING
Commissions and Expenses
Option to Purchase Additional Shares
Lock-Up Agreements
Offering Price Determination
Indemnification
Stabilization, Short Positions and Penalty Bids
Electronic Distribution
Nasdaq Global Market
Discretionary Sales
Stamp Taxes
Relationships
Selling Restrictions
European Economic Area
United Kingdom
Israel
Hong Kong
Japan
Singapore
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
WINTEGRA, INC. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS
INDEX
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of WINTEGRA, INC. AND SUBSIDIARIES
WINTEGRA, INC. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS In thousands
WINTEGRA, INC. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS In thousands, except share and per share data
WINTEGRA, INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS In thousands, except share and per share data
WINTEGRA, INC. AND ITS SUBSIDIARIES STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY In thousands, except share data
WINTEGRA, INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 1. GENERAL
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 3. INVENTORIES
NOTE 4. PROPERTY AND EQUIPMENT, NET
NOTE 5. INTANGIBLE ASSETS, NET
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 5. INTANGIBLE ASSETS, NET – (continued)
NOTE 6. RELATED PARTY TRANSACTIONS
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES – (continued)
NOTE 8. STOCKHOLDERS' EQUITY
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 8. STOCKHOLDERS' EQUITY – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 8. STOCKHOLDERS' EQUITY – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 8. STOCKHOLDERS' EQUITY – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 8. STOCKHOLDERS' EQUITY – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 8. STOCKHOLDERS' EQUITY – (continued)
NOTE 9. NET INCOME (LOSS) PER SHARE
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 10. TAXES ON INCOME
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 10. TAXES ON INCOME – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 10. TAXES ON INCOME – (continued)
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 11. GEOGRAPHIC AND MAJOR CUSTOMERS INFORMATION
WINTEGRA, INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands, except share and per share data
NOTE 12. FINANCIAL INCOME (EXPENSES), NET
NOTE 13. EVENTS SUBSEQUENT TO DECEMBER 31, 2009
Barclays Capital
Deutsche Bank Securities
Needham & Company, LLCOppenheimer & Co.Roth Capital Partners
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Item 14. Indemnification of Directors and Officers
Item 15. Recent Sales of Unregistered Securities
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
(b) Financial Statement Schedules
Item 17. Undertakings
SIGNATURES
EXHIBIT INDEX
Contents
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