1
As filed with the Securities and Exchange Commission on April 27, 1998
REGISTRATION NO. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------------------------
AAVID THERMAL TECHNOLOGIES, INC.
(Exact Name Of Registrant As Specified In Its Charter)
DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
13-3033811
(I.R.S. Employer
Identification No.)
ONE EAGLE SQUARE, SUITE 509
CONCORD, NEW HAMPSHIRE 03301
(603) 224-1117
(Address of Principal Executive Offices)
-----------------------------------------------------
Stock Option Agreement dated October 15, 1996 between Aavid Thermal
Technologies, Inc. and Ronald F. Borelli
Stock Option Agreement dated June 19, 1997 between Aavid Thermal Technologies,
Inc. and Stephen D. Eldred
Stock Option Agreement dated November 1, 1996 between Aavid Thermal
Technologies, Inc. and Vivek Mansingh
(Full Title of the Plan)
RONALD F. BORELLI
Chairman Of The Board and Chief Executive Officer
AAVID THERMAL TECHNOLOGIES INC.
ONE EAGLE SQUARE, SUITE 509
CONCORD, NEW HAMPSHIRE 03301
(603) 224-1117
(Name, address, including area code, and
telephone number of agent for service)
-----------------------------------------------------
Copies of all communications, including all communications sent to the agent
for service, should be sent to:
JOHN MITCHELL, ESQ.
AAVID THERMAL TECHNOLOGIES, INC.
CONCORD, NEW HAMPSHIRE 03301
(603) 224-1117 (TELEPHONE)
(603) 224-6673 (FAX)
CALCULATION OF REGISTRATION FEE
PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM
PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED SHARE(1) PRICE(2) FEE
Common Stock, par value of $.01 per
share.................................... 449,375 shares $10.42 $4,681,875 $1,381.15
(1) Calculated by dividing the proposed maximum aggregate offering price by
the amount to be registered.
(2) The price is estimated pursuant to Rule 457(h) of the Securities Act of
1933, as amended (the "Act") solely for the purpose of calculating the
registration fee and is the product resulting from multiplying 300,000,
65,000 and 84,375, the number of shares registered by this Registration
Statement as to which options have
2
been granted, by $9.50 per share, $16.50 per share and $9.00 per share,
the respective exercise prices of such options.
-2-
3
PROSPECTUS
449,375 SHARES
AAVID THERMAL TECHNOLOGIES, INC.
COMMON STOCK
This Prospectus relates to the offer and sale of up to 449,375 shares
(the "Shares") of Common Stock, par value $0.01 per share (the "Common Stock"),
of Aavid Thermal Technologies, Inc. ("Aavid" or the "Company"). The Shares are
being offered for sale by certain stockholders of the Company (the "Selling
Stockholders") who acquired such Shares pursuant to stock option agreements
between the Selling Stockholder and the Company. See "Selling Stockholders." The
Company's Common Stock is traded on the Nasdaq Stock Market's National Market
(the "Nasdaq National Market") under the symbol "AATT." On April 24, 1998, the
closing price of the Common Stock, as reported in the consolidated reporting
system, was $34.00 per share.
The Company will not receive any of the proceeds from sales of the
Shares by the Selling Stockholders. The Shares may be offered from time to time
by the Selling Stockholders (and their donees and pledgees) through ordinary
brokerage transactions, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices. See "Plan of
Distribution."
The Selling Stockholders may be deemed to be "Underwriters" as defined
in the Securities Act of 1933, as amended (the "Securities Act"). If any
broker-dealers are used to effect sales, any commissions paid to broker-dealers
and, if broker-dealers purchase any of the Shares as principals, any profits
received by such broker-dealers on the resale of the Shares, may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
profits realized by the Selling Stockholders may be deemed to be underwriting
commissions. All costs, expenses and fees in connection with the registration of
the Shares will be borne by the Company. Brokerage commissions, if any,
attributable to the sale of the Shares will be borne by the Selling Stockholders
(or their donees and pledgees).
------------------
SEE "RISK FACTORS", WHICH BEGINS ON PAGE 6 OF THIS
PROSPECTUS, FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 27, 1998
4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Proxy statements,
reports and other information concerning the Company can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048, and 500 West Madison Street, Chicago, Illinois 60661, and
copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois, at prescribed
rates. Copies of such information may also be inspected at the reading room of
the library of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding the Company and other
registrants that file electronically with the Commission.
This Prospectus constitutes a part of a Registration Statement on Form
S-8 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any contract, agreement or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract, agreement or other document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference. Copies of the Registration
Statement together with exhibits may be inspected at the offices of the
Commission as indicated above without charge and copies thereof may be obtained
therefrom upon payment of a prescribed fee.
Private Securities Litigation Reform Act Safe Harbor Statement. This
Prospectus (including the documents incorporated by reference herein) contains
certain forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) and information relating to the
Company that are based on the beliefs of the management of the Company, as well
as assumptions made by and information currently available to the management of
the Company. When used in this Prospectus, the words "estimate," "project,"
"believe," "anticipate," "intend," "expect" and similar expressions are intended
to identify forward-looking statements. Such statements reflect the current
views of the Company with respect to future events and are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated in such forward-looking statements, including those discussed under
"Risk Factors." Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
does not undertake any obligation to publicly release any revisions to these
forward looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
-2-
5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The information in the following documents filed by Aavid Thermal
Technologies, Inc. (the "Company") with the Commission (File No. 0-27308)
pursuant to the Exchange Act is incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997; and
(b) The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A dated January 25,
1996.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed incorporated by reference into this Prospectus
and to be a part hereof from the date of the filing of such documents or
reports. The information relating to the Company in this Prospectus should be
read together with the information in the documents incorporated by reference.
Any statement contained in a document incorporated by reference herein,
unless otherwise indicated therein, speaks as of the date of the document. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this Prospectus modifies or replaces such statement. Any
such statement so modified or superseded shall not be deemed, except as modified
or superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the documents
described above, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents. Requests should be
addressed to: Aavid Thermal Technologies, Inc., One Eagle Square, Suite 509,
Concord, New Hampshire 03301 (603) 224-1117 Attention: Company Secretary (Tel.
No. (603) 224-1117).
-3-
6
THE COMPANY
Aavid Thermal Technologies, Inc. ("Aavid" or the "Company") is a
leading provider of thermal management solutions for microprocessors and
integrated circuits ("ICs") for digital and power applications. The Company
operates in two business areas: thermal management solutions and computational
fluid dynamics ("CFD") software. Aavid's thermal management solutions include
products and services that solve problems associated with the dissipation of
unwanted heat in electronic and electrical components and systems. The Company
develops and offers CFD software for computer modeling and flow analysis of
products and processes that reduce the time and expense associated with physical
models and the facilities to test them.
Ongoing increases in silicon and system integration, higher processing
speeds and frequencies, smaller form factors, more sophisticated power
requirements and other advances in chip technology create excessive heat in
microprocessors and ICs in electronic and electrical components and systems.
Heat is an absolute constraint in electronic system design, since microprocessor
and ICs operate efficiently only in a narrow temperature band. The excessive
heat generated within the component not only degrades semiconductor and system
performance and reliability but can also cause semiconductor and system failure.
These negative effects are exacerbated by the increasingly wide range of
environmental conditions, including temperature extremes, in which electronic
systems are expected to operate.
Increasingly, neither externally supplied off-the-shelf thermal
management products, nor internally designed and produced parts, have been able
to effectively address the expanding complexity of thermal management problems
resulting from increasing silicon integration and system integration. The
complexity of thermal management problems has been intensified by the increasing
amount of power to be dissipated, reductions in system size, shorter
time-to-market, shorter product life cycles and more demanding temperature
operating requirements. Many electronics manufacturers do not have the internal
resources to solve these challenges and are turning to third parties to design
thermal solutions. Additionally, the increasing amount of electronics systems
manufactured outside the United States and the need for fast ramp up of high
volume production capabilities has forced these manufacturers to seek a highly
integrated, worldwide provider of thermal management solutions.
The Company's strategy is to capitalize on the two principal trends in
the electronics industry: first, the trend to develop products which incorporate
microprocessors and semiconductors with increasingly complex thermal dissipation
problems, and second, the trend to outsource development of thermal management
solutions. Key elements of the Company's strategy are to: (i) provide "total
solutions" capability for thermal management globally; (ii) expand its
technological leadership by leveraging its approximately 80 Ph.D.s and 250
engineers; (iii) expand its quick ramp, high-volume manufacturing, design, sales
and distribution activities both domestically and overseas; (iv) form strategic
alliances with customers; and (v) grow its general purpose CFD software
business.
The Company operates in two markets -- thermal management solutions and
general purpose computational fluid dynamics software -- through three
wholly-owned subsidiaries: Aavid Thermal Products, Inc. ("Aavid Thermal
Products"), Fluent, Inc. ("Fluent") and Applied Thermal Technologies, Inc.
("Applied Thermal Technologies").
-- Aavid Thermal Products provides its customers in the
digital and power electronics markets with quick ramp, high volume
production of thermal management products and customer support
worldwide. Its thermal management products, which
-4-
7
operate by conducting, convecting and radiating away unwanted heat,
help maintain device and system performance and reliability, and help
avoid premature component and system failure. They require substantial
engineering in their design to maximize heat dissipation and minimize
customers' assembly costs. The Company believes it has the broadest
range of products in the thermal management industry. Aavid Thermal
Products' customers include Allen-Bradley, Chrysler, COMPAQ, General
Electric, Hewlett-Packard, IBM, Intel, Lucent, Motorola and Packard
Bell.
-- Fluent develops CFD software and provides problem-solving
support services. Its software enables computer generated modeling and
analysis of air and other fluid flows, heat and mass transfer, chemical
reaction, and related phenomena, which can significantly reduce its
customers' time-to-market and engineering costs, while improving the
final product or process design. Fluent's customers include Boeing,
British Aerospace, Ford, Fujitsu, IBM, Intel and Motorola.
-- Applied Thermal Technologies' design center integrates the
Company's technical strengths in the thermal solutions business to
solicit customer funded research and development, and to provide
consulting and cutting edge design. Applied Thermal Technologies was
formed in the first quarter of 1997 to act as a catalyst for technology
and business development for Aavid Thermal Products and Fluent, and to
take advantage of the increasing trend of its customers to outsource
their thermal management solutions development. Applied Thermal
Technologies works as an extension of its clients' product design team,
leveraging on technical capabilities gained from both Aavid Thermal
Products and Fluent to develop, test and validate thermal solutions.
The Company believes that design centers will enhance the visibility of
the Company as a technology leader, resulting in earlier and closer
ties to existing and new customers. Applied Thermal Technologies'
customers include Applied Materials, Hewlett-Packard, Bay Networks,
Cisco Systems, Sun Microsystems and Sony.
The Company services a highly diversified base of more than 4,000
national and international customers including OEMs, distributors, and contract
manufacturers through a highly integrated network of software, development,
manufacturing, sales and distribution locations throughout North America, Europe
and the Far East.
----------
The Company was incorporated in Delaware in October 1993. Aavid Thermal
Products, Inc. (formerly known as Aavid Engineering, Inc.), the Company's
predecessor which was acquired by the Company in October 1993, was incorporated
in New Hampshire in February 1964. The Company's principal executive offices are
located at One Eagle Square, Suite 509, Concord, New Hampshire 03301 and its
telephone number is (603) 224-1117.
-5-
8
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus. This Prospectus contains, in
addition to historical information, forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as those discussed elsewhere in this
Prospectus.
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY
The Company's quarterly and annual operating results are affected by a
wide variety of factors, many of which are outside the Company's control, that
have in the past and could in the future materially and adversely affect net
sales, gross margins and profitability. These factors include the volume and
timing of orders received, competitive pricing pressures, the availability and
cost of raw materials, changes in the mix of products and services sold,
potential cancellation or rescheduling of orders, changes in the level of
customer inventories of the Company's products, the timing of new product and
manufacturing process technology introductions by the Company or its
competitors, availability of manufacturing capacity and market acceptance of new
or enhanced products introduced by the Company. Additionally, the Company's
growth and results of operations have in the past been, and would in the future
be, adversely affected by downturns in the semiconductor or electronics
industries. The Company is limited in its ability to reduce costs quickly in
response to revenue shortfalls, and this limitation will be exacerbated to the
extent the Company adds additional manufacturing capacity. The need for
continued investment in research and development could also limit the Company's
ability to reduce expenses quickly. As a result of these factors, the Company
expects its operating results to continue to fluctuate. Results of operations in
any one quarter should not be considered indicative of results to be expected
for any future period, and fluctuations in operating results may also cause
fluctuations in the market price of the Common Stock. There can be no assurance
that the overall thermal management market, the segments of the market served by
the Company or the Company will continue to grow in the future.
The Company's business has experienced and is expected to continue to
experience significant seasonality due to, among other things, the slowdown
during the third quarter summer months which historically has occurred in the
electronics industry and the second and third quarter slowdown in European
software revenues primarily due to the purchasing and budgeting patterns of its
European software customers. Typically, the Company's revenues are lowest during
the second and third quarters of the fiscal year, which ends in December.
DEPENDENCE ON THE SEMICONDUCTOR MARKET
A significant portion of the recent growth in the Company's net sales
has been, and is expected to continue to be, dependent upon sales of thermal
management products for digital electronics applications, consisting primarily
of microprocessors and related chip sets for computers and computer networks.
The Company's sales for digital electronics applications accounted for
approximately 23%, 31% and 34% of net sales in 1995, 1996 and 1997,
respectively. The thermal management market for commercial digital electronics
applications is characterized by rapid and uncertain technological change, short
product life cycles, greater pricing pressure and increasing foreign and
domestic competition as compared to the market for power electronics
applications.
-6-
9
A significant portion of the Company's net sales has been, and is
expected to continue to be, dependent upon sales of thermal management products
for power electronics applications, consisting primarily of ICs. The Company's
sales for power electronics applications accounted for approximately 68%, 54%
and 46% of net sales in 1995, 1996 and 1997, respectively. The market for
thermal management products for power electronics applications is characterized
by rapid and uncertain technological change, short product life cycles, greater
pricing pressure and increasing foreign and domestic competition.
Continued growth of the Company will, to a significant extent, depend
upon increased demand for semiconductor devices and products that require
thermal solutions. The semiconductor industry (both digital and power) has
historically been cyclical and subject to significant economic downturns
characterized by diminished product demand and eroding average selling prices. A
decrease in demand for semiconductor products would reduce demand for the
Company's products and have an adverse impact on the Company's results of
operations. Further, semiconductor manufacturers and their customers, in
developing and designing new products, typically seek to eliminate or minimize
thermal problems, and such efforts could have the effect of reducing or
eliminating demand for certain of the Company's products. Additionally, the
Company believes that many of its OEM customers compete in intensely competitive
markets characterized by declining prices and low margins. These OEMs apply
continued pricing pressure on their component suppliers, such as the Company.
There can be no assurance that the Company will not be adversely affected by
cyclical conditions in the semiconductor and electronics industries.
RELIANCE ON A SIGNIFICANT CUSTOMER
Historically, the Company has not derived a significant portion of its
revenues from a limited number of customers, with no customer accounting for
more than 10% of the Company's net sales in 1994, 1995 or 1996. However, in 1997
and the fourth quarter of 1997, Intel Corporation accounted for approximately
15% and 22%, respectively, of net sales. No other single customer exceeded 10%
of net sales in this period. Intel Corporation is not obligated to purchase any
minimum quantity of the Company's products in any period. In addition, as the
Company pursues strategic relationships certain customers could account for a
substantial portion of total revenues in the future. If the Company were to lose
a major customer, such as Intel Corporation, or if a major customer
significantly reduced its purchases in any period, the Company's business,
financial condition and results of operations would be materially adversely
affected.
RELIANCE ON MANUFACTURING FACILITIES; IMPACT OF CHANGING RAW MATERIAL PRICES
The principal raw material used in the Company's products is aluminum
and aluminum represents a significant component of the Company's cost of goods
sold. The Company produces 50% to 60% of its aluminum extrusion requirements on
a single press at its extrusion facility in Franklin, New Hampshire. Any
extended interruptions to the operation of the press could have a material
adverse effect on the Company's business and results of operations. In addition,
a substantial majority of the Company's net sales are currently derived from
products manufactured at its manufacturing facility in Laconia, New Hampshire.
If the Company were unable to use all or a substantial portion of its Laconia
facility for any reason, the Company's business and results of operations would
be materially adversely affected until the Company were able to obtain
substitute production capability.
Market prices for raw aluminum have historically been cyclical and
highly volatile and are influenced by numerous factors beyond the control of the
Company. The Company's ability to pass price increases for aluminum or other raw
materials along to its customers may be
-7-
10
limited by competitive pressures, customer resistance, and price adjustment
limitations in the Company's product purchase contracts with its customers. Even
if the Company is able to pass along all or a portion of raw material price
increases, of which there can be no assurance, there is typically a lag of three
to twelve months between the actual cost increase of raw material and the
corresponding increase in the prices of the Company's products. There can be no
assurance that the Company in the future will be able to recover increased
aluminum or other raw material costs through higher prices to its customers. As
the effective purchase price for the Company's aluminum and other raw materials
changes, competitive conditions will influence the amount of the change, if any,
in the Company's prices to its customers. Fluctuating aluminum prices have a
significant effect on the Company's gross margin and could have a material
adverse effect upon the Company's results of operations and business, as
occurred in 1995 and the second half of 1994.
MANAGEMENT OF GROWTH
The Company has recently experienced substantial growth in its thermal
management products for the digital market and has significantly expanded its
operations through manufacturing capacity additions, acquisitions and geographic
expansion. The Company intends to continue to increase its thermal products and
software businesses overseas, expand products and services it offers, and make
selective acquisitions. This growth and expansion has placed, and will continue
to place, a significant strain on the Company's production, technical, financial
and other management resources. To manage growth effectively, the Company must
maintain a high level of manufacturing quality and efficiency, and must continue
to enhance its operational, financial, and management systems, and attract,
train, motivate and manage its employees. There can be no assurance that the
Company will be able to effectively manage this expansion, and any failure to do
so could have a material adverse effect on the Company's operating results and
financial condition.
RAPID TECHNOLOGICAL CHANGE
The markets for the Company's products are characterized by rapidly
changing technology, frequent new product introductions and enhancements, and
rapid product obsolescence. The Company's future success will be highly
dependent upon its ability to continually enhance or develop new thermal and
software products, materials, manufacturing processes and services in order to
keep pace with the technological advancements of its customers and their
corresponding increasingly complex thermal management and CFD needs. There can
be no assurance that the Company will be able to identify new product trends or
opportunities, develop and bring to market new products or respond effectively
to new technological changes or product announcements by others, develop or
obtain access to advanced materials, or achieve commercial acceptance of its
products. In addition, there can be no assurance that products or technologies
developed by others, including the Company's customers, will not render the
Company's products or technologies noncompetitive or obsolete.
COMPETITION
The markets for thermal management products and CFD software are highly
competitive. Certain of the Company's customers and competitors, including
divisions or subsidiaries of large companies, have substantially greater
technical, financial, research and development and marketing resources than the
Company. Further, the Company expects that as the trend toward outsourcing
continues, a number of new competitors may emerge, some of which may have
greater technical, financial, research and development and marketing resources
than the Company. The ability of the Company to compete successfully depends
upon a number of factors, including price, customer acceptance of the Company's
products, cost
-8-
11
effective high-volume manufacturing, proximity to customers, lead times, ease of
installation of its products, new product and manufacturing process technology
introductions by the Company and its competitors, access to new technologies and
general market and economic conditions. There can be no assurance that the
Company will be able to compete successfully in the future against existing or
potential competitors, or that the Company's operating results will not be
adversely affected by increased price competition. In addition, there can be no
assurance that the Company's customers for thermal management and software
products will not manufacture or develop such products internally or actively
support new entrants into the Company's market rather than purchase thermal
products from the Company.
PATENTS AND OTHER INTELLECTUAL PROPERTY
The Company's success depends in part on its proprietary technology.
The Company attempts to protect its proprietary technology through patents,
copyrights, trademarks, trade secrets and license agreements. The Company
believes, however, that its success will depend to a greater extent upon
innovation, technological expertise and distribution strength. There can be no
assurance that the Company will be able to protect its technology, or that
competitors will not be able to develop similar technology independently. No
assurance can be given that the claims allowed on any patents held by the
Company will be sufficiently broad to protect the Company's technology. In
addition, no assurance can be given that any patents issued to the Company will
not be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide competitive advantages to the Company. In addition,
effective patent, copyright and trade secret protection may be unavailable or
limited in certain foreign countries in which the Company conducts business.
Although the Company believes that its products and technology do not infringe
upon proprietary rights of others, there can be no assurance that third parties
will not assert infringement claims in the future. Moreover, litigation may be
necessary in the future to enforce the Company's patents, copyrights and other
intellectual property rights, to protect the Company's trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on the Company's financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL AND SKILLED EMPLOYEES
The Company's success depends to a large extent upon the continued
services of its senior management and technical personnel. The loss of such
personnel could have a material adverse effect on the Company. The Company's
business also depends upon its ability to retain skilled and semi-skilled
employees. There is intense competition for qualified management and skilled and
semi-skilled employees and the failure to recruit, train and retain such
employees could adversely affect the Company's business, results of operations
and financial condition.
TRANSACTION WITH AFFILIATE; POTENTIAL CONFLICT OF INTEREST
Mr. Alan F. Beane, the Company's prior President and Chief Executive
Officer and a former director, is Chairman and Chief Executive Officer and,
together with one of his brothers, 90% owner of Materials Innovation, Inc.
("MII"). Founded in 1985, MII is principally engaged in the invention,
development and commercialization of, among other things, new engineered
materials and related net shape part manufacturing technologies. The Company and
MII are parties to an agreement pursuant to which the Company licenses certain
patents from MII in exchange for a royalty payment based on net sales. In
addition, MII has conducted research and development for the Company in advanced
materials and related net shape part
-9-
12
manufacturing technologies. In 1995, 1996 and 1997 royalties and expenses
incurred by the Company for services supplied by MII were not material.
The relationship of MII to the Company is regulated by the terms of an
agreement between MII, its principals, and Aavid (the "MII Agreement"), which
prohibits MII from competing with the Company in the markets for heat sinks and
other products whose principal purpose is to dissipate heat from electronic
devices. MII is pursuing the development of certain products and advanced
materials which, if successfully developed, would have applications to the
Company's business. MII is not obligated, however, to license such technology to
Aavid, and there can be no assurance that Aavid will benefit from the
relationship with MII or will be able to license any intellectual property from
MII, if desirable, on acceptable terms or at all. There can be no assurance that
a conflict of interest will not develop between Aavid and MII.
On March 4, 1998, MII and Messrs. Alan and Glenn Beane (collectively,
the "Petitioners") filed a petition for declaratory judgment against the Company
seeking to have the agreement between the Company and MII declared invalid. The
Petitioners claim that the Company had failed to pay royalties associated with
the vacuum die cast patent. The action does not seek monetary damages. The
Company believes it has meritorious defenses and intends to vigorously defend
the action. Although the Company believes that the termination of the agreement
with MII will not have a material adverse effect on its business, results of
operations or financial condition, there can be no assurance it will not have
such a material adverse effect in the future. Mr. Beane's personal non-compete
agreement with the Company expires in October 1998.
FOREIGN OPERATIONS
The Company has been expanding its manufacturing capacity overseas to
adequately service its customers, many of which have moved manufacturing
operations and expanded their business overseas. The Company has had only
limited experience to date operating outside the United States. There can be no
assurance that the Company's expansion of its foreign operations will be
successful. Foreign operations are subject to a number of risks, including
greater difficulties in controlling and administering business, less familiarity
with business customs and practices, increased reliance on key local personnel,
difficulties caused by language barriers, increased difficulty in collecting
receivables, work stoppages, transportation delays and interruptions, political
instability, foreign currency fluctuations, economic disruptions, expropriation,
nationalization, misappropriation of intellectual property, the imposition of
tariffs and import and export controls, changes in governmental policies
(including U.S. policy toward these countries) and other factors which could
have an adverse effect on the Company's business. The occurrence of any of these
factors may have a material adverse effect on the Company's results of
operations and could have an adverse effect on the Company's relationships with
its customers. Furthermore, the occurrence of certain of these factors in
countries in which Aavid operates could result in the impairment or loss of the
Company's investment in such countries.
DEPENDENCE ON INDEPENDENT DISTRIBUTORS
During 1995, 1996 and 1997, sales to independent distributors accounted
for approximately 15% of net sales annually. The largest single distributor
accounted for less than 3% of net sales in each of these periods. Several of
these distributors have a limited right to return unsold products to the
Company, and there can be no assurance that such returns will not have a
material adverse effect on the Company. These independent distributors generally
are not subject to any minimum purchase requirements and can discontinue
marketing the Company's products at any time upon proper notice. Accordingly,
the Company must compete
-10-
13
for the focus and sales efforts of its distributors. There can be no assurance
that the Company's distributors will continue to distribute the Company's
products or do so successfully. Although the Company believes that other
channels of distribution would be available if the Company were to lose the
services of one or more of its independent distributors, there can be no
assurance that such loss would not have an adverse effect on its results of
operations.
ENVIRONMENTAL AND OTHER REGULATIONS
The Company is subject to a variety of federal, state and local laws
and regulations relating to the use, storage, discharge and disposal of
hazardous materials used to manufacture the Company's products. Public attention
has increasingly been focused on the environmental impact of operations that use
hazardous materials. The Company's operations are also governed by laws and
regulations relating to workplace safety and worker health, principally the
Occupational Safety and Health Act and regulations thereunder which, among other
requirements, establish noise and dust standards. Failure to comply with present
or future regulations could result in substantial liability to the Company. The
Company cannot predict the nature, scope or effect of legislation or regulatory
requirements that could be imposed or how existing or future laws or regulations
will be administered or interpreted with respect to products or activities to
which they have not previously applied. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of regulatory
agencies, could require substantial expenditures by the Company and could
adversely affect its results of operations.
VOLATILITY OF SHARE PRICE.
The market prices for securities of technology companies, including the
Company, have been volatile, and it is likely that the price of the Common Stock
will fluctuate in the future. Factors such as announcements of technological
innovations or new commercial products by the Company or its competitors,
changes in the semiconductor industry and other markets in which the Company
sells its products, patent or proprietary rights developments, changes in
earnings estimates and recommendations by securities analysts, and market
conditions in general may have a significant impact on the market price of the
Common Stock. In addition, the market price of the Common Stock could be
adversely affected by future exercises of outstanding warrants and options. At
March 1, 1998, options and warrants to purchase an aggregate of approximately
2,700,000 shares of Common Stock were outstanding. Substantially all of these
options and warrants have exercise prices below the current market price of the
Common Stock. Additionally, substantially all of the shares of Common Stock
issuable upon exercise of these outstanding options and warrants have been
registered for resale under the Securities Act of 1933, as amended, and,
accordingly, when issued will be freely tradable without restriction. In
addition, the Company may issue additional stock, warrants and/or options to
raise capital in the future. The Company may also issue additional securities in
connection with its employee benefit plans. During the terms of such options and
warrants, the holders thereof are given the opportunity to profit from a rise in
the market price of the Common Stock. The exercise of such options and warrants
may have an adverse effect on the market value of the Common Stock. The
existence of such options and warrants may adversely affect the terms on which
the Company can obtain additional equity financing. To the extent the exercise
prices of such options and warrants are less than the net tangible book value of
the Common Stock at the time such options and warrants are exercised, the
Company's stockholders will experience an immediate dilution in the net tangible
book value of their investment. Further, the future sale of a substantial number
of shares of Common Stock by existing stockholders and option and warrant
holders may have an adverse impact on the market price of the Common Stock.
-11-
14
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth information as of March 1, 1998 with
respect to the number of shares of Common Stock beneficially owned by each of
the Selling Stockholders.
Selling Stockholder Number of Shares of Common Stock
- ------------------- --------------------------------
Beneficially Owned Registered Hereunder
------------------ --------------------
Ronald F. Borelli 402,000(1) 300,000
Stephen D. Eldred 65,000 65,000
Vivek Mansingh 84,375 84,375
(1) Includes 300,000 shares of Common Stock issuable upon exercise of
outstanding options, including shares issuable upon exercise of options
not exercisable within 60 days of March 1, 1998.
(2) Represents shares issuable upon exercise of outstanding options.
Mr. Borelli is both an officer and a director of the Company, Mr.
Eldred is an officer of the Company and Mr. Mansingh is an employee of the
Company. None of the proceeds from the sale of the shares offered by the Selling
Stockholders will be received by the Company.
-12-
15
PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Stockholders. All costs, expenses and fees in connection with the registration
of the Shares offered hereby will be borne by the Company. Brokerage
commissions, if any, attributable to the sale of Shares will be borne by the
Selling Stockholders (or their donees or pledgees).
Sales of Shares may be effected from time to time in transactions
(which may include block transactions) on the Nasdaq National Market, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. The Selling Stockholders have advised the Company that
they have not entered into any agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of their securities. The
Selling Stockholders may effect such transactions by selling Common Stock
directly to purchasers or to or through broker-dealers which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholder and/or the
purchasers of Common Stock for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Stockholders and any broker-dealers that act in connection with the sale of the
Common Stock might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commission received by them and any profit
on the resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. Liabilities
under the federal securities laws cannot be waived.
Because the Selling Stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling
Stockholders will be subject to prospectus delivery requirements under the
Securities Act. Furthermore, in the event of a "distribution" of the Shares,
such Selling Stockholder, any selling broker or dealer and any "affiliated
purchasers" may be subject to Regulation M under the Exchange Act, which
Regulation would prohibit, with certain exceptions, any such person from bidding
for or purchasing any security which is the subject of such distribution until
his participation in that distribution is completed. In addition, Regulation M
under the Exchange Act prohibits any "stabilizing bid" or "stabilizing purchase"
for the purpose of pegging, fixing or stabilizing the price of Common Stock in
connection with this offering.
LEGAL MATTERS
Legal matters relating to the Common Stock have been passed upon for
the Company by John W. Mitchell, Vice President and General Counsel of the
Company. Mr. Mitchell, beneficially owns an aggregate of 45,659 shares of the
Company's Common Stock.
EXPERTS
The consolidated financial statements as of December 31, 1995 and for
the year ended December 31, 1995 incorporated by reference in this Prospectus
and elsewhere in the Registration Statement have been audited by Coopers &
Lybrand L.L.P., independent public
-13-
16
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements and schedule as of and for the
years ended December 31, 1996 and 1997 incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
-14-
17
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
TABLE OF CONTENTS
PAGE
----
Available Information ...................................2
Incorporation of Certain
Documents by Reference ................................ 3
The Company ............................................ 4
Risk Factors............................................ 6
Use of Proceeds........................................ 12
Selling Stockholders....................................12
Plan of Distribution....................................13
Legal Matters ..........................................13
Experts.................................................13
449,375
Shares
AAVID THERMAL
TECHNOLOGIES, INC.
Common Stock
-------------------------------
PROSPECTUS
-------------------------------
April 27, 1998
18
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents heretofore filed by Aavid Thermal Technologies,
Inc. ("Registrant") (File No. 0-27308) with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(i) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
(ii) The description of the Registrant's Common Stock set forth in the
Registrant's Registration Statement on Form 8-A dated January 25, 1996.
In addition, all documents filed by Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 subsequent to
the date of this filing and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated herein
by reference and to be a part thereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Legal matters relating to the Common Stock have been passed upon for
the Company by John W. Mitchell, Vice President and General Counsel of the
Company. Mr. Mitchell, beneficially owns an aggregate of 45,659 shares of the
Company's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of Delaware provides that
a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation), by reason of the
fact that he is or was a director, officer, employee or agent of another
corporation or enterprise, against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right
II-1
19
of the corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine that despite the adjudication of liability, such person
is fairly and reasonably entitled to be indemnified for such expenses which the
court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under such Section 145.
The Registrant's By-laws provide that the Company shall indemnify
certain persons, including officers, directors, employees and agents, within the
limitations permitted by Section 145 of the General Corporation Law of the State
of Delaware. The Registrant has also entered into indemnification agreements
with its current directors and executive officers. Reference is made to the
By-laws and Form of Indemnification Agreement filed as exhibits 3.3 and 10.61,
respectively, to the Company's Registration Statement on Form S-1, as amended
(No. 33-99232). The Registrant's directors and officers are insured against
losses arising from any claim against them as such for wrongful acts or
omissions, subject to certain limitations.
The Registrant maintains a policy of insurance under which the
directors and officers of the Registrant are insured, subject to the limits of
the policy, against certain losses arising from claims made against such
directors and officers by reason of any acts or omissions covered under such
policy in their respective capacities as directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
(a) See Index to Exhibits.
ITEM 9. UNDERTAKINGS
(a) 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 of 1933;
(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 herein;
II-2
20
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
herein or any material change to such information in this
registration statement;
Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated herein by reference;
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, 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;
and
(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.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
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.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, 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 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 Act and
will be governed by the final adjudication of such issue.
II-3
21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Concord, State of New Hampshire, on this 27thday
of April, 1998.
Aavid Thermal Technologies, Inc.
By: /s/ RONALD F. BORELLI
--------------------------------------------
Ronald F. Borelli, Chairman of the Board and
Chief Executive Officer
-----------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints RONALD F. BORELLI and STEPHEN D. ELDRED,
or either of them, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same
with all exhibits thereto and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
II-4
22
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ RONALD F. BORELLI April 27, 1998
- ------------------------------------ Chairman of the Board, Chief
Ronald F. Borelli Executive Officer and Director
(Principal Executive Officer)
/s/ CHARLES A. DICKINSON
- ------------------------------------ Director April 27, 1998
Charles A. Dickinson
/s/ EDWARD F. GLASSMEYER
- ------------------------------------ Director April 27, 1998
Edward F. Glassmeyer
/s/ M. WILLIAM MACEY, JR.
- ------------------------------------ Director April 27, 1998
M. William Macey, Jr.
/s/ DOUGLAS L. NEWHOUSE
- ------------------------------------ Director April 27, 1998
Douglas L. Newhouse
/s/ BHARTAN R. PATEL
- ------------------------------------ Director April 27, 1998
Bhartan R. Patel
/s/ DAVID R.A. STEADMAN
- ------------------------------------ Director April 27, 1998
David R.A. Steadman
/s/ STEPHEN D. ELDRED
- ------------------------------------ Vice President-Finance and April 27, 1998
Stephen D. Eldred Chief Financial Officer
(Principal Financial and
Accounting Officer)
II-5
23
INDEX TO EXHIBITS
EXHIBIT NO.
- -----------
5 Opinion of John W. Mitchell
10.1 Stock Option Agreement dated as of October 15, 1996 between Aavid
Thermal Technologies, Inc. and Ronald F. Borelli.
10.2 Stock Option Agreement dated as of June 19, 1997 between Aavid Thermal
Technologies, Inc. and Stephen D. Eldred.
10.3 Stock Option Agreement dated as of November 1, 1996 between Aavid
Thermal Technologies, Inc. and Vivek Mansingh.
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Arthur Andersen LLP
23.3 Consent of John W. Mitchell (included in Exhibit 5)
24 Power of Attorney (included on signature page)
II-6