<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMION ON AUGUST 10, 1998
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
NICHOLS RESEARCH CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15295 63-0713665
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4040 South Memorial Parkway, Huntsville, Alabama 35802-1326
(256) 883-1140
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Michael J. Mruz
4040 South Memorial Parkway, Huntsville, Alabama 35802-1326
(256) 883-1140
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
John R. Wynn, Esq.
Lanier Ford Shaver & Payne P.C.
200 West Court Square, Suite 5000
Huntsville, Alabama 35801
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Approximate date of commencement of proposed sale to the
public: From time to time after this Registration Statement becomes
effective as determined by market conditions.
If the only securities being registered on this Form are being
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? 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
===============================================================================
Proposed
Proposed Maximum
Title of Maximum Offering Aggregate Amount of
Shares to be Amount to Be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
===============================================================================
Common Stock, 415,689 $23.625 $9,820,653 $2,897
$.01 par value shares
===============================================================================
(1) Calculation, solely for the purpose of determining the amount of the
registration fee, is made pursuant to Rule 457 and is based upon the average of
the high and low price of the Company's Common Stock on August 4, 1998 as
reported on the Nasdaq National Market.
________________________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
==============================================================================
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME
EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
==============================================================================
SUBJECT TO COMPLETION, DATED AUGUST 11, 1998
PROSPECTUS
- ----------
415,689 SHARES
NICHOLS RESEARCH CORPORATION
COMMON STOCK
($.0l Par Value)
------------------
This Prospectus relates to 415,689 shares (the "Shares") of the $.0l par
value common stock (the "Common Stock") of Nichols Research Corporation
(the "Company") being offered for sale by certain Stockholders (the
"Selling Stockholders") who acquired restricted shares of the Company's
Common Stock in a transaction exempt from registration pursuant to
federal and state securities laws. See "OFFERING BY SELLING
STOCKHOLDERS". The Shares offered by this Prospectus may be sold from
time to time by the Selling Stockholders. No underwriting arrangements
have been entered into by the Selling Stockholders. The distribution of
the Shares by the Selling Stockholders may be offered in one or more
transactions that may take place on the Nasdaq National Market (the
"Nasdaq"), including ordinary broker's transactions, privately-
negotiated transactions, through sales to one or more dealers for resale
of such Shares as principals or through a combination of such methods of
sale, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at fixed prices that may be changed,
or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the Selling Stockholders in
connection with sales of the Shares by Selling Stockholders. See
"OFFERING BY SELLING STOCKHOLDERS".
The Company's Common Stock is traded on the Nasdaq under the symbol
NRES. On August 10, 1998, the last sale price of the Common Stock
as reported by the Nasdaq was $24.00 per share. See "RISK FACTORS".
SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT
IN THE COMMON STOCK OFFERED HEREBY.
The Company will receive no proceeds from the sales of the Shares by the
Selling Stockholders. The expenses of the offering described in this
Prospectus, which are payable by the Company, are estimated to be approximately
$___________.
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 August ____ , 1998.
-----------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER
CONTAINED HEREIN. THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION IN WHICH SUCH OFFER MAY NOT LAWFULLY BE
MADE.
---------------------
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein together with all amendments thereto referred to as the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933 (the "Securities Act"), as
amended. This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto, and statements included in this
Prospectus as to the content of any contract or other document referred to are
not necessarily complete. For further information, reference is made to the
Registration Statement and to the exhibits and schedules filed therewith. All
these documents may be inspected at the Commission's principal office in
Washington, D.C. without charge, and copies of them may be obtained from the
Commission upon payment of prescribed fees. Statements contained in this
Prospectus as to the contents of any contract or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in each
instance reference is hereby made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith
files reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, Room 1024 and at the following Regional
Offices of the Commission: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York
10048. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's Web site
is http://www.sec.gov. Copies of such material also can be obtained at
prescribed rates by writing to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, such material may be
inspected and copied at the offices of the Nasdaq Stock Market, Inc., National
Association of Securities Dealers, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that previously were, or are required in the future to
be, filed with the Commission (File No. 0-15295) pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the year ended August 31,
1997; and the Company's Quarterly Reports on Form 10-Q for the quarters ended
November 30, 1997, February 28, 1998, and May 31, 1998;
(ii) the description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A filed with the Commission on
January 14, 1987, as amended by Form 8 filed with the Commission on August 18,
1989;
(iii) the Company's Proxy Statement dated December 8, 1997, concerning the
Company's Annual Meeting of Stockholders to be held January 8, 1998;
(iv) the Company's Current Report on Form 8-K dated August 31, 1997, filed
with the Commission on September 11, 1997, as amended by Form 8-K/A filed with
the Commission on November 10, 1997; and
(v) all documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that such statement is modified or replaced by a statement contained in
this Prospectus or in any other subsequently filed document that also is or is
deemed to be incorporated by reference into this Prospectus. Any such
statement so modified or superseded shall not be deemed, except as so modified
or replaced, to constitute a part of this Prospectus. The Company will provide
without charge to each person to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a copy of any
or all of the documents referred to above that have been or may be incorporated
in this Prospectus by reference, other than exhibits to such documents.
Written or oral requests for such copies should be directed to Patsy L. Hattox,
Corporate Secretary, Nichols Research Corporation, 4040 South Memorial Parkway,
P.O. Box 400002, Huntsville, Alabama 35815-1502, or telephone at (256)883-1140.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included or incorporated
in this Prospectus, including without limitation statements regarding the
Company's financial position, business strategy, plans and objectives of
management of the Company for future operations, and capital expenditures, are
forward-looking statements. Although the Company believes that the
expectations reflected in the forward-looking statements and the assumptions
upon which such forward-looking statements are based are reasonable, it can
give no assurance that such expectations and assumptions will prove to have
been correct. Additional important factors that could cause actual results to
differ materially from the Company's expectations ("Cautionary Statements") are
disclosed in this Prospectus and the documents incorporated in this Prospectus.
All written and oral forward-looking statements attributable to the Company or
persons acting on its behalf subsequent to the date of this Prospectus are
expressly qualified in their entirety by the Cautionary Statements.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the financial
statements and other documents incorporated by reference into this Prospectus.
As used herein, the "Company" means Nichols Research Corporation and its
subsidiaries unless the context requires otherwise. Unless otherwise
indicated, all references to annual or quarterly periods refer to the Company's
fiscal year ending August 31. Investors should carefully consider the
information set forth under the heading "RISK FACTORS".
The Selling Stockholders may sell from time-to-time an aggregate of 415,689
Shares of the Company's Common Stock at prices obtainable on the Nasdaq or as
otherwise negotiated. Each of the Selling Stockholders has informed the
Company that he or she does not have any arrangements or agreements with any
underwriters or broker/dealers to sell the Shares, and intends to contact
various broker/dealers to identify prospective purchasers. Additionally,
agents, brokers or dealers may acquire Shares or interests therein as a pledgee
and may, from time to time, effect distributions of the Shares or interests in
such capacity. Prior to this offering, the Selling Stockholders beneficially
owned an aggregate of 415,689 shares, or less than one percent, of the
Company's outstanding Common Stock, and each individual Selling Stockholder
beneficially owned less than one percent of the Company's outstanding Common
Stock. If the Selling Stockholders sell all the Shares offered hereby, the
Selling Stockholders will not own any shares of the Company's Common Stock
after this offering. See "OFFERING BY SELLING STOCKHOLDERS".
The offering by the Selling Stockholders involves certain risks concerning the
nature of the Company's business, and other matters. See "RISK FACTORS". The
Company will not receive any of the proceeds from the sales of the Shares by
the Selling Stockholders.
RISK FACTORS
Prospective investors should carefully consider, together with the other
information herein, the following factors that affect the Company.
Concentration of Revenue
- ------------------------
Approximately 88%, 76%, and 81% of the Company's total revenues in fiscal 1997,
fiscal 1996, and fiscal 1995, respectively, were derived from contracts or
subcontracts funded by the U.S. Government. These U.S. Government contracts
include military weapons systems contracts, funded by the Department of Defense
("DOD") that accounted for approximately 53%, 57%, and 69% of the Company's
total revenues in such years, respectively. The Company believes that the
success and development of this business will continue to be dependent upon its
ability to participate in U.S. Government contract programs. Accordingly, the
Company's financial performance may be directly affected by changing U.S.
Government procurement practices and policies. Other factors that could
materially and adversely affect the Company's government contracting business
and programs include budgetary constraints, changes in fiscal policies or
available funding, changes in government programs or requirements (including
proposals to abolish certain government agencies or departments, curtailing the
U.S. Government's use of technology service firms, the adoption of new laws or
regulations), technical developments and general economic conditions. These
factors could cause U.S. Government agencies to exercise their rights to
terminate existing contracts for convenience or not to exercise options to
renew such contracts.
In addition, certain of the Company's contracts individually contribute
a significant percentage of the Company's revenues. For the year ended
August 31, 1997, the Company's two largest contracts (by revenues) were
high-performance systems integration contracts, which generated
approximately 30% of the Company's total revenues for such period. These
two contracts are expected to represent less than 15% of fiscal year
1998 revenues. The Company's five largest contracts (by revenues)
generated approximately 50% of the Company's total revenues for such
period. The Company expects revenues to continue to be concentrated in
a relatively small number of large U.S. Government contracts.
Termination of such contracts, or the Company's inability to renew or
replace such contracts when they expire, could materially and adversely
affect the Company's revenues and income.
Risk of Reductions or Changes in Military Weapons Expenditures
- --------------------------------------------------------------
Historically, a majority of the Company's revenues (53% for the year ended
August 31, 1997) are related to U.S. military weapons systems. The U.S.
military weapons budget has been declining in real terms since the mid-1980's,
resulting in some cases in program delays, extensions, and cancellations. A
further significant decline in U.S. military expenditures for weapons systems,
or a reduction in the weapons systems portion of the defense budget, could
materially and adversely affect the Company. The loss or significant
curtailment of the Company's U.S. military contracts would materially and
adversely affect the Company's revenues and income.
Approximately 20% of the Company's revenues in fiscal 1997 were from contracts
related to Ballistic Missile Defense, compared to 26% of revenues in fiscal
1996 and 33% of revenues in fiscal 1995 from such contracts. Strategic defense
has existed for more than 26 years as a mission of DOD through activities such
as the Ballistic Missile Defense ("BMD") program. If a decision were made to
reduce substantially the scope of current BMD programs, management believes
that many national and theater missile defense programs would continue to be
funded by the U.S. Army and Air Force, and other DOD agencies. While the
Company has expanded into other markets, a decision to reduce significantly or
eliminate missile defense funding would have an adverse effect on the Company's
revenues and income.
Uncertainty Associated With Government Contracts
- ------------------------------------------------
The Company performs its services under U.S. Government contracts that usually
require performance over a period of one to five years. Long-term contracts
may be conditioned upon continued availability of Congressional appropriations.
Variances between anticipated budgets and Congressional appropriations may
result in delay, reduction, or termination of such contracts. Contractors can
experience revenue uncertainties with respect to available contract funding
during the first quarter of the government's fiscal year beginning October 1,
until differences between budget requests and appropriations are resolved.
The Company's contracts with the U.S. Government and its prime contractors are
subject to termination, in whole or in part, either upon default by the Company
or at the convenience of the government. The termination for convenience
provisions generally entitle the Company to recover costs incurred, settlement
expenses, and profit on work completed prior to termination. Because the
Company contracts to supply goods and services to the U.S. Government, it is
also subject to other risks, including contract suspensions, audit adjustments,
protests by disappointed bidders of contract awards which can result in the
re-opening of the bidding process, and changes in government policies or
regulations.
Contract Profit Exposure
- ------------------------
The Company's services are provided primarily through three types of contracts:
fixed- price, time-and-materials and cost-reimbursement contracts. Fixed-price
contracts require the Company to perform services under a contract at a
stipulated price. Time-and-materials contracts reimburse the Company for the
number of labor hours expended at an established hourly rate negotiated in the
contract, plus the cost of materials incurred. Under cost reimbursement
contracts, the Company is reimbursed for all actual costs incurred in
performing the contract to the extent that such costs are within the contract
ceiling and allowable under the terms of the contract, plus a fee or profit.
The Company assumes greater financial risk on fixed-price contracts than on
either time- and-materials or cost-reimbursement contracts. As the Company
increases its commercial business, it believes that an increasing percentage of
its contracts will be fixed-priced. Failure to anticipate technical problems,
estimate costs accurately, or control costs during performance of a fixed-price
contract, may reduce the Company's profit or cause a loss. In addition,
greater risks are involved under time-and-materials contracts than under
cost-reimbursement contracts because the Company assumes the responsibility for
the delivery of specified skill at a fixed hourly rate. Although management
believes that adequate provision for its fixed-price and time-and-materials
contracts is reflected in the Company's financial statements, no assurance can
be given that this provision is adequate or that losses on fixed-price and
time-and-materials contracts will not occur in the future.
To compete successfully for business, the Company must satisfy client
requirements at competitive rates. Although the Company continually attempts
to lower its costs, there are other information technology and technical
services companies that may provide the same or similar services at comparable
or lower rates than the Company. Additionally, certain of the Company's
clients require that their vendors reduce rates after services have commenced.
The Company's success will also depend upon its ability to attract, retain,
train, and motivate highly skilled employees, particularly in the areas of
information technology, where such employees are in great demand.
Acquisition Strategy
- --------------------
Expansion through acquisitions is an important component of the Company's
overall business strategy. The Company has successfully completed ten
strategic acquisitions and alliances since September 1, 1994, most of which
have centered on information technology (IT) and healthcare information
services markets. Since the respective dates of the acquisitions, the Company
has integrated these acquired entities in order to draw on the Company's base
of technical expertise and capabilities in designing solutions for government,
commercial, and healthcare clients. The Company's continued ability to grow by
acquisitions is dependent upon, and may be limited by, the availability of
compatible acquisition candidates at reasonable prices, the Company's ability
to fund or finance acquisitions on acceptable terms, and the Company's ability
to maintain or enhance the profitability of any acquired business.
Competition
- -----------
The information services industry in which the Company operates is highly
fragmented with no single company or small group of companies in a dominant
position. The Company's competitors include large, diversified firms with
substantially greater financial resources and larger technical staffs than
those of the Company. Some of the large competitors offer services in a number
of markets which overlap many of the same areas in which the Company offers
services, while certain companies are focused on only one or a few of these
markets. The firms which compete with the Company are consulting firms,
computer services firms, applications software companies and accounting firms,
as well as the computer service arms of computer manufacturing companies and
defense and aerospace firms.
As part of the Company's business strategy to enter new markets, the Company
intends to pursue large systems integration contracts in both the government
and commercial markets, although competition for such contracts is intense and
many of the Company's competitors have greater resources than the Company.
While such contracts are working capital intensive, requiring large equipment
and software purchases to be funded by the Company before payment from the
customer, the Company believes such contracts offer attractive revenue growth
and margin expansion opportunities for the Company's range of technical
expertise and capabilities.
Attraction and Retention of Professional Staff
- ----------------------------------------------
The Company's success will depend in part upon its ability to attract, retain,
train and motivate highly skilled employees, particularly in the area of
information technology. There is significant competition for employees with
the information technology skills required to perform the services the Company
offers. Qualified information technology professionals are in great demand and
are likely to remain a limited resource for the foreseeable future. There can
be no assurance that the Company will be successful in attracting a sufficient
number of highly skilled employees in the future or that it will be successful
in retaining, training and motivating the employees it is able to attract and
any inability to do so could impair the Company's ability to perform adequately
its existing contracts and to bid for or obtain new contracts.
Variability of Quarterly Operating Results
- ------------------------------------------
The Company's revenues and earnings may fluctuate from quarter to quarter based
on such factors as the number, size, and scope of projects in which the Company
is engaged, the contractual terms and degree of completion of such projects,
expenditures required by the Company in connection with such projects, any
delays incurred in connection with such projects, employee utilization rates,
the adequacy of provisions for losses, the accuracy of estimates of resources
required to complete ongoing projects, and general economic conditions. Under
certain contracts, the Company is required to purchase, integrate and deliver
to the customer large amounts of computer processing systems and other
equipment. Revenues are accrued as costs to deliver these systems are
incurred, and as a result, quarterly revenues will be impacted by fluctuations
related to equipment purchases which occur on a periodic basis depending on
contract terms and modifications.
THE COMPANY
The Company is a leading provider of technical and information technology (IT)
services, including information processing, systems development and systems
integration. The Company provides these services to a wide range of clients,
including the DOD, other federal agencies, state and local governments,
healthcare and insurance organizations, and commercial enterprises. The
Company was founded in 1976 to develop specialized optical sensing capabilities
for military weapons and ballistic defense programs. Until fiscal year 1991,
virtually all of the Company's revenues were derived under contracts with the
federal government relating to high technology weapons systems, strategic
missile defense and other related aerospace technologies. Areas of particular
strength have included tactical technology, smart sensing systems, simulations,
data processing, systems engineering and systems integration (including
software development, networking, hardware acquisition and installation, user
training and system operation and maintenance). Beginning in fiscal year 1991,
in response to increasing budget pressure on military procurements, the Company
strategically began to develop applications for its technical capabilities
outside its traditional core military business. Although the Company's core
military business has continued to grow, the Company has successfully entered
the markets for other government information technology solutions, as well as
information technology solutions in the healthcare industry and other
commercial markets. The Company's business strategy consists of three key
elements: (i) maintain the Company's leadership in technology; (ii) apply the
Company's technology to create solutions for new clients; and (iii) make
strategic acquisitions and form alliances to expand the business of the Company
and gain industry knowledge. The Company's business and financial performance
are subject to risks and uncertainties, including those discussed above. See
"RISK FACTORS."
The Company is organized in four strategic business units, reflecting the
particular market focus of each line of business. The Defense and Intelligence
unit (formerly referred to as Nichols Federal) provides technical services
primarily to U.S. Government defense agencies. The Government Information
Technology unit (formerly referred to as Nichols InfoFed) provides information
and technology solutions and services to a variety of governmental agencies.
Nichols InfoTec provides information and technology services to various
commercial clients, other than healthcare clients. Nichols TXEN provides
information services to clients in the healthcare and insurance industries. The
Company is currently evaluating whether the services and products provided to
the insurance industry should continue to be included with Nichols TXEN or
reorganized into Nichols InfoTec. For the nine months ended May 31, 1998, the
percentage of total revenues attributable to the four business units was
approximately 55% for Defense and Intelligence, 24% for Government Information
Technology, 10% for Nichols InfoTec, and 11% for Nichols TXEN.
The Company's executive offices are located at 4040 South Memorial Parkway,
Huntsville, Alabama 35802-1326, and its telephone number is (256) 883-1140.
OFFERING BY SELLING STOCKHOLDERS
The Company is registering the sale of an aggregate of 415,689 Shares of Common
Stock by the Selling Stockholders. The Selling Stockholders may sell their
Common Stock at such prices as they are able to obtain in the market or as
otherwise negotiated. The Company will receive no proceeds from the sale of
Common Stock by the Selling Stockholders. Additionally, agents, brokers or
dealers may acquire Shares or interests therein as a pledgee and may, from time
to time, effect distributions of the Shares or interests in such capacity.
The Shares offered by the Selling Stockholders were acquired from the Company
in connection with the merger of a wholly-owned subsidiary of the Company with
and into Welkin Associates, Ltd. (the "Welkin Acquisition'). The Welkin
Acquisition was completed pursuant to the terms of an Agreement and Plan of
Merger dated June 26, 1998 (the "Merger Agreement"). As a result of the
consummation of the merger, all issued and outstanding shares of Welkin
Associates, Ltd. were exchanged for 415,689 shares of the Company's Common
Stock. As part of the Merger Agreement, the Company agreed to effect a
registration of all shares of the Company's Common Stock received by the
Selling Stockholders in the Welkin Acquisition in order to permit the Selling
Stockholders to effect sales of such Shares from time to time in the market or
in privately negotiated transactions. Accordingly, the Company has filed with
the Commission, under the Securities Act, a Registration Statement on Form S-3,
of which this Prospectus is a part, with respect to the resale of the Shares
from time to time on the Nasdaq National Market or in privately negotiated
transactions. The Company has agreed to use reasonable efforts to keep such
Registration Statement in effect for up to two years from the date of its
effectiveness or, if earlier, until the distribution contemplated in this
Prospectus is completed.
Each of Carl W. Monk, Jr., David Thomas, and Alan A. Ross was a director of
Welkin Associates, Ltd. ("Welkin") at the time that Welkin became a
wholly-owned subsidiary of the Company on July 28, 1998. In addition, Carl W.
Monk was President, Treasurer, as well as a stockholder. Each of Alan A. Ross
and Jose Jimenez was a Vice President and stockholder, and Patricia Toomey was
Secretary and a stockholder at that time.
The following table sets forth the name of each Selling Stockholder, the number
of shares of Common Stock owned by each Selling Stockholder before the
offering, the number of shares of Common Stock to be sold by each Selling
Stockholder, the number of shares owned by each Selling Stockholder after the
offering, and the percentage of shares of Common Stock owned after the
offering. For purposes of this table, the Company has assumed the sale of all
Shares registered hereby, although the Company is not aware of any present
intention of any Selling Shareholder to sell such Shares.
Number of
Shares Number of Percentage of
Owned Number of Shares Shares
Before Shares to Owned After Owned After
Name Offering Be Sold Offering Offering
- ------- --------- ---------- ----------- -------------
Carl W. Monk, Jr. 136,280 136,280 -0- *
Zeta Associates, Inc. 119,245 119,245 -0- *
Alan A. Ross 56,783 56,783 -0- *
Frederick W. Raymond 39,350 39,350 -0- *
Donald E. Snoddy 8,517 8,517 -0- *
David S. Stafford 8,517 8,517 -0- *
Lawrence E. Earl 7,381 7,381 -0- *
Arthur T. Larson, Jr. 6,814 6,814 -0- *
Jose S. Jimenez 5,678 5,678 -0- *
Kent B. Pelot 4,542 4,542 -0- *
David L. Shickle 4,542 4,542 -0- *
James A. Flanagan 2,839 2,839 -0- *
Robert J. Heim 2,839 2,839 -0- *
Royal G.C. Collette 2,271 2,271 -0- *
Carl E. Josefson 1,260 1,260 -0- *
Linas A. Roe 1,135 1,135 -0- *
William H. Skipper 1,135 1,135 -0- *
Paul S. Vick 1,135 1,135 -0- *
David H. Bryant 851 851 -0- *
Neil A. Costanzo 851 851 -0- *
Marya K. Pickering 851 851 -0- *
William J. Comstock 794 794 -0- *
Trent A. Trapp 567 567 -0- *
Robert L. Forcier 567 567 -0- *
Jack V. Brendmoen 272 272 -0- *
James R. Sowers 136 136 -0- *
Patricia A. Toomey 136 136 -0- *
Conrad J. Wigge 136 136 -0- *
Leila M. Moyer 113 113 -0- *
James F. Spaulding 68 68 -0- *
James A. Cheek 22 22 -0- *
Dana L. Heisey 22 22 -0- *
Gary D. Wells 22 22 -0- *
- -----------------------------------------------
*Less than 1% of the Common Stock outstanding.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Shares by
the Selling Stockholders. See "OFFERING BY SELLING STOCKHOLDERS."
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby by the Selling Stockholders may
be delivered and/or sold from time to time in transactions on the Nasdaq
National Market, in privately negotiated transactions, or by a combination of
both (which compensation to a particular broker- dealer might be in excess of
customary commissions). There is no assurance that any of the Selling
Stockholders will sell any or all of the Shares offered by them.
Any Selling Stockholder and any broker-dealer that participates in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by such
broker-dealers and any profits realized on the resale of Shares may be deemed
to be underwriting discounts and commissions under the Securities Act. Each
Selling Stockholder may agree to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act. In addition, the
Company has agreed to indemnify in certain circumstances the Selling
Stockholders against certain liabilities including liabilities arising under
the Securities Act. The Selling Stockholders have agreed to indemnify in
certain circumstances the Company against certain liabilities.
EXPERTS
The consolidated financial statements of Nichols Research Corporation appearing
in Nichols Research Corporation's Annual Report (Form 10-K) for the year ended
August 31, 1997, 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.
LEGAL MATTERS AND INTERESTS OF NAMED EXPERTS
The validity of the shares of Common Stock being offered hereby will be passed
upon the Company and the Selling Stockholders by Lanier Ford Shaver & Payne,
P.C., Huntsville, Alabama. John R. Wynn, a member of the law firm of Lanier
Ford Shaver & Payne P.C., is a director of the Company. As of July 27, 1998,
four (4) attorneys of Lanier Ford Shaver & Payne, P.C., including Mr. Wynn,
beneficially owned an aggregate of 23,773 shares of Common Stock.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
------------------
TABLE OF CONTENTS
PAGE
----
Available Information 2
Incorporation Of Certain Documents By Reference 3
Disclosure Regarding Forward-Looking Statements 3
Prospectus Summary 4
Risk Factors 4
The Company 8
Offering By Selling Stockholders 9
Use of Proceeds 12
Plan of Distribution 12
Experts 12
Legal Matters and Interests of Named Experts 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution.
- ------------------------------------------------------
The estimated expenses of the Offering described in this Registration Statement
are as follows:
Registration Fee $2,897
Nasdaq Additional Listing Fee $ **
Printing and Engraving Expenses* $ **
Accounting Fees and Expenses* $ **
Legal Fees and Expenses* $ **
Blue Sky Fees and Expenses* $ **
Registrar and Transfer Agent Fees* $ **
Miscellaneous* $ **
__________
Total* $2,897
==========
- -----------------------------
* Estimated
** To be filed by amendment
Item 15. Indemnification Of Directors And Officers.
- ----------------------------------------------------
Section 145 of the Delaware General Corporation Law permits indemnification by
the Company of any director, officer, employee or agent of the Company or
person who is serving or was serving at the Company's request as a director,
officer, employee or agent of another corporation or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with the
defense of any threatened, pending or completed action (whether civil,
criminal, administrative or investigative), to which he is or may be a party by
reason of having been such director, officer, employee or agent provided that
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, and, with respect to any criminal
action or proceeding had no reasonable cause to believe his conduct was
unlawful. The Company also has the power under Section 145 to indemnify
persons set forth above from threatened, pending or completed actions or suits
by or in the right of the Company to procure a judgment in its favor by reason
of the fact that such person was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or enterprise against
expenses actually and reasonably incurred by him in connection with the defense
or settlement of the action if 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, except that no indemnification can be made with regard to any claim,
issue or matter as to which the person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the Delaware Court of Chancery or the court in
which the action was brought determines that the person was fairly and
reasonably entitled to indemnity. Any indemnification (unless ordered by a
court) must be made by the Company only as authorized in the specific case upon
a determination that indemnification of the person is proper in the
circumstances because he has met the applicable standards of conduct. The
determination must be made by the Board of Directors by a majority vote of a
quorum consisting of directors who are not parties to the action, or if a
quorum is not obtainable or, even if obtainable, a quorum of disinterested
directors so directs, by independent counsel in a written opinion, or by the
stockholders. The Company may pay the expenses of an action in advance of
final disposition if authorized by the Board of Directors in a specific case,
upon receipt of an undertaking by the person to be indemnified to repay any
such advances unless it shall ultimately be determined that such person is
entitled to be indemnified by the Company as authorized by law.
Article Nine of the Company's By-laws provides for indemnification of the
Company's directors, officers, employees or agents to the extent permitted by
Section 145 of the Delaware General Corporation Law. Article Nine of the
Company's By-laws further provides that the Company may purchase and maintain
insurance on behalf of those persons described above as eligible for
indemnification for liability arising out of such person's duties or status
with the Company whether or not indemnification in respect of such liability
would be permissible.
The Company has in effect an officers and directors liability insurance policy
with National Union Fire Insurance Company of Pittsburgh. The policy provides
indemnity to the directors and officers of the Company for the loss arising
from any claim by reason of a wrongful act where there is no corporate
indemnification. The insurance provides for the Company to be reimbursed for
any indemnification it may be required by statute or the Company's By-laws to
make to any of its directors and officers in connection with a claim by reason
of a wrongful act. Pursuant to exclusions, the policy covers negligent acts,
errors, omissions or breach of duty by a director or officer. The principal
exclusions from coverage include the following: (i) claims involving various
violations of Section 16(b) of the Securities Exchange Act of 1934; (ii)
dishonest acts; and (iii) libel, slander, or non-monetary damages. The policy
has no deductible amount per director or officer for each loss. A $500,000
deductible self-insurance retention applies to the Company. The limit of
liability under the policy is $5,000,000 in the aggregate annually in excess of
deductibles and participations.
Item 16. Exhibits And Financial Statement Schedules.
- -----------------------------------------------------
5 Opinion of Lanier Ford Shaver & Payne, P.C. regarding legality of
securities being registered.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Lanier Ford Shaver & Payne, P.C. (included in Exhibit 5).
24 Power of attorney (included in Part II of the Registration Statement).
Item 17. Undertakings.
- -----------------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
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 an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in this Registration Statement shall
be deemed to be a new Registration Statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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.
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.
<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-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Huntsville, State of Alabama, on the 10th day of
August, 1998.
NICHOLS RESEARCH CORPORATION
By: Michael J. Mruz
_____________________________
Michael J. Mruz
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors of
the Registrant, by virtue of their signatures appearing below to this
Registration Statement, hereby constitute and appoint Michael J. Mruz or Allen
E. Dillard, and each or either of them, with full power of substitution, as
attorneys-in-fact in their names, place and stead to execute any and all
amendments to this Registration Statement in the capacities set forth opposite
their name and hereby ratify all that said attorneys-in-fact and each of them
or his substitutes may do 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
Chris H. Horgen Chairman of the Board (Principal August 7, 1998
- -------------------- Executive Officer)
Chris H. Horgen
Michael J. Mruz Chief Executive Officer, President, August 5, 1998
- -------------------- Chief Operating Officer and
Michael J. Mruz Director
Roy J. Nichols Senior Vice President and Vice- August 6, 1998
- -------------------- Chairman of the Board
Roy J. Nichols
Patsy L. Hattox Chief Administrative Officer, August 6, 1998
- -------------------- Corporate Vice President, Secretary
Patsy L. Hattox and Director
Roger P. Heinish Director August 6, 1998
- --------------------
Roger P. Heinish
John R. Wynn Director August 10, 1998
- --------------------
John R. Wynn
William E. Odom Director August 6, 1998
____________________
William E. Odom
James R. Thompson, Jr. Director August 6, 1998
- --------------------
James R. Thompson, Jr.
Phil E. Depoy Director August 6, 1998
____________________
Phil E. DePoy
Thomas L. Patterson President of Nichols TXEN August 6, 1998
____________________ Corporation and Director
Thomas L. Patterson
____________________ Director
Daniel W. McLaughlin
David Friend Director August 7, 1998
___________________
David Friend
Allen E. Dillard Chief Financial Officer and August 6, 1998
___________________ Treasurer (Principal Financial and
Allen E. Dillard Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
5 Opinion of Lanier Ford Shaver & Payne, P.C.
regarding legality of securities being registered.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Lanier Ford Shaver & Payne, P.C.
(included in Exhibit 5).
24 Power of attorney (included in Part II of the
Registration Statement).
EX-5
OPINION OF LEGAL COUNSEL RE: LEGALITY
August 11, 1998
Nichols Research Corporation
4040 Memorial Parkway, S.
Huntsville, Alabama 35802
Registration Statement on Form S-3
Gentlemen and Ladies:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on or about August 11,
1998 (the "Registration Statement") in connection with the registration
under the Securities Act of 1933, as amended, of a total of 415,689
shares of your Common Stock (the "Shares"), to be sold by certain
shareholders listed in the Registration Statement (the "Selling
Shareholders"). As your legal counsel, we have examined the proceedings
taken and are familiar with the proceedings proposed to be taken by you
in connection with the sales of the Shares by the Selling Shareholders
in the manner set forth in the the Registration Statements in the
section entitled "Plan of Distribution."
It is our opinion that the Shares, when sold by the Selling Shareholders
in the manner referred to in the Registration Statement, will be legally
and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and furth consent to the use of our name wherever it appears
in the Registration Statement and any amendments to it.
Sincerely,
LANIER FORD SHAVER & PAYNE P.C.
By:Elizabeth W. Abel
----------------------------
Elizabeth W. Abel
Member-Shareholder
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 333-______) and related
Prospectus of Nichols Research Corporation for the registration of
415,689 shares of its common stock and to the incorporation by reference
therein of our report dated October 8, 1997, with respect to the
consolidated financial statements of Nichols Research Corporation
included in its Annual Report (Form 10-K) for the year ended August 31,
1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Birmingham, Alabama
August 10, 1998
