AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 2004
REGISTRATION NO. 333-113820
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALLEGHENY TECHNOLOGIES INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 25-1792394
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 SIX PPG PLACE
PITTSBURGH, PENNSYLVANIA 15222-5479
(412) 394-2800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JON D. WALTON
EXECUTIVE VICE PRESIDENT, CHIEF LEGAL AND
COMPLIANCE OFFICER AND CORPORATE SECRETARY
ALLEGHENY TECHNOLOGIES INCORPORATED
1000 SIX PPG PLACE
PITTSBURGH, PENNSYLVANIA 15222-5479
(412) 394-2800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPY TO:
RONALD D. WEST
KIRKPATRICK & LOCKHART LLP
HENRY W. OLIVER BUILDING
535 SMITHFIELD STREET
PITTSBURGH, PENNSYLVANIA 15222
(412) 355-6500
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.
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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 NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 13, 2004
$400,000,000
ALLEGHENY TECHNOLOGIES INCORPORATED
Common Stock
Preferred Stock
Warrants
Depositary Shares
Purchase Contracts
Purchase Units
Debt Securities
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Allegheny Technologies Incorporated from time to time may offer to sell, in
one or more series, common stock, preferred stock, warrants, depositary shares,
purchase contracts, purchase units or debt securities, or any combination of
these securities. The total amount of securities offered by this prospectus will
have an initial aggregate offering price of up to $400,000,000, or the
equivalent amount in other currencies, currency units or composite currencies,
although ATI may increase this amount in the future.
The common stock of ATI is listed on the New York Stock Exchange and trades
under the ticker symbol "ATI."
This prospectus describes some of the general terms that may apply to these
securities and the general manner in which they may be offered. The specific
terms of any securities to be offered, and the specific manner in which they may
be offered, will be described in one or more supplements to this prospectus.
This prospectus may not be used to sell securities unless it is accompanied by a
prospectus supplement that describes those securities.
WE URGE YOU TO CAREFULLY READ "RISK FACTORS" BEGINNING ON PAGE 2 AND OTHER
INFORMATION INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT FOR A DISCUSSION OF FACTORS YOU SHOULD CAREFULLY CONSIDER
BEFORE DECIDING TO INVEST IN ANY SECURITIES OFFERED BY THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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The date of this prospectus is , 2004.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION......................... ii
SUMMARY..................................................... 1
RISK FACTORS................................................ 2
FORWARD-LOOKING STATEMENTS.................................. 9
RATIOS OF EARNINGS TO FIXED CHARGES......................... 9
USE OF PROCEEDS............................................. 9
DESCRIPTION OF CAPITAL SECURITIES........................... 10
DESCRIPTION OF WARRANTS..................................... 14
DESCRIPTION OF DEPOSITARY SHARES............................ 15
DESCRIPTION OF PURCHASE CONTRACTS........................... 18
DESCRIPTION OF PURCHASE UNITS............................... 18
DESCRIPTION OF DEBT SECURITIES.............................. 19
PLAN OF DISTRIBUTION........................................ 28
LEGAL MATTERS............................................... 30
EXPERTS..................................................... 30
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WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
We have filed a registration statement on Form S-3 (together with all
amendments, exhibits, schedules and supplements thereto, the "registration
statement") under the Securities Act of 1933, as amended (the "Securities Act").
This prospectus, which forms part of that registration statement, does not
contain all of the information set forth in that registration statement.
Statements contained in this prospectus as to the contents of any contract,
agreement or other document are not necessarily complete. For a more complete
understanding and description of each contract, agreement or other document
filed as an exhibit to the registration statement, we urge you to read the
documents contained in those exhibits.
We file reports, proxy statements and other information with the SEC. These
reports, proxy statements and other information that we file with the SEC can be
read and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 to obtain further
information on the operation of the Public Reference Room. The SEC maintains an
Internet site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC, including
us. The SEC's Internet address is http://www.sec.gov. In addition, our common
stock is listed on the New York Stock Exchange, and our reports and other
information can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. Our Internet address is
http://www.alleghenytechnologies.com. The information on our Internet site is
not a part of this prospectus.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with it. This means that we can disclose important information to you by
referring you to other documents. Any information we incorporate in this manner
is considered part of this prospectus except to the extent updated and
superseded by information contained in this prospectus. Some information that we
file with the SEC after the date of this prospectus and until we sell all of the
securities covered by this prospectus will automatically update and supersede
the information contained in this prospectus.
We incorporate by reference the following documents that we have filed with
the SEC and any filings that we will make with the SEC in the future under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we sell all of the securities covered by this prospectus, including between the
date of this prospectus and the date on which the registration statement of
which this prospectus is a part is declared effective by the SEC, except as
noted below:
OUR SEC FILINGS (FILE NO. 1-12001) PERIOD FOR OR DATE OF FILING
---------------------------------- ----------------------------
Annual Report on Form 10-K Year Ended December 31, 2003
Quarterly Report on Form 10-Q Quarter Ended March 31, 2004
Current Reports on Form 8-K January 21, February 17 (as amended by
a Form 8-K/A filed on February 18,
2004), March 11, April 2, April 21, May
3 and May 10, 2004
Form 8-A July 30, 1996
Pursuant to General Instruction B of Form 8-K, any information submitted
under Item 9, Regulation FD Disclosure, or Item 12, Results of Operations and
Financial Condition, of Form 8-K is not deemed to be "filed" for the purpose of
Section 18 of the Securities and Exchange Act of 1934, and we are not subject to
the liabilities of Section 18 with respect to information submitted under Item 9
or Item 12 of Form 8-K. We are not incorporating by reference any information
submitted under Item 9 or Item 12 of Form 8-K into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934 or into this
prospectus.
We will provide without charge, upon written or oral request, a copy of any
or all of the documents that are incorporated by reference into this prospectus
and a copy of any or all other contracts or documents which are
ii
referred to in this prospectus. Requests should be directed to: Allegheny
Technologies Incorporated, Attention: Corporate Secretary, 1000 Six PPG Place,
Pittsburgh, Pennsylvania 15222-5479, telephone number: (412) 394-2800. You also
may review a copy of the registration statement and its exhibits at the SEC's
Public Reference Room in Washington, D.C., as well as through the SEC's Internet
site.
iii
SUMMARY
This summary is a brief discussion of material information contained in, or
incorporated by reference into, this prospectus as further described above under
"Where You Can Find More Information." This summary does not contain all of the
information that you should consider before investing in any securities being
offered by this prospectus. We urge you to carefully read this entire
prospectus, the documents incorporated by reference into this prospectus and the
prospectus supplement relating to the securities that you propose to buy,
especially any description of investment risks that we may include in the
prospectus supplement. References to "Allegheny Technologies," "ATI," the
"Company," the "registrant," "we," "our" and "us" and similar terms mean
Allegheny Technologies Incorporated and its subsidiaries, unless the context
otherwise requires.
ALLEGHENY TECHNOLOGIES INCORPORATED
We believe we are one of the largest and most diversified specialty
materials producers in the world. We use innovative technologies to offer global
markets a wide range of specialty materials. High-value products include super
stainless steel, nickel-based and cobalt-based alloys and superalloys, titanium
and titanium alloys, specialty steels, tungsten materials, exotic alloys, which
include zirconium, hafnium and niobium, and highly engineered strip and
Precision Rolled Strip(R) products. In addition, we produce commodity specialty
materials such as stainless steel sheet and plate, silicon electrical and tool
steels, and carbon alloy steel impression die forgings and large grey and
ductile iron castings. We operate in the following three business segments,
which accounted for the indicated percentages of our consolidated revenues of
$1.94 billion, $1.91 billion, and $2.13 billion for the years ended December 31,
2003, 2002, and 2001, respectively:
2003 2002 2001
---- ---- ----
Flat-Rolled Products........................................ 54% 55% 51%
High Performance Metals..................................... 33% 33% 36%
Engineered Products......................................... 13% 12% 13%
We are a Delaware corporation with our principal executive offices located
at 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222-5479, telephone number
(412) 394-2800.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
offer from time to time up to an aggregate of $400,000,000 of any of the
securities described in this prospectus. This prospectus provides you with a
general description of the securities that we may offer. Each time we offer
securities under this prospectus, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.
We may use this prospectus to offer any of the following securities from
time to time:
- common stock, par value $0.10;
- preferred stock, either directly or represented by depositary shares;
- warrants for the purchase of our common stock, preferred stock or debt
securities;
- purchase contracts for the purchase by us, or sale to us, of our common
stock, preferred stock, warrants, depositary shares or debt securities,
or debt securities of third parties (including U.S. Treasury securities),
an index or indices of any of those securities or any combination of
those securities;
- purchase units consisting of purchase contracts together with common
stock, preferred stock, warrants, depositary shares or debt securities,
or debt securities of third parties (including U.S. Treasury securities)
securing the holders' obligations to purchase the securities under the
purchase contracts, or any of these securities in any combination; and
- debt securities, either directly or represented by depositary shares,
which may be senior or subordinated.
When we use the term "securities" in this prospectus, we mean any of the
securities that we may offer under this prospectus, unless we say otherwise.
This prospectus describes the general terms that may apply to the securities.
The specific terms of any particular securities that we may offer will be
described in a separate supplement to this prospectus. You also should read the
documents we have referred to you in "Where You Can Find More Information" for
additional information about our company, including our financial statements.
RISK FACTORS
INVESTING IN OUR SECURITIES INVOLVES RISKS. IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND THE INFORMATION UNDER
"FORWARD-LOOKING STATEMENTS," WHICH APPEAR ELSEWHERE IN THIS PROSPECTUS,
TOGETHER WITH ANY ADDED, UPDATED OR CHANGED INFORMATION INCLUDED IN ANY
PROSPECTUS SUPPLEMENT AND IN OUR REPORTS FILED WITH THE SEC THAT ARE
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, BEFORE DECIDING WHETHER TO
INVEST IN OUR SECURITIES.
THE CYCLICAL NATURE OF THE INDUSTRIES IN WHICH OUR CUSTOMERS OPERATE CAUSE THEIR
DEMAND FOR OUR PRODUCTS TO BE CYCLICAL, CREATING UNCERTAINTY REGARDING OUR
FUTURE PROFITABILITY.
The cyclical nature of the industries in which our customers operate cause
demand for our products to be cyclical, creating uncertainty regarding future
profitability. Various changes in general economic conditions affect the
industries in which our customers operate. These changes include decreases in
the rate of consumption or use of our customers' products due to economic
downturns. Other factors causing fluctuation in our customers' positions are:
- changes in market demand;
- lower overall pricing due to domestic and international overcapacity;
- currency fluctuations;
- lower priced imports; and
- increases in use or decreases in prices of substitute materials.
As a result of these factors, our profitability has been and may in the
future be subject to significant fluctuation. Partly as a result of weak general
economic conditions in the markets we serve that have caused demand for our
products to decrease, we have experienced operating and net losses, and our
financial condition has been adversely affected. These conditions could
continue, adversely affecting our ability to produce and sell our products
profitably.
A significant portion of the sales of our High Performance Metals segment
represents products sold to customers in the commercial aerospace industry.
Economic and other factors, including the September 11, 2001 terrorist attacks,
that have been adversely affecting the airline industry have resulted in overall
reduced demand for the products that we sell to the commercial aerospace market.
The downturn in the commercial aerospace industry could continue to adversely
affect our results of operations, and our business and financial condition could
be materially aversely affected.
VARIABILITY IN THE PRICING OF OUR PRODUCTS MAY ADVERSELY AFFECT OUR OPERATING
RESULTS.
The recent trend of price deflation for many commodity products has
adversely affected prices for many of our commodity products, including
stainless steel, and may continue to do so. Intense competition and excess
manufacturing capacity in the commodity stainless steel industry have resulted
in reduced prices, excluding raw material surcharges, for many of our stainless
steel products. As a result of these factors, our revenues, operating results
and financial condition have been and may continue to be adversely affected.
Although inflationary trends in recent years have been moderate, during the
same period certain critical raw material costs, such as nickel and scrap
containing iron and nickel, have been volatile. While we are able to mitigate
some of the adverse impact of rising raw material costs through surcharges to
customers, rapid increases in raw material costs adversely affect our results of
operations.
We change prices on certain of our products from time to time. The ability
to implement price increases is dependent on market conditions, economic
factors, raw material costs and availability, competitive factors, operating
costs and other factors, some of which are beyond our control. The benefits of
any price increases may be delayed due to long manufacturing lead times and the
terms of existing contracts.
2
OUR DEPENDENCE UPON CERTAIN CRITICAL RAW MATERIALS THAT ARE SUBJECT TO PRICE AND
AVAILABILITY FLUCTUATIONS COULD LEAD TO INCREASED COSTS OR DELAYS IN THE
MANUFACTURE AND SALE OF OUR PRODUCTS.
We rely to a substantial extent on outside vendors to supply certain raw
materials that are critical to the manufacture of products. Purchase prices and
availability of these critical raw materials are subject to volatility. At any
given time, we may be unable to obtain an adequate supply of these critical raw
materials on a timely basis, on price and other terms acceptable, or at all.
If suppliers increase the price of critical raw materials, we may not have
alternative sources of supply. In addition, to the extent that we have quoted
prices to customers and accepted customer orders for products prior to
purchasing necessary raw materials, we may be unable to raise the price of
products to cover all or part of the increased cost of the raw materials.
The manufacture of some of our products is a complex process and requires
long lead times. As a result, we have in the past and may in the future
experience delays or shortages in the supply of raw materials. If we are unable
to obtain adequate and timely deliveries of required raw materials, we may be
unable to timely manufacture sufficient quantities of products. This could cause
us to lose sales, incur additional costs, delay new product introductions and
suffer harm to our reputation.
While we enter into raw materials futures contracts from time to time to
hedge exposure to price fluctuations, such as for nickel, we cannot be certain
that our hedge position adequately reduces exposure. We believe that we have
adequate controls to monitor these contracts, but we may not be able to
accurately assess exposure to price volatility in the markets for critical raw
materials.
In addition, although we occasionally use raw materials surcharges to
offset the impact of increased costs, competitive factors in the marketplace can
limit our ability to institute such surcharges, and there can be a delay between
the increase in the price of raw materials and the realization of the benefit of
surcharges. For example, since we generally use in excess of 35,000 tons of
nickel each year, a hypothetical change of $1.00 per pound in nickel prices
would result in increased costs of approximately $70 million. In addition, we
also use in excess of 270,000 tons of ferrous scrap in the production of our
Flat-Rolled products. During 2003 and entering into 2004, ferrous scrap prices
have increased significantly. A hypothetical change of $10.00 per ton would
result in increased costs of approximately $2.7 million.
We acquire certain important raw materials that we use to produce specialty
materials, including nickel, chrome, cobalt, titanium sponge and ammonia
paratungstate, from foreign sources. Some of these sources operate in countries
that may be subject to unstable political and economic conditions, such as
Russia, South Africa, Zimbabwe, Albania, Kazakhstan and the Dominican Republic.
These conditions may disrupt supplies or affect the prices of these materials.
ENERGY RESOURCES MARKETS ARE SUBJECT TO MARKET CONDITIONS THAT CREATE
UNCERTAINTY IN THE PRICES AND AVAILABILITY OF ENERGY RESOURCES UPON WHICH WE
RELY.
Energy resources markets are subject to conditions that create uncertainty
in the prices and availability of energy resources upon which we rely. We rely
upon third parties for our supply of energy resources consumed in the
manufacture of products. The prices for and availability of electricity, natural
gas, oil and other energy resources are subject to volatile market conditions.
These market conditions often are affected by political and economic factors
beyond our control. Disruptions in the supply of energy resources could
temporarily impair the ability to manufacture products for customers. Further,
increases in energy costs, or changes in costs relative to energy costs paid by
competitors, has and may continue to adversely affect our profitability. To the
extent that these uncertainties cause suppliers and customers to be more cost
sensitive, increased energy prices may have an adverse effect on our results of
operations and financial condition. We use approximately 10 to 12 million
MMBtu's of natural gas annually, depending upon business conditions, in the
manufacture of our products. These purchases of natural gas expose us to risk of
higher gas prices. For example, a hypothetical $1.00 per MMBtu increase in the
price of natural gas would result in increased annual energy costs of
approximately $10 to $12 million.
3
As part of our risk management strategy, from time to time, we purchase
swap contracts to manage exposure to changes in energy costs. The contracts
obligate us to make or receive a payment equal to the net change in value of the
contract at its maturity. These contracts are designated as hedges of the
variability in cash flows of a portion of our forecasted energy payments.
WE HAVE A SIGNIFICANT AMOUNT OF DEBT RELATIVE TO OUR EQUITY CAPITALIZATION,
WHICH LIMITS OUR FLEXIBILITY, AND MAY MATERIALLY AFFECT OUR ABILITY TO MEET OUR
FUTURE FINANCIAL COMMITMENTS AND LIQUIDITY NEEDS.
We have a substantial amount of debt relative to our equity capitalization,
which increases our vulnerability to adverse economic and industry conditions,
limits our ability to obtain additional financing, makes it potentially more
difficult to pay dividends as we have in the past, limits our flexibility in
planning for or reacting to changes in our industry, and places us at a
competitive disadvantage when compared to competitors with less relative amounts
of debt.
EXPENDITURES THAT WE MAY BE REQUIRED TO MAKE IN THE FUTURE TO FUND OUR DEFINED
BENEFIT PENSION PLAN AND THE UNAVAILABILITY OF REIMBURSEMENT FOR RETIREE MEDICAL
COSTS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATION AND
FINANCIAL POSITION.
Our U.S. defined benefit pension plan was funded in accordance with ERISA
as of December 31, 2003. Based upon current actuarial analyses and forecasts, we
do not expect to be required to make contributions to the defined benefit
pension plan for at least the next several years. However, a significant decline
in the value of plan investments in the future or unfavorable changes in laws or
regulations that govern pension plan funding could materially change the timing
and amount of required pension funding. Depending on the timing and amount, a
requirement that we fund our defined benefit pension plan could have a material
adverse effect on our results of operations and financial condition.
In 2001 and prior years, our U.S. defined benefit pension plan was fully
funded with assets significantly in excess of the projected benefit obligation.
Under Internal Revenue Code (Section 420) provisions, certain amounts that we
paid for retiree health care benefits could be reimbursed annually from the
excess pension plan assets. During the 2001 second quarter, we recovered $35.0
million under these provisions. While not affecting reported operating profit,
cash flow from operations increased by the recovered amount. Our ability to be
reimbursed for retiree medical costs in future years is dependent upon the level
of pension surplus, if any, as computed under regulations of the Internal
Revenue Service, as of the beginning of each year. The level of pension surplus
(the value of pension assets less pension obligations) changes constantly due to
the volatility of pension asset investments. Due to the decline in the U.S.
equities market from 2000 through 2002, the pension funded status at the
beginning of 2004 is substantially below the threshold required for
reimbursement of retiree medical costs in 2004. The ability to resume
reimbursement from pension assets for retiree health care costs in future
periods will depend upon the performance of the pension investments, and any
changes in the Internal Revenue Code and regulations pertaining to reimbursement
of retiree health care costs from pension surplus. Beginning in the second half
of 2001, we began funding certain retiree health care benefits for Allegheny
Ludlum using plan assets held in a Voluntary Employee Benefit Association (VEBA)
trust. This allows us to recover a portion of the retiree medical costs that
were previously funded from the pension surplus. During 2003, we were able to
fund $14.2 million of retiree medical costs using the assets of the VEBA trust.
We may continue to fund certain retiree medical benefits utilizing the plan
assets held in the VEBA if the value of these plan assets exceed $50 million.
CHANGES IN OUR CREDIT RATINGS COULD ADVERSELY AFFECT OUR COSTS AND EXPENSES.
Our ability to access the credit markets in the future to obtain additional
financing, if needed, is influenced by the Company's credit rating. In February
2004, Moody's Investor Service downgraded our senior implied rating to B1 from
Ba3, our $300 million senior unsecured Notes to B3 from B2, and our guaranteed
$150 million debentures to B1 from Ba3, while continuing to review our credit
ratings for possible downgrades. In May 2004, Standard & Poor's Ratings Services
lowered its rating for our senior unsecured debt to B+ from BB-. Changes in our
credit rating do not impact our access to our existing credit facilities.
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OUR CREDIT FACILITY CONTAINS LIMITATIONS ON OUR ABILITY TO ENTER INTO CERTAIN
TRANSACTIONS, AS WELL AS FINANCIAL COVENANTS THAT MAY IMPACT OUR ABILITY TO
BORROW UNDER THE CREDIT FACILITY.
The agreement governing our secured bank credit facility imposes a number
of covenants on us. For example, it contains covenants that create limitations
on our ability to, among other things, effect acquisitions or dispositions or
incur additional debt, and require us to, among other things, maintain a
financial ratio when our available borrowing capacity measured under the credit
agreement decreases below $150 million. Our ability to comply with the financial
covenant may be affected by events beyond our control and, as a result, we may
be unable to comply with the covenant, which may adversely affect our ability to
borrow under our secured credit facility if the availability level is below $150
million.
CHANGES IN INTEREST RATES MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL
POSITION BY INCREASING OUR FINANCING COSTS.
We attempt to maintain a reasonable balance between fixed- and
floating-rate debt to keep financing costs as low as possible. At December 31,
2003, including the effect of interest rate swap agreements, we have
approximately $179 million of floating rate debt outstanding with an average
interest rate of approximately 1.5%. Since the interest rate on this debt floats
with the short-term market rate of interest, we are exposed to the risk that
these interest rates may increase. For example, a hypothetical 1% in rate of
interest on $179 million of outstanding floating rate debt would result in
increased annual financing costs of $1.8 million.
BECAUSE WE ARE SUBJECT TO ENVIRONMENTAL REGULATION AND ENVIRONMENTAL
LIABILITIES, WE MAY BE REQUIRED TO REMEDIATE THE EFFECTS OF PAST AND PRIOR
OPERATIONS, AND OUR PROFITABILITY MAY BE ADVERSELY AFFECTED.
We are subject to various domestic and international environmental laws and
regulations that govern the discharge of pollutants into the air or water, and
disposal of hazardous substances, and which may require that we investigate and
remediate the effects of the release or disposal of materials at sites
associated with past and present operations, including sites at which we have
been identified as a potentially responsible party ("PRP") under the Federal
Superfund laws, and comparable state laws. We could incur substantial cleanup
costs, fines and civil or criminal sanctions, third party property damage or
personal injury claims as a result of violations or liabilities under these laws
or non-compliance with environmental permits required at our facilities. We are
currently involved in the investigation and remediation of a number of our
current and former sites as well as third party locations sites under these
laws.
With respect to proceedings brought under the federal Superfund laws, or
similar state statutes, we have been identified as a PRP at approximately 33 of
such sites, excluding those at which we believe we have no future liability. Our
involvement is limited or de minimis at approximately 15 of these sites, and the
potential loss exposure with respect to any of the remaining 18 individual sites
is not considered to be material.
We are a party to various cost-sharing arrangements with other PRPs at the
sites. The terms of the cost-sharing arrangements are subject to non-disclosure
agreements as confidential information. Nevertheless, the cost-sharing
arrangements generally require all PRPs to post financial assurance of the
performance of the obligations or to pre-pay into an escrow or trust account
their share of anticipated site-related costs. In addition, the Federal
government, through various agencies, is a party to several such arrangements.
We believe that we operate our businesses in compliance in all material
respects with applicable environmental laws and regulations. However, we are a
party to lawsuits and other proceedings involving alleged violations of, or
liabilities arising from environmental laws. When our liability is probable and
we can reasonably estimate our costs, we record environmental liabilities in our
financial statements. In many cases, investigations are not at a stage where we
are able to determine whether we are liable, or if liability is probable, to
reasonably estimate the loss, or certain components thereof. Estimates of our
liability remain subject to additional uncertainties regarding the nature and
extent of site contamination, the range of remediation alternatives available,
evolving remediation standards, imprecise engineering evaluations and estimates
of appropriate cleanup technology, methodology and cost, the extent of
corrective actions that may be required, and the participation number and
financial condition of other PRPs, as well as the extent of their responsibility
for the remediation. Accordingly, we periodically review the accruals, as
investigation and remediation of these sites proceed. As we
5
receive new information, we expect that we will adjust our accruals to reflect
new information. Future adjustments could have a material adverse effect on our
results of operations in a given period, but we cannot reliably predict the
amounts of such future adjustments. At December 31, 2003, our reserves for
environmental matters totaled approximately $41 million.
Based on currently available information, we do not believe that there is a
reasonable possibility that a loss exceeding the amount already accrued for any
of the sites with which we are currently associated (either individually or in
the aggregate) will be an amount that would be material to a decision to buy or
sell our securities.
CURRENT OR FUTURE LITIGATION MAY ADVERSELY AFFECT OUR FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
A number of lawsuits, claims and proceedings have been or may be asserted
against us relating to the conduct of our business, including those pertaining
to product liability, patent infringement, commercial, employment, employee
benefits, environmental and stockholder matters. Due to the uncertainties of
litigation, we can give no assurance that we will prevail on all claims made
against us in the lawsuits that we currently face or that additional claims will
not be made against us in the future. While the outcome of litigation cannot be
predicted with certainty, and some of these lawsuits, claims or proceedings may
be determined adversely to us, we do not believe that the disposition of any
such pending matters is likely to have a material adverse effect on our
financial condition or liquidity, although the resolution in any reporting
period of one or more of these matters could have a material adverse effect on
our results of operations for that period. Also, we can give no assurance that
any other matters brought in the future will not have a material effect on our
financial condition, liquidity or results of operations.
WE MAY BE UNABLE TO REACH SATISFACTORY COLLECTIVE BARGAINING AGREEMENTS WITH
UNIONS REPRESENTING A SIGNIFICANT PORTION OF OUR EMPLOYEES.
We have approximately 8,800 employees. A portion of our workforce is
covered by various collective bargaining agreements, principally with the United
Steelworkers of America ("USWA"), including:
- approximately 3,000 Allegheny Ludlum production, office and maintenance
employees covered by collective bargaining agreements between Allegheny
Ludlum and the USWA, which are effective through June 2007;
- approximately 165 Oremet employees covered by a collective bargaining
agreement with the USWA which is effective through June 2007; and
- approximately 600 Wah Chang employees covered by a collective bargaining
agreement with the USWA which continues through March 2008.
Negotiations are ongoing for a new collective bargaining agreement with the
USWA affecting approximately 100 employees at the Casting Service facility in
LaPorte, Indiana. During the 2003 second quarter, we requested the re-opening of
labor agreements with the USWA pertaining to the Allegheny Ludlum and Oremet
operations. In May 2004, we reached a tentative agreement with the USWA
pertaining to our Allegheny Ludlum operations. The agreement, which would be
effective through June 2007, is subject to ratification by the affected
employees.
Generally, agreements that expire may be terminated after notice by the
union. After termination, the union may authorize a strike. A strike by the
employees covered by one or more of the collective bargaining agreements could
have a materially adverse affect on our operating results. There can be no
assurance that we will succeed in concluding collective bargaining agreements
with the unions to replace those that expire.
WE PLAN TO CONTINUE TO IMPLEMENT ACQUISITION AND DISPOSITION STRATEGIES THAT
INVOLVE A NUMBER OF INHERENT RISKS, ANY OF WHICH COULD CAUSE US NOT TO REALIZE
ANTICIPATED BENEFITS.
We intend to continue to strategically position our businesses in order to
improve our ability to compete. We plan to do this by seeking specialty niches,
expanding our global presence, acquiring businesses complementary to existing
strengths and continually evaluating the performance and strategic fit of
existing business units. We
6
regularly consider acquisition, joint ventures, and other business combination
opportunities as well as possible business unit dispositions. From time to time,
management holds discussions with management of other companies to explore such
opportunities. As a result, the relative makeup of the businesses comprising our
company is subject to change. As of the date of this prospectus and except as
previously disclosed with regard to the proposed acquisition of assets of J&L
Specialty Steel, LLC, we are not engaged in discussions or negotiations with any
acquisition target in which completion of the acquisition has become probable.
Acquisitions, joint ventures, and other business combinations involve various
inherent risks, such as:
- assessing accurately the value, strengths, weaknesses, contingent and
other liabilities and potential profitability of acquisition or other
transaction candidates;
- the potential loss of key personnel of an acquired business;
- our ability to achieve identified financial and operating synergies
anticipated to result from an acquisition or other transaction; and
- unanticipated changes in business and economic conditions affecting an
acquisition or other transaction.
International acquisitions and other transactions also could be affected by
export controls, exchange rate fluctuations, domestic and foreign political
conditions and a deterioration in domestic and foreign economic conditions.
WE MAY EXPERIENCE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AS A
RESULT OF INCREASES IN THE COSTS OF INSURANCE COVERAGE OR AN INABILITY TO OBTAIN
INSURANCE COVERAGE TO FULLY COVER FUTURE CLAIMS.
We have maintained various forms of insurance, including insurance covering
claims related to our properties and risks associated with our operations. Our
existing property and liability insurance coverages contain exclusions and
limitations on coverage. In connection with renewals of insurance, we have
experienced additional exclusions and limitations on coverage, larger
self-insured retentions and deductibles and significantly higher premiums. As a
result, in the future our insurance coverage may not cover claims to the extent
that it has in the past and the costs that we incur to procure insurance may
increase significantly, either of which could have an adverse effect on our
results of operations.
OUR PROFITABILITY MAY FLUCTUATE DUE TO POLITICAL, SOCIAL AND ECONOMIC FACTORS
THAT ARE NOT WITHIN OUR CONTROL.
The war on terrorism and recent political and social turmoil, including
terrorist and military actions and the implications of the military actions in
Iraq, could continue to put pressure on economic conditions in the United States
and worldwide. These political, social and economic conditions make it difficult
for us, our suppliers and our customers to forecast accurately and plan future
business activities, and could adversely affect the financial condition of our
suppliers and customers and affect customer decisions as to the amount and
timing of purchases from us. As a result, the recovery of our industry from weak
demand conditions could be delayed, and our business, financial condition and
results of operations could be materially adversely affected.
RISKS ASSOCIATED WITH EXPORT SALES COULD MATERIALLY ADVERSELY AFFECT OUR
RESULTS.
We believe that export sales will continue to account for a significant
percentage of our future revenues. Risks associated with export sales include:
- political and economic instability, including weak conditions in the
world's economies;
- accounts receivable collection;
- export controls;
- changes in legal and regulatory requirements;
- policy changes affecting the markets for our products;
- changes in tax laws and tariffs; and
7
- exchange rate fluctuations (which may affect sales to international
customers and the value of profits earned on export sales when converted
into dollars).
Any of these factors could materially adversely effect our results for the
period in which they occur.
WE MAY BE FORCED TO PAY DAMAGES, INCUR EXPENSES OR LIMIT OUR CONTRACTUAL WORK
FOR THE U.S. GOVERNMENT AS A RESULT OF GOVERNMENT CONTRACTS TO WHICH WE ARE
PARTIES, AND SUCH DAMAGES OR EXPENSES COULD HAVE A MATERIAL ADVERSE EFFECT ON
US.
Some of our operating companies directly perform contractual work for the
U.S. Government. Various claims (whether based on U.S. Government or Company
audits and investigations or otherwise) could be asserted against us related to
our U.S. Government contract work. Depending on the circumstances and the
outcome, such proceedings could result in fines, penalties, compensatory and
treble damages or the cancellation or suspension of payments under one or more
U.S. Government contracts. Under government regulations, a company, or one or
more of its operating divisions or units, can also be suspended or debarred from
government contracts based on the results of investigations.
8
FORWARD-LOOKING STATEMENTS
You should carefully review the information contained in or incorporated by
reference into this prospectus. In this prospectus, statements that are not
reported financial results or other historical information are "forward-looking
statements." Forward-looking statements give current expectations or forecasts
of future events and are not guarantees of future performance. They are based on
our management's expectations that involve a number of business risks and
uncertainties, any of which could cause actual results to differ materially from
those expressed in or implied by the forward-looking statements.
You can identify these forward-looking statements by the fact that they do
not relate strictly to historic or current facts. They use words such as
"anticipates," "believes," "estimates," "expects," "would," "should," "will,"
"will likely result," "forecast," "outlook," "projects," and similar expressions
in connection with any discussion of future operating or financial performance.
We cannot guarantee that any forward-looking statements will be realized,
although we believe that we have been prudent in our plans and assumptions.
Achievement of future results is subject to risks, uncertainties and assumptions
that may prove to be inaccurate. Among others, the factors discussed in "Risk
Factors" could cause actual results to differ from those in forward-looking
statements included in or incorporated by reference into this prospectus or that
we otherwise make. Should known or unknown risks or uncertainties materialize,
or should underlying assumptions prove to be inaccurate, actual results could
vary materially from those anticipated, estimated or projected. You should bear
this in mind as you consider any forward-looking statements.
We undertake no obligation to publicly update forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required by law. You are advised, however, to consider any additional
disclosures that we may make on related subjects in future filings with the SEC.
You should understand that it is not possible to predict or identify all factors
that could cause our actual results to differ. Consequently, you should not
consider any list of factors to be a complete set of all potential risks or
uncertainties.
RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges for the three months
ended March 31, 2004, and for the years ended December 31, 2003, 2002, 2001,
2000 and 1999 are as follows:
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------- -----------------------
2004 2003 2002 2001 2000 1999
----------- ---- ---- ---- ---- ----
Ratios of earnings to fixed charges...... -- -- -- -- 5.7 5.5
---------------
(1) For the three months ended March 31, 2004, and for the years ended December
31, 2003, 2002, and 2001, fixed charges exceeded earnings by approximately
$51.5 million, $280.7 million, $100.7 million and $37.0 million,
respectively.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes unless otherwise indicated in the applicable
prospectus supplement relating to a specific issuance of securities. Our general
corporate purposes include, but are not limited to, repayment, redemption or
refinancing of debt, capital expenditures, investments in or loans to
subsidiaries and joint ventures, funding of possible acquisitions, working
capital, satisfaction of other obligations and repurchase of our outstanding
securities. Pending any such use, the net proceeds from the sale of the
securities may be invested in short-term, investment grade, interest-bearing
instruments. We will include a more detailed description of the use of proceeds
of any specific offering in the applicable prospectus supplement relating to the
offering.
9
DESCRIPTION OF CAPITAL SECURITIES
COMMON STOCK
We may issue, either separately or together with other securities,
including as a part of units, shares of our common stock. Shares of common stock
issued as part of units may be attached to or separate from any other securities
part of those units. Under our Restated Certificate of Incorporation, we are
authorized to issue up to 500,000,000 shares of our common stock. As of February
29, 2004, we have 80,931,369 shares of common stock issued and outstanding and
have reserved 8,305,787 additional shares of common stock for issuance under our
stock compensation plans.
A prospectus supplement relating to an offering of common stock or other
securities convertible or exchangeable for, or exercisable into, common stock,
or the settlement of which may result in the issuance of common stock, will
describe the relevant terms, including the number of shares offered, any initial
offering price and market price and dividend information, as well as, if
applicable, information on other related securities.
The following summary is not complete and is not intended to give full
effect to provisions of statutory or common law. You should refer to the
applicable provisions of the following:
- the Delaware General Corporation Law, as it may be amended from time to
time;
- our Restated Certificate of Incorporation, as it may be amended or
restated from time to time; and
- our bylaws, as they may be amended or restated from time to time.
DIVIDENDS. The holders of our common stock are entitled to receive
dividends when, as and if declared by our board of directors, out of funds
legally available for their payment subject to the rights of holders of our
preferred stock.
VOTING RIGHTS. The holders of our common stock are entitled to one vote
per share on all matters submitted to a vote of stockholders.
RIGHTS UPON LIQUIDATION. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally in any of our assets available for distribution after
the payment in full of all debts and distributions and after the holders of all
series of our outstanding preferred stock have received their liquidation
preferences in full.
MISCELLANEOUS. The outstanding shares of common stock are fully paid and
nonassessable. The holders of common stock are not entitled to preemptive or
redemption rights. Shares of common stock are not convertible into shares of any
other class of capital stock. Mellon Investor Services LLC is the transfer agent
and registrar for the common stock.
PREFERRED STOCK
We may elect to issue shares of our preferred stock from time to time, as
described in the applicable prospectus supplement. We may issue shares of
preferred stock separately or as a part of units, and any such shares issued as
part of units may be attached to or separate from any other securities part of
those units. Shares of our preferred stock may have dividend, redemption, voting
and liquidation rights taking priority over our common stock, and shares of our
preferred stock may be convertible into our common stock.
Our Board of Directors is authorized, subject to any limitations prescribed
by law, to provide for the issuance of shares of preferred stock in one or more
series. In addition, our Board of Directors is authorized to establish from time
to time the number of shares to be included in each series of preferred stock
and to fix the designation, powers (including but not limited to voting powers,
if any), preferences and rights of the shares of each series of preferred stock
and any qualifications, limitations or restrictions of each series of preferred
stock. The number of authorized shares of preferred stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the outstanding common stock,
without a vote of the holders of the preferred stock, or of any series of
preferred stock, unless a vote of any such holders is required pursuant to the
terms of any preferred stock.
10
Our Restated Certificate of Incorporation authorizes our Board of Directors
without further stockholder action, to provide for the issuance of up to
50,000,000 shares of preferred stock, in one or more series. As of the date of
this prospectus, no shares of preferred stock have been issued. We have
6,000,000 shares of preferred stock reserved for issuance upon exercise of
rights under the rights agreement described below under "-- Preferred Stock
Purchase Rights," leaving 44,000,000 shares of preferred stock remaining
available for designation and issuance.
The particular terms of any series of preferred stock being offered by us
under this prospectus will be described in the prospectus supplement relating to
that series of preferred stock. Those terms may include:
- the title and liquidation preference per share of the preferred stock and
the number of shares offered;
- the purchase price of the preferred stock;
- the dividend rate (or method of calculation), the dates on which
dividends will be paid and the date from which dividends will begin to
accumulate;
- any redemption or sinking fund provisions of the preferred stock;
- any conversion provisions of the preferred stock;
- the voting rights, if any, of the preferred stock; and
- any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of the
preferred stock.
If the terms of any series of preferred stock being offered differ from the
terms set forth in this prospectus, the definitive terms will be disclosed in
the applicable prospectus supplement. The summary in this prospectus is not
complete. You should refer to the applicable Certificate of Amendment to our
Restated Certificate of Incorporation or certificate of designations, as the
case may be, establishing a particular series of preferred stock, in either case
which will be filed with the Secretary of State of the State of Delaware and the
SEC in connection with an offering of preferred stock.
The preferred stock will, when issued, be fully paid and nonassessable.
DIVIDEND RIGHTS. The preferred stock will be preferred over our common
stock as to payment of dividends. Before any dividends or distributions (other
than dividends or distributions payable in common stock) on our common stock
will be declared and set apart for payment or paid, the holders of shares of
each series of preferred stock will be entitled to receive dividends when, as
and if declared by our board of directors. We will pay those dividends either in
cash, shares of common stock or preferred stock or otherwise, at the rate and on
the date or dates set forth in the applicable prospectus supplement. With
respect to each series of preferred stock, the dividends on each share of the
series will be cumulative from the date of issue of the share unless another
date is set forth in the applicable prospectus supplement relating to the
series. Accruals of dividends will not bear interest.
RIGHTS UPON LIQUIDATION. The preferred stock will be preferred over our
common stock as to assets so that the holders of each series of preferred stock
will be entitled to be paid, upon our voluntary or involuntary liquidation,
dissolution or winding up and before any distribution is made to the holders of
common stock, the amount set forth in the applicable prospectus supplement.
However, in this case the holders of preferred stock will not be entitled to any
other or further payment. If upon any liquidation, dissolution or winding up our
net assets are insufficient to permit the payment in full of the respective
amounts to which the holders of all outstanding preferred stock are entitled,
our entire remaining net assets will be distributed among the holders of each
series of preferred stock in amounts proportional to the full amounts to which
the holders of each series are entitled.
REDEMPTION. All shares of any series of preferred stock will be redeemable
to the extent set forth in the prospectus supplement relating to the series. All
shares of any series of preferred stock will be convertible into shares of our
common stock or into shares of any other series of our preferred stock to the
extent set forth in the applicable prospectus supplement.
11
VOTING RIGHTS. Except as indicated in the applicable prospectus
supplement, the holders of preferred stock will be entitled to one vote for each
share of preferred stock held by them on all matters properly presented to
stockholders. The holders of common stock and the holders of all series of
preferred stock will vote together as one class.
PREFERRED STOCK PURCHASE RIGHTS. On March 12, 1998, our Board of Directors
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.10 (the "Common Shares"), of the
Company. The dividend was payable to stockholders of record at the close of
business on March 23, 1998 (the "Record Date"). Each Right entitles the
registered holder to purchase from us one one-hundredth of a share of our Series
A Junior Participating Preferred Stock (the "Preferred Shares") at a price of
$100.00 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between us and Mellon Investor
Services LLC, as successor in interest to ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) a public announcement that a person or
group of affiliated or associated persons (each an "Acquiring Person"), has
acquired beneficial ownership of 15% or more of the outstanding Common Shares or
(ii) 10 business days (or such later date as may be determined by the Board)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of the Summary
of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of the Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by that certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the close of business on March 12, 2008 (the "Final Expiration Date"),
unless the final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidence of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an
12
aggregate dividend of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $100 per share but will be entitled
to an aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. These rights are protected by
customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of Common Shares having a market value of
two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by that person or group of 50% or more of the outstanding
Common Shares, our Board of Directors may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in part,
at an exchange ratio of one Common Share, or one one-hundredth of a Preferred
Share, per Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time on such basis
with such conditions as our Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by our Board of Directors without
the consent of the holders of the Rights, except that from and after such time
as any person or group of affiliated or associated persons becomes an Acquiring
Person, no such amendment may adversely affect the interests of the holders of
the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights Agreement, which specifies the terms of the Rights and includes
the form of Certificate of Designations, Preferences and Rights setting forth
the terms of the Preferred Shares is an exhibit to the registration statement of
which this prospectus is a part. The foregoing description of the Rights is
qualified in its entirety by reference to that Rights Agreement.
ADDITIONAL SERIES OF PREFERRED STOCK. In the event of a proposed merger or
tender offer, proxy contest or other attempt to gain control of us and not
approved by our board of directors, it would be possible for the board to
authorize the issuance of one or more series of preferred stock with voting
rights or other rights and preferences which would impede the success of the
proposed merger, tender offer, proxy contest or other attempt to gain control of
us. This authority may be limited by applicable law, our Restated Certificate of
Incorporation,
13
as it may amended or restated from time to time, and the applicable rules of the
stock exchanges upon which the common stock is listed. The consent of our
stockholders would not be required for any such issuance of preferred stock.
SPECIAL CHARTER PROVISIONS. Our Restated Certificate of Incorporate
provides that:
- our Board of Directors is classified into three classes;
- in addition to the requirements of law and the other provisions of our
Restated Certificate of Incorporation, the affirmative vote of at least
two-thirds of the outstanding shares of our common stock is required for
the adoption or authorization of any of the following events unless the
event has been approved at a meeting of our Board of Directors by the
vote of more than two-thirds of the incumbent members of our Board of
Directors:
- any merger or consolidation of us with or into any other corporation;
- any sale, lease, exchange, transfer or other disposition, but excluding
a mortgage or any other security device, of all or substantially all of
our assets;
- any merger or consolidation of a Significant Shareholder (as defined in
our Restated Certificate of Incorporation) with or into us or a direct
or indirect subsidiary of ours;
- any sale, lease, exchange, transfer or other disposition to us or to a
direct or indirect subsidiary of ours of any of our common stock held by
a Significant Shareholder or any other assets of a Significant
Shareholder which, if included with all other dispositions consummated
during the same fiscal year of ours by the same Significant Shareholder,
would result in dispositions of assets having an aggregate fair value in
excess of five percent of our total consolidated assets as shown on our
certified balance sheet as of the end of the fiscal year preceding the
proposed disposition;
- any reclassification of our common stock, or any re-capitalization
involving our common stock, consummated within five years after a
Significant Shareholder becomes a Significant Shareholder, whereby the
number of outstanding shares of common stock is reduced or any of those
shares are converted into or exchanged for cash or other securities;
- any dissolution; and
- any agreement, contract or other arrangement providing for any of these
transactions but notwithstanding anything not including any merger
pursuant to the Delaware General Corporation Law, as amended from time
to time, which does not require a vote of our stockholders for approval;
- our stockholders may not adopt, amend or repeal our Amended and Restated
Bylaws other than by the affirmative vote of 75% of the combined voting
power of all of our outstanding voting securities entitled to vote
generally in an election of directors, voting together as a single class;
- any action required or permitted to be taken by our stockholders must be
effected at a duly called annual or special meeting of stockholders and
may not be effected by the written consent of the stockholders; and
- special meetings of the stockholders may be called at any time by a
majority of our directors and may not be called by any other person or
persons or in any other manner.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of our common stock, preferred stock
or debt securities. We may issue warrants independently or as part of purchase
units, and warrants issued as part of purchase units may be attached to or
separate from any other securities part of those purchase units. Each series of
warrants will be issued under a separate warrant agreement to be entered into
between us and a bank or trust company, as warrant agent. The warrant agent will
act solely as our agent in connection with the warrants and will not assume any
obligation or relationship of agency or trust for or with any registered holders
of warrants or beneficial owners of warrants. This summary of some provisions of
the warrants is not complete. You should refer to the applicable
14
warrant agreement, including the applicable form of warrant certificate,
relating to the specific warrants being offered for the complete terms of the
warrant agreement and the warrants, as well as the identity of the applicable
warrant agent. That warrant agreement, together with the applicable form of
warrant certificate, will be filed with the SEC in connection with the offering
of the specific warrants and will be available by the means described under
"Where You Can Find More Information."
The particular terms of any issue of warrants will be described in the
applicable prospectus supplement relating to the issue. Those terms may include:
- the securities for which you may exercise the warrants;
- the designation, aggregate principal amount, currencies, denominations
and terms of the series of debt securities purchasable upon exercise of
warrants to purchase debt securities and the price at which the debt
securities may be purchased upon exercise, if applicable;
- the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights)
of the series of preferred stock purchasable upon exercise of warrants to
purchase shares of preferred stock and the price at which that number of
shares of preferred stock of such series may be purchased upon exercise,
if applicable;
- the number of shares of common stock purchasable upon the exercise of
warrants to purchase shares of common stock and the price at which that
number of shares of common stock may be purchased upon exercise, if
applicable;
- the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
- the material U.S. federal income tax consequences applicable to the
warrants; and
- any other terms of the warrants.
The exercise price and the expiration date for warrants, as well as the
kind, frequency and timing of any notice to be given, will be subject to
adjustment as described in the applicable prospectus supplement. Holders of
warrants may exchange warrant certificates for new warrant certificates of
different denominations and may exercise warrants at the corporate trust office
of the warrant agent or any other office that we indicate in the applicable
prospectus supplement. Prior to the exercise of warrants, holders of warrants
will not have any of the rights of holders of the common stock, preferred stock
or debt securities purchasable upon that exercise, as the case may be, and will
not be entitled to payments of principal, premium or interest, as applicable, on
any debt securities purchasable upon the exercise or dividend payments, if any,
or voting rights of any preferred stock or common stock purchasable upon the
exercise.
Each warrant will entitle its holder to purchase the principal amount of
debt securities or the number of shares of preferred stock or common stock, as
the case may be, at the exercise price set forth in, or calculable as set forth
in, the applicable prospectus supplement. After the close of business on the
expiration date, unexercised warrants will become void. We will specify the
place or places where, and the manner in which, warrants may be exercised in the
applicable prospectus supplement.
We will forward the securities purchasable upon the exercise of warrants as
soon as practicable after receipt of payment and the properly completed and
executed warrant certificate at the corporate trust office of the warrant agent
or other office stated in the applicable prospectus supplement. If a holder of
warrants exercises less than all of the warrants represented by the warrant
certificate, we will issue a new warrant certificate for the remaining warrants.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
At our option, we may elect to offer fractional interests in our debt
securities or fractional shares of our preferred stock, rather than full
interests in our debt securities or full shares of our preferred stock, as the
case
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may be. If we exercise this option, we will issue to the public receipts for
depositary shares, and each of these depositary shares will represent a fraction
of a debt security of ours or of a share of a particular series of our preferred
stock, as the case may be, and that fraction or the formula by which that
fraction may be determined will be set forth in the applicable prospectus
supplement. Depositary shares may be issued separately or as a part of units.
Depositary shares issued as part of units may be attached to or separate from
any other securities part of those units.
The debt securities or shares of any series of preferred stock underlying
the depositary shares, as the case may be, will be deposited under a deposit
agreement between us and a bank or trust company, as depositary. The depositary
will have its principal office in the United States, unless specified otherwise
in the applicable prospectus supplement. Subject to the terms of the applicable
deposit agreement, each owner of a depositary share will be entitled, in
proportion to the applicable fraction of the debt security or share of preferred
stock, as the case may be, underlying that depositary share, to all the rights
and preferences of the debt security or preferred stock, as the case may be,
underlying that depositary share. Those rights include any applicable dividend,
voting, redemption and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the depositary shares in accordance with the terms of
the offering. This summary of some provisions of the depositary receipts is not
complete. You should refer to the applicable deposit agreement, including the
applicable form of depositary receipts, relating to the specific depositary
receipts being offered for the complete terms of the deposit agreement and the
depositary receipts and the identity of the depositary. That deposit agreement,
together with the applicable form of depositary receipt, will be filed with the
SEC in connection with the offering of the depositary receipts and will be
available by the means described under "Where You Can Find More Information."
Pending the preparation of definitive engraved depositary receipts and upon
our written order, the depositary may issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts will entitle their holders
to all the rights of definitive depositary receipts which are to be prepared
without unreasonable delay. Temporary depositary receipts then will be
exchangeable for definitive depositary receipts at our expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute any payments of interest, cash dividends or
other cash distributions received with respect to the debt securities or
preferred stock, as the case may be, to the record holders of depositary shares
in proportion to the number of depositary shares owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, with our
approval, the depositary may sell the property and distribute the net proceeds
from the sale to the applicable holders in proportion to the number of
depositary shares owned by those holders.
REDEMPTION OF DEPOSITARY SHARES
If the debt security or series of preferred stock, as the case may be,
represented by depositary shares is subject to redemption, the depositary shares
will be redeemed with the proceeds received by the depositary from the
redemption, in whole or in part, of that debt security or series of preferred
stock held by the depositary. The redemption price per depositary share will be
equal to the applicable fraction of the redemption price payable with respect to
that debt security or series of the preferred stock, as the case may be.
Whenever we redeem debt securities or shares of preferred stock that are held by
the depositary, the depositary will redeem, as of the same redemption date, the
number of depositary shares representing the debt securities or shares of
preferred stock, as the case may be, so redeemed. If fewer than all of the
depositary shares are to be redeemed, the depositary shares to be redeemed will
be selected by lot or pro rata, as may be determined by the depositary.
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EXERCISE OF RIGHTS OR VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of preferred
stock underlying depositary shares are entitled to vote, or of any request for
instructions or directions from holders of debt securities underlying depositary
shares, the depositary will mail the information contained in the notice to the
record holders of the applicable depositary shares. Each record holder of the
applicable depositary shares on the record date will be entitled to instruct the
depositary how to give instructions or directions with respect to the debt
securities represented by that holder's depositary shares or how to vote the
amount of the preferred shares represented by that holder's depositary shares,
as the case may be. The record date for the depositary shares will be the same
date as the record date for the underlying debt securities or preferred stock,
as the case may be. The depositary then will attempt, to the extent practicable,
to give instructions or directions with respect to the debt securities or to
vote the number of shares of preferred stock underlying those depositary shares,
as the case may be, in accordance with such instructions, and we will agree to
take all actions which may be deemed necessary by the depositary to enable the
depositary to do so. The depositary will not give instructions or directions
with respect to debt securities or vote shares of preferred stock, as the case
may be, if it does not receive specific instructions from the holders of the
depositary shares representing interests in those securities.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing depositary shares and any
provision of a deposit agreement may at any time be amended by agreement between
us and the depositary. However, any amendment which materially and adversely
alters the rights of the holders of depositary shares will not be effective
unless the amendment has been approved by the holders of at least a majority of
the depositary shares then outstanding. A deposit agreement may be terminated by
us or by the depositary only if:
- all outstanding depositary shares issued under that deposit agreement
have been redeemed; or
- with respect to all depositary shares issued under that deposit
agreement, there has been a complete repayment or redemption of the
underlying debt securities or a final distribution of the underlying
preferred stock, as the case may be, including in connection with our
liquidation, dissolution or winding up, and the repayment, redemption or
distribution proceeds, as the case may be, have been distributed to you.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We also will pay
charges of the depositary in connection with the initial deposit and any
redemption of the underlying debt securities or preferred stock. Holders of
depositary receipts will pay the transfer and other taxes and governmental and
other charges, including a fee for the withdrawal of debt securities or shares
of preferred stock, as the case may be, upon surrender of depositary receipts,
as are expressly provided in the relevant deposit agreement.
MISCELLANEOUS
The depositary will forward to holders of depositary receipts all reports
and communications from us that we deliver to the depositary and that we are
required to furnish to the holders of the underlying debt securities or
preferred stock, as the case may be.
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those of
the depositary will be limited to performance in good faith of our respective
duties under the deposit agreement. Neither we nor the depositary will be
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or underlying debt securities or preferred stock unless
satisfactory indemnity is furnished. We and the depositary may rely upon written
advice of counsel or accountants, or upon information provided by persons
presenting debt securities or preferred stock, as the case may be, for deposit,
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holders of depositary receipts or other persons believed to be competent and on
documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering notice to us of its
election to resign. We may remove the depositary at any time. Any resignation or
removal will take effect upon the appointment of a successor depositary and its
acceptance of the appointment.
DESCRIPTION OF PURCHASE CONTRACTS
We may issue purchase contracts for the purchase from us, or sale to us, of
our common stock, preferred stock, warrants, depositary shares or debt
securities, or debt securities of third parties (including U.S. Treasury
securities), an index or indices of those securities or any combination of those
securities. Purchase contracts may be issued separately or in purchase units, as
specified in the applicable prospectus supplement. Purchase contracts issued as
part of units may be attached to or separate from any other securities part of
the units.
We may issue purchase contracts obligating holders to purchase from us, and
obligating us to sell to holders, a specified or varying number of securities at
a purchase price, which may be based on a formula, at a future date.
Alternatively, we may issue purchase contracts obligating us to purchase from
holders, and obligating holders to sell to us, a specified or varying number of
securities at a purchase price, which may be based on a formula, at a future
date. We may satisfy our obligations, if any, with respect to any purchase
contract by delivering the subject securities or by delivering the cash value of
the purchase contract or the cash value of the property otherwise deliverable,
as set forth in the applicable prospectus supplement. The applicable prospectus
supplement will specify the methods by which the holders may purchase or sell
the subject securities, as the case may be, and any acceleration, cancellation
or termination provisions or other provisions relating to the settlement of a
purchase contract.
The purchase contracts may require us to make periodic payments to the
holders of those purchase contracts or vice versa, and the periodic payments may
be unsecured or prefunded and may be paid on a current or deferred basis. The
purchase contracts may require holders of those purchase contracts to secure
their obligations under the contracts in a specified manner to be described in
the applicable prospectus supplement. Alternatively, purchase contracts may
require holders to satisfy their obligations under the purchase contracts when
the purchase contracts are issued, as described in the applicable prospectus
supplement.
This summary of some provisions of the purchase contracts is not complete.
You should refer to the purchase contract agreement, including the applicable
form of purchase contract security certificate, relating to the specific
purchase contracts being offered for the complete terms of the purchase contract
agreement and the purchase contracts. That purchase contract agreement, together
with the applicable form of purchase contract security certificate, will be
filed with the SEC in connection with the offering of the specific purchase
contracts and will be available by the means described under "Where You Can Find
More Information."
DESCRIPTION OF PURCHASE UNITS
We may issue purchase units consisting of our purchase contracts taken
together with our common stock, preferred stock, warrants, depositary shares or
debt securities, warrants or purchase contracts, or debt securities of third
parties (including U.S. Treasury Securities), in any combination, which may be
purchased with the proceeds of the sales of purchase units. The securities
comprising the purchase units may or may not be separate from one another, as
described in the applicable prospectus supplement.
The applicable prospectus supplement will describe:
- the designation and the terms of the purchase units and of the securities
constituting the units, including whether and under what circumstances
the securities comprising the units may be traded separately;
- any additional terms of the governing purchase unit agreement; and
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- any additional provisions for the issuance, payment, settlement, transfer
or exchange of the purchase units or of the securities constituting the
purchase units.
The terms and conditions described in this prospectus under "Description of
Debt Securities," "Description of Capital Securities," "Description of
Warrants," "Description of Depositary Shares," and "Description of Purchase
Contracts" will apply to each purchase unit and to any security included in each
purchase unit, as applicable, unless otherwise specified in the applicable
prospectus supplement.
We will issue the purchase units under one or more purchase unit agreements
to be entered into between us and a bank or trust company, as unit agent. We may
issue purchase units in one or more series, which will be described in the
applicable prospectus supplement. This summary of some provisions of the
purchase units is not complete. You should refer to the purchase unit agreement,
including the applicable form of purchase unit certificate, relating to the
specific purchase units being offered for the complete terms of the purchase
unit agreement and the purchase units and the identity of the unit agent with
respect to those purchase units. That purchase unit agreement, together with the
applicable form of purchase unit certificate, will be filed with the SEC in
connection with the offering of the specific purchase units and will be
available by the means described under "Where You Can Find More Information."
DESCRIPTION OF DEBT SECURITIES
The following is a general description of the debt securities (the "Debt
Securities") that we may offer from time to time. The particular terms of the
Debt Securities offered by any prospectus supplement and the extent, if any, to
which the general provisions described below may apply will be described in the
applicable prospectus supplement. Although our securities include securities
denominated in U.S. dollars, we may choose to issue securities in any other
currency, including the euro.
The Debt Securities will be either senior Debt Securities or subordinated
Debt Securities. We will issue the senior Debt Securities under the senior
indenture between us and a trustee. We will issue the subordinated Debt
Securities under a subordinated indenture between us and the same or another
trustee. The senior indenture and the subordinated indenture are collectively
referred to in this prospectus as the indentures, and each of the trustee under
the senior indenture and the trustee under the subordinated indenture are
referred to in this prospectus as trustee.
The following description is only a summary of the material provisions of
the indentures. We urge you to read the appropriate indenture because it, and
not this description, defines your rights as holders of the Debt Securities. See
the information under the heading "Where You Can Find More Information" to
contact us for a copy of the appropriate indenture.
GENERAL
The senior Debt Securities are unsubordinated obligations, will rank on par
with all other debt obligations of ours and, unless otherwise indicated in the
related prospectus supplement, will be unsecured. The subordinated Debt
Securities will be subordinate, in right of payment to senior Debt Securities. A
description of the subordinated Debt Securities is provided below under
"-- Subordinated Debt Securities." The specific terms of any subordinated Debt
Securities will be provided in the related prospectus supplement. For a complete
understanding of the provisions pertaining to the subordinated Debt Securities,
you should refer to the subordinated indenture attached as an exhibit to the
Registration Statement of which this prospectus is a part.
TERMS
The indentures do not limit the principal amount of debt we may issue.
We may issue notes or bonds in traditional paper form, or we may issue a
global security. The Debt Securities of any series may be issued in definitive
form or, if provided in the related prospectus supplement, may be represented in
whole or in part by a global security or securities, registered in the name of a
depositary designated by us. Each Debt Security represented by a global security
is referred to as a "Book-Entry Security."
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Debt Securities may be issued from time to time pursuant to this prospectus
and will be offered on terms determined by market conditions at the time of
sale. Debt Securities may be issued in one or more series with the same or
various maturities and may be sold at par, a premium or an original issue
discount. Debt Securities sold at an original issue discount may bear no
interest or interest at a rate that is below market rates. Unless otherwise
provided in the prospectus supplement, Debt Securities denominated in U.S.
dollars will be issued in denominations of $1,000 and integral multiples
thereof.
Please refer to the prospectus supplement for the specific terms of the
Debt Securities offered including the following:
- Designation of an aggregate principal amount, purchase price and
denomination;
- Date of maturity;
- If other than U.S. currency, the currency for which the Debt Securities
may be purchased;
- The interest rate or rates and the method of calculating interest;
- The times at which any premium and interest will be payable;
- The place or places where principal, any premium and interest will be
payable;
- Any redemption or sinking fund provisions or other repayment obligations;
- Any index used to determine the amount of payment of principal of and any
premium and interest on the Debt Securities;
- The application, if any, of the defeasance provisions to the Debt
Securities;
- If other than the entire principal amount, the portion of the Debt
Securities that would be payable upon acceleration of the maturity
thereof;
- Whether the Debt Securities will be issued in whole or in part in the
form of one or more global securities, and in such case, the depositary
for the global securities;
- Any additional covenants applicable to the Debt Securities being offered;
- Any additional events of default applicable to the Debt Securities being
offered;
- The terms of subordination, if applicable;
- The terms of conversion, if applicable; and
- Any other specific terms including any terms that may be required by or
advisable under applicable law.
Except with respect to Book-Entry Securities, Debt Securities may be
presented for exchange or registration of transfer, in the manner, at the places
and subject to the restrictions set forth in the Debt Securities and the
prospectus supplement. Such services will be provided without charge, other than
any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the indentures.
CERTAIN COVENANTS IN THE INDENTURES
PAYMENT
We will pay principal of and premium, if any, and interest on the Debt
Securities at the place and time described in the Debt Securities. Unless
otherwise provided in the prospectus supplement, we will pay interest on any
Debt Security to the person in whose name that security is registered at the
close of business on the regular record date for that interest payment.
Any money deposited with the trustee or any paying agent for the payment of
principal of or any premium or interest on any Debt Security that remains
unclaimed for two years after that amount has become due and payable will be
paid to us at our request. After this occurs, the holder of that security must
look only to us for payment of that amount and not to the trustee or paying
agent.
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LIENS
Each indenture provides that we will not, and will not permit any of our
domestic subsidiaries, directly or indirectly, to issue, assume or guarantee any
Debt if that Debt is secured by any Lien upon any Principal Property (or portion
thereof) of ours or of any Domestic Subsidiary or any shares of stock or
indebtedness of any Domestic Subsidiary, whether owned at the date of the
indenture or thereafter acquired, without effectively securing the notes equally
and ratably with that Debt, so long as such Debt is so secured. The foregoing
restriction does not apply to:
- Liens on any property acquired, constructed or improved by us or any
domestic subsidiary of ours after the date of the indenture, which are
created or assumed contemporaneously with or within three years after its
acquisition, or completion of construction or improvement (or within six
months thereafter pursuant to a firm commitment for financing
arrangements entered into within that three-year period) to secure or
provide for the payment of the purchase price or cost thereof, or Liens
existing on any property at the time of its acquisition;
- Liens existing on any property, shares of stock or indebtedness acquired
from a Person merged with or into us or a Domestic Subsidiary of ours
after the date of the indenture;
- with respect to any corporation that becomes a Domestic Subsidiary after
the date of the indenture, Liens on property of, or shares of stock or
indebtedness issued by, any such corporation existing at the time it
becomes a Domestic Subsidiary and not incurred in connection with or in
anticipation of such corporation becoming a Domestic Subsidiary;
- Liens to secure Debt of a Domestic Subsidiary owed to us or Debt of one
of our Domestic Subsidiaries owed to another Domestic Subsidiary;
- Liens in favor of governmental bodies to secure partial, progress,
advance or other payments pursuant to any contract or statute;
- any Lien existing on the date of the indenture; or
- Liens for the sole purpose of extending, renewing or replacing Debt, in
whole or in part, secured by any Lien referred to above, provided,
however, that the principal amount of Debt secured by that Lien shall not
exceed the principal amount of Debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to the property that secured the Lien so
extended, renewed or replaced (plus improvements on such property).
The limitation on Liens will not apply to the issuance, assumption or
guarantee by us or any Domestic Subsidiary of Debt secured by a Lien which would
otherwise be subject to the foregoing restrictions up to an aggregate amount
which, together with all other Debt of ours and our Domestic Subsidiaries
secured by Liens (not including Liens permitted under the foregoing exceptions)
and the Attributable Debt with respect to Sale and Leaseback Transactions
existing at that time (other than Sale and Leaseback Transactions in which the
property involved would have been permitted to be subject to a Lien under clause
(1) above) does not exceed 10% of Consolidated Net Tangible Assets.
LIMITATIONS ON CERTAIN SALE AND LEASEBACKS
We and our Domestic Subsidiaries are prohibited from entering into Sale and
Leaseback transactions unless:
- We or such Domestic Subsidiary would be entitled to incur Debt secured by
a Lien on the Principal Property to be leased without equally and ratably
securing the Debt Securities, pursuant to the provisions described under
"Limitations on Liens"; or the Attributable Debt with respect thereto
would be an amount permitted under the last sentence under "Limitations
on Liens;" or
- We or such Domestic Subsidiary will, within 180 days of the effective
date of any such arrangement apply an amount equal to the proceeds from
such Sale and Leaseback Transaction to the payment or other retirement of
Debt that ranks senior to or equal with the notes (other than, in either
case, Debt owed by us or any Subsidiary); or to the purchase of other
Principal Property.
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LIMITATIONS ON GUARANTEES
We and our Domestic Subsidiaries are prohibited from entering into any
agreement pursuant to which any such Domestic Subsidiary guarantees the payment
of Debt incurred by us without providing that the Debt Securities be equally and
ratably guaranteed by such Domestic Subsidiary.
MERGER AND CONSOLIDATION
We will not merge or consolidate with any other entity or sell or convey
all or substantially all of its assets to any person, firm, corporation or other
entity, except that we may merge or consolidate with, or sell or convey all or
substantially all of our assets to, any other entity if (i) we are the
continuing entity, or the successor entity (if other than us) is organized and
existing under the laws of the United States of America or a State thereof and
such entity expressly assumes payment of the principal and interest on all the
Debt Securities, and the performance and observance of all of the covenants and
conditions of the applicable indenture to be performed by us and (ii) there is
no default under the applicable indenture. Upon such a succession, we will be
relieved from any further obligations under the applicable indenture. For
purposes of this paragraph, "substantially all of our assets" means, at any
date, a portion of the non-current assets reflected in our consolidated balance
sheet as of the end of the most recent quarterly period that represents at least
66 2/3% of the total reported value of such assets.
WAIVER OF CERTAIN COVENANTS
Unless otherwise provided in the prospectus supplement, we may, with
respect to the Debt Securities of any series, omit to comply with any provision
of the covenants described under "Liens" and "Limitations on Certain Sale and
Leasebacks" above or in any covenant provided in the terms of those Debt
Securities if, before the time for such compliance, holders of at least a
majority in principal amount of the outstanding Debt Securities of that series
waive such compliance in that instance or generally.
EVENTS OF DEFAULT
An Event of Default occurs with respect to any series of Debt Securities
when:
- We default in paying principal of or premium, if any, on any of the Debt
Securities of such series when due;
- We default in paying interest on the Debt Securities of such series when
due, continuing for 30 days;
- We default in making deposits into any sinking fund payment with respect
to any Debt Security of such series when due;
- failure by us in the performance of any other covenant or warranty in the
Debt Securities of such series or in the applicable indenture continues
for a period of 90 days after notice of such failure as provided in that
indenture;
- certain events of bankruptcy, insolvency, or reorganization occur; or
- any other Event of Default provided with respect to Debt Securities of
that series.
We are required annually to deliver to the trustee officers' certificates
stating whether or not the signers have any knowledge of any default in the
performance by us of certain covenants.
If an Event of Default shall occur and be continuing with respect to any
series, the trustee or the holders of not less than 25% in principal amount of
the Debt Securities of such series then outstanding may declare the Debt
Securities of such series to be due and payable. If an Event of Default
described in clause (vi) of the first paragraph under "Events of Default" occurs
with respect to any series of Debt Securities, the principal amount of all Debt
Securities of that series (or, if any securities of that series are original
issue discount securities, the portion of the principal amount of such
securities as may be specified by the terms thereof) will automatically become
due and payable without any declaration by the trustee or the holders. The
trustee is required to give holders of the Debt Securities of any series written
notice of a default with respect to such series as and to the extent provided by
the Trust Indenture Act, except that the trustee may not give such notice of a
default described
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in clause (v) of the first paragraph under "Events of Default" until at least 60
days after the default. As used in this paragraph, a "default" means an event
described in the first paragraph under "Events of Default" without including any
applicable grace period.
If at any time after the Debt Securities of such series have been declared
due and payable, and before any judgment or decree for the moneys due has been
obtained or entered, we will pay or deposit with the trustee amounts sufficient
to pay all matured installments of interest upon the Debt Securities of such
series and the principal of all Debt Securities of such series which shall have
become due, otherwise than by acceleration, together with interest on such
principal and, to the extent legally enforceable, on such overdue installments
of interest and all other amounts due under the applicable indenture shall have
been paid, and any and all defaults with respect to such series under that
indenture shall have been remedied, then the holders of a majority in aggregate
principal amount of the Debt Securities of such series then outstanding, by
written notice to us and the trustee, may rescind and annul the declaration that
the Debt Securities of such series are due and payable. In addition, the holders
of a majority in aggregate principal amount of the Debt Securities of such
series may waive any past default and its consequences with respect to such
series, except a default in the payment of the principal of or any premium or
interest on any Debt Securities of such series or a default in the performance
of a covenant that cannot be modified under the indentures without the consent
of the holder of each affected Debt Security.
The trustee is under no obligation to exercise any of the rights or powers
under the indentures at the request, order or direction of any of the holders of
Debt Securities, unless such holders shall have offered to the trustee
reasonable security or indemnity. Subject to such provisions for the
indemnification of the trustee and certain limitations contained in the
indentures, the holders of a majority in aggregate principal amount of the Debt
Securities of each series at the time outstanding shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee, or exercising any trust or power conferred on the trustee, with
respect to the Debt Securities of such series.
No holder of Debt Securities will have any right to institute any
proceeding, judicial or otherwise, with respect to the indentures, for the
appointment of a receiver or trustee or for any other remedy under the
indentures unless:
- The holder has previously given written notice to the trustee of a
continuing Event of Default with respect to the Debt Securities of that
series; and
- The holders of at least 25% in principal amount of the outstanding Debt
Securities of that series have made a written request to the trustee, and
offered reasonable indemnity, to the trustee to institute proceedings as
trustee, the trustee has failed to institute the proceedings within 60
days and the trustee has not received from the holders of a majority in
principal amount of the Debt Securities of that series a direction
inconsistent with that request.
Notwithstanding the foregoing, the holder of any Debt Security will have an
absolute and unconditional right to receive payment of the principal of and any
premium and, subject to the provisions of the applicable indenture regarding the
payment of default interest, interest on that Debt Security on the due dates
expressed in that security and to institute suit for the enforcement of payment.
MODIFICATION OF THE INDENTURES
Each indenture contains provisions permitting us and the trustee to modify
that indenture or enter into or modify any supplemental indenture without the
consent of the holders of the Debt Securities in regard to matters as shall not
adversely affect the interests of the holders of the Debt Securities, including,
without limitation, the following:
- to evidence the succession of another corporation to us;
- to add to the covenants of ours further covenants for the benefit or
protection of the holders of any or all series of Debt Securities or to
surrender any right or power conferred upon us by that indenture;
- to add any additional Events of Default with respect to all or any series
of Debt Securities;
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- to add to or change any of the provisions of that indenture to facilitate
the issuance of Debt Securities in bearer form with or without coupons,
or to permit or facilitate the issuance of Debt Securities in
uncertificated form;
- to add to, change or eliminate any of the provisions of that indenture in
respect of one or more series of Debt Securities thereunder, under
certain conditions designed to protect the rights of any existing holder
of those Debt Securities;
- to secure all or any series of Debt Securities;
- to establish the forms or terms of the Debt Securities of any series;
- to evidence the appointment of a successor trustee and to add to or
change provisions of that indenture necessary to provide for or
facilitate the administration of the trusts under that indenture by more
than one trustee;
- to cure any ambiguity, to correct or supplement any provision of that
indenture which may be defective or inconsistent with another provision
of that indenture;
- to make other amendments that do not adversely affect the interests of
the holders of any series of Debt Securities in any material respect; and
- to add or change or eliminate any provision of that indenture as shall be
necessary or desirable in accordance with any amendments to the Trust
Indenture Act.
We and the trustee may otherwise modify each indenture or any supplemental
indenture with the consent of the holders of not less than a majority in
aggregate principal amount of each series of Debt Securities affected thereby at
the time outstanding, except that no such modifications shall
- extend the fixed maturity of any Debt Securities or any installment of
interest or premium on any Debt Securities, or reduce the principal
amount thereof or reduce the rate of interest or premium payable upon
redemption, or reduce the amount of principal of an original issue
discount Debt Security or any other Debt Security that would be due and
payable upon a declaration of acceleration of the maturity thereof, or
change the currency in which the Debt Securities are payable or impair
the right to institute suit for the enforcement of any payment after the
stated maturity thereof or the redemption date, if applicable, or
adversely affect any right of the holder of any Debt Security to require
us to repurchase that security, without the consent of the holder of each
Debt Security so affected;
- reduce the percentage of Debt Securities of any series, the consent of
the holders of which is required for any waiver or supplemental
indenture, without the consent of the holders of all Debt Securities
affected thereby then outstanding; or
- modify the provisions of that indenture relating to the waiver of past
defaults or the waiver or certain covenants or the provisions described
under "Modification of the indentures," except to increase any percentage
set forth in those provisions or to provide that other provisions of that
indenture may not be modified without the consent of the holder of each
Debt Security affected thereby, without the consent of the holder of each
Debt Security affected thereby.
SATISFACTION AND DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Each indenture shall be satisfied and discharged if (i) we shall deliver to
the trustee all Debt Securities then outstanding for cancellation or (ii) all
Debt Securities not delivered to the trustee for cancellation shall have become
due and payable, are to become due and payable within one year or are to be
called for redemption within one year and we shall deposit an amount sufficient
to pay the principal, premium, if any, and interest to the date of maturity,
redemption or deposit (in the case of Debt Securities that have become due and
payable), provided that in either case we shall have paid all other sums payable
under that indenture.
Each indenture provides, if such provision is made applicable to the Debt
Securities of a series,
24
- that we may elect either (A) to defease and be discharged from any and
all obligations with respect to any Debt Security of such series (except
for the obligations to register the transfer or exchange of such Debt
Security, to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B)
to be released from our obligations with respect to such Debt Security
under Sections 801, 803, 1005, 1006, 1007 and 1009 of that indenture
(being the restrictions described above under "Certain Covenants of ours
in the indentures") together with additional covenants that may be
included for a particular series; and
- that Sections 501(4), 501(5) (as to Sections 801, 803, 1005, 1006, 1007
and 1009) and 501(8), as described in clauses (iv), (v) and (vii) under
"Events of Default," shall not be Events of Default under that indenture
with respect to such series ("covenant defeasance"), upon the deposit
with the trustee (or other qualifying trustee), in trust for such
purpose, of money certain U.S. government obligations and/or, in the case
of Debt Securities denominated in U.S. dollars, certain state and local
government obligations which through the payment of principal and
interest in accordance with their terms will provide money, in an amount
sufficient to pay the principal of (and premium, if any) and interest on
such Debt Security, on the scheduled due dates.
In the case of defeasance, the holders of such Debt Securities are entitled to
receive payments in respect of such Debt Securities solely from such trust. Such
a trust may only be established if, among other things, we have delivered to the
trustee an Opinion of Counsel (as specified in the indentures) to the effect
that the holders of the Debt Securities affected thereby will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred. Such
Opinion of Counsel, in the case of defeasance under clause (A) above, must refer
to and be based upon a ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the date of the indentures.
RECORD DATES
The indentures provide that in certain circumstances we may establish a
record date for determining the holders of outstanding Debt Securities of a
series entitled to join in the giving of notice or the taking of other action
under the applicable indenture by the holders of the Debt Securities of such
series.
SUBORDINATED DEBT SECURITIES
Although the senior indenture and the subordinated indenture are generally
similar and many of the provisions discussed above pertain to both senior and
subordinated Debt Securities, there are many substantive differences between the
two. This section discusses some of those differences.
SUBORDINATION
Subordinated Debt Securities will be subordinate, in right of payment, to
all Senior Debt. "Senior Debt" is defined to mean, with respect to us, the
principal, premium, if any, and interest on the following:
- all indebtedness of ours, whether outstanding on the date of issuance or
thereafter created, incurred or assumed, which is for money borrowed, or
evidenced by a note or similar instrument given in connection with the
acquisition of any business, properties or assets, including securities;
- any indebtedness of others of the kinds described in the preceding clause
for the payment of which we are responsible or liable (directly or
indirectly, contingently or otherwise) as guarantor or otherwise; and
- amendments, renewals, extensions and refundings of any indebtedness
described in the preceding clauses (1) or (2), unless in any instrument
or instruments evidencing or securing such indebtedness or pursuant to
which the same is outstanding, or in any such amendment, renewal,
extension or refunding.
25
DIFFERENCE BETWEEN SUBORDINATED DEBT SECURITY COVENANTS AND SENIOR DEBT
SECURITY COVENANTS AND EVENTS OF DEFAULT
Subordinated Debt Securities may not have the advantage of all of the
covenants and Events of Default provided in the senior indenture. For example,
covenants relating to Liens, Limitations on Certain Sale and Leasebacks as
discussed above are not applicable to securities issued pursuant to the
subordinated indenture
TERMS OF SUBORDINATED DEBT SECURITIES MAY CONTAIN CONVERSION OR EXCHANGE
PROVISIONS
The prospectus supplement for a particular series of subordinated Debt
Securities will describe the specific terms discussed above that apply to the
subordinated Debt Securities being offered thereby as well as any applicable
conversion or exchange provisions.
MODIFICATION OF THE INDENTURE RELATING TO SUBORDINATED DEBT SECURITIES
The subordinated indenture may be modified by us and the trustee without
the consent of the Holders of the subordinated Debt Securities for one or more
of the purposes discussed above under "-- Modification of the indentures." We
and the trustee may also modify the subordinated indenture to make provision
with respect to any conversion or exchange rights for a given issue of
subordinated Debt Securities.
GOVERNING LAW
The laws of the State of New York govern each indenture and will govern the
Debt Securities.
BOOK-ENTRY SECURITIES
The following description of book-entry securities will apply to any series
of Debt Securities issued in whole or in part in the form of one or more global
securities except as otherwise described in the prospectus supplement.
Book-entry securities of like tenor and having the same date will be
represented by one or more global securities deposited with and registered in
the name of a depositary that is a clearing agent registered under the Exchange
Act. Beneficial interests in book-entry securities will be limited to
institutions that have accounts with the depositary ("participants") or persons
that may hold interests through participants.
Ownership of beneficial interests by participants will only be evidenced
by, and the transfer of that ownership interest will only be effected through,
records maintained by the depositary. Ownership of beneficial interests by
persons that hold through participants will only be evidenced by, and the
transfer of that ownership interest within such participant will only be
effected through, records maintained by the participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in a global security.
Payment of principal of and any premium and interest on book-entry
securities represented by a global security registered in the name of or held by
a depositary will be made to the depositary, as the registered owner of the
global security. Neither we, the trustee nor any agent of ours or the trustee
will have any responsibility or liability for any aspect of the depositary's
records or any participant's records relating to or payments made on account of
beneficial ownership interests in a global security or for maintaining,
supervising or reviewing any of the depositary's records or any participant's
records relating to the beneficial ownership interests. Payments by participants
to owners of beneficial interests in a global security held through such
participants will be governed by the depositary's procedures, as is now the case
with securities held for the accounts of customers registered in "street name,"
and will be the sole responsibility of such participants.
A global security representing a book-entry security is exchangeable for
definitive Debt Securities in registered form, of like tenor and of an equal
aggregate principal amount registered in the name of, or is transferable in
whole or in part to, a person other than the depositary for that global
security, only if (a) the depositary notifies us that it is unwilling or unable
to continue as depositary for that global security or the depositary ceases to
be a clearing agency registered under the Exchange Act, (b) there shall have
occurred and be continuing an Event of Default with respect to the Debt
Securities of that series or (c) other circumstances exist
26
that have been specified in the terms of the Debt Securities of that series. Any
global security that is exchangeable pursuant to the preceding sentence shall be
registered in the name or names of such person or persons as the depositary
shall instruct the trustee. It is expected that such instructions may be based
upon directions received by the depositary from its participants with respect to
ownership of beneficial interests in such global security.
Except as provided above, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the holders thereof for any purpose
under the indentures, and no global security shall be exchangeable, except for a
security registered in the name of the depositary. This means each person owning
a beneficial interest in such global security must rely on the procedures of the
depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a holder under the indentures. We understand that under existing industry
practices, if we request any action of holders or an owner of a beneficial
interest in such global security desires to give or take any action that a
holder is entitled to give or take under the indentures, the depositary would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participant to give or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in this "Description of Debt
Securities." Reference is made to the indentures for complete definitions of
these terms, as well as any other capitalized terms used in this description for
which no definition is provided. Unless otherwise provided in the applicable
prospectus supplement, the following terms will mean as follows for purposes of
covenants that may be applicable to any particular series of senior debt
securities.
The term "Attributable Debt," in respect of a Sale and Leaseback
Transaction, means, as of any particular time, the present value (discounted at
the rate of interest implicit in the lease involved in such Sale and Leaseback
Transaction, as determined by us in good faith) of the obligation of the lessee
thereunder for rental payments (excluding, however, any amounts required to be
paid by the lessee, whether or not designated as rent or additional rent, on
account of maintenance and repairs, insurance, taxes, assessments, water rates
or similar charges or any amounts required to be paid by the lessee thereunder
contingent upon the monetary inflation or the amount of sales, maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges) during
the remaining term of the lease (including any period for which the lease has
been extended or may, at the option of the lessor, be extended).
The term "Consolidated Net Tangible Assets" means the total of all the
assets appearing on the consolidated balance sheet of us and our Subsidiaries,
less the following: (A) current liabilities; (B) intangible assets such as
goodwill, trademarks, trade names, patents and unamortized debt discount and
expense; and (C) appropriate adjustments on account of minority interests of
other persons holding stock in any Subsidiary of ours.
The term "Debt" means indebtedness for money borrowed.
The term "Domestic Subsidiary" means a Subsidiary formed under the laws of,
or conducting its principal operations within, the Unites States or any State or
territory thereof.
The term "Lien" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind, excluding certain liens relating to taxes,
easements and similar liens arising in the ordinary course of business.
The term "Person" means an individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
The term "Principal Property" means any manufacturing plant or other
similar facility owned by us or any Domestic Subsidiary, the book value of the
real property, plant and equipment of which (as shown, without deduction of any
depreciation reserves, on the books of the owner or owners) is not less than two
percent of Consolidated Net Tangible Assets except (A) any such plant or
facility which our Board of Directors determines is not of material importance
to the total business conducted, or assets owned, by us and our Domestic
27
Subsidiaries as an entirety, or (B) any portion of any such plant or facility
which our Board of directors determines not to be of material importance to the
use or operation thereof.
The term "Sale and Leaseback Transaction" means any arrangement with any
Person providing for the leasing to us or any Domestic Subsidiary of ours of any
Principal Property or portion thereof (except for temporary leases for a term,
including any renewal thereof, of not more than 36 months and except for leases
between us and a Subsidiary or between Subsidiaries), which Principal Property
(or portion thereof has been or is to be sold or transferred by us or such
Domestic Subsidiary to such Person.
The term "Subsidiary" means with respect to any Person, any corporation,
association or other business entity of which more than 50% of the outstanding
voting stock is owned, directly or indirectly, by such Person and one or more
Subsidiaries of such Person (or combination thereof). Unless otherwise
specified, "Subsidiary" means a Subsidiary of ours.
PLAN OF DISTRIBUTION
We may offer the offered securities in one or more of the following ways,
or any other way set forth in an applicable prospectus supplement from time to
time:
- to or through underwriting syndicates represented by managing
underwriters;
- through one or more underwriters without a syndicate for them to offer
and sell to the public;
- through dealers or agents;
- to investors directly in negotiated sales or in competitively bid
transactions; or
- to holders of other securities in exchanges in connection with
acquisitions.
The prospectus supplement for each series of securities we sell will
describe the offering, including:
- the name or names of any underwriters;
- the purchase price and the proceeds to us from that sale;
- any underwriting discounts and other items constituting underwriters'
compensation, which in the aggregate will not exceed eight percent of the
gross proceeds of the offering;
- any commissions paid to agents;
- the initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and
- any securities exchanges on which the securities may be listed.
UNDERWRITERS
If underwriters are used in a sale, we will execute an underwriting
agreement with them regarding those securities. Unless otherwise described in
the applicable prospectus supplement, the obligations of the underwriters to
purchase these securities will be subject to conditions, and the underwriters
must purchase all of these securities if any are purchased.
The securities subject to the underwriting agreement may be acquired by the
underwriters for their own account and may be resold by them from time to time
in one or more transactions, including negotiated transactions, at a fixed
offering price or at varying prices determined at the time of sale. Underwriters
may be deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from the purchasers of
these securities for whom they may act as agent. Underwriters may sell these
securities to or through dealers. These dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and
commissions from the purchasers for whom they may act as agent. Any initial
offering price and any discounts or concessions allowed or re-allowed or paid to
dealers may be changed from time to time.
28
We may authorize underwriters to solicit offers by institutions to purchase
the securities subject to the underwriting agreement from us, at the public
offering price stated in the applicable prospectus supplement under delayed
delivery contracts providing for payment and delivery on a specified date in the
future. If we sell securities under these delayed delivery contracts, the
applicable prospectus supplement will state that this is the case and will
describe the conditions to which these delayed delivery contracts will be
subject and the commissions payable for that solicitation.
In connection with underwritten offerings of the securities, the
underwriters may engage in over-allotment, stabilizing transactions, covering
transactions and penalty bids in accordance with Regulation M under the Exchange
Act, as follows:
- Over-allotment transactions involve sales in excess of the offering size,
which create a short position for the underwriters.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Covering transactions involve purchases of the securities in the open
market after the distribution has been completed in order to cover short
positions.
- Penalty bids permit the underwriters to reclaim a selling concession from
a broker/dealer when the securities originally sold by that broker-dealer
are repurchased in a covering transaction to cover short positions.
These stabilizing transactions, covering transactions and penalty bids may
cause the price of the securities to be higher than it otherwise would be in the
absence of these transactions. If these transactions occur, they may be
discontinued at any time.
AGENTS
We also may sell any of the securities through agents designated by us from
time to time. We will name any agent involved in the offer or sale of these
securities and will list commissions payable by us to these agents in the
applicable prospectus supplement. These agents will be acting on a best efforts
basis to solicit purchases for the period of its appointment, unless we state
otherwise in the applicable prospectus supplement.
DIRECT SALES
We may sell any of the securities directly to purchasers. In this case, we
will not engage underwriters or agents in the offer and sale of these
securities.
In addition, debt securities, shares of common stock or preferred stock or
other of our securities described in this prospectus may be issued upon the
exercise of warrants or the settlement of purchase contracts or units.
INDEMNIFICATION
We may indemnify underwriters, dealers or agents who participate in the
distribution of securities against certain liabilities, including liabilities
under the Securities Act of 1933, and may agree to contribute to payments that
these underwriters, dealers or agents may be required to make.
NO ASSURANCE OF LIQUIDITY
The securities we offer may be a new issue of securities with no
established trading market. Any underwriters that purchase securities from us
may make a market in these securities. The underwriters will not be obligated,
however, to make a market and may discontinue market-making at any time without
notice to holders of the securities. We cannot assure you that there will be
liquidity in the trading market for any securities of any series.
29
LEGAL MATTERS
The validity of the issuance of the offered securities will be passed upon
for us by Kirkpatrick & Lockhart LLP, Pittsburgh, Pennsylvania.
EXPERTS
The consolidated financial statements of Allegheny Technologies
Incorporated incorporated by reference in Allegheny Technologies Incorporated's
Annual Report (Form 10-K) for the year ended December 31, 2003, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon incorporated by reference therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
SEC registration fee........................................ $ 50,680
Blue Sky fees and expenses.................................. 5,000
Legal fees and expenses..................................... 50,000
Accounting fees and expenses................................ 50,000
Trustee's fees and expenses................................. 15,000
Printing and engraving fees................................. 50,000
Miscellaneous............................................... 29,320
--------
Total..................................................... $250,000
========
All of the above amounts, other than the SEC filing fee, are estimates
only.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of directors
to the corporation or its stockholders for monetary damages for breaches of
fiduciary duty, except for liability (a) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the DGCL or (d) for any transaction from which the
director derived an improper personal benefit. Our restated certificate
provides, among other things, that the personal liability of our directors is so
eliminated.
Under Section 145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances and subject to
certain limitations against certain costs and expenses, including attorneys'
fees actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of his being a director or officer of the
corporation if it is determined that he acted in accordance with the applicable
standard of conduct set forth in such statutory provision. Our Amended bylaws
provide that we will indemnify any person who may be involved, as a party or
otherwise, in a claim, action, suit or proceeding (other than any claim, action,
suit or proceeding brought by or in the right of Allegheny Technologies
Incorporated) by reason of the fact that such person is or was a director or
officer, or is or was serving at the request of us as a director or officer of
any other corporation or entity, against certain liabilities, costs and
expenses. We are also authorized to maintain insurance on behalf of any person
who is or was a director or officer, or is or was serving at the request of us
as a director or officer of any other corporation or entity, against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of his status as such, whether or not we would have the
power to indemnify such person against such liability under the DGCL. We are a
party to agreements with our directors and officers pursuant to which we have
agreed to indemnify them against certain costs and expenses incurred by them in
their capacities as such.
ITEM 16. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
* 1.1 Form of Purchase Agreement.
* 1.2 Form of Distribution Agreement.
II-1
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Restated Certificate of Incorporation of Allegheny
Technologies Incorporated, as amended (incorporated herein
by reference to Exhibit 3.1 to the Registrant's Report on
Form 10-K for the year ended December 31, 1999 (File No.
1-12001)).
3.2 Amended and Restated Bylaws of Allegheny Technologies
Incorporated (incorporated herein by reference to Exhibit
3.2 to the Registrant's Report on Form 10-K for the Year
Ended December 31, 1998 (File No. 1-12001)).
4.1 Revolving Credit and Security Agreement dated June 13, 2003
(incorporated by reference to Exhibit 99.1 to the
Registrant's Report on Form 8-K dated June 19, 2003 (File
No. 1-12001)).
4.2 Indenture dated as of December 18, 2001 between Allegheny
Technologies Incorporated and The Bank of New York, as
trustee, relating to Allegheny Technologies Incorporated
8.375% Notes due 2011 (incorporated by reference to Exhibit
4.2 to the Registrant's Report on Form 10-K for the year
ended December 31, 2001 (File No. 1-12001)).
4.3 Form of 8.375% Notes due 2011 (included as part of Exhibit
4.2).
4.4 Indenture dated as of December 15, 1995 between Allegheny
Ludlum Corporation and The Chase Manhattan Bank (National
Association), as trustee (relating to Allegheny Ludlum
Corporation's 6.95% Debentures due 2025) (incorporated by
reference to Exhibit 4(a) to Allegheny Ludlum Corporation's
Report on Form 10-K for the year ended December 31, 1995
(File No. 1-9498)), and First Supplemental Indenture by and
among Allegheny Technologies Incorporated, Allegheny Ludlum
Corporation and The Chase Manhattan Bank (National
Association), as Trustee, dated as of August 15, 1996
(incorporated by reference to Exhibit 4.1 to Registrant's
Current Report on Form 8-K dated August 15, 1996 (File No.
1-12001)).
4.5 Rights Agreement dated March 12, 1998, including Certificate
of Designation for Series A Junior Participating Preferred
Stock as filed with the State of Delaware on March 13, 1998
(incorporated by reference to Exhibit 1 to the Registrant's
Current report on Form 8-K dated March 12, 1998 (File No.
1-12001)).
* 4.6 Form of Certificate of Common Stock, par value $.10 per
share, of Allegheny Technologies Incorporated.
* 4.7 Form of Certificate of Preferred Stock.
* 4.8 Form of Warrant Agreement.
* 4.9 Form of Warrant Certificate.
* 4.10 Form of Deposit Agreement.
* 4.11 Form of Depositary Receipt.
* 4.12 Form of Purchase Contract Agreement.
* 4.13 Form of Purchase Contract Security Certificate.
* 4.14 Form of Purchase Unit Agreement.
* 4.15 Form of Purchase Unit Certificate.
4.16 Form of Indenture for Senior Debt (previously filed).
4.17 Form of Senior Debt Security (included as part of Exhibit
4.16).
4.18 Form of Indenture for Subordinated Debt (previously filed).
4.19 Form of Subordinated Debt Security (included as part of
Exhibit 4.18).
+ 5.1 Opinion of Kirkpatrick & Lockhart LLP.
12.1 Computation of Ratio of Earnings to Fixed Charges
(previously filed).
+ 23.1 Consent of Ernst & Young LLP.
23.2 Consent of Kirkpatrick & Lockhart LLP (included as part of
Exhibit 5.1).
24.1 Powers of Attorney (previously filed).
* 25.1 Form of T-1 Statement of Eligibility of Senior Debt
Indenture Trustee.
* 25.2 Form of T-1 Statement of Eligibility of Subordinated Debt
Indenture Trustee.
II-2
---------------
* To be filed either by amendment to this Registration Statement or as an
exhibit to a report filed under the Securities Exchange Act of 1934, as
amended, and incorporated herein by reference.
+ Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) 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 the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table on the cover of this registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
undersigned registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the undersigned registrant pursuant to the foregoing provisions, or otherwise,
the undersigned 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 undersigned registrant of expenses incurred or paid by a
director, officer or controlling person of the undersigned registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director,
II-3
officer or controlling person in connection with the securities being
registered, the undersigned 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 is against
public policy as expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act (the "Act") in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this amendment to registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Pittsburgh, Commonwealth of Pennsylvania on May 13, 2004.
ALLEGHENY TECHNOLOGIES INCORPORATED
By: /s/ L. PATRICK HASSEY
------------------------------------
Name: L. Patrick Hassey
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. PATRICK HASSEY Chairman, President and Chief May 13, 2004
------------------------------------------------ Executive Officer
L. Patrick Hassey
/s/ RICHARD J. HARSHMAN Executive Vice President -- May 13, 2004
------------------------------------------------ Finance and Chief Financial
Richard J. Harshman Officer
(Principal Financial Officer)
/s/ DALE G. REID Vice President, Controller, May 13, 2004
------------------------------------------------ Chief Accounting Officer and
Dale G. Reid Treasurer (Principal Accounting
Officer)
/s/ H. KENT BOWEN Director May 13, 2004
------------------------------------------------
H. Kent Bowen
* Director
------------------------------------------------
Robert P. Bozzone
* Director
------------------------------------------------
Frank V. Cahouet
* Director
------------------------------------------------
Diane C. Creel
* Director
------------------------------------------------
James C. Diggs
* Director
------------------------------------------------
W. Craig McClelland
II-5
SIGNATURE TITLE DATE
--------- ----- ----
* Director
------------------------------------------------
Charles J. Queenan, Jr.
* Director
------------------------------------------------
James E. Rohr
/s/ JOHN D. TURNER Director May 13, 2004
------------------------------------------------
John D. Turner
*By: /s/ JON D. WALTON Attorney-in-Fact May 13, 2004
------------------------------------------
Jon D. Walton
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
* 1.1 Form of Purchase Agreement.
* 1.2 Form of Distribution Agreement.
3.1 Restated Certificate of Incorporation of Allegheny
Technologies Incorporated, as amended (incorporated herein
by reference to Exhibit 3.1 to the Registrant's Report on
Form 10-K for the year ended December 31, 1999 (File No.
1-12001)).
3.2 Amended and Restated Bylaws of Allegheny Technologies
Incorporated (incorporated herein by reference to Exhibit
3.2 to the Registrant's Report on Form 10-K for the Year
Ended December 31, 1998 (File No. 1-12001)).
4.1 Revolving Credit and Security Agreement dated June 13, 2003
(incorporated by reference to Exhibit 99.1 to the
Registrant's Report on Form 8-K dated June 19, 2003 (File
No. 1-12001)).
4.2 Indenture dated as of December 18, 2001 between Allegheny
Technologies Incorporated and The Bank of New York, as
trustee, relating to Allegheny Technologies Incorporated
8.375% Notes due 2011 (incorporated by reference to Exhibit
4.2 to the Registrant's Report on Form 10-K for the year
ended December 31, 2001 (File No. 1-12001)).
4.3 Form of 8.375% Notes due 2011 (included as part of Exhibit
4.2).
4.4 Indenture dated as of December 15, 1995 between Allegheny
Ludlum Corporation and The Chase Manhattan Bank (National
Association), as trustee (relating to Allegheny Ludlum
Corporation's 6.95% Debentures due 2025) (incorporated by
reference to Exhibit 4(a) to Allegheny Ludlum Corporation's
Report on Form 10-K for the year ended December 31, 1995
(File No. 1-9498)), and First Supplemental Indenture by and
among Allegheny Technologies Incorporated, Allegheny Ludlum
Corporation and The Chase Manhattan Bank (National
Association), as Trustee, dated as of August 15, 1996
(incorporated by reference to Exhibit 4.1 to Registrant's
Current Report on Form 8-K dated August 15, 1996 (File No.
1-12001)).
4.5 Rights Agreement dated March 12, 1998, including Certificate
of Designation for Series A Junior Participating Preferred
Stock as filed with the State of Delaware on March 13, 1998
(incorporated by reference to Exhibit 1 to the Registrant's
Current report on Form 8-K dated March 12, 1998 (File No.
1-12001)).
* 4.6 Form of Certificate of Common Stock, par value $.10 per
share, of Allegheny Technologies Incorporated.
* 4.7 Form of Certificate of Preferred Stock.
* 4.8 Form of Warrant Agreement.
* 4.9 Form of Warrant Certificate.
* 4.10 Form of Deposit Agreement.
* 4.11 Form of Depositary Receipt.
* 4.12 Form of Purchase Contract Agreement.
* 4.13 Form of Purchase Contract Security Certificate.
* 4.14 Form of Purchase Unit Agreement.
* 4.15 Form of Purchase Unit Certificate.
4.16 Form of Indenture for Senior Debt (previously filed).
4.17 Form of Senior Debt Security (included as part of Exhibit
4.16).
4.18 Form of Indenture for Subordinated Debt (previously filed).
4.19 Form of Subordinated Debt Security (included as part of
Exhibit 4.18).
+ 5.1 Opinion of Kirkpatrick & Lockhart LLP.
12.1 Computation of Ratio of Earnings to Fixed Charges
(previously filed).
+ 23.1 Consent of Ernst & Young LLP.
23.2 Consent of Kirkpatrick & Lockhart LLP (included as part of
Exhibit 5.1).
EXHIBIT
NUMBER DESCRIPTION
------- -----------
24.1 Powers of Attorney (previously filed).
* 25.1 Form of T-1 Statement of Eligibility of Senior Debt
Indenture Trustee.
* 25.2 Form of T-1 Statement of Eligibility of Subordinated Debt
Indenture Trustee.
---------------
* To be filed either by amendment to this Registration Statement or as an
Exhibit to a report filed under the Securities Exchange Act of 1934, as
amended, and incorporated herein by reference.
+ Filed herewith.