AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 2000
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
__________
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)
__________
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: From
time to time after the effective date of this Registration Statement as
determined by market conditions and other factors.
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. [ ]
__________
CALCULATION OF REGISTRATION FEE
Title of Proposed Maximum Proposed Maximum
Shares Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Share(1) Offering Price(1) Registration Fee(2)
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 466,255 shares $25.1875 $11,743,797.81 $3,100.37
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 100,000 shares $25.1875 $ 2,518,750.00 $ 664.95
(upon exercise of a warrant)
- ---------------------------------------------------------------------------------------------------------------------
(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, Inc. (the "Company")
on the Nasdaq National Market on December 1, 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.
********************************************************************************
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statment filed with the
Securities and Exchange Comission 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.
********************************************************************************
SUBJECT TO COMPLETION DATED DECEMBER 6, 2000
PROSPECTUS
466,255 SHARES
SEACHANGE INTERNATIONAL, INC.
COMMON STOCK
_______________________
This prospectus is part of a registration statement that covers 466,255
shares of our common stock held by Comcast SC Investment, Inc., a wholly-owned
subsidiary of Comcast Corporation, or which may be acquired by it upon the
exercise of a warrant held by it. The shares may be offered and sold from time
to time by Comcast SC. 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 December 1, 2000, the last reported sale price of our common stock
on the Nasdaq National Market was $26.0938 per share.
_______________
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 6.
_______________
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.
_______________
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.
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 Amended Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1999 (File No. 000-21393).
2. SeaChange's Quarterly Report on Form 10-Q for the period ended March
31, 2000 (File No. 000-21393).
3. SeaChange's Quarterly Report on Form 10-Q for the period ended July
31, 2000 (File No. 000-21393).
4. SeaChange's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on January 14, 2000 (File No. 000-21393).
5. SeaChange's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on April 25, 2000 (File No. 000-21393).
6. 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, license and sell broadband and broadcast systems,
related services and movie content to television operators, telecommunications
companies and broadcast television 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.
In our Broadband business, we have several 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 residential video on demand or
interactive television system (ITV) to provide products to digitally manage,
store and distribute digital video for television operators and
telecommunications companies to be used for the home. Starting in 1998, 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. Several of these cable operators began deploying these ITV systems
in 2000. We also have agreements with certain developers of digital set-top
boxes to test and integrate their products with our ITV System.
In addition to our VOD products in Broadband, 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.
In our Broadcast business, our Broadcast MediaCluster offers play to air
capability for commercials and syndicated or other programming for broadcast
television companies. Since 1998, we installed broadcast systems at customer
locations including network affiliates and multi-channel operations in the
United States, Europe and the Far East.
4
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.
The information contained on our web site is not incorporated by reference into
this document and should not be considered a part of this prospectus. Our web
site address is included in this document as an inactive textual reference only.
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:
o the timing and recognition of revenue from significant orders;
o the seasonality of the placement of customer orders;
o the success of our products;
o increased competition;
o changes in our pricing policies or those of our competitors;
o the financial stability of major customers;
o new product introductions or enhancements by competitors;
o delays in the introduction of our products or product enhancements;
o customer order deferrals in anticipation of upgrades and new products;
o the ability to access a sufficient supply of sole source and third
party components;
o the quality and market acceptance of new products we may develop or
are in the process of developing;
o the timing and nature of selling and marketing expenses, such as trade
shows and other promotions;
o personnel changes;
o risks associated with our international sales; and
o 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 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. Any inability to penetrate these new markets 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 the remainder
of 2000 and in 2001. 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, 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
9
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%, 55% 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 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.
10
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.
and JMR Electronics, Inc., a switch chassis by Ego Systems, an MPEG-2 decoder
card manufactured by Vela Research, Inc. and an MPEG-2 encoder manufactured by
Optibase, 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 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
11
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 VALUABLE
ASSETS OR INCUR COSTLY LITIGATION TO PROTECT OUR RIGHTS.
Our success and ability to compete depend upon our intellectual property,
including our proprietary 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:
o difficulties in assimilation of acquired personnel, operations,
technologies or products;
o unanticipated costs associated with acquisitions;
o diversion of management's attention from other business concerns;
o adverse effects on our existing business relationships with suppliers
and customers; and
o use of substantial portions of our available cash 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.
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
12
be able to maintain or increase international sales of our products.
International sales are subject to a variety of risks, including:
o difficulties in establishing and managing international distribution
channels;
o difficulties in selling, servicing and supporting overseas products and
in translating products into foreign languages;
o the uncertainty of laws and enforcement in certain countries relating
to the protection of intellectual property;
o multiple and possibly overlapping tax structures;
o currency and exchange rate fluctuations; and
o 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 35.27% of the outstanding shares of our common stock as of
November 29, 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.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by Comcast SC.
See "Comcast SC Investment, Inc." and "Plan of Distribution" described below.
COMCAST SC INVESTMENT, INC.
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
Comcast SC prior to this offering and the maximum number of shares that Comcast
SC, its transferees, distributees, pledgees, donees or other successors in
interest may offer and sell pursuant to this prospectus. Since Comcast SC 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 Comcast SC or the aggregate
number or percentage of shares of our common stock that such Comcast SC will own
upon completion of this offering. See "Plan of Distribution."
13
The shares of our common stock offered under this prospectus may be offered
from time to time by and for the account of Comcast SC. Comcast SC has sole
voting and investment power over the shares shown below as beneficially owned by
it.
The applicable percentage of ownership listed below is based on 22,016,805
shares of our common stock outstanding as of November 29, 2000 and assumes the
exercise of the warrant held by Comcast SC to purchase 100,000 shares of our
common stock.
Number and Percentage Number of Shares
of Shares Beneficially Offered Pursuant
Selling Stockholder Owned Prior to Offering to this Prospectus
- ------------------------------------ ----------------------------------------- --------------------------------------
NUMBER Percent
------------------- --------------------
Comcast SC 566,255 2.6% 566,255
On December 1, 2000, we entered into a common stock and warrant purchase
agreement with Comcast SC pursuant to which we agreed to sell in a private
placement to Comcast SC in exchange for approximately $10,000,000 an aggregate
of 466,255 shares of common stock and a warrant to purchase 100,000 shares of
our common stock with an exercise price of $21.4475 per share. The transactions
contemplated by this purchase agreement will be consummated either on the second
business day following fulfillment or waiver of the closing conditions set forth
therein or at such other time as we mutually agree with Comcast SC.
Comcast SC represented to us that it was acquiring these shares and the
warrant in the private placement without any present intention of effecting a
distribution of those shares, the warrant, or the shares of our common stock
issuable upon exercise of the warrant other than in compliance with applicable
securities laws. In recognition of the fact, however, that Comcast SC may
desire the ability to sell those shares of our common stock it owns or will own
upon exercise of the warrant when it considers it appropriate, in connection
with the private placement we agreed to file the registration statement with the
Securities and Exchange Commission to permit the public sale of these shares and
to use our best efforts to keep the registration statement effective until the
earlier of the second anniversary of the effective date of this registration
statement or the sale of all of the shares covered by this registration
statement. 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 Comcast SC or its transferees, distributees, pledgees, donees or other
successors in interest, in each case for its own respective 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 Comcast SC against certain liabilities, including liabilities under
the Securities Act,
14
and Comcast SC has agreed to indemnify us against certain liabilities, including
liabilities under the Securities Act.
The distribution of the shares by Comcast SC is not currently subject to
any underwriting agreement. 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. 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. Sales may be effected by one or more of the
following:
o one or more block trades in which a broker or dealer so engaged will
attempt to sell all or a portion of the shares as agent but may
position and resell a portion of the block as principal to facilitate
the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o in negotiated transactions, including short sales and transactions
relating to the purchase or sale of options to purchase shares; and
o through other means.
Such transactions may be effected 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
seller 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 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 Comcast SC 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
Comcast SC upon request with a copy of these Rules. We will also inform Comcast
SC 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 best efforts to maintain the effectiveness of the
registration statement until the earlier of the second anniversary of the
effective date of this registration statement and the sale of all of the shares
covered by this registration statement.
15
Sales of shares offered hereby are not restricted as to the price or prices
at which such sales may be effected. 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, Comcast SC has agreed to potential
restrictions on resale if notified by us of certain potential material events,
the disclosure of which could have a material adverse effect on our business and
financial condition, for a period commencing upon such notice and ending upon
the earlier of forty-five days after we have notified Comcast SC of such an
event and the time we notify Comcast SC that such event has been disclosed to
the public or has ceased to be material or that sales pursuant to this
registration statement may otherwise be resumed. Notwithstanding the foregoing,
we have agreed that no such sales blackout shall occur within ninety days of the
purchase by Comcast SC of our shares covered hereby or any other sales blackout
period and that no more than two sales blackouts shall be commenced by us in any
twelve month period. There is no restriction 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.
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 2,250 shares of our common stock.
EXPERTS
The consolidated financial statements of SeaChange International, Inc.
incorporated in this Prospectus by reference to the Amended Annual Report on
Form 10-K/A for the year ended December 31, 1999 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
16
=========================================== ===========================================
You should rely only on the information 566,255 Shares
contained in this prospectus. We have not
authorized anyone to provide you with
information different from that contained in
this prospectus. Comcast SC Investment, Inc.
is offering to sell, and seeking offers to
buy, the securities only in jurisdictions SEACHANGE INTERNATIONAL, INC.
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 that
the information contained herein is correct
as of any time subsequent to the date hereof
or that the affairs of SeaChange have not COMMON STOCK
changed since the date hereof. In this prospectus,
references to "SeaChange International," "we,"
"our" and "us" refer to SeaChange International, Inc.
------------- -------------
TABLE OF CONTENTS PROSPECTUS
Page -------------
----
Available Information 2
Incorporation of Certain Information
by Reference 3
SeaChange International 4
Risk Factors 6
Comcast SC Investment, Inc. 13
Plan of Distribution 14 _________ __, 2000
Legal Matters 16
Experts 16
- ------------------------------------------- ---------------------------------------------------
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........................................... $ 3,765.32
Nasdaq Filing Fees............................................. 5,662.55
Legal fees and expenses........................................ 20,000.00
Accounting fees and expenses................................... 1,000.00
----------
TOTAL.......................................................... $30,427.87
==========
We will bear all expenses shown above. Comcast SC 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 4.2 to our registration
statement on Form S-8 filed with the Securities and Exchange Commission on
December 8, 1996 (File No. 333-17379) and the amendment thereto filed with this
registration statement.
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 stock purchase agreement executed in connection with the
private placement provides that Comcast SC is 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 common stock and warrant purchase agreement filed as Exhibit 10.1
to this registration statement on Form S-3.
1
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* Certificate of Amendment, filed May 25, 2000 with the Secretary of
State in the State of Delaware, to the 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)
4.3 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
10.1* Stock Purchase Agreement, dated as of December 1, 2000, by and between
SeaChange and Comcast SC
10.2* Registration Rights Agreement, dated as of December 1, 2000, by and
between SeaChange and Comcast SC
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
(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 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 December
6, 2000.
SEACHANGE INTERNATIONAL, INC.
By: /s/ William C. Styslinger, III
------------------------------
William C. Styslinger, III
President, Chief Executive Officer,
Director 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, Director December 6, 2000
- -------------------------------------- and Chairman (Principal Executive Officer)
William C. Styslinger, III
/s/ William L. Fiedler Chief Financial Officer, Secretary, Treasurer December 6, 2000
- -------------------------------------- and Vice President, Finance and
William L. Fiedler Administration (Principal Financial Officer
and Principal Accounting Officer)
/s/ Martin R. Hoffmann Director December 6, 2000
- --------------------------------------
Martin R. Hoffmann
/s/ Carmine Vona Director December 6, 2000
- --------------------------------------
Carmine Vona
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* Certificate of Amendment, filed May 25, 2000 with the Secretary of
State in the State of Delaware, to the 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)
4.3 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
10.1* Stock Purchase Agreement, dated as of December 1, 2000, by and between
SeaChange and Comcast SC
10.2* Registration Rights Agreement, dated as of December 1, 2000, by and
between SeaChange and Comcast SC
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.