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[LOGO]
PROSPECTUS
BUILDING MATERIALS HOLDING CORPORATION
COMMON STOCK
($.001 PAR VALUE)
2,000,000 SHARES
This Prospectus relates to 2,000,000 shares of common stock, par value
$.001 per share (the "Common Stock"), of Building Materials Holding Corporation
(the "Company"), that may be issued from time to time in connection with future
business combinations, acquisitions and mergers. In general, the terms of such
combinations, acquisitions and mergers will be determined by direct negotiations
between representatives of the Company and the owners or principal executives of
the companies or other entities to be so combined, acquired or merged or the
assets of which are to be acquired, and the factors taken into account will
include, among other things, the established quality of management, earning
power, cash flow, growth potential, facilities and locations of the companies or
other entities to be acquired or merged, and the market value of the Common
Stock.
The Common Stock is listed on Nasdaq under the symbol "BMHC." The last
reported sales price per share of the Common Stock, as quoted on Nasdaq on
August 17, 1998 was $13.938 per share.
The shares of Common Stock issued in connection with acquisitions may be
resold by the receipients thereof. See "Securities Covered by this Prospectus"
for information relating to resales pursuant to this Prospectus of Common Stock
issued pursuant to this Prospectus.
See "Risk Factors" on pages 5 to 7 for certain considerations relevant to
an investment in the Common Stock.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
The date of this Prospectus is August 18, 1998
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AVAILABLE INFORMATION
The Company has filed two Registration Statements on Form S-4 (the
"Registration Statements"), File No. 333-36387 and File No. 333-61221, with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares covered
by this Prospectus. This Prospectus omits certain information and exhibits
included in the Registration Statements, copies of which may be obtained upon
payment of a fee prescribed by the Commission or may be examined free of charge
at the principal office of the Commission in Washington, D.C.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 500 West
Madison Street, Room 1400, Chicago, Illinois 60606 and at the Jacob K. Javits
Federal Building, 75 Park Place, New York, New York 10278. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company or the Company's
predecessor, BMC West Corporation, with the Commission are by this reference
incorporated in and made a part of this Prospectus: (i) the S-4 Registration
Statement No. 333-36387 filed with the Commission on September 25, 1997, (ii)
the Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
File No. 0-19335; (iii) the Proxy Statement dated March 31, 1998; (iv) the
Quarterly Report on Form 10-Q for the quarters ended March 31 and June 30,
1998 (v) the description of the Company's Common Stock contained in the
Company's Current Report on Form 8-K filed with the Commission on September
24, 1997 and (vi) all documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the filing of a post-effective amendment which
indicates that all shares of Common Stock offered hereby have been sold or
which deregisters all Common Stock then remaining unsold. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Copies of all documents that are incorporated
herein by reference (not including the exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents or into
this Prospectus) will be provided without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon a written or oral
request to Building Materials Holding Corporation, Attention: Corporate
Secretary, One Market Plaza, Steuart Tower #2650, San Francisco, California
94105.
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THE COMPANY
Building Materials Holding Corporation ("BMHC") or the ("Company") is a
holding company engaged, through its wholly owned subsidiary, BMC West
Corporation ("BMC West") in the distribution of building materials, selling
primarily to professional contractors as well as to project-oriented consumers
(including professional repair and remodel contractors hired by them). BMHC was
formed to centralize, at the holding company, responsibilities for acquisitions,
financial and administrative functions - including strategic, financial and
capital planning, corporate governance, and investor relations activities. In
addition, the holding company structure is intended to focus operational
management of the day-to-day activities. As part of this restructuring, the
operating units of BMC West have been divided into three major operating
divisions, with plans to create a fourth, with a division president having
general responsibility for the profitability of each division. This
restructuring is intended to give local management more focused responsibility
and enhances the opportunity to recommend the introduction of new products or
services appropriate for a given market.
BMC West is a leading distributor and retailer of building materials. In
addition to distributing products from manufacturers, the Company conducts
value-added conversion activities which include fabricating pre-hung doors, roof
and floor trusses, pre-assembled windows and pre-cutting lumber to meet customer
specifications. The Company operates 56 building materials centers located in
Arizona, California, Colorado, Idaho, Montana, Nevada, Oregon, Texas, Utah, and
Washington. Value-added activities are conducted at 40 separate facilities,
most of which are located at building materials sites.
The Company targets primarily the professional contractor market, which is
a strategy distinct from that pursued by the high-volume, consumer-oriented home
center retailers now found throughout the United States. The Company's
professional contractor market consists of persons engaged principally in the
construction of single-family homes and, to a lesser extent, multi-family units
and light commercial and industrial construction. The Company also targets the
repair and remodel market which consists generally of advanced, project-oriented
consumers and contractors hired by them, who engage primarily in substantial
projects such as room additions, kitchen or bathroom remodeling and fence or
deck installations. The Company believes that many of its building materials
centers hold a first or second place local market share among professional
contractors and that the Company, as a whole, has the largest sales volume of
any distributor of building materials serving primarily professional contractors
in its market area.
Professional contractors generally are large-volume, repeat customers,
requiring certainty of product availability and delivery and a number of
specialized services typically not offered by home center retailers. The
Company develops long-term relationships with its customers by providing them
with a broad range of high-quality products and services. Each of the Company's
building materials centers tailors its product and service mix to meet the
demands of its local market. The Company's products, which include lumber,
panel products, roofing materials, prehung doors, roof and floor trusses, pre-
assembled windows, cabinets, hardware, paint and tools, are used primarily for
new residential construction, light commercial construction and repair and
remodeling projects. These products are sold by experienced professionals
consisting of both field sales personnel and facility-based sales and support
personnel. The Company also offers its customers various services, including
assistance with project designs and materials specifications, coordination of
delivery of orders to job sites, provision of credit to pre-approved contractors
and referral of retail customers to pre-qualified contractors. Complete home
packages (delivered to the sites of the Company's builder customers according to
their construction
3
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schedules) account for a significant amount of the Company's total sales.
Professional contractors accounted for approximately 75% to 78% of the
Company's net sales in each of the last three years.
The Company believes that it is well positioned in some of the most
attractive markets for building materials. Population and migration trends in
the markets served by the Company as well as the relative strength of many of
the local economies in the regions it serves, have resulted in the growth of
residential housing in these markets at rates faster than the United States as a
whole. The Company believes that these population and migration trends provide
a foundation for continued growth. Furthermore, the Company's 56 building
materials centers operate in several distinct regional markets, which
collectively have a diverse economic base of manufacturing, agricultural,
recreational and service-based industries. The Company believes that this
geographic diversification lessens the impact on the Company of a downturn in
any one of its regional markets.
BMHC traces its roots through various predecessor companies to 1915. BMC
West Corporation, BMHC's predecessor and principal subsidiary, was formed in
1987 through the acquisition of 20 building materials centers from Boise Cascade
Corporation and has since grown to 56 centers, predominantly through
acquisitions. References to the Company in this Prospectus include BMC West
Corporation.
Acquisition Strategy
The Company is seeking multi-unit acquisitions that could be acquired as
new stand-alone units as well as opportunity to acquire additional centers in
the geographic areas currently served by BMHC. The Company believes that the
fragmented nature of its industry presents opportunities for additional
acquisitions of strategically located building materials centers and value-added
facilities. The management of the Company has substantial experience in
expanding building materials supply businesses through acquisitions. Over the
past several years, the Company's management has contacted and visited many
acquisition candidates. In addition, the Company is contacted regularly by
persons seeking to sell their businesses. The Company believes that, due to
professional contractor loyalty to existing centers, the most expedient way for
the Company to enter new geographic markets is through acquisitions. The
Company also believes that the availability of a public market for the Company's
Common Stock provides it with additional financial flexibility in pursuing
acquisitions.
While the Company evaluates each potential acquisition candidate on its
individual merits, its primary objective has been to acquire profitable building
materials centers that meet certain general criteria. The typical targeted
acquisition candidate is located on 5 to 10 acre sites which includes 8,000 to
15,000 square feet of indoor showroom and contractor sales space and 20,000 to
50,000 square feet of covered storage area, with reasonable access to the local
road system and proximity to regional areas of construction demand. Additional
factors include the reputation of the center among local contractors and the
quality of the center's management and sales organization.
Typically, after an acquisition of a center, the Company enhances the
center's sales and service capabilities and expands its product offerings,
including value-added products, in an effort to increase sales and
profitability. In addition, the Company seeks to implement its accounting and
management systems in each newly acquired center. These systems assist in the
effective management of the Company's inventories and accounts receivable and in
efforts to improve customer service and the utilization of assets. The Company
generally is able to use its centralized purchasing expertise to reduce product
costs following acquisitions.
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In 1996, the Company acquired one building materials center and three
value-added facilities in Texas and Utah for aggregate consideration of $10.1
million, of which $8.4 million was paid in cash and $1.7 million was paid in
promissory notes. In 1997, the Company acquired two building materials centers
and six value-added-facilities in Colorado, Nevada, Texas, Utah and Washington
for aggregate consideration of $52.8 million; of which $40.2 million was paid in
cash, $3.7 million was paid through the issuance of a long-term note, $6.3
million was paid in Common Stock of the Company (approximately 492,000 shares),
and $2.6 million consisted of liabilities assumed by the Company. In the second
quarter of 1998, the Company completed five acquisitions consisting of three
building materials centers and six value-added facilities located in Montana,
Oregon, Texas and Washington. The total consideration given was $15.6 million
consisting of $11.5 million in cash, 299,343 shares of common stock valued at
$4.0 million and other assumed operating liabilities of $81,000.
The following chart sets forth the number of building materials centers
acquired and consolidated by the Company during each of the last five fiscal
years and the 6 months ended June 30, 1998.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
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<S> <C> <C> <C> <C> <C> <C>
Beginning Balance 32 39 49 52 53 55
Acquisitions 7 10 4 1 5 5
Consolidations & Closures (1) (3) (4)
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Ending Balance 39 49 52 53 55 56
-- -- -- -- -- --
-- -- -- -- -- --
</TABLE>
RISK FACTORS
The shares of Common Stock offered hereby are speculative in nature and
involve a high degree of risk. In addition to the other information included
elsewhere in this Prospectus, the following factors should be considered
carefully in evaluating an investment in the Common Stock offered by this
Prospectus.
INDUSTRY CONDITIONS; CYCLICALITY; SEASONALITY
The building materials industry historically has been subject to
substantial cyclical variation, and adverse economic changes in the regions
served by the Company that could have a material adverse effect on the Company's
financial condition. The Company's operations have reflected substantial
fluctuations from period to period as a consequence of various factors,
including general economic conditions, prices of commodity wood products, levels
of building activity and interest rates, single-family housing starts,
employment levels, consumer confidence and availability of credit to
professional contractors and homeowners. Because a substantial percentage of
the Company's net sales is attributable to professional contractors, these
factors may have a more significant impact on the Company than on companies
focused on a broad range of retail customers.
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In addition, although weather patterns affect the Company's results of
operations throughout the year, adverse weather historically has reduced
construction activity in the first and fourth quarters in the Company's markets.
The Company anticipates that fluctuations from period to period will continue in
the future.
ACQUISITION AND DEVELOPMENT STRATEGY
The Company is seeking multi-unit acquisitions that could be acquired as
new stand-alone units as well as opportunity to acquire additional centers in
the geographic areas currently served by BMHC. The Company's objective is to
continue to acquire, or from time to time develop, building materials centers
and to acquire or develop value-added facilities. Accomplishing this expansion
goal will depend on a number of factors, including the Company's ability to
identify and acquire acceptable building materials centers and acquire or
develop value-added facilities, hire and train competent managers, integrate new
acquisitions into the Company's operations, successfully implement cost
reduction and working capital management systems, generate funds from operations
and continue to access external sources of financing. There can be no assurance
that the Company will be able to continue to identify and complete successful
acquisitions. The process of developing facilities or integrating acquired
businesses may be prolonged due to unforeseen difficulties and may require a
disproportionate amount of resources and management's attention. There can be
no assurance that the integration, implementation and expansion of the Company's
cost reduction and working capital and other management information and control
systems will keep pace with the Company's growth. Future acquisitions may be
financed through the incurrence of additional indebtedness or the issuance of
equity securities, which may dilute the Company's shareholders.
RELIANCE ON KEY PERSONNEL; MANAGEMENT OF GROWTH
The Company does not have employment agreements with any members of its
senior management team (other than agreements with respect to termination in the
event of a change of control of the Company). The Company believes that its
future success, including the skillful management of the Company's growth, will
depend on its ability to retain key members of its management team and to
attract, train and retain general managers in the future. There can be no
assurance that the Company will be able to do so. A failure to retain, acquire
and/or adequately train managerial employees sufficient to effectively manage
the Company's operations and growth could result in organizational deficiencies
and a material adverse impact on the Company.
PRICES OF COMMODITY WOOD PRODUCTS
Historically, approximately 50% of the Company's sales have been
attributable to commodity wood products, including lumber and panel products.
Approximately 47% of the Company's sales in 1995, 1996, and 1997, respectively,
were attributable to commodity wood products. Prices of commodity wood products
are subject to significant volatility and affect the Company's sales and
earnings. During 1997, the prices of commodity wood products purchased and sold
by the Company were on average 1.6% lower than in 1996. During 1996, the prices
of commodity wood products purchased and sold by the Company were on average 7%
higher than in 1995. During 1995, the prices of commodity wood products
purchased and sold by the Company were on average 14% lower than in 1994, which
reduced the rate of increase of both the Company's sales and gross profit and
increased costs as a percentage of sales as the Company shipped more product per
dollar of sales. Declines in commodity wood prices in the future may have an
adverse effect on the Company's results of operations.
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COMPETITION
BMC West operates in a highly competitive environment. The Company's
centers compete primarily with privately owned, single-site enterprises as well
as local and regional building materials chains. To a lesser extent, in certain
larger markets the Company also competes with national building materials chains
and large home center retailers. Some of these large retailers have
substantially greater resources than the Company. Although home center
retailers historically have focused their sales efforts on consumers, there can
be no assurance that they will not intensify their marketing efforts to
professional contractors in the future. Home center retailers may indirectly
increase competition in the professional contractor market by prompting smaller
local retailers of building materials to increase their focus on this market.
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of the Company's Certificate of Incorporation and
Bylaws, as well as Delaware corporate law and the Company's Stockholder Rights
Plan (the "Rights Plan"), may be deemed to have anti-takeover effects and may
delay, defer or prevent a takeover attempt that a stockholder might consider in
its best interest. Such provisions also may adversely affect prevailing market
prices for the Company's Common Stock. Certain of such provisions allow the
Company's Board of Directors to issue, without additional stockholder approval,
preferred stock having rights senior to those of the Common Stock. Other
provisions impose various procedural and other requirements that could make it
more difficult for stockholders to effect certain corporate actions. In
addition, the Company is subject to the anti-takeover provisions of Section 203
of the Delaware General Corporation Law, which prohibits the Company from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The Company has adopted the Rights Plan, pursuant to which
holders of the Common Stock received a distribution of rights to purchase
additional shares of Common Stock, which rights become exercisable upon the
occurrence of certain events. The Rights Plan has certain anti-takeover
effects.
RESTRICTIONS ON PAYMENTS OF DIVIDENDS
The Company has never paid cash dividends on its Common Stock and has no
current plans to pay any such dividends in the future. Agreements governing
certain of the Company's indebtedness contain provisions that restrict the
Company's ability to pay dividends. There can be no assurance as to the amount
of funds, if any, that will be available for the declaration and payment of
dividends in the future.
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SELECTED FINANCIAL INFORMATION
The following selected consolidated financial data are derived from the
Company's consolidated financial statements. Historical results should not be
taken as necessarily indicative of the results that may be expected for any
future period. This consolidated data should be read in conjunction with the
consolidated financial statements and notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, and
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
each of which is incorporated by reference herein. Certain items in the prior
years' consolidated financial statements have been reclassified to conform to
the 1997 presentation. All amounts shown are in thousands, except per share
data.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1993 1994 1995 1996 1997
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<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales. . . . . . . . . . . . . . . . . . . . . . . $399,597 $547,109 $630,201 $718,024 $728,065
Cost of sales. . . . . . . . . . . . . . . . . . . . 315,693 427,951 492,028 559,408 559,655
-------- -------- -------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . . . . . 83,904 119,158 138,173 158,616 168,410
Selling, general and administrative expense. . . . . . 65,619 91,203 116,353 131,462 145,935
Other income net . . . . . . . . . . . . . . . . . . . 948 1,529 1,601 1,268 1,882
-------- -------- -------- -------- --------
Income from operations . . . . . . . . . . . . . . . . 19,233 29,484 23,421 28,422 24,357
Interest expense . . . . . . . . . . . . . . . . . . . 4,554 6,486 10,746 10,496 8,666
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Income before income taxes & extraordinary item. . . . 14,679 22,998 12,675 17,926 15,691
Income taxes . . . . . . . . . . . . . . . . . . . . . 5,888 8,739 4,910 6,935 6,198
-------- -------- -------- -------- --------
Income before extraordinary item . . . . . . . . . . . 8,791 14,259 7,765 10,991 9,493
-------- -------- -------- -------- --------
Extraordinary item, net of tax . . . . . . . . . . . . -- -- -- (342) --
-------- -------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . $8,791 $14,259 $7,765 $10,649 $9,493
-------- -------- -------- -------- --------
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Income per share before extraordinary item . . . . . . $1.14 $1.62 $0.79 $1.00 $0.78
Extraordinary item . . . . . . . . . . . . . . . . . . -- -- -- (0.03) --
-------- -------- -------- -------- --------
Net income per share - Basic . . . . . . . . . . . . . -- -- $0.81 $0.99 $0.80
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income per share - Diluted . . . . . . . . . . . . $1.14 $1.62 $0.79 $0.97 $0.78
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
At December 31,
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1993 1994 1995 1996 1997
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<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital. . . . . . . . . . . . . . . . . . . . $60,321 $76,201 $100,196 $110,467 $118,612
Total assets . . . . . . . . . . . . . . . . . . . . . 142,297 222,450 264,970 288,369 340,373
Long-term debt (net of current maturities) and
redeemable preferred stock. . . . . . . . . . . . . . 57,168 79,336 123,080 90,203 113,410
Stockholders' equity . . . . . . . . . . . . . . . . . 49,510 87,002 95,927 145,088 160,951
</TABLE>
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock of the Company trades on the Nasdaq National Market, under
the symbol BMHC. The following table sets forth, for the periods indicated, the
high and low closing sales prices of the Common Stock on the Nasdaq National
Market as reported by the National Association of Securities Dealers, Inc.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal 1996:
First Quarter . . . . . . . . . . . . . . . $16-1/4 $13
Second Quarter. . . . . . . . . . . . . . . 20-1/4 15-1/4
Third Quarter . . . . . . . . . . . . . . . 17-1/8 12-3/4
Fourth Quarter. . . . . . . . . . . . . . . 13-7/8 11-7/8
Fiscal 1997:
First Quarter . . . . . . . . . . . . . . . $14-5/16 $11-1/2
Second Quarter. . . . . . . . . . . . . . . 13-7/8 10-3/4
Third Quarter . . . . . . . . . . . . . . . 13-1/4 11-1/16
Fourth Quarter. . . . . . . . . . . . . . . 13-1/2 10-1/4
Fiscal 1998
First Quarter . . . . . . . . . . . . . . . $10-5/8 $13-5/8
Second Quarter. . . . . . . . . . . . . . . 14-7/8 11-1/2
Third Quarter (thru August 17, 1998). . . . 14-7/16 11-13/32
</TABLE>
As of July 31, 1998, the Company had 12,641,439 shares outstanding, and the
Company's Common Stock was held by approximately 5,835 stockholders of record or
through nominee or street name accounts with brokers (approximately 200
stockholders of record).
The Company has never paid dividends on its Common Stock, and the Board of
Directors presently intends to continue this policy in order to return earnings
for use in the Company's business. Agreements governing certain of the
Company's indebtedness contain provisions that restrict the Company's ability to
pay dividends.
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DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue two classes of shares, common stock and
preferred stock. As of July 31, 1998, there were approximately 200 stockholders
of record of the Company Common Stock.
COMMON STOCK
The number of shares of Common Stock authorized by the Company's
Certificate of Incorporation is 20,000,000, $.001 par value. At July 31, 1998,
the Company had issued and outstanding 12,641,439 shares of Common Stock. All
issued and outstanding shares of Common Stock are, and the shares of Common
Stock issuable in connection the offering contemplated by this Prospectus will
be, validly issued, fully paid and non-assessable.
The holders of Common Stock are entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders, and are not entitled
to cumulative voting in the election of directors. Subject to the preferences
applicable to any shares of preferred stock outstanding at the time, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Company's Board of Directors out of funds legally available therefor and,
in the event of the liquidation, dissolution or winding up of the Company, are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference, if any, of any outstanding shares of preferred
stock. Holders of Common Stock have no preemptive rights and have no rights to
convert their Common Stock into any other securities and there are no redemption
provisions with respect to such shares.
PREFERRED STOCK
The number of shares of preferred stock authorized by the Company's
Certificate of Incorporation is 2,000,000, at $.001 par value. There are
presently authorized 40,150 shares of Class A Preferred Stock, but no shares of
Class A Preferred Stock are issued and outstanding and the Company has no plans
to issue any in the foreseeable future. There are presently authorized 50,000
shares of Class B Preferred Stock (the "Class B Preferred"), of which none are
outstanding.
The Company has also designated 150,000 shares of preferred stock as
Class C Junior Participating Preferred Stock (the "Class C Preferred"). The
Class C Preferred was designated pursuant to the adoption of the Rights Plan
adopted by the Company in September 1997.
The Company's Board of Directors is authorized, without further action by
the stockholders, to issue, from time to time, additional series of preferred
stock, $.001 par value per share, in one or more series, to fix the
designations, preferences and relative, participating, optional or other special
rights and qualifications or restrictions of the shares of each series and to
determine the voting powers, if any, of such shares. The Company's Board of
Directors, without further stockholder approval, can thus issue preferred stock
with voting and conversion rights that would adversely affect the voting power
and other rights of the holders of Common Stock. The issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to holders of Common Stock. In addition, the Company's Board of
Directors is authorized to issue and sell shares of preferred stock to
designated persons the impact of which could make it more difficult for a holder
of a substantial block of Common Stock to remove incumbent directors or
otherwise gain control of the Company. As of the date of this Prospectus, there
are no shares of Class C Preferred outstanding.
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STOCKHOLDER RIGHTS PLAN
On September 19, 1997 the Company adopted the Rights Plan, pursuant to
which the Company's Board of Directors declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Common Stock to
holders of record as of October 2, 1997. All Common Stock issued thereafter
also includes a Right. Each Right entitles the holder to purchase from the
Company one one-hundredth (1/100) of a share of Series C Preferred at a price of
$33.33 per one one-hundredth of a share of Class C Preferred, subject to
adjustment (the "Purchase Price"). Pursuant to the Rights Plan, in the event of
a public announcement that a person or group of affiliated or associated persons
(a "Person") has acquired beneficial ownership of 15% or more of the outstanding
Common Stock (such Person, a "15% Stockholder") or a tender offer or exchange
offer is announced or commenced, except pursuant to a Permitted Offer (as
defined below), the consummation of which would cause any Person to become a 15%
Stockholder, each holder of a Right (other than such 15% Stockholder) will have
the right to receive upon exercise, on and after the close of business on the
tenth business day following the first to occur of such events (unless in the
case of a tender offer or exchange offer described above, prior to the time such
Person becomes a 15% Stockholder, the Company's Board of Directors sets a later
date) (the "Distribution Date"), Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a market value
(immediately prior to such triggering event) equal to two times the Purchase
Price. In the event that any Person becomes a 15% Stockholder, all rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by such 15% Stockholder, or any affiliate or associate
thereof, will be null and void. The Rights Plan further provides that if, on or
after the date that a Person becomes a 15% Stockholder, the Company is acquired
in a merger or other business combination transaction (other than a merger which
follows a Permitted Offer) or 50% or more of its assets or earning power are
sold, each holder of a Right (other than a 15% Stockholder) will have the right
to receive, upon exercise, common stock of the acquiring Company having a market
value of two times the Purchase Price. The Purchase Price payable, and the
number shares of Class C Preferred or other securities or property issuable,
upon exercise of the Rights are subject to adjustment from time to time in order
to prevent dilution.
A tender or exchange offer for all outstanding shares of Common Stock at a
price and/or on terms determined by the Company's Board of Directors (or
approved at a special stockholders meeting called for such purpose), prior to
the purchase, to be adequate and in the best interests of the Company and its
stockholders (other than the acquiring person) is a Permitted Offer under the
Rights Plan. A Permitted Offer does not trigger the exercisability of the
Rights.
The Rights will expire on October 1, 2007, unless earlier redeemed or
exchanged, or unless the expiration date is extended. Prior to expiration, the
Rights may be redeemed by the Company, in whole, but not in part, under certain
circumstances (including after a Person has become a 15% Stockholder, provided
that certain conditions are satisfied) at a price of $.0067 per Right. The
terms of the Rights may be amended under certain circumstances.
At any time after any Person becomes a 15% Stockholder and prior to the
first date thereafter upon which such 15% Stockholder becomes the beneficial
owner of 50% or more of the outstanding Common Stock, the Company may exchange
all or part of the then outstanding Rights for Common Stock, at an exchange
ratio of one share of Common Stock for one one-hundredth of a share of Class C
Preferred (or a share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges) per Right (subject to
adjustment). Until a Right is exercised, the holder thereof has no rights as a
stockholder of the Company solely by virtue of the ownership of such Right.
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<PAGE>
Upon the close of business on a Distribution Date, the Rights will be
traded independently of the Common Stock, and each Right, except those held by
the 15% Stockholder (which will be void), will entitle the holder thereof to
acquire, upon payment of the exercise price, a fraction of a share of Series C
Preferred of the Company. The shares of Class C Preferred purchasable upon
exercise of the Rights will not be redeemable. Each share of Class C Preferred
will be entitled to a minimum preferential quarterly dividend payment of $l per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders of
shares of Class C Preferred 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 share of Common Stock. Each share of
Class C Preferred will have 100 votes, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged, each share of Class C Preferred will be
entitled to receive 100 times the amount received per share of Common Stock.
These rights are protected by customary antidilution provisions. Because of the
nature of the Class C Preferred's dividend, liquidation and voting right, the
value of one-hundredth interest in a Class C Preferred share purchasable upon
exercise of each Right should approximate the value of one share of Common
Stock.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to the person or group that attempts to acquire the Company
unless the offer is conditioned on a substantial number of Rights being
acquired. The Rights, however, should not affect any prospective offerer
willing to make an offer at an equitable price and that is otherwise in the best
interests of the Company and its stockholders, as determined by the Company's
Board of Directors. The Rights should not interfere with any merger or other
business combination approved by the Company's Board of Directors, since the
Board of Directors may redeem the rights at a price of $.0067 per Right under
certain circumstances.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
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SECURITIES COVERED BY THIS PROSPECTUS
The shares of the Common Stock covered by this Prospectus consist of
2,000,000 shares (the "Shares") which may be issued or delivered from time to
time in connection with future business combinations, mergers and/or
acquisitions. The consideration for such combinations, acquisitions and mergers
may consist of cash, assumption of liabilities, evidences of debt, Common Stock
or a combination thereof. In general, the terms of such combinations,
acquisitions and mergers will be determined by direct negotiations between
representatives of the Company and the owners or principal executives of the
companies or other entities to be so combined, acquired or merged or the assets
of which are to be acquired, and the factors taken into account will include,
among other things, the established quality of management, earning power, cash
flow, growth potential, facilities and locations of the companies or other
entities to be acquired or merged, and the market value of the Common Stock. It
is anticipated that the shares of the Common Stock issued or delivered in
connection therewith will be valued at a price reasonably related to the market
value of the Common Stock either at the time the terms of the combination,
acquisition or merger are tentatively agreed upon, or at or about the time or
times such shares are issued or delivered.
Persons who directly or indirectly control, are controlled by, or are under
common control with, companies or other entities which are acquired by or merged
or combined with the Company may be deemed to be engaged in a distribution of
securities, and therefore underwriters of securities within the meaning of
Section 2(11) of the Securities Act, if such persons offer or sell any shares of
the Common Stock covered by this Prospectus other than in accordance with the
provisions of paragraph (d) of Rule 145 under the Securities Act or pursuant to
an effective registration statement. Rule 145(d) provides that such persons
will not be deemed to be underwriters if (a) among other things, (i) the Company
has complied with certain reporting requirements of the Exchange Act, (ii) the
amount of shares sold falls within certain volume limitations, (iii) such shares
are sold only in brokers' transactions within the meaning of Section 4(4) of the
Securities Act or in a manner otherwise permitted by Rule 144 under the
Securities Act, (iv) such persons do not solicit or arrange for the solicitation
of orders to buy such shares in anticipation of or in connection with the sale
thereof, and (v) such persons do not make any payments in connection with the
offer or sale thereof to any persons other than the brokers executing the orders
to sell such shares; (b) such persons are not affiliates of the Company and have
been the beneficial owners of the Common Stock for at least one year, and the
Company has complied with certain reporting requirements of the Exchange Act; or
(c) such persons are not, and have not been for at least three months,
affiliates of the Company and have been the beneficial owners of the Common
Stock for at least two years.
This Prospectus, as appropriately supplemented or amended, may be used from
time to time by persons who have received from the Company Common Stock covered
by the Registration Statement in acquisitions and who may be entitled to offer
such Common Stock under circumstances requiring the use of a prospectus (such
persons being referred to as "Selling Stockholders"); provided, however, that no
Selling Stockholder will be authorized to use this Prospectus for any offer of
such Common Stock without first obtaining the consent of the Company. The
Company may consent to the use of this Prospectus for a limited period of time
by the Selling Stockholders and subject to limitations and conditions which may
be varied by agreement between the Company and the Selling Stockholders.
Resales of such shares may be made on the Nasdaq National Market or such other
exchange on which the Common Stock may be listed, in the over-the-counter market
or in private transactions.
The Company will receive none of the proceeds from any sales by the Selling
Stockholders. Any commissions paid or concessions allowed to any broker-dealer
and, if any broker dealer purchases such
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<PAGE>
shares as principal, any profits received on the resale of such shares, may
be deemed to be underwriting discounts and commissions under the Securities
Act. Printing, certain legal, filing or similar expenses of this offering
will be paid by the Company. Selling Stockholders will be responsible for all
brokerage fees and commissions and underwriting discounts. The Selling
Stockholders and any broker-dealer through which such shares are sold may be
deemed to be underwriters within the meaning of the Securities Act.
There presently are no arrangements or understandings pertaining to the
distribution of the shares as described herein. Upon the Company being notified
by a Selling Stockholder that any material arrangement has been entered into
with a broker-dealer for the sale of shares through a block trade, special
offering, exchange distribution or secondary distribution a supplemented
Prospectus will be filed, pursuant to Rule 424(b) under the Securities Act,
setting forth (i) the name of each Selling Stockholder and of the participating
broker-dealers; (ii) the number of shares involved; (iii) the price at which
such shares were sold and (iv) the commissions paid or discounts or concessions
allowed to such broker-dealers, where applicable; and (v) other facts material
to the transaction.
Selling Stockholders may sell the shares being offered hereby from time to
time in transactions (which may involve crosses and block transactions) on the
Nasdaq National Market or such other securities exchange on which the Company's
Common Stock may be listed, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices. Selling
Stockholders may sell some or all of the shares in transactions involving
broker-dealers, who may act solely as agent and/or may acquire shares as
principal. Selling Stockholders may also offer shares pursuant to exemptions
from the registration requirements of the Securities Act, including sales which
meet the requirements of Rule 145(d) under the Securities Act. Selling
Stockholders should seek the advice of their own counsel with respect to the
legal requirements for such sales.
In connection with distributions of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of the Company's Common
Stock in the course of hedging the positions they assume with Selling
Stockholders. The Selling Stockholders may also sell the Company's Common Stock
short and redeliver the shares to close out such short positions. The Selling
Stockholders may also enter into option or other transactions with broker-
dealers or other financial institutions which require the delivery to such
broker-dealer or other financial institutions that may then resell pursuant to
this Prospectus. The Selling Stockholders may also pledge Shares to a broker-
dealer or other financial institution, and, upon a default, such broker-dealer
or other financial institution may effect sales of the pledged Shares pursuant
to this Prospectus.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not bid for or purchase shares of
Common Stock during a period which commences one business day prior to such
person's participation in the distribution, subject to exceptions for certain
passive market making activities. In addition and without limiting the
foregoing, each Selling Stockholder will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M which provisions may limit the timing of purchases and
sales of shares of the Company's Common Stock by such Selling Stockholder.
The Company may agree to indemnify the Selling Stockholders against certain
civil liabilities, including liabilities under the Securities Act, and the
Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
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LEGAL OPINION
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Gibson, Dunn & Crutcher LLP, Palo Alto, California.
EXPERTS
The audited consolidated financial statements and schedule incorporated by
reference in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING HEREIN CONTAINED AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON HAS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information. . . . . . . . . . . . . . . 2
Incorporation of Certain Information by
Reference. . . . . . . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . 5
Selected Financial Information . . . . . . . . . . 8
Price Range of Common Stock and
Dividend Policy. . . . . . . . . . . . . . . . . 9
Description of Capital Stock . . . . . . . . . . . 10
Securities Covered by this Prospectus. . . . . . . 13
Legal Opinion. . . . . . . . . . . . . . . . . . . 15
Experts. . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
2,000,000 SHARES
BUILDING MATERIALS HOLDING CORPORATION
COMMON STOCK
($.001 PAR VALUE)
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PROSPECTUS
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AUGUST 18, 1998
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