| MMC Networks, Inc. | |||
| Ticker: | MMCN | 1134 East Arques Avenue | |
| Exchange: | NASDAQ-National Market | Sunnyvale, CA 94086 | |
| Industry: | High-Tech (SIC Code 3674) | (408) 731-1600 | |
| # of Employees: | 69 | ||
| Type of Shares: | Common Shares | Filing Date: | 8/20/97 | |
| U.S. Shares: | 3,500,000 | Offer Date: | 10/28/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $7.00 - $8.00 | |
| Primary Shares: | 3,500,000 | Offer Price: | $11.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.77 | |
| Offering Amount: | $26,250,000 | Selling: | $0.46 | |
| Expenses: | $1,000,000 | Reallowance: | $0.10 | |
| Shares Out After: | - |
| Manager | Tier | Phone |
| Morgan Stanley Dean Witter Discover & Co. | Lead Manager | (212) 761-5900 |
| Deutsche Morgan Grenfell | Co-manager | (212) 469-5600 |
| Wessels, Arnold & Henderson | Co-manager | (612) 373-6105 |
| Issuer's Law Firm: | Wilson, Sonsini, Goodrich & Rosati |
| Bank's Law Firm: | Gray Cary Ware & Freidenrich |
| Auditor: | Price Waterhouse |
| Registrar/Transfer Agent: | BankBoston |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 6/30/97 | 6/30/96 | 6/30/97 | ||
| Revenue: | $10.52 | $8.20 | $4.69 | Assets: | $11.73 |
| Net Income: | $0.70 | $0.43 | $0.33 | Curr Assets: | $9.41 |
| EPS: | $0.02 | $0.01 | $0.01 | Liabilities: | $3.01 |
| Prior EPS: | $0.36 | -$0.92 | Curr Liabilities: | $2.56 | |
| Cash Flow/Oper: | -$0.86 | -$0.11 | -$0.04 | Equity: | $8.72 |
| Cash Flow/Fin: | -$0.25 | -$2.11 | $4.09 | Cash: | $5.56 |
| Cash Flow/Inv: | $5.67 | -$2.11 | Working Cap: | $6.85 | |
| Business Description |
| The company is a leading developer and supplier of network processors, high performance, open-architecture, software-programmable processors optimized for network applications. The Company's network processors form the core silicon "engines" of LAN and WAN switches and routers and are designed to allow network equipment vendors to rapidly develop high-performance, feature-rich, cost-effective products supporting a broad range of networking functions. The Company Networks' customers employ the Company's network processors to develop and market multi-gigabit, wire-speed switches and routers with advanced features such as layer 3 switching, internetworking of LANs and WANs, security, class of service, quality of service and network management. The Company's current products, the PS1000 and ATMS2000 families of network processors, provide the core functionality of high-performance Fast Ethernet and Asynchronous Transfer Mode ("ATM") networking equipment, respectively. The Company believes that network equipment vendors are able to reduce design and development costs and accelerate product development cycles for high-performance routers and switches by using the Company's products. All of the Company's products are based on the Company's proprietary ViX architecture, which enables network equipment vendors to easily and cost-effectively implement high-performance, value-added features in their switch and router products. |
| Competition |
| The data networking and semiconductor industries are intensely competitive and are characterized by constant technological change, rapid rates of product obsolescence and price erosion. The Company's PS1000 and ATMS2000 product families compete with products from companies such as Texas Instruments, Lucent Technologies, PMC-Sierra, Galileo Technology, Integrated Telecom and I-Cube. In addition, the Company expects significant competition in the future from major domestic and international semiconductor suppliers. The Company also may face competition from suppliers of products based on new or emerging technologies. Moreover, several established electronics and semiconductor suppliers have recently entered or indicated an intent to enter the switching and routing equipment market. In addition, many of the Company's existing and potential customers internally develop ASICs, general purpose processors, network processors and other devices which attempt to perform all or a portion of the functions performed by the Company's products. Many of the Company's current and prospective competitors offer broader product lines and have significantly greater financial, technical, manufacturing and marketing resources than the Company. In particular, companies such as Texas Instruments and Lucent Technologies have proprietary semiconductor manufacturing ability, preferred vendor status with many of the Company's customers, extensive marketing power and name recognition, greater financial resources than the Company, and other significant advantages over the Company. In addition, current and potential competitors may determine, for strategic reasons, to consolidate, lower the prices of their products substantially or to bundle their products with other products. Current and potential competitors have established or may establish financial or strategic relationships among themselves or with existing or potential customers, resellers or other third parties. Accordingly, it is possible that new competitors or alliances among competitors could emerge and rapidly acquire significant market share. The Company believes that important competitive factors in its market are performance, price, length of development cycle, design wins with major network equipment vendors, support for new data networking standards, features and functionality, adaptability of products to specific applications, support of product differentiation, reliability, technical service and support, and protection of products by effective utilization of intellectual property laws. Failure of the Company to compete successfully as to any of these or other factors could have a material adverse effect on its operating results. The failure of the Company to successfully develop and market products that compete successfully with those of other suppliers in the market would have a material adverse effect on the Company's business, financial condition and results of operations. In addition, the Company must compete for the services of qualified distributors and sales representatives. To the extent that the Company's competitors offer such distributors or sales representatives more favorable terms or a higher volume of business, such distributors or sales representatives may decline to carry, or discontinue carrying, the Company's products. The Company's business, financial condition and results of operations could be adversely affected by any failure to maintain and expand its distribution network. |
| Business Plan |
| The company's strategy is to enable network equipment vendors to rapidly develop and introduce differentiated products by leveraging the high-performance, feature-rich, software-programmable and cost-effective network processors offered by the company. Key elements of the company's strategy include: (I) Target High-Growth Markets, (ii) Facilitate Customer Success, (iii) Extend Technology Leadership and (iv) Leverage Fabless Semiconductor Model. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for general corporate purposes including working capital and capital expenditures. |
| Name of Shareholder | % Owned Before | % Owned After |
| U.S. Venture Partners | 21.80% | |
| Institutional Venture Partners | 21.80% | |
| Alexander Joffe | 7.60% | |
| Prabhat K. Dubey | 7.30% | |
| Amos Wilnai | 7.00% | |
| Kleiner Perkins Caufield & Byers | 5.50% | |
| Yael Wilnai | 5.30% | |
| Sigal Wilnai | 5.30% | |
| Nitzan Wilnai | 5.30% |
| Officer Name | Title | Age |
| Amos Wilnai | Chairman of the Board and Executive Vice President, Business Development | 57 |
| Sena C. Reddy | Executive Vice President, Operations | 49 |
| Prabhat K. Dubey | President, Chief Executive Officer and Director | 46 |
| William R. Walker | Vice President, Chief Financial Officer and Secretary | 55 |
| Alexander Joffe | Vice President, Engineering | 40 |
| Brent R. Bilger | Vice President, Marketing | 39 |
| John A. Teegen | Vice President, Sales | 38 |