AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 2, 1999
REGISTRATION NO. 333 - ____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
IMRGLOBAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
FLORIDA 59-2911475
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
100 SOUTH MISSOURI AVENUE
CLEARWATER, FLORIDA 33756
(727) 467-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
DILIP PATEL
IMRGLOBAL CORP.
100 SOUTH MISSOURI AVENUE
CLEARWATER, FLORIDA 33756
(727) 467-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
COPIES TO:
THOMAS J. EGAN, JR. JOHN R. FALLON, JR.
BAKER & MCKENZIE LEBOEUF, LAMB, GREENE & MACRAE, L.L.P.
815 CONNECTICUT AVENUE, N.W. 125 WEST 55TH STREET
WASHINGTON, DC 20006 NEW YORK, NEW YORK 10019
(202) 452-7050 (212) 424-8279
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
At various times after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[X]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.[X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [X]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [X]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================
<S> <C> <C> <C> <C>
Title of Shares Amount to be Proposed Proposed Maximum Amount of Registration Fee
to be Registered Registered(1) Maximum Offering Aggregate Offering
Price Per Unit(2) Price
- ------------------------------------------------------------------------------------------------------------
Common Stock, par value 3,408,846 $10.250 $34,940,672 $9,713.51
</TABLE>
(1) Pursuant to Rule 457(c) under the Securities Act of 1933, the proposed
maximum aggregate offering price is based upon the average of the high and low
prices per share of the Registrant's Common Stock report on the Nasdaq National
Market on November 29, 1999.
(2) This Registration Statement covers shares owned by certain selling
shareholders which shares may be offered from time to time by the selling
shareholders.
<PAGE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 2, 1999
[imrglobal LOGO]
3,408,846 SHARES
OF
COMMON STOCK
This prospectus is part of a registration statement that has been filed
with the Securities and Exchange Commission and that covers 3,408,846 shares of
our common stock. These shares may be offered and sold from time to time by
certain of our shareholders, which we refer to as the selling shareholders.
Certain selling shareholders obtained their shares of our common stock in
connection with 1999 business combinations entered into between IMRglobal and
Fusion Systems, Ltd. and Orion Consulting, Inc. Other selling shareholders
obtained their shares through a private placement by the Chief Executive Officer
of IMRglobal Corp.
The selling shareholders may offer their shares of our common stock
through public or private transactions, on or off the United States exchanges,
at prevailing market prices, or at privately negotiated prices.
We will not receive any of the proceeds from the sale of this common
stock. We will, however, bear the costs relating to the registration of these
shares of common stock, which we estimate to be $59,714.
Our common stock is quoted on the Nasdaq National Market under the symbol
"IMRS." The average of the high and low prices of our common stock as reported
on the Nasdaq National Market on November 29, 1999 was $10.250 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 TO READ ABOUT CERTAIN RISKS THAT
YOU SHOULD CONSIDER BEFORE MAKING AN INVESTMENT DECISION.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS. NO ONE HAS BEEN AUTHORIZED TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER OF THESE SHARES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS.
The date of this prospectus is December 2, 1999
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Summary .......................................................... 1
Where You Can Find More Information.......................................... 3
Special Note Regarding Forward-Looking Statements............................ 3
Risk Factors................................................................. 4
Use of Proceeds.............................................................. 11
Dividend Policy.............................................................. 11
Business .................................................................... 12
Selling Shareholders......................................................... 22
Plan of Distribution......................................................... 26
Legal Matters................................................................ 27
Experts...................................................................... 27
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE
RISKS OF INVESTING IN OUR SECURITIES DISCUSSED UNDER "RISK FACTORS" BEFORE
MAKING AN INVESTMENT DECISION.
OUR BUSINESS
We are an international provider of innovative business and IT
solutions to Fortune 500 and Global 2000 sized companies. We focus on providing
our comprehensive range of services to companies in the following vertical
industries:
o Insurance
o Capital markets
o Healthcare
o Utilities
o Media and communications
o Retail and manufacturing/distribution
We believe companies in these industries are facing unique and
substantial changes and competition that are altering the way they conduct
business.
We offer the following services to our clients in these industries:
o Business consulting - provide vertical industry business expertise
o IT strategy formulation - plan and develop IT strategies
o E-Business services - design and implement Internet solutions
o Component-based application development- build new applications
using components
o Component-based vertical industry solutions - build industry
specific applications using components.
o Application modernization/transformation - transform older software
to newer technologies
o Application management and support - manage and support existing
computer applications
Due to the scope and pace of the changes facing our clients, IT
solutions in these industries rarely lend themselves to packaged "off the shelf"
programs or services. Instead, a customized and technology-based approach is
needed. Since early 1998, we have been developing component-based, vertical
industry solutions to meet these needs and have acquired companies with
complementary business knowledge or technology to assist in this development
effort. Our component-based vertical industry solutions combine the
functionality of customized software with the speed of implementation of a
packaged solution and are generally delivered at a lesser total cost than fully
customized solutions. In addition we believe component-based solutions to be
more reliable and better tailored to the specific needs of our clients than
pre-packaged products.
We provide all of our services on an outsourcing basis and provide our
clients with a global network of centers with highly trained and qualified
technology professionals. We utilize the time differences between our
development centers in our global network to create a 24-hour "virtual workday"
during which our technology professionals can work on projects for our clients.
An important part of our strategy is to offer our services on a
fixed-price, fixed-time basis. By offering fixed pricing, we enable our clients
to reduce their exposure to increased costs and by using our "on-site, off-site"
delivery model, which utilizes one or more of our worldwide delivery centers, we
can maintain consistent quality and reduce the project delivery time.
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In addition to fixed-priced, fixed-time projects, we provide
programming and IT consulting services at clients' sites as needed, usually on a
time and materials basis. We also help our clients with tactical issues such as
Year 2000 conversion services and the transition to the Euro currency. Our Year
2000 service offering was our largest source of revenue in each of 1997 and 1998
as our clients committed significant financial resources in addressing this
issue. As Year 2000 engagements are completed in 1999, our revenue from this
service offering will decrease and is expected to be less than 15% of our
business in 1999.
Currently, we maintain a staff of approximately 2,500 software
development professionals to serve our clients from our 46 locations worldwide.
We intend to further broaden our geographical reach mainly through acquisitions.
In addition, we intend to continue to acquire companies that have specific
industry expertise in one of our vertical markets and/or significant expense in
new technologies.
HOW TO REACH US
Our principal executive offices are located at 100 South Missouri
Avenue, Clearwater, Florida 33756. Our telephone number at that address is
727-467-8000.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the public reference facilities of the SEC at 450 Fifth Street, N.W.,
Washington, D.C., or at the public reference rooms of the SEC in Chicago,
Illinois and New York, New York. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http:\www.sec.gov and from
our website at http://www.imrglobal.com.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and any later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any additional documents
we file with the SEC until the offering of the common stock is terminated. This
prospectus is part of a registration statement on Form S-3 that we filed with
the SEC. The documents we incorporate by reference are:
o Our Annual Report on Form 10-K for the fiscal year ended December 31, 1998
o Our Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
o The description of our common stock that is contained in our
Registration Statement on Form 8-A filed on October 20, 1996
o Our Current Reports on Form 8-K filed on January 15, 1999, April 8,
1999, June 29, 1999, August 27, 1999, October 29, 1999, November 4,
1999, November 15, 1999, and November 18, 1999.
You may request a copy of these filings, at no cost, by writing,
telephoning or e-mailing us at the following address:
Investor Relations
IMRglobal Corp.
100 South Missouri Avenue
Clearwater, Florida 33756
727-467-8000 - tel
727-467-8001 - fax
[email protected] - e-mail
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. These statements express or are based on
expectations about future events and generally include forward-looking language
such as "will likely result," "may," are expected to," "is anticipated,"
"believes," "estimated," "projected," "intends to" or other similar words. Our
actual results are likely to differ, and could differ materially, from the
results expressed in, or implied by, these forward-looking statements. There are
many factors that could cause these forward-looking statements to be incorrect,
including but not limited to the risks described above under "Risk Factors".
When considering these forward-looking statements, you should keep in mind these
risk factors and the other cautionary statements in this prospectus, and should
recognize that those forward-looking statements speak only as of the date made.
We do not undertake any obligation to update any forward-looking statement
included in this prospectus.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING
AN INVESTMENT DECISION. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE
ONLY ONES FACING US. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO
US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR OPERATIONS.
IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN
SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE
ALL OR PART OF YOUR INVESTMENT.
WE MAY NOT EFFECTIVELY MANAGE OUR GROWTH
The continued rapid growth of our business is an important part of our
strategy. Our growth places, and will continue to place, significant demands on
our management and other resources, especially on members of senior management
who have to manage more people, and face a larger number of, and increasingly
complex, issues as our company grows. If we do not manage our growth
effectively, the quality of the services we offer, our ability to attract and
retain key personnel and our business and our financial condition would be
materially adversely affected. We expect that the number of our employees,
particularly skilled technical, marketing and management employees will continue
to increase. We must continue to develop and improve our operational, financial,
communications and other internal systems, both in the United States and
offshore.
In addition, we must coordinate our business and staffing needs because
any unexpected shortfall in revenue without a corresponding and timely reduction
in staffing and other expenses, or a staffing increase that is unaccompanied by
a corresponding increase in revenue, could also have a material adverse effect
on our results of operations and our financial condition.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO INTEGRATE
BUSINESSES WE ACQUIRE
We have expanded, and plan to continue to expand, our operations
through the acquisition of additional companies that complement our business. We
may not be able to continue to identify and acquire companies that have the
potential to increase our overall value at prices that are attractive to us, or
at all. During 1999, we completed several acquisitions, including the following:
o Atechsys, S.A. and ECWerks, Inc. in January 1999
o Fusion Systems Japan Co., Ltd. in March 1999
o Professional Partners Inc. and Lakewood Software Technology
Center, Inc. in April 1999
o Orion Consulting, Inc. in June 1999
We may not be able to achieve the anticipated benefits from these and
future acquisitions unless the operations of the acquired business are
successfully combined with our business in a timely manner. The integration of
acquisitions requires substantial attention from management. The diversion of
the attention of management, and any difficulties encountered in the transition
process, could have an adverse impact on this integration and, as a result, on
our business results. In addition, the process of integrating various businesses
could cause the interruption of, or a loss of momentum in, the activities of
some or all of these businesses, which could also have an adverse effect on our
business results.
WE FACE SIGNIFICANT COMPETITION IN MARKETS THAT ARE NEW, INTENSELY COMPETITIVE
AND RAPIDLY CHANGING
The markets for the services we provide are highly competitive. We
believe that we currently compete principally with information technology (known
as "IT") consulting firms, Internet and E-business professional service
providers, software integration firms, application software vendors and internal
IT departments. Many companies that provide such services have significantly
greater financial, technical and marketing resources, generate greater revenues
and have greater name recognition than we do. In addition, there are relatively
few
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barriers to entry into our markets. We have faced, and expect to continue to
face, additional competition from new entrants into our markets. We believe that
the principal competitive factors in our markets include:
o quality of service, price and speed of delivery;
o ability to integrate strategy, technology and creative design
services;
o vertical industry knowledge;
o Internet expertise and talent; and
o project management capability.
We believe that our ability to compete also depends in part on
competitive factors outside our control, including:
o the ability of our competitors to hire, retain and motivate their
personnel;
o the development by others of software that is competitive with our
products and services; and
o our competitors' responsiveness to client needs.
WE MAY NOT BE ABLE TO GENERATE SUFFICIENT NEW BUSINESS TO REPLACE OUR
SIGNIFICANT, BUT DIMINISHING, REVENUE FROM YEAR 2000 CONVERSION PROJECTS
We realized a substantial but diminishing proportion of our total
revenue from Year 2000 conversion services in 1997, 1998 and the nine months
ended September 30, 1999 (details of which are described in our 10K, 8K and 10Q
filings). We believe that demand for Year 2000 conversion services has started
to diminish and will continue to diminish as many Year 2000 compliance solutions
are implemented and tested. A core element of our growth strategy is to obtain
additional IT projects from the clients to whom we have provided Year 2000
compliance solutions. If we are not successful in obtaining additional business
from these clients for other services or if the additional business is less
profitable, our profitability may decline substantially.
THE SIGNIFICANCE OF OUR NON-UNITED STATES OPERATIONS IS INCREASING AND IF WE
CANNOT MONITOR OUR INTERNATIONAL BUSINESS EXPOSURE, INCLUDING OUR FOREIGN
CURRENCY TRANSACTIONS, OUR RESULTS OF OPERATIONS AND OUR FINANCIAL CONDITION MAY
SUFFER
Revenue from clients outside the United States was substantial and has
continued to increase throughout 1997, 1998 and the nine months ended September
30, 1999. We expect that international revenue will account for an increasingly
significant percentage of our revenue. Our international operations and business
activities are subject to the following risks:
o difficulty in managing international operations;
o tariffs, duties, governmental royalties and other trade barriers;
o potential foreign tax consequences, including taxes payable on the
repatriation of earnings;
o compliance with, and unexpected changes in, a growing variety of
foreign laws and regulations; and
o unexpected changes in the local and regional political climate and
the possible reactions to those
changes by the international community, including economic
sanctions.
Our international operations greatly depend upon business and
technology transfer laws and related restrictions and upon continued development
of technology infrastructure.
We presently incur a significant amount of our costs in local currency
in India and expect to establish additional offshore centers in other countries.
In contrast, we presently generate most of our revenue in United States dollars.
Accordingly, we are subject to risks that, as a result of currency fluctuations,
the translation of foreign currencies into United States dollars for accounting
purposes will adversely affect our result of operations. Historically, we have
not hedged any material portion of our foreign exchange transactions.
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THE LOSS OF ANY LARGE CLIENTS WOULD HAVE AN ADVERSE EFFECT ON OUR REVENUE AND
OUR BUSINESS
We derive and believe that we will continue to derive a significant
portion of our revenue from a limited number of large corporate clients. In the
nine months ended September 30, 1999, our five largest clients accounted for
18.2% of our total revenue. During that period, Michelin North America, Inc
accounted for 5.9% of revenues and John Hancock Mutual Life Insurance Company
accounted for 5.4%. The volume of work performed for specific clients is likely
to vary from year to year. A major client in one year may not provide the same
level of revenue in any subsequent year. Because many of our contractual
engagements involve projects that are critical to our clients' businesses, our
failure to meet a client's expectations could result in a cancellation or
nonrenewal of the contract and could damage our reputation and adversely affect
our ability to attract new business. Furthermore, we generally are not the
exclusive outside source of IT products and services to our clients.
Accordingly, a client's dissatisfaction with our performance could lead the
client to purchase these services from a competitor, thereby reducing our
revenue and profitability.
IF WE CANNOT RECRUIT AND RETAIN TECHNICAL PERSONNEL, OUR BUSINESS WILL SUFFER
The future success of our growth strategy, our ability to manage and
complete our existing projects and our ability to bid for or obtain new projects
all depend, to a significant extent, on our ability to attract, train, motivate
and retain highly skilled software development professionals, particularly
project managers, software engineers and other senior technical personnel. If we
are not successful in this regard, our business will suffer.
We believe that there is a shortage of, and significant competition
for, software development professionals with the advanced technological skills
necessary to perform the services offered by us. Our ability to maintain and
renew existing engagements and obtain new business depends, in large part, on
our ability to hire, train and retain technical personnel with the IT skills to
keep pace with the continuing changes in information processing technology,
evolving industry standards and changing client preferences.
As of September 30, 1999, approximately 500 of our United States
employees were working for us pursuant to the non-immigrant work permitted visa
(H-1B) classification. There is a limit on the number of new H-1B petitions that
the United States Immigration and Naturalization Services may approve in any
government fiscal year. In years in which this limit is reached, we may not be
able to obtain the H-1B visas necessary to bring critical foreign employees to
the United States. Compliance with existing United States immigration laws, or
changes in such laws, make it more difficult to hire foreign nationals or limit
our ability to retain H-1B employees in the United States, and could require us
to incur unexpected labor costs.
THE LOSS OF SATELLITE COMMUNICATIONS WITH OUR OFFSITE SOFTWARE DEVELOPMENT
CENTERS COULD HARM OUR BUSINESS
Any loss of our ability to transmit voice and data through satellite
communications, at commercially reasonable prices, could have a material adverse
effect on our financial condition because a significant element of our business
strategy is to continue to leverage our offsite software development centers in
Bangalore and Mumbai, India. We believe that the use of a strategically located
network of offshore software development centers provides us with potential cost
advantages as well as the ability to provide 24-hour service to our clients. To
achieve this goal, we must maintain active satellite communications among our
offices, the offices of our clients in the United States and elsewhere, and with
our offshore software development facilities.
WE ARE EXPOSED TO GREATER BUSINESS RISKS RELATING TO THE ECONOMIC, LEGAL AND
SOCIAL ENVIRONMENT OF OUR OPERATIONS IN OTHER COUNTRIES, ESPECIALLY INDIA AND
NORTHERN IRELAND, THAN WE ARE FOR OUR OPERATIONS IN THE UNITED STATES
We may be adversely affected by future changes in inflation, interest
rates, taxation, social stability or other political, economic or diplomatic
developments in or affecting countries in which we establish software
development facilities. For example, in the past, India has experienced
significant inflation, low growth in gross domestic product and shortages of
foreign exchange. Furthermore, both India and Northern Ireland have experienced
civil unrest and terrorism and, from time to time, have been involved in
regional conflicts.
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We have also enjoyed certain benefits granted by the governments of
India and Northern Ireland. The elimination of any of these benefits could have
a material adverse effect on our financial results. The Indian government has
exercised and continues to exercise significant influence over many aspects of
the Indian economy, and its actions concerning the economy could adversely
affect private sector entities, including us. During the past five years,
India's government has provided significant tax incentives and relaxed certain
regulatory restrictions in order to encourage foreign investment in specified
sectors of the economy, including the software development industry. Benefits
which have directly affected us include, among others, tax holidays, liberalized
import and export duties and preferential rules concerning foreign investment
and repatriation. Notwithstanding these benefits, however, India's central and
state governments remain significantly involved in the Indian economy as
regulators.
The government of Northern Ireland has committed to provide monetary
grants to us to encourage employment in our software development center in
Belfast, if we meet specified requirements, including investments in facilities
and the employment and training of a minimum number of personnel.
THE SUCCESS OF THE E-BUSINESS CONSULTING SERVICES BUSINESS DEPENDS ON INCREASED
ADOPTION BY BUSINESSES AND CONSUMERS OF THE INTERNET AS A MEANS FOR COMMERCE
The future success of our E-business consulting services depends
heavily on the acceptance and use of the Internet as a means for commerce. The
widespread acceptance and adoption of the Internet for conducting business is
likely only in the event that the Internet provides businesses with greater
efficiencies and improvements. If commerce on the Internet does not grow, or
grows more slowly than expected, our growth would decline and our business would
be seriously harmed. Businesses and consumers may reject the Internet as a
viable commercial medium for a number of reasons, including:
o potentially inadequate network infrastructure;
o delays in the development of Internet enabling technologies and
performance improvements;
o delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity;
o delays in the development of security and authentication;
o insufficient technology necessary to ensure secure transmission of
confidential information;
o changes in, or insufficient availability of, telecommunications
services to support the Internet; and
o failure of companies to meet their clients' expectations in
delivering goods and services over the Internet.
OUR BUSINESS IS DEPENDENT ON OUR ABILITY TO KEEP PACE WITH THE LATEST
TECHNOLOGICAL CHANGES
Our market and the technologies used by our clients are characterized
by rapid technological changes. Failure to respond successfully to technological
developments, or failure to respond in a timely or cost-effective way, will
seriously harm our business and operating results. We expect to derive a
substantial portion of our revenue from creating E-business systems that are
based upon today's leading technologies and that are capable of adapting to
future technologies. As a result, our success will depend, in part, on our
ability to offer services that keep pace with continuing changes in technology,
evolving industry standards and changing client preferences. In addition, we
must hire, train and retain technologically knowledgeable professionals so that
they can fulfill the increasingly sophisticated needs of our clients. We cannot
assure you that we will be successful in addressing these developments on a
timely basis or that even if we address them, we will be successful in the
marketplace.
INCREASING GOVERNMENT REGULATION COULD AFFECT OUR BUSINESS
We are subject not only to regulations applicable to businesses
generally, but also to laws and regulations directly applicable to electronic
commerce. Although there are currently few such laws and regulations, both
state, federal and foreign governments may adopt a number of these laws and
regulations. Any such legislation or regulation could dampen the growth of the
Internet and decrease its acceptance as a communications and commercial medium.
If such a decline occurs, companies may decide in the future not to use our
services to create
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electronic business channels. This decrease in the demand for our services would
seriously harm our business and operating results. New laws and regulations may
affect the following:
o user privacy;
o the pricing and taxation of goods and services offered over the
Internet;
o the content of websites;
o consumer protection; and
o the characteristics and quality of products and services offered
over the Internet.
For example, the Telecommunications Act of 1996 prohibits the
transmission of certain types of information and content over the Internet. The
scope of the Act's prohibition is currently unsettled. In addition, although
courts recently held that substantial portions of the Communications Decency Act
are unconstitutional, federal or state governments may enact, and courts may
uphold, similar legislation in the future. Future legislation could expose
companies involved in Internet commerce to liability.
WE MAY HAVE LIABILITY TO CLIENTS FOR DAMAGES TO THEIR COMPUTER SYSTEMS BECAUSE
OUR CONTRACTS LIMITING THE LIABILITY MAY NOT BE ENFORCEABLE OR BECAUSE WE MAY
NOT BE COVERED BY INSURANCE
Many of our contractual engagements involve projects that are critical
to our clients' operations and provide benefits that may be difficult to
quantify. Any failure in a client's system could result in a claim for
substantial damages against us, regardless of our responsibility for such
failure. We attempt to limit contractually our liability for damages arising
from negligent acts, errors, mistakes, or omissions in rendering our IT products
and services, but the limitations of liability set forth in our service
contracts may not be enforceable in all instances or may not otherwise protect
us from liability for damages. In addition, we maintain general liability
insurance coverage, including coverage for errors or omissions, but this
coverage may not continue to be available on reasonable terms or may not be
available in sufficient amounts to cover one or more large claims, or the
insurer may disclaim coverage as to any future claim. The successful assertion
of one or more large claims against us that exceed available insurance coverage
or changes in our insurance policies, including premium increases or the
imposition of large deductible or co-insurance requirements, could materially
adversely affect our results of operations and financial condition.
WE RISK HAVING COST OVERRUNS IN FIXED-PRICE, FIXED-TIME FRAME CONTRACTS WHICH
MAY REDUCE OUR PROFITABILITY
As a core element of our business philosophy, our strategy is to offer
many of our IT services on fixed-price, fixed-time frame contracts, rather than
contracts in which payment to us is determined solely on a time and materials
basis. Although we use our total software quality management software
engineering process and our past project experience to reduce the risks
associated with estimating, planning and performing fixed-price, fixed-time
frame projects, we bear the risk of cost over-runs and inflation in connection
with these projects. Our failure to estimate accurately the resources and time
required for a project, future rates of inflation and currency translations, or
our failure to complete our contractual obligations within the time frame
committed could reduce our profitability.
OUR OPERATING RESULTS ARE SUBJECT TO FLUCTUATIONS AND WE HAVE SIGNIFICANT FIXED
OPERATING COSTS
Our revenue and earnings have fluctuated in the past and may continue
to fluctuate from quarter to quarter based on such factors as:
o the number, timing and scope of projects that we are undertaking;
o the contractual terms and degrees of completion of such projects;
o any delays incurred in connection with projects;
o the accuracy of estimates of resources required to complete ongoing
projects; and
o general economic conditions.
Wage costs in India are presently increasing at a faster rate than in
the United States. As of September 30, 1999, approximately 25% of our employees
reside in India. Historically, our wage costs in India have been
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significantly lower than our wage costs in the United States for comparably
skilled employees. However, in light of the current wage increases in India, we
cannot assure you that this will remain the same.
A high percentage of our operating expenses, particularly personnel and
rent, are fixed in advance of any particular quarter. As a result, unanticipated
variations in the number, or progress toward completion, of our projects or in
employee utilization rates may cause significant variations in operating results
in any particular quarter and could result in losses for such quarter.
Factors that could require us to pay underutilized employees are as
follows:
o an unanticipated termination of a major project;
o a client's decision not to pursue a new project;
o a client's decision not to proceed to succeeding stages of a current
project; and
o the completion during a quarter of several major clients' projects.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE
LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
In order to protect our proprietary rights in our various intellectual
properties, we rely on a combination of copyright and trade secret laws,
nondisclosure and other contractual arrangements, and technical measures. The
United States, India, the U.K., France, Canada, Japan and Australia are members
of the Berne Convention, an international treaty. As a member of the Berne
Convention, these governments have agreed to extend copyright protection under
their domestic laws to foreign works, including works created or produced in the
United States. We believe that laws, rules, regulations and treaties in effect
in these seven countries are adequate to protect us from misappropriation or
unauthorized use of our copyrights. However, we cannot assure you that these
laws will not change in ways that may prevent or restrict the transfer of
software components, libraries and toolsets among these seven countries. We
cannot assure you that the steps we have taken to protect our proprietary rights
will be adequate to prevent misappropriation of our proprietary rights or any of
our other intellectual property. We also cannot assure you that we will be able
to detect unauthorized use and take appropriate steps to enforce our rights. We
presently hold no patents or registered copyrights.
Although we believe that our intellectual property rights do not
infringe on the intellectual property rights of others, we cannot assure you
that such claims will not be asserted against us in the future, that assertion
of such claims will not result in litigation or that we would prevail in such
litigation or be able to obtain a license for the use of any infringed
intellectual property from a third party on commercially reasonable terms.
Additionally, we anticipate that in the future we will license certain
technologies to our clients. We cannot assure you that we will be able to
successfully license these technologies, protect them from infringement or
misuse, or prevent infringement claims against us in connection with our
licensing efforts. We expect that the risk of infringement claims against us
will increase if more of our competitors are able to successfully obtain patents
for software products and processes. Any such claims, regardless of their
outcome, could result in substantial cost to us and divert management's
attention from our operations. Any infringement claim or litigation against us
could, therefore, have a material adverse effect on our financial results.
OUR STOCK PRICE IS SUBJECT TO VOLATILITY
Our common stock was first publicly traded on November 8, 1996 and has
traded from a low of $5.00 per share to a high of $42.17 per share. The market
price of our common stock is likely to continue to fluctuate substantially due
to a variety of factors, including:
o quarterly fluctuations in results of operations;
o competitors' announcements of their operating results;
o adverse circumstances affecting the introduction or market
acceptance of new products and services;
o announcements of new products and services by competitors;
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o changes in the IT environment;
o changes in earnings estimates by analysts;
o changes in accounting principles;
o sales of common stock by existing holders;
o announcement and market acceptance of acquisitions;
o loss of key personnel; and
o worldwide economic and political conditions.
The market price for our common stock may also be affected by our
ability to meet analysts' expectations. Any failure to meet analysts'
expectations, even if minor, could adversely affect the market price of our
common stock.
OUR CHIEF EXECUTIVE OFFICER'S STOCK OWNERSHIP PROVIDES SUBSTANTIAL CONTROL OVER
OUR COMPANY
Satish K. Sanan, our Chairman of the Board and Chief Executive Officer,
owns approximately 19% of our outstanding shares of common stock. As a result,
Mr. Sanan retains the voting power to exercise significant control over the
election of directors and other matters requiring a vote of shareholders. Such a
concentration of ownership may delay or prevent a change in control and may
impede or preclude transactions in which shareholders might otherwise receive a
premium for their shares over the then current market prices.
IF WE LOSE OUR KEY PERSONNEL, OUR BUSINESS MAY SUFFER
Our continued success depends in large part upon the continued
availability of key management personnel, particularly the services of Mr.
Sanan. The loss of the services of Mr. Sanan would have a material adverse
effect on us. We do not currently maintain nor do we intend to acquire key man
insurance on the life of Mr. Sanan.
OUR CHARTER DOCUMENTS AND FLORIDA LAW COULD DISCOURAGE ACQUISITION PROPOSALS AND
DELAY OR PREVENT A CHANGE OF CONTROL
We have a number of protective provisions in place designed to provide
our board of directors with time to consider whether a hostile takeover offer is
in our shareholders' best interests. These provisions, however, could discourage
potential acquisition proposals and could delay or prevent a change of control
of our corporation. These provisions could also diminish the opportunities for
our shareholders to participate in tender offers, including tender offers at a
price above the then current market price for our common stock. These provisions
may also inhibit fluctuations in our stock price that could result from takeover
attempts.
These provisions are:
o the requirement that our board of directors be divided into three
classes serving staggered three-year terms with only one of the
three classes being elected each year;
o the requirement that members of the board of directors may only be
removed for cause upon the vote of holders of at least two-thirds
of the shares of our stock; and
o the authority of the board of directors to fix the rights and
preferences and issue shares of preferred stock without further
action by you and the other shareholders.
The issuance of preferred stock could have the effect of making it more
difficult for a third party to acquire a majority of our outstanding stock,
thereby delaying, deferring or preventing a change in control of our
corporation. Furthermore, such preferred stock may have other rights, including
economic rights senior to our common stock. As a result, the issuance of such
preferred stock could have a material adverse effect on our common stock price.
We currently do not plan to issue shares of preferred stock.
In addition, Florida law also contains provisions that may delay, defer
or prevent a non-negotiated merger or other business combination. These
provisions are intended to encourage any person interested in acquiring us to
negotiate with and obtain the approval from our board of directors. Certain of
these provisions may, however,
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discourage a future acquisition not approved by the board of directors in which
shareholders might receive an attractive value for their shares or that a
substantial number or even the majority of our shareholders might believe to be
in their best interest. As a result, shareholders who desire to participate in
such a transaction may not have the opportunity to do so.
THERE ARE SUBSTANTIAL SHARES ELIGIBLE FOR FUTURE SALE. SALES OF THESE SHARES MAY
RESULT IN LOWER MARKET PRICES FOR OUR COMMON STOCK
Sales of a substantial number of our shares into the public market or
the perception that such sales could occur, could materially and adversely
affect the price of our shares and could impair our ability to obtain capital
through future offerings of equity securities.
We had 37,091,548 shares outstanding on November 30, 1999. Satish K.
Sanan, our Chairman, beneficially owns 12,861,597 shares, which number includes
shares underlying options which are exercisable by Mr. Sanan. A significant
number of these shares have been pledged by Mr. Sanan. In the past, large
numbers of shares owned by Mr. Sanan have been sold, either by him or by the
pledgee of the shares. The same may occur in the future and those sales may have
a negative effect on the price of our shares. Shares outstanding at November 30,
1999 are summarized as follows:
Shares being registered and that may be sold
with this prospectus. 3,408,846
Shares previously registered under a separate
prospectus and freely tradeable while this separate
prospectus is effective. 2,513,159
Unregistered shares, which are expected to become
freely tradeable between January 15, 2000 and June 15, 2000. 3,017,595
Freely tradeable shares, including 1,184,353 shares
which are subject to volume limitations. 28,151,948
----------
37,091,548
==========
In addition to the 37,091,548 shares we had outstanding at November 30,
1999, there are in excess of 12,500,000 shares we will issue when stock options
are exercised that are outstanding as of the date of this prospectus. Of the
shares to be issued upon exercise of stock options, approximately 6,500,000 will
be freely tradeable and the remainder are expected to be freely tradeable over
the next five years.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by
the selling shareholders.
DIVIDEND POLICY
We do not anticipate paying cash dividends on our stock in the
foreseeable future. We anticipate that we will retain our earnings and other
cash resources for reinvestment in our business.
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BUSINESS
GENERAL
We are an international provider of innovative business and IT
solutions to Fortune 500 and Global 2000 sized companies. We focus on providing
our comprehensive range of services to companies in the following vertical
industries:
o Insurance
o Capital markets
o Healthcare
o Utilities
o Media and communications
o Retail and manufacturing/distribution
We believe companies in these specific industries are facing unique and
substantial changes and competition that are altering the way they conduct
business. Due to the scope and the pace of these changes, we believe that the IT
solutions needed for these industries rarely lend themselves to packaged "off
the shelf" programs or services. Instead, a customized and technology-based
approach, provided in a short time frame, is needed. However, the development of
customized applications is expensive and time consuming.
Since early 1998, we have been developing component-based, vertical
industry solutions to meet the needs of our clients and have acquired companies
with complementary business knowledge or technology to assist in this
development effort. Our component-based vertical industry solutions combine the
functionality of customized software with the speed of implementation of a
packaged solution. These solutions usually require a relatively low level of
customization and lower maintenance costs and are easily modified to meet
changing business requirements.
Examples of some of our specific vertical market solutions include:
o Our insurance solution includes a suite of component-based
applications that support definition of new products, acquisition
of new businesses, and the administration, billing, processing and
paying of claims and commissions. We customize these applications
for clients in property and casualty, life and reinsurance sectors
of the insurance business.
o Our capital markets solution includes a number of asset management
and order execution component-based applications that we market
under the name of FOX(TM). The FOX solution enables securities
firms to manage portfolios of securities, monitor changing market
conditions and send orders to purchase or sell securities
electronically.
o Our healthcare solution allows health insurance companies to
analyze data and identify trends and anomalies in claims, which
can then be targeted for further investigation. This allows our
clients to screen their incoming claims and to identify erroneous
reimbursement claims more efficiently.
While our component-based solutions do not represent a material part of
our business at this time, we intend to continue to focus on developing
component solutions because we believe that they provide significant benefits to
our clients including a faster deployment time and generally at a lesser total
cost than fully customized solutions. In addition, we believe that our
component-based solutions are more reliable and better tailored to the specific
needs of our clients than pre-packaged products.
We offer our customers the following services, separately or in
combination:
o Business consulting - provide vertical industry business expertise
o IT strategy formulation - plan and develop IT strategies
o E-Business services - design and implement Internet solutions
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o Component-based application development- build new applications
using components
o Application modernization/transformation - transform older software
to newer technologies
o Application management and support - manage and support existing
computer applications
We provide all of our services on an outsourcing basis. Outsourcing is
the use by a client of third party providers to perform activities traditionally
handled by that company's internal staff. We believe that outsourcing has proven
effective in helping in-house IT departments manage costs while reducing the
time needed to complete projects. We augment the benefits of outsourcing by
providing our clients with a global network of centers with highly trained and
qualified technology professionals. We utilize the time differences between our
development centers in our global network to create a 24-hour "virtual workday"
during which our technology professionals can work on projects for our clients.
An important part of our strategy is to offer our services on a
fixed-price, fixed-time basis. We believe that a high percentage of projects
started by internal IT departments are not completed on time or on budget, with
many not completed at all. By offering fixed pricing, we enable our clients to
reduce their exposure to increased costs and by using our "on-site, off-site"
delivery model, which utilizes one or more of our worldwide delivery centers, we
can maintain consistent quality and reduce the project delivery time. Typically,
we split the project team into an "on-site" team and one or more "off-site"
teams. For a typical application management and support engagement,
approximately 20% to 30% of the people are located at the client's site and the
balance at one of our delivery centers. For large-scale development projects we
can deliver projects faster by using multiple delivery centers. Over the past
two years, we have successfully delivered over 100 fixed-price projects while
improving our gross margins.
In addition to fixed-price, fixed-time projects, we provide programming
and IT consulting services at clients' sites as needed, usually on a time and
materials basis. We also help our clients with tactical issues such as Year 2000
conversion services and the transition to the Euro currency. Our Year 2000
service offering was our largest source of revenue in each of 1997 and 1998 as
our clients committed significant financial resources in addressing this issue.
As Year 2000 engagements are completed in 1999, our revenue from this service
offering will decrease and we expect it to be less than 15% of our business for
1999.
Currently, we maintain a staff of approximately 2,500 software
development professionals to serve our clients. We maintain three dedicated
software development centers (Belfast, Mumbai and Bangalore) and operate five
software development centers, in our corporate and international headquarters in
Clearwater, London, Paris, Sydney and Tokyo. We also have 29 domestic
branch/sales offices. We intend to further broaden our geographical reach and
are considering additional locations in Europe, Asia and Eastern Europe. We
expect this expansion to be accomplished primarily through acquisitions.
In addition to seeking acquisitions to broaden our geographical reach,
we intend to continue to acquire companies that have specific industry expertise
in one of our targeted vertical markets and/or significant expertise in new
technologies . For example, in March 1999, we acquired Fusion Systems Japan Co.,
Ltd., headquartered in Tokyo, Japan, which provides asset management and order
execution solutions for companies in the capital markets industry. In April
1999, we acquired PLP, which provides solutions for companies in the property
and casualty insurance market. In addition, in June 1999 we acquired Orion,
which provides solutions to facilitate transactions with payors and providers in
the healthcare industry.
INDUSTRY OVERVIEW
We believe that the vertical industries for which we are developing
solutions are faced with dramatic business, technological and economic changes
that are forcing them to alter their traditional business methods. These changes
include demutualization and merger and acquisition activities in the insurance
industry, deregulation of the utility industry, merger and acquisition activity
in the financial services industry and privatization in the healthcare industry.
Intense competition and globalization in turn are driving the development of new
products and services which must be made available on a cost and time efficient
basis. In addition, the integration of e-commerce into companies has become an
integral part of the competitive environment.
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These changes require the support of IT solutions. We believe companies
in our targeted industries are faced with competitive pressures to reduce the
time needed to develop and market new products. As a consequence, many companies
can no longer develop new applications relying solely on their internal IT
staff. Moreover, the complexities of the industries in which our clients operate
often preclude the use of packaged solutions. We believe these industries
require customized solutions with the speed of packaged solutions, and the
flexibility to constantly integrate these solutions with updated technologies
and pre-existing systems.
In addition, technology is enabling companies to increase productivity,
shorten product cycles, enhance client services and create new lines of
business. We believe that the rapid pace of these changes has overwhelmed many
internal IT departments and has created a skills gap that IT service providers
help to bridge. By outsourcing IT services, companies can focus on their core
business, access specialized technical skills and implement IT solutions more
rapidly while significantly reducing the costs of recruiting, training and
retaining IT professionals.
The IT services industry has evolved into a highly fragmented
environment with several large, national service providers, a small number of
international providers and a large number of regional service providers. We
believe that, in light of recent globalization trends, IT service providers with
an increasing global presence will be better able to address the IT needs of the
large Fortune 500 and Global 2000 sized companies.
OUR SOLUTIONS MODEL
The model of the traditional IT services provider has long been
three-dimensional, with the level of customer service largely determined by the
caliber of the provider's people, the level of its technology and the process by
which it manages and delivers projects. We have been able to enhance customer
service by adding a fourth dimension to the model utilizing our international
network of software development and sales centers which provide a global
presence while permitting local service and support to our clients. Our offices
are distributed among nine time zones which gives us the ability to offer
24-hours of service per day, and thereby significantly decreases the time needed
to complete clients projects. In addition, we are focusing on the business needs
of companies within our targeted vertical industries and intend to continue to
acquire more industry-specific knowledge. As a result, we have added industry
knowledge as the fifth dimension to our model. We believe this five-dimensional
model represents the ideal IT product and services provider.
[GRAPHIC OF SOLUTIONS MODEL]
Our solutions and service offerings reflect the five-dimensional approach we
have taken to build our business. We provide solutions to selected vertical
markets utilizing advanced tools and technology together with highly qualified
personnel using proprietary methodologies. We deliver these solutions using an
international network of development and support facilities that permit a lower
cost alternative and shorter development times.
o VERTICAL MARKET SOLUTION PROVIDER. We believe that what we offer our
clients within our targeted vertical industries is unique. We act as a business
partner who can provide our clients with industry specific solutions that
reflect a thorough understanding and appreciation of the challenges they face
and the business implications of those challenges. We believe we are one of the
first to market component-based solutions that are tailored to meet industry
specific business requirements, are platform independent, and are deployed using
a rapid application development environment. Our solutions position us to become
a long-term strategic partner and solution provider to our clients in these
industries.
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o TOOLS AND TECHNOLOGY. We continue to invest in research and
development of tools and technologies that enable us to increase the overall
quality and productivity and shorten the "time-to-market" for delivering our
services and solutions. For example, our Maintenance Improvement Workbench
enables us to more effectively manage and maintain large software applications.
Our component-based development allows us to deliver software solutions,
including vertical industry specific solutions, significantly faster than
building entirely customized software, and our Systems Evolution Toolset which
is a tool that enables us to transform older software into newer technologies
quickly and cost-effectively.
o GLOBAL BUSINESS MODEL. Our international network of software
development centers provides us with a significant cost advantage and the
ability to provide 24-hour service to our clients. Many of our clients are
linked by satellite communications to our offsite development centers, where we
perform a substantial amount of each project's work.
This global network allows us to take maximum advantage of the time
differences between our clients' offices and ours, creating a seamless, 24 hour
"virtual workday" to speed project completion. Working during our clients'
off-peak hours also often allows us to use the excess capacity of their existing
computing facilities, enabling us to undertake additional projects without
substantial client investment in new hardware and software. For projects with
critically short time frames, our multiple shifts allow us to further accelerate
delivery by "concurrent development" - working on many development phases
simultaneously in different offices. Cost savings and efficiencies are further
enhanced because we are able to spread the costs of satellite communications and
infrastructure at these centers among multiple clients and projects.
Our international network of software development centers is supported
by a separate network of sales and support offices located close to our client.
Currently, we have 29 offices in the United States and 13 international sales
offices, six of which are in Canada with the remainder in London, Paris,
Frankfurt, Luxembourg, Bangalore, Sydney and Tokyo.
o TSQM. We use our proprietary Total Software Quality Management
(TSQM) set of defined software development processes, techniques and tools to
maximize the quality of our operations and client services, and to minimize
project risks. For every project, we implement a two-staged approach that
provides: (a) an extensive initial assessment of the project's scope and risks,
and (b) a fixed-price implementation stage, divided into phases with frequent
deliverables and client feedback. Continuously refined, TSQM allows us to
detect, correct and mitigate quality defects and to establish appropriate
contingencies for each project.
The responsibilities of completing each TSQM phase are allocated
between an on-site and an off-site team to optimize cost savings and accelerate
project delivery. The specific tasks allocated to each team member are
determined principally by the amount of client interaction required. The
initial, front-end phase, which may include business area analysis, technical
strategy development, requirements definition and analysis, and high level
technical architecture design, is completed by the on-site team. The
implementation phase, which may include programming, unit and system testing, is
largely performed via satellite link by our off-site teams.
Our TSQM process is based in part on software standards published by
the Institute of Electrical and Electronic Engineers and the Software
Engineering Institute (SEI) software engineering process models and ISO 9001
quality processes. To position us for future business from companies in Europe,
and from international affiliates of our North American clients, our facilities
in Bangalore and Mumbai, India; London, England; Paris France; and Belfast,
Northern Ireland have achieved ISO 9001 certification. We are currently pursuing
company-wide ISO 9001 and SEI certification.
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GROWTH STRATEGIES
To enhance our position in the market, we believe it will be necessary
for us to further develop our industry expertise and expand our component-based
application offerings to those industries. To do that, we have identified
several key strategies we intend to pursue.
o CONTINUE TO DEVELOP EXPERTISE IN SELECTED VERTICAL MARKETS. We will
continue to build a comprehensive understanding of the business needs of our
clients in our targeted vertical industries. We shifted from a traditional
technology-based focus to an industry-based focus beginning in 1998. In part, we
have built on our relationships and integrated the industry knowledge that we
acquired from previous Year 2000 and other engagements into our new service
offerings. Since then, we have continued to build our industry expertise by
investing in industry-specific research and development, by acquiring companies
with industry specific knowledge or technology and by hiring individuals with
proven expertise in these industries. For example, in February 1999, we hired
John Alexander, former CIO of Unum Life Insurance Company, as Director of our
Insurance Vertical Practice. In addition, some of our acquisitions have provided
us with additional expertise in vertical markets.
o ACQUIRE AND DEVELOP PRODUCTIVITY-ENHANCING SOFTWARE TOOLS. We
continue to improve our proprietary software engineering methodologies and
toolsets through a combination of strategic acquisitions and internal research
and development. In May 1998, we acquired Lyon Consultants which provided us
with core technologies in component-based architectures, which, we believe, will
be the dominant development technology over the next several years. We continue
to enhance the technology we use to transform older software into newer
technologies with licensing agreements and continued investments in research and
development.
o DEVELOP LONG-TERM STRATEGIC PARTNERSHIPS WITH CLIENTS. A key element
of our strategy is to expand the scope of the services that we provide to each
client with the goal of forging lasting strategic partnerships with them. By
striving to exceed our client expectations and delivering projects on time and
on budget, we have been successful in retaining clients and converting projects
into additional engagements. Our significant investment in the technology
necessary to support our clients' business strategies and the addition of new
services such as E-business and component-based development, should help us
further to develop their loyalty and trust and should provide us with the
ability to sell additional services to our existing clients as well as to
attract new clients. To underscore our commitment to our clients, we actively
solicit feedback with client satisfaction surveys, consultant performance
surveys and regularly scheduled client meetings with senior management. We also
link a substantial portion of our senior executives' performance based
compensation directly to client satisfaction.
o CONCENTRATE ON KEY TECHNOLOGIES. We continue to focus on obtaining
the most advanced software development technologies. The acquisition of ECWerks
in January 1999 provided us with enhanced capabilities to design, develop and
deliver large-scale solutions in the electronic commerce market. We also utilize
software provided by companies such as Forte Software, Inc., in addition to our
internally developed toolsets in offering the most advanced technology
solutions. We conduct on-going personnel training to ensure that our employees
are up to date in key technology areas.
o EXPAND GEOGRAPHIC PRESENCE. As we continue to expand our client
base, we intend to open additional regional offices in other geographic areas.
We have eight software development facilities around the world and 42 sales
offices, of which 22 were added in 1999.
o PURSUE SELECTIVE STRATEGIC ACQUISITIONS. Our acquisition strategy is
to select companies with well-established client bases, a strong cultural fit
and one or more of the following criteria:
o Geography - located where we want to increase our global
presence
o Technology - significant expertise in new technologies
o Vertical - specific industry expertise in one of our targeted
verticals
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By acquiring companies that meet these requirements, we believe we can
create opportunities to sell additional products and services throughout our
client base. For example, component development solutions obtained from Lyon
have been sold to our existing clients in the United States, and some of our
core services have been sold to Lyon's clients in France.
Our most significant acquisitions over the last two years met our
requirements as follows:
Geography Technology Vertical
- --------------------------------------------------------------------------------
1999
- --------------------------------------------------------------------------------
Orion /check mark/ /check mark/ /check mark/
- --------------------------------------------------------------------------------
PLP /check mark/ /check mark/
- --------------------------------------------------------------------------------
Fusion /check mark/ /check mark/ /check mark/
- --------------------------------------------------------------------------------
ECWerks /check mark/
- --------------------------------------------------------------------------------
Atechsys /check mark/ /check mark/
- --------------------------------------------------------------------------------
1998
- --------------------------------------------------------------------------------
Visual /check mark/ /check mark/
- --------------------------------------------------------------------------------
RHO /check mark/ /check mark/
- --------------------------------------------------------------------------------
Lyon /check mark/ /check mark/
- --------------------------------------------------------------------------------
o LEVERAGE TACTICAL OPPORTUNITIES. We intend to continue to identify
tactical opportunities and use them to sell additional products and services to
our clients. Our Year 2000 and European Monetary Union (Euro) conversion
services are examples of tactical opportunities we have used to develop new
business.
OUR SERVICE OFFERINGS
o BUSINESS CONSULTING. We provide vertical industry business
experience such as helping our healthcare clients by simplifying complex
business issues in the healthcare industry, evaluating their financial and
operational performance and supplying advice in the ever-changing healthcare
industry. Our healthcare consultants have a national reputation as experts in
healthcare payment methodologies and help our clients to improve the quality of
their services, increase productivity and reduce costs. We have been
significantly increasing our vertical industry business expertise in each of our
targeted verticals by hiring people with extensive experience in particular
vertical industries and by acquiring companies that focus exclusively on a
particular vertical industry.
o IT STRATEGY FORMULATION. By combining vertical industry business
expertise with our technological experience, we are able to assist our clients
in formulating effective IT strategies that best match the business objectives
of our clients. For example, we assisted Baylor College of Medicine in a
strategic software selection and subsequently established a project management
office that supported the on-time implementation of that selection.
o E-BUSINESS SOLUTIONS. We help clients design and implement solutions
involving the Internet and electronic commerce. This service includes the
development of Internet strategies, management of web content and training. Our
senior e-commerce consultants assist clients in understanding the opportunities,
procedures and technologic challenges associated with conducting electronic
commerce. Our technical staff concurrently design, develop and implement the
underlying technologies supporting the e-business initiative, using
state-of-the-market development technologies. The scope of e-business projects
includes: web retailing, client extranets, online service centers, supply chain
optimization, electronic data interface, corporate intranets, back office
integration, sales force extranets and knowledge base management.
o APPLICATION MODERNIZATION/TRANSFORMATION. We have developed a
proprietary methodology for deploying new technologies and managing the
successful transformation of mainframe systems with new technologies. Our
TRANSFORM series of re-engineering tools automate many of the processes
required, thereby substantially reducing the time and cost to perform these
services. These "productivity tools" enable us to perform source code analysis,
redesign target databases and convert certain programming languages.
o APPLICATION MANAGEMENT AND SUPPORT. We have four distinct processes
for our application management and support services:
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1) CORRECTIVE MAINTENANCE requires software failures to be diagnosed
and fixed as they occur. These failures can directly affect
business operations and require the highest level of support.
Quick fixes and poor documentation often result in increased code
complexity and increased future maintenance costs.
2) ADAPTIVE MAINTENANCE requires software modification to support
changing business requirements or changing technical environments.
This includes user enhancements, operating system upgrades and
other outside improvements. Enhancement backlogs are generally the
biggest source of concern for IT management.
3) PERFECTIVE MAINTENANCE involves modifications to application
systems to improve performance, without changing the basic system.
4) PREVENTIVE MAINTENANCE identifies and eliminates the maintenance
problems that create the need for corrective maintenance. Year
2000 compliance services are forms of preventive maintenance.
o COMPONENT-BASED VERTICAL INDUSTRY SOLUTIONS. Using an approach
similar to the popular Lego(R)-building block approach, we utilize reusable,
industry-specific software components to quickly build vertical industry
specific applications for our clients. These pre-built, pre-tested software
components, along with components customized for company specific purposes, are
assembled in significantly less time than building an application from scratch
and provide clients a solution that fits their business better than a packaged
solution. This approach can be used to deliver projects on an accelerated basis
for selected platforms, avoiding the functional shortcomings of traditional
standardized, pre-packaged software solutions or the time and cost of developing
completely new custom solutions.
o COMPONENT-BASED APPLICATION DEVELOPMENT. We utilize reusable
technical and generic business components to quickly build applications for our
clients. This approach can be used to deliver highly customized applications on
an accelerated basis where no pre-packaged software solution exists. For example
we recently built a supply chain management and billing system for CGM, a large
European shipping company, using this approach. We also develop customized
applications using our world wide development centers in significantly less time
than building an application from scratch.
In addition, we provide Year 2000 services to support the ongoing needs
of our clients and Euro conversion services to help large international
companies and organizations transition to the Euro currency. We also provide
programming services on a time and materials basis. In addition to staffing our
client's short-term needs, our objective is to leverage professional staffing
engagements to learn more about the client's business and IT system needs and
position ourselves to provide additional services.
18
<PAGE>
REPRESENTATIVE CLIENTS
INSURANCE CAPITAL MARKETS HEALTHCARE
--------- --------------- ----------
AMPlus Merrill Lynch Health Plan Services
CGU Insurance Morgan Stanley Blue Cross/Blue Shield
John Hancock Mutual Life Schroders International Foundation Health System
Reliastar Banque National de Paris American Medical Association
RETAIL AND
UTILITIES MEDIA AND COMMUNICATIONS MANUFACTURING/DISTRIBUTION OTHER
--------- ------------------------ -------------------------- -----
Ameritech EBSCO Industries Blockbuster Amtrak
SAUR Thompson EC Resources Dayton Hudson TWA
Southern California Fingerhut Mitsui
Edison Winn Dixie CGM
Salt River Project Dow Corning
Michelin
Renault
SALES AND MARKETING
We market and sell our services directly through our professional staff
and senior management operating at our United States and international regional
offices and sales branch offices. We focus our marketing efforts on large
corporations within our six targeted vertical industries that have significant
IT budgets and recurring staffing or software development needs. Marketing
personnel identify prospects and enter the information into a database which is
consistently maintained. Direct sales representatives utilize these records to
initiate the sales cycle from prospect qualification to closing. As a result, we
can prequalify sales opportunities and minimize the time that direct sales
representatives spend on prospect qualification.
Our marketing programs include direct mail campaigns, advertising,
seminars, conferences and other activities. The sales executive and technical
support teams define the scope, deliverables, assumptions and execution
strategies for a proposed project. They also develop project estimates, prepare
pricing, margin, and cash flow analyses, and finalize sales proposals.
Management reviews and approves the proposal, then the sales staff presents the
proposal to the prospective client. Sales personnel are actively involved
throughout the execution phase.
As we expand in Europe and Asia, we will consider establishing branch
sales offices to pursue business opportunities in these regions.
INTELLECTUAL PROPERTY
Our business consists of software applications development and other
deliverables including written specifications and documentation in connection
with specific client engagements. Ownership of these products is generally
retained by or assigned to the client. We also develop reusable software
components and vertical industry component libraries for application
development, as well as certain software toolsets and proprietary methodologies.
Many are developed in one country and subsequently used in another country.
Furthermore, we maintain trademarks and service marks in our various service
offerings. To protect our intellectual properties, we rely on copyright and
trade secret laws, nondisclosure and other contractual arrangements, and
technical measures.
19
<PAGE>
COMPETITION
The IT services market is highly competitive and is served by numerous
national, regional and local firms. Our clients generally consist of large
corporations principally in the insurance, capital markets, utilities,
healthcare, retail, manufacturing and distribution, and media and communications
industries. Many of our competitors are aggressively pursuing business from
these entities. In addition to in-house IT departments, market participants
include systems consulting and integration firms, professional service
companies, applications software firms, temporary employment agencies,
professional services divisions of large integrated manufacturing and other
companies, facilities management and outsourcing companies, accounting and
business consulting firms such as the "Big 5" and related entities.
We believe that many of our competitors have significantly greater
financial, technical and market resources and generate greater revenue than we
do. We compete by offering component-based software products, a successful
services delivery model, excellent referral base, continued focus on client
needs, quality of services, competitive prices and strong project management
capabilities and technical expertise.
HUMAN RESOURCES
As of September 30, 1999, we had approximately 2,800 employees,
including approximately 1,900 people in our United States, U.K., France, Japan,
Canada and Australian headquarters and branch offices, and approximately 900 in
our software development centers in India and Northern Ireland. Additionally, we
had approximately 200 independent contractors performing various services. None
of our employees are subject to a collective bargaining arrangement, except for
approximately 200 employees in France.
As of the end of September 1999, approximately 500 of our United States
employees were working under the H-1B non-immigration work permitted visa
classification, which we processed for those employees through the United States
Immigration and Naturalization Service. The H-1B visa classification enables
United States employers to hire qualified foreign workers in positions which
require education at least equal to a United States baccalaureate degree in
specialty occupations such as software systems engineering and systems analysis.
We believe that there is a shortage of, and significant competition
for, IT professionals and that our future success will depend in large part upon
our ability to attract, train, motivate and retain highly skilled employees with
the advanced technical skills necessary to perform the services we offer. We
have active recruiting programs in North America, Europe, Australia, India and
certain other countries and have developed a recruiting system and database that
facilitates the rapid identification of skilled candidates. We also have adopted
a career and education management program working with employees to define their
objectives and career plans. Through an intensive orientation and training
program, we introduce new employees to our TSQM software engineering process and
our products and services.
20
<PAGE>
PROPERTIES
The following table sets forth a description of our principal
facilities:
<TABLE>
<CAPTION>
Square Feet Owned/
Location (Approx.) Lease Expiration Date Function
- ------------------------ --------- --------------------- ------------------------------
<S> <C> <C> <C>
Clearwater, Florida 51,000 Owned Corporate headquarters and
software development facility
London (Chesham),England 12,500 March 2013 U.K. headquarters and software
development facility
Howell, New Jersey 22,700 September 1999 - Insurance facility
July 2003
Bangalore, India 66,000 June 2000 Software development facility
Belfast, Northern Ireland 21,500 September 2002 Software development facility
Cleveland, Ohio 30,900 September 2007 Healthcare industry facility
Mumbai, India 28,000 Owned Software development facility
New Delhi, India 28,000 Owned Future facility
Paris, France 18,900 May 2005 France headquarters and
software development facility
Paris, France 5,600 October 2000 - European Capital Market
November 2001 Industry facility
Sydney, Australia 6,800 May 2002 Australian headquarters and
software development facility
Toronto, Canada 6,300 October 2002 Canada headquarters
Tokyo, Japan 16,200 January 2001 Japan headquarters and software
development facility
Tampa, Florida 20,000 January 2004 ECWerks headquarters
</TABLE>
In 1998, we purchased approximately 15 acres in Clearwater, Florida for
the purpose of constructing a headquarters complex. In July 1999, we took
possession of land and our 51,000 square foot headquarters building. A second
80,000 square foot building is scheduled for completion in January 2000. The
second building will also house the entire research and development team that is
currently housed in Clearwater, France, Australia and India. The property has
room for two additional buildings and a parking garage if further development is
needed. In connection with taking possession of the headquarters building in
Clearwater, the Tampa, Florida ECWerks headquarters is being vacated and
employees are moving to the headquarters in Clearwater.
The leases for our facilities in Bangalore, Belfast, Paris
(headquarters) and Toronto contain options to extend the term for an additional
five years.
We own the building at our software development facility in Mumbai,
India and we lease the land through March 2096. We own land and a building in
New Delhi, India which may be renovated to house a future facility.
In addition, we lease branch offices, which are used primarily for
sales and marketing purposes, in Atlanta, Boston, Chicago, Dallas, Detroit, Los
Angeles, Minneapolis, New York, Seattle, Boston, Denver, Greenville,
Jacksonville, Ashburn, Cincinnati, Clifton Park, Deerfield Beach, Harrisburg,
Kansas City, Midlothian, New Iberia, Pittsburg, San Francisco, Saratoga Springs,
St. Louis, Tempe in the United States, Montreal, Quebec City, Winnipeg, Calgary
and Vancouver in Canada, Frankfurt, Germany and Luxembourg.
LEGAL PROCEEDINGS
We are not a party to any pending material litigation.
21
<PAGE>
SELLING SHAREHOLDERS
Certain shares registered for sale under this prospectus are owned by
the former shareholders of Fusion Systems Japan Co., Ltd. ("Fusion") and Orion
Consulting, Inc. ("Orion"). The shares offered by the selling shareholders were
acquired in connection with the March 26, 1999 merger with Fusion as amended and
the June 15, 1999 merger with Orion.
Under the terms of the above merger agreements, as amended in the case
of Fusion, we agreed to register the shares of common stock received by these
selling shareholders in connection with the above business combinations. In the
past three years, none of the selling shareholders has had a material
relationship with us, except that certain selling shareholders have become
non-officer employees of our company (or a subsidiary of our company) after the
above transactions were consummated.
The remaining shares registered for sale under this prospectus are
owned by two unaffiliated entities. These shares were acquired in a private
placement from IMRglobal's CEO on November 12, 1999. By contract agreement,
these selling shareholders can only sell up to 25% of these shares until May 12,
2000.
The following table sets forth certain information regarding the
beneficial ownership of our common stock by the selling shareholders. The table
organizes the selling shareholders according to the business combinations
pursuant to which they became shareholders. Information provided in this table
is organized as follows in six columns (from left to right):
(1) Selling shareholders names and addresses
(2) Shares owned prior to this offering (number) - The number of shares
of our common stock beneficially owned by each selling shareholder at November
15, 1999.
(3) Shares owned prior to this offering (percent) - The percentage, if
1% or more, of the total outstanding shares of our common stock beneficially
owned by each selling shareholder at November 15, 1999.
(4) Shares offered - The number of shares of our common stock that are
being registered under this registration statement for each selling shareholder.
Some or all of these shares may be sold pursuant to this Prospectus.
(5) Shares owned after this offering (number) - The number of our
common shares that will be beneficially owned following this offering, assuming
all of the shares in the column entitled "Shares Offered" are sold by the
selling shareholder.
(6) Shares owned after this offering (percent) - The percentage, if 1%
or more, of our total outstanding common shares that will be beneficially owned
following this offering, assuming all of the shares in the column entitled
"Shares Offered" (as defined above) are sold by the selling shareholder.
22
<PAGE>
<TABLE>
<CAPTION>
Shares Owned Prior to Shares Owned After
Selling Shareholders This Offering (1) This Offering (1)
-------------------- ----------------- -----------------
Shares
Number Percent Offered Number Percent
<S> <C> <C> <C> <C> <C>
FUSION ACQUISITION:
Michael J. Alfant 812,364 2.2% 324,690 487,674 1.3%
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Mami Alfant 63,822 -- 20,725 43,097 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Boris Umylny 40,361 -- 40,361 0 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Raymond F. Ribble 109,290 -- 40,361 68,929 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Ian L. Chun 40,361 -- 40,361 0 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Judith Fitzcherald 124,290 -- 124,290 0 --
602 Sanribu
2-6-3 Ebisu-Nishi
Shibuya
Tokyo, Japan 150
Huw Rogers 13,454 -- 13,454 0 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Shares Owned Prior to Shares Owned After
Selling Shareholders This Offering (1) This Offering (1)
-------------------- ----------------- -----------------
Shares
Number Percent Offered Number Percent
<S> <C> <C> <C> <C> <C>
FUSION ACQUISITION:
Gary Hyman 41,430 -- 13,454 27,976 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Gregory Tucker 13,454 -- 13,454 0 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Andrew Howells 31,430 -- 13,454 17,976 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Ian Gardner 13,454 -- 13,454 0 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Tony Fujii 41,430 -- 13,454 27,976 --
c/o Fusion Systems Japan Co., Ltd.
Daiwa Naka-Meguro Bldg. 5-8F
4-6-1 Naka-Meguro, Meguro-ku
Tokyo, Japan 153-0061
Stephen F. Siegel 32,297 -- 32,297 0 --
c/o FSJ, Inc.
185 Devonshire Street
Boston, MA 02110
Kevin G. Weber 25,788 -- 13,454 12,334 --
c/o FSJ, Inc.
185 Devonshire Street
Boston, MA 02110
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Shares Owned Prior to Shares Owned After
Selling Shareholders This Offering (1) This Offering (1)
-------------------- ----------------- -----------------
Shares
Number Percent Offered Number Percent
<S> <C> <C> <C> <C> <C>
FUSION ACQUISITION(CONTINUED):
Marvin A. Wolfthal 41,430 -- 13,454 27,976 --
c/o FSJ, Inc.
185 Devonshire Street
Boston, MA 02110
Total Fusion Acquisition 1,444,655 3.9% 730,717 713,938 1.9%
ORION ACQUISITION:
Phillip J. Campanella, Trustee of 31,957 -- 6,392 25,565 --
the Phillip J. Campanella Trust
dated May 21, 1997
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, OH 44114-2688
Charles M. Ciuni, Trustee of 11,020 -- 2,204 8,816 --
the Phillip J. Campanella
Irrevocable Trust dated July 31, 1996
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, OH 44114-2688
Firstar Bank (formerly Star Bank,
N.A.) Trustee 14,326 -- 2,866 11,460 --
of the Joseph A. Campanella Irrevocable
Trust dated January 1, 1998
c/o George M. Arsenault
The Tower of Eireview
Suite 3000
1301 East Ninth Street
Cleveland, OH 44114-1800
Total Orion Acquisition 57,303 -- 11,462 45,841 --
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Shares Owned Prior to Shares Owned After
Selling Shareholders This Offering (1) This Offering (1)
-------------------- ----------------- -----------------
Shares
Number Percent Offered Number Percent
<S> <C> <C> <C> <C> <C>
OTHER:
Bridge East Capital, L.P. 800,000 2.2% 800,000 0 --
c/o W.S. Walker & Co.
Caledonian House
Mary Street
Georgetown, Grand Cayman
Cayman Islands, BWI
BV-IT Global LLC 1,866,667 5.0% 1,866,667 0 --
8065 Leesburg Pike - Suite 140
Vienna, Virginia 22182
--------- --------- -------
Total other 2,666,667 7.2% 2,666,667 -- 0
--------- --------- -------
Total selling shareholders 4,168,625 11.2% 3,408,846 759,779 2.0%
========= ===== ========= ======= ====
</TABLE>
(1) Beneficial ownership is sole voting and investment power with respect to the
shares beneficially owned.
PLAN OF DISTRIBUTION
Shares covered by this prospectus will be sold by the selling
shareholders as principals for their own account. We will not receive any
proceeds from sales of any shares by selling shareholders.
We are registering the common stock covered by this prospectus for the
selling shareholders. As used in this prospectus, the words "selling
shareholders" include the pledgees, donees, transferees or others who may later
hold the selling shareholders' interests. We will pay the costs and fees of
registering the shares of common stock, but the selling shareholders will pay
any brokerage commissions, discounts or other expenses relating to the sale of
their shares of common stock.
The selling shareholders may sell their shares of common stock in the
over-the-counter market or otherwise, at market prices prevailing at the time of
sale, at prices related to the prevailing market prices, or at negotiated
prices. In addition, the selling shareholders may sell some or all of their
shares through:
o a block trade in which a broker-dealer may resell a portion of the
block, as principal, in order to facilitate the transaction;
o purchase by a broker-dealer, as principal, and resale by the
broker-dealer for its account; or
o ordinary brokerage transactions and transactions in which a broker
solicits purchasers.
When selling the common shares, the selling shareholders may enter into
hedging transactions. For example, the selling shareholders may:
o enter into transactions involving short sales of the shares by
broker-dealers;
o sell shares of the common stock short themselves and redeliver
such shares to close out their short positions;
26
<PAGE>
o enter into an option or other type of transactions that requires
the selling shareholder to deliver their shares of common stock to
a broker-dealer, who will then resell or transfer them under this
prospectus; or
o loan or pledge the shares to a broker-dealer, who may sell the
loaned shares or, in the event of default, sell the pledged
shares.
The selling shareholders may negotiate and pay broker-dealers
commissions, discounts or concessions for their services. Broker-dealers engaged
by the selling shareholders may allow other broker-dealers to participate in
resales. However, the selling shareholders and any broker-dealers involved in
the sale or resale of the shares of common stock may qualify as "underwriters"
within the meaning of the Section 2(a)(11) of the Securities Act of 1933 (the
"1933 Act"). In addition, the broker-dealers' commissions, discounts or
concession may qualify as underwriters' compensation under the 1933 Act. If the
selling shareholders qualify as "underwriters," they will be subject to the
prospectus delivery requirements of Section 5(b)(2) of the 1933 Act.
In addition to selling their shares of common stock under this
prospectus, the selling shareholders may:
o agree to indemnify any broker-dealer or agent against certain
liabilities related to the selling of their shares, including
liabilities arising under the 1933 Act;
o transfer their common shares in other ways not involving market
makers or established trading markets, including directly by gift,
distribution, or other transfer; or
o sell their shares of our common stock under Rule 144 of the 1933
Act rather than under this prospectus, if the transaction meets
the requirements of Rule 144.
LEGAL MATTERS
For purposes of this offering, our Co-General Counsel, is giving his
opinion on the validity of the common shares.
EXPERTS
The consolidated financial statements of IMRglobal Corp. appearing in
IMRglobal Corp.'s current report on Form 8-K for each of the three years ended
December 31, 1998, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference, which as to the years 1997 and 1996, are based in part on the reports
of PricewaterhouseCoopers LLP, independent auditors. Such consolidated financial
statements are incorporated herein by reference in reliance upon such reports
given on the authority of such firms as experets in accounting and auditing.
The consolidated financial statements of Fusion Systems Japan Co., Ltd.
appearing in IMRglobal Corp.'s current report on Form 8-K for the nine month
period ended December 31, 1998, have been audited by Ernst & Young, LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The financial statements of Orion Consulting, Inc. appearing in
IMRglobal Corp.'s current report on Form 8-K for the year ended December 31,
1998, have been audited by Arthur Andersen LLP, independent public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
27
<PAGE>
[imrglobal LOGO]
3,408,846 SHARES
OF
COMMON STOCK
Prospectus
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the securities offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus current only as of its date.
December 2, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses relating to the registration of Shares will be borne by
IMRglobal. Such expenses are estimated to be as follows:
Registration Fee - Securities and Exchange Commission $ 9,713.51
Accounting Fees and Expenses 10,000.00
Legal Fees and Expenses 30,000.00
Printing Fees 5,000.00
Miscellaneous 5,000.00
----------
Total $59,713.51
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act ("FBCA") provides that, in
general, a business Company may indemnify any person who is or was a party to
any proceeding (other than action by, or in the right of, the Company) by reason
of the fact that he or she is or was a director or officer of the Company,
against liability incurred in connection with such proceeding, including any
appeal thereof, provided certain standards are met, including that such officer
or director acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the Company, and provided
further that, with respect to any criminal action or proceeding, the officer or
director had no reasonable cause to believe his or her conduct was unlawful. In
the case of proceedings by or in the right of the Company, the FBCA provides
that, in general, a Company may indemnify any person who was or is a party to
any such proceeding by reason of the fact that he or she is or was a director or
officer of the Company against expenses and amounts paid in settlement actually
and reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such person acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interest of the Company, except that no indemnification
shall be made in respect of any claim as to which such person is adjudged liable
unless a court of competent jurisdiction determines upon application that such
person is fairly and reasonably entitled to indemnity. To the extent that any
officers or directors are successful on the merits or otherwise in the defense
of any of the proceedings described above, the FBCA provides that the Company is
required to indemnify such officers or directors against expenses actually and
reasonably incurred in connection therewith. However, the FBCA further provides
that, in general, indemnification or advancement of expenses shall not be made
to or on behalf of any officer or director if a judgment or other final
adjudication establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe it
was unlawful; (ii) a transaction from which the director or officer derived an
improper personal benefit; (iii) in the case of a director, circumstances under
which the director has voted for or assented to a distribution made in violation
of the FBCA or the Company's Articles of Incorporation; or (iv) willful
misconduct or a conscious disregard for the best interests of the Company in a
proceeding by or in the right of the Company to procure a judgment in its favor
or in a proceeding by or in the right of a shareholder. Article IX of the
Company's Amended and Restated Bylaws provides that the Company shall indemnify
any director or officer or any former director or officer to the fullest extent
permitted by law.
II-1
<PAGE>
ITEM 16. LIST OF EXHIBITS
The exhibits to this registration statement are listed in the Index to
Exhibits on page II-4.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the 1933 Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
this registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this registration
statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
IMRglobal pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) For purposes of determining any liability under the 1933 Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 2nd day of
December, 1999.
IMRGLOBAL CORP.
By: /s/ Satish K. Sanan
--------------------
Satish K. Sanan
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Satish K. Sanan and Dilip Patel, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this Report on Form S-3,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Satish K. Sanan Chief Executive Officer December 2, 1999
- ----------------------------- (Principal Executive Officer),
Satish K. Sanan President and Director
/s/ Robert M. Molsick Chief Financial Officer December 2, 1999
- ----------------------------- (Principal Financial and Accounting
Robert M. Molsick Officer)
/s/ Vincent Addonisio Senior Vice President and December 2, 1999
- ----------------------------- Director
Vincent Addonisio
/s/ Philip Shipperlee Senior Vice President-Global Sales December 2, 1999
- ----------------------------- and Director
Philip Shipperlee
/s/ Charles C. Luthin Director December 2, 1999
- -----------------------------
Charles C. Luthin
/s/ Jeffrey S. Slowgrove Director December 2, 1999
- -----------------------------
Jeffrey S. Slowgrove
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5 Opinion of Counsel re: legality
23.1 Consent of Ernst & Young LLP as Independent Certified Public
Accountants
23.2 Consent of PricewaterhouseCoopers LLP as Independent Certified
Public Accountants
23.3 Consent of Ernst & Young as Independent Auditors
23.4 Consent of Arthur Andersen LLP as Independent Public Accountants
23.5 Consent of Legal Counsel (contained in Exhibit 5)
24 Power of Attorney (included in the signature page in Part II of
this Registration Statement).
27 Financial Data Schedule
EXHIBIT NUMBER 5
[imrglobal LOGO]
December 2, 1999
IMRglobal Corp.
100 South Missouri Avenue
Clearwater, Florida 33756
Re: Validity of Common Stock
Ladies and Gentlemen:
I am rendering this opinion in connection with the registration, pursuant to a
registration statement of Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), of 3,408,846 shares
of common stock, par value $0.10 per share, (the "Common Stock") of IMRglobal
Corp., a Florida Corporation (the "Company").
In connection with the preparation of this opinion, I have examined the minute
books and stock records as maintained by the Company, the Amended and Restated
Articles of Incorporation and the Amended and Restated By-Laws of the Company,
the Registration Statement, copies of the resolutions duly adopted by the Board
of Directors of the Company relating to the authorization and issuance of the
Common Stock, and certain documents relating to the issuance of the Common
Stock. In addition, I have reviewed such other documents and have conferred with
various officers and directors of the Company and have ascertained or verified
to my satisfaction such additional facts with respect to the Company as I have
deemed necessary or appropriate for the purposes of this opinion.
I have assumed for purposes of this opinion that all applicable laws, rules and
regulations in effect at the time of the issuance of the Common Stock will be
the same as such laws, rules and regulations in effect as of the date hereof.
Based on the foregoing, I am of the opinion that, subject to the effectiveness
of the Registration Statement and compliance with applicable state securities
laws, the Common Stock constitutes duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock of the Company.
I hereby consent to all references to me in the Registration Statement and to
the filing of this opinion by the Company as an exhibit to the Registration
Statement. This consent is not to be construed as an admission that I am a
person whose consent is required to be filed with the Registration Statement
under the Securities Act.
I am licensed to practice law only in the State of Florida and do not hold
myself out to be an expert on the laws of any jurisdictions other than the State
of Florida, and the Federal law of the United States of America. Accordingly,
the opinions expressed herein are specifically limited to the laws of the State
of Florida and the Federal Law of the United States of America.
<PAGE>
EXHIBIT NUMBER 5
(Continued)
The opinions expressed herein are as of the date hereof, and I assume no
obligation to update or supplement such opinions to reflect any facts or
circumstances that may hereafter come to my attention or any changes that may
hereafter occur.
This opinion letter has been issued solely for the benefit of the Company and no
other party or entity shall be entitled to rely hereon without my express
written consent. Without my prior written consent, the opinion letter may not be
quoted in whole or in part or otherwise referred to in any document or report
and may not be furnished to any person or entity.
Very truly yours,
/s/ Dilip Patel
-----------------------
Dilip Patel
Vice President & Co-General Counsel
EXHIBIT NUMBER 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of IMRglobal Corp. for
the registration of 3,408,846 shares of its common stock and to the
incorporation by reference therein of our report dated August 20, 1999 (except
for Note 23, as to which the date is October 25, 1999) with respect to the
consolidated financial statements of IMRglobal Corp. included in the Current
Report Form 8-K dated November 15, 1999 filed with the Securities and Exchange
Commission.
/S/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
Tampa, Florida
November 29, 1999
EXHIBIT NUMBER 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 13, 1998, relating to the
consolidated financial statements of IMRglobal Corp. as of December 31, 1997 and
for the years ended December 31, 1997 and 1996, which appears in the Current
Report (Form 8-K) of IMRglobal Corp. We also consent to the reference to us
under the heading "Experts" in such Registration Statement.
/S/ PRICEWATERHOUSECOOPERS LLP
-------------------------------
PRICEWATERHOUSECOOPERS LLP
Tampa, Florida
November 29, 1999
EXHIBIT NUMBER 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of IMRglobal Corp. for
the registration of 3,408,846 shares of its common stock and to the
incorporation by reference therein of our report dated November 12, 1999, with
respect to the consolidated financial statements of Fusion Systems Japan Co.,
Ltd. for the nine month period ended December31, 1998, included in the Current
Report on Form 8-K filed on November 18, 1999 with the Securities and Exchange
Commission.
/S/ ERNST & YOUNG
-----------------
ERNST & YOUNG
Tokyo, Japan
November 29, 1999
EXHIBIT NUMBER 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated January
22, 1999 (relating to the financial statements of Orion Consulting, Inc. as of
December 31, 1998 and for the year then ended), included in the current report
on Form (8-K) (No. 000-28840) of IMRglobal Corp. and to all references to our
Firm included in this registration statement.
/S/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Cleveland, Ohio
November 29, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 58,748
<SECURITIES> 16,535
<RECEIVABLES> 44,526
<ALLOWANCES> 1,949
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 158,184
<PP&E> 52,524
<DEPRECIATION> 11,157
<TOTAL-ASSETS> 353,381
<CURRENT-LIABILITIES> 63,524
<BONDS> 1,633
0
0
<COMMON> 3,855
<OTHER-SE> 276,422
<TOTAL-LIABILITY-AND-EQUITY> 353,381
<SALES> 0
<TOTAL-REVENUES> 177,000
<CGS> 0
<TOTAL-COSTS> 97,173
<OTHER-EXPENSES> 54,659
<LOSS-PROVISION> 169
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 29,015
<INCOME-TAX> 11,587
<INCOME-CONTINUING> 17,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,428
<EPS-BASIC> .50
<EPS-DILUTED> .44
<FN>
<F1>Amounts inapplicable or not disclosed as a separate line on the Statement of
Financial Position or Results of Operations are reported as 0 herein.
</FN>
</TABLE>
