Prospectus Summary
You should read the following summary, together with the more detailed information regarding our company, especially the "Risk Factors" section, and our financial statements and notes to those statements appearing elsewhere in this prospectus, before deciding to invest in shares of our common stock.
Our Business
We are a leading provider of software products that enable the rapid and effective design and verification of semiconductors for Internet infrastructure, including next generation networking and communications equipment, as well as various electronic devices. We benefit both from the rapid growth of the Internet, which creates strong demand for new networking and communications equipment, and from continual innovation in these markets, which produces ever shorter product life cycles and an expanded number of new design starts. Manufacturers of networking and communications equipment increasingly respond to competitive pressures by using large, complex semiconductors such as field programmable gate arrays, or FPGAs, to deliver new product features and shorten the time between design and full production, known as time to market. Our software products perform essential steps in the process of designing and verifying complex semiconductors, including application specific integrated circuits, known as ASICs, system on a chip ASICS that include microprocessors, known as SoCs, and, in particular, high-end FPGAs. We employ proprietary logic synthesis and physical synthesis technology to simplify, improve and accelerate the design and verification of these complex semiconductors. We have sold our software products to over 1,300 corporations, governmental agencies and other organizations including leading Internet infrastructure and next generation networking customers, such as Alcatel Business Systems, Ascend Communications Inc., Cisco Systems Inc., LM Ericsson, Lucent Technologies Inc., Motorola Inc., Nortel Networks Corporation, Siemens AG and Tellabs Inc.
The growth in Internet traffic and increased demand for bandwidth have resulted in the rapid deployment of high speed communications equipment, known as next generation networking equipment. Intense competition and the constant evolution of standards by which networking and communications equipment manufactured by different vendors can communicate increases pressure on equipment providers to design next generation products quickly. Their need for improved performance and interoperability is accelerating the design cycle for a variety of networking and communications equipment including fiber optic backbone equipment, broadband access equipment, routers, switches, satellite devices and wireless base stations. Dataquest, a market research firm, projects that the worldwide market size for telecommunications equipment will be approximately $314 billion in 2003. The expanded capacity and performance of ASICs and SoCs, along with the relative ease of use and design flexibility of FPGAs, have given rise to their use in core Internet infrastructure applications. Dataquest also expects that spending for semiconductor components of Internet-specific applications will reach $39.5 billion per year by 2003.
Our software solutions enable customers to design and verify large, complex, high performance semiconductors quickly and intuitively. Our Synplify and Synplify Pro FPGA logic synthesis products use our proprietary Behavior Extracting Synthesis Technology to quickly transform high-level semiconductor design specifications into a format ready for implementation in a high performance semiconductor. Our HDL Analyst product enables designers to visualize and identify design bottlenecks and potential improvements using an intuitive graphical interface. Our Amplify Physical Optimizer product uses and improves physical implementation information for large, complex FPGAs to create faster semiconductors in a shorter period of time. In addition, our Certify ASIC and SoC verification product facilitates design verification at or near real-time speeds -- a distinct advantage when designing semiconductors for data intensive applications such as data networking or streaming media. We believe our software products, coupled with our expert customer support, enable our customers to meet performance goals and decrease the time to market of their products.
We intend to enhance and expand our semiconductor logic synthesis, physical synthesis and verification product offerings by continuing to invest in research, development and product innovation. Specifically, we intend to focus our research and development efforts on our industry leading FPGA design software as larger and more complex programmable semiconductors become increasingly used in next generation networking and communications equipment. In addition, we plan to continue expanding our strategic relationships with leading manufacturers and suppliers of FPGAs to enhance the full value, flexibility and depth of our product offerings. By doing so, we plan to strengthen our position as a leading provider of software solutions for manufacturers of Internet infrastructure and next generation networking and communications equipment.
Our total revenue was $11.0 million in 1998, $18.2 million in 1999 and $13.9 million in the six months ended June 30, 2000. Our net losses were $3.6 million, $6.9 million and $2.8 million for the same periods. Our total accumulated deficit was $4.2 million as of December 31, 1998, $11.2 million as of December 31, 1999 and $14.0 million as of June 30, 2000.
Corporate Information We incorporated in California on February 1, 1994 under the name Elemental Logic, Inc. We changed our name to Synplicity, Inc. on February 22, 1994 to represent the functionality of our products as simple to use synthesis solutions. Our principal executive offices are located at 935 Stewart Drive, Sunnyvale, California 94086. Our telephone number is (408) 215-6000. You can access our web site at www.synplicity.com. Information contained on our web site is not a part of this prospectus.
The Offering
Common stock offered............................... shares Common stock to be outstanding after the offering.. shares Use of proceeds.................................... General corporate purposes, including funding our operations, working capital, repayment of a term loan, capital expenditures and potential acquisitions of complementary businesses, products and technologies.
Proposed Nasdaq National Market symbol............. SYNP The above information is based on 19,194,580 shares outstanding as of June 30, 2000 and excludes:
. 4,137,814 shares issuable upon exercise of options outstanding at a weighted average exercise price of $2.86 per share as of June 30, 2000;
. 14,035 shares issuable upon exercise of warrants outstanding at a weighted average exercise price of $4.28 per share as of June 30, 2000; and . a total of 3,399,998 shares available for future issuance under our various stock plans as of June 30, 2000, excluding the annual increases in the number of shares authorized under each of our stock plans beginning January 1, 2001. See "Management--Incentive Plans" for a description of how these annual increases are determined.
Subsequent to June 30, 2000, we have not granted any additional options or warrants or issued any new shares except pursuant to the exercise of outstanding options.
Other Information
Unless otherwise noted, this prospectus assumes:
. the completion of our two-for-three reverse stock split in July 2000;
. the automatic conversion of 888,885 shares of our outstanding series A preferred stock into 1,777,770 shares of common stock and an aggregate of 2,526,313 shares of our outstanding series B preferred stock and series C preferred stock into 2,526,313 shares of common stock upon the closing of this offering;
. the filing of our amended and restated articles of incorporation authorizing a class of 10,000,000 shares of undesignated preferred stock upon the closing of this offering; and . no exercise by the underwriters of their option to purchase additional shares of our common stock in this offering.
Summary Consolidated Financial Information (in thousands, except per share data) The following table sets forth a summary of our consolidated statement of operations data for the periods presented. We incurred $175,000 of expense related to amortization of stock compensation in 1999, $4,000 in the six months ended June 30, 1999 and $386,000 in the six months ended June 30, 2000. The pro forma basic and diluted net loss per share for the year ended December 31, 1999 and the six months ended June 30, 2000 gives effect to the conversion of our convertible preferred stock (using the if-converted method) from the original date of issuance.
Six Months
Year Ended December 31, Ended June 30,
1995 1996 1997 1998 1999 1999 2000
(unaudited)
Consolidated Statement of Operations Data: Total revenue........... $ 365 $1,798 $ 5,454 $11,028 $18,175 $ 8,082 $13,860 Gross profit............ 347 1,755 5,293 10,349 16,749 7,438 13,087 Loss from operations.... (17) (22) (519) (3,619) (6,933) (3,501) (2,904) Net loss................ (16) (13) (472) (3,638) (6,940) (3,548) (2,827) Basic and diluted net loss per common share.. $(0.01) $ 0.0 $ (0.04) $ (0.29) $ (0.52) $ (0.27) $ (0.20) Shares used in per share calculation............ 2,171 6,667 11,954 12,451 13,227 13,054 13,820 Pro forma basic and diluted net loss per common share (unaudited)............ $ (0.42) $ (0.16) Shares used in pro forma per share calculation.. 16,432 17,742 The following table sets forth a summary of our consolidated balance sheet data as of June 30, 2000:
. on an actual basis; and
. on a pro forma basis to reflect the automatic conversion of our
outstanding preferred stock upon the closing of this offering and our
receipt of the estimated net proceeds from the sale of shares
of common stock by us in this offering at an estimated initial public
offering price of $ per share, after deducting the estimated
underwriting commissions and discounts and estimated offering expenses.
As of June 30, 2000 Pro Forma Actual As Adjusted (unaudited)
Consolidated Balance Sheet Data: Cash and cash equivalents................................. $ 8,248 $ Working capital........................................... 1,496 Total assets.............................................. 14,011 Total current liabilities................................. 10,082 Long-term obligations, less current portion............... 584 Accumulated deficit....................................... (13,990) Total shareholders' equity................................ 3,345