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PROSPECTUS
Filed pursuant to Rule 424(b) (1)
Commission File No. 333-38513
SYKES ENTERPRISES, INCORPORATED
375,000 SHARES
COMMON STOCK, $.01 PAR VALUE
This Prospectus relates to shares of Common Stock of Sykes Enterprises,
Incorporated ("Sykes" or the "Company") which may be offered for sale from time
to time for the account of certain stockholders of the Company (the "Selling
Stockholders"). Shares may be offered until June 15, 1998 [one year after the
date of issuance of the shares subject to this Prospectus] for the account of
the Selling Stockholders. See "The Offering." The Company will not receive any
proceeds from the sale of Common Stock by the Selling Stockholders. The
Company's Common Stock is traded on the Nasdaq National Market under the symbol
"SYKE." On October 28, 1997, the last reported sale price of the Common Stock
was $28.375 per share.
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The distribution of shares of Common Stock by the Selling Stockholders may
be effected from time to time in one or more transactions (which may involve
block transactions) in the over-the-counter market, on the Nasdaq National
Market, or on any exchange on which the Common Stock may then be listed in
negotiated transactions, through the writing of options on shares (whether such
options are listed on an options exchange or otherwise), or a combination of
such methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. The Selling
Stockholders may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
and/or purchasers of shares for whom they may act as agent (which compensation
may be in excess of customary commissions). The Selling Stockholders also may
pledge shares as collateral for margin accounts and such shares could be resold
pursuant to the terms of such accounts.
All expenses of the registration of the Common Stock covered by this
Prospectus will be borne by the Company pursuant to preexisting agreements,
except that the Company will not pay (i) any Selling Stockholder's underwriting
discounts or selling commissions, or (ii) fees and expenses of any Selling
Stockholder's counsel.
SEE "RISK FACTORS" AT PAGE 5 FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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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 OCTOBER 29, 1997.
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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"). The reports, proxy
statements and other information filed by the Company with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at the Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material may also be
obtained from the Public Reference Section of the Commission at Washington,
D.C., at prescribed rates. In addition, the Company's Common Stock is quoted on
the Nasdaq National Market of The Nasdaq Stock Market (the "Nasdaq National
Market") and reports, proxy statements and other information filed by the
Company with the Nasdaq National Market may be inspected at the offices of The
Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006-1500.
In addition, the Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such web site is
http://www.sec.gov.
This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto which the Company has filed with the
Commission under the Securities Act of 1933, as amended, to which reference is
hereby made.
INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference in this
Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 29, 1997; and
(4) The Company's Current Report on Form 8-K, dated June 16, 1997
filed October 20, 1997.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus and shall be deemed to be a part
hereof from the respective dates of filing of such reports and other 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 all
purposes to the extent that a statement contained in this Prospectus or in any
other subsequently filed document that is also 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 a part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any and all
documents incorporated by reference in this Prospectus (other than exhibits to
such documents unless such exhibits are incorporated by reference therein).
Requests for such copies should be directed to Sykes Enterprises, Incorporated,
100 North Tampa Street, Suite 3900, Tampa, Florida 33602, Attention: Scott J.
Bendert, Vice President, Treasurer, and Chief Financial Officer, Telephone (813)
274-1000.
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THE OFFERING
Up to 375,000 shares may be offered from time to time for the account
of the Selling Stockholders until June 15, 1998. See "Selling Stockholders." The
Company will not receive any proceeds from the sale of shares covered by this
Prospectus. The Company's Common Stock is traded in the Nasdaq National Market
under the symbol "SYKE."
THE COMPANY
The Company is a leading provider of information technology outsourcing
services throughout North America, Europe, and South Africa. Through its 12
state-of-the-art technical support call centers ("IT call centers"), the Company
provides services to leading computer hardware and software companies by
providing technical support services to end users of their products, and to
major companies by providing corporate help desk and other support services.
Through its staff of technical professionals, the Company also provides software
development and related services to large corporations, on a contract or
temporary staffing basis, including software design, development, integration
and implementation; systems support, maintenance, and documentation; foreign
language translation; and software localization. The integration of these
services enables Sykes's customers to outsource a broad range of their
information technology services needs to the Company. Sykes's customers include
Apple Computer, Compaq, Disney, Gateway, Hewlett Packard, IBM, Monsanto,
NationsBank, and Tech Data Corporation ("Tech Data").
In 1993, Sykes began providing technical product support to leading
computer hardware and software companies through the Company's IT call centers.
From two domestic and one European IT call centers at the end of 1994 to eight
domestic IT call centers and seven European IT call centers as of September
1997, Sykes has increased its capacity from handling 7,000 calls per day to
handling 124,000 calls per day.
All of Sykes's eight domestic IT call centers have been built by the
Company and are modeled after the same prototype, which enables Sykes to
construct new IT call centers rapidly and cost effectively. The Company's
strategy of locating its domestic IT call centers in smaller communities,
typically near a college or university, has enabled it to benefit from a
relatively lower cost structure and a technically proficient, stable work force.
The Company's domestic call centers are located in Colorado, Kansas, North
Dakota, Oklahoma, and Oregon. Through its European IT call centers located in
The Netherlands, Switzerland, and Germany, Sykes provides information technology
support and translation services to its multinational customers in 20 countries
in 24 languages. The Company also maintains 13 branch offices located in
metropolitan areas of Colorado, Florida, Georgia, Kentucky, Massachusetts,
Missouri, New York, North Carolina, and Texas, giving the Company the ability to
offer a broad range of professional services on a local basis, and respond to
changing market demands in each geographical area served. Each branch office is
responsible for staffing the professional personnel needs of customers within
its geographic region and customers referred from other branch offices based on
specialized needs.
Sykes also has expanded its services and increased its IT call center
capabilities through strategic alliances. By combining technology acquired in
1996 with technology developed jointly pursuant to its May 1997 alliance with
SystemSoft Corporation, a leading vendor of remote diagnostic tools for software
products, Sykes has introduced electronic technical support center ("ETSC")
services that integrate hardware and software diagnostics with call avoidance
capabilities. The Company's ETSC diagnostic tools provide a comprehensive
solution for end users of computer hardware and software products. Through its
ETSC services, end users can (i) work with an Sykes call center agent to
expedite problem resolution utilizing communications protocols that allow for
voice and data communications over a single telephone line, (ii) forward a
request for assistance from an Sykes call center agent via the internet, or
(iii) diagnose and solve their technical hardware or software problems without
the assistance of an Sykes call center agent. The Company believes that its ETSC
services will provide it direct access to broader markets, including
post-warranty support services for home and small business users.
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In addition to ETSC services, Sykes has expanded its IT call center
utilization capabilities through its July 1997 agreement with Tech Data to
provide technical product support services to customers of Tech Data's network
of 35,000 computer product resellers. Sykes believes that this arrangement will
enable the Company to reach end users of computer hardware and software products
through an established distribution channel.
Additionally, the Company's growth of its technical staffing, software
development and documentation and software translation services has been
supplemented by Sykes's acquisition in March 1997 of Info Systems of North
Carolina, Inc., a provider of software and support to national high volume
retail chains. Sykes believes that its ability to work in partnership with its
customers during the life cycle of their information technology products and
systems, from software design and systems implementation, through technical
documentation and foreign language translation, to end-user technical product
support, gives it a competitive advantage to become a preferred provider of
outsourced IT services to its customers. In particular, the Company seeks to
broaden its IT outsourcing customer base in the retail, financial services,
healthcare and telecommunications industries.
The Company believes that outsourcing by information technology
companies and companies with information technology needs will continue to grow
as businesses focus on their core competencies rather than nonrevenue producing
activities. Additionally, rapid technological changes, significant capital
requirements for state-of-the-art technology, and the need to integrate and
update complex information technology systems spanning multiple generations of
hardware and software components make it increasingly difficult for businesses
to maintain cost-effective, quality information technology services in-house. To
capitalize on this trend toward outsourcing, the Company has developed a
strategy which incudes the following key elements:
- rapidly expand information technology support services
revenues through additional IT call centers in the United
States and aborad;
- market the Company's expanded array of services to existing
customers to position Sykes as a preferred vendor of
outsourced information technology support services;
- establish a competitive advantage through the Company's
proprietary, sophisticated technological capabilities; and
- expand its customer base through strategic alliances and
selective acquisitions.
The Company believes the majority of its growth is attributable to its
opening of additional IT call centers and the execution of its acquisition
strategy. There can be no assurance, however, that the Company will continue to
experience the same level of success in the opening of additional IT call
centers or that it will be able to find suitable entities which will enable it
to continue the execution of its acquisition strategy.
The Company was founded in 1977 in North Carolina and moved its
headquarters to Florida in 1993. In March 1996, the Company changed its state of
incorporation from North Carolina to Florida. Unless the context requires
otherwise, references to "Sykes" or the "Company" means Sykes Enterprises,
Incorporated and its consolidated subsidiaries. The Company's executive offices
are located at 100 North Tampa Street, Suite 3900, Tampa, Florida 33602, and its
telephone number is (813) 274-1000.
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE
FOLLOWING INFORMATION IN ADDITION TO THE OTHER INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN EVALUATING AN INVESTMENT IN THE
COMMON STOCK. CERTAIN MATTERS DISCUSSED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL
SECURITIES LAWS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED
IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED UPON REASONABLE ASSUMPTIONS, THERE
CAN BE NO ASSURANCE THAT ITS EXPECTATIONS WILL BE ACHIEVED. FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S CURRENT
EXPECTATIONS INCLUDE THE LOSS OF A SIGNIFICANT CUSTOMER; THE INABILITY OF THE
COMPANY TO MANAGE ITS GROWTH; RISKS ASSOCIATED WITH THE COMPANY'S INTERNATIONAL
OPERATIONS, GENERAL ECONOMIC CONDITIONS, AND THE OTHER RISKS SET FORTH BELOW.
DEPENDENCE ON KEY CUSTOMERS
Significant customers of the Company comprised 24%, 29%, and 12% of the
Company's consolidated revenues for the years ended December 31, 1995 and 1996
and the six months ended June 29, 1997, respectively. Two customers comprised
24% and 21% of the Company's revenues for the years ended December 31, 1995 and
1996, respectively. Revenues from a single customer amounted to 12%, 9%, and 9%
for the years ended December 31, 1995 and 1996 and the six months ended June 29,
1997, respectively. The Company's largest ten customers accounted for
approximately 50% of the Company's consolidated revenues in 1996. Generally, the
Company's contracts are cancelable by each customer at any time or on short term
notice, and customers may unilaterally reduce their use of the Company's
services under such contracts without penalty. The Company's loss of (or the
failure to retain a significant amount of business with) any of its key
customers could have a material adverse effect on the Company.
ABILITY TO MANAGE GROWTH
The Company has rapidly expanded its operation since it began providing
information technology support services through its IT call centers in 1994 and
anticipates continued growth to be driven by industry trends toward outsourcing
of such services. The continued growth of the Company's customer base and
expansion of the scope of services offered by it can be expected to continue to
place a significant strain on its resources. These resources could be further
strained from the opening of new IT call centers and the necessity to
successfully attract and retain qualified management personnel to manage the
growth and operations of the Company's business. There can be no assurance that
the Company will have sufficient resources or otherwise be able to maintain its
historic rate of growth or to maintain the quality of its services.
RECENT ACQUISITIONS AND IMPLEMENTATION OF ACQUISITION STRATEGY
During the six months ended June 29, 1997, the Company completed two
acquisitions and intends to pursue other acquisitions. There can be no assurance
that it will be able to successfully integrate the operations and management of
recent acquisitions and future acquisitions. Acquisitions involve significant
risks which could have a material adverse effect on the Company, including: (i)
the diversion of management's attention to the assimilation of the businesses to
be acquired; (ii) the risk that the acquired businesses will fail to maintain
the quality of services that the Company has historically provided; (iii) the
need to implement financial and other systems and add management resources; (iv)
the risk that key employees of the acquired business will leave after the
acquisition; (v) potential liabilities of the acquired business; (vi) unforeseen
difficulties in the acquired operations; (vii) adverse short-term effects on the
Company's operating results; (viii) lack of success in assimilating or
integrating the operations of acquired businesses with those of the Company;
(ix) the dilutive effect of the issuance of additional equity securities; (x)
the incurrence of additional debt; and (xi) the amortization of goodwill and
other intangible assets involved in any acquisitions that are accounted for
using the purchase method of accounting. There can be no assurance that the
Company will successfully implement its acquisition strategy. Furthermore, there
can be no assurance any acquisition will achieve levels of revenue and
profitability or otherwise perform as expected, or be consummated on acceptable
terms to enhance shareholder value.
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RAPID TECHNOLOGICAL CHANGE
The market for information technology services is characterized by
rapid technological advances, frequent new product introductions and
enhancements, and changes in customer requirements. The Company's future success
will depend in large part on its ability to service new products, platforms and
rapidly changing technology. These factors will require the Company to provide
adequately trained personnel to address the increasingly sophisticated, complex
and evolving needs of its customers. Its ability to capitalize on its
acquisitions will depend on its ability to (i) continually enhance software and
services and (ii) adapt such software to new hardware and operating system
requirements. Any failure by the Company to anticipate or respond rapidly to
technological advances, new products and enhancements, or changes in customer
requirements could have a material adverse effect on it.
DEPENDENCE ON QUALIFIED PERSONNEL
The Company's business is labor intensive and places significant
importance on its ability to recruit and retain qualified technical and
professional personnel. It generally experiences high turnover of its personnel
and is continuously required to recruit and train replacement personnel as a
result of a changing and expanding work force. Additionally, demand for
qualified professionals conversant with certain technologies is intense and may
outstrip supply as new and additional skills are required to keep pace with
evolving computer technology. There can be no assurance that the Company will be
successful in attracting and retaining the personnel its requires to conduct its
operations successfully. Failure to attract and retain such personnel could have
a material adverse effect on the Company.
RELIANCE ON TECHNOLOGY AND COMPUTER SYSTEMS
The Company has invested significantly in sophisticated and specialized
telecommunications and computer technology, and has focused on the application
of this technology to meet its clients' needs. It anticipates that it will be
necessary to continue to invest in and develop new and enhanced technology on a
timely basis to maintain its competitiveness. Significant capital expenditures
may be required to keep its technology up-to-date. Investments in technology,
including future investments in upgrades and enhancements to software, may not
necessarily maintain the Company's competitiveness. The Company's future success
will also depend in part on its ability to anticipate and develop information
technology solutions which keep pace with evolving industry standards and
changing client demands. In addition, the Company's business is highly dependent
on its computer and telephone equipment and software systems, and the temporary
or permanent loss of such equipment or systems, through casualty, operating
malfunction or otherwise, could have a material adverse effect on it.
DEPENDENCE ON TREND TOWARD OUTSOURCING
The Company's business and growth depend in large part on the industry
trend toward outsourcing information technology services. There can be no
assurance that this trend will continue, as organizations may elect to perform
such services in-house. A significant change in the direction of this trend
could have a material adverse effect on the Company.
EMERGENCY INTERRUPTION OF IT CALL CENTER OPERATIONS
The Company's operations are dependent upon its ability to protect its
IT call centers and its information databases against damages that may be caused
by fire, power failure, telecommunications failures, unauthorized intrusion,
computer viruses and other emergencies. The Company has taken precautions to
protect itself and its customers from events that could interrupt delivery of
its services. These precautions include off-site storage of backup data, fire
protection and physical security systems, rerouting of telephone calls to one or
more of its other IT call centers in the event of an emergency, backup power
generators and a disaster recovery plan. The Company also maintains business
interruption insurance in amounts it considers adequate. Notwithstanding such
precautions, there can be no assurance that a fire, natural disaster, human
error, equipment malfunction or inadequacy, or other event would not result in a
prolonged interruption in the Company's ability to provide support services to
its customers. Such an event could have a material adverse effect on the
Company.
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INTERNATIONAL OPERATIONS AND EXPANSION
At September 30, 1997, the Company's international operations were
conducted from seven IT call centers located in Sweden, The Netherlands, and
Germany, and recently it has initiated support services in South Africa.
Revenues from foreign operations for the years ended December 31, 1995 and
December 31, 1996 and the six months ended June 29, 1997, were 11.5%, 12.1%, and
13.1% of consolidated revenues, respectively. The Company intends to continue
its international expansion. International operations are subject to certain
risks common to international activities, such as changes in foreign
governmental regulations, tariffs and taxes, import/export license requirements
for the Company's software, the imposition of trade barriers, difficulties in
staffing and managing foreign operations, political uncertainties, longer
payment cycles, foreign exchange restrictions that could limit the repatriation
of earnings, possible greater difficulties in accounts receivable collection,
potentially adverse tax consequences, and economic instability.
The Company conducts business in various foreign currencies and is
therefore subject to the transaction exposures that arise from foreign exchange
rate movements between the dates that foreign currency transactions are
committed and the date that they are consummated. The Company also is subject to
certain exposures arising from the translation and consolidation of the
financial results of its foreign subsidiaries. The Company has from time to time
taken limited actions to attempt to mitigate the Company's foreign transaction
exposure. However, there can be no assurance that actions taken to manage such
exposure will be successful or that future changes in currency exchange rates
will not have a material impact on the Company's future operating results. The
Company does not hedge either its translation risk or its economic risk.
There can be no assurance that one or more of such factors or other
factors relating to international operations will not have a material adverse
effect on the Company's business, results of operations or financial condition.
COMPETITION
The industry in which the Company competes is extremely competitive and
highly fragmented. While many companies provide information technology services,
the Company believes no one company is dominant. There are numerous and varied
providers of such services, including firms specializing in call center
operations, temporary staffing and personnel placement companies, general
management consulting firms, divisions of large hardware and software companies
and niche providers of information technology services, many of whom compete in
only certain markets. The Company's competitors include many companies who may
possess substantially greater resources, greater name recognition and a more
established customer base than it does. In addition, the services offered by the
Company historically have been provided by in-house personnel. There can be no
assurance that the Company will be able to compete successfully against existing
or potential new competitors as the industry continues to evolve.
Many of the Company's large customers purchase information technology
services primarily from a limited number of preferred vendors. The Company has
experienced and continues to anticipate significant pricing pressure from these
customers in order to remain a preferred vendor. These companies also require
vendors to be able to provide services in multiple locations. Although the
Company believes it can effectively meet its customers' demands, there can be no
assurance that it will be able to compete effectively with other information
technology services companies.
RISKS ASSOCIATED WITH SOFTWARE DEVELOPMENT
DEPENDENCE ON NEW PRODUCTS AND ADAPTATION TO TECHNOLOGICAL CHANGE. The
computer software industry is subject to rapid technological change often
evidenced by new competing products and improvements in existing products. The
Company depends on the successful development of new products, including
upgrades of existing products, to replace revenues from products introduced in
prior years that have begun to experience reduced revenues. If the Company's
leading products become outdated and lose market share or if new products or
existing product upgrades are not introduced when planned or do not achieve the
revenues anticipated by the Company, the Company's operating results could be
adversely affected. Even with normal development cycles, the market environment
can change so quickly that features in certain
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products can become outdated soon after market introduction. These events may
occur in the future and may have an adverse effect on future revenues and
operating results.
COMPETITION. The personal computer market is intensely competitive,
subject to strategic alliances of hardware and software companies and
characterized by rapid changes in technology and frequent introductions of new
products and features. The Company's competitors include developers of operating
systems, applications and utility software vendors and personal computer
manufacturers that develop their own software products. The Company's current
revenues and profitability are dependent on the viability of the Microsoft
Windows and DOS operating systems. The Company expects to encounter continued
competition both from established companies and from new companies that are now
developing, or may develop, competing products. Many of the Company's existing
and potential competitors have financial, marketing and technological resources
significantly greater than those of the Company.
Future competitive product releases may cause disruptions in orders for
the Company's software products while users and the marketplace evaluate the
competitive products. The extent of the disruption in orders and the impact on
future orders of the Company's products will depend on various factors that are
not fully known at this time, including the level of functionality, performance
and features included in the final release of these competitive products and the
market's evaluation of competitive products compared to the then current
functionality, performance and features of the Company's products.
The Company anticipates that the type and level of competition
experienced to date will continue and may increase and that future sales of its
software products will be dependent upon the Company's ability to timely and
successfully develop or acquire new software products or enhanced versions of
its existing products, and to demonstrate to the user a need for the Company's
products while developers of operating systems and competitive software products
continue to enhance their products. To the extent that operating system
enhancements, competitive products or bundling of competitive products with
operating systems or computer hardware reduce the number of users who perceive a
benefit from the Company's products, sales of the Company's software products in
the future would be adversely impacted.
PRODUCT RETURNS. Like other manufacturers of package software products,
the Company is exposed to the risk of product returns from distributors and
reseller customers. Although the Company believes that it provides adequate
allowances for returns, there can be no assurance that actual returns in excess
of recorded allowances will not result in an adverse effect on business,
operating results and financial condition.
DEPENDENCE ON AND INTENSE COMPETITION FOR KEY PERSONNEL. Recruitment of
personnel in the computer software industry is highly competitive. The Company's
success in this product area depends to a significant extent upon the
performance of its executive officers and other key personnel. The loss of the
services of key individuals could have an adverse effect on the Company. The
Company's future success will depend in part upon its continued ability to
attract and retain highly qualified personnel. There can be no assurance that
the Company will be successful in attracting and retaining such personnel.
PATENTS AND PROPRIETARY INFORMATION. The Company provides its products
to end users under a nonexclusive, nontransferable license. Under the Company's
current form of software license agreement, software is to be used solely for
internal operations on designated computers at specified sites. The ability of
software companies to enforce such licenses has not been finally determined and
there can be no assurance that misappropriation will not occur.
The extent to which United States and foreign copyright and patent laws
protect software as well as the enforceability of end user licensing agreements
has not been fully determined. In addition, changes in the interpretation of
copyright and patent laws could expand or reduce the extent to which the Company
or its competitors are able to protect their software and related intellectual
property.
Because the computer industry is characterized by technological
changes, the policing of the unauthorized use of computer software is a
difficult task. Software piracy is expected to continue to be a persistent
problem for the packaged software industry. Despite steps taken by the Company
to protect its software products, third parties still may make unauthorized
copies of the Company's products for their own use or for sale to others. These
concerns are particularly acute in certain international markets. The
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Company believes that the knowledge, abilities and experience of its employees,
its timely product enhancements and upgrades and the availability and quality of
its support services provided to users are more significant factors in
protecting its software products than patent, trade secret and copyright
protection laws.
DEPENDENCE ON SENIOR MANAGEMENT
The success of the Company is largely dependent upon the efforts,
direction and guidance of its senior management. Although it has entered into
employment and noncompetition agreements with its executive officers, its
continued growth and success also depends in part on its ability to attract and
retain qualified managers, and on the ability of its executive officers and key
employees to manage its operations successfully. The loss of John H. Sykes,
Chairman of the Board, President and Chief Executive Officer, or the Company's
inability to attract, retain or replace key management personnel in the future,
could have a material adverse effect on it.
CONTROL BY PRINCIPAL SHAREHOLDER; ANTI-TAKEOVER CONSIDERATIONS
As of September 30, 1997, John H. Sykes, the Company's founder and
Chairman of the Board, beneficially owned approximately 52.5% of the Company's
outstanding Common Stock. As a result, Mr. Sykes will be able to elect the
Company's directors and determine the outcome of other matters requiring
shareholder approval. The voting power of Mr. Sykes, together with the staggered
Board of Directors and the anti-takeover effects of certain provisions contained
in both the Florida Business Corporation Act and in the Company's Articles of
Incorporation and Bylaws (including, without limitation, the ability of the
Board of Directors to issue shares of Preferred Stock and to fix the rights and
preferences thereof), may have the effect of delaying, deferring or preventing
an unsolicited change in the control of the Company, which may adversely affect
the market price of the Common Stock or the ability of shareholders to
participate in a transaction in which they might otherwise receive a premium for
their shares.
VOLATILITY OF STOCK PRICE
The Common Stock has experienced significant volatility, as well as a
significant increase in market price, since the Company's initial public
offering in April 1996. The market for securities of technology companies
historically has been more volatile than the market for stocks in general. The
trading of the Common Stock may be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results, announcement of recent
developments or new products by the Company or its competitors and other events
or factors. In addition, the stock market has from time to time experienced
extreme price and volume fluctuations that have particularly affected the market
price for many high technology companies and that often have been unrelated to
the operating performance of these companies. These broad market fluctuations
may adversely affect the market price of the Common Stock.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock. The Company currently anticipates that all of its earnings will be
retained for development and expansion of the Company's business and does not
anticipate paying any cash dividends in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
offered hereby.
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DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company's Certificate of Incorporation (the "Certificate")
authorizes 200,000,000 shares of Common Stock, $0.01 par value per share, of
which 35,516,969 shares were issued and outstanding as of September 30, 1997,
and 1,635,970 were subject to issuance to employees and six nonemployee
directors upon exercise of outstanding stock options. Holders of Common Stock
are entitled to one vote per share on all matters to be voted upon by the
stockholders. The holders of Common Stock do not have cumulative voting rights
in the election of directors. The Board of Directors presently consists of nine
members divided into three classes. The directors of the class elected at each
annual meeting of stockholders hold office for a term of three years. Holders of
Common Stock are entitled to receive dividends when, as and if declared from
time to time by the Board of Directors out of funds legally available therefor,
after payment of dividends required to be paid on outstanding Preferred Stock,
if any. In the event of liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities subject to prior distribution rights of
any Preferred Stock then outstanding. The Common Stock has no preemptive or
conversion rights and is not subject to further calls or assessment by the
Company. There are no redemption or sinking fund provisions applicable to the
Common Stock. All currently outstanding Common Stock of the Company is duly
authorized, validly issued, fully paid, and nonassessable.
PREFERRED STOCK
The Certificate authorizes 10,000,000 shares of Preferred Stock, $0.01
par value, none of which were outstanding as of September 30, 1997. The Board of
Directors has the authority, without any further vote or action by the
stockholders, to issue Preferred Stock in one or more series and to fix the
number of shares, designations, relative rights (including voting rights),
preferences, and limitations of such series to the full extent now or hereafter
permitted by Florida law. The Company has no present intention to issue
Preferred Stock.
ANTI-TAKEOVER PROVISIONS
Management of the Company currently owns or has the right to acquire
approximately 52.6% of the outstanding Common Stock. The provisions regarding
the division of the Board of Directors into classes and the ability of the Board
of Directors to issue Preferred Stock as described above may make it more
difficult for, and may discourage other persons or companies from making a
tender offer for, or attempting to acquire, substantial amounts of the Company's
Common Stock. This could have the effect of inhibiting changes in management and
may also prevent temporary fluctuations in the market price of the Company's
Common Stock which often result from actual or rumored takeover attempts.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for the Company's Common Stock is
Firstar Trust Company, 615 East Wisconsin Avenue, Fourth Floor, Milwaukee,
Wisconsin 53202.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market could
adversely affect market prices of the Common Stock and make it more difficult
for the Company to sell equity securities in the future at times and prices
which it deems appropriate.
As of September 30, 1997, 35,516,969 shares of Common Stock were issued
and outstanding, of which 15,820,503 shares will be freely tradeable (assuming
all of the 375,000 shares offered hereby are sold to nonaffiliates) without
restriction or further registration under the Securities Act. The 19,696,466
remaining shares ("Restricted Shares") may not be sold except in compliance with
the registration requirements of the Securities Act or pursuant to an exemption
from registration such as the exemption provided by Rule 144
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under the Securities Act, and then only in compliance with the volume and manner
of sale limitations of Rule 144. Approximately 18,667,966 Restricted Shares
owned by affiliates and others currently are eligible for sale under Rule 144.
The remaining 1,028,500 shares will be eligible for sale under Rule 144 at
various times throughout the next 12 months.
In general, under Rule 144 a stockholder (or stockholders whose shares
are aggregated) who has beneficially owned for at least one year shares
privately acquired directly or indirectly from the Company or from an
"affiliate" of the Company, and persons who are affiliates of the Company, are
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the outstanding shares of the Company's Common Stock
(approximately 355,170 shares at September 30, 1997) or the average weekly
trading volume in the Company's Common Stock in the over-the-counter market
during the four calendar weeks preceding such sale and may only sell such shares
through unsolicited brokers' transactions. A stockholder (or stockholders whose
shares are aggregated) who has not been an affiliate of the Company for at least
90 days and who has beneficially owned the Restricted Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to the
volume and manner of sale limitations described above.
SELLING STOCKHOLDERS
On June 16, 1997, the Company issued 750,000 shares of the Company's
Common Stock to the holders of all of the outstanding capital interests
("Quotas") of Telcare Gesellschaft fur Telekommunikations--Mehrwertdieste mbH
("Telcare"), a limited liability company organized under the laws of the Federal
Republic of Germany, located in Wilhelmshaven, Germany, and an operator of an
information technology call center and provider of technical product support and
services to numerous German industries. The shares were issued in connection
with the purchase of the Quotas by the Company's wholly owned subsidiary, Sykes
Enterprises GmbH ("Sykes GmbH"), a limited liability company newly organized
under the laws of the Federal Republic of Germany, pursuant to an Acquisition
Agreement, dated May 30, 1997, among holders of the Quotas, Sykes GmbH, and the
Company. Under the terms of the Registration Rights Agreement, dated June 16,
1997, entered into among the holders of the Quotas and the Company in
conjunction with the consummation of the acquisition, the Company agreed to file
a registration statement under the Securities Act to cover the sale of up to 50%
of the shares issued to the former holders of the Quotas, and to keep such
registration statement effective for a period not to exceed the first
anniversary date of issuance of the shares covered by this Prospectus.
Accordingly, 375,000 shares of Common Stock covered by this Prospectus are being
offered for sale by the former Telcare Quotasholders.
The number of shares being offered by the Selling Stockholders are
governed by the preexisting agreements between the Selling Stockholders and the
Company described above. The following table sets forth certain information with
respect to the beneficial ownership of the Company's Common Stock as of
September 30, 1997, and as adjusted to reflect the assumed sale of all of the
shares offered hereby by each Selling Stockholder.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering (1)
------------------ Being ------------------
Number Percent Offered Number Percent
------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Dienst, Rolf Christof................................ 138,937 * 69,468 69,469 *
Greff, Gunter........................................ 180,000 * 90,000 90,000 *
Halbherr, Ralf....................................... 60,000 * 30,000 30,000 *
Klawitter, Thomas (2)................................ 60,000 * 30,000 30,000 *
Rucker, Ruth......................................... 131,063 * 65,532 65,531 *
Schoss, Joachim (3).................................. 180,000 * 90,000 90,000 *
Total Shares Offered............................ 375,000
=======
</TABLE>
*Less than 1%. See footnotes following page.
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(1) The named stockholder has sole voting and investment power with respect
to the shares shown as being beneficially owned by it, except as
otherwise indicated.
(2) Mr. Klawitter is employed by the Company as General Manager of Telcare,
a wholly owned subsidiary of Sykes GmbH.
(3) Effective November 1997, Mr. Schoss will serve as Chairman of the Board
of Sykes GmbH, and will be employed by the Company as its President.
PLAN OF DISTRIBUTION
The distribution of the shares of Common Stock by a Selling Stockholder
may be effected from time to time in one or more transactions (which may involve
block transactions) in the over-the-counter market, or on the NASDAQ National
Market System (or any exchange on which the Common Stock may then be listed) in
negotiated transactions, through the writing of options (whether such options
are listed on an options exchange or otherwise), or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. A Selling
Stockholder may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from a Selling Stockholder
and/or purchasers of shares for whom they may act as agent (which compensation
may be in excess of customary commissions). A Selling Stockholder also may
pledge shares as collateral for margin accounts and such shares could be resold
pursuant to the terms of such accounts.
In order to comply with certain state securities laws, if applicable,
the Common Stock will not be sold in a particular state unless such securities
have been registered or qualified for sale in such state or any exemption from
registration or qualification is available and complied with.
The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Stockholders.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Foley & Lardner, Tampa, Florida.
EXPERTS
The financial statements incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-K for the year ended December 31,
1996, and from the Company's Current Report on Form 8-K dated June 16, 1997,
have been audited by Coopers & Lybrand L.L.P., independent auditors, as stated
in their reports, which are incorporated herein by reference and have been so
incorporated in reliance upon such reports given upon the authority of that firm
as experts in accounting and auditing.
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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information................................. 2
Incorporation of Certain Documents
by Reference....................................... 2
The Offering.......................................... 3
The Company........................................... 3
Risk Factors ......................................... 5
Use of Proceeds....................................... 9
Description of Capital Stock.......................... 10
Shares Eligible for Future Sale...................... 10
Selling Stockholders.................................. 11
Plan of Distribution.................................. 12
Legal Matters......................................... 12
Experts............................................... 12
</TABLE>
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SYKES ENTERPRISES, INCORPORATED
375,000 SHARES
COMMON STOCK
------------
PROSPECTUS
------------
October 29, 1997
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