PROSPECTUS
2,500,000 SHARES
MASTEC, INC.
Common Stock
This Prospectus relates to the issuance from time to time by MasTec, Inc.,
a Delaware corporation (the "Company"), of shares of the Company's common stock,
$.10 par value (the "Common Stock"), in an aggregate amount of up to 2,500,000
shares, upon terms to be determined at the time of each such offering.
The Common Stock is to be offered directly by the Company in connection
with the acquisition of the assets of, or ownership interests in, certain
entities engaged in the same or similar lines of business as the Company or any
of its subsidiaries. The consideration for acquisitions will consist of shares
of Common Stock, cash, notes or other evidences of indebtedness, guarantees,
assumption of liabilities, tangible or intangible property, or a combination
thereof, as determined from time to time by negotiations between the Company and
the owners or controlling persons of the assets or ownership interests to be
acquired. In addition, the Company may lease property from and enter into
management or consulting agreements and non-competition agreements with the
former owners and key executive personnel of the businesses to be acquired.
The Company contemplates that the terms of an acquisition will be
determined by negotiations between the Company's representatives and the owners
or controlling persons of the assets or ownership interests to be acquired.
Factors taken into account in acquisitions include, among other relevant
factors, the quality and reputation of the business, the assets, liabilities,
results of operations and cash flows of the business, the quality of its
management and employees, its earnings potential, its products and products
under development, the geographic locations of the business and the market value
of the Common Stock of the Company when pertinent. The Company anticipates that
shares of Common Stock issued in any such acquisition will be valued at a price
reasonably related to the market value of the Common Stock, either at the time
the terms of the acquisition are tentatively agreed upon, or at or about the
time of closing, or during the period or periods prior to delivery of the
shares.
The Company does not expect that underwriting discounts or commissions will
be paid, except that finders fees may be paid to persons from time to time in
connection with specific acquisitions. Any person receiving any such fees may be
deemed to be an underwriter within the meaning of the Securities Act of 1933.
The Common Stock is listed on the New York Stock Exchange under the symbol
MTZ. On July 28, 1997, the closing sale price of the Common Stock on the New
York Stock Exchange was $53.6875 per share.
See "Risk Factors" commencing on page 12 for a discussion of certain risks
associated with an investment in the Common Stock.
____________________________________
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 July 29, 1997
<PAGE>
AVAILABLE INFORMATION
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
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: Seven World Trade Center, Suite
1300, New York, New York 10048; and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained at prescribed rates by writing to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding issuers who file electronically with
the Commission. The address of that site is http://www.sec.gov. The Common Stock
is listed on the New York Stock Exchange under the symbol "MTZ." Reports, proxy
and information statements and other information concerning the Company can also
be inspected at the New York Stock Exchange at 20 Broad Street, New York, New
York 10005.
This Prospectus constitutes part of a Registration Statement on Form S-4
(together with all amendments and exhibits thereto, the "Registration
Statement") and does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement and to the exhibits and schedules thereto. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and such statement is qualified in its entirety by such
reference.
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The following documents, previously filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated herein by reference:
The Company's Annual Report on Form 10-K for the year ended December 31,
1996, including the portions of the Company=s Proxy Statement for the 1997
Annual Meeting of Stockholders dated April 14, 1997 incorporated by reference in
the Form 10-K;
The Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; and
The Company's Current Report on Form 8-K dated May 21, 1997.
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Prospectus, shall be
deemed to be incorporated by reference into this Prospectus and made a part of
this Prospectus from the date any such document is filed. Any statements
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 in this Prospectus (or in
any other subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein) specifically modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus except as so modified or superseded.
Capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Company's Annual Report on Form 10-K for the year ended December
31, 1996, incorporated herein by reference.
This Prospectus incorporates documents by reference that are not presented
herein or delivered herewith. These documents are available without charge upon
request from MasTec, Inc., 3155 N.W. 77th Avenue, Suite 135, Miami, Florida
33122-1205, telephone (305) 599-1800, Attention: Nancy J. Damon, Corporate
Secretary.
<PAGE>
THE COMPANY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, incorporated
by reference in this Prospectus.
MasTec, Inc. (together with its subsidiaries and affiliates, "MasTec" or
the "Company") is one of the world's largest contractors specializing in the
build-out of telecommunications infrastructure. The Company's principal business
consists of the design, installation, and maintenance of the outside physical
plant for telephone and cable television communications systems ("outside plant
services"), including the installation of aerial, underground and buried copper,
coaxial and fiber optic cable networks and the construction of wireless antenna
networks for telecommunication service companies such as local exchange
carriers, competitive access providers, cable television operators,
long-distance carriers and wireless phone companies. The Company also installs
central office switching equipment, and designs, installs and maintains
integrated voice, data and video local and wide area networks inside buildings
("inside wiring"). The Company believes it is the largest independent contractor
providing telecommunications infrastructure construction services in the United
States and Spain and one of the largest in Argentina, Chile and Peru.
The Company is able to provide a full range of infrastructure services to
its telecommunications company customers. Domestically, the Company primarily
provides outside plant services to local exchange carriers such as BellSouth
Telecommunications, Inc. ("BellSouth"), U.S. West Communications, Inc., SBC
Communications, Inc., United Telephone of Florida, Inc. (a subsidiary of Sprint
Corporation) and GTE Corp. MasTec currently has 23 exclusive, multi-year service
contracts with regional bell operating companies ("RBOCs") and other local
exchange carriers to provide all of their outside plant requirements up to a
specific dollar amount per job and within certain geographic areas.
Internationally, the Company provides outside plant services, turn-key switching
system installation and inside wiring services primarily to Telefonica de
Espana, S.A. ("Telefonica") under multi-year contracts similar to those in the
U.S.
The Company also provides outside plant services to competitive access
providers such as MFS Communications Company, Inc., Sprint Metro and MCI Metro
(the local telephone subsidiaries of Sprint and MCI), cable television operators
such as Time Warner, Inc., Continental Cablevision, Inc. and Media One, long
distance carriers such as MCI Communications Corporation and Sprint Corporation,
and wireless communications providers such as PCS Primeco and Sprint Spectrum,
L.P. Inside wiring services are provided to large corporate customers such as
First Union National Bank, IBM, Smith Barney, Inc. and Dean Witter Reynolds,
Inc., and to universities and government agencies. The Company also provides
design, installation and maintenance services (similar to those provided to
telecommunications companies) to public utilities and the traffic control and
highway safety industry.
The telecommunications industry which the Company services is undergoing
fundamental changes in most markets throughout the world. The Telecommunications
Act of 1996 in the United States, agreements among participating countries in
the European Community and privatization and regulatory initiatives in South and
Central America are removing barriers to competition. In addition, growing
customer demand for enhanced voice, video and data telecommunications have
increased bandwidth requirements and highlighted network bandwidth limitations
in many markets.
The Company believes that these industry trends will create increased
demand for telecommunications infrastructure services in four ways.
Increased customer demand for bandwidth will compel services providers to
upgrade existing networks to broadband technologies such as fiber optic
cable.
$ Competitive pressures will force existing service providers to attempt to
reduce their cost structures, leading to increased outsourcing of outside
plant services to lower cost independent contractors.
New service providers entering previously monopolistic markets will
ultimately require their own infrastructure.
$ Deployment of more powerful multi-media computers in business will increase
the demand for inside wiring services to install communications networks
with greater bandwidth capacity.
The Company believes that it is well positioned to capitalize on these
trends and is pursuing a strategy of growth in its core business through
internal expansion and strategic acquisitions. The Company believes that the
volume of business generated under existing contracts will increase as a result
of the anticipated general increase in demand for its services. In addition, the
Company believes that its reputation for quality and reliability, operating
efficiency, financial strength, technical expertise, presence in key geographic
areas and ability to achieve economies of scale provide competitive advantages
in bidding for and winning new contracts for telecommunication infrastructure
projects.
The Company also plans to continue to make strategic acquisitions. In April
1996, MasTec acquired Sistemas e Instalaciones de Telecomunicacion, S.A.
(ASintel@), the largest telecommunications infrastructure contractor in Spain,
from Telefonica. This acquisition has positioned the Company to take advantage
of increased competition coming to Europe and the rapid upgrading of
telecommunications services expected in Latin America. In the United States, the
Company is continuing to pursue opportunities to acquire selected operators that
will enable the Company to expand its geographic coverage and customer base
without the risks and expense of start-up operations and to acquire additional
management talent for future growth. Since January 1996, the Company has
completed eight domestic acquisitions. In May 1997, the Company agreed to
purchase 51% of the telecommunications construction division of Inepar S.A.,
Industrias e Construcoes, one of the largest telecommunications construction
companies in Brazil.
The principal executive offices of the Company are located at 3155 N.W.
77th Avenue, Miami, Florida, 33122-1205, telephone (305) 599-1800.
<PAGE>
SELECTED FINANCIAL INFORMATION
The following table presents selected historical financial data of the
Company as of the dates and for the periods indicated. This data is derived from
the audited and unaudited Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
Quarterly Report on Form 10-Q for the three months ended March 31, 1997,
respectively, both incorporated herein by reference. These Financial Statements,
the related notes, and the discussion in the Form 10-K and Form 10-Q under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" are important and should be read in conjunction with the selected
financial information presented below. The unaudited data set forth below
includes, in the opinion of management, all material adjustments, consisting
only of normal recurring accruals, necessary for a fair presentation.
<TABLE>
(In thousands, except per share amounts)
- -----------------------------------------------------------------------------------------------------------------
Three Months
Ended March 31,
Year Ended December (Unaudited)
31,
- ------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
(1) (1) (2) (3)
-------- --
Income statement data:
Revenue $34,136 $44,683 $111,294 $174,583 $472,800 $62,547 $130,143
- ------------------------
Operating income 8,313 5,474 9,881 17,827 49,942 6,477 15,495
-- ----- -- ----- -- ----- -- ------ ------ ----- ------
- ------------------------
Interest expense (4) 33 133 3,587 4,954 11,434 1,677 2,873
- ------------------------
Interest and dividend
income (5) 207 315 1,469 3,349 3,246 824 462
- ------------------------
Special charges -real
estate and investment
write-downs 0 0 0 23,086 0 0 0
- ------------------------
Other (expense)
income, net 209 (81) 1,009 2,028 950 8 520
- ------------------------
Equity in earnings
(losses) of
uncon-solidated
companies and minority (416) 1,177 247 (139) 3,133 371 703
interest
- ------------------------
Provision (benefit)
for income taxes (6) 3,113 2,539 3,211 (1,835) 15,661 2,323 4,969
-- ----- -- ----- -- ----- -- ------ ------ ----- -----
- ------------------------
Income (loss) from
continuing operations $5,167 $4,213 $5.808 $ (3.140) $30,065 $3.695 $9,338
===== ===== ===== ======== ====== ===== =====
(6)
- ------------------------
Net income (loss) $5,167 $ $ 6,633 $ (609) $30,065 $3.681 $9,287
===== == ======= ======= ====== ===== =====
4,213
- ------------------------
Weighted average
shares outstanding (7) 15,375(8) 15,375(8) 24,116 24,069 25,128 24,232 26,068
====== ====== ====== ====== ====== ====== ======
- ------------------------
Income (loss) per
share from continuing
operations (7) $ 0.34 $ $ 0.24 $ (0.13) $1.20 $0.15 $0.36
======= ==== ====== ======= ==== ==== ====
0.27
- ------------------------ ------------- ------------ ------------ ------------ ----------- ----------- -----------
- -----------------------------------------------------------------------------------------------------------------
Balance sheet data:
Property and
equipment, net $3,656 $4,632 $40,102 $44,571 $59,602 $59,847
- ------------------------
Total assets 23,443 21,325 142,452 170,163 483,018 442,982
- ------------------------
Total long-term debt 855 3,579 35,956 44,226 117,157 97,325
- ------------------------
Stockholders= equity 15,690 10,943(9) 50,874 50,504 103,504 120,385
<FN>
(1) Includes the results and financial condition of Church & Tower, Inc. and Church & Tower of
Florida, Inc. (collectively, "Church & Tower") only.
(2) Includes the results of Church & Tower for the full year 1994, the
results of Burnup & Sims Inc. from March 11, 1994 through the end of
1994, and the results of Designed Traffic Installation Company from
June 22, 1994 through the end of 1994.
(3) Includes the results of operations for Sintel for the eight months ended December 31, 1996.
(4) Included is interest due to stockholders from outstanding notes amounting to $223,000 for the
year ended December 31, 1994, $135,000 for the year ended December 31, 1995, and $0 for the
year ended December 31, 1996.
(5) Includes interest accrued from notes from stockholders amounting to
$182,000, $289,000 and $304,000 for the years ended December 31, 1996,
1995 and 1994, respectively, and $46,000 and $46,000 for the three
months ended March 31, 1996 and 1997, respectively.
(6) Church & Tower was not subject to income taxes because it was an S
corporation and, consequently, income from continuing operations for
1992 through 1994 has been adjusted to reflect a pro forma provision
for income taxes.
(7) Weighted average shares and income per share have been adjusted to
reflect the three-for-two stock split declared in 1997.
(8) Reflects the shares of Common Stock of the Company received by the
former shareholders of Church & Tower upon acquisition of the Company
and not the outstanding shares of common stock of Church & Tower.
(9) Distributions of $11.5 million were made to the shareholders of Church
& Tower representing subchapter S earnings.
</FN>
</TABLE>
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a
high degree of risk. In addition to the other information contained or
incorporated by reference herein, the following factors should be considered
carefully in evaluating the Company and its business prospects before purchasing
any shares of Common Stock.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain statements included in this
Prospectus are forward-looking, such as statements regarding the Company=s
growth strategy. Such forward-looking statements are based on the Company=s
current expectations and are subject to a number of risks and uncertainties that
could cause actual results in the future to differ significantly from results
expressed or implied in any forward-looking statements made by, or on behalf of,
the Company. These risks and uncertainties include, but are not limited to,
uncertainties relating to the Company=s relationships with key customers and
implementation of the Company=s growth strategy. These and other risks are
detailed below as well as in other documents filed by the Company with the
Commission.
Dependence on Key Customers
The Company derives a substantial portion of its revenue from the
provision of telecommunication infrastructure services to Telefonica and to
BellSouth. For the year ended December 31, 1996 and the quarter ended March 31,
1997, approximately 35% and 38%, respectively of the Company=s revenue was
derived from services performed for Telefonica and approximately 15% and 13%,
respectively, was derived from services performed for BellSouth. Revenue
generated by Sintel from Telefonica is included from May 1, 1996. During the
quarter ended March 31, 1996 and during the years ended December 31, 1995 and
1994, the Company derived approximately 25%, 42% and 44%, respectively, of its
revenue from BellSouth. Although the Company's strategic plan envisions
diversification of its customer base, the Company anticipates that it will
continue to be dependent on Telefonica and its affiliates and BellSouth for a
significant portion of its revenue. There are a number of factors that could
adversely affect Telefonica or BellSouth and their ability or willingness to
fund capital expenditures in the future, which in turn could negatively affect
the Company, including the potential adverse nature of, or the uncertainty
caused by, changes in governmental regulation, technological changes, increased
competition, adverse financing conditions for the industry and economic
conditions generally.
Risk Inherent in Growth Strategy
The Company has grown rapidly through the acquisition of other
companies. The Company anticipates that it will make additional acquisitions and
is actively seeking and evaluating new acquisition candidates. There can be no
assurance, however, that the Company will be able to continue to identify and
acquire appropriate businesses or obtain financing for such acquisitions on
satisfactory terms. The Company's growth strategy presents the risks inherent in
assessing the value, strengths and weaknesses of growth opportunities, in
evaluating the costs and uncertain returns of expanding the operations of the
Company and in integrating existing operations with new acquisitions. The
Company's growth strategy also assumes there will be significant increase in
demand for telecommunications services, which may not materialize. The Company's
anticipated growth may place significant demands on the Company's management and
its operational, financial and marketing resources. The Company's operating
results could be adversely affected if it is unable to successfully integrate
new companies into its operations. Future acquisitions by the Company could
result in potentially dilutive issuances of securities, the incurrence of
additional debt and contingent liabilities, and amortization expenses related to
goodwill and other intangible assets, which could materially adversely affect
the Company's profitability.
<PAGE>
Certain Risks Associated With Sintel
Continued Cost Reductions
During 1993, 1994 and 1995, Sintel experienced net losses of $22.5
million, $5.6 million, and $15.6 million, respectively (based on the average
exchange rate for each period). In 1991, 1992 and 1993 Telefonica significantly
reduced its capital expenditure for telecommunications infrastructure
construction services. During these years, Sintel was unable to adjust its cost
structure to keep pace with the resultant decline in revenue, primarily due to
the high cost of service and restrictive Spanish labor laws. However, Sintel was
able to negotiate reductions in its workforce in 1993, 1994 and 1995 at a cost
of $24 million, $4.3 million and $30.1 million, respectively. The Company has
continued to reduce Sintel's cost structure to maintain and improve
profitability, and intends to continue to reduce these costs in the future.
There can be no assurance that the Company's efforts will be successful or that
other factors such as greater than anticipated reductions in demand or prices
for Sintel's services or greater than anticipated labor costs will not have a
material adverse effect on Sintel's financial condition or business prospects.
Labor Relations.
Substantially all of Sintel's work force in Spain is unionized. The
agreement with Sintel's unions expired in December 1995 and a new agreement has
not been negotiated. There can be no assurance that future labor agreements with
Sintel's employee representatives can be negotiated successfully or on favorable
terms. Sintel has suffered strikes and work stoppages in the past, none of which
has had a material adverse effect on Sintel. Future strikes or work stoppages,
or the failure to negotiate future labor agreements on competitive terms, could
have a material adverse effect on Sintel.
Non-Majority Control of Certain Latin American Affiliates.
Sintel owns 50% of the affiliates through which it does business in
Chile and Peru. As a result, the Company may not be able to cause these
companies to pay dividends and other distributions and its lack of majority
control may inhibit the Company's ability to implement strategies that it
favors.
Risk of Investment in Foreign Operations
The Company's current and future operations and investments in certain
foreign countries are generally subject to the risks of political, economic or
social instability, including the possibility of expropriation, currency
devaluation, hyper-inflation, confiscatory taxation or other adverse regulatory
or legislative developments, or limitations on the repatriation of investment
income, capital and other assets. The Company cannot predict whether any of
these factors will occur in the future or the extent to which these factors
would have a material adverse effect on the Company's international operations.
Currency Exchange Risks
The Company conducts business in several foreign currencies, which are
subject to fluctuations in the exchange rate relative to the U.S. dollar. The
Company attempts to balance its foreign currency denominated assets and
liabilities as a means of hedging its balance sheet currency risk, but there can
be no assurance that this balance can be maintained. In addition, the Company's
results of operations from foreign activities are translated into U.S. dollars
at the average prevailing rates of exchange during the period reported, which
average rates may differ from the actual rates of exchange in effect at the time
of actual conversion into U.S. dollars.
Dependence on Senior Management
The Company's businesses are managed by a small number of key executive
officers, including Jorge Mas, the Company's President and Chief Executive
Officer, and Jorge L. Mas, the Company's Chairman. The loss of services of
certain of these executives could have a material adverse effect on the
business, financial condition and results of operations of the Company. The
Company's success may also be dependent on its ability to hire and retain
additional qualified management personnel. There can be no assurance that the
Company will be able to hire and retain such personnel.
Competition
The Company competes with independent third parties in most of the
markets in which it operates. While the Company believes that it has greater
expertise, experience and resources than its competitors in many of the markets
in which it operates, there are relatively few barriers to entry into such
markets and, as a result, any business that has access to persons who possess
technical expertise and adequate financing may become a competitor of the
Company. Because of the highly competitive bidding environment in the United
States for the services provided by the Company, the price of a contractor's bid
has often been the deciding factor in determining whether such contractor was
awarded a contract for a particular project. There can be no assurance that the
Company's competitors will not develop the expertise, experience and resources
to provide services that achieve greater market acceptance or that are superior
in both price and quality to the Company's services, or that the Company will be
able to maintain and enhance its competitive position.
The Company also faces competition from the in-house service
organizations of RBOCs, which employ personnel who perform some of the same
types of services as those provided by the Company. Although a significant
portion of these services currently is outsourced, there can be no assurance
that existing or prospective customers of the Company will continue to outsource
telecommunication infrastructure services in the future.
Technological Changes
The telecommunications industry is subject to rapid technological
changes. Wireline systems which are used for the transmission of video, voice
and data face potential displacement by various technologies, including wireless
technologies such as direct broadcast satellite television and cellular
telephony. Should the use of such technologies increase, it could, over the long
term, have an adverse effect on the Company's wireline operations.
Controlling Shareholders
Jorge Mas, the Company's President and Chief Executive Officer, and his
father, Jorge L. Mas, the Company's Chairman, together with other family
members, beneficially own more than 50% of the outstanding shares of Common
Stock of the Company. Accordingly, they have the power to control the election
of the Company's directors and to effect certain fundamental corporate
transactions.
Shares Eligible for Future Sale
Future sales of shares by existing stockholders under Rule 144 of the
Securities Act or the issuance of shares of Common Stock upon the exercise of
options, could materially adversely affect the market price of shares of Common
Stock and could materially impair the Company's future ability to raise capital
through an offering of equity securities. The Company has registered 2,600,000
shares of Common Stock for issuance upon exercise of options granted to its
employees under the Company's 1994 Stock Incentive Plan and for purchase by
employees under the Company's 1997 Non-Qualified Employee Stock Purchase Plan,
and an additional 600,000 shares of Common Stock for issuance upon the exercise
of options granted to its non-employee directors under the Company's 1994 Stock
Option Plan for Non-Employee Directors. Options to purchase approximately
252,000 shares are currently issued and exercisable. The Company also has
reserved 1,000,000 shares of Common Stock for issuance to key employees under
the 1997 Annual Incentive Compensation Plan. In addition, the Company has
registered 1,000,000 shares of Common Stock for future issuance in a shelf
registration, which it may sell from time to time in the future as the Company's
needs and market conditions dictate. No prediction can be made as to the effect,
if any, that market sales of such shares or the availability of such shares for
future sales, or market sales of shares sold in offerings pursuant to this
Prospectus or the availability of such shares for future sales, will have on the
market price of shares of Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock in the public market could adversely affect
the prevailing market price of the Common Stock.
Anti-Takeover Provisions
The Company's certificate of incorporation and bylaws and certain
provisions of the Delaware General Corporation Law (the "DGCL") may make it
difficult in some respects to effect a change in control of the Company and
replace incumbent management. The existence of these provisions may have a
negative impact on the price of the Common Stock, may discourage third party
bidders from making a bid for the Company, or may reduce any premiums paid to
stockholders for their Common Stock. In addition, the Board of Directors of the
Company has the authority to fix the rights and preferences of, and to issue
shares of, the Company's preferred stock, and to take other actions that may
have the effect of delaying or preventing a change of control of the Company
without the action of its stockholders.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, no par value, and 5,000,000 shares of preferred stock,
$.10 par value (the "Preferred Stock"). Upon completion of the Offering,
assuming all registered shares are offered, there will be approximately
29,000,000 shares of Common Stock issued and outstanding. No shares of Preferred
Stock are outstanding.
Common Stock
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders. Holders of Common Stock do not
have cumulative rights, so that holders of more than 50% of the shares of Common
Stock are able to elect all of the Company's directors eligible for election in
a given year. For a description of the classification of the Board of Directors,
see "-Delaware Law and Certain Provisions of Certificate of Incorporation and
Bylaws." The holders of Common Stock are entitled to dividends and other
distributions if and when declared by the Board of Directors out of assets
legally available therefor, subject to the rights of any holder of Preferred
Stock that may from time to time be outstanding. Upon the liquidation,
dissolution or winding up of the Company, the holders of shares of Common Stock
are entitled to share pro rata in the distribution of all of the Company's
assets remaining available for distribution after satisfaction of all the
Company's liabilities and the payment of the liquidation preference of any
Preferred Stock that may be outstanding. The holders of Common Stock have no
preemptive or other subscription rights to purchase shares of stock of the
Company, and there are no redemptive or sinking fund provisions applicable to
the Common Stock.
The transfer agent and registrar for the Common Stock is First Union
National Bank of North Carolina.
Preferred Stock
The Company's Restated Certificate of Incorporation (the
"Certificate"), which is filed as an exhibit to the Registration Statement of
which this Prospectus constitutes a part, authorizes the Company's Board of
Directors to issue Preferred Stock in series and to establish the number of
shares to be included in each such series and to fix the designations, powers,
preferences and rights of the shares of each such series and any qualifications,
limitations or restrictions thereof. Because the Board of Directors has the
power to establish the preferences and rights of the shares of any such series
of Preferred Stock, it may afford the holders of any Preferred Stock that may be
outstanding preferences, powers and rights (including voting rights) senior to
the rights of the holders of Common Stock. The issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company. See "Risk Factors-Anti-Takeover Provisions."
Delaware Law and Certain Provisions of Certificate of Incorporation and By-Laws
The Certificate, the Company's By-laws (the "By-laws") and Section 203
of the DGCL contain certain provisions that may make the acquisition of control
of the Company by means of a tender offer, open market purchase, proxy fight or
otherwise, more difficult.
Business Combinations. The Company is a Delaware corporation and is
subject to Section 203 of the DGCL. In general, subject to certain exceptions,
Section 203 of the DGCL prohibits a publicly held Delaware corporation 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 upon consummation of such transaction,
the interested stockholder owned 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding for purposes of
determining the number of shares outstanding those shares owned by (x) persons
who are directors and also officers and (y) employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer)
or unless the business combination is, or the transaction in which such person
became an interested stockholder was, approved by the board of directors of the
corporation before the stockholder became an interested stockholder; or the
business combination is approved by the board of directors of the corporation
and authorized at an annual or special meeting of the corporation's stockholders
by the affirmative vote of at least 66-2/3% of the outstanding voting stock
which is not owned by the interested stockholder. For purposes of Section 203, a
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder; an " interested
stockholder" is a person who, together with affiliates and associates, owns (or,
in the case of affiliates and associates of the issuer, did own within the last
three years) 15% or more of the corporation's voting stock other than a person
who owned such shares on December 23, 1987.
In addition to the requirements in Section 203 described above, the
Certificate requires the affirmative vote of the holders of at least eighty
percent (80 %) of the voting power of all outstanding shares of the Company
entitled to vote at an election of directors, voting together as a single class
to approve certain business combinations proposed by an individual or entity
that is the beneficial owner, directly or indirectly, of more than 10% of the
outstanding voting stock of the Company. This voting requirement is not
applicable to "business combinations" if either (i) the Company's Board of
Directors has approved a memorandum of understanding with such other corporation
with respect to and substantially consistent with such transaction prior to the
time that such other corporation became a holder of more than 10% of the
outstanding voting stock of the Company; or (ii) the transaction is proposed by
a corporation of which a majority of the outstanding voting stock is owned of
record or beneficially by the Company and/or any one or more of its subsidiaries
. For purposes of this discussion, a "business combination" includes any merger
or consolidation of the Company with or into another corporation, any sale or
lease of all or any substantial part of the property and assets of the Company,
or issuances of securities of the Company in exchange for sale or lease to the
Company of property and assets having an aggregate fair market value of $1
million or more.
Classified Board of Directors and Related Provisions. The Certificate
provides that the number of directors of the Company shall be fixed from time to
time by, or in the manner provided in, the By-laws. The By-laws provide that the
number of directors will be six, the Board of Directors will be divided into
three classes of directors, with each class having a number as nearly equal as
possible and that directors will serve for staggered three-year terms. As a
result, one-third of the Company's Board of Directors will be elected each year.
The classified board provision could prevent a party who acquires control of a
majority of the outstanding voting stock of the Company from obtaining control
of the Board of Directors until the second annual stockholders meeting following
the date the acquirer obtains the controlling interest.
Directors may be removed with or without cause by the affirmative vote
of the holders of 80% of all outstanding voting stock entitled to vote. A
majority of the entire Board of Directors may also remove any director for
cause. Vacancies on the Board of Directors may be filled by a majority of the
remaining directors, or by the stockholders.
Authorized and Unissued Preferred Stock. On the date hereof, there are
5,000,000 authorized and unissued shares of Preferred Stock. The existence of
authorized and unissued Preferred Stock may enable the Board of Directors to
render more difficult or to discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy consent or otherwise. For
example, if in the due exercise of its fiduciary obligations, the Board of
Directors were to determine that a takeover proposal is not in the Company's
best interests, the Board of Directors could cause shares of Preferred Stock to
be issued without stockholder approval in one or more private offerings or other
transactions that might dilute the voting or other rights of the proposed
acquirer or insurgent stockholder or stockholder group or create a substantial
voting block in institutional or other hands that might undertake to support the
position of the incumbent Board of Directors. In this regard, the Certificate
grants the Board of Directors broad power to establish the designations, powers,
preferences and rights of each series of Preferred Stock. See "- Preferred
Stock."
Stockholder Action by Written Consent. The By-laws provide that
stockholder action can be taken only at an annual meeting or special meeting of
stockholders and can only be taken by written consent in lieu of a meeting with
the unanimous written consent of the stockholders.
Indemnification. The Certificate provides that the Company shall
indemnify each director and officer of the Company to the fullest extent
permitted by law and limits the liability of directors to the Company and its
stockholders for monetary damages in certain circumstances. The Certificate also
provides that the Company may purchase insurance on behalf of the directors,
officers, employees and agents of the Company against certain liabilities they
may incur in such capacity, whether or not the Company would have the power to
indemnify against such liabilities.
Dividend Restrictions
The Company's credit facilities currently limit the Company's ability
to pay dividends on the Common Stock. The payment of dividends on the Common
Stock is also subject to the preference that may be applicable to any then
outstanding Preferred Stock.
LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus
have been passed upon for the Company by Jose M. Sariego, Senior Vice President
and General Counsel of the Company.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1996
and 1995 and the consolidated statements of income, stockholders equity and cash
flows for each of the three years in the period ended December 31, 1996
incorporated by reference into this Prospectus have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK OFFERED
HEREBY OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SHARES TO
ANY PERSON, OR THE SOLICITATION OF A PROXY FROM ANY PERSON, IN ANY JURISDICTION
IN WHICH SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IS UNLAWFUL.
THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain Documents by Reference 3
The Company 4
Selected Financial Information 6
Risk Factors 8
Description of Capital Stock 12
Legal Matters 14
Experts 14
