As filed with the Securities and Exchange Commission on April 3, 2000
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SeaChange International, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-3197974
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
124 Acton Street, Maynard, MA 01754, (978) 897-0100
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
William C. Styslinger, III
Chairman, President and Chief Executive Officer
SeaChange International, Inc.
124 Acton Street
Maynard, MA 01754
(978) 897-0100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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Copy to:
William B. Simmons, Jr., Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
(617) 248-7000
Approximate date of commencement of proposed sale to the public: As soon as
practicable 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. [_]
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. [_]
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CALCULATION OF REGISTRATION FEE
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Title of Proposed Maximum Proposed Maximum Amount of
Shares Amount to Offering Price Aggregate Registration
to be Registered be Registered Per Share(1) Offering Price(1) Fee(2)
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Common Stock, $.01 par value 330,000 shares $62.375 $20,583,750 $5,434.11
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
(2) Pursuant to Rule 457(c) of the Securities Act of 1933, the registration fee
has been calculated based upon the average of the high and low prices per
share of the Common Stock of SeaChange International Services Corp. (the
"Company") on the Nasdaq National Market on March 31, 2000.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED April 3, 2000
SUBJECT TO COMPLETION DATED APRIL 3, 2000
PROSPECTUS
330,000 SHARES
SEACHANGE INTERNATIONAL, INC.
COMMON STOCK
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
This prospectus is part of a registration statement that covers 330,000
shares of our common stock. The shares may be offered and sold from time to time
by certain selling stockholders of SeaChange International. We will receive no
proceeds from the sale of the shares.
Our shares are traded on the Nasdaq National Market under the symbol
"SEAC." On March 31, 2000, the last reported sale price of our common stock on
the Nasdaq National Market was $61.625 per share.
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Investing in the common stock involves risks. See "Risk Factors" beginning
on page 6.
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The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. It is illegal for any person to tell you
otherwise.
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The date of this Prospectus is_______ ___, 2000.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and accordingly file reports, proxy statements and
other information with the Securities and Exchange Commission. Reports, proxy
statements and other information filed by SeaChange International may be
inspected and copied at the public reference facilities maintained by the
Commission at:
. 450 Fifth Street, N.W., Washington, D.C. 20549;
. Seven World Trade Center, Suite 1300, New York, New York 10048; and
. Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
Copies may also be obtained from the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Information on the operation of the Public Reference Room may be obtained
by calling 1-800-SEC-0330. Our common stock is traded on the Nasdaq National
Market. Reports, proxy statements and other information concerning SeaChange
International may be inspected at the offices of the National Association of
Securities Dealers, Inc. located at 1735 K Street, N.W., Washington, D.C. 20006.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act of 1933, as amended, with respect
to the shares of our common stock offered hereby. This prospectus does not
contain all information set forth in the registration statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Securities and Exchange Commission. For further information regarding us and the
shares of our common stock offered hereby, we refer you to the registration
statement and to the exhibits and schedules filed with it. Statements contained
in this prospectus regarding the contents of any agreement or other document
filed as an exhibit to the registration statement are necessarily summaries of
those documents, and in each instance we refer you to the copy of that document
filed as an exhibit to the registration statement for a more complete
description of the matters involved. The registration statement, including the
exhibits and schedules thereto, may be inspected at the public reference
facilities maintained by the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and copies of all or any part thereof may
be obtained from that office upon payment of the prescribed fees. In addition,
the Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission.
We will provide without charge to each person who is delivered a
prospectus, on written or oral request, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to those documents unless
those exhibits are specifically incorporated by reference into those documents).
Requests for copies should be directed to Investor Relations, SeaChange
International, Inc., 124 Acton Street, Maynard, Massachusetts 01754, Telephone:
(978) 897-0100.
2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by us with the Securities and Exchange
Commission pursuant to the Exchange Act are incorporated in this prospectus by
reference:
1. SeaChange's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (File No. 000-21393).
2. The description of our common stock contained in the section entitled
"Description of Registrant's Securities to be Registered" contained in
our registration statement on Form 8-A filed under the Exchange Act
with the Securities and Exchange Commission on September 18, 1996
(File No. 000-21393), and incorporating by reference the information
contained in our registration statement on Form S-1 (File No.
333-12233), including any amendment or report filed for the purpose of
updating that description.
All documents subsequently filed by us pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act, prior to the termination of this offering, shall
be deemed incorporated by reference in this prospectus and made a part hereof
from the date of filing of those documents. Any statement contained in a
document incorporated or deemed incorporated by reference in this prospectus
shall be deemed modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed incorporated by reference herein or in any
prospectus supplement modifies or supersedes that statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
3
SEACHANGE INTERNATIONAL
We develop, market and support products to manage, store and distribute
digital video for television operators, including cable, broadcast,
telecommunications and other new media companies. Our products utilize our
proprietary distributed application software and standard industry components to
automate the management and distribution of short- and long-form video streams
including advertisements, movies, news updates and other video programming
requiring precise, accurate and continuous execution. Our digital video products
with their state-of-the-art electronic storage and retrieval capabilities are
designed to provide a higher image quality and to be more reliable, easier to
use and less expensive than analog tape-based systems. In addition, our products
enable our customers to increase revenues by offering more targeted services
such as geography-specific spot advertising, video-on-demand movies and other
interactive television services.
Our products address a number of specific markets. Our SPOT System is the
leading digital advertisement and other short-form video insertion system for
the multichannel television market in terms of installations in the United
States, based on currently available industry sources and our internal data. A
majority of our customers consist of major cable television operators and
telecommunications companies in the United States. Our SPOT System converts
analog video forms such as advertisements and news updates to digital video
forms. It stores them in remote or local digital libraries, and inserts them
automatically into television network streams. The SPOT System provides high
run-rate accuracy and video image quality, permits geographic and demographic
specificity of advertisements and reduces operating costs. Our Advertising
Management Software operates in conjunction with our SPOT System to automate and
simplify complex sales, scheduling and billing processes for the multichannel
television market.
We have one existing movie product and two video-on-demand (VOD) products
for interactive television markets. We sell our Movie System which provides
long-form video storage and delivery for the pay-per-view movie markets and our
GuestServe System for delivering video-on-demand and other guest services,
internet access and PC games in a hotel environment for cable television and
telecommunications companies. We developed our ITV (Interactive Television)
System to provide residential video-on-demand and other interactive services for
cable television operators and telecommunications companies. During 1998 and
1999, we entered into agreements with several cable companies to provide our ITV
System for demonstration and testing of the video-on-demand systems used by
those cable companies. We also have agreements with certain developers of
digital set-top boxes to test and integrate their products with our ITV System.
We also sell our video server, which is designed to store and distribute
video streams of various lengths, and the MediaCluster, our proprietary software
technology that enables multiple video servers to operate together as an
integrated video server and a video streaming product for internet applications.
We introduced our Broadcast MediaCluster product in 1998, offering play to
air capability for commercials and syndicated or other programming for broadcast
television companies. During 1998 and 1999, we installed broadcast systems at
customer locations
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including network affiliates and multi-channel operations in the United States
and broadcast companies.
We were incorporated in Delaware in July 1993. Our principal executive
offices are located at 124 Acton Street, Maynard, Massachusetts 01754, and our
telephone number is (978) 897-0100. Our web site is located at www.schange.com.
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The information contained on our web site is not part of this prospectus.
5
RISK FACTORS
You should carefully consider the following risks before investing in our
common stock. These are not the only risks that we face. Additional risks may
also impair our business operations. If any of the following risks come to
fruition, our business, results of operations or financial condition could be
materially adversely affected. In that case, the trading price of our common
stock could decline, and you may lose all or part of your investment. You should
also refer to the other information set forth in this prospectus, including our
financial statements and the accompanying notes.
This prospectus contains certain "forward-looking statements" based on our
current expectations, assumptions, estimates and projections about our company
and our industry. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in the forward-looking statements as a result of many factors, as more fully
described in this section and elsewhere in the prospectus.
If we are unable to manage our growth and the related expansion in our
operations effectively, our business may be harmed.
Our ability to successfully offer products and services and implement our
business plan in a rapidly evolving market requires effective planning and
management. Our growth has placed, and our anticipated future operations will
continue to place, a significant strain on our management, administrative,
operational and other resources. To manage future growth effectively, we must
continue to improve our management and operational controls, enhance our
reporting systems and procedures, integrate new personnel and manage expanded
operations.
We may not be able to hire and retain highly skilled employees, particularly
managerial, engineering, selling and marketing, finance and manufacturing
personnel, which could affect our ability to compete effectively.
Our success depends to a significant degree upon the continued
contributions of our key management, engineering, selling and marketing and
manufacturing personnel, many of whom would be difficult to replace. We do not
have employment contracts with our key personnel. We believe that our future
success will also depend in large part upon our ability to attract and retain
highly skilled managerial, engineering, selling and marketing, finance and
manufacturing personnel. Competition for such personnel is intense, and there
can be no assurance that we will be successful in attracting and retaining such
personnel. The loss of the services of any of the key personnel, the inability
to attract or retain qualified personnel in the future or delays in hiring
required personnel, particularly software engineers and sales personnel, could
have a material adverse effect on our business, financial condition and results
of operations.
Our operating results are likely to fluctuate significantly.
As a result of our limited operating history and the rapidly evolving
nature of the markets in which we compete, our quarterly and annual revenues and
operating results are likely to
6
fluctuate from period to period. These fluctuations may be caused by a number of
factors, many of which are beyond our control, including:
. the timing and recognition of revenue from significant orders;
. the seasonality of the placement of customer orders;
. the success of our products;
. increased competition;
. changes in our pricing policies or those of our competitors;
. the financial stability of major customers;
. new product introductions or enhancements by competitors;
. delays in the introduction of our products or product enhancements;
. customer order deferrals in anticipation of upgrades and new products;
. the ability to access a sufficient supply of sole source and third
party components;
. the quality and market acceptance of new products we may develop or
are in the process of developing;
. the timing and nature of selling and marketing expenses, such as trade
shows and other promotions;
. personnel changes;
. risks associated with our international sales; and
. economic conditions affecting our customers.
Any significant cancellation or deferral of purchases of our products could have
a material adverse effect on our business, financial condition and results of
operations in any particular quarter, and to the extent significant sales occur
earlier than expected, operating results for subsequent quarters may be
adversely affected. Our expense levels are based, in part, on our expectations
as to our future revenues, and we may be unable to adjust spending in a timely
manner to compensate for any revenue shortfall. If our revenues are below our
expectations, our operating results are likely to be adversely affected and net
income may be disproportionately affected because a significant portion of our
expenses do not vary with revenues.
Because of these factors, we believe that period-to-period comparisons of
our results of operations are not necessarily meaningful and should not be
relied upon as indications of our future performance. In addition, due to all of
the foregoing factors, in some future quarter our operating results may be below
the expectations of public market analysts and investors.
Seasonal trends may cause our quarterly operating results to fluctuate which may
adversely affect the market price of our common stock.
We have experienced significant variations in the revenue, expenses and
operating results from quarter to quarter and such variations are likely to
continue. We believe that fluctuations in the number of orders being placed from
quarter to quarter are principally attributable to the buying patterns and
budgeting cycles of television operators and broadcast companies, the primary
buyers of the digital advertising systems and broadcast systems, respectively.
We expect that there will continue to be fluctuations in the number and value of
orders received. As a result, our results of operations have in the past and
likely will, at least in the near future,
7
fluctuate in accordance with such purchasing activity. Operating expenses also
vary with the number, timing and significance of our new product and product
enhancement introductions and those of our competitors, increased competition,
the gain or loss of significant customers, the hiring of new personnel and
general economic conditions. All of the above factors are difficult for us to
forecast, and these or other factors may materially adversely affect our
business, financial condition and results of operations for one quarter or a
series of quarters. Only a small portion of our expenses vary with revenues in
the short-term and there would likely be a material adverse effect on our
operating results if future revenues are lower than expectations.
Due to the lengthy sales cycle involved in the sale of our products, our
quarterly results may vary and make period-to-period comparisons of our
operating results meaningless.
Digital video, movie and broadcast products are relatively complex and
their purchase generally involves a significant commitment of capital, with
attendant delays frequently associated with large capital expenditures and
implementation procedures within an organization. Moreover, the purchase of such
products typically requires coordination and agreement among a potential
customer's corporate headquarters and its regional and local operations. For
these and other reasons, the sales cycle associated with the purchase of our
digital video, movie and broadcast products are typically lengthy and subject to
a number of significant risks, including customer's budgetary constraints and
internal acceptance reviews, over which we have little or no control. Based upon
all of the foregoing, we believe that our quarterly revenues, expenses and
operating results are likely to vary significantly in the future, that
period-to-period comparisons of our results of operations are not necessarily
meaningful and that, in any event, such comparisons should not be relied upon as
indications of future performance.
Intense competition may adversely affect our financial condition and operating
results.
The market for digital video, movie and broadcast products is highly
competitive. If we are unable to compete effectively, our business, prospects,
financial condition and operating results would be materially adversely
affected.
We currently compete against suppliers of both analog tape-based and
digital systems in the digital advertisement insertion market and against both
computer companies offering video server platforms and more traditional movie
application providers in the movie system market. In the television broadcast
market, we compete against various computer companies offering video server
platforms and television equipment manufacturers.
Due to the rapidly evolving markets in which we compete, additional
competitors with significant market presence and financial resources, including
computer hardware and software companies and television equipment manufacturers,
may enter those markets, thereby further intensifying competition. Increased
competition could result in price reductions and loss of market share which
would adversely affect our business, financial condition and results of
operations. Many of our current and potential competitors have greater
financial, selling and marketing, technical and other resources than we do.
Moreover, our competitors may also foresee the course of market developments
more accurately than us. Although we believe that we have certain technological
and other advantages over our competitors, realizing and
8
maintaining such advantages will require a continued high level of investment by
us in research and product development, marketing and customer service and
support. There can be no assurance that we will have sufficient resources to
continue to make such investments or that the we will be able to make the
technological advances necessary to compete successfully with our existing
competitors or with new competitors.
The success of our business model is dependent on the acceptance of the emerging
digital video market.
Cable television operators and television broadcasters have historically
relied on traditional analog technology for video management, storage and
distribution. Digital video technology is still a relatively new technology and
requires a significant initial investment of capital. Our future growth will
depend both on the rate at which television operators convert to digital video
systems and the rate at which digital video technology expands to additional
market segments. There can be no assurance that the use of digital video
technology will expand among television operators or into additional markets.
Any failure by the market to accept digital video technology will have a
material adverse effect on our business, financial condition and results of
operations.
Our success is contingent on our ability to penetrate the broadcast television
market.
To date our products have been purchased primarily by cable television
operators and telecommunications companies. Our success depends in part on the
penetration of new markets. In particular, we introduced broadcast products
during the quarter ended June 30, 1998 for use by television broadcasters. These
broadcast products will be directed toward a market that we have not
significantly addressed. There can be no assurance that we will be successful in
marketing and selling broadcast products to customers in the broadcast
television market. Any inability to penetrate this new market would have a
material adverse effect on our business, financial condition and results of
operations.
A decline in sales of our SPOT System could materially affect our revenues.
Sales of our SPOT System have historically accounted for a large percentage
of our revenues, and this product and related enhancements are expected to
continue to account for a significant portion of our revenues in 2000. Our
success depends in part on continued sales of our SPOT System. A decline in
demand or average selling prices for our SPOT System product line, whether as a
result of new product introductions by others, price competition, technological
change, inability to enhance the products in a timely fashion, or otherwise,
would have a material adverse effect on our business, financial condition and
results of operations.
If we are unable to continue to develop successfully new products or enhance
existing products, our financial condition and operating results will suffer.
Our future success requires that we develop and market additional products
that achieve significant market acceptance and enhance our current products.
There can be no assurance that we will not experience difficulties that could
delay or prevent the successful development,
9
introduction and marketing of these and other new products and enhancements, or
that our new products and enhancements will adequately meet the requirements of
the marketplace and achieve market acceptance. Announcements of currently
planned or other new product offerings may cause customers to defer purchasing
our existing products. Moreover, there can be no assurance that, despite testing
by us, and by current and potential customers, errors or failures will not be
found in our products, or, if discovered, successfully corrected in a timely
manner. Such errors or failures could cause delays in product introductions and
shipments, or require design modifications that could adversely affect our
competitive position. Our inability to develop on a timely basis new products,
enhancements to existing products or error corrections, or the failure of such
new products or enhancements to achieve market acceptance could have a material
adverse effect on our business, financial condition and results of operations.
If we fail to respond to rapidly changing technologies related to digital video,
our business, financial condition and results of operations would be materially
adversely effected.
The markets for our products are characterized by rapidly changing
technology, evolving industry standards and frequent new product introductions
and enhancements. Future technological advances in the television and video
industries may result in the availability of new products or services that could
compete with the solutions provided by us or reduce the cost of existing
products or services, any of which could enable our existing or potential
customers to fulfill their video needs better and more cost efficiently than
with our products. Our future success will depend on our ability to enhance our
existing digital video products, including the development of new applications
for our technology and to develop and introduce new products to meet and adapt
to changing customer requirements and emerging technologies. There can be no
assurance that we will be successful in enhancing our digital video products or
developing, manufacturing and marketing new products which satisfy customer
needs or achieve market acceptance. In addition, there can be no assurance that
services, products or technologies developed by others will not render our
products or technologies uncompetitive, unmarketable or obsolete, or that
announcements of currently planned or other new product offerings by either by
us or our competitors will not cause customers to defer or fail to purchase our
existing solutions.
Because our customer base is highly concentrated among a limited number of large
customers, the loss of or reduced demand of these customers could have a
material adverse effect on our business, financial condition and results of
operations.
Our customer base is highly concentrated among a limited number of large
customers, and, therefore, a limited number of customers account for a
significant percentage of our revenues in any year. In 1997, 1998 and 1999,
revenues from our five largest customers represented approximately 66%, 54% and
47%, respectively, of our total revenues. In 1997, 1998 and 1999, three, two and
two customers, respectively, each accounted for more than 10% of our revenues.
We generally do not have written continuing purchase agreements with our
customers and do not have any written agreements that require customers to
purchase fixed minimum quantities of our products. Our sales to specific
customers tend to vary significantly from year to year depending upon such
customers' budgets for capital expenditures and new product introductions. In
addition, we derive a substantial portion of our revenues from products that
have a selling price in excess of $200,000. We believe that revenue derived from
current
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and future large customers will continue to represent a significant proportion
of our total revenues. The loss of, or reduced demand for products or related
services from, any of our major customers could have a material adverse effect
on our business, financial condition and results of operations.
Because we purchase certain of the components used in manufacturing our product
from a sole supplier and we use a limited number of third party manufacturers to
manufacture our product, our business, financial condition and results of
operation could be materially adversely affected by a failure of this supplier
or these manufacturers.
Certain key components of our products are currently purchased from a sole
supplier, including a computer chassis manufactured by Trimm Technologic Inc., a
disk controller manufactured by Mylex Corporation, an MPEG-2 decoder card
manufactured by Vela Research, Inc. and an MPEG-2 encoder manufactured by
Optivision, Inc. We have in the past experienced quality control problems, where
products did not meet specifications or were damaged in shipping, and delays in
the receipt of such components. These problems were generally of short duration
and did not have a material adverse effect on us. However, we may in the future
experience similar types of problems which could be more severe or more
prolonged. The inability to obtain sufficient key components as required, or to
develop alternative sources if and as required in the future, could result in
delays or reductions in product shipments which, in turn, could have a material
adverse effect on our business, financial condition and results of operations.
In addition, we rely on a limited number of third parties who manufacture
certain components used in our products. While to date there has been suitable
third party manufacturing capacity readily available at acceptable quality
levels, there can be no assurance that such manufacturers will be able to meet
our future volume or quality requirements or that such services will continue to
be available to us at favorable prices. Any financial, operational, production
or quality assurance difficulties experienced by such third party manufacturers
that result in a reduction or interruption in supply to us could have a material
adverse effect on our business, financial condition and results of operations.
The success of our business model depends on the continued deregulation of the
telecommunications and television industries.
The telecommunications and television industries are subject to extensive
regulation in the United States and other countries. Our business is dependent
upon the continued growth of such industries in the United States and
internationally. Although recent legislation has lowered the legal barriers to
entry for telecommunications companies into the United States multichannel
television market, there can be no assurance that telecommunications companies
will successfully enter this or related markets. Moreover, the growth of our
business internationally is dependent in part on similar deregulation of the
telecommunications industry abroad and there can be no assurance that such
deregulation will occur.
Television operators are also subject to extensive government regulation by
the Federal Communications Commission and other federal and state regulatory
agencies. These regulations
11
could have the effect of limiting capital expenditures by television operators
and thus could have a material adverse effect on our business, financial
condition and results of operations. The enactment by federal, state or
international governments of new laws or regulations, changes in the
interpretation of existing regulations or a reversal of the trend toward
deregulation in these industries could adversely affect our customers, and
thereby materially adversely affect our business, financial condition and
results of operations.
If we are unable to protect our intellectual property we may lose a valuable
assets or incur costly litigation to protect our rights.
Our success and ability to compete depend upon our intellectual property,
including our propriety technology and confidential information. We rely on
patent, trademark, trade secret and copyright laws to protect our intellectual
property. Despite our efforts to protect our intellectual property, a third
party could copy or otherwise obtain our proprietary information without
authorization. Our means of protecting our proprietary rights may not be
adequate and our competitors may independently develop similar technology, or
duplicate our products or our other intellectual property. We may have to resort
to litigation to enforce our intellectual property rights, to protect our trade
secrets or know-how or to determine their scope, validity or enforceability.
Enforcing or defending our proprietary technology is expensive, could cause the
diversion of our resources, and may not prove successful. Our protective
measures may prove inadequate to protect our proprietary rights, and any failure
to enforce or protect our rights could cause us to lose a valuable asset.
Future acquisitions may be difficult to integrate, disrupt our business, dilute
stockholder value or divert management attention.
As part of our business strategy, we may seek to acquire or invest in
businesses, products or technologies that we believe could complement or expand
our business, augment our market coverage, enhance our technical capabilities or
otherwise offer growth opportunities. Acquisitions could create risks for us,
including:
. difficulties in assimilation of acquired personnel, operations,
technologies or products;
. unanticipated costs associated with acquisitions;
. diversion of management's attention from other business concerns;
. adverse effects on our existing business relationships with suppliers
and customers; and
. use of substantial portions of our available cash, including the
proceeds of this offering, to consummate the acquisitions.
In addition, if we consummate acquisitions through an exchange of our
securities, our existing stockholders could suffer significant dilution. Any
future acquisitions, even if successfully completed, may not generate any
additional revenue or provide any benefit to our business.
12
We are subject to risks of operating internationally.
International sales accounted for approximately 12%, 13% and 23% of our
revenues in 1997, 1998 and 1999, respectively. We expect that international
sales will account for a significant portion of our business in the future.
However, there can be no assurance that we will be able to maintain or increase
international sales of its products. International sales are subject to a
variety of risks, including:
. difficulties in establishing and managing international distribution
channels;
. difficulties in selling, servicing and supporting overseas products
and in translating products into foreign languages;
. the uncertainty of laws and enforcement in certain countries relating
to the protection of intellectual property;
. multiple and possibly overlapping tax structures;
. currency and exchange rate fluctuations; and
. economic or political changes in international markets.
Our executive officers, directors and major stockholders possess significant
control over us which may lead to conflicts with other stockholders over
corporate governance matters.
Our officers, directors and their affiliated entities, and other holders of
5% or more of our outstanding capital stock, together beneficially owned
approximately 45.17% of the outstanding shares of our common stock as of March
13, 2000. As a result, such persons will have the ability to elect our board of
directors and to determine the outcome of corporate actions requiring
stockholder approval, irrespective of how other of our stockholders may vote.
This concentration of ownership may have the effect of delaying or preventing a
change in control of us which may be favored by a majority of the remaining
stockholders, or cause a change of control not favored by our other
stockholders.
Year 2000 compliance issues could harm our business.
In prior years, we discussed the nature and progress of our plans to become
Year 2000 ready. In late 1999, we completed our remediation and testing of our
systems. As a result of those planning and implementation efforts, we
experienced no significant disruptions in mission critical information
technology and non-information technology systems and believe those systems
successfully responded to the Year 2000 date change. We are not aware of any
material problems resulting from Year 2000 issues, either with our products, our
internal systems, or the products and services of third parties. We will
continue to monitor our mission critical computer applications and those of our
suppliers and vendors throughout the year 2000 to ensure that any latent Year
2000 matters that may arise are addressed promptly.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholders. See "Selling Stockholders" and "Plan of Distribution" described
below.
13
SELLING STOCKHOLDERS
The following table sets forth, as of the date of the prospectus, the
number and percentage of shares of our common stock beneficially owned by each
of the selling stockholders prior to this offering and the maximum number of
shares that each selling stockholder, its transferees, distributees, pledgees,
donees or other successors in interest may offer and sell pursuant to this
prospectus. Since each of the selling stockholders may sell all, some or none of
its shares, we cannot estimate the actual number of shares of our common stock
that will be sold by such selling stockholder or the aggregate number or
percentage of shares of our common stock that such selling stockholder will own
upon completion of this offering. See "Plan of Distribution."
The shares of our common stock offered under this prospectus may be
offered from time to time by and for the account of each of the selling
stockholders.
Number and Percentage Number of Shares
of Shares Beneficially Offered Pursuant
Selling Stockholder Owned Prior to Offering(1) to this Prospectus
------------------- ----------------------- ------------------
Number Percent(2)
George E. Breen (3) 150,202 * 150,202
Corum Group, Ltd. 17,078 * 17,078
Inno Micro Corporation (4) 12,517 * 12,517
InnoTech Corporation (5) 50,068 * 50,068
Stephen Kraiman (6) 100,135 * 100,135
- ----------------
* Less than 1%.
(1) Except as otherwise indicated, the persons and entities named in the above
table have sole voting and investment power with respect to all shares
shown as beneficially owned by them. Beneficial ownership is determined in
accordance with the rules of the Commission, and includes voting and
investment power with respect to shares.
(2) Based upon 21,432,320 shares of our common stock outstanding as of March
13, 2000.
(3) Includes 15,020 shares of our common stock that are held in escrow pursuant
to the terms of an escrow agreement, dated as of December 30, 1999, by and
among SeaChange, the selling stockholders and State Street Bank and Trust
Company. Such shares may not be released from escrow and sold hereunder
except in accordance with the terms and conditions of the escrow agreement.
(4) Includes 1,251 shares of our common stock that are held pursuant to the
above-mentioned escrow agreement. Such shares may not be released from
escrow and sold hereunder except in accordance with the terms and
conditions of the escrow agreement.
(5) Includes 5,007 shares of our common stock that are held pursuant to the
above-mentioned escrow agreement. Such shares may not be released from
escrow and sold hereunder except in accordance with the terms and
conditions of the escrow agreement.
(6) Includes 10,013 shares of our common stock that are held pursuant to the
above-mentioned escrow agreement. Such shares may not be released from
escrow and sold hereunder except in accordance with the terms and
conditions of the escrow agreement.
14
All of the shares offered hereby were acquired in connection with our
acquisition of all of the outstanding capital stock of Digital Video Arts, Ltd.
on December 30, 1999.
Since our acquisition of Digital Video Arts, Messrs. Breen and Kraiman have
continued to be employees of Digital Video Arts, now a wholly-owned subsidiary
of SeaChange.
Each of the selling stockholders represented to us that it was acquiring
its shares in the acquisition without any present intention of effecting a
distribution of those shares. In recognition of the fact, however, that each of
the selling stockholders may desire the ability to sell those shares of our
common stock it owns when it considers it appropriate, in connection with our
acquisition of Digital Video Arts we agreed to file the registration statement
with the Securities and Exchange Commission to permit the public sale of its
shares and to use its reasonable efforts to keep the registration statement
effective until the earlier December 30, 2000 or the sale of all of its shares
pursuant to the registration statement or Rule 144 under the Securities Act. We
will prepare and file such amendments and supplements to the registration
statement as may be necessary to keep it effective during such period.
PLAN OF DISTRIBUTION
The shares of our common stock offered hereby may be sold from time to time
by the selling stockholders for their own account. We are responsible for the
expenses incurred in the registration of the shares, other than the underwriting
discounts and selling commissions and stock transfer fees and taxes applicable
to the sale of the shares. In addition, we have agreed to indemnify the selling
stockholders against certain liabilities, including liabilities under the
Securities Act, and the selling stockholders have agreed to indemnify us against
certain liabilities, including liabilities under the Securities Act.
The distribution of the shares by the selling stockholders is not currently
subject to any underwriting agreement. The shares covered by this prospectus may
be sold by the selling stockholders or their transferees, distributees,
pledgees, donees, or other successors in interest from time to time. Such sales
may be made at fixed prices that may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, or at
negotiated prices. Such sales may be effected in the over-the-counter market, on
the National Association of Securities Dealers Automated Quotation System, on
the Nasdaq National Market, or on any exchange on which the shares may then be
listed. The shares may be sold by one or more of the following:
. one or more block trades in which a broker or dealer so engaged will
attempt to sell all or a portion of the shares held by the selling
stockholders as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
. purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. in negotiated transactions; and
15
. through other means.
The selling stockholders may effect such transactions by selling shares to
or through broker-dealers, and such broker-dealers will receive compensation in
negotiated amounts in the form of underwriting discounts, concessions,
commissions or fees from the selling stockholders and/or the purchasers of the
shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). Such brokers or dealers or the participating
brokers or dealers and the selling stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act, in connection with such
sales, and any commissions received by such broker-dealers may be deemed to be
underwriting compensation.
We have informed the selling stockholders that the antimanipulation rules
under the Securities Exchange Act of 1934 (including, without limitation, Rule
10b-5 and Regulation M - Rule 102) may apply to sales in the market and will
furnish the selling stockholders upon request with a copy of these Rules. We
will also inform the selling stockholders of the need for delivery of copies of
this prospectus.
Any shares of our common stock covered by the prospectus that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
We agreed to file a registration statement to register the resale of the
shares and to use our reasonable efforts to maintain the effectiveness of the
registration statement until the earlier of December 30, 2000 and the date on
which no shares originally held by the selling stockholders remain unsold.
The selling stockholders are not restricted as to the price or prices at
which they may sell their shares. Sales of such shares at less than the market
prices may depress the market price of our common stock. During the effective
time of this prospectus, the selling stockholders have agreed to potential
restrictions on resale if notified by us of a potential material event that
could have a material effect on our business and financial condition, for a
period commencing upon such notice and ending upon notice by us that such
potential material event either has been disclosed to the public or no longer
constitutes a potential material event. Notwithstanding the foregoing, we have
agreed that the maximum aggregate number of days during which the resale rights
of the selling stockholders may be suspended during the distribution period
shall not exceed 60 days. The selling stockholders are not restricted as to the
number of shares which may be sold at any one time, and it is possible that a
significant number of shares could be sold at the same time.
ChaseMellon Shareholder Services, L.L.C., 111 Founders Plaza, Suite 1100,
East Hartford, Connecticut 06108 is the transfer agent for our common stock.
16
LEGAL MATTERS
Certain legal matters with respect to the issuance of the shares offered
hereby will be passed upon for SeaChange International by Testa, Hurwitz &
Thibeault, LLP, Boston, Massachusetts. As of the date of this prospectus,
certain attorneys with the firm of Testa, Hurwitz & Thibeault, LLP beneficially
own an aggregate of 1,500 shares of our common stock.
EXPERTS
The consolidated financial statements of SeaChange International, Inc. as
of December 31, 1998 and 1999 and for each of the three years in the period
ended December 31, 1999 that are incorporated by reference in this prospectus
have been so incorporated by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
17
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy, the securities only in jurisdictions where offers and
sales are permitted. Neither the delivery of this prospectus nor any sales made
hereunder after the date of this prospectus shall create an implication
contained herein or the affairs of SeaChange have not changed since the date
hereof. In this prospectus, references to "SeaChange International," "we," "our"
and "us" refer to SeaChange International, Inc.
-----------
TABLE OF CONTENTS
Page
----
Available Information 2
Incorporation of Certain Information
by Reference 3
SeaChange International 4
Risk Factors 6
Selling Stockholders 14
Plan of Distribution 15
Legal Matters 17
Experts 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
330,000 Shares
SEACHANGE INTERNATIONAL, INC.
COMMON STOCK
----------
PROSPECTUS
----------
[_________ __], 2000
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:
SEC Registration Fee....................................... 5,434.11
Nasdaq Filing Fees......................................... 6,600.00
Legal fees and expenses.................................... 20,000.00
Accounting fees and expenses............................... 1,000.00
----------
TOTAL...................................................... $ 33,034.11
============
We will bear all expenses shown above. The selling stockholders will bear
all underwriting discounts and selling commissions and stock transfer fees and
taxes applicable to the sale of the shares sold pursuant to this prospectus.
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law and our Certificate of Incorporation
provide for indemnification of our directors and officers for liabilities and
expenses that they may incur in those capacities. In general, directors and
officers are indemnified with respect to actions taken in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of
SeaChange, and with respect to any criminal action or proceeding, actions that
the indemnitee had no reasonable cause to believe were unlawful. We refer you to
our Certificate of Incorporation filed as Exhibit 4.3 to our registration
statement on Form S-8 filed with the Securities and Exchange Commission on
December 8, 1996 (File No. 333-17379).
We maintain directors' and officers' liability insurance to insure our
directors and certain officers against certain liabilities and expenses which
arise out of or in connection with their capacities as directors and officers.
In addition, the registration rights agreement executed in connection with
our acquisition of all of the outstanding capital stock of Digital Video Arts
provides that the selling stockholders are obligated, under certain
circumstances, to indemnify SeaChange and its directors and officers against
certain liabilities, including liabilities under the Securities Act. Reference
is made to the registration rights agreement filed as Exhibit 2.2 to our Current
Report on Form 8-K filed with the Securities and Exchange Commission on January
14, 2000.
Item 16. Exhibits.
4.1 Amended and Restated Certificate of Incorporation of SeaChange
(filed as Exhibit 4.2 to SeaChange's registration statement on Form
S-8 (File No. 333-17379) and incorporated herein by reference)
4.2 Amended and Restated By-laws of SeaChange (filed as Exhibit 4.3 to
SeaChange's registration statement on Form S-8 (File No. 333-17379)
and incorporated herein by reference)
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
23.1* Consent of PricewaterhouseCoopers LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1* Power of attorney (included on signature page)
- ------------------------
*Filed herewith.
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;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement; and
(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 this
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 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
2
15(d) of the Securities Exchange Act of 1934 (and, where appropriate, 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 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 Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
3
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 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 Maynard and Commonwealth of Massachusetts on April 3,
2000.
SEACHANGE INTERNATIONAL, INC.
By: /s/ William C. Styslinger, III
---------------------------------------
William C. Styslinger, III
President, Chief Executive Officer and
Chairman
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of SeaChange International,
Inc., hereby severally constitute and appoint William C. Styslinger, III and
William L. Fiedler, and each of them singly, our true and lawful attorneys, with
full power to them and each of them singly, to sign for us in our names in the
capacities indicated below, all pre-effective and post-effective amendments to
this registration statement, and generally do all things in our names and on our
behalf in such capacities to enable SeaChange International, Inc. to comply with
the provisions of the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title(s) Date
- --------- -------- ----
/s/ William C. Styslinger, III President, Chief Executive Officer and April 3, 2000
- ---------------------------------------- Chairman (Principal Executive Officer)
William C. Styslinger, III
/s/ William L. Fiedler Chief Financial Officer, Treasurer and April 3, 2000
- ---------------------------------------- Vice President, Finance and
William L. Fiedler Administration (Principal Financial
Officer and Principal Accounting Officer)
4
/s/ Paul H. Saunders Director April 3, 2000
- ----------------------------------------
Paul H. Saunders
/s/ Carmine Vona Director April 3, 2000
- ----------------------------------------
Carmine Vona
5
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 Amended and Restated Certificate of Incorporation of SeaChange
(filed as Exhibit 4.2 to SeaChange's registration statement on Form
S-8 (File No. 333-17379) and incorporated herein by reference)
4.2 Amended and Restated By-laws of SeaChange (filed as Exhibit 4.3 to
SeaChange's registration statement on Form S-8 (File No. 333-17379)
and incorporated herein by reference)
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
23.1* Consent of PricewaterhouseCoopers, LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit
5.1)
24.1* Power of attorney (included on signature page)
- ------------------------
*Filed herewith.