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PROSPECTUS
Commission File No. 333-46569
Reg. Sec. 230.424(b)(1)
SYKES ENTERPRISES, INCORPORATED
290,000 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 September 25, 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 March 3, 1998, the last reported sale price
of the Common Stock was $18.32 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, (ii) transfer taxes or (iii) fees and
expenses of any Selling Stockholder's counsel exceeding $5,000 in the
aggregate.
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 MARCH 4, 1998.
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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;
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 28, 1997;
(5) The Company's Current Report on Form 8-K, dated June 16, 1997
filed October 20, 1997; and
(6) The Company's Current Report on Form 8-K, dated September 26,
1997 filed February 13, 1998.
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,
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Florida 33602, Attention: Scott J. Bendert, Senior Vice President--Finance,
Treasurer, and Chief Financial Officer, Telephone (813) 274-1000.
THE OFFERING
Up to 290,000 shares may be offered from time to time for the account
of the Selling Stockholders until September 25, 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, Africa, and The
Philippines. Through its 20 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 Adobe Systems, 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, Sykes
has grown to nine domestic IT call centers and 11 overseas IT call centers as
of December 1997.
All of Sykes's nine 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, Florida,
Kansas, North Dakota, Oklahoma, and Oregon. Through its IT call centers
located in Sweden, The Netherlands, France, Germany, South Africa, Scotland,
Ireland, and The Philippines, Sykes provides information technology support and
translation services to its multinational customers. The Company also
maintains 20 branch offices located in metropolitan areas of the United States,
Europe, Africa and The Philippines, 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.
During 1997, Sykes increased its services and expanded its customer
base through strategic acquisitions of Telcare
Telekommunikations--Mehrwertdieste mbH of Wilhelmshaven, Germany, on June 16,
1997, TAS Telemarketing Gesellschaft fur Kommunikation und Dialog mbH of
Bochum, Germany on September 25, 1997, TAS Hedi Fabinyi GmbH of Stuttgart,
Germany on September 25, 1997, and McQueen International Limited of Galashiels,
Scotland ("McQueen") on December 31, 1997. With the acquisition of McQueen,
Sykes has grown to an organization of more than 6,400 employees across 40
worldwide locations, providing IT support services at all stages in the life
cycle of their products and services--from initial development to documentation
and training to end-user support. Sykes also provides diagnostic capabilities
and retail software applications and support for back-office and point-of-sale
customers.
Sykes also 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
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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.
In addition to ETSC services, Sykes 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.
The Company's growth of its technical staffing, software development
and documentation and software translation services has been additionally
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 includes the following key elements:
. rapidly expand information technology support services revenues
through additional IT call centers in the United States and abroad;
. 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.
Sykes also expanded its services to the health care industry through
its formation and funding with HealthPlan Services Corporation ("HPS") of Sykes
HealthPlan Services, Inc. ("SHPS") in December 1997. The new company, SHPS, is
owned 50% by Sykes and 50% by HPS. SHPS will provide care management services,
technology solutions, customer services and outsourcing capabilities to the
health care and insurance industries. Through its technology solutions and
call center based operations, SHPS will provide various managed care services
to a large population of users interested in controlling medical loss ratios.
In particular, SHPS will seek to provide utilization, demand, disease, and
disability management to its target markets, which include large self-funded
employers as well as traditional health insurance carriers, HMOs, integrated
provider systems and third party administrators.
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
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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.
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.
RECENT ACQUISITIONS AND IMPLEMENTATION OF ACQUISITION STRATEGY
During the 12 months ended December 31, 1997, the Company completed
five 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.
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.
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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 KEY CUSTOMERS
Revenue from a single customer comprised 13%, 13%, and 11% of the
Company's consolidated revenues for the years ended December 31, 1995, 1996 and
1997, respectively. Two customers comprised 21% and 18% of the Company's
revenues for the years ended December 31, 1996 and 1997, respectively. The
Company's largest ten customers accounted for approximately 44% of the
Company's consolidated revenues in 1997. 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.
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.
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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.
INTERNATIONAL OPERATIONS AND EXPANSION
At December 31, 1997, the Company's international operations were
conducted from eleven IT call centers located in Sweden, The Netherlands,
France, Germany, South Africa, Scotland, Ireland, and The Philippines.
Revenues from foreign operations for the years ended December 31, 1996 and
December 31, 1997 were 40.4% and 36.7% 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
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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 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
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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
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 December 31, 1997, John H. Sykes, the Company's founder and
Chairman of the Board, beneficially owned approximately 47.7% 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.
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<PAGE> 10
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.
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 39,057,626 shares were issued and outstanding as of December 31, 1997,
and 1,446,411 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 December 31, 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 48.9% 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.
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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 December 31, 1997, 39,057,626 shares of Common Stock were issued
and outstanding, of which 15,615,775 shares will be freely tradeable (assuming
all of the 290,000 shares offered hereby and all of the 375,000 shares offered
for sale by selling shareholders under Registration Statement File No.
333-89513 are sold to nonaffiliates) without restriction or further
registration under the Securities Act. The 23,441,851 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 under the
Securities Act, and then only in compliance with the volume and manner of sale
limitations of Rule 144. Approximately 19,236,851 Restricted Shares owned by
affiliates and others currently are eligible for sale under Rule 144. The
4,205,000 remaining Restricted Shares (assuming all of the 290,000 shares
offered hereby and all of the 375,000 shares offered for sale by selling
shareholders under Registration Statement File No. 333-89513 are sold to
nonaffiliates) will be eligible for sale under Rule 144 at various times
throughout the next 12 months. Of these remaining Restricted Shares, 3,540,000
shares are subject to an agreement which grants so-called "demand registration
rights" to the holders which may be exercised at any time after March 1, 1998,
and, if exercised by the holders of at least 400,000 of such shares, would
require the Company to register up to 50% of the shares held by the
shareholders exercising such rights.
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 390,576 shares at December 31, 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 September 25, 1997, the Company issued 400,000 shares of Common
Stock to the holders of all of the outstanding capital interests ("Quotas") of
TAS Telemarketing Gesellschaft fur Kommunikation und Dialog mbH ("TAS I") of
Bochum, Germany, a limited liability company organized under the laws of the
Federal Republic of Germany, and an operator of information technology call
centers and a 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 organized under the laws of the
Federal Republic of Germany, pursuant to an Acquisition Agreement, dated
September 19, 1997, among TAS I Quotasholders, Sykes GmbH, and the Company.
Under the terms of the Registration Rights Agreement, dated September 25, 1997,
entered into among the TAS I Quotasholders 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 TAS I Quotasholders, 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.
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Accordingly, 200,000 shares of Common Stock covered by this Prospectus are
being offered for sale by the former TAS I Quotasholders.
On September 25, 1997, the Company issued 180,000 shares of Common
Stock to the Quotasholder of TAS Hedi Fabinyi GmbH ("TAS II") of Stuttgart,
Germany, a limited liability company organized under the laws of the Federal
Republic of Germany, and an operator of an information technology call center
and a 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 GmbH, pursuant to an
Acquisition Agreement, dated September 25, 1997, among the TAS II Quotasholder,
Sykes GmbH, and the Company. Under the terms of the Registration Rights
Agreement, dated September 25, 1997, entered into among the TAS II Quotasholder
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 TAS II
Quotasholder, 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, 90,000 shares of Common Stock covered by this
Prospectus are being offered for sale by the former TAS II Quotasholder.
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
December 31, 1997, and as adjusted to reflect the assumed sale of all of the
shares offered hereby by each Selling Stockholder.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Number Beneficially
Owned Prior of Owned After
to the Offering Shares the Offering (1)
----------------- Being -----------------
Number Percent Offered Number Percent
------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Bromkamp, Alfons (2)(3) . . . . . . . . . . . . . 348,000 * 174,000 174,000 *
Fabinyi, Hedi (4) . . . . . . . . . . . . . . . . 180,000 * 90,000 90,000 *
Frohlich, Christian (2) . . . . . . . . . . . . 52,000 * 26,000 26,000 *
-------
Total Shares Offered . . . . . . . . . . . . 290,000
=======
</TABLE>
*Less than 1%.
- --------------
(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) Former TAS I Quotasholder.
(3) Mr. Bromkamp is employed by the Company as general manager of TAS I, a
wholly owned subsidiary of Sykes GmbH.
(4) Former TAS II Quotasholder. Ms. Fabinyi is employed by the Company as
general manager of TAS II, a wholly owned subsidiary of Sykes GmbH.
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
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<PAGE> 13
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 Reports on Form 8-K dated June 16, 1997
and September 26, 1997, respectively, have been audited by Coopers & Lybrand
L.L.P., independent auditors, as stated in their report, which is incorporated
herein by reference and have been so incorporated in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
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<TABLE>
<S> <C>
==================================================== ======================================================
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 SYKES ENTERPRISES, INCORPORATED
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION
IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS 290,000 SHARES
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN COMMON STOCK
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.
----------------
PROSPECTUS
TABLE OF CONTENTS ----------------
</TABLE>
<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 . . . . . . . . . . . . . . . . . 10
Description of Capital Stock . . . . . . . . . . 10
Shares Eligible for Future Sale . . . . . . . . . 11
Selling Stockholders . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . 12
Legal Matters . . . . . . . . . . . . . . . . . . 13
Experts . . . . . . . . . . . . . . . . . . . . . 13 March 4, 1998
==================================================== ======================================================
</TABLE>
