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As filed with the Securities and Exchange Commission on September 16, 1998
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
(INCLUDING REGISTRATION OF SHARES FOR
RESALE BY MEANS OF A FORM S-3 PROSPECTUS)
UNDER
THE SECURITIES ACT OF 1933
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CARREKER-ANTINORI, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 75-1622836
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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14001 N. DALLAS PARKWAY, SUITE 1100
DALLAS, TEXAS 75240
(Address of Principal Executive Offices)
(Zip Code)
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AMENDED AND RESTATED CARREKER-ANTINORI, INC. 1994 LONG TERM INCENTIVE PLAN
CARREKER-ANTINORI, INC. DIRECTOR STOCK OPTION PLAN
(Full titles of the plans)
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JOHN D. CARREKER, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
CARREKER-ANTINORI, INC.
14001 N. DALLAS PARKWAY
SUITE 1100
DALLAS, TEXAS 75240
(972) 458-1981
(Name, address and telephone number, including area code, of agent for service)
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Copies to:
JOHN B. MCKNIGHT, ESQ.
KENT JAMISON, ESQ.
LOCKE PURNELL RAIN HARRELL
(A PROFESSIONAL CORPORATION)
2200 ROSS AVENUE, SUITE 2200
DALLAS, TEXAS 75201
(214) 740-8000
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CALCULATION OF REGISTRATION FEE
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MAXIMUM PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE PRICE REGISTRATION FEE
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Common Stock, $0.01 par value
Issued under Amended and
Restated Carreker-Antinori,
Inc. 1994 Long Term Incentive
Plan . . . . . . . . . . . . . . 1,152,174 shares $2.63(2) $ 3,030,218 $ 893.91
To be issued under Amended and
Restated Carreker-Antinori,
Inc. 1994 Long Term Incentive
Plan . . . . . . . . . . . . . . 4,032,126 shares $4.66(3) $18,789,707 $5,542.96
To be issued under Carreker-
Antinori, Inc. Director Stock
Option Plan . . . . . . . . . . 100,000 shares $4.66(4) $ 466,000 $ 137.47
TOTAL 5,284,300 shares $22,285,925 $6,574.34
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(1) For the sole purpose of calculating the registration fee, the number of
shares to be registered under this Registration Statement has been broken
down into four subtotals.
(2) Computed in accordance with Rule 457(h) under the Securities Act of 1933.
Such computation is based on the weighted average exercise price of $2.63
per share covering 1,152,174 shares presently issued and outstanding under
the Registrant's Amended and Restated Carreker-Antinori, Inc. 1994 Long
Term Incentive Plan.
(3) Computed in accordance with Rules 457(h) and 457(c) under the Securities
Act of 1933, as amended. The estimated exercise price of $4.66 per share
was computed in accordance with Rule 457 by averaging the high and low
prices of a share of the Registrant's Common Stock as reported by The
Nasdaq National Market on September 10, 1998.
(4) Computed in accordance with Rules 457(h) and 457(c) under the Securities
Act of 1933. Such computation is based on an estimated exercise price of
$4.66 per share covering 100,000 authorized but unissued shares. The
estimated exercise price of $4.66 per share was computed in accordance
with Rule 457(c) by averaging the high and low prices of a share of the
Registrant's Common Stock as reported by The Nasdaq National Market on
September 10, 1998.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1: PLAN INFORMATION
The information specified by Item 1 of Part I of Form S-8 is omitted
from this filing in accordance with the provisions of Rule 428 under the
Securities Act of 1933, as amended, and the introductory note to Part I of
Form S-8.
ITEM 2: REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The information specified by Item 2 of Part I of Form S-8 is omitted
from this filing in accordance with the provisions of Rule 428 under the
Securities Act of 1933, as amended, and the introductory note to Part I of
Form S-8.
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REOFFER AND RESALE PROSPECTUS
CARREKER-ANTINORI, INC.
1,152,174 SHARES
COMMON STOCK, $0.01 PAR VALUE
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This Prospectus relates to 1,152,174 shares of the Common Stock, par
value $0.01 per share (the "Common Stock"), of Carreker-Antinori, Inc., a
Delaware corporation (the "Company" or "Carreker-Antinori"), which may be
offered from time to time by certain selling stockholders (the "Selling
Stockholders") for their own accounts. It is anticipated that the Selling
Stockholders will offer shares for sale at prevailing prices on The Nasdaq
National Market on the date of sale. The Company will receive no part of the
proceeds from sales made hereunder. All expenses of registration incurred
in connection with this offering are being borne by the Company, but all
selling and other expenses incurred by the Selling Stockholders will be borne
by such Selling Stockholders. None of the shares offered pursuant to this
Prospectus have been registered prior to the filing of the Registration
Statement of which this Prospectus is a part.
The Selling Stockholders have advised the Company that the shares of
Common Stock covered hereby are being registered to enable the Selling
Stockholders, or the lender to whom substantially all of the shares of Common
Stock are pledged to secure margin loans made to the Selling Stockholders
(the "pledgee"), to publicly sell the Common Stock, whether for independent
reasons or to repay the principal or interest on such margin loans or in the
event of a margin call or default in connection with such loans.
The Common Stock may be offered by or for the account of the Selling
Stockholders or pledgee, from time to time, on The Nasdaq National Market or
on any stock exchange on which the Common Stock may be listed at the time of
sale, in negotiated transactions, or through a combination of such methods of
sale, at fixed prices which may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, or at
negotiated prices. The Selling Stockholders or pledgee may effect such
transactions by selling Common Stock to or through broker-dealers who may
receive compensation in the form of discounts, concessions, or commissions
from the Selling Stockholders, pledgee and/or the purchasers of Common Stock
for whom such broker-dealers may act as agent or to whom they sell as
principal, or both. Any broker-dealer acquiring Common Stock may sell such
Common Stock in its normal market making activities, through other brokers on
a principal or agency basis, in negotiated transactions, or through a
combination of such methods. See "Selling Stockholders" and "Plan of
Distribution."
Pursuant to applicable securities laws, the amount of Common Stock
offered or resold by any Selling Stockholder (and any person with whom such
Selling Stockholder is acting in concert for the purpose of selling
securities of the Company) pursuant to this Prospectus shall not exceed,
during any three-month period, the amount specified in Rule 144(e)
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"). The provisions of Rule 144(e) restrict the maximum amount of
securities that may be sold within any three-month period to the greater of
(a) 1% of the then outstanding shares of Common Stock as shown by the most
recent report or statement published by the Company, (b) the average weekly
reported volume of trading in such securities on all national securities
exchanges and/or reported through the automated quotation system of a
registered securities association during the four calendar weeks preceding
the filing of notice required by Rule 144, or, if no such notice is required,
the date of receipt of the order to execute the transaction by the broker or
the date of execution of the transaction directly with a market maker, or
(c) the average weekly volume of trading in such securities reported
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through the consolidated transaction reporting system contemplated by
Rule 11Aa3-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), during the four-week period specified in (b) above.
The Common Stock is traded on The Nasdaq National Market (Nasdaq
Symbol: CANI). On September 14, 1998, the last reported sale price of the
Common Stock was $6.31 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
PROSPECTIVE PURCHASERS SHOULD CAREFULLY REVIEW THE MATTERS SET FORTH IN "RISK
FACTORS" COMMENCING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September 16, 1998.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus is delivered, upon written or oral
request of any such person, a copy of any and all of the information that has
been or may be incorporated by reference in this Prospectus, other than
exhibits to such documents. Requests for such copies should be directed to
Mr. Terry L. Gage, Carreker-Antinori, Inc., 14001 N. Dallas Parkway, Suite
1100, Dallas, Texas 75240. The Company's telephone number at that location
is (972) 458-1981.
The Company is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended, and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such materials may be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549, at prescribed rates. Information on the
operation of the Public Reference Section may be obtained by calling the
Commission at 1-800-SEC-0330. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the Commission's Web site is http://www.sec.gov. The Company's
Common Stock is traded on The Nasdaq National Market. The foregoing
materials are also available for inspection at the National Association of
Securities Dealers, Inc., 1735 K Street N.W., Washington, D.C. 20006.
This prospectus contains information concerning the Company and the
sale of its Common Stock by the Selling Stockholders, but does not contain
all the information set forth in the Registration Statement on Form S-8 which
the Company has filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"). The Registration
Statement, including various exhibits, may be inspected as the Commission's
office in Washington, D.C.
The Company intends to furnish to its stockholders annual reports
containing audited consolidated financial statements examined by an
independent accounting firm.
The Company's fiscal year ends January 31. References contained in
this Prospectus to a given fiscal year refer to the twelve-month period ended
January 31 of the succeeding year. For example, the fiscal year ended
January 31, 1998 is referred to herein as "fiscal 1997."
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TABLE OF CONTENTS
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RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . 31
INFORMATION INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . . . 31
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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RISK FACTORS
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE
FACTORS SET FORTH BELOW, ALONG WITH THE OTHER INFORMATION CONTAINED HEREIN,
SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES OF
COMMON STOCK OFFERED HEREBY. FURTHER, THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS
STATEMENTS OF THE COMPANY'S PLANS, GOALS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS APPLY TO ALL
RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS.
PROSPECTIVE INVESTORS IN THE SHARES OF COMMON STOCK OFFERED HEREBY ARE
CAUTIONED THAT, WHILE THE FORWARD-LOOKING STATEMENTS REFLECT THE COMPANY'S
GOOD FAITH BELIEFS, THEY ARE NOT GUARANTEES OF FUTURE PERFORMANCE, AND
INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES. IN ADDITION, THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN.
SOME OF THE FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS
PROSPECTUS.
DEPENDENCE ON BANKING INDUSTRY
Carreker-Antinori, Inc. (the "Company" or "Carreker-Antinori")
derives substantially all of its revenues from solutions provided to banks
and other participants in the banking industry. Accordingly, the Company's
future success significantly depends upon the continued demand for its
solutions within this industry. The Company believes that an important
factor in its growth has been the substantial change in the banking industry,
as manifested by continuing consolidation, regulatory change, technological
innovation and other trends. If this environment of change were to slow, the
Company could experience reduced demand for its solutions. In addition, the
banking industry is sensitive to changes in economic conditions and is highly
susceptible to unforeseen events, such as political instability, recession,
inflation or other adverse occurrences that may result in a significant
decline in the utilization of bank services. Any event that results in
decreased consumer or corporate use of bank services, or increased pressures
on banks towards the in-house development and implementation of revenue
enhancement or cost reduction measures, could have a material adverse effect
on the Company's business, financial condition and results of operations.
See "Business--Industry Background."
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company has experienced in the past, and expects to experience
in the future, significant fluctuations in quarterly operating results. Such
fluctuations may be caused by many factors, including but not limited to the
extent and timing of revenues recognized, and costs incurred, under
value-pricing contracts, the degree of customer acceptance of new solutions,
the introduction of new or enhanced solutions by the Company or its
competitors, budget concerns of customers, competitive conditions in the
industry, seasonal factors, bank purchasing cycles, timing of consolidation
decisions by banks, the extent of their international expansion and general
economic conditions. See "--Customer Project Risks." In addition, the
volume and timing of contract signings during a quarter are difficult to
forecast, particularly in light of the Company's historical tendency to have
a disproportionately large portion of contract signings in the final weeks of
a quarter. Due to the foregoing factors, many of which are beyond the
Company's control, quarterly revenues and operating results are difficult to
forecast. It is possible that the Company's future quarterly results of
operations from time to time will not meet the expectations of securities
analysts or investors, which could have a material adverse effect on the
market price of the Company's Common Stock.
LIMITED OPERATING HISTORY AS A COMBINED COMPANY
In January 1997, the Company acquired Antinori Software, Inc.
("ASI"). Accordingly, the Company has only a limited operating history as a
combined company upon which an evaluation of the Company and its prospects
can be based, and is subject to the risks generally inherent in the
establishment and growth of a new business enterprise. The Company is still
in the process of integrating ASI's business, management information systems,
software products and other operations with the Company's operations. There
can be no assurance that the Company will be able to integrate successfully
ASI's operations or institute integrated Company-wide systems and procedures
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to manage successfully the combined enterprise on a profitable basis. The
inability of the Company to integrate successfully ASI's operations could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, because the Company's consolidated
financial results of operations reflect only slightly more than one fiscal
year of actual integration of the operations of the Company and ASI, these
results of operations should not be relied upon as any indication of future
performance.
CUSTOMER CONCENTRATION
The Company's five largest customers accounted for approximately
49%, 38% and 46% of total revenues during fiscal 1995, 1996 and 1997,
respectively. While the Company's significant customers have changed from
period to period, Norwest Corporation has consistently ranked as one of the
Company's top customers, and accounted for approximately 16%, 16% and 14% of
total revenues in fiscal 1995, 1996 and 1997, respectively. The Company's
largest customer in fiscal 1997 was Fleet Financial Group, Inc., which
accounted for approximately 15% of total revenues in that period. Further,
inasmuch as approximately 74% and 85% of the Company's total revenues in
fiscal 1997 were derived from companies who were customers of the Company in
fiscal 1995 and fiscal 1996, respectively, the Company is dependent to a
significant degree on its ability to maintain its existing relationships with
these customers. There can be no assurance that the Company will be
successful in maintaining its existing customer relationships or in securing
additional major customers, and there can be no assurance that the Company
can retain or increase the volume of business that it does with such
customers. In particular, continuing consolidation within the banking
industry may result in the loss of one or more significant customers. Any
failure by the Company to retain one or more of its large customers, maintain
or increase the volume of business done for such customers or establish
profitable relationships with additional customers would have a material
adverse effect on the Company's business, financial condition and results of
operations.
CUSTOMER PROJECT RISKS
The Company prices its solutions on a time-and-materials,
fixed-price and value-pricing basis. In connection with fixed-price
projects, the Company occasionally incurs expenses in excess of its projected
costs, and, as a result, achieves lower margins than expected or may incur
losses with respect to projects. In connection with value-priced projects,
the Company is paid based on an agreed percentage of either projected or
actual increased revenues or decreased costs derived by the bank over a
period of up to twelve months following the implementation of the Company's
solutions. The Company typically must first commit time and resources to
develop such projections before a bank will commit to purchase the Company's
solutions, and therefore assumes the risk of making these commitments and
incurring related expenses with no assurance that the bank will purchase the
solutions. In addition, from time to time, a customer will not achieve
projected revenues or savings because it belatedly decides not to implement
the Company's solutions or the solutions do not produce the projected
results, in which case the Company may not be able to collect any or all of
the fees provided for in the customer's contract. The nature of the
Company's fixed-price and value-pricing arrangements can result in decreased
operating margins or losses and could materially and adversely affect the
Company's business, financial condition and results of operations. See
"Business--The Carreker-Antinori Solution-Reduced Customer Risk" and
"Business--Strategy--Increase Use of High-Margin Pricing Arrangements."
ABILITY TO MANAGE GROWTH
The Company has experienced significant growth in recent years, and
anticipates that additional expansion may be required in order to address
potential market opportunities. Any expansion of the Company's business
would place further demands on the Company's management, operational capacity
and financial resources. The Company anticipates that it will need to
recruit large numbers of qualified personnel in all areas of its operations,
including management, sales, marketing, delivery and software development.
There can be no assurance that the Company will be effective in attracting
and retaining additional qualified personnel, expanding its operational
capacity or otherwise managing growth. In addition, there can be no
assurance that the Company's systems, procedures or controls will be adequate
to support any expansion of the Company's operations. The Company is
currently in the
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process of updating its management information system (the "MIS system"),
which could require the Company to provide additional training to existing
personnel or hire additional personnel. If the Company cannot implement the
new MIS system in a timely manner, the Company's ability to manage growth
effectively or generate timely quarterly reports could be materially and
adversely affected. The failure to manage growth effectively could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Strategy-Pursue Strategic Alliances
and Acquisitions."
MARKET ACCEPTANCE OF THE COMPANY'S SOLUTIONS
The Company's success depends upon continued demand for its
solutions. Market acceptance of the Company's existing and future solutions
depends on several factors including: (i) the ease with which such solutions
can be implemented and used; (ii) the performance and reliability of such
solutions; (iii) the degree to which customers achieve expected revenue
gains, cost savings and performance enhancements; and (iv) the extent to
which the Company's customers and prospective customers are able to implement
alternative approaches to meet their business development and cost-saving
needs. Some of the foregoing factors are beyond the Company's control.
There can be no assurance that the Company's customers will realize the
intended benefits of the Company's solutions or that the Company's solutions
will achieve continued or increased market acceptance. Any significant or
ongoing failure to achieve such benefits or to maintain or increase market
acceptance would restrict substantially the future growth of the Company and
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Products and Services."
ABSENCE OF LONG-TERM AGREEMENTS
The Company typically provides services to customers on a
project-by-project basis without long-term agreements. When a customer
defers, modifies or cancels a project, the Company must be able to rapidly
redeploy its personnel to other projects in order to minimize the
underutilization of its personnel and the resulting adverse impact on
operating results. In addition, the Company's operating expenses are
relatively fixed and cannot be reduced on short notice to compensate for
unanticipated variations in the number or size of projects in progress. As a
result, any termination, significant reduction or modification of its
business relationships with any of its significant customers or with a number
of smaller customers could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business--Sales and Marketing."
POTENTIAL FOR SOFTWARE AND/OR SOLUTIONS DEFECTS
The Company's solutions at times in the past have been, and in the
future may be, incompatible with the operating environments of its customers
or inappropriate to address their needs, resulting in additional costs being
incurred by the Company in rendering services to its customers. Further,
like other software products, the Company's software occasionally has
contained undetected errors, or "bugs," which become apparent through use of
the software. Because the Company's new or enhanced software initially is
installed at a limited number of sites and operated by a limited number of
users, such errors and/or incompatibilities may not be detected for a number
of months after delivery of the software. The foregoing errors in the past
have resulted in the deployment of Company personnel and funds to cure
errors, resulting in cost overruns and delays in solutions development and
enhancement. Moreover, solutions with substantial errors could be rejected
by or result in damages to customers, which could have a material adverse
effect on the Company's business, financial condition and results of
operations. There can be no assurance that errors or defects will not be
discovered in the future, potentially causing delays in solution
implementation or requiring design modifications that could adversely affect
the Company's business, financial condition and results of operations. It is
also possible that errors or defects in the Company's solutions could give
rise to liability claims against the Company. See "Business--Technology."
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COMPETITION
The Company competes with third-party providers of services and
software products to the banking industry, including firms providing
consulting services, such as Andersen Consulting, Electronic Data Systems
Corporation and KPMG Peat Marwick LLP, and software companies, such as
Earnings Performance Group, Inc., Pegasystems Inc., Sterling Software, Inc.
and Transoft International, Inc. Many of these competitors have
significantly greater financial, technical, marketing and other resources
than the Company. The Company's competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements
or to devote greater resources to the development, promotion and sale of
their products than can the Company. Also, several of the Company's current
and potential competitors have greater name recognition and larger customer
bases that such competitors could leverage to increase market share at the
Company's expense. The Company expects to face increased competition as
other established and emerging companies enter the banking services market.
Increased competition could result in price reductions, fewer customer orders
and loss of market share, any of which could materially and adversely affect
the Company's business, financial condition and results of operations. There
can be no assurance that the Company will be able to compete successfully
against current or future competitors, and the failure to do so would have a
material adverse effect upon the Company's business, financial condition and
results of operations. See "Business--Competition."
In addition to competing with a variety of third parties, the
Company experiences competition from its customers and potential customers.
From time to time, these potential customers develop, implement and maintain
their own services and applications for revenue enhancements, cost reductions
and/or enhanced customer services, rather than purchasing services and
related products from third parties. As a result, the Company must
continuously educate existing and prospective customers about the advantages
of purchasing its solutions. There can be no assurance that these customers
or other potential customers will perceive sufficient value in the Company's
solutions to justify investing in them. In addition, customers or potential
customers could enter into strategic relationships with one or more of the
Company's competitors to develop, market and sell competing services or
products.
USE OF INDEPENDENT CONTRACTORS
The Company often provides solutions through independent
contractors. As the Company does not treat these individuals as its
employees, it does not pay federal or state employment taxes or withhold
federal or state employment or income taxes from compensation paid to such
persons. The Company also does not consider these persons to qualify as
eligible for coverage or benefits provided under its employee benefit plans
or include these persons when evaluating the compliance of its employee
benefit plans with the requirements of the Internal Revenue Code.
Additionally, the Company does not treat such persons as employees for
purposes of worker's compensation, labor and employment, or other legal
purposes. From time to time, the Company may face legal challenges to the
appropriateness of the characterization of such persons as independent
contractors from governmental agencies, the independent contractors
themselves or some other person or entity. The determination of such a legal
challenge generally will be determined on a case-by-case basis in view of the
particular facts of each case. The fact-specific nature of such a
determination raises the risk that from time to time an individual that the
Company has characterized as an independent contractor will be reclassified
as an employee for these or other legal purposes. In the event persons
engaged by the Company as independent contractors are determined to be
employees by the Internal Revenue Service (the "IRS") or any applicable
taxing authority, the Company would be required to pay applicable federal and
state employment taxes and withhold income taxes with respect to such persons
and could become liable for amounts required to be paid or withheld in prior
periods and for costs, penalties and interest thereon. In addition, the
Company could be required to include such persons in its employee benefit
plans on a retroactive, as well as a current, basis. Furthermore, depending
on the party that makes the legal challenge and the remedy sought, the
Company could be subject to other liabilities sought by governmental
authorities or private persons. At August 30, 1998, 66 consultants were
engaged by the Company as independent contractors. Any challenge by the IRS,
state authorities or private litigants resulting in a determination that such
persons are employees would have a material adverse effect on the Company's
business, financial condition and results of operations. In October 1997, a
bill was introduced in the United States House of Representatives that would
amend the Internal Revenue Code to establish
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more stringent requirements for the engagement of independent contractors.
The Company is unable to assess the likelihood that this bill or similar
legislation will be enacted. Further, the Company's ability to retain
independent contractors could in the future deteriorate, due in part to the
lower commitment level that such contractors have to the Company. See
"Business--Independent Contractors."
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends, in significant part, upon the
continued services of John D. Carreker, Jr., its Chairman of the Board and
Chief Executive Officer, as well as other executive officers and key
personnel. The loss of services of Mr. Carreker or one or more of the
Company's other executive officers or key employees could have a material
adverse effect on the Company's business, financial condition and results of
operations, and there can be no assurance that the Company will be able to
retain its executive officers or key personnel. The Company does not
maintain key-man life insurance covering any of its executive officers or
other key personnel.
ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL
The Company's future success depends upon its continuing ability to
attract and retain highly qualified banking, technical and managerial
personnel. Competition for such personnel is intense, and the Company at
times has experienced difficulties in attracting the desired number of such
individuals. Further, the Company's employees frequently have left the
Company to work in-house with the Company's customers. There can be no
assurance that the Company will be able to attract or retain a sufficient
number of highly qualified employees or independent contractors in the
future. If the Company is unable to attract personnel in key positions, the
Company's business, financial condition and results of operations could be
materially and adversely affected.
IMPACT OF TECHNOLOGICAL ADVANCES
The Company's future success will depend, in part, upon its ability
to enhance its existing solutions, develop and introduce new solutions that
address the increasingly sophisticated and varied needs of its current and
prospective customers, develop leading technology and respond to
technological advances and emerging industry standards on a timely and
cost-effective basis. There can be no assurance that future advances in
technology will be beneficial to, or compatible with, the Company's business
or that the Company will be able to incorporate such advances into its
business. In addition, keeping abreast of technological advances in the
Company's business may require substantial expenditures and lead time. There
can be no assurance that the Company will be successful in using new
technologies, adapting its solutions to emerging industry standards or
developing, introducing and marketing solution enhancements or new solutions,
or that the Company will not experience difficulties that could delay or
prevent the successful development, introduction or marketing of these
solutions. If the Company incurs increased costs or is unable, for technical
or other reasons, to develop and introduce new solutions or enhancements of
existing solutions in a timely manner in response to changing market
conditions or customer requirements, the Company's business, financial
condition and results of operations could be materially and adversely
affected. See "Business--Solutions Development."
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF INFRINGEMENT
The Company's success significantly depends upon its proprietary
technology and information. The Company relies upon a combination of patent,
copyright, trademark and trade secret laws and confidentiality procedures to
protect its proprietary technology and information. The Company generally
has relied on common law rights to protect the use of its name, technology
and brands. The Company has a number of issued patents and one registered
trademark. There can be no assurance that the steps taken by the Company to
protect its services and products are adequate to prevent misappropriation of
its technology or that the Company's competitors independently will not
develop technologies that are substantially equivalent or superior to the
Company's technology. Further, it is very difficult to police unauthorized
use of the Company's software due to the nature of software. Any such
misappropriation of the Company's proprietary technology or information or
the development of competitive
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<PAGE>
technologies could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the laws of
certain countries in which the Company's software is distributed do not
protect the Company's intellectual property rights to the same extent as the
laws of the United States. For example, the laws of a number of foreign
jurisdictions in which the Company licenses its software protect trademarks
solely on the basis of the first to register. The Company currently does not
possess any trademark registrations in foreign jurisdictions, although it
does have copyright protection of its software under the provisions of
various international conventions. Accordingly, intellectual property
protection of its services and products may be ineffective in many foreign
countries. In summary, there can be no assurance that the protection
provided by the laws of the United States or such foreign jurisdictions will
be sufficient to protect the Company's proprietary technology or information.
The Company could incur substantial costs in protecting and
enforcing its intellectual property rights. Although presently there are no
pending or threatened intellectual property claims against the Company, third
parties may, in the future, assert patent, trademark, copyright and other
intellectual property right claims to technologies which are incorporated
into the Company's solutions. In such event, the Company may be required to
incur significant costs in reaching a resolution to the asserted claims.
There can be no assurance that such a resolution would not require that the
Company pay damages or obtain a license to the third party's intellectual
property rights in order to continue licensing the Company's software as
currently offered or, if such a third-party license is required, that it
would be available on terms acceptable to the Company.
Certain technology used in the Company's current software and
software in development includes technology licensed from third parties.
These licenses generally require the Company to pay royalties and to fulfill
confidentiality obligations. The termination of any such licenses, or the
failure of the third-party licensors to adequately maintain or update their
products, could result in delays in the Company's ability to implement
solutions or in delays in the introduction of the Company's new or enhanced
solutions while it searches for similar technology from alternative sources,
if any, which would prove costly. Any need to implement alternative
technology could prove to be very expensive for the Company and any delay in
solution implementation could result in a material adverse effect on the
business, financial condition and results of operations of the Company. It
may also be necessary or desirable in the future to obtain additional
licenses for use of third-party products in the Company's solutions and there
can be no assurance that the Company will be able to do so on commercially
reasonable terms, if at all. See "Business--Proprietary Rights."
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are
coded to accept only two-digit entries in the date code field. Beginning in
the year 2000, these date code fields will need to accept four-digit entries
to distinguish 21st century dates from 20th century dates. As a result,
computer systems and/or software used by many companies, including those used
by Carreker-Antinori, may need to be upgraded to comply with such "Year 2000"
requirements. In addition, if banks dedicate a significant portion of their
information technology budgets to the resolution of Year 2000 issues, their
ability to purchase the Company's solutions may be adversely affected, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. Although most of the software currently
offered by the Company is either designed to be Year 2000 compliant or has
been upgraded to be Year 2000 compliant, the Company still offers some
software which has imbedded software developed by a third party that may not
be Year 2000 compliant. The Company is in the process of correcting this
situation for a number of its customers. There can be no assurance that the
Company's Year 2000 compliant software or related upgrades contain all
necessary date code changes or that such software or upgrades will interface
with its customers' other software programs. Further, liability claims could
arise out of the Company's delivery of solutions that address Year 2000
issues to the extent that such solutions do not effectively address such
issues, and the failure of such solutions to effectively address Year 2000
issues could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, although the
Company believes that each of the software programs used in its MIS system
and other internal programs is Year 2000 compliant, there can be no assurance
that such software will be Year 2000 compliant, and any failure to be so
compliant may require additional expenditures by the Company to rectify the
noncompliance.
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POTENTIAL LIABILITY CLAIMS
As a result of the Company's provision of solutions that address
critical functions of bank operations, the Company is exposed to possible
liability claims from banks and their customers. Although the Company has
not experienced any material liability claims to date, there can be no
assurance that the Company will not become subject to such claims in the
future. A liability claim against the Company could have a material adverse
effect on its business, financial condition and results of operations.
RISKS ASSOCIATED WITH POTENTIAL STRATEGIC ALLIANCES OR ACQUISITIONS
Except as described immediately below, the Company has no current
agreements or negotiations underway with respect to any potential strategic
alliances or acquisitions. The Company does, however, regularly evaluate
such opportunities and may enter into strategic alliances or make
acquisitions of other companies or technologies in the future. Risks
inherent in alliances include, among others: (i) substantial investment of
the Company's resources in the alliance; (ii) inability to realize the
intended benefits of an alliance; (iii) increased reliance on third parties;
(iv) increased payment of third-party licensing fees or royalties for the
incorporation of third-party technology into the Company's solutions; and
(v) inadvertent transfer of the Company's proprietary technology to strategic
"partners." Acquisitions involve numerous risks, including difficulties in
assimilating acquired operations and products, diversion of management's
attention from other business concerns, amortization of acquired intangible
assets and potential loss of key employees of acquired companies. There can
be no assurance that the Company will be successful in identifying and
entering into strategic alliances, if at all, and any inability to do so
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, there can be no assurance
that the Company will be able to integrate successfully any operations,
personnel or services that might be acquired in the future, and a failure by
the Company to do so could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business--Strategy."
The Company is currently providing management services to the
Electronic Check Clearing House Organization ("ECCHO") and Payment Solutions
Network, Inc. ("PSN"), which enables it to be an infrastructure development
partner to the banking industry. These relationships, and the Company's
participation in INFITEQ, LLC ("INFITEQ"), are forms of strategic alliances.
In order to support the formation and growth of PSN, the Company invested
time and technological resources in PSN (for which it received an equity
interest that was later sold for a gain) and has loaned to PSN an aggregate
of $582,000 ($500,000 of which has been reserved due to the Company's belief
that collection is doubtful). The Company has also invested time and
technological resources in the formation and growth of ECCHO and INFITEQ,
although it has not invested any funds directly in those entities. In
addition, the Company has experienced, and may continue to experience, delays
in collections of management fees from these respective strategic alliances.
See "Business--Strategic Banking Initiatives."
GOVERNMENT REGULATION
The Company's primary customers are banks. Although the solutions
currently offered by the Company have not been subject to any material,
specific government regulation, the banking industry is regulated heavily,
and the Company expects that such regulation will affect the relative demand
for the Company's solutions. There can be no assurance that federal, state
or foreign governmental authorities will not adopt new regulations, and any
adoption of new regulations could require the Company to modify its current
or future solutions. The adoption of laws or regulations affecting the
Company's or its customers' business could reduce the Company's growth rate
or could otherwise have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Government
Regulation."
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company recently has begun to provide solutions to banks outside
the United States, and a key component of the Company's growth strategy is to
broaden its international operations. The Company's international
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operations are subject to risks inherent in the conduct of international
business, including unexpected changes in regulatory requirements, exchange
rates, export license requirements, tariffs and other economic barriers to
free trade, political and economic instability, limited intellectual property
protection, difficulties in collecting payments and potentially adverse tax
and labor consequences. Certain of the Company's international sales are
denominated in local currencies, and the impact of future exchange rate
fluctuations on the Company's financial condition and results of operations
cannot be accurately predicted. There can be no assurance that fluctuations
in currency exchange rates in the future will not have a material adverse
effect on revenue from international sales and thus the Company's business,
financial condition and results of operations. See "Business--Strategy."
ANTI-TAKEOVER MATTERS
The Company's Certificate of Incorporation (the "Certificate") and
Bylaws ("Bylaws") contain provisions that may have the effect of delaying,
deterring or preventing a potential takeover of the Company that stockholders
purchasing shares in the offering may consider to be in their best interests.
The Certificate and Bylaws provide for a classified Board of Directors
serving staggered terms of three years, prevent stockholders from calling a
special meeting of stockholders and prohibit stockholder action by written
consent. The Certificate also authorizes only the Board of Directors to fill
vacancies, including newly-created directorships, and states that directors
of the Company may be removed only for cause and only by the affirmative vote
of holders of at least two-thirds of the outstanding shares of the voting
stock, voting together as a single class. Section 203 of the Delaware General
Corporation Law, which is applicable to the Company, contains provisions that
restrict certain business combinations with interested stockholders, which
may have the effect of inhibiting a non-negotiated merger or other business
combination involving the Company.
POTENTIAL VOLATILITY OF STOCK PRICE
The market price for the Common Stock has been and will continue to
be affected by a number of factors, including the announcement of new
products, product enhancements or services by the Company or its competitors,
quarterly variations in the Company's results of operations or results of
operations of the Company's competitors, changes in earnings estimates or
recommendations by securities analysts, developments in the Company's
industry and in the banking industry, general market and economic conditions
and other factors, including factors unrelated to the operating performance
of the Company or its competitors. In addition, stock prices for many
companies in the technology and emerging growth sectors have experienced wide
fluctuations which have often been unrelated to the operating performance of
such companies. Such factors and fluctuations may adversely affect the
market price of the Company's Common Stock.
BUSINESS
Carreker-Antinori is a leading provider of integrated consulting and
software solutions that enable banks to increase their revenues, reduce their
costs and enhance their delivery of customer services. The Company's
offerings include revenue enhancement, payment systems, payment
electronification and enabling technologies solutions. Carreker-Antinori's
solutions assist banks in re-engineering their operational systems and
implementing new software applications to increase earning assets, develop
new revenue sources, improve operating efficiencies and reduce check fraud
losses. The Company believes that its 20 years of experience in the banking
industry, combined with its advanced technological expertise, positions it to
effectively address and anticipate the challenges and opportunities faced by
banks in today's increasingly competitive environment. The Company's
customers include approximately two-thirds of the largest 100 bank holding
companies in the United States, including Fleet Financial Group, Inc.,
NationsBank Corporation, Norwest Corporation and SunTrust Banks, Inc.
The Company's offerings include revenue enhancement, payment
systems, payment electronification and enabling technologies solutions. The
Company's revenue enhancement solutions are designed to quickly increase a
bank's revenues through improved operational workflows, pricing structures
and liquidity and cash management.
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The Company's payment systems and payment electronification solutions are
designed to reduce check-processing costs through procedural and
technological improvements and reduced check fraud and other risks of loss.
Carreker-Antinori's enabling technologies convert leading-edge technologies
and ideas into practical banking solutions.
The Company's principal executive office is located at 14001 N.
Dallas Parkway, Suite 1100, Dallas, Texas 75240, and its telephone number at
that office is (972) 458-1981. The Company's World Wide Web home page is
located at http:\\www.carreker.com. Information contained in the Company's
Web site does not constitute, and shall not be deemed to constitute, part of
this Prospectus.
INDUSTRY BACKGROUND
The banking industry is one of the nation's largest industries, with
aggregate annual revenues of nearly $250 billion. In recent years, the
industry has undergone significant change, and today's banking environment is
characterized by intense competition, continuing consolidation, changing
regulations and rapid technological innovation. In addition to increased
competition within the banking industry, banks are encountering significant
competition from insurance companies, brokerage houses and other financial
institutions, all of which are expanding to provide services that were once
within the exclusive domain of banks. Although banks historically have
focused on reducing their operating expenses to remain competitive, they are
today increasingly focusing on developing new sources of revenue growth,
automating operations to increase efficiencies and outsourcing commodity-like
banking functions to sustain market value growth. To this end, banks are
expending significant resources, both internally and through outsourcing
arrangements. Information technology expenditures by the industry in 1997 on
paper-based payment systems and financial and risk management systems alone
are estimated to have been approximately $1.0 billion and $2.3 billion,
respectively, of which approximately 59% and 51% were paid to third parties.
CONSOLIDATION
Over the past several years, the banking industry has experienced
substantial consolidation as banks have sought to gain a competitive
advantage by acquiring other banks. This consolidation is driven by a
continuing effort to increase revenues through a larger customer base,
achieve efficiencies of scale associated with increased operating size and
enhance customer service through a nationwide presence and consequent broader
geographic reach. This trend has resulted in a decrease in the number of
banks, but an increase in the number of banks with assets of $5 billion or
more. As they grow by acquisition, these banks require improved operational
processes and technological applications that increase efficiencies in order
to recapture acquisition premiums paid. In the face of this consolidation
trend, banks are under considerable pressure to maximize their public market
valuations to enhance the attractiveness of their acquisition currency,
provide a credible defense to unsolicited offers and increase returns to
shareholders.
REGULATORY CHANGE
Currently, the banking industry is characterized by continuing
regulatory changes. Regulations in certain areas, such as interstate banking
operations, have been relaxed while regulations in other areas, such as
payment systems, have become more restrictive. These changes have presented
banks with both challenges and opportunities to improve their operations and
achieve competitive advantages. For instance, over the past several years
changes in regulations have required banks to provide their depositors with
accelerated credit on deposited checks, which has increased the risk of bank
loss if the deposited checks are returned unpaid after the depositor has
withdrawn the funds. A 1995 study estimated that banks absorbed $850 million
of losses due to check fraud. Banks have responded by implementing expedited
check processing, presentment and return item processing systems not only to
reduce such losses, but also to gain added revenue and generate further
efficiencies. Revisions to regulations also have permitted interstate
banking, which allows bank holding companies to own banks in multiple states
under a single charter and, consequently, to capture the operating and
structural efficiencies that such expanded operations make possible. In
addition, deregulation in certain sectors of the banking industry has led to
increased competition
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for banks from insurance companies, brokerage houses and other financial
institutions in areas of business which were previously the exclusive domain
of banks.
TECHNOLOGICAL INNOVATION
Rapid technological innovation is creating new means for
participants in the banking industry to gain competitive advantages, and this
development has increased customers' expectations. Increasingly, customers
are requiring that their banks provide a broader scope of banking services
quickly and easily through automated teller machines ("ATMs"), by telephone
or over the Internet. The banking industry has witnessed an exponential
growth in distributed banking, including Internet banking, with more than
2,000 banks having launched Web sites and more than 16% of United States
households estimated to be banking via the Internet by the year 2000.
Additionally, technological development has provided banks with the potential
for numerous operational enhancements. For instance, technology currently
allows for the electronic storage of images of documents and instruments,
including checks, and the ability to recall the data quickly and to utilize
the data at multiple locations simultaneously. Technology also currently
enables banks to optimize their earning assets by reducing their reserve
requirements. Furthermore, technological developments are fueling
industry-wide advancements, such as the electronification of the check
payment process. According to industry sources, in 1996, over 60 billion
paper checks were used, of which electronic check payment presentment ("ECP")
accounted for approximately 3%. However, electronification of the check
payment system has been gaining increasing acceptance as an efficient and
viable solution for eliminating the time-consuming and expensive paper
shuffle.
INDUSTRY CHALLENGES
In order to compete effectively in this dynamic environment, banks
often must identify effective and innovative solutions to address their
unique requirements and re-design, and in some cases completely replace,
their operational systems. Effective development and implementation of these
solutions is technically challenging, time-consuming and expensive, and banks
often are faced with a choice between building internal, custom solutions or
purchasing third-party offerings. The development of internal solutions
necessarily involves either re-deploying already stretched resources or
acquiring new resources that increase fixed costs, while typically resulting
in isolated, departmental solutions. Traditional third-party solutions often
have their own shortcomings. Some third-party providers only offer analysis
and consultation regarding a bank's operations, while others only provide
specific software applications resulting in a piecemeal approach to solutions
development. By using multiple providers, banks face increased costs, more
complex implementation and delayed realization of benefits. In addition,
traditional third-party solutions typically are not designed to the banking
industry's unique requirements and are often inflexible, requiring banks to
conform their work processes to available systems. The situation is
exacerbated by the fact that effective solutions cannot be developed in
isolation, given the increasingly interdependent nature of bank-to-bank
operations. Consequently, banks are in need of a third party, familiar with
the banking industry, to provide integrated consulting services and
technological applications.
THE CARREKER-ANTINORI SOLUTION
Designed to address the unique requirements of the banking industry,
Carreker-Antinori's solutions enable banks to increase revenues, reduce costs
and enhance delivery of customer services. These solutions combine
consulting services and technological applications in such areas as liquidity
management, payment processing, deposit taking, fraud prevention, customer
service and cash management services. In delivering its solutions,
Carreker-Antinori: (i) gathers and analyzes information about a customer's
operations, markets and external environments; (ii) identifies opportunities
for revenue enhancement, cost minimization and other efficiency-generating
solutions; (iii) develops and proposes tailored solutions, which typically
include one or more of the Company's software applications; (iv) designs a
business case to justify investment in the solutions; (v) builds project
consensus among senior management; and (vi) provides implementation and
maintenance services. Carreker-Antinori's solutions are differentiated by the
following characteristics:
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INDUSTRY-SPECIFIC CONSULTING EXPERTISE. The Company's consultants,
managers and employees, many of whom are former bankers, include experts in
complex bank operations. Carreker-Antinori provides services to
approximately two-thirds of the largest 100 bank holding companies. The
Company believes that its expertise and its in-depth experience have allowed
it to develop the most advanced consulting services and technological
applications for the banking industry.
ADVANCED TECHNOLOGY. Carreker-Antinori incorporates the latest
technological developments in client/server systems and protocols to produce
software applications that are scaleable, functional and able to interface
with a bank's legacy systems. In addition, the Company's participation in
various interbank organizations enables the Company to stay at the forefront
of technological innovations in the industry.
INTEGRATED APPROACH. Carreker-Antinori combines its consulting
expertise and proprietary technology to serve as a single-source provider of
fully-integrated, end-to-end solutions that address the critical needs of
banks. This approach sets the Company apart from providers of partial
solutions that require banks to seek costly additional expertise or
implementation services to attain a complete solution. By offering
integrated solutions, the Company achieves more rapid identification and
implementation of solutions than would a piecemeal approach.
REDUCED CUSTOMER RISK. The Company's solutions reduce investment
risk by increasing revenues or reducing costs in a relatively short period of
time. In addition, in appropriate circumstances, the Company value-prices
certain of its solutions, whereby it receives a percentage of the amount of
additional revenues or reduced costs achieved by the customer. These
arrangements allow banks to fund their investments in the Company's solutions
with the benefits derived from their implementation.
BROAD ARRAY OF SERVICES AND TECHNOLOGY. The Company believes that
its offerings of revenue enhancement, payment systems and related bank
operations solutions are the broadest in the banking industry. By offering a
broad set of complementary solutions, the Company is able to provide a bank
with an expert solution targeted to a narrow area of a bank's operations or
to address a broad range of a bank's operational requirements. The Company
believes that by offering a wide variety of solutions, it enhances the value
that is offered to its customers.
STRATEGY
The Company's objective is to be the leading provider of revenue
enhancement, payment systems, payment electronification and enabling
technologies solutions to the banking industry, and to continue to serve in a
leadership role in transitioning the check payment system from paper to
electronic formats. Key elements of the Company's strategy include the
following:
ADVANCE POSITION AS INDUSTRY INNOVATOR. Carreker-Antinori intends
to maintain its consulting and technology leadership position in the banking
industry by anticipating and responding to evolving industry needs and
creating consulting services and technological applications that address
these needs. Through its industry contacts and customer interaction, the
Company plans to identify new methods for converting leading-edge
technologies and ideas into practical banking solutions. The Company's
leadership position is enhanced by the role it plays in ECCHO, which is
focused on developing the rules and standards for transitioning the check
payment system from paper to electronic format, and in PSN, which provides
database and information-based products and services needed for realization
of the benefits associated with the electronification of the check payment
system, which participation enables it to be an infrastructure development
partner to the banking industry as it transitions the check payment system
from paper to electronic formats.
PURSUE STRATEGIC ALLIANCES AND ACQUISITIONS. The Company seeks to
form alliances with large service providers or acquire smaller companies
whose solutions, when combined with those of the Company, provide incremental
value-added benefits to banks. The Company has implemented this strategy
through its acquisition of ASI, its strategic alliance with Visa and IBM
Global Services in forming PSN and its recent alliance with UPS
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Worldwide Logistics, National Processing Company, Fiserv, Inc. and Brink's
Incorporated relating to INFITEQ, an entity formed with these organizations
to provide a single-source provider of specialized outsourcing services to
the banking industry for transaction processing, information management,
electronic camera and image technology. The Company believes that strategic
alliances and acquisitions will further enable the Company to combine its own
solutions with those of complementary businesses, provide it with strong
opportunities to expand its line of banking solutions, increase its customer
base and pursue new growth platforms.
LEVERAGE MARKET POSITION TO EXPAND CUSTOMER BASE. The Company seeks
to increase its customer base by leveraging its strong relationships with
bank holding companies with assets over $50 million ("Tier I Banks") and bank
holding companies and independent banks with assets of between $5 million and
$50 billion ("Tier II Banks") to market its solutions to other Tier II Banks
and selected smaller banks and other financial institutions. The Company
also intends to leverage its existing technological applications by marketing
them to smaller banks that do not require significant customization or
implementation services. Additionally, the Company plans to leverage its
position of being a leading provider of integrated consulting and software
solutions to the banking industry in the United States market to pursue
international customers, particularly banks elsewhere in North America and in
Europe. To this end, the Company recently has provided solutions
internationally to Barclays Bank, as well as to four of the largest Canadian
banks through several service companies owned by these banks. Furthermore,
as non-bank financial institutions aggressively continue to expand their
markets to include related financial services, the Company is identifying new
opportunities to market its solutions to these institutions.
BUILD LONG-TERM RELATIONSHIPS. By focusing on long-term customer
relationships where the Company can identify and offer a continual stream of
value-added solutions, the Company intends to increase its repeat business
with existing customers. Through its long-term customer relationships, the
Company plans to continue focusing on the generation of significant
year-to-year revenues, which typically produce higher gross profit margins as
the Company is able to deliver value-added solutions to existing customers
without incurring many of the start-up costs associated with the development
of new relationships.
INCREASE USE OF HIGH-MARGIN PRICING ARRANGEMENTS. Carreker-Antinori
will continue to share in the value that its solutions create for customers
by expanding the use of pricing methods and negotiated arrangements to
generate recurring and high-margin revenues. The Company will seek to
increase the use of value pricing for solutions in appropriate circumstances
where increased revenues or reduced costs resulting from such solutions can
be readily projected or measured. In addition, the Company intends to expand
its practice of structuring license fees for software-based solutions
according to the number of transactions processed with the solutions, which
will increase its recurring revenues and smooth period-to-period revenues.
PRODUCTS AND SERVICES
The Company offers a wide range of consulting services and
state-of-the-art, proprietary technology applications designed to address the
unique requirements of the banking industry. The Company's services and
technology applications fall into five categories: Revenue Enhancement,
Payment Systems, Payment Electronification, Enabling Technologies and
Management Services, with most of these categories consisting of a number of
practices. The Company's solutions are sold individually, or complementary
solutions may be sold together (similarly, software products may be sold
individually or as part of a product suite). The following table summarizes
the Company's solutions, together with each of their respective practices:
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<TABLE>
<CAPTION>
SOLUTIONS DESCRIPTION
--------- -----------
<S> <C>
REVENUE ENHANCEMENT
YIELD MANAGEMENT Improves operational workflows and processes
and pricing structures employed by a bank.
LIQUIDITY MANAGEMENT Reduces the amount of non-earning assets that
a bank maintains in reserve accounts or in
cash-on-hand. The solutions incorporate
reserve management and cash management
software, including RESERVELINK, RESERVELINK
PLUS, THE ANALYSIS ADVANTAGE, CASHFORECASTER
and CASHTRACKER.
CASH MANAGEMENT Improves efficiency and effectiveness of a
bank's cash management business lines and
related practices.
PAYMENT SYSTEMS
CONSOLIDATION AND BEST Consolidates check processing operations,
PRACTICES streamlines payment process flows and enables
potential reductions of full-time personnel.
The solutions incorporate software
applications, including INNOVASION and
ILLUMINATION SUITE, that enable a bank to
obtain customer or internally requested
information electronically.
FLOAT MANAGEMENT Enhances bank float management through
improved check collection, workflow and float
allocation and pricing. The solutions
incorporate software applications, including
DEPOSITMANAGER, BRANCH ITEM TRUNCATION, FLOAT
PRICING SYSTEM and FLOAT ANALYSIS SYSTEM,
that simplify the processing of certain
customer deposits, facilitate float
processing and enable a bank to increase its
competitiveness by extending teller window
hours.
RISK MANAGEMENT Reduces risk of loss from the check payment
process as a result of operational failures,
check fraud and litigation. The solutions
incorporate software applications, including
ON-US FRAUD and TRANSIT FRAUD, that identify
potentially fraudulent checks.
PAYMENT ELECTRONIFICATION Facilitates the capture of the benefits from
the electronification of the check payment
process. The solutions incorporate software
applications, including SMARTNOTES, TNOTES
and CNOTES, that reduce the risk of loss at a
number of points in the check payment
process.
ENABLING TECHNOLOGIES
ELECTRONIC COMMERCE Develops and implements a bank's electronic
commerce strategy.
YEAR 2000 Assesses a bank's ability to process data
during the transition from the year 1999 to
the year 2000 without functional or data
abnormality.
IMAGE SYSTEMS Applies check imaging technologies to improve
the efficiency of a bank's "back-office"
customer service operations.
</TABLE>
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<TABLE>
<CAPTION>
SOLUTIONS DESCRIPTION
--------- -----------
<S> <C>
INTEGRATION SERVICES Aligns work processes, information needs,
business infrastructure and long-term
strategic goals with operational practices
and technology applications.
MANAGEMENT SERVICES Provides management services to ECCHO, PSN
and INFITEQ.
</TABLE>
REVENUE ENHANCEMENT
The Company's Revenue Enhancement solutions utilize
Carreker-Antinori's in-depth banking expertise and history of innovation to
produce increased revenues for banks in a compressed time frame through
improved operational workflows, pricing structures and liquidity and cash
management. The Revenue Enhancement solutions generally consist of three
practices: yield management, liquidity management and cash management.
YIELD MANAGEMENT
The yield management practice identifies opportunities to increase a
bank's revenues quickly and recommends operational practices to capitalize on
these opportunities. In this practice, the Company analyzes a bank's records
and interviews bank representatives to obtain information regarding the
bank's retail and commercial business, markets, products, pricing policies,
workflow practices and operating procedures. This analysis typically focuses
on several functional areas, including check, loan, deposit and trust
operations, deposit and loan product management, finance and accounting.
With this information, the Company is able to recommend changes in fee
structures, operational processes and other procedures to increase a bank's
revenues.
LIQUIDITY MANAGEMENT
The liquidity management practice enables a bank to increase its
revenues by minimizing the amount of non-earning assets that, under
applicable regulations, the bank is obligated to maintain as a reserve
against deposit balances. Banks typically satisfy their reserve requirement
by maintaining interest-free balances at the Federal Reserve Bank and as cash
in vaults, branches and ATMs. By minimizing the level of reserves the bank
is required to maintain, the liquidity management practice enables the bank
to re-deploy funds maintained in interest free balances at the Federal
Reserve Bank to more productive uses. Additionally, this practice assists
banks in identifying cash-on-hand that is surplus to normal operating
requirements and reserve requirements so that such surplus may be re-deployed
in earning assets. The Company's RESERVELINK and RESERVELINK PLUS
applications minimize a bank's required reserves by automatically sweeping
daily balances in consumer and commercial accounts from transaction accounts,
which are subject to a 10% reserve requirement, to non-transaction accounts,
which have no reserve requirement. The Analysis Advantage application allows
a bank, if it so desires, to share the benefits from reduced reserves with
its commercial customers. In addition, the Company's CASHFORECASTER, ATM
CASHFORECASTER and CASHTRACKER software applications are designed to identify
surplus cash in a bank's branches and ATMs, which information can then be
used to reduce a bank's cash inventory.
CASH MANAGEMENT
The cash management practice enhances the revenues that certain
large banks derive from providing their institutional customers with cash
management services, such as check clearing, lockbox and money transfer
services. In this practice, the Company reviews the profitability, quality
of delivery and overall business strategy of a bank's cash management lines
of business and benchmarks the bank's performance against other industry
participants. Following such a review, the Company proposes and implements
specific adjustments relating to business strategies, market segmentation,
product offerings and pricing policies to improve the financial performance
of the bank's cash management business line.
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PAYMENT SYSTEMS
The Company's Payment Systems solutions assist banks in reducing
check-processing costs through procedural and technological improvements that
support internal growth and acquisitions, standardize transactional
processing and reduce risk of loss. The Company's Payment Systems solutions
enable banks to manage their check-processing operations to function more
efficiently and effectively at reduced costs without compromising customer
service. The Payment Systems solutions generally consist of three practices:
consolidation and best practices, float management and risk management.
CONSOLIDATION AND BEST PRACTICES
The consolidation and best practices practice reduces bank operating
costs in the area of check processing by consolidating check-processing
centers, streamlining check-process flows and reducing personnel to achieve
economies of scale, better management control, more standardized operations
and improved customer service. This practice also uses industry benchmarks to
assure that a bank's check-processing operations are utilizing the industry's
most advanced procedures. The consolidation and best practices practice has
been used in a variety of contexts that require streamlined check-processing
operations, including reconfiguring multi-state operations into a single
operation, collapsing multi-state banking charters into a single state
charter, and re-engineering "back-office" operations through the application
of technology. The consolidation and best practices practice offers
technology applications that focus on different areas of check processing,
including customer service and research and adjustments. The Company's
technology applications that focus on customer service, INNOVASION and
ILLUMINATION SUITE, enable a bank to obtain electronically information needed
internally by the bank or for customer requests that require a copy of a
check or other documentation, such as a statement of account. Technology
applications focused on adjustments and research allow banks to respond to
inquiries about checks that are stored in the bank's archives.
FLOAT MANAGEMENT
The Company's float management practice focuses on a bank's
check-processing procedures and increases a bank's investable funds by
optimizing bank float profitability through improved check collection,
efficient check-processing workflow and float allocation and pricing. As a
result of the implementation of float management practices, a bank can reduce
the float and related costs that the bank incurs, increase the float
allocated to the bank's customers, decrease the bank's non-earning assets,
improve the bank's check-processing workflow, increase the bank's
profitability and improve the bank's management reporting. The float
management practice consists generally of conducting float audits and
performing reviews and analyses of check-processing workflow, float
management organization, structure and reporting, check clearing and market
segmentation. The float management practice offers software applications
that focus on different approaches to optimizing a bank's float. The
Company's technology applications, such as FLOAT PRICING SYSTEM and FLOAT
ANALYSIS SYSTEM, assist banks in taking maximum advantage of float by
selectively pricing the availability of funds for deposited checks, measuring
float profitability by customer and generating detailed check clearing
end-point data. The Company also offers technology applications, such as
BRANCH ITEM TRUNCATION and DEPOSIT MANAGER, that simplify the processing of
customer deposits containing five items or less and enable banks to become
more competitive by extending teller window hours while still meeting
"back-office" processing deadlines.
RISK MANAGEMENT
The risk management practice assists banks in identifying and
reducing the risk of loss from the check payment process as a result of
operational failures, check fraud and litigation. The Company provides risk
management reviews and training and offers implementation and support of its
risk management technology applications. The Company also offers "expert
opinion" services for litigation support. The Company's risk management
technology applications consist of an application for deposited checks drawn
by the bank's customer and an application for deposited checks drawn on other
banks. The application for checks drawn by the bank's customer, ON-US FRAUD,
detects potential fraud both at the teller station and in the bank's
"back-office" using a set
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of bank-defined detection rules, such as duplicate check numbers,
out-of-range check numbers, out-of-range amount and inconsistent account
activity. The technology application for checks drawn on other banks and
deposited with the customer bank, TRANSIT FRAUD, detects deposit fraud by
evaluating each deposited item and account against a series of bank-defined
detection rules to identify those items that have a high probability of being
fraudulent. This technology application also lists "suspects" in a report so
that bank personnel can exercise their judgment on whether to allow a
depositor to withdraw funds against the deposited item or account.
PAYMENT ELECTRONIFICATION
The Company's Payment Electronification solutions enable banks to
capture the benefits from the conversion of paper checks to electronic items.
These benefits, estimated by ECCHO to be between $2 billion and $3 billion
for the banking industry as a whole, arise in the near term from the earlier
electronic presentment and collection of checks deposited at one bank and
drawn on another, the reduced risk of loss from earlier electronic
identification of checks that have been or are likely to be returned unpaid,
new sources of fee revenue from a bank's institutional customers who stand to
benefit from additional services made possible by the electronification of
checks, and in the longer term, from the reduced costs associated with the
truncation of paper checks at the bank of first deposit. The Company's
Payment Electronification solutions incorporate a number of technology
applications, such as CHECKLINK, that allow banks to electronically present
checks drawn on other banks and receiving banks to post these checks to their
books from the electronic transmission in advance of receipt of the paper
item, which increases the receiving bank's investable funds as customers
replenish the balances in their accounts earlier than they otherwise would.
Additionally, the Company offers a suite of technology applications, such as
SMARTNOTES, TNOTES and CNOTES, that reduce the risk of loss from returned
checks and fraudulent checks by enabling early electronic communication with
respect to these items between banks, between banks and their customers, and
between banks and third parties that furnish such information to the
retailing industry.
ENABLING TECHNOLOGIES
The Enabling Technologies solutions provide services and products
that assist in the deployment of advanced technologies, while enabling the
rapid realization of benefits from these technologies, such as higher
revenues, reduced costs and heightened customer service. The current
Enabling Technologies solutions consist generally of four practices:
electronic commerce, Year 2000, image systems and integration services.
ELECTRONIC COMMERCE
The electronic commerce practice provides electronic commerce
solutions to banks that lack current on-line transactional capabilities. The
Company's electronic commerce solutions are designed to enable banks to
attract and retain larger numbers of customers, expand their geographic reach
and create a lower cost transaction processing platform. In the electronic
commerce practice, the Company assists in the development and execution of
the bank's electronic commerce strategy, the design of the electronic
commerce transaction processing platform and the procurement of appropriate
technologies.
YEAR 2000
The Company's Year 2000 practice assists banks in determining
whether their systems will be able to manage and manipulate data in the
context of the transition of the dates from 1999 to 2000 without functional
or data abnormality and without inaccurate results related to such dates. In
this practice, the Company tests a bank's computer-dependent systems and
infrastructure to assure that they are able to make the transfer to the year
2000 both independently and in concert with other interrelated systems. The
Company also partners with third parties that provide additional resources to
address the Year 2000 problem. By combining the Company's expertise with the
resources of these partners, Carreker-Antinori is able to provide banks with
a comprehensive solution to their Year 2000 problems.
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IMAGE SYSTEMS
The image system deployment practice assists banks in increasing
"back-office" productivity through the use of image technologies. In many of
a bank's areas of operation, the use of an electronically stored image that
can be recalled quickly from a database and used in several places
simultaneously greatly streamlines a bank's operational processes. In its
image system deployment practice, the Company capitalizes on its industry
leadership and technological expertise to identify potential changes that
image system deployment can make to a bank's current workflow.
INTEGRATION SERVICES
The integration services practice assists banks in aligning their
technology and systems with their work processes, information needs, business
infrastructure and long-term strategic goals. In the integration services
practice, the Company provides banks with business process modeling, as well
as process simulation that incorporates the solutions proposed by the
Company. The Company also combines prototype client/server systems with
mainframe legacy systems and assists with architecture design and systems
development. Additionally, the Company implements operational processes and
assists in training bank personnel to realize the benefits of the Company's
proposals.
MANAGEMENT SERVICES
The Company provides management services to three banking
organizations: ECCHO, PSN and INFITEQ. The Company provides all of ECCHO's
and PSN's non-legal management services, which include administration,
research and development, industry representation and public relations. For
INFITEQ, the Company is responsible for customer service, quality assurance,
recruiting additional service providers, billing, marketing, sales,
integrating products and technology and acting as the organization's general
manager (subject to the supervision, direction and approval of the board of
managers of INFITEQ). See "--Strategy."
CUSTOMERS AND MARKETS
A substantial majority of the Company's revenues are generated from
contracts with Tier I Banks and Tier II Banks. The Company's customers
include 95% of Tier I Banks, including Fleet Financial Group, Inc.,
NationsBank Corporation, Norwest Corporation and SunTrust Banks, Inc. In
fiscal 1997, Fleet Financial Group, Inc. and Norwest Corporation accounted
for approximately 15% and 14% of the Company's revenues, respectively. See
"Risk Factors--Customer Concentration." The Company's customers include
approximately 60% of Tier II Banks, including Comerica Incorporated, Firstar
Corporation, Huntington Bancshares and Summit Service Corporation. The
Company also targets smaller bank holding companies and independent banks
with assets of between $550 million and $5 billion. Smaller bank customers
include California Federal Savings Bank, Mechanics Bank and U.S. Trust
Company. The Company believes that the smaller bank market affords it an
opportunity for growth. See "--Strategy-Leverage Market Position to Expand
Customer Base" and "Risk Factors--Dependence on Banking Industry."
The Company enters into numerous types of engagements with
customers. The needs of each customer are unique, and Carreker-Antinori
seeks to provide those specific solutions that most effectively address a
customer's needs. A standard model engagement description is set forth below.
MODEL ENGAGEMENT
In a model engagement, the Company would conduct its due diligence
review of a bank's operations within a short time span of six-to-eight weeks
to identify opportunities that would enhance the bank's revenues and reduce
the bank's expenses. Upon identification of these opportunities and
agreement by the bank, Carreker-Antinori would implement certain of its
revenue enhancement solutions (yield management and liquidity management),
and certain of its payment systems solutions (float management and risk
management), to rapidly generate enhanced revenues
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and cost reductions for the bank. These solutions often incorporate
technology applications, such as RESERVELINK, FLOAT PRICING SYSTEM, FLOAT
ANALYSIS SYSTEM, ON-US FRAUD and TRANSIT FRAUD, and are designed to enable
the bank to recover its investment in a shorter time frame than would be the
case with competing alternatives.
Upon the bank realizing the near-term benefits of the solutions that
previously were implemented, the Company would work with the bank to install
additional solutions that may require a longer period of time to implement.
These solutions include services from the liquidity management practice and
consolidation and best practices practice, as well as implementation of
software applications, such as RESERVELINK PLUS, CASHTRACKER, CASHFORECASTER,
INNOVASION and ILLUMINATION SUITE, to improve the bank's "back-office"
operations.
As the bank realizes further revenue enhancements, cost reductions
and customer service improvements from these solutions, the Company would
work with the bank to provide additional services and technology applications
that further improve the operational efficiency of the bank and generate new
sources of revenue. These solutions would include consulting services and
technology applications from the payment electronification practice and from
certain of its enabling technologies practices (electronic commerce, Year
2000, image systems and integration services).
SALES AND MARKETING
The Company has developed strong relationships with many senior bank
executives as a result of its delivery of effective solutions to Tier I and
Tier II Banks for 20 years. In addition, Carreker-Antinori's leadership
position within the industry enables it to develop relationships with senior
banking executives of its prospective customers. The Company has found that
an important element of its success has been its ability to maintain
relationships with banking executives as they are elevated to senior
positions in a consolidating banking industry. The Company believes that the
strength of its customer relationships contributes significantly to sales and
marketing efforts. The Company has seven Account Relationship Managers who
are responsible for managing the Company's day-to-day relationships with its
customers. Their responsibilities include identifying customers' needs and
assisting the Company's practice managers in presenting their solutions and
concluding sales. The Company's Account Relationship Managers work closely
with the Company's executive officers who serve as Executive Relationship
Managers to the Company's customers. The Company also employs Software
Account Managers who are familiar with the Company's technology and who
participate in opportunities to sell technology-based solutions.
The Company derives a significant portion of its business through
customer referrals and repeat business. In addition, the Company markets its
services through a variety of media, including: the Company's Web site,
direct mail, "user" conferences conducted by Carreker-Antinori exclusively
for its customers, speaking engagements, participation in industry
conferences and trade shows, publication of "white papers" related to
specific aspects of the Company's services, customer newsletters, and
informational listings in trade journals. The Company employs a marketing
staff of seven persons, including graphics designers, writers, administrative
coordinators and a Web master.
STRATEGIC BANKING INITIATIVES
The Company provides management services to ECCHO and PSN, each of
which is playing an instrumental role in the electronification of the check
payment process. In addition, the Company is a co-founder of INFITEQ, which
provides outsourcing services to the banking industry.
ECCHO
ECCHO, Electronic Check Clearing House Organization, is a
not-for-profit rules and standards organization whose bank members hold
approximately 80% of the deposits held by the top 100 banks in the United
States. This organization is committed to promoting the transition of
payment systems from paper to electronic formats. ECCHO
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intends to accomplish these goals by aligning the relationships among various
participants in the banking industry to promote the rapid acceptance and
implementation of electronic check applications.
PSN
PSN, Payment Systems Network, Inc., is a corporation owned by VISA
USA and 19 bank holding companies representing more than 180 banks in all 50
states, which collectively hold over 40% of bank deposits in the United
States. VISA USA and a subsidiary of International Business Machines (IBM)
are strategic suppliers to PSN. PSN strives to support the initiatives of
ECCHO by creating products that will generate new revenue streams and reduce
fraud losses and processing expenses for banks and provide incentives to
banks to take incremental steps towards the utilization of electronic check
processing. PSN's products incorporate a number of applications developed by
the Company, such as SMARTNOTES, TNOTES and CNOTES. See "Products and
Services--Payment Electronification."
INFITEQ
INFITEQ, a joint venture among the Company, UPS Worldwide Logistics,
National Processing Company, Fiserv, Inc. and Brink's Incorporated, is a
single-source provider of specialized outsourcing services to the banking
industry for transaction processing, information management, electronic
commerce and image technology. INFITEQ integrates leading providers of
specific services into a broad cafeteria of service offerings, which allows
banks to economically expand the number of services offered to customers by
outsourcing these additional services. INFITEQ offers to banks the expertise
of UPS Worldwide Logistics in package delivery and ground/air logistics,
National Processing Company in the retail lockbox business and image-enabled
remote capture, Fiserv, Inc. in its compute/capture centers and its deposit
processing system, and the Company in payment systems, cash management,
system integration, data warehousing, Year 2000 solutions and electronic
commerce. INFITEQ markets its broad array of services as a complement to the
services that the bank performs itself.
SOLUTIONS DEVELOPMENT
The Company seeks to maintain its position as a leading innovator in
the banking industry by converting leading-edge technologies and ideas into
practical banking solutions. The Company's relationships with its customers
provide it with opportunities to identify additional bank needs. The
Company's solutions development activities focus on prototyping promising
applications, test marketing new products, developing sales strategies and
coordinating distribution and on-going maintenance for each of the Company's
solutions.
The Company frequently receives customer requests for new services
and/or software, develops solutions in response to these requests and
historically has been able to recoup some or all of its development costs
from these customers. In addition to customer-funded solutions development,
the Company has invested significant amounts in solutions development,
including expenditures of $906,000, $1.2 million and $3.4 million for
software development in fiscal 1995, 1996 and 1997, respectively. Further,
some of the Company's key product introductions have resulted from the
adaptation for a wider market of customized solutions that were originally
developed by customers for their internal use. In exchange for either a
one-time payment and/or on-going royalties, the Company is often able to
obtain the right to develop, enhance and market such products.
The Company believes that its leadership role in and interaction
with the banking industry through ECCHO, PSN and INFITEQ uniquely position it
to identify and develop interbank solutions that have bilateral or
multilateral banking industry applications. The Company believes that its
management of these organizations provides further opportunities to recognize
and respond to the changing needs of the banking industry.
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TECHNOLOGY
The Company designs its software products to incorporate the latest
developments in open systems architecture and protocols to provide maximum
scaleability and functionality and to interface with a bank's legacy systems.
The Company's core proprietary technologies, for both its client/server
software products and mainframe software products, are primarily directed at
using a standard set of components, drivers and application interfaces so
that the Company's software products are constructed from reusable components
which are linked together in a tool-set fashion.
Most of the Company's client/server software products are based upon
the Company's proprietary ILLUMINATION SUITE architecture. The ILLUMINATION
SUITE architecture is a component framework that provides reusable building
blocks or object-oriented components for developing multi-tiered, highly
distributed software applications. The ILLUMINATION SUITE architecture is
intended to provide a straightforward framework for defining and implementing
the core, or low level, components used in constructing software products.
The current core components of the ILLUMINATION SUITE architecture include
DAS persistent object, trace/audit component and viewer, messaging
infrastructure, network management functionality, work flow engine, folder
manager, distribution manager, DAS client and data archive server.
The Company has adopted the IBM System Application Architecture for
developing its interactive screen designs for its mainframe products and for
interactions with other systems, such as client/server products. The
Company's mainframe software products have been evolving toward a standard
set of core processing components, drivers and exit points and are more fully
leveraging published standard application programming interfaces. As a
result, the Company can employ reusable components to create new utility
modules and link them together in a tool-set fashion, much like objects in
object-oriented programming.
The Company has a number of software products that either fall
within the client/server or the batch-oriented file sharing categories. Many
of the newer software products are developed to operate with an OS/2 and/or
Windows NT operating system. Most of the Company's mainframe software
products are written in COBOL. The Company has several software products
that operate on two or more of these operating systems. For example, the
Company's INNOVASION software application operates with the OS/2 operating
system, while the Company's DAS software application, a substantially similar
product programmed in C++, operates with the Windows NT operating system.
The Company develops its technology both internally and, in certain
strategically beneficial situations, with third-party preferred developers
that can offer an expertise within a core competency. For example, currently
Carreker-Antinori is working on features of its CASHFORECASTER software
application with a third party that has a core competency in developing
advanced forecasting engines based on synthetic algorithms, including neural
net technology and annealing techniques.
COMPETITION
The Company competes with third-party providers of services and
software products to the banking industry, including firms providing
consulting services, such as Andersen Consulting, Electronic Data Systems
Corporation and KPMG Peat Marwick LLP, and software companies, such as
Earnings Performance Group, Inc., Pegasystems Inc., Sterling Software, Inc.
and Transoft International, Inc. Many of these competitors have
significantly greater financial, technical, marketing and other resources
than the Company; however, the Company believes that its market position with
respect to these competitors is enhanced by virtue of its unique ability to
deliver fully integrated consulting services and software solutions focused
on enabling banks to increase their revenues, reduce their costs and enhance
their delivery of customer services. The Company believes that it competes
based on a number of factors, including: (i) scope of solutions provided;
(ii) industry expertise; (iii) access to decision makers within banks; (iv)
ease and speed of solutions implementation; (v) quality of solutions; and
(vi) price. While many of the Company's competitors are better equipped to
compete with the Company in certain of these areas, the Company believes that
it is uniquely qualified to compete effectively in all of these areas.
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In addition to competing with a variety of third parties, the
Company experiences competition from its customers and potential customers.
From time to time, such customers develop, implement and maintain their own
services and applications for revenue enhancement, cost reductions or
enhanced customer service, rather than purchasing services and related
software products from third parties. As a result, the Company must
continually educate existing and prospective customers about the advantages
of purchasing its services and products. In addition, customers or potential
customers could enter into strategic relationships with one or more of the
Company's competitors to develop, market and sell competing services or
products. See "Risk Factors--Competition."
GOVERNMENT REGULATION
The Company's primary customers are banks. Although the services
currently offered by the Company have not been subject to any material
industry-specific government regulation, the banking industry is heavily
regulated. The Company's services and products must allow banking customers
to comply with all applicable regulations, and, as a result, the Company must
understand the intricacies and application of many government regulations.
The regulations most applicable to the Company's provision of solutions to
banks include requirements establishing minimum reserve requirements,
governing funds availability and the collection and return of checks, and
establishing rights, liabilities and responsibilities of parties in
electronic funds transfers. For example, the Company's RESERVELINK and
RESERVELINK PLUS software and related consulting services assist banks with
minimizing their reserves while complying with federal reserve requirements.
In addition, the expedited availability and check return requirements imposed
by funds availability regulations have increased fraud opportunities
dramatically, and the Company's risk management and float management services
address this concern while complying with such regulations. See "Risk
Factors--Governmental Regulation."
PROPRIETARY RIGHTS
The Company relies upon a combination of patent, copyright,
trademark and trade secret laws, including the use of confidentiality
agreements with employees, independent contractors and third parties and
physical security devices to protect its proprietary technology and
information. The Company primarily has relied on common law rights to
protect the use of its name, technology and brands. The Company has a number
of issued patents and one registered trademark and has filed applications for
additional patents and trademarks in the United States. The Company
vigorously defends its proprietary rights.
The Company presently enters into invention assignment and
confidentiality agreements with its employees and independent contractors and
confidentiality agreements with certain customers. The Company also limits
access to the source codes for its software and other proprietary
information. Further, the Company's software will not operate with computers
which have not been synchronized with the Company's equipment. The Company
believes that due to the rapid pace of innovation within the software
industry, factors such as the technological and creative expertise of its
personnel, the quality of its solutions, the quality of its technical support
and training services, and the frequency of release of technology
enhancements are more important to establishing and maintaining a technology
leadership position than the various legal protections available for the
Company's technology.
The Company is not aware that it is infringing any proprietary
rights of third parties. The Company relies upon certain software that it
licenses from third parties, including software that is integrated with the
Company's internally developed software and used in its solutions to perform
key functions. See "Risk Factors--Dependence on Proprietary Technology; Risk
of Infringement."
EMPLOYEES
The Company had 226 employees as of August 30, 1998, with 67 persons
providing consulting services, 74 persons in the technical group, 29 persons
performing sales and marketing, customer relations and business development
functions and 56 persons performing corporate, finance and administrative
functions. The Company has no unionized employees. The Company believes
that its employee relations are good.
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INDEPENDENT CONTRACTORS
The Company provides consulting services and develops software in
part through the use of independent contractors who are not employees of the
Company. As of August 30, 1998, the Company used 29 independent contractors to
provide consulting services, 27 of whom work from their homes using
self-owned equipment. Many of these contractors are former bank executives,
and the Company believes that their experience in the banking industry
uniquely enables them to provide consulting services to the Company's
customers. In addition, as of August 30, 1998, the Company had 37 independent
contractors who assisted in the development of technology. These technology
contractors spend a majority of their time performing software development in
the Company's offices; however, from time to time these contractors travel
with Company personnel and work directly with the Company's customers. See
"Risk Factors--Use of Independent Contractors."
FACILITIES
The Company's principal executive office is a leased facility with
approximately 32,000 square feet of space in Dallas, Texas. The lease
agreement for this space expires in May 1999. The Company also leases
approximately 21,000 square feet in Atlanta, Georgia pursuant to a lease
agreement that expires in August 2002. The Company believes that its
existing facilities are well maintained and in good operating condition and
are adequate for its present and anticipated levels of operations.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceeding.
DIVIDEND POLICY
The Company has not paid a cash dividend on shares of its Common
Stock since its incorporation (although prior to its acquisition by the
Company, ASI did make cash dividend payments principally to enable its
shareholders to pay income taxes arising out of ASI's status as an S
corporation). The Company currently intends to retain its earnings in the
future to support operations and finance its growth and, therefore, does not
intend to pay cash dividends on the Common Stock in the foreseeable future.
Any payment of cash dividends in the future will be at the discretion of the
Board of Directors and subject to certain limitations under the Delaware
General Corporation Law and will depend upon factors such as the Company's
earnings levels, capital requirements, financial condition and other factors
deemed relevant by the Board of Directors. The Company is prohibited from
paying cash dividends under the terms of its current line of credit agreement.
SELLING STOCKHOLDERS
Except as otherwise set forth below, each of the Selling
Stockholders is neither an officer nor a director of the Company and does not
beneficially own, individually or in the aggregate, more than 1% of the
outstanding Common Stock of the Company prior to this offering. The
following table sets forth (i) the name of each Selling Stockholder, (ii) the
nature of any position, office or other material relationship that each such
Selling Stockholder has with the Company, (iii) the number of shares of
Common Stock beneficially owned by each such Selling Stockholder prior to
this offering, (iv) the number of shares of Common Stock offered for each
such Selling Stockholder's account, and (v) the number of shares of Common
Stock and the percentage beneficially owned by each such Selling Stockholder
after completion of the offering (assuming that all shares of Common Stock
offered pursuant to this Prospectus are sold).
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<CAPTION>
SHARES
SHARES NUMBER OF BENEFICIALLY
BENEFICIALLY SHARES OFFERED OWNED AFTER
OWNED PRIOR FOR SELLING THE OFFERING(1)
RELATIONSHIP TO THE STOCKHOLDER'S --------------------------
SELLING STOCKHOLDER TO COMPANY OFFERING ACCOUNT NUMBER PERCENT
- ------------------- ---------------- ------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Henry A. Allen, III Employee 12,320 12,320 0 *
Rick D. Austin Employee 12,320 12,320 0 *
Henry Blair, Jr. Employee 12,320 12,320 0 *
Royce D. Brown(2)(3) Executive Vice 341,587 5,390 336,197 2.02%
President
John Carreker, III Senior Vice 51,336 51,336 0 *
President
Paul Carrubba Employee 41,072 41,072 0 *
James S. Cross Employee 12,320 12,320 0 *
John S. Davis, Executive Vice 144,429 44,406 100,023 *
Jr.(2)(3) President
Thomas Dedecker Employee 12,320 12,320 0 *
Arthur Doucette Senior Vice 15,400 15,400 0 *
President
Howard D. Eubanks(2) Executive Vice 118,072 25,672 92,400 *
President
Terry Gage Executive Vice 177,100 154,000 23,100 *
President & Chief
Financial Officer
Randle Haga Employee 27,019 27,019 0 *
Betty Haley Employee 25,664 25,664 0 *
David Helsper Senior Vice 90,860 90,860 0 *
President
Robert Hill Employee 7,700 7,700 0 *
Mary Hockridge Employee 7,700 7,700 0 *
Michael Inman Employee 15,400 15,400 0 *
Michael Israel Employee 215,515 177,870 37,645 *
Michael Jessie Employee 75,976 52,876 23,100 *
Wendy Johnson Employee 12,320 12,320 0 *
Robert S. Kownslar Employee 7,700 7,700 0 *
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
SHARES
SHARES NUMBER OF BENEFICIALLY
BENEFICIALLY SHARES OFFERED OWNED AFTER
OWNED PRIOR FOR SELLING THE OFFERING(1)
RELATIONSHIP TO THE STOCKHOLDER'S --------------------------
SELLING STOCKHOLDER TO COMPANY OFFERING ACCOUNT NUMBER PERCENT
- ------------------- ---------------- ------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Wyn Lewis(2)(3) Executive Vice 509,563 45,430 464,133 2.76%
President
Ruth L. McCullough Employee 10,010 10,010 0 *
Phylis Meyerson Employee 7,700 7,700 0 *
George Noga(2) Senior Vice 135,166 42,766 92,400 *
President
Victoria Richter Employee 7,700 7,700 0 *
Clifford Shirah Employee 12,320 12,320 0 *
Kenneth Siegman Employee 57,750 57,750 0 *
William J. Stuart Employee 48,772 48,772 0 *
James Higgins-Thomas Employee 12,320 12,320 0 *
David Walker Employee 56,472 41,072 15,400 *
Blake Williams Employee 42,350 42,350 0 *
</TABLE>
- ---------------
(1) Based upon the assumption that all shares offered pursuant to the
Prospectus are actually sold.
(2) Includes 38,500, 88,550, 92,400, 231,000 and 77,000 shares of Common Stock
issuable to Messrs. Brown, Davis, Eubanks, Lewis and Noga, respectively,
pursuant to the exercise of options that may be exercised within sixty (60)
days of the date of this Prospectus.
(3) Includes 42,866, 11,473 and 17,148 shares of Common Stock held in the
Company's Employee Stock Option Plan ("ESOP") for the benefit of Messrs.
Brown, Davis and Lewis, respectively.
* Represents less than one percent (1%) of the outstanding shares of Common
Stock.
PLAN OF DISTRIBUTION
The Selling Stockholders or pledgee may sell all or a portion of the
shares offered hereby. Resales of the Common Stock may be made from time to
time in The Nasdaq National Market at prices prevailing in The Nasdaq
National Market at the times of such sales or at negotiated prices. The
Selling Stockholders or pledgee may also make private sales directly or
through a broker or brokers, who may act as agent or as principal. Further,
the Selling Stockholders may choose to dispose of the shares offered hereby
by gift to a third party or as a donation to a charitable or other non-profit
entity. In connection with any sales, the Selling Stockholders or pledgee
and any brokers participating in such sales may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act, and any
commissions received by them and any profit realized on the sale of shares of
Common Stock as principals might be deemed to be underwriting compensation
under the Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders or pledgee (and, if such
broker acts as agent for the purchaser of such shares, from such purchaser).
-29-
<PAGE>
Usual and customary brokerage fees will be paid by the Selling Stockholders.
Broker-dealers may agree with the Selling Stockholders or pledgee to sell a
specified number of shares at a stipulated price per share, and, to the
extent such a broker-dealer is unable to do so acting as agent for the
Selling Stockholders or pledgee, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the Selling
Stockholders or pledgee. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or
otherwise at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive from the
purchasers of such shares commissions as described above.
The Company has advised the Selling Stockholders and pledgee that
the anti-manipulative provisions of Regulation M promulgated under the
Securities Exchange Act of 1934, as amended, may apply to sales in the market
and has informed them of the possible need for delivery of copies of this
Prospectus. The Selling Stockholders or pledgee may indemnify any
broker-dealer that participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act. Any commissions paid or any discounts or concessions allowed
to any such broker-dealers, and, if any such broker-dealers purchase shares
as principal, any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act.
Upon the Company's being notified by the Selling Stockholders or
pledgee that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a cross or block trade, a
supplemental prospectus may be filed under Rule 424(c) under the Securities
Act, setting forth the name of the participating broker-dealer(s), the number
of shares involved, the price at which such shares were sold, the commissions
paid or discounts or concessions allowed to such broker-dealer(s), and where
applicable, that such broker-dealer(s) did not conduct any investigation to
verify the information set out in this Prospectus.
Pursuant to applicable securities laws, the amount of Common Stock
offered or resold by any Selling Stockholder (and any person with whom such
Selling Stockholder is acting in concert for the purpose of selling
securities of the Company) pursuant to this Prospectus shall not exceed,
during any three-month period, the amount specified in Rule 144(e)
promulgated under the Securities Act of 1933. The provisions of Rule 144(e)
restrict the maximum amount of securities that may be sold within any
three-month period to the greater of (a) 1% of the shares of then outstanding
shares of Common Stock as shown by the most recent report or statement
published by the Company, (b) the average weekly reported volume of trading
in such securities on all national securities exchanges and/or reported
through the automated quotation system of a registered securities association
during the four calendar weeks preceding the filing of notice required by
Rule 144, or, if no such notice is required, the date of receipt of the order
to execute the transaction by the broker or the date of execution of the
transaction directly with a market maker, or (c) the average weekly volume of
trading in such securities reported through the consolidated transaction
reporting system contemplated by Rule 11Aa3-1 under the Securities Exchange
Act of 1934 during the four-week period specified in (b) above.
Any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 promulgated under the Securities Act may be sold under
that Rule rather than pursuant to this Prospectus. In general, under Rule
144 a person (or persons whose shares are aggregated), including any person
who may be deemed to be an "affiliate" of the Company, is entitled to sell
within any three-month period "restricted shares" beneficially owned by him
or her in an amount not to exceed the amount determined in the immediately
preceding paragraph, provided that at least one year has elapsed since such
shares were acquired from the Company or from an affiliate of the Company.
Sales are also subject to certain requirements as to the manner of sale,
notice and availability of current public information regarding the Company.
However, a person who has not been an "affiliate" of the Company at any time
within three months prior to the sale is entitled to sell his or her shares
without regard to the volume limitations or other requirements of Rule 144,
provided that at least two years have elapsed since such shares were acquired
from the Company or an affiliate of the Company.
-30-
<PAGE>
There can be no assurance that the Selling Stockholders or pledgee
will sell any or all of the shares of Common Stock offered hereunder.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a party to any action by reason of
the fact that he is or was a director, officer, employee or agent of the
Company may and, in certain cases, must be indemnified by the Company
against, in the case of a non-derivative action, judgments, fines, amounts
paid in settlement and reasonable expenses (including attorney's fees)
incurred by him as a result of such action, and in the case of a derivative
action, against expenses (including attorney's fees), if in either type of
action he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company. This indemnification
does not apply, in a derivative action, to matters as to which it is adjudged
that the director, officer, employee or agent is liable to the Company,
unless upon court order it is determined that, despite such adjudication of
liability, but in view of all the circumstances of the case, he is fairly and
reasonably entitled to indemnity for expenses, and, in a non-derivative
action, to any criminal proceeding in which such person had reasonable cause
to believe his conduct was unlawful.
Article Eight of the Company's Certificate of Incorporation provides
that no director of the Company shall be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
to the fullest extent permitted by the DGCL.
Article Eight of the Company's Certificate of Incorporation also
provides that the Company may indemnify to the fullest extent permitted by
Delaware law any and all of its directors and officers, or former directors
and officers, or any person who may have served at the Company's request as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise. In addition, Section 7.07 of the Company's Bylaws
provides for similar indemnification of officers and directors within the
limits of Delaware law.
The Company has entered into Indemnification Agreements with each
director and officer of the Company. Pursuant to such agreements, the
Company does, to the extent permitted by applicable law, indemnify such
directors and officers against all expenses, judgments, fines and penalties
incurred in connection with the defense or settlement of any actions brought
against them by reason of the fact that they were directors or officers of
the Company or assumed certain responsibilities at the direction of the
Company. The Company has purchased directors and officers liability
insurance in order to limit its exposure to liability for indemnification of
directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company, it is the opinion of the Securities and Exchange Commission (the
"Commission") such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
INFORMATION INCORPORATED BY REFERENCE
The following documents and information previously filed with the
Commission are hereby incorporated by reference in this Prospectus:
(1) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed May 5, 1998 pursuant to
Section 12(g) of the Exchange Act.
(2) The information set forth under "Description of Capital Stock"
in the Company's Prospectus with respect to its Form S-1 Registration
Statement (Registration No. 333-48399) filed with the Commission pursuant to
Securities Act Rule 424(b).
(3) The Company's reports on Form 10-Q for the quarters ended April
30, 1998 and July 31, 1998.
-31-
<PAGE>
(4) The Company's report on Form 8-K dated June 3, 1998.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities registered
have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference into this Prospectus and to
be part hereof from the date of filing of such documents.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
by this Prospectus will be passed upon for the Company by Locke Purnell Rain
Harrell (A Professional Corporation), Dallas, Texas. Maurice E. Purnell,
Jr., a shareholder of Locke Purnell Rain Harrell (A Professional
Corporation), is the Secretary of the Company.
-32-
<PAGE>
CARREKER-ANTINORI, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and information previously filed with the
Commission are hereby incorporated by reference in this Registration
Statement:
(1) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed May 5, 1998 pursuant to
Section 12(g) of the Exchange Act.
(2) The Company's Prospectus with respect to its Form S-1
Registration Statement (Registration No. 333-48399) filed with the Commission
pursuant to Securities Act Rule 424(b) on May 20, 1998.
(3) The Company's reports on Form 10-Q for the quarters ended
April 30, 1998 and July 31, 1998.
(4) The Company's report on Form 8-K dated June 3, 1998.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities registered
have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
As of the date of this Prospectus, Maurice E. Purnell, Jr., a
shareholder of Locke Purnell Rain Harrell (A Professional Corporation),
counsel to the Company, is the Secretary of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a party to any action by reason of
the fact that he is or was a director, officer, employee or agent of the
Company may and, in certain cases, must be indemnified by the Company
against, in the case of a non-derivative action, judgments, fines, amounts
paid in settlement and reasonable expenses (including attorney's fees)
incurred by him as a result of such action, and in the case of a derivative
action, against expenses (including attorney's fees), if in either type of
action he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company. This indemnification
does not apply, in a derivative action, to matters as to which it is adjudged
that the director, officer, employee or agent is liable to the Company,
unless upon court order it is determined that, despite such adjudication of
liability, but in view of all the circumstances of the case, he is fairly and
reasonably entitled to indemnity for expenses, and, in a non-derivative
action, to any criminal proceeding in which such person had reasonable cause
to believe his conduct was unlawful.
II-1
<PAGE>
Article Eight of the Company's Certificate of Incorporation provides
that no director of the Company shall be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
to the fullest extent permitted by the DGCL.
Article Eight of the Company's Certificate of Incorporation also
provides that the Company may indemnify to the fullest extent permitted by
Delaware law any and all of its directors and officers, or former directors
and officers, or any person who may have served at the Company's request as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise. In addition, Section 7.07 of the Company's Bylaws
provides for similar indemnification of officers and directors within the
limits of Delaware law.
The Company has entered into Indemnification Agreements with each
director and officer of the Company. Pursuant to such agreements, the
Company does, to the extent permitted by applicable law, indemnify such
directors and officers against all expenses, judgments, fines and penalties
incurred in connection with the defense or settlement of any actions brought
against them by reason of the fact that they were directors or officers of
the Company or assumed certain responsibilities at the direction of the
Company. The Company has purchased directors and officers liability
insurance in order to limit its exposure to liability for indemnification of
directors and officers.
See also the undertakings set out in the response to Item 9 herein.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The issuance of the shares being offered by the resale prospectus
filed with this Form S-8 registration statement was deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701
promulgated under Section 3(b) of the Securities Act, as transactions by an
issuer not involving a public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under such Rule 701. The recipients of securities in each such transaction
represented their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof,
and appropriate legends were affixed to the share certificates and
instruments issued in such transactions. All recipients had adequate access,
through their relationship with the Company, to information about the Company.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
4.1* Amended and Restated Carreker-Antinori, Inc. 1994 Long Term
Incentive Plan.
5.1+ Opinion of Locke Purnell Rain Harrell (A Professional
Corporation).
23.1+ Consent of counsel (included in opinion filed as Exhibit 5.1).
23.2+ Consent of Ernst & Young LLP, Independent Auditors.
25.1+ Power of Attorney (see page II-4).
</TABLE>
- ---------------
+ Filed herewith.
* Incorporated by reference to Exhibit 10.7 filed with the Company's
Registration Statement on Form S-1, as amended (No. 333-48399), which the
Securities and Exchange Commission declared effective on May 19, 1998 (the
"Form S-1").
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
II-2
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(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) The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 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 Company pursuant to applicable law, the Company's
Certificate of Incorporation, Bylaws or indemnification agreements, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in a successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Company will,
unless in the opinion of its counsel the matter has already been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on this
15th day of September, 1998.
By: /s/ JOHN D. CARREKER, JR.
------------------------------------
John D. Carreker, Jr.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John D. Carreker, Jr. and Terry L.
Gage, and each of them, as his attorney-in-fact, with full power of
substitution in each, for him in any and all capacities to sign any
amendments to this Registration Statement on Form S-8, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitutes, may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ JOHN D. CARREKER, JR. Chairman of the Board and Chief September 15, 1998
- -------------------------- Executive Officer
John D. Carreker, Jr. (Principal Executive Officer)
/s/ TERRY L. GAGE Executive Vice President, Treasurer September 15, 1998
- -------------------------- and Chief Financial Officer
Terry L. Gage (Principal Financial and Accounting
Officer)
/s/ RONALD R. ANTINORI Vice Chairman of the Board and Chief September 15, 1998
- -------------------------- Technology Officer
Ronald R. Antinori
/s/ RICHARD L. LINTING President, Chief Operating Officer September 15, 1998
- -------------------------- and Director
Richard L. Linting
/s/ JAMES D. CARREKER Director September 15, 1998
- --------------------------
James D. Carreker
/s/ JAMES L. FISCHER Director September 15, 1998
- --------------------------
James L. Fischer
/s/ RICHARD R. LEE, JR. Director September 15, 1998
- --------------------------
Richard R. Lee, Jr.
/s/ LARRY J. PECK Director September 15, 1998
- --------------------------
Larry J. Peck
/s/ DAVID K. SIAS Director September 15, 1998
- --------------------------
David K. Sias
/s/ DONALD HOUSE Director September 15, 1998
- --------------------------
Donald House
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
4.1* Amended and Restated Carreker-Antinori, Inc. 1994 Long Term
Incentive Plan.
5.1+ Opinion of Locke Purnell Rain Harrell (A Professional
Corporation).
23.1+ Consent of counsel (included in opinion filed as Exhibit 5.1).
23.2+ Consent of Ernst & Young LLP, Independent Auditors.
25.1+ Power of Attorney (see page II-4).
</TABLE>
- ----------------
+ Filed herewith.
* Incorporated by reference to Exhibit 10.7 filed with the Company's
Registration Statement on Form S-1, as amended (No. 333-48399), which the
Securities and Exchange Commission declared effective on May 19, 1998 (the
"Form S-1").
<PAGE>
EXHIBIT 5.1
September 14, 1998
Carreker-Antinori, Inc.
14001 N. Dallas Parkway
Suite 1100
Dallas, Texas 75240
Re: Registration of Five Million Two Hundred Eighty-Four Thousand Three
Hundred (5,284,300) shares of Common Stock, par value $.01 per share,
pursuant to a Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel for Carreker-Antinori, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement on Form S-8 (the "Registration Statement"), of Five
Million Two Hundred Eighty-Four Thousand Three Hundred (5,284,300) shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock")
(i) of which One Hundred Thousand (100,000) shares are issuable pursuant to
the Carreker-Antinori, Inc. Director Stock Option Plan (the "Director Plan")
and Four Million Thirty-Two Thousand One Hundred Twenty-Six (4,032,126)
shares are issuable pursuant to the Amended and Restated Carreker-Antinori,
Inc. 1994 Long Term Incentive Plan (the "LTIP") and (ii) of which One Million
One Hundred Fifty-Two Thousand One Hundred Seventy-Four (1,152,174) shares
have been issued pursuant to the LTIP (the "Issued Shares").
In connection with this opinion, we have examined the Registration
Statement, the Company's Certificate of Incorporation and Bylaws, each as
amended to date, and such other documents, records, certificates, memoranda
and other instruments as we deem relevant or necessary as a basis for this
opinion. We have assumed the genuineness and authenticity of all documents
submitted to us as originals, the conformity to originals of all documents
submitted to us as copies thereof and the due execution and delivery of all
documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
Based upon our examination of such documents and the investigations
of such matters of law as we have deemed relevant or necessary in rendering
this opinion, we hereby advise you that we are of the opinion that:
1. The Company is a corporation incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. On the basis of the foregoing, (i) the Issued Shares are duly
authorized and validly issued, fully paid and nonassessable,
and (ii) assuming, with respect to shares of Common Stock
issued under the Director Plan and the LTIP after the date
hereof, (A) the receipt of proper consideration for the
issuance thereof in excess of the par value thereof, (B) the
availability of a sufficient number of shares of Common Stock
authorized by the Company's Certificate of Incorporation then
in effect, (C) compliance with the terms of any agreement
entered into in connection with any options or restricted
stock under the Director Plan and the LTIP, and (D) no change
occurs in the applicable law or the pertinent facts, the
shares of Common Stock purchasable upon the exercise of any
option granted under or issued upon the awarding of any
restricted stock under the Director Plan or the LTIP will upon
issuance be duly authorized and validly issued, fully paid and
nonassessable.
<PAGE>
We are expressing the opinions above as members of the Bar of the
State of Texas and we express no opinion as to any laws other than the laws
of the State of Texas and, to the extent relevant to the opinions herein, the
General Corporation Law of the State of Delaware. You should be aware that
we are not admitted to the practice of law in the State of Delaware, and any
opinion herein as to the laws of such state is based solely on the most
recent unofficial compilation of the corporate statutes of the State of
Delaware available to us.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement filed by the Company with the Securities and Exchange
Commission for the registration under the Securities Act of Five Million Two
Hundred Eighty-Four Thousand Three Hundred (5,284,300) shares of Common Stock
of the Company covered by the Director Plan and the LTIP. By so consenting,
we do not thereby admit that our firm's consent is required by Section 7 of
the Securities Act.
Very truly yours,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: /s/ Kent Jamison
--------------------------------
Kent Jamison
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8, including registration of shares for resale by means
of a Form S-3 prospectus, pertaining to the amended and restated Carreker
Antinori, Inc. 1994 Long Term Incentive Plan and the Carreker Antinori, Inc.
Director Stock Option Plan of our report dated March 18, 1998, except for
Notes 1 and 11 as to which the date is May 14, 1998, with respect to the
consolidated financial statements of Carreker-Antinori, Inc. included in the
Form S-1 Registration Statement (Registration No. 333-48399) filed with the
Securities and Exchange Commission.
Ernst & Young LLP
/s/ ERNST & YOUNG LLP
Dallas, Texas
September 14, 1998
