As filed with the Securities and Exchange Commission on September 20, 1996
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Form S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
INTER-TEL, INCORPORATED
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Arizona 3661 86-0220994
- --------------- ---------------- ---------------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
120 North 44th Street, Suite 200
Phoenix, Arizona 85034
(602) 302-8900
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
-----------------------------------
John Gardner, Esq., General Counsel
INTER-TEL, INCORPORATED
120 North 44th Street, Suite 200
Phoenix, Arizona 85034
(602) 302-8900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------------------
Copies of all communications should be
sent to:
Jeffrey D. Saper, Esq.
Patrick J. Schultheis, Esq.
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
(415) 493-9300
--------------------------------------
Approximate date of commencement of proposed
sale to the public:
From time to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box.|_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Securities to be Registered Registered Price Per Share* Offering Price* Registration Fee
<S> <C> <C> <C> <C>
Common Stock............. 14,458 shares $21.9375 $317,172.38 $109.38
-------- ----------- -------
</TABLE>
* Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, based on the
average of the high and low prices per share of Common Stock reported on
the Nasdaq National Market System on September 13, 1996.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION,
DATED SEPTEMBER 20, 1996
14,458 Shares
INTER-TEL
Common Stock
All of the 14,458 shares of Common Stock of Inter-Tel, Incorporated
("Inter-Tel" or the "Company") offered hereby are being offered for sale from
time to time by certain of the Company's shareholders (the "Selling
Shareholders"). See "Selling Shareholders." The Company has been advised that
the Selling Shareholders expect to offer the shares on the Nasdaq National
Market System through certain broker-dealers at the then current market price or
in negotiated transactions. See "Plan of Distribution." The Company will not
receive any of the proceeds from the sale of shares by the Selling Shareholders.
SEE "RISK FACTORS" COMMENCING ON PAGE 3 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
The Selling Shareholders will bear all discounts and commissions paid
to broker-dealers in connection with the sale of the shares and the fees and
expenses of any counsel and other advisers that the Selling Shareholders may
employ to represent them in this offering.
The Common Stock is quoted on the NASDAQ National Market System under
the trading symbol "INTL." On September 19, 1996, the last sale price of the
Common Stock as reported by the NASDAQ National Market System was $22.50 per
share.
----------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------
The date of this Prospectus is ________, 1996
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<PAGE>
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 the Selling Shareholders. 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.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy and information statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: New York Regional Office, 7 World Trade Center, 13th Floor,
New York, New York 10048, and Chicago Regional Office, Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
at prescribed rates.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to this Registration Statement or incorporated by reference herein. For
further information regarding the Company and the Common Stock offered by this
Prospectus, reference is made to such Registration Statement and the exhibits
and schedules thereto. The Registration Statement and the exhibits and schedules
thereto may be inspected without charge at the office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are hereby
incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996;
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<PAGE>
(d) The description of the Registrant's capital stock contained in the
Registrant's Registration Statement on Form 8-A filed with the Securities
and Exchange Commission pursuant to Section 12(g) of the Exchange Act of
1934 on February 26, 1982 (File No. 0-10211).
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 of 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Shares offered hereby shall
be deemed to be incorporated by reference into this Prospectus. Any statement
contained in a document, all or a portion of which is incorporated herein by
reference, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently dated document, which also is incorporated herein by reference,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to the
Company's executive offices as follows: Inter-Tel, Incorporated, 120 North 44th
Street, Suite 200, Phoenix, Arizona 85034. Telephone requests may be directed to
(602) 302-8900, Attn: Corporate Secretary.
RISK FACTORS
In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
presented in this Prospectus and the documents incorporated by reference herein.
Rapid Technological Change and Dependence on New and Timely Product
Introductions
The market for the Company's systems, products and services is
characterized by rapid technological change and continuing demand for new
products, features and applications. Current competitors or new market entrants
may develop new products or product features that could adversely affect the
competitive position of the Company's products. Accordingly, the timely
introduction of new products and product features, as well as new
telecommunications applications, will be a key factor in the Company's future
success. Occasionally, new products contain undetected errors or "bugs" when
released. Such bugs may result from bugs contained in software products offered
by the Company's suppliers or other third parties that are intended to be
compatible with the Company's products, over which the Company has little or no
control. Although the Company seeks to minimize the number of bugs in its
products by its test procedures and strict quality control, there can be no
assurance that its new products will be error free when introduced. Any
significant delay in the commercial introduction of the Company's products due
to bugs, any design modifications required to correct bugs or any impairment of
customer satisfaction as a result of bugs could have a material adverse effect
on the Company's business and operating results. In addition, new products often
take several months before their manufacturing costs stabilize, which may
adversely affect operating results for a period of time following introduction.
The Company introduced ISDN its AXXESS digital communication platform to
controlled product introduction, expanded the size of the AXXESS and Inter-Tel
Axxent platforms, and introduced a number of upgrades to its existing Axxessory
Talk and IVX-500 voice processing platforms during the past 12 months. In the
event that the Company were to fail to successfully introduce new systems,
products or services or upgrades to its existing systems or products on a
regular and timely basis, demand for the Company's existing systems, products
and services could decline, which could have a material adverse effect on the
Company's business and operating results. There can be no assurance that the
Company will be able to successfully develop new systems, products, services,
technologies and applications on a timely basis as required by changing market
needs or that new
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<PAGE>
systems or products or enhancements thereto, including its recently announced
products and upgrades, when introduced by the Company will achieve market
acceptance.
The Company has recently developed and continues to develop products
designed to address the emerging market for the convergence of voice and data
applications, or computer telephony integration. If the computer telephony
integration ("CTI") market fails to develop or grows more slowly than the
Company anticipates, or if the Company is unable for any reason to capitalize on
this emerging market opportunity, the Company's business and operating results
could be materially adversely affected.
Dependence Upon Contract Manufacturers and Component Suppliers
Certain components used in the Company's digital communication
platforms, including certain microprocessors, integrated circuits, power
supplies and voice processing interface cards, are currently available from a
single source or limited sources of supply, and certain of these components,
including integrated circuits, are currently in limited supply. In addition, the
Company currently manufactures its products through a limited number of contract
manufacturers located in the United States, the Philippines and the People's
Republic of China. Foreign manufacturing facilities are subject to changes in
governmental policies, imposition of tariffs and import restrictions and other
factors beyond the Company's control. Varian Associates, Inc. ("Varian")
currently manufactures a significant portion of the Company's products at
Varian's Tempe, Arizona facility, including substantially all of the printed
circuit boards used in the AXXESS and Inter-Tel Axxent digital communications
platforms. From time to time, the Company has experienced delays in the supply
of components and finished goods, and there can be no assurance that the Company
will not experience such delays in the future. The Company's reliance on third
party manufacturers involves a number of additional risks, including reduced
control over delivery schedules, quality assurance and costs. Any delay in
delivery or shortage of supply of components or finished goods from Varian or
any other supplier, or the Company's inability to develop in a timely manner
alternative or additional sources if and when required, could damage the
Company's relationships with current and prospective customers and could
materially and adversely affect the Company's business and operating results.
The Company has no long term agreements with its suppliers that require the
suppliers to provide fixed quantities of components or finished goods at set
prices. There can be no assurance that the Company will be able to continue to
obtain components or finished goods in sufficient quantities or quality or on
favorable pricing and delivery terms in the future.
Competition
The market for the Company's digital communications platforms is highly
competitive and in recent periods has been characterized by pricing pressures
and business consolidations. The Company's competitors include AT&T Corp.
("AT&T") and Northern Telecom Limited ("NorTel"), as well as Comdial Corporation
("Comdial"), EXECUTONE Information Systems, Inc. ("Executone"), Mitel
Corporation ("Mitel"), Panasonic, Siemens ROLM Communications Inc. ("ROLM"),
Toshiba and others. The Company also competes against the regional Bell
operating companies ("RBOCs"), which offer systems produced by one or more of
the aforementioned competitors and also offer Centrex systems in which call
processing facilities are provided through equipment located in the telephone
company's central office. Competition by the RBOCs may increase significantly
since the RBOCs have been granted the right to manufacture telephone systems and
equipment themselves and/or to bundle the sale of equipment with telephone
calling services.
In the market for voice processing applications, including voice mail,
the Company competes against Centigram Communications Corporation ("Centigram"),
Octel Communications Corporation ("Octel"), Active Voice Corporation ("Active
Voice"), Applied Voice Technology, Inc. ("AVT") and other competitors, including
telephone
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<PAGE>
systems manufacturers such as Lucent Technologies, NorTel and Siemens ROLM,
which offer integrated voice processing systems under their own label as well as
through various OEM arrangements. Certain of the Company's competitors may
achieve marketing advantages by bundling their voice processing equipment with
sales of telephone systems, or by designing their telephone systems so that they
do not readily integrate with independent voice processing systems. Inter-Tel
expects that the development of industry standards and the acceptance of open
systems architectures in the voice processing market will reduce technical
barriers to market entry and lead to increased competition.
In the market for long distance services, the Company competes against
AT&T, MCI Telecommunications Corporation ("MCI"), Sprint Corporation ("Sprint")
and other suppliers, certain of which also supply the long distance calling and
network services that the Company resells. Although the Company acquires a
variety of long distance calling services in bulk from certain long distance
carriers, there can be no assurance that the Company will be able to purchase
long distance calling services on favorable terms from one or more of such
providers in the future. In addition, a substantial majority of prospective new
long distance customers for the Company currently purchase long distance calling
services from the Company's competitors. The Company believes that it is likely
to face increased competition in the long distance calling services market to
the extent that telecommunications deregulation enables RBOCs to supply long
distance calling and network services or enables RBOCs and others to bundle long
distance, local telephone and wireless services. Moreover, the Company expects
to face increased competition in the future because low technical barriers to
entry will allow new market entrants.
Many of the Company's competitors have significantly greater financial
and technical resources, name recognition and marketing and distribution
capabilities than the Company. The Company expects that competition will
continue to be intense in the markets addressed by its products and services,
and there can be no assurance that the Company will be able to compete
successfully in the future.
Management of Growth; Implementation of New Management Information Systems
The growth in the Company's business has placed, and is expected to
continue to place, a significant strain on the Company's personnel, management
and other resources. The Company's ability to manage any future growth
effectively will require it to attract, train, motivate and manage new employees
successfully, to integrate new employees into its overall operations and to
continue to improve its operational, financial and management information
systems.
In particular, the Company implemented new management information
systems (MIS) late in 1995. The Company believes the new MIS systems
significantly affect many aspects of its business, including its accounting,
operations, purchasing, sales and marketing functions. The Company has
experienced some difficulty in the implementation of these MIS systems. This
difficulty has increased the Company's costs, has had an adverse effect on the
Company's ability to provide products and services to its customers on a timely
basis, and, in addition, has caused some delay in coordinating accounting and
financial results. There can be no assurance that the Company will successfully
complete the total automation and integration of the MIS systems in their
current configuration. In addition, one of the Company's primary MIS systems
software vendors has filed for protection under Chapter 11 of the Bankruptcy
Code in the U.S. District Court, District of Arizona, which may further
complicate the steps necessary for a full integration. The Company is currently
reviewing remedial steps and alternatives, including (1) methods to improve
reliability of data and performance in the current MIS systems and
configuration; (2) variations to the current configuration; and (3) the
possibility of the selection of alternative providers. Any of the above could
have a material adverse effect on the Company's business and operating results.
The Company has made strategic acquisitions in the past and expects to
continue to do so in the future. Acquisitions require a significant amount of
the Company's management attention and financial and operational resources, all
of which are limited. The integration of acquired entities may also result in
unexpected costs and disruptions, and significant fluctuations in, or reduced
predictability of, operating results from period to period. There can be no
assurance that an acquisition will not adversely affect the business
relationships of the Company or the acquired entity with their respective
suppliers or customers. Further, there can be no assurance that the Company will
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successfully integrate the acquired operations or achieve any of the intended
benefits of an acquisition. The Company's failure to manage its growth
effectively could have a material adverse effect on its business and operating
results.
Product Protection and Infringement
The Company's future success is dependent in part upon its proprietary
technology. The Company has no patents and relies principally on copyright and
trade secret law and contractual provisions to protect its intellectual
property. There can be no assurance that any copyright owned by the Company will
not be invalidated, circumvented or challenged or that the rights granted
thereunder will provide competitive advantages to the Company. Further, there
can be no assurance that others will not develop technologies that are similar
or superior to the Company's technology or that duplicate the Company's
technology. As the Company expands its international operations, effective
intellectual property protection may be unavailable or limited in certain
foreign countries. There can be no assurance that the steps taken by the Company
will prevent misappropriation of its technology. Litigation may be necessary in
the future to enforce the Company's intellectual property rights, to protect the
Company's trade secrets, to determine the validity and scope of the proprietary
rights of others, or to defend against claims of infringement or invalidity.
Such litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on the Company's business and operating
results.
From time to time, the Company is subject to proceedings alleging
infringement by the Company of intellectual property rights of others. If any
such claim is asserted against the Company, the Company may seek to obtain a
license under the third party's intellectual property rights. There can be no
assurance that a license will be available on terms acceptable to the Company or
at all. In the alternative, the Company could resort to litigation to challenge
any such claim, which could require the Company to expend significant sums and
could require the Company to pay significant damages, develop noninfringing
technology or acquire licenses to the technology which is the subject of the
asserted infringement, any of which could have a material adverse effect on the
Company's business and operating results. In the event that the Company is
unable or chooses not to license such technology or decides not to challenge
such third party's rights, the Company could encounter substantial and costly
delays in product introductions while attempting to design around such third
party rights, or could find that the development, manufacture or sale of
products requiring such licenses could be materially inhibited.
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<PAGE>
Reliance on Dealer Network
A substantial portion of the Company's net sales are made through its
network of independent dealers. The Company faces intense competition from other
telephone system and voice processing system manufacturers for such dealers'
business, as most of the Company's dealers carry products which compete with the
Company's products. The Company has no long term agreements with any of its
dealers, and there can be no assurance that any such dealer will not promote the
products of the Company's competitors to the detriment of the Company's
products. The loss of any significant dealer or group of dealers, or any event
or condition adversely affecting the Company's dealer network, could have a
material adverse effect on the Company's business and operating results. In
recent years the Company has effected a number of strategic acquisitions of
resellers of telephony products and integrated these operations with its
existing direct sales operations in the same geographic areas and in other
strategic markets. There can be no assurance that one or more of the Company's
dealers will not be acquired by a competitor and that the loss of any such
dealer so acquired will not adversely affect the Company's business and
operating results.
Risks of Providing Long Distance and Network Services
Inter-Tel depends on a reliable supply of telecommunications services
and information from several long distance carriers. Because it does not own
transmission facilities, the Company relies on long distance carriers for the
provision of network services to the Company's customers and for billing
information. Long distance services are subject to extensive and uncertain
governmental regulation on both the federal and state level. There can be no
assurance that the promulgation of certain regulations, such as regulations
requiring the reduction of direct-dial billing rates, will not adversely affect
the Company's business and operating results. The Company currently resells long
distance services pursuant to contracts with four of the six largest long
distance carriers with U.S. networks. These contracts typically have a
multi-year term in which the Company's prices are relatively fixed and have
minimum use requirements. There can be no assurance that the Company will meet
minimum use commitments, will be able to negotiate lower rates with carriers in
the event of any decrease in end user rates or will be able to extend its
contracts with long distance carriers at prices favorable to the Company. The
Company's ability to continue to expand its long distance service operations
will depend on its ability to continue to secure reliable long distance services
from a number of long distance carriers and the willingness of such carriers to
continue to make telecommunications services and billing information available
to the Company on favorable terms.
Potential Fluctuations in Quarterly Results; Limited Backlog
The Company's quarterly operating results depend upon a variety of
factors, including the volume and timing of orders received during the quarter,
the mix of products sold and mix of distribution channels, general economic
conditions, patterns of capital spending by customers, the timing of new product
announcements and releases by the Company and its competitors, pricing
pressures, the level of the Company's operating expenses and the availability
and cost of products and components from the Company's suppliers. The Company's
customers typically require the immediate shipment and installation of systems.
As a result, the Company has historically operated with a relatively small
backlog, and sales and operating results in any quarter are principally
dependent on orders booked and shipped in that quarter. Moreover, market demand
for investment in capital equipment such as telephone systems and applications
is largely dependent on general economic conditions, and can vary significantly
as a result of changing conditions in the economy as a whole. The Company's
expense levels are based in part on expectations as to future sales and, if
sales levels do not meet expectations, operating results could be adversely
affected. Because sales of systems through the Company's dealers produce lower
gross margins than sales through the Company's direct sales organization,
operating results will vary based upon the mix of sales through direct and
indirect channels. Although the Company to date has been able to resell the
rental streams from leases under its Totalease program profitably and on a
substantially current basis, the timing and profitability of lease resales from
quarter to quarter could impact operating results, particularly in an
environment of fluctuating interest rates. Long distance sales have, in recent
periods, grown at a faster rate than the Company's overall net sales and such
sales have lower gross margins than the Company's core business. As a result,
gross margins could be adversely affected in the event that long distance
calling services continue to increase as a percentage of net sales. In addition,
the Company is subject to seasonality in its operating results, as net sales for
the first and third quarters are frequently less than those experienced in the
fourth and second quarters, respectively. As a result of these and other
factors, the Company has in the past and could in the future experience
fluctuations in sales and operating results on a quarterly basis.
Dependence on Key Personnel
The Company is dependent on the continued service of, and its ability
to attract and retain, qualified technical, marketing, sales and managerial
personnel. The competition for such personnel is intense, and the loss of any of
such persons, as well as the failure to recruit additional key technical and
sales personnel in a timely manner, would have a material adverse effect on the
Company's business and operating results. There can be no assurance that the
Company will be able to continue to attract and retain the qualified personnel
necessary for the development of its business.
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Possible Volatility of Stock Price
The Company believes that factors such as announcements of developments
relating to the Company's business, fluctuations in the Company's operating
results, general conditions in the telecommunications industry or the worldwide
economy, changes in legislation or regulation affecting the telecommunications
industry, an outbreak of hostilities, a shortfall in revenue or earnings from
securities analysts' expectations, announcements of technological innovations or
new products or enhancements by the Company or its competitors, developments in
intellectual property rights and developments in the Company's relationships
with its customers and suppliers could cause the price of the Company's Common
Stock to fluctuate, perhaps substantially. In addition, in recent years the
stock market in general, and the market for shares of technology stocks in
particular, have experienced extreme price fluctuations, which have often been
unrelated to the operating performance of affected companies. There can be no
assurance that the market price of the Company's Common Stock will not
experience significant fluctuations in the future, including fluctuations that
are unrelated to the Company's performance.
Concentration of Ownership
As of July 31, 1996, the Company's Chairman of the Board of Directors
and Chief Executive Officer beneficially owned approximately 22% of the
outstanding shares of the Common Stock. As a result, he has the ability to
exercise significant influence over all matters requiring shareholder approval.
In addition, the concentration of ownership could have the effect of delaying or
preventing a change in control of the Company.
THE COMPANY
Inter-Tel is a single point of contact, full service solutions
integrator providing AXXESS and Inter-Tel Axxent digital communication
platforms, Axxessory Talk voice processing platforms, call processing software
and voice processing software along with various other productivity enhancing
software applications, computer telephony integration, and network services and
long distance calling services, as well as maintenance, leasing and support
services. Because of the modular design and high level of software content in
the Company's products, including its AXXESS and Inter-Tel Axxent systems,
customers can readily increase the size and functionality of their systems as
their future telecommunications needs change. The Company believes that it is a
leading supplier of small to medium size business telephone systems.
The Company has developed a distribution network of direct sales
offices and dealers which sells the Company's products to small to medium size
organizations and to divisions or departments of larger organizations, including
Fortune 500 companies, large service organizations and governmental agencies. In
the United States, the Company has 25 direct sales offices and a growing network
of hundreds of dealers who purchase directly from the Company. The Company is
also in the process of expanding its international dealer network.
The Company was incorporated in Arizona in July 1969. Its corporate
offices are located at 120 North 44th Street, Suite 200, Phoenix, Arizona 85034
and its telephone number at that address is (602) 302-8900. As used in this
Prospectus, "Inter-Tel" or the "Company" refers to Inter-Tel, Incorporated and
its subsidiaries.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
offered hereby.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock of the Selling Shareholders.
Percentage Number of Percentage
of Shares Being of
Name of Selling Shareholder Number Outstanding Offered Number Outstanding
- --------------------------- ------ ----------- --------- ------ -----------
Ronald J. Levy............. 26,506 * 7,952 18,554 *
Peter J. Nicoliasen........ 6,747 * 2,024 4,723 *
Stanley Fisher............. 7,711 * 2,313 5,398 *
Daniel A. Neipling......... 1,928 * 579 1,349 *
Michael A. Veres........... 5,301 * 1,590 3,711 *
- ---------------------------
* Less than one percent (1%).
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby are being offered directly by
the Selling Shareholders. The Company has been advised by the Selling
Shareholders that they intend to sell all of the shares offered hereby from time
to time during the one hundred eighty (180) day period following the date of
this Prospectus in the over-the-counter market and that sales will be made at
prices prevailing at the times of such sales. The Selling Shareholders may also
make private sales at negotiated prices directly or through a broker or brokers,
who may act as agent or as principal or by a combination of such methods of
sale. The Selling Shareholders and any underwriter, dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Shareholders (and, if acting as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Shareholders. Broker-dealers may
agree with the Selling Shareholders 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 Shareholders, to purchase as principals
any unsold shares at the price required to fulfill the broker-dealer commitment
to the Selling Shareholders. Broker-dealers who acquire shares as principals 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 by a
combination of such methods of sale 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 computed as
described above.
The Company has advised the Selling Shareholders that the
anti-manipulative Rules 10b-6 and 10b-7 under the Exchange Act may apply to
sales in the market, has furnished the Selling Shareholders with copies of these
Rules and has informed the Selling Shareholders of the need for delivery of
copies of this Prospectus. The Selling Shareholders
-9-
<PAGE>
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 any profits received on the resale of
such shares, may be deemed to be underwriting discounts and commissions under
the Securities Act if any such broker-dealers purchase shares as principal.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Common Stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
At the time a particular offer of the shares of Common Stock registered
hereunder is made, if required, a Prospectus Supplement will be distributed that
will set forth the number of shares being offered and the terms of the offering
including the name of any underwriter, dealer or agent, the purchase price paid
by any underwriter for securities purchased from, any discount, commission and
other item constituting compensation and any discount, commission or concession
allowed or reallowed or paid to any dealer, and the proposed selling price to
the public.
There can be no assurance that the Selling Shareholders will sell all or
any of the shares of Common Stock offered hereunder.
LEGAL MATTERS
Certain matters with respect to the validity of the shares of Common Stock
offered hereby are being passed upon for the Company by John L. Gardner, the
Company's General Counsel.
EXPERTS
The consolidated financial statements of Inter-Tel, Incorporated appearing in
Inter-Tel, Incorporated's Annual Report (Form 10-K) for the year ended December
31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
<PAGE>
INTER-TEL, INCORPORATED
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration fee--Securities and
Exchange Commission................................... $ 109
Accountant's fees....................................... 2,000
Legal fees.............................................. 3,000
Miscellaneous........................................... 891
---------
Total................................................... $ 6,000
---------
All of the above expenses are estimates, with the exception of the registration
fee. The Company intends to pay all expenses of registration, issuance and
distribution, excluding commissions, with respect to shares being sold by the
Selling Shareholders.
Item 15. Indemnification of Directors and Officers.
The Company's Articles of Incorporation limit the personal liability of
directors for monetary damages for breach of their fiduciary duties as a
director. The Company's Bylaws provide that the Company shall indemnify its
officers and directors and may indemnify its employees and other agents to the
fullest extent permitted by law. The Company has entered into indemnification
agreements with its officers and directors containing provisions which are in
some respects broader than the specific indemnification provisions contained in
the Arizona General Corporation Law. The indemnification agreements may require
the Company, among other things, to indemnify such officers and directors
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance, if available on reasonable terms. The
Company believes that these agreements are necessary to attract and retain
qualified persons as directors and officers.
At present, there is no pending litigation or proceeding involving
any director, officer, employee or agent of the Company where indemnification
will be required or permitted. The Company is not aware of any threatened
litigation or proceeding which may result in a claim for such indemnification.
II-1
<PAGE>
Item 16. Exhibits.
Exhibit No. Exhibit
---------- -------
5.1 Opinion of John L. Gardner, Esq., General Counsel
23.1 Consent of Independent Auditors
23.2 Consent of John L. Gardner, Esq., General Counsel (included in Exhibit
5.1)
24.1 Power of Attorney (see page II-3)
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement 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; and
(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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to 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.
II-2
<PAGE>
INTER-TEL, INCORPORATED
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-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on the 19 day of
September, 1996.
INTER-TEL, INCORPORATED
By: /s/ Kurt R. Kneip
------------------------------------
Kurt R. Kneip, Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Steven G. Mihaylo and Kurt R. Kneip and each of them, as attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendment to this Registration Statement and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorneys-in-fact, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or either of them, or their or
his substitute or substitutes, may lawfully 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 by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- ----------- ----- ----
/s/ Steven G. Mihaylo Chairman of the Board of
- ----------------------- Directors and Chief September 19, 1996
Steven G. Mihaylo Executive Officer (Principal
Executive Officer)
/s/ Kurt R. Kneip Vice President and Chief
- ----------------------- Financial Officer September 19, 1996
Kurt R. Kneip (Principal Financial and
Accounting Officer)
/s/ Maurice H. Esperseth
- ----------------------- Director September 19, 1996
Maurice H. Esperseth
/s/ C. Roland Haden Director September 19, 1996
- -----------------------
C. Roland Haden
/s/ Kathleen Wade Director September 19, 1996
- -----------------------
Kathleen Wade
/s/ Gary D. Edens Director September 19, 1996
- -----------------------
Gary D. Edens
/s/ Norman Stout Director September 19, 1996
- -----------------------
Norman Stout
II-3
Exhibits 5.1 and 23.2
---------------------
September 19, 1996
Inter-Tel, Incorporated
120 North 44th Street, Suite 200
Phoenix, Arizona 85034
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
I have examined the Registration Statement on Form S-3 of Inter-Tel,
Incorporated, an Arizona corporation (the "Company"), which will be filed with
the Securities and Exchange Commission on or about September 20, 1996 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 14,458 shares of Common Stock, no par
value (the "Shares") of the Company, all of which will be sold by certain
shareholders of the Company (the "Selling Shareholders"). As corporate counsel
to the Company, I have also examined the proceedings proposed to be taken in
connection with the issuance of the Shares to the Selling Shareholders and said
proposed sale of the Shares.
Based upon such review, it is my opinion that the Shares are legally
and validly issued, fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of my name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
/s/ John L. Gardner
------------------------
John L. Gardner
General Counsel
II-4
CONSENT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Inter-Tel,
Incorporated for the registration of 14,458 shares of its common stock and to
the incorporation by reference therein of our report dated March 20, 1996, with
respect to the consolidated financial statements and schedule of Inter-Tel,
Incorporated included in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Phoenix, Arizona
September 20, 1996
