31,000,000 shares outstanding, 400 employees acccording to their website, the stock was originally scheduled to come out at 9 to 11 and ending up coming at 16. What kind of earnings do you expect, it would have to be around .50 for the quarter to support today's price. This one looks like the ultimate airball to me, Cisco has an 8% stake but they did not even pay 16 for theirs.
Form S-1/A for INTERNATIONAL NETWORK SERVICES filed on 18 Sep 1996
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1996
REGISTRATION NO. 333-9287
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
INTERNATIONAL NETWORK SERVICES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
CALIFORNIA 7379 77-0289509
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INTERNATIONAL NETWORK SERVICES
1213 INNSBRUCK DRIVE
SUNNYVALE, CA 94089
(408) 542-0100
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DONALD K. MCKINNEY
CHIEF EXECUTIVE OFFICER
INTERNATIONAL NETWORK SERVICES
1213 INNSBRUCK DRIVE
SUNNYVALE, CA 94089
(408) 542-0100
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
ELIZABETH R. FLINT, ESQ. GREGORY M. GALLO, ESQ
BRIAN C. ERB, ESQ. DENNIS C. SULLIVAN, ESQ.
SUSAN L. STAPLETON, ESQ. SCOTT M. STANTON, ESQ.
WILSON SONSINI GOODRICH & ROSATI GRAY CARY WARE & FREIDENRICH
PROFESSIONAL CORPORATION A PROFESSIONAL CORPORATION
650 PAGE MILL ROAD 400 HAMILTON AVENUE
PALO ALTO, CA 94304 PALO ALTO, CA 94301
(415) 493-9300 --------------- (415) 328-6561
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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,
check the following box: [_]
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. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
INTERNATIONAL NETWORK SERVICES
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS OF FORM S-1
FORM S-
1 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
------------------------- ----------------------
1. Forepart of the Registration
Statement and
Outside Front Cover Page of
Prospectus................... Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus.... Inside Front and Outside Back Cover Pages
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges............. Prospectus Summary; The Company; Risk
Factors
4. Use of Proceeds............... Prospectus Summary; Use of Proceeds
5. Determination of Offering
Price........................ Outside Front Cover Page; Underwriters
6. Dilution...................... Dilution
7. Selling Security Holders...... Not Applicable
8. Plan of Distribution.......... Outside and Inside Front Cover Pages;
9. Description of Securities to Underwriters
be Registered................ Prospectus Summary; Dividend Policy;
Capitalization; Description of Capital
10. Interests of Named Experts and Stock
Counsel...................... Not Applicable
11. Information with Respect to
the Registrant............... Outside and Inside Front Cover Pages;
Prospectus Summary; The Company; Risk
Factors; Use of Proceeds; Dividend Policy;
Capitalization; Dilution; Selected
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal Shareholders; Description of
Capital Stock; Shares Eligible for Future
Sale; Legal Matters; Experts; Financial
12. Disclosure of Commission Statements
Position on Indemnification
for Securities Act
Liabilities.................. Not Applicable
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued September 18, 1996
2,500,000 Shares
[LOGO OF INTERNATIONAL NETWORK SERVICES APPEARS HERE]
COMMON STOCK
-----------
ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY.
PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK OF
THE COMPANY. IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE
WILL BE BETWEEN $12 AND $14 PER SHARE. SEE "UNDERWRITERS" FOR A DISCUSSION OF
THE FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE.
APPLICATION HAS BEEN MADE TO LIST THE SHARES FOR QUOTATION ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL "INSS."
-----------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5 HEREOF.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
PRICE $ A SHARE
-----------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------- -------------- -----------
Per Share................................... $ $ $
Total(3).................................... $ $ $
-----
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."
(2) Before deducting expenses payable by the Company estimated at $860,000.
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to an aggregate of 375,000
additional Shares at the price to public less underwriting discounts and
commissions for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total price to public,
underwriting discounts and commissions and proceeds to Company will be
$ , $ and $ , respectively. See "Underwriters."
-----------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Gray Cary Ware & Freidenrich, counsel for the Underwriters. It is expected
that delivery of the Shares will be made on or about , 1996 at the office
of Morgan Stanley & Co. Incorporated, New York, New York, against payment
therefor in immediately available funds.
-----------
MORGAN STANLEY & CO.
Incorporated
ALEX. BROWN & SONS
Incorporated
ROBERTSON, STEPHENS & COMPANY
, 1996
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
----------------
UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
----------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary....................................................... 3
The Company.............................................................. 4
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 11
Dividend Policy.......................................................... 11
Capitalization........................................................... 12
Dilution................................................................. 13
Selected Financial Data.................................................. 14
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 15
Business................................................................. 21
Management............................................................... 32
Certain Transactions..................................................... 38
Principal Shareholders................................................... 39
Description of Capital Stock............................................. 41
Shares Eligible for Future Sale.......................................... 43
Underwriters............................................................. 45
Legal Matters............................................................ 46
Experts.................................................................. 46
Additional Information................................................... 46
Index to Financial Statements............................................ F-1
----------------
International Network Services, INS, EnterprisePRO, "Providing the Power of
Operable Networks" and "Providing the Power of Predictable Networks" are
trademarks of the Company. This Prospectus also includes product names and
other trade names and trademarks of the Company and of other organizations.
----------------
Except as otherwise noted herein, all information in this Prospectus (i)
assumes the conversion of all outstanding shares of the Company's Mandatorily
Redeemable Convertible Preferred Stock (the "Preferred Stock") into shares of
Common Stock, which will occur automatically upon the closing of this
offering, (ii) assumes no exercise of the Underwriters' over-allotment option,
(iii) assumes the issuance of 237,053 shares upon the exercise of warrants
upon the closing of this offering and (iv) reflects an increase in the
authorized number of shares of Common Stock from 45,000,000 to 75,000,000
shares and the authorization of 5,000,000 shares of blank check Preferred
Stock which will be effected upon the closing of this offering. See
"Description of Capital Stock" and "Underwriters." The Company's fiscal year
is composed of four 13-week quarters, each of which ends on the last Sunday of
the final fiscal month of the quarter, with the fiscal year ending on the
Sunday closest to June 30th. For presentation purposes, each fiscal quarter
and year is titled as ending on the last date of the applicable month.
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
THE NETWORK WIZARDS . . .
PROVIDING THE POWER OF OPERABLE NETWORKS.
(INS logo and graphic of wizard)
THE GROWTH OF NETWORK TRAFFIC . . .
More businesses are increasingly using client/server based applications, e-
mail, remote access, the Internet, corporate Intranets, video, graphics and
audio. The increase in the amount of data generated by these applications
combined with the large number of users connected to networks has increased
traffic and placed higher demands on networks.
(Photograph of large room of workers using computer)
HAS LED TO INCREASINGLY COMPLEX NETWORKS . . .
Network hardware and software companies are rapidly developing sophisticated
new technologies such as routers, inverse multiplexers, switches, ATM and
virtual LANs to accommodate the increase in data traffic. In addition, the
complexity of networks is magnified by the need to integrate these new
technologies with legacy network systems.
(Graphic of networks)
THAT REQUIRE A FULL RANGE OF SERVICES AND EXPERTISE.
INS is a provider of services for complex enterprise networks. The Company
provides services for the full life cycle of a network, including planning,
design, implementation, operations and optimization, and maintains expertise
in the most complex network technologies and multivendor environments. As a
services only provider, the Company believes it provides unbiased assessments
and optimal solutions for its clients. In addition, the Company provides a
focused, flexible approach to assisting clients in any or all phases of the
network life cycle. As a result, the Company's services are particularly well
suited to clients who out-task a portion of their information technology
infrastructure.
(Graphic showing life cycle of services, planning, design, implementation,
operations and optimization)
INS TECHNOLOGY EXPERTISE
.Wide area networks
.Network management
.Network and host security
.Frame relay
.High performance LANs and Virtual LANs
.ATM
.TCP/IP
.SNA
.Switching
.SNMP
SERVING A RANGE OF CLIENTS REQUIRES COLLABORATION BY EXPERTS . . .
The Company's network systems engineers together have expertise in a wide array
of computer and network systems. Knowledge Network, the Company's on-line
solutions resource, enables the Company to leverage the collective talents of
its experts to provide solutions to clients' network services needs.
(Photograph of engineer looking at INS Knowledge Network on a computer)
FROM A NETWORK SERVICE PROVIDER.
With 435 employees and offices in 17 cities, INS is a provider of services for
complex enterprise networks.
(Graphic of map of United States with dot for each city in which the Company
has an office)
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus, including under "Risk Factors."
THE COMPANY
International Network Services ("INS" or the "Company") is a provider of
services for complex enterprise networks. The Company provides services for the
full life cycle of a network, including planning, design, implementation,
operations and optimization, and maintains expertise in the most complex
network technologies and multivendor environments. Areas of expertise include
WANs, network management, network and host security and high performance LANs
and VLANs. As a services only provider, the Company believes that it is able to
provide unbiased assessments and optimal solutions for its clients. The Company
offers its services on a long or short term basis in any or all phases of the
network life cycle. As a result, the Company's services are particularly well
suited to clients who out-task a portion of their information technology
infrastructure. The Company has developed an on-line solutions resource,
Knowledge Network, through which the Company's network systems engineers
communicate and collaborate to provide solutions to clients' complex enterprise
network needs. In addition, the Company is leveraging its expertise in complex
networks to develop electronic services for certain repetitive network
management tasks, such as network monitoring and network performance reporting.
The Company's current electronic service, EnterprisePRO, is designed to collect
data, generate reports and compile network information for use in the
optimization of networks. The Company's clients include AT&T, Ascend
Communications, Cable and Wireless, Continental Cablevision, Countrywide Home
Loans, Cox Communications, Georgia Pacific, Kaiser Permanente, Lam Research,
MCI, MFS Datanet, NCR, Robert Half, SAIC, Sprint and UJB Financial. Together,
these clients, with whom the Company has ongoing relationships, represented
approximately 43% of the Company's fiscal 1996 revenues, ranging from a high of
17% of revenue to a low of .2%. Fourteen of these sixteen clients individually
represented less than 3% of the Company's fiscal 1996 revenues. The Company
serves its clients, many of which have multi-location enterprise networks,
through its nationwide network of 17 offices. As of June 30, 1996, the Company
had 344 network systems engineers.
THE OFFERING
Common Stock offered............. 2,500,000 shares
Common Stock to be outstanding
after the offering.............. 30,909,977 shares(1)
Use of proceeds.................. For repayment of debt and general corporate
purposes, including working capital and
capital expenditures
Proposed Nasdaq National Market
symbol.......................... INSS
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PERIOD FROM
AUGUST 19, 1991 YEAR ENDED JUNE 30,
(INCEPTION) TO ----------------------------------
JUNE 30, 1992 1993 1994 1995 1996
--------------- ------- ------- ------- -------
STATEMENT OF OPERATIONS
DATA:
Revenue.................... $ 186 $ 1,479 $ 7,565 $15,549 $44,092
Total operating expenses... 877 3,556 8,929 14,733 39,378
Net income (loss).......... (701) (2,161) (1,394) 775 2,877
Net income (loss)
attributable to Common
Stock..................... (701) (2,194) (1,797) (108) 1,742
Net income (loss) per share
(2)....................... $(0.08) $ (0.21) $ (0.07) $ 0.03 $ 0.09
Net income (loss)
attributable to Common
Stock per share (2)....... $(0.08) $ (0.22) $ (0.09) $ -- $ 0.06
Shares used to compute net
income (loss) per
share (2)................. 9,287 10,095 19,480 29,523 30,719
Shares used to compute net
income (loss) attributable
to Common Stock per share
(2)....................... 9,287 10,095 19,480 27,173 30,719
JUNE 30, 1996
-----------------------
ACTUAL AS ADJUSTED(3)
------- --------------
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 869 $28,543
Working capital........................................ 6,060 35,133
Total assets........................................... 18,072 45,746
Notes payable, less current portion.................... 316 --
Mandatorily Redeemable Convertible Preferred Stock..... 12,427 --
Shareholders' equity (deficit)......................... (2,544) 39,272
-------
(1) Based on shares outstanding as of August 15, 1996. Includes 237,053 shares
of Common Stock to be issued upon the exercise of warrants upon the closing
of this offering. Excludes (i) 2,776,820 shares of Common Stock issuable
upon exercise of options outstanding as of September 13, 1996 at a weighted
average exercise price of $3.50 per share, of which 737,730 shares were
fully vested and exercisable as of September 13, 1996, (ii) 552,455 shares
of Common Stock reserved for future issuance under the Company's Amended
and Restated 1992 Flexible Stock Incentive Plan and (iii) 63,291 shares of
Common Stock issuable upon exercise of outstanding warrants at an exercise
price of $0.79 per share. In July 1996, the Company adopted the 1996 Stock
Plan and 1996 Employee Stock Purchase Plan, under which 5,500,000 shares
and 1,200,000 shares have been reserved for future grant, respectively. See
"Management--Stock Plans," "Description of Capital Stock" and Notes 5 and 9
of Notes to Financial Statements.
(2) See Note 1 of Notes to Financial Statements for an explanation of shares
used to compute net income (loss) per share.
(3) Adjusted to reflect (i) the sale of 2,500,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $13.00 per share and application of the net proceeds therefrom (after
deducting estimated underwriting discounts and commissions and offering
expenses payable by the Company), (ii) the exercise of warrants to purchase
237,053 shares of Common Stock at $0.10 per share upon the closing of this
offering and (iii) the conversion of all outstanding Preferred Stock of the
Company into an aggregate of 16,734,889 shares of Common Stock upon the
closing of the offering. See "Capitalization."
3
THE COMPANY
INS is a provider of services for complex enterprise networks. The Company
provides services for the full life cycle of a network, including planning,
design, implementation, operations and optimization, and maintains expertise
in the most complex network technologies and multivendor environments. Areas
of expertise include wide area networks ("WANs"), network management, network
and host security, high performance local area networks ("LANs") and virtual
LANs ("VLANs"). As a services only provider, the Company believes that it is
able to provide unbiased assessments and optimal solutions for its clients.
The Company offers its services on a long- or short-term basis in any or all
phases of the network life cycle. As a result, the Company's services are
particularly well suited to clients who out-task a portion of their
information technology infrastructure. The Company has developed an on-line
solutions resource, Knowledge Network, through which the Company's network
systems engineers communicate and collaborate to provide solutions to clients'
complex enterprise network needs. In addition, the Company is leveraging its
expertise in complex networks to develop electronic services for certain
repetitive network management tasks, such as network monitoring and network
performance reporting. The Company's current electronic service,
EnterprisePRO, is designed to collect data, generate reports and compile
network information for use in the optimization of networks.
As network traffic has grown, the technology underlying networks has become
increasingly complex. Network hardware and software companies are rapidly
developing sophisticated new technologies such as routers, inverse
multiplexers, switches, ATM and VLANs to accommodate the increase in data
traffic. The implementation of these technologies requires significant
expertise. In addition, the complexity of networks is magnified by the need to
integrate these new technologies with legacy network systems. As a result, it
is increasingly difficult for network managers to ensure the reliability,
performance and security of these large, heterogeneous networks. Furthermore,
the tools available to manage today's networks are themselves very complex and
require investments in hardware, software, personnel and training.
Although companies have attempted to develop the necessary expertise, this
rapid technological cha |
