PROSPECTUS
288,037 SHARES
WHITTMAN-HART, INC.
COMMON STOCK
These 288,037 shares of common stock may be offered and sold at various
times by the stockholders of the Company identified in this Prospectus (the
"Selling Stockholders"). The Selling Stockholders or their respective
transferees or other successors may sell at various times the common stock
directly or through broker-dealers, on the Nasdaq National Market, or in
privately negotiated transactions or otherwise. These sales may occur at
prevailing market prices or at negotiated prices.
Our common stock is quoted on the Nasdaq National Market under the
symbol "WHIT." On March 15, 1999, the closing sale price of our common stock on
the Nasdaq National Market was $25 9/16 per share.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 3 OF
THIS PROSPECTUS BEFORE MAKING A DECISION TO PURCHASE OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE
ELSE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. THE COMMON STOCK
IS NOT BEING OFFERED IN ANY STATE OR JURISDICTION WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF SUCH
DOCUMENTS. YOU SHOULD READ CAREFULLY THE ENTIRE PROSPECTUS, AS WELL AS THE
DOCUMENTS INCORPORATED BY REFERENCE IN THE PROSPECTUS, BEFORE MAKING AN
INVESTMENT DECISION.
The date of this Prospectus is May 10, 1999
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TABLE OF CONTENTS
About This Prospectus........................................................2
Where You Can Find More Information..........................................2
The Company..................................................................3
Risk Factors.................................................................3
Use of Proceeds..............................................................7
The Selling Stockholders.....................................................8
Plan of Distribution.........................................................8
Experts......................................................................10
ABOUT THIS PROSPECTUS
This Prospectus is a part of a registration statement (the
"Registration Statement") that we have filed with the Securities and Exchange
Commission (the "SEC") using a "shelf registration" process. You should read
both this Prospectus and any supplement together with additional information
described under "Where You Can Find More Information."
You should rely only on the information provided or incorporated by
reference in this Prospectus or any supplement. We have not authorized anyone
else to provide you with additional or different information. Our common stock
is not being offered in any state where the offer is not permitted. You should
not assume that the information in this Prospectus or any supplement is accurate
as of any date other than the date on the front of such documents.
All references in this Prospectus to "Whittman-Hart," the "Company,"
"we," "us," or "our" mean Whittman-Hart, Inc. and its subsidiaries, except where
indicated.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document that we file
at the SEC's public reference rooms located at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, at The Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and at Seven World Trade Center, Suite
1300, New York, New York 10048. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our filings with the SEC are
also available to the public on the SEC's Internet web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file with the
SEC later will automatically update and supersede this information. The
following documents filed by us and any future filings made by us with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
until the Selling Stockholders sell all of the common stock offered hereby, are
incorporated by reference in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
(ii) the Company's Registration Statement on Form 8-A; and
(iii)the Company's Schedule 14A filed with the Commission on April
28, 1999.
YOU MAY REQUEST A COPY OF THESE FILINGS, AT NO COST, BY WRITING OR
TELEPHONING US AT WHITTMAN-HART, INC., 311 SOUTH WACKER DRIVE, 35TH FLOOR,
CHICAGO, ILLINOIS 60606; TELEPHONE NUMBER (312) 922-9200; ATTENTION: DAVID P.
SHELOW.
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THE COMPANY
Because this is a summary, it does not contain all of the information
about us that may be important to you. You should read the more detailed
information and the financial statements and related notes which are
incorporated by reference in this Prospectus.
The Company provides strategic information technology ("IT") business
solutions designed to improve our clients' productivity and competitive
position. We offer our clients a single source for a comprehensive range of
services required to successfully design, develop and implement integrated
solutions in the client/server, open systems, midrange and mainframe computing
environments. Some of the services we offer are: systems integration; strategic
information technology planning; software development; package software
implementation; business process reengineering; organizational change
management; networking and connectivity; conventional and multimedia
documentation and training; design and implementation of collaborative computing
solutions; and design and implementation of electronic commerce solutions (such
as Internet/intranet and electronic data interchange). We believe this breadth
of services fosters long-term client relationships, affords cross-selling
opportunities and minimizes our dependence on any single technology.
Whittman-Hart(R) is a registered trademark of the Company. Our address
is 311 South Wacker Drive, 35th Floor, Chicago, Illinois 60606, and our
telephone number is (312) 922-9200.
RISK FACTORS
You should carefully consider the following risk factors in addition to
the other information contained and incorporated by reference in this Prospectus
before purchasing our common stock. The risks and uncertainties described below
are not the only ones that we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also impair our
business operations.
ATTRACTION AND RETENTION OF EMPLOYEES
Our business involves the delivery of professional services and is
labor-intensive. Our success depends in large part upon our ability to attract,
develop, motivate and retain highly skilled technical employees. Qualified
technical employees are in great demand and are likely to remain a limited
resource for the foreseeable future. There can be no assurance that we will be
able to attract and retain sufficient numbers of highly skilled technical
employees in the future. We have historically experienced turnover rates which
we believe are consistent with industry norms. An increase in this rate could
have a material adverse effect on our business, operating results and financial
condition, including our ability to secure and complete engagements.
MANAGEMENT OF GROWTH
We are currently experiencing rapid growth that has strained, and could
continue to strain, our managerial and other resources. Our ability to manage
the growth of our operations will require us to continue to improve our
operational, financial and other internal systems and to attract, develop,
motivate and retain our employees. If our management is unable to manage growth
or new employees are unable to achieve anticipated performance levels, then our
business and operating results could be materially and adversely affected.
PROJECT RISKS
Many of our engagements involve projects that are critical to the
operations of our clients' businesses and provide benefits that may be difficult
to quantify. Our failure or inability to meet a client's expectations in the
performance of our services could result in a material adverse change to the
client's operations and therefore could give rise to claims against us or damage
our reputation, which could adversely affect our business and operating results.
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VARIABILITY OF QUARTERLY OPERATING RESULTS
Variations in our revenues and operating results occur from time to
time as a result of many factors. These factors include the significance of
client engagements commenced and completed during a quarter, the number of
business days in a quarter, timing of branch and service line expansion
activities, the timing of corporate expenditures and employee hiring and
utilization rates. The timing of revenues is difficult to forecast because our
sales cycle can be relatively long and may depend on factors such as the size
and scope of assignments and general economic conditions. Because a high
percentage of our expenses are relatively fixed, a variation in the number of
client assignments or the timing of the initiation or the completion of client
assignments, particularly at or near the end of any quarter, can cause
significant variations in operating results from quarter to quarter and could
result in losses to us. In addition, our engagements generally are terminable by
the client without penalty. Although the number of consultants can be adjusted
to correspond to the number of active projects, we must maintain a sufficient
number of senior consultants to oversee existing client projects and assist with
our sales force in securing new client assignments.
COMPETITION
The information technology services market includes a large number of
competitors. It is also subject to rapid change and is highly competitive. Our
primary competitors include participants from a variety of market segments,
including "Big Five" accounting firms, systems consulting and implementation
firms, application software firms, service groups of computer equipment
companies, facilities management companies, general management consulting firms
and programming companies. In addition, we compete with our clients' internal
resources, particularly where these resources represent a fixed cost to our
client. Such competition may impose additional pricing pressures on us. There
can be no assurance that we will compete successfully with our existing
competitors or with any new competitors.
RELIANCE ON KEY EXECUTIVES
Our success is highly dependent upon the efforts and abilities of our
executive officers, particularly Robert Bernard, the Company's founder and Chief
Executive Officer. Although these executives have entered into employment
agreements containing noncompetition, nondisclosure and nonsolicitation
covenants, these contracts do not guarantee that these individuals will continue
their employment. The loss of the services of any of these key executives could
have a material adverse effect upon our business and operating results.
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SOLUTIONS
Our success will depend in part on our ability to develop information
technology solutions that keep pace with continuing changes in information
technology, evolving industry standards and changing client preferences. There
can be no assurance that we will be successful in adequately addressing these
developments on a timely basis or that, if these developments are addressed, we
will be successful in the marketplace. In addition, there can be no assurance
that products or technologies developed by others will not render our services
uncompetitive or obsolete. Our failure to address these developments could have
a material adverse effect on our business and operating results.
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RISKS RELATED TO ACQUISITIONS
We have expanded and intend to continue to expand our operations
through the acquisition of additional businesses. There can be no assurance that
we will be able to identify, acquire or profitably manage additional businesses
or successfully integrate any acquired businesses without substantial expenses,
delays or other operational or financial problems. Further, acquisitions may
involve a number of special risks or effects, including diversion of
management's attention, failure to retain key acquired personnel, unanticipated
events or circumstances, legal liabilities and amortization of acquired
intangible assets and other one-time or ongoing acquisition related expenses.
Some or all of these special risks or effects could have a material adverse
effect on our business and operating results. Client satisfaction or performance
problems at one acquired firm could have a material adverse impact on our
reputation. In addition, there can be no assurance that acquired businesses, if
any, will achieve anticipated revenues and earnings. Our failure to manage our
acquisition strategy successfully could have a material adverse effect on our
business and operating results.
SIGNIFICANT INFLUENCE OF PRINCIPAL STOCKHOLDER
As of April 30, 1999, Mr. Bernard beneficially owned approximately
24.4% of our common stock. As a result, Mr. Bernard will have significant
influence over the outcome of matters requiring a stockholder vote, including
the election of the members of the Board of Directors. Such control could
adversely affect the market price of our common stock or delay or prevent a
change in control.
INTELLECTUAL PROPERTY RIGHTS
Our success is dependent upon certain methodologies we utilize in
designing, installing and integrating computer software and systems and other
proprietary intellectual property rights. Our business includes the development
of custom software in connection with specific client engagements. Ownership of
such software is generally assigned to our client. We also develop certain
foundation and application software products, or software "tools," which remain
our property.
We rely upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect our
proprietary rights and the proprietary rights of third parties from whom we
license intellectual property. We enter into confidentiality agreements with our
employees and limit distribution of proprietary information. There can be no
assurance that these steps will be adequate to deter misappropriation of
proprietary information or that we will be able to detect unauthorized use and
take appropriate steps to enforce our intellectual property rights.
We believe that our services do not infringe on the intellectual
property rights of others and that we have all rights necessary to utilize the
intellectual property employed in our business. However, we are subject to the
risk of claims alleging infringement of third-party intellectual property
rights. Any such claims could require us to spend significant sums in
litigation, pay damages, develop non-infringing intellectual property or acquire
licenses to the intellectual property which is the subject of asserted
infringement.
FIXED-BID PROJECTS
We undertake certain projects billed on a fixed-bid basis, which is
distinguishable from our principal method of billing on a time and materials
basis. We also undertake other projects on a fee-capped basis. Our failure to
complete such projects within budget or below the cap would expose us to risks
associated with cost overruns. Such cost overruns could have a material adverse
effect on our business and operating results.
STOCK PRICE VOLATILITY
Our common stock's market price has and could continue to fluctuate
substantially. Reasons for such fluctuations include quarterly fluctuations in
results of operations, adverse circumstances affecting the introduction or
market acceptance of new products and services that we offer and new product and
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service announcements by competitors, changes in the information technology
environment, changes in earnings estimates by analysts, changes in accounting
principles, sales of common stock by existing holders, loss of key personnel and
other factors. The market price for our common stock may also be affected by our
ability to meet analysts' expectations. Any failure to meet such expectations,
even if minor, could significantly decrease the market price of the common
stock. In addition, the stock market is subject to extreme price and volume
fluctuations. This volatility has had a significant effect on the market prices
of securities issued by many companies for reasons unrelated to the operating
performance of these companies. In the past, following periods of volatility in
the market price of a company's securities, securities class action litigation
has often been instituted against such a company. Any such litigation instigated
against us could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on our
business and operating results.
CERTAIN ANTI-TAKEOVER EFFECTS
Our Certificate of Incorporation and By-Laws and the Delaware General
Corporation Law include provisions that may be deemed to have anti-takeover
effects and may delay, defer or prevent a takeover attempt that stockholders
might consider in their best interests. These include By-Law provisions under
which only the Chairman of the Board or the President may call meetings of
stockholders and certain advance notice procedures for nominating candidates for
election to the Board of Directors. Our directors are divided into three classes
and are elected to serve staggered three-year terms. Our Board of Directors is
empowered to issue up to 3,000,000 shares of preferred stock and to determine
the price, rights, preferences and privileges of such shares, without any
further stockholder action. The existence of this "blank-check" preferred stock
could render more difficult or discourage an attempt to obtain control of us by
means of a tender offer, merger, proxy contest or otherwise. In addition, this
"blank-check" preferred stock, and any issuance thereof, may significantly
decrease the market price of the common stock.
YEAR 2000
We have identified three issues related to Year 2000 compliance; first
is the affect on our internal information systems, second are issues related to
our vendors performing services for us, and finally are the issues related to
our consulting activities. We are in the process of replacing our existing
internal information systems. This initiative is expected to be completed in the
third quarter of 1999. A contingency plan exists to make existing systems Year
2000 compliant by the end of the third quarter 1999 in the unlikely event the
new systems' implementation cannot be completed. The cost of this implementation
is not expected to have a material adverse impact on the Company's results of
operations or financial condition.
We have relationships with several vendors who provide administration
of compensation and related employee benefits and other vendors who perform
banking and treasury services. We are in the process of evaluating the state of
readiness of these vendors and expect to complete our assessment in the first
quarter of 1999. Contingency plans are in place to administer employee
compensation and benefits in the event of non-compliance by any of these
vendors. The cost to us in the event of non-compliance with Year 2000 issues by
any of these third parties is not expected to have material impact on our
results of operations or financial condition.
We believe that a majority of middle-market companies have yet to
achieve Year 2000 compliance. To resolve the Year 2000 issue, many companies are
electing to install new package software applications, rather than modify
existing systems, thus creating significant demand for package software-related
services such as those provided by us. Consequently, we believe that companies'
need to address their Year 2000 compliance is creating significant demand for
our products and services. The passage of the Year 2000 could have a material
adverse effect on the demand for our services. We provide solutions for IT
systems that are critical to companies' operations. Business interruptions, loss
or corruption of data or other major problems resulting from the failure of a
client's IT system to process year 2000 data correctly could have significant
adverse consequences to that client. We cannot currently predict whether or to
what extent there will be any legal claims brought against us or whether there
will be any other material adverse effect on our business, financial condition
or results of operations, as a result of any such adverse consequences to our
clients.
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INTERNATIONAL
In November 1997, we began our international operations through the
acquisition of Axis Consulting International, Inc. and World Consulting Limited.
As a result of these acquisitions, we recruit consultants and generate a portion
of our revenues from outside the United States. We believe that our
international operations will continue to grow. Foreign operations are subject
to special risks that can materially affect sales and profits, including
currency exchange rate fluctuations, labor strikes, political and economic
disruptions, changes in government policies and regulatory requirements, tariff
and trade barriers, immigration laws and regulations, potentially adverse tax
consequences, exchange control and other risks.
ABSENCE OF DIVIDENDS
We do not anticipate paying any cash dividends on our common stock in
the foreseeable future.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our common stock by
the Selling Stockholders.
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THE SELLING STOCKHOLDERS
The following table sets forth certain information regarding the
Selling Stockholders, including (i) the name of each Selling Stockholder, (ii)
the beneficial ownership of common stock of each Selling Stockholder as of March
15, 1999, and (iii) the maximum number of shares of common stock offered by each
Selling Stockholder. The information presented is based on data furnished to the
Company by the Selling Stockholders.
The number of shares that may be actually sold by each Selling
Stockholder will be determined by such Selling Stockholder. Because each Selling
Stockholder may sell all, some or none of the shares of Common Stock which each
holds, and because the offering contemplated by this Prospectus is not currently
being underwritten, no estimate can be given as to the number of shares of
Common Stock that will be held by the Selling Stockholders upon termination of
the offering.
Pursuant to Rule 416 of the Securities Act of 1933 (the "Securities
Act"), Selling Stockholders may also offer and sell additional shares of common
stock issued as a result of stock splits, stock dividends and anti-dilution
provisions.
SHARES BENEFICIALLY OWNED PRIOR
TO OFFERING (1)
------------------------------- SHARES BEING
NUMBER PERCENT OFFERED
------ ------- -------
Kurt Salmon Associates, Inc. 147,244 * 73,622
John M. Dacey, Jr. (2) 402,788 * 201,394
Marie Lopinto Dacey (3) 26,042 * 13,021
- ---------------------
*Less than 1%
(1) Consists of shares acquired in connection with the Company's acquisition of
Waterfield Technology Group, Inc. ("WTG"). In connection with the
acquisition, the above stockholders received registration rights covering
50% of the shares of Common Stock that such stockholder received in the
Company's acquisition of WTG.
(2) Does not include shares held by Mr. Dacey's wife, as trustee of certain
trusts for their children.
(3) As trustee for The 1997 Trust For Michael L. Dacey and The 1997 Trust For
Lisa M. Dacey (13,021 shares allocated to each trust). Ms. Dacey is the
wife of Mr. Dacey.
RELATIONSHIPS WITH THE COMPANY
The shares being sold by the Selling Stockholders were issued in
connection with our acquisition of WTG, a Boston-based IT service provider, in
March 1999. In consideration for all of the capital stock of WTG, the Company
issued to WTG stockholders a total of 576,074 shares of Common Stock.
In connection with the acquisition, the Company granted to the WTG
stockholders certain registration rights to register 50% of the Common Stock
that the WTG stockholders received in the acquisition (288,037 shares). The
shares to be sold under this Prospectus are the shares for which the WTG
stockholders have registration rights.
In connection with the Company's acquisition of WTG, the Company
entered into an employment agreement with Mr. Dacey. The employment agreement
contains non-solicitation and noncompete provisions.
PLAN OF DISTRIBUTION
Sales of the shares being sold by the Selling Stockholders are for the
Selling Stockholders' own accounts. The Company will not receive any proceeds
from the sale of the shares offered hereby.
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The Selling Stockholders have advised the Company that:
o the shares may be sold by the Selling Stockholders or their
respective pledgees, donees, transferees or successors in interest,
on the Nasdaq National Market, in sales occurring in the public
market of such market quotation system, in privately negotiated
transactions, through the writing of options on shares, short sales
or in a combination of such transactions;
o each sale may be made either at market prices prevailing at the time
of such sale or at negotiated prices;
o some or all of the shares may be sold through brokers acting on
behalf of the Selling Stockholders or to dealers for resale by such
dealers; and
o in connection with such sales, such brokers and dealers may receive
compensation in the form of discounts and commissions from the
Selling Stockholders and may receive commissions from the purchasers
of shares for whom they act as broker or agent (which discounts and
commissions may be less than or exceed those customary in the types
of transactions involved). Any broker or dealer participating in any
such sale may be deemed to be an "underwriter" within the meaning of
the Securities Act and will be required to deliver a copy of this
Prospectus to any person who purchases any common stock from or
through such broker or dealer. The Company has been advised that, as
of the date hereof, none of the Selling Stockholders have made any
arrangements with any broker for the sale of their common stock.
In offering the common stock covered hereby, the Selling Stockholders
and any broker-dealers and any other participating broker-dealers who execute
sales for the Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Stockholders and the compensation of such broker-dealer
may be deemed to be underwriting discounts and commissions. In addition, any
common stock covered by this Prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus.
In order to comply with certain states' securities laws, if applicable,
the common stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the common stock may not be sold
unless the common stock has been registered or qualified for sale in such state
or an exemption from registration or qualification is available and is complied
with.
Under applicable rules and regulations under Regulation M under the
Exchange Act of 1934 (the "Exchange Act"), any person engaged in the
distribution of the common stock may not simultaneously engage in market making
activities, subject to certain exceptions, with respect to the common stock of
the Company for a specified period set forth in Regulation M prior to the
commencement of such distribution and until its completion. In addition and
without limiting the foregoing, each Selling Stockholder will be subject to the
applicable provisions of the Securities Act and Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of the common
stock by the Selling Stockholders. The foregoing may affect the marketability of
the common stock.
The Company will bear all expenses of the offering of the common stock,
except that the Selling Stockholders will pay any applicable underwriting
commissions and expenses, brokerage fees and transfer taxes, as well as the fees
and disbursements of counsel to and experts for the Selling Stockholders.
Pursuant to the terms of registration rights agreements with the
Selling Stockholders, the Company has agreed to indemnify and hold harmless such
Selling Stockholders from certain liabilities under the Securities Act.
<PAGE>
EXPERTS
The consolidated financial statements and schedule of the Company as of
December 31, 1998 and 1997, and for each of the years in the three-year period
ended December 31, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
