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As filed with the Securities and Exchange Commission on September 15, 1998.
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
INSIGHT ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0766246
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6820 South Harl Ave.
Tempe, Arizona 85283
(602) 902-1001
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
--------------------------------------------
Eric J. Crown, Chief Executive Officer
Insight Enterprises, Inc.
6820 South Harl Ave.
Tempe, Arizona 85283
(602) 902-1001
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------------------------
Copy to:
Michael M. Donahey
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
(602) 382-6381
--------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
<PAGE> 2
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>
- --------------------------------------------------------------------------------
PROPOSED
MAXIMUM
PROPOSED AGGREGATE AMOUNT OF
TITLE OF SHARES AMOUNT TO BE MAXIMUM OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) PRICE(2) FEE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 300,892 $32.625 $9,816,602 $2,896
- --------------------------------------------------------------------------------
</TABLE>
(1) In the event of a stock split, stock dividend, or similar transaction
involving the Company's Common Stock, in order to prevent dilution, the
number of shares registered shall be automatically increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the last reported sale price of the
Common Stock on September 10, 1998, as reported by the Nasdaq Stock
Market.
The Company hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Company 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> 3
SUBJECT TO COMPLETION, DATED SEPTEMBER 15, 1998
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.
PROSPECTUS
300,892 SHARES
INSIGHT ENTERPRISES, INC.
COMMON STOCK
This Prospectus relates to the offer and sale by Gary Oreman, Darin
Oreman, Eleanor Oreman, and Jay Oreman (the "Selling Stockholders") of an
aggregate of 300,892 shares of the Common Stock, $0.01 par value per share (the
"Common Stock"), of Insight Enterprises, Inc., a Delaware corporation (the
"Company"). The Company will not receive any portion of the proceeds from the
sale of the Common Stock offered hereby. All expenses of registration incurred
in connection with this offering are being borne by the Company. The brokerage
and other expenses of sale incurred by the Selling Stockholders will be borne by
the Selling Stockholders. See "Plan of Distribution" and "Selling Stockholders."
The Company's Common Stock is traded on the Nasdaq Stock Market under the
symbol "NSIT." As of September 11, 1998, the closing sale price for the Common
Stock, as reported by the Nasdaq Stock Market, was $33.9375 per share.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN RISKS
ASSOCIATED WITH THIS OFFERING.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SEPTEMBER ___, 1998
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements, and other information filed by the Company with the Commission may
be inspected and copied at the Public Reference Room of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices located
at 7 World Trade Center, 13th Floor, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
public may obtain information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission maintains a World Wide
Web site on the Internet (http://www.sec.gov) that contains reports, proxy and
information statements, and other information regarding registrants, such as the
Company, that file electronically with the Commission. In addition, the
Company's Common Stock is traded on the Nasdaq Stock Market. Reports, proxy
statements, and other information filed by the Company are also available for
inspection at the offices of Nasdaq Stock Market, Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") that the Company has filed with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain information contained in the Registration Statement and the exhibits
thereto and reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the Common
Stock offered hereby. Statements contained in this Prospectus as to the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete and, in each
instance, reference is made to the copy of such document as so filed. Each such
statement is qualified in its entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed by the Company with the Commission
and are hereby incorporated by reference in this Prospectus: (i) the Annual
Report of the Company on Form 10-K for the year ended December 31, 1997, (ii)
the Quarterly Reports of the Company on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998, (iii) the Current Reports of the Company on Form
8-K, filed April 20, 1998 and January 20, 1998, and (iv) the Proxy Statement
filed by the Company on April 9, 1998. All other documents and reports filed by
the Company with the Commission pursuant to Sections 13, 14, or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of this offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be made a part hereof from
their respective dates of filing.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will cause to be furnished without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all documents
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in the document
which this Prospectus incorporates).
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Requests should be directed to the Secretary, Insight Enterprises, Inc., 6820
South Harl Ave., Tempe, Arizona 85283; telephone (602) 902-1001.
RISK FACTORS
The purchase of the Common Stock offered hereby involves substantial risk.
The following matters, including those mentioned elsewhere, should be considered
carefully by a prospective investor in evaluating a purchase of the Common
Stock.
FLUCTUATIONS IN OPERATING RESULTS; VOLATILITY OF STOCK PRICE
The Company's results of operations are influenced by a variety of
factors, including general economic conditions, the condition of the computer
and related products industry, shifts in demand for or availability of computer
and related products and industry announcements of new products or upgrades.
Sales can be dependent on specific product categories and any change in demand
for or supply of such products could have a material adverse effect on the rate
of growth of the Company's sales. The Company's operating results are also
highly dependent upon its level of gross profit as a percentage of net sales
which fluctuates due to numerous factors including opportunities to increase
market share, the availability of opportunistic purchases, changes in prices
from suppliers, reductions in the amount of supplier reimbursements that are
made available, general competitive conditions, and the relative mix of products
sold during the period. The Company expects gross margins to continue to decline
primarily due to industry-wide pricing pressures and a continued shift in
product mix. In addition, the Company's expense levels are based, in part, on
anticipated revenues. Therefore, the Company may not be able to control spending
in a timely manner to compensate for any unexpected revenue shortfall. As a
result, quarterly period-to-period comparisons of the Company's financial
results are not necessarily meaningful and should not be relied upon as an
indication of future performance.
The technology sector of the United States stock markets has experienced
substantial volatility in recent months and years, and the market price of the
Company's Common Stock has, likewise, fluctuated. The deterioration of
conditions which favor the technology sector or the stock markets in general or
the Company in particular, whether or not such events relate to or reflect upon
the Company's operating performance, could adversely affect the market price of
the Company's Common Stock. Furthermore, fluctuations in the Company's operating
results, increased competition, reduced vendor incentives and trade credit,
higher postage and operating expenses and other developments may impact public
perception and analyst reports regarding the Company which could have a
significant impact on the market price of the Common Stock.
HIGHLY COMPETITIVE INDUSTRY
The computer and related products industry is highly competitive.
Competition is based primarily on product availability, price, speed of
delivery, credit availability, ability to tailor specific solutions to customer
needs, quality and breadth of product lines. The Company expects competition to
increase as retailers and direct marketers who have not traditionally sold
computers and related products enter the industry and if the industry's rate of
growth in the United States slows. The Company competes with a large number and
wide variety of marketers and resellers of computers and related products,
including traditional computer and related products retailers, computer
superstores, consumer electronics and office supply superstores, mass
merchandisers and national direct marketers (including value-added resellers and
specialty retailers, aggregators, distributors, franchisers, manufacturers and
national computer retailers some of which have commenced their own direct
marketing operations). Certain of the Company's competitors have longer
operating histories and greater financial, technical, marketing and other
resources than the Company. In addition, many of these competitors offer a wider
range of products and services than the Company, and may be able to respond more
quickly to new or changing opportunities, technologies and customer
requirements. Many current and potential competitors also have greater name
recognition, more extensive promotional activities and adopt more aggressive
pricing policies than the Company. There can be no assurance that the
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Company will be able to compete effectively with current or future competitors
or that the competitive pressures faced by the Company will not have a material
adverse effect on the Company's business, results of operations and financial
condition.
The computer and related products industry is undergoing significant
change. The Company believes that consumers have become more accepting of
large-volume, cost-effective channels of distribution such as computer
superstores, consumer electronic and office supply superstores, national direct
marketers and mass merchandisers. Product resellers and direct marketers are
combining operations or acquiring or merging with other resellers and direct
marketers to increase efficiency. Moreover, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties to enhance their products and services. Accordingly, it is
possible that new competitors or alliances among competitors may emerge and
acquire significant market share. Generally, pricing is very aggressive in the
industry and the Company expects pricing pressures to continue. There can be no
assurance that the Company will be able to offset the effects of price
reductions with an increase in the number of customers, higher sales, cost
reductions or otherwise. Such pricing pressures could result in an erosion of
the Company's market share, reduced sales and reduced operating margins, any of
which could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company expects gross margins to
continue to decline primarily due to industry-wide pricing pressures and a
continued shift in product mix.
MANAGING RAPID GROWTH; NO ASSURANCE OF ADDITIONAL FINANCING
Since its inception, the Company has experienced substantial changes in
and expansion of its business and operations. The Company's past expansion has
placed, and any future expansion would place, significant demands on the
Company's administrative, operational, financial and other resources. The
Company's operating expenses and staffing levels have increased and are expected
to increase substantially in the future. In particular, the Company has hired a
significant number of additional personnel, including senior sales managers,
account executives and other persons with experience in both the computer and
direct marketing industries, and there can be no assurance that such persons
will perform to the Company's expectations. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to continue
to attract, assimilate and retain additional highly qualified persons in the
future. In addition, the Company expects that any future expansion will continue
to challenge the Company's ability to hire, train, motivate and manage its
employees. The Company also expects over time to expend considerable resources
to expand its management system and to implement a variety of new systems and
procedures. If the Company's sales do not increase in proportion to its
operating expenses, the Company's management systems do not expand to meet
increasing demands, the Company fails to attract, assimilate and retain
qualified personnel, or otherwise fails to manage its expansion effectively,
there would be a material adverse effect on the Company's business, results of
operations and financial condition. There can be no assurance that the Company
will achieve its growth strategy.
Historically, cash flow from operations has been insufficient to finance
the Company's growth and the Company has relied upon a line of credit and
proceeds from public offerings to finance working capital requirements. There
can be no assurance that the Company's operations will generate sufficient cash
flow or that adequate financing will be available to finance continued growth.
RELIANCE ON SUPPLIERS; ALLOCATION OF GOODS
The Company acquires products for resale both directly from manufacturers
and indirectly through distributors. Purchases from Ingram Micro, Inc., a
distributor of computers and related products, accounted for approximately 19%
of the Company's aggregate purchases for calendar 1997. No other supplier
accounted for more than 16% of purchases in calendar 1997. However, the top five
suppliers as a group accounted for approximately 59% of the Company's product
purchases during calendar 1997. The loss of Ingram Micro, Inc. or any other
supplier could cause a short-term disruption in the availability of products.
Certain of the products offered from time to time by the Company are subject to
manufacturer allocation which limits the number of
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units of such products available to resellers, including the Company. The
inability of the Company to obtain a sufficient quantity of products, in
particular, high demand products such as desktops and notebooks, or an
allocation of products from a manufacturer in a way which favors one of the
Company's competitors relative to the Company, could cause the Company to be
unable to fill customers' orders in a timely manner, or at all, which could have
a material adverse effect on the Company's business, results of operations and
financial condition. Certain suppliers provide the Company with substantial
incentives in the form of payment discounts, supplier reimbursements, price
protections and rebates. Supplier funds are used to offset, among other things,
cost of goods sold, marketing costs, and other operating expenses. The Company
competes with other market competitors for these funds. No assurance can be
given that the Company will continue to receive such incentives or that it will
be able to collect outstanding amounts relating to these incentives in a timely
manner or at all. A reduction in or discontinuance of, a significant delay in
receiving or the inability to collect such incentives could have a material
adverse effect on the Company's business, results of operations and financial
condition.
RAPID CHANGES IN PRODUCT STANDARDS AND RISK OF INVENTORY OBSOLESCENCE
The computer and related products industry is characterized by rapid
technological change and the frequent introduction of new products and product
enhancements which can decrease demand for current products or render them
obsolete. In addition, in order to satisfy customer demand and to obtain greater
purchasing discounts, the Company may carry increased inventory levels of
certain products in the future. The Company can have limited or no return
privileges with respect to certain of its products. There can be no assurance
that the Company will be able to avoid losses related to inventory obsolescence.
BUSINESS INTERRUPTION; RELIANCE ON MANAGEMENT INFORMATION SYSTEMS
The Company believes that its success to date has been, and future results
of operations will be, dependent in large part upon its ability to provide
prompt and efficient service to customers. In addition, the Company's success is
largely dependent on the accuracy, quality and utilization of the information
generated by its management information systems, which affect its ability to
manage its sales, accounting, inventory and distribution systems. Although the
Company has redundant systems, with full data backup, a substantial interruption
in these systems or in the Company's telephone communication systems would have
a material adverse effect on the Company's business, results of operations and
financial condition.
CHANGING METHODS OF DISTRIBUTION
The manner in which computers and related products are distributed and
sold is changing, and new methods of distribution and sale, such as on-line
shopping services via the Internet have emerged. Hardware and software
manufacturers have sold, and may intensify their efforts to sell, their products
directly to end-users. From time to time, certain manufacturers have instituted
programs for the direct sales of large order quantities of hardware and software
to certain major corporate accounts. These types of programs may continue to be
developed and used by various manufacturers. In addition, manufacturers may
attempt to increase the volume of software products distributed electronically
to end-users. An increase in the volume of products sold through or used by
consumers of any of these competitive programs or distributed electronically to
end-users could have a material adverse effect on the Company's business,
results of operations and financial condition.
STATE SALES OR USE TAX COLLECTION
The Company presently collects sales tax only on sales of products shipped
to customers in the State of Arizona. Sales to customers located within the
State of Arizona were approximately 11% of the Company's net sales during
calendar 1997. Various states have sought to impose on direct marketers the
burden of collecting state sales or use taxes on the sales of products shipped
to that state's residents. The United States Supreme Court affirmed its position
that under the Commerce Clause of the United States Constitution, a state cannot
constitutionally impose sales or use tax collection obligations on an
out-of-state mail order company
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whose only contacts with the state are the distribution of catalogs and other
advertising materials through the mail and the subsequent delivery of purchased
goods by United States mail or by interstate common carrier. If the Supreme
Court changes its position or if legislation is passed to overturn the Supreme
Court's decision, the imposition of a sales or use tax collection obligation on
the Company in states to which it ships products would result in additional
administrative expenses to the Company, could result in price increases to the
customer or could otherwise have a material adverse effect on the Company's
business, results of operations and financial condition. From time to time,
legislation to overturn this decision of the Supreme Court has been introduced,
although to date, no such legislation has been passed.
RISKS ASSOCIATED WITH FUTURE ACQUISITIONS; INTERNATIONAL OPERATIONS
The Company may seek to acquire businesses to expand or complement its
operations. The magnitude, timing and nature of any future acquisitions will
depend on a number of factors, including suitable acquisition candidates, the
negotiation of acceptable terms, the Company's financial capabilities, and
general economic and business conditions. There is no assurance that the Company
will identify acquisition candidates that would result in successful
combinations or that any such acquisitions will be consummated on acceptable
terms. Any future acquisitions by the Company may result in potentially dilutive
issuances of equity securities, the incurrence of additional debt and
amortization of expenses related to goodwill and intangible assets, all of which
could adversely affect the Company's profitability. In addition, acquisitions
involve numerous risks, including difficulties in the assimilation of operations
of the acquired company, the diversion of management's attention from other
business concerns, risks of entering markets in which the Company has had no or
only limited direct experience and the potential loss of key employees of the
acquired company, all of which in turn, could have a material adverse effect on
the Company's business, results of operations and financial condition.
In addition, the Company recently opened an operation in Canada and
completed an acquisition in Europe as part of its effort to penetrate
international markets. In implementing this strategy, the Company faces barriers
to entry and the risk of competition from local and other companies that already
have established global businesses, as well as the risks generally associated
with conducting business internationally, including exposure to currency
fluctuations, limitations on foreign investment, and the additional expense and
risks inherent in operating in geographically and culturally diverse locations.
Because the Company may continue to develop its international business through
acquisitions, the Company may also be subject to risks associated with such
acquisitions, including those relating to the marriage of different corporate
cultures and shared decision-making. There can be no assurance that the Company
will succeed in increasing its international business, if at all, in a
profitable manner.
RISK OF INCREASING MARKETING, POSTAGE AND SHIPPING COSTS
The Company mails catalogs through the U. S. Postal Service, generates
sales leads through marketing and ships products to customers by commercial
delivery services. Shipping, postage and paper costs are significant expenses in
the operation of the Company's business. Historically, the Company has
experienced increases in postage and paper costs. There can be no assurance that
any such increases can be recouped through an increase in vendor supported
advertising rates or that the Company will be able to offset future increased
costs. The inability to pass on these increased costs could have a material
adverse effect on the Company's business, results of operations and financial
condition. In addition, the Company ships primarily through Federal Express(R),
and labor disputes or other service interruptions with Federal Express, the U.S.
Postal Service or other commercial carriers could have an adverse effect on the
Company's operating costs and ability to deliver products on a timely basis.
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POSSIBLE NONRENEWAL OR CANCELLATION OF OUTSOURCING ARRANGEMENTS
The Company performs outsourcing services for certain manufacturers
pursuant to various arrangements. These parties may cancel such arrangements on
relatively short notice or fail to renew them upon expiration. There is no
assurance that the Company will be able to replace any manufacturers that
terminate or fail to renew their relationships with the Company. The failure to
maintain such arrangements or the inability to enter into new ones could have a
material adverse effect on the Company's business, results of operations and
financial condition.
RISKS ASSOCIATED WITH YEAR 2000 PROBLEM
Several currently installed computer systems and software products,
including the primary system used by the Company, are coded to accept only two
digit entries in the date code field. Beginning in the year 2000, these date
code fields will need to accept four digit entries to distinguish 21st century
dates from 20th century dates. Therefore, the Company's date critical functions
related to the year 2000 and beyond, such as sales, distribution, purchasing,
inventory control, marketing, product management, and financial systems may be
adversely affected unless these computer systems are or become year 2000
compliant. The Company is in the process of preparing its computer-based systems
for the year 2000 and plans on utilizing both internal and external resources to
identify, correct, replace, or reprogram, and test its systems for year 2000
compliance in advance of the year 2000. In addition, in order to accommodate its
rapid growth, the Company is planning to replace most major components of its
existing software over the next year with software that would be year 2000
compliant. The Company continues to evaluate the estimated costs associated with
these efforts based on actual experience and does not expect the future costs of
resolving its internal year 2000 problems to be material. However, no assurance
can be given that the Company's computer systems will be year 2000 compliant in
a timely manner or that the Company will not incur significant additional
expenses pursuing year 2000 compliance. Furthermore, even if the Company's
systems are year 2000 compliant, there can be no assurance that the Company will
not be adversely affected by the failure of others to become year 2000 compliant
or by the failure of the Company's suppliers to provide year 2000 compliant
products for resale by the Company. For example, the Company may be adversely
affected by, among other things, warranty and other claims made by the Company's
customers related to product failures caused by the year 2000 problem, the
disruption or inaccuracy of data provided to the Company by non-year 2000
compliant third parties, and the failure of the Company's service providers,
such as credit card processors and independent shipping companies to become year
2000 compliant. The Company will continue to monitor the progress of its
material vendors and customers and formulate a contingency plan at that point
and time if the Company does not believe a material vendor or customer will be
compliant. Despite the Company's efforts to date, there can be no assurance that
the year 2000 problem will not have a material adverse affect on the Company in
the future.
DEPENDENCE ON KEY PERSONNEL
The Company's future success will be largely dependent on the efforts of
key management personnel, including Eric J. Crown, Chief Executive Officer,
Timothy A. Crown, President, and other key employees. The loss of one or more of
these key employees could have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, the
Company believes that its future success will be largely dependent on its
continued ability to attract and retain highly qualified management, sales and
technical personnel, and there can be no assurance that the Company will be able
to attract and retain such personnel. Further, the Company makes a significant
investment in the training of its sales account executives. The inability of the
Company to retain such personnel or to train them rapidly enough to meet its
expanding needs could cause a decrease in the overall quality and efficiency of
its sales staff, which could have a material adverse effect on the Company's
business, results of operations and financial condition.
CONTROL BY EXISTING STOCKHOLDERS
Eric J. Crown, Chief Executive Officer, and Timothy A. Crown, President,
beneficially own in the aggregate approximately 17.4% of the Company's
outstanding Common Stock. Because of their beneficial stock ownership, these
stockholders are in a position to continue to influence the election of the
members of the Board of Directors and decisions requiring stockholder approval.
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SHARES ELIGIBLE FOR FUTURE SALE
As of the date of this Prospectus, the Company has 16,602,468 shares of
Common Stock outstanding, of which 16,519,256 are freely tradeable. All of the
shares that are not currently freely tradeable will be eligible for sale in the
public markets in the near future in accordance with Rule 144 ("Rule 144")
promulgated under the Securities Act. In addition, there are outstanding options
to purchase a total of 2,087,871 shares of Common Stock. Except as limited by
Rule 144 volume limitations applicable to affiliates, shares issued upon the
exercise of stock options generally are available for sale in the open market.
Future sales of such Common Stock and additional presently indeterminate shares
of Common Stock which may be issued by the Company pursuant to "earnout"
provisions of completed acquisitions and issued pursuant to any future
acquisitions, as well as the Common Stock offered by this Prospectus and Common
Stock subject to outstanding options could adversely affect the prevailing
market price of the Common Stock.
ANTI-TAKEOVER EFFECT OF CHARTER AND BYLAW PROVISIONS
The Company's Certificate of Incorporation and Bylaws empower the Board of
Directors, without approval of the stockholders, to fix the rights and
preferences and to issue shares of preferred stock, prohibit a substantial
stockholder of the Company from entering into a business combination or
otherwise significantly increasing its interest in the stock or assets of the
Company without the consent of the Board of Directors or a two-thirds majority
of the stockholders of the Company, prohibit stockholders of the Company from
calling a special meeting unless requested by at least 25% of the outstanding
voting shares, and require that the Board of Directors be divided into three
classes, one of which classes would be elected each year. These provisions could
have the effect of deterring unsolicited takeovers or other business
combinations or delaying or preventing changes in control or management of the
Company, including transactions in which stockholders might otherwise receive a
premium for their shares over then-current market prices. In addition, these
provisions may limit the ability of stockholders to approve transactions that
they may deem to be in their best interests.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus, including statements in
documents incorporated herein by reference, may be forward-looking statements
within the meaning of The Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include projections of revenue and net
income and issues that may affect revenue or net income; projections of capital
expenditures; plans for future operations; financing needs or plans; plans
relating to the Company's products and services; and assumptions relating to the
foregoing. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying the forward-looking statements. Statements in this Prospectus,
including those set forth above and in documents incorporated herein by
reference, describe factors, among others, that could contribute to or cause
such differences.
USE OF PROCEEDS
All 300,892 shares of Common Stock offered hereby are being offered by the
Selling Stockholders. The Company will not receive any proceeds from the sale of
Common Stock by the Selling Stockholders.
SELLING STOCKHOLDERS
On September 13, 1998, the Company purchased all of the issued and
outstanding shares of capital stock of Treasure Chest Computers, Inc. ("TCCI")
pursuant to an Agreement of Purchase and Sale of Stock (the "Agreement") among
the Company and the Selling Stockholders. At the time of the Agreement, the
Selling Stockholders owned all of the issued and outstanding shares of the
capital stock of TCCI. As a result of the acquisition, TCCI became a
wholly-owned subsidiary of the Company and the Company issued an
8
<PAGE> 11
aggregate of 300,892 shares of the Company's Common Stock to the Selling
Stockholders. Under the Agreement, the Company is required to register for
resale those shares of Common Stock issued to the Selling Stockholders. This
Prospectus is a part of the Registration Statement filed by the Company in order
to satisfy this requirement. In addition, in connection with the Agreement, the
Company entered into Employment Agreements with Darin Oreman and Eleanor Oreman.
The following table provides certain information with respect to the
Common Stock owned by the Selling Stockholders as of the date hereof.
<TABLE>
<CAPTION>
NO. OF SHARES
OF COMMON PERCENTAGE OF
STOCK OWNED COMMON STOCK NO. OF SHARES
PRIOR TO THE OWNED PRIOR TO OF COMMON
SELLING STOCKHOLDER OFFERING OFFERING(1) STOCK OFFERED(2)
- ------------------- -------- ----------- -------------
<S> <C> <C> <C>
Gary Oreman 75,223 * 75,223
Darin Oreman 75,373 * 75,223
Eleanor Oreman 75,223 * 75,223
Jay Oreman 75,223 * 75,223
</TABLE>
- ----------
* less than 1%
(1) Includes all shares of Common Stock beneficially owned by the Selling
Stockholders as a percentage of the 16,602,468 shares of Common Stock
outstanding at September 14, 1998.
(2) The Selling Stockholders, or their permitted transferees, may sell up to all
of the Common Stock shown above under the heading "No. of Shares of Common
Stock Offered" pursuant to this Prospectus in one or more transactions from
time to time as described below under "Plan of Distribution." Since the
Selling Stockholders may sell all, some or none of their shares, no estimate
can be made of the aggregate number of shares of Common Stock that will be
owned by each Selling Stockholder upon completion of the offering to which
this Prospectus relates.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale of 300,892 shares of Common
Stock by the Selling Stockholders. The Company has been advised by each Selling
Stockholder that each Selling Stockholder may offer his or her Common Stock to
or through brokers and dealers and underwriters to be selected by the Selling
Stockholder from time to time. In addition, the Common Stock may be offered for
sale through the Nasdaq Stock Market, through a market maker, in one or more
private transactions, or a combination of such methods of sale, at prices and on
terms then prevailing, at prices related to such prices, or at negotiated
prices. Each Selling Stockholder may pledge all or a portion of the Common Stock
owned by him or her as collateral in loan transactions. Upon default by any such
Selling Stockholder, the pledgee in such loan transaction would have the same
rights of sale as such Selling Stockholder under this Prospectus. Each Selling
Stockholder also may enter into exchange traded listed option transactions which
require the delivery of the Common Stock registered hereunder. Each Selling
Stockholder may also transfer Common Stock owned by him or her in other ways not
involving market makers or established trading markets, including directly by
gift, distribution, or other transfer without consideration, and upon any such
transfer the transferee would have the same rights of sale as such Selling
Stockholder under this Prospectus. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 of the Securities Act,
may be sold under Rule 144 rather than pursuant to this Prospectus. Finally,
each Selling Stockholder and any brokers and dealers through whom sales of the
Common Stock are made may be deemed to be "underwriters" within the meaning of
the Securities Act, and the commissions or discounts and other compensation paid
to such persons may be regarded as underwriters' compensation.
9
<PAGE> 12
The Company will pay all of the expenses related to the registration of
the Common Stock offered hereby, other than commissions and selling expenses
with respect to the Common Stock being sold by the Selling Stockholders.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona
85004.
EXPERTS
The consolidated financial statements of Insight Enterprises, Inc. and
subsidiaries as of December 31, 1997 and 1996, and for each of the years in the
three-year period ended December 31, 1997 which are included in Insight
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1997, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
10
<PAGE> 13
No dealer, sales person, or other person has been authorized in connection with
this offering to give any information or to make any representations other than
those contained in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. 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 date subsequent to the date
hereof. This Prospectus does not constitute an offer of the securities offered
hereby by anyone in any jurisdiction in which it is unlawful to make such offer
of solicitation.
TABLE OF CONTENTS
--------------------------
PAGE
Available Information..........................................................2
Information Incorporated by Reference..........................................2
Risk Factors...................................................................3
Use of Proceeds................................................................8
Selling Stockholders...........................................................8
Plan of Distribution...........................................................9
Legal Matters.................................................................10
Experts.......................................................................10
INSIGHT ENTERPRISES, INC.
300,892
SHARES
OF
COMMON STOCK
PROSPECTUS
September__, 1998
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the expenses to be borne by the registrant in
connection with the offering being registered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee...... $ 2,896
Printing and Engraving Expenses.......................... 3,000
Legal Fees and Expenses.................................. 7,000
Accounting Fees and Expenses............................. 5,000
Blue Sky Fees and Expenses............................... 1,000
Other Expenses........................................... 1,104
-------
Total Expenses..................................... $20,000
=======
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 145(a) of the General Corporation Law of the States of Delaware
(the "General Corporation Law"), provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no cause to believe his or her conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted under similar standards,
except that no indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine that despite the adjudication of liability,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense or any claim, issue or
matter therein, he or she shall be indemnified against expenses actually and
reasonably incurred by him or her in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and that the corporation may
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or her or incurred by him
or her in any such capacity or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against such
liabilities under such Section 145.
Section 102(b)(7) of the General Corporation Law provides that a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders may eliminate or limit personal liability of
members of its board of directors or governing body for violations of a
director's duty of care.
<PAGE> 15
However, no such provision may eliminate or limit the liability of a
director for breaching his or her duty of loyalty, acting or failing to act in
good faith, engaging in intentional misconduct or knowingly violating a law,
paying an unlawful dividend or approving an unlawful stock repurchase, or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission, for
breach of fiduciary duty. The Company's Certificate of Incorporation contains
such a provision.
The Company's Bylaws provide that the Company shall indemnify officers and
directors to the full extent permitted by and in the manner permissible under
the laws of the State of Delaware
The Company has a directors and officers' liability insurance policy with
a policy limit of $25,000,000 and coverage for, among other things, liability
for violations of federal and state securities laws.
The Company has entered into indemnity agreements with its directors and
officers for indemnification of and advance of expenses to such persons to the
full extent permitted by law. The Company intends to execute such indemnity
agreements with its future officers and directors.
Item 16. Exhibits
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation of the Company (1)
4.2 By-Laws of the Company (2)
4.3 Specimen Common Stock Certificate (2)
5 Opinion of Snell & Wilmer L.L.P.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Snell & Wilmer L.L.P. (included in Exhibit 5)
24 Power of Attorney (included in signature page)
- ----------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1997.
(2) Incorporated by reference to the Company's Registration Statement on Form
S-1 (No. 33-86142) declared effective January 25, 1995.
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 of 1933;
<PAGE> 16
(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 (l)(ii) above do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
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 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 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.
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 provisions described in Item 15 above, 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> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Insight
Enterprises, Inc. 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 September 13,
1998.
INSIGHT ENTERPRISES, INC.
By: /s/ ERIC J. CROWN
------------------------------
Eric J. Crown,
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Eric J. Crown and Stanley Laybourne, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Form S-3
Registration Statement and to sign any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) of the
Securities Act of 1933, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as he might or could do in person hereby ratifying and confirming that
all said attorneys-in-fact and agents, 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 below by the following persons in the
capacities and on the date indicated.
PERSON TITLE DATE
------ ----- ----
/s/ ERIC J. CROWN Chairman of the Board of Directors September 13,1998
Eric J. Crown and Chief Executive Officer
(Principal Executive Officer)
/s/ TIMOTHY A. CROWN President and Director September 13,1998
Timothy A. Crown
/s/ STANLEY LAYBOURNE Chief Financial Officer, Secretary, September 13,1998
Stanley Laybourne Treasurer and Director (Principal
Financial and Accounting Officer)
Director September __,1998
Larry A. Gunning
Director September __,1998
Robertson C. Jones
<PAGE> 18
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation of the Company (1)
4.2 By-Laws of the Company (2)
4.3 Specimen Common Stock Certificate (2)
5 Opinion of Snell & Wilmer L.L.P.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Snell & Wilmer L.L.P. (included in Exhibit 5)
24 Power of Attorney (included in signature page)
- ----------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1997.
(2) Incorporated by reference to the Company's Registration Statement on Form
S-1 (No. 33-86142) declared effective January 25, 1995.
<PAGE> 1
EXHIBIT 5
September 14, 1998
Insight Enterprises, Inc.
6820 South Harl Ave.
Tempe, Arizona 85283
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3, including
amendments and exhibits thereto (the "Registration Statement"), for the proposed
offer and sale of up to 300,892 shares of Common Stock (the "Shares") of Insight
Enterprises, Inc. (the "Company") by Gary Oreman, Darin Oreman, Eleanor Oreman,
and Jay Oreman, it is our opinion that the Shares are validly issued, fully
paid, and nonassessable.
In rendering this opinion, we have examined the Certificate of
Incorporation, as amended, and the By-Laws, as amended, of the Company, the
Agreement of Purchase and Sale of Stock among Insight Enterprises Inc., Gary
Oreman, Darin Oreman, Eleanor Oreman, and Jay Oreman, (the "Agreement"), the
proceedings of the Board of Directors of the Company authorizing the Agreement,
and such other documents and records of the Company as we have deemed necessary.
In addition, we have assumed the following:
(i) the genuineness of all signatures and the authenticity of documents
submitted to us as originals, and the conformity to originals of all
documents submitted to us as copies;
(ii) the accuracy, completeness, and genuineness of all representations
and certifications, with respect to factual matters, made to us by
officers of the Company and public officials; and
(iii) the accuracy and completeness of Company records.
The opinions expressed herein are based upon the law and other matters in
effect on the date hereof, and we assume no obligation to revise or supplement
this opinion should such law be changed by legislative action, judicial
decision, or otherwise, or should any facts or other matters upon which we have
relied be changed.
This opinion is intended solely for the use of the Company in connection
with the registration of the Shares. It may not be relied upon by any other
person or for any other purpose, or reproduced or filed publicly by any person
without the prior written consent of this firm; provided, however, consent is
hereby given to the use of this opinion as part of the Registration Statement
and to the use of our name wherever it appears in said Registration Statement.
Very truly yours,
/s/ SNELL & WILMER L.L.P.
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors
Insight Enterprises, Inc.:
We consent to the use of our report dated January 29, 1998 incorporated herein
by reference and to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG Peat Marwick LLP
Phoenix, Arizona
September 14, 1998
