Prospectus Summary
The following summary highlights basic information about us and this offering contained more fully elsewhere in this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire prospectus carefully, including the section entitled "Risk Factors" and the financial statements and the related notes to those statements included in this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward- looking statements as a result of factors described under the heading "Risk Factors," "Management's Discussion and Analysis and Financial Condition and Results of Operations" and "Business" as well as discussions elsewhere in this prospectus.
Centillium Communications, Inc.
Centillium provides technologies that enable broadband communications to the home and business enterprise. Our system-level products integrate our programmable digital signal processor, our communications algorithms, our highly integrated mixed-signal chip, our highly integrated digital chip and our related software. We provide broadband equipment vendors with system-level products for the DSL market and are leveraging our technology to develop products for complementary markets which share common technologies and customers. We have near-term plans to release products that target the voice over packet and home networking markets. Our core technology and expertise have enabled us to establish a viable product roadmap within these three complementary markets.
As more consumers and businesses have begun to rely on the Internet and communications networks, the demand for access to these networks has accelerated. In addition, the demand for access is increasing as more and more small businesses, self-employed individuals and corporate telecommuters are regularly accessing the Internet and other communications networks. Many users are also demanding the same access speeds from their home offices that they experience at corporate locations. To meet the demand for high-speed, broadband data transmission, network service providers have begun deploying digital subscriber line, or DSL technology.
DSL enables data transmission speeds of 128 Kbps to 52 Mbps using the telephone company's existing copper wire infrastructure and delivers "always on" availability, eliminating the tedious dial-up process associated with traditional analog modem technologies. DSL is a point-to-point technology that connects the end user to the local phone company's central office or to an intermediate hub. DSL equipment is deployed at each end of the copper wire and the transmission speed depends on the length and condition of the existing wire as well as the capabilities of the DSL equipment.
As network access providers deploy DSL services, demand is emerging for complementary networking technologies. Two of these technologies are voice over packet, which allows integrated transmission of voice and data, and home networking, which enables users to share high bandwidth resources throughout the home. As equipment manufacturers continue to develop the DSL, voice over packet and home networking markets, they face significant challenges. Several of these challenges include:
. constantly evolving technology and networking standards;
. size constraints;
. power constraints; and . shorter product life-cycles.
Our products allow communications equipment vendors to meet these challenges by providing:
. flexibility due to programmable DSP architecture;
. high levels of semiconductor integration allowing reduced size;
. low power consumption; and . fast time-to-market.
Our objective is to be the leading provider of system-level products for equipment manufacturers serving the broadband communications markets. We intend to achieve this objective by:
. targeting complementary broadband communications markets;
. strengthening and expanding our strategic relationships;
. extending our technology leadership;
. leveraging our system-level expertise; and . pursuing strategic acquisitions.
We outsource the manufacturing of our products which allows us to focus our resources on design, development and marketing efforts within our target markets. We have announced design wins with 17 customers, and have shipped our products to 13 of those customers to be used in their products. Our largest customers, based on 1999 revenue, include Sumitomo Electric Industries, NEC, Mitsubishi Electric and Copper Mountain Networks.
We were incorporated in February 1997. Our principal executive offices are located at 47211 Lakeview Boulevard, Fremont, CA 94538 and our telephone number is (510) 771-3700.
The Offering
Common stock offered in this offering............... shares Common stock to be outstanding after this offering.. shares Use of proceeds..................................... For general corporate purposes and working capital, including expected operating expenses, and potential acquisitions. See "Use of Proceeds." Proposed Nasdaq National Market symbol.............. CTLM The total number of outstanding shares of our common stock above is based on:
. 10,318,841 shares of our common stock outstanding as of December 31, 1999; and . the automatic conversion of all outstanding shares of preferred stock upon completion of this offering into 15,450,236 additional shares of common stock.
The total number of outstanding shares of our common stock above does not include:
. 3,390,257 shares of common stock issuable upon the exercise of outstanding stock options as of December 31, 1999 at a weighted average exercise price of $1.09 per share;
. 26,750 shares of common stock issuable upon the exercise of outstanding warrants as of December 31, 1999 at a weighted average exercise price of $4.00 per share;
. 4,423,395 shares of common stock available for issuance under our 1997 Stock Plan following this offering; and . 500,000 additional shares of common stock available for issuance under our 2000 Employee Stock Purchase Plan immediately following this offering.
Unless otherwise specifically stated, information throughout this prospectus:
. reflects the conversion of all outstanding shares of preferred stock into shares of common stock automatically upon completion of this offering; and . assumes no exercise of the underwriter's over-allotment option.
Summary Consolidated Financial Information
Period from Fiscal Year
February 21, 1997 Ending December 31,
(inception) to ---------------------
December 31, 1997 1998 1999
(in thousands except per share data)
Consolidated Statement of Operations Data: Total revenues....................... $ 300 $ 752 $ 3,744 Operating loss....................... $(2,102) $ (9,703) $ (19,304) Net loss............................. $(1,937) $ (9,237) $ (18,272) Deemed divided on Series B convertible preferred stock......... $(2,800) $ -- $ -- Net loss applicable to common stockholders........................ $(4,737) $ (9,237) $ (18,272) Historical basic and diluted net loss per share applicable to common stockholders........................ $ (0.59) $ (1.15) $ (2.07) Shares used to compute basic and diluted net loss per share applicable to common stockholders... 8,000 8,056 8,842 Pro forma basic and diluted net loss per share applicable to common stockholders........................ $ (0.84) Shares used to compute pro forma basic and diluted net loss per share applicable to common stockholders... 21,755 December 31, 1999 Pro Forma Actual Pro Forma As Adjusted (in thousands)
Consolidated Balance Sheet Data: Cash and cash equivalents and short-term investments.................................... $28,313 $28,313 $ Working capital................................. $26,043 $26,043 $ Total assets.................................... $35,587 $35,587 $ Long-term debt and capital lease obligations, less current portion........................... $ 549 $ 549 $ Total stockholders' equity...................... $30,055 $30,055 $
See note 1 of notes to consolidated financial statements for an explanation of the determination of the number of shares used in computing per share data.
The pro forma amounts above reflect the conversion of all outstanding shares of preferred stock into shares of common stock upon the completion of this offering.
The pro forma as adjusted amounts above give effect to the sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share, after deducting underwriting discounts and commissions and estimated offering expenses.
In our discussion throughout this prospectus, references to the year ended December 31, 1997 refer to the period from February 21, 1997 (inception) through December 31, 1997.