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Rule 424(b)(3)
333-43017
PROSPECTUS
278,650 SHARES
CARPENTER TECHNOLOGY CORPORATION
COMMON STOCK
(PAR VALUE $5 PER SHARE)
This Prospectus provides for the offering by the Selling Stockholder named
herein (the "Selling Stockholder") of up to an aggregate of 278,650 shares (the
"Shares") of the Common Stock, par value $5 per share ("Common Stock"), of
Carpenter Technology Corporation (the "Company" or "Carpenter"). The Shares
were issued by the Company on February 28, 1997 pursuant to the terms of an
Agreement and Plan of Merger (the "Merger Agreement") among the Company, Dynamet
Incorporated ("DI") and the shareholders of DI ("DI Shareholders") dated January
6, 1997. See "Selling Stockholder."
The Shares may be offered or sold by or for the account of the Selling
Stockholder from time to time on one or more exchanges or otherwise, at prices
and on terms to be determined at the time of sale, to purchasers directly or by
or through brokers or dealers, who may receive compensation in the form of
discounts, commissions or concessions. The Selling Stockholder and/or any such
brokers or dealers may be deemed to be "underwriters" within the meaning of the
United States Securities Act of 1933, as amended (the "Securities Act"), and any
discounts, concessions and commissions received by any such brokers and dealers
may be deemed to be underwriting commissions or other discounts under the
Securities Act. The Company will not receive any of the proceeds from any sale
of the Shares offered hereby. See "Use of Proceeds," "Selling Stockholder" and
"Plan of Distribution".
The Common Stock is listed on the New York Stock Exchange (the "NYSE") and
traded under the symbol "CRS". The last reported sale price of the Common Stock
on the NYSE on April 2, 1998 was $54.625 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
April 8, 1998
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
Prospectus Page
Available Information............................................ 2
Incorporation of Certain Documents by Reference.................. 3
The Company...................................................... 3
Special Note Regarding Forward Looking Statements................ 4
Risk Factors..................................................... 4
Use of Proceeds.................................................. 10
Selling Stockholder.............................................. 10
Plan of Distribution............................................. 12
Validity of Common Stock......................................... 13
Experts.......................................................... 13
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy solicitation materials and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy solicitation materials and other information
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 Commission's Regional Offices located at Seven World Trade Center,
Suite 1300, New York, New York 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Such reports, proxy and information statements and other
information may be found at http://www.sec.gov. The Common Stock is listed on
the NYSE. Such reports, proxy solicitation materials and other information can
also be inspected and copied at the NYSE at 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the offering
made hereby. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain portions of which are omitted in
accordance with the rules and regulations of the Commission. Such additional
information may be obtained from the Commission's principal office in
Washington, D.C. as set forth above. For further information, reference is
hereby made to the Registration Statement, including the exhibits which are
filed as a part thereof. Statements made in this Prospectus as to the contents
of any document are not necessarily complete, and in each instance reference is
made to the applicable exhibit for a more complete description and each such
statement is modified in its entirety by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-5828) with the
Commission pursuant to the Exchange Act are incorporated by reference: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997;
(ii) the Company's Current Report on Form 8-K filed on September 30, 1997; (iii)
the Company's Quarterly Reports on Form 10-Q for the quarters ended September 30
and December 31, 1997; (iv) the Company's Current Report on Form 8-K filed on
March 27, 1997, as amended by Amendment No. 1 thereto on Form 8-K/A filed on May
13, 1997; (v) the Company's Current Report on Form 8-K filed on December 15,
1997, as amended by Amendment No. 1 thereto on Form 8-K/A filed on January 22,
1998 and as further amended by Amendment No. 2 thereto on Form 8-K/A filed on
February 12, 1998; (vi) the Company's Current Report on Form 8-K filed on
February 26, 1998; (vii) the Company's Current Report on Form 8-K filed on March
16, 1998, as amended by Amendment No. 1 thereto on Form 8-K/A filed on March 19,
1998; and (viii) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as the same has been and may be amended.
All documents and reports 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 termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference herein. Any statement contained herein or 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 subsequently filed document
which 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.
The Company will provide to each person to whom a copy of this Prospectus is
delivered, upon the written or oral request of such person, without charge, a
copy of any or all of the documents that are incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Carpenter Technology Corporation, 101 West Bern Street, Reading, Pennsylvania
19601, Attention: Corporate Secretary, telephone number (610) 208-2000.
THE COMPANY
Carpenter, a specialty materials company, is a leading manufacturer of stainless
steel and specialty alloys, including titanium alloys, and various engineered
products.
The Company's principal executive offices are located at 101 West Bern Street,
Reading, Pennsylvania 19601, and its telephone number is (610) 208-2000.
Reference herein to the Company refers to Carpenter Technology Corporation and
its subsidiaries, unless the
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context requires otherwise.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements under the caption "Risk Factors" in this Prospectus and
certain statements under the captions "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business" in the documents
incorporated by reference constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements, which represent the Company's expectations or beliefs concerning
future events, include, among other matters, statements concerning future
revenues and continued growth in various market segments. These statements are
based on current expectations that involve a number of risks and uncertainties
which could cause actual results to differ from those of such forward-looking
statements. These risks include the following: (i) the cyclical nature of the
specialty materials business and certain end use markets, including, but not
limited to, aerospace, automotive and consumer durables, which are subject to
changes in general economic conditions; (ii) the critical importance of certain
raw materials used by the Company, some of which can only be acquired from
foreign sources and some of which are located in countries subject to unstable
political and economic conditions which may affect the prices or supply of these
materials; (iii) the susceptibility of export sales to the effects of export
controls, changes in legal and regulatory requirements, policy changes affecting
the markets, changes in tax laws and tariffs, exchange rate fluctuations,
political and economic instability and accounts receivable collection; and (iv)
the effects on operations of changes in domestic and foreign governmental laws
and public policy, including environmental regulations. Any of these factors
could have an adverse effect on the Company's business, financial condition or
results of operations.
RISK FACTORS
CYCLICAL NATURE OF SPECIALTY MATERIALS BUSINESS
Demand for certain of Carpenter's products, such as titanium and high-
temperature alloys, is highly cyclical in nature and demand for certain other of
the Company's products, such as stainless steel, is sensitive to general
economic conditions. The prices of certain of Carpenter's products have had,
and in the future may have, significant fluctuations as a result of general
economic conditions and other factors beyond Carpenter's control. The demand
for Carpenter's products and thus its financial performance generally are
affected by domestic economic fluctuations, as well as changes in the world
economy. Because of the comparatively high level of fixed costs associated with
Carpenter's manufacturing processes, changes in production volumes can result in
significant variations in net income. Any significant decrease in demand for
Carpenter's products or a decline in prices for such products could have a
material adverse effect on Carpenter's business, financial condition or results
of operations.
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DEPENDENCE ON AEROSPACE INDUSTRY
Demand for certain of Carpenter's products is affected by the strength of the
aerospace industry. Shipments to the aerospace industry, Carpenter's largest
end-use market, accounted for approximately 30% of net sales for the six months
ended December 31, 1997. These sales consist primarily of premium grade, higher
margin alloys. The Company's acquisition of Dynamet in February, 1997 increased
its dependence on the aerospace industry. There can be no assurance that future
sales to the aerospace industry or profit margins will equal historic levels.
The demand by commercial airlines for new aircraft historically has been closely
related to the financial condition and performance of the U.S and world
economies. The large number of aircraft delivered in the late 1980s and early
1990s, the U.S. economic recession in the early 1990s and the Persian Gulf War
created excess capacity in the air carrier system. After this period, airlines
and leasing companies deferred existing orders for new aircraft and, to a lesser
degree, canceled existing orders. These deferrals and cancellations adversely
affected the volume and price of orders placed with manufacturers of commercial
aircraft engine and other components and their suppliers, including Carpenter.
Recently, the commercial airline industry has generally been profitable, excess
capacity has been reduced and the backlog for new aircraft reported by major
aircraft manufacturers is at high levels. However, there can be no assurance
that the improved operating performance of the commercial aircraft industry will
continue or that deliveries of commercial aircraft will not be deferred or
canceled in the future. Any developments in the aerospace market resulting in a
significant reduction in future aircraft deliveries, including cancellations and
deferrals of scheduled deliveries, could have a material adverse effect on
Carpenter's business, financial condition or results of operations.
DEPENDENCE ON AUTOMOTIVE INDUSTRY
Certain of the Company's products are used for applications in the automotive
market. The demand for such products is closely linked to trends in sales of
motor vehicles. For the six months ended December 31, 1997, shipments to the
automotive industry accounted for 13% of Carpenter's net sales. Sales by the
Company to automotive markets may be affected generally by economic conditions
and particularly by levels of consumer confidence, discretionary spending and
interest rates. Over the past several years, the annual U.S. production rate of
automobiles and light trucks has been relatively stable at approximately 15
million units per year. However, there can be no assurance that the automotive
industry will not experience sustained periods of decline in vehicle sales in
the future and that such decline would not have a material adverse effect on
Carpenter's business, financial condition or results of operations.
NET ASSETS HELD FOR SALE
Carpenter plans to divest both the government products and services segment and
the industrial products segment of Talley Industries, Inc. ("Talley"). Although
management
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believes that it will be able to sell these businesses for the values assumed in
its financial statements and within one year of the acquisition, no assurance
can be given that the businesses in these segments can be sold on a timely basis
or that Carpenter will realize the values it has estimated for these businesses.
If the businesses cannot be sold on a timely basis, Carpenter will be required
to support a higher level of indebtedness than it would otherwise have.
Existing management and employees of the businesses to be sold may not wish to
stay at these companies and could pursue other opportunities before the
companies are sold. In addition, while Carpenter owns these businesses,
managing them may place additional demands on Carpenter's personnel and other
resources. The businesses held for sale are in a variety of industries in which
Carpenter's management generally has no experience. If these businesses are not
managed effectively, their value, financial condition, results of operations,
cash flows or prospects could be materially and adversely affected. During the
period of time these businesses are held for sale, overall economic conditions
or the competitive environment for these businesses could change and could
reduce the value of any one or all of these businesses. See "-Acquisition
Strategy."
COMPETITION
Generally, the markets in which Carpenter participates are competitive.
Carpenter competes with companies located throughout the world. The competitive
nature of the markets in the future could have an adverse effect on Carpenter's
business, financial condition or results of operations. Carpenter competes
generally on the basis of quality, the ability to meet customers' product
specifications, price requirements and delivery schedules. Price competition
could increase as a result of the devaluation of foreign currencies,
particularly in Asia. Currently, there is worldwide excess capacity for certain
alloys which Carpenter produces and markets. This excess capacity could result
in increased competition based on price and delivery. The competitive nature of
the industries in which Carpenter participates may in the future exert downward
pressure on prices for certain of Carpenter's products. Although Carpenter
believes it is well positioned to compete in its markets, competitors may
develop new products or production processes that reduce or impair Carpenter's
competitiveness. In addition, Carpenter has joined other domestic producers in
filing dumping and countervailing duty claims in the United States against
competitors from seven foreign countries. A determination of such claims,
adversely to Carpenter, may make it more difficult for Carpenter to compete in
certain markets.
ACQUISITION STRATEGY
Carpenter continues to investigate acquisitions of businesses that expand or
complement its business or product offerings. Acquisitions may result in
dilution in the value of the Company's securities because of the issuance of
equity securities, additional debt, increased amortization of expenses related
to goodwill and other assets or other charges to operations.
Acquisitions could involve numerous additional risks, including unsuccessful
integration
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with Carpenter's existing operations and lower operating margins and return on
investment in such acquired operations. Acquisitions will require, among other
things, continued development of Carpenter's financial and management controls
and training of personnel. Moreover, Carpenter's results of operations may be
affected by the timing of acquisitions, the costs of integrating such
acquisitions and the extent to and the rate at which the economic benefits of
integration are realized. There can be no assurance that Carpenter will be
successful in realizing operating and financial improvements from acquisitions.
In addition, the availability of acquisition financing in the future cannot be
assured and, depending on the terms of such additional acquisitions, may be
restricted by Carpenter's debt agreements.
Carpenter completed the acquisition of Talley on February 19, 1998. Carpenter
plans to retain two Talley operations, Talley Metals Technology, Inc. ("Talley
Metals"), which operates a stainless steel mini-mill located in Hartsville,
South Carolina, and Amcan Specialty Steels, Inc. ("Amcan"), which is a stainless
steel master distributor. No assur ance can be given that Talley Metals and
Amcan will be successfully integrated with Carpenter's existing operations or
that Carpenter will be able to achieve the operating and financial improvements
which it contemplates for these operations. Carpenter plans to divest Talley's
government products and services and industrial products segments. See "-Net
Assets Held for Sale."
MANAGEMENT OF GROWTH
Carpenter's growth, both in its existing businesses and through acquisitions,
has placed demands on its personnel and other resources. Although Carpenter
believes that it has successfully managed growth in the past, future growth may
place additional demands on Carpenter's personnel and other resources, including
increased responsibilities for management personnel. Carpenter's ability to
manage growth effectively will require continued improvement in its operational,
management and financial systems and controls and successful training,
motivation and management of its employees. If Carpenter cannot manage growth
effectively, it could have a material adverse effect on Carpenter's business,
financial condition or results of operations.
SIGNIFICANT CAPITAL REQUIREMENTS
As a result of Carpenter's acquisitions, capacity expansion and regular
maintenance programs, Carpenter's business operations are capital intensive and
will require substantial capital expenditures in the future. Continued access
to capital with acceptable terms is necessary to assure the success of the
future growth of Carpenter's business. There can be no assurance that Carpenter
will be able to secure such additional capital or that the expense of such
capital will not increase. There also can be no assurance that Carpenter will
fully utilize new or expanded facilities or that such facilities will earn an
adequate return on investment. Carpenter's inability to adequately utilize such
facilities or to earn an adequate return on investment could have a material
adverse effect on Carpenter's business, financial condition or results of
operations.
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ENVIRONMENTAL MATTERS
Like similar companies, Carpenter's operations and properties are subject to
various stringent federal, state, local and foreign environmental laws and
regulations governing, among other things, the use, storage, handling,
generation, treatment, emission, release, discharge, disposal or remediation of
certain materials, substances and wastes (collectively, "Environmental Laws").
There is a risk that these governmental environmental requirements, or
enforcement thereof, may become even more restrictive in the future and that
Carpenter may be subject to future regulatory scrutiny or legal proceedings
brought by private parties or government agencies with respect to environ mental
matters. Although Carpenter believes that it is currently in substantial
compliance with current Environmental Laws, there can be no assurance that
material costs will not be incurred in connection with limitations imposed by,
or compliance with, or claims or liabilities arising under current or future
Environmental Laws or that the costs of compliance or of liabilities would not
have a material adverse effect on Carpenter's business, financial condition or
results of operations.
Carpenter accrues amounts for environmental costs which represent management's
best estimates of the probable and reasonably estimable costs relating to
environmental remediation. However, there can be no assurance that these
amounts are adequate. See Note 6 to Carpenter's Interim Consolidated Financial
Statements contained in Carpenter's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1997 which is incorporated by reference herein.
LABOR MATTERS
Most of Carpenter's facilities are nonunion, and Carpenter believes that its
relations with its employees are good. A significant portion of Carpenter's
workforce is located in Reading, Pennsylvania, a nonunion facility. Dynamet has
a union workforce at its principal titanium processing facility in Washington,
Pennsylvania. The union contract for this facility expires in August, 2001.
Carpenter historically has not experienced work stoppages or strikes at its
existing facilities. Although Carpenter believes that it will continue to
maintain good relations with its employees, there can be no assurance that this
will be the case, that the cost of labor will not increase or that a disruption
in operations resulting from disagreements with employees will not result.
DEPENDENCE ON ESSENTIAL MACHINERY AND EQUIPMENT
Carpenter's manufacturing processes are dependent on the reliable operation of
its machinery and equipment. The repair or replacement of certain critical
pieces of machinery and equipment could disrupt operations for a significant
period of time, and substitutes may not be readily available on commercially
acceptable terms. Any such disruption in Carpenter's production or distribution
could have a material adverse effect on Carpenter's business, financial
condition or results of operations.
Carpenter's principal manufacturing facilities, located in Reading,
Pennsylvania, have
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been operating at near capacity for several quarters. Carpenter believes that
it maintains adequate property damage insurance to provide for reconstruction of
damaged equipment, as well as business interruption insurance to mitigate losses
resulting from any production shutdown caused by an insured loss; however, there
can be no assurance that such insurance coverage will be adequate to cover such
losses.
SUPPLY AND COST OF RAW MATERIALS
Carpenter purchases substantial quantities of raw materials, principally nickel,
chromium, cobalt and titanium. Although Carpenter believes that raw materials
are available in adequate quantities at prevailing market prices, the
availability of these materials may be curtailed or prices increased due to,
among other things, new laws or regulations, suppliers' allocations to other
purchasers, interruptions in production by suppliers and changes in exchange
rates and worldwide price levels. Raw materials are generally purchased
directly from producers. Commercial deposits of certain metals used by
Carpenter are found in only a few parts of the world, and their availability may
be affected by political or other developments in those areas. Any protracted
interruption in the supply of raw materials, or substantial increases in their
costs, could have a material adverse effect on Carpenter's business, financial
condition or results of operations.
As described above, a substantial portion of the raw materials used in
Carpenter's manufacturing processes are commodities, such as nickel, that are
subject to wide price fluctuations. Although certain of Carpenter's sales are
pursuant to product orders which provide for price adjustments to reflect
changes in the price of raw materials, some of Carpenter's product orders
currently are and in the future are expected to be made under firm price
contracts which do not provide for raw material price adjustments. To attempt
to mitigate the risks associated with raw material price fluctuations and to
match raw material purchases with firm price product orders, Carpenter sometimes
enters into firm price contracts for the purchase of raw materials from
suppliers and also hedges the price of nickel. Although Carpenter uses
commercially reasonable efforts to collect cancellation penalties if a customer
cancels a firm price purchase order, there can be no assurance that Carpenter
will receive cancellation penalties which are adequate to cover any raw material
losses. There can be no assurance that the hedging and other techniques
implemented by Carpenter will be successful in eliminating or reducing the
effects of fluctuation in the price of Carpenter's raw materials or that
Carpenter will not incur losses on certain transactions.
PRODUCT LIABILITY RISK; POSSIBLE INSUFFICIENCY OF INSURANCE
Carpenter's business involves the risk of product liability claims, particularly
in connection with its sales to the aerospace, automotive, medical device and
nuclear power industries. Carpenter maintains product liability insurance at
coverage levels which it deems commercially reasonable; however, there can be no
assurance that product liability or other claims will not exceed such insurance
coverage limits or that such insurance will
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continue to be available on commercially acceptable terms, or at all. Carpenter
periodically evaluates the amounts and types of its product liability insurance
coverage, but even if Carpenter obtains additional product liability insurance,
there can be no assurance that such coverage would prove adequate or that a
product liability claim or claims, individually or in the aggregate, insured or
uninsured, would not have a material adverse effect on Carpenter's business,
financial condition or results of operations. Even if a product liability claim
is not successful, the time and expense of defending against such a claim may
adversely affect Carpenter's business, financial condition or results of
operations.
FOREIGN ECONOMIC CONDITIONS AND GOVERNMENT POLICIES
Carpenter has operations in Mexico and may in the future have operations in
other emerging market countries, such as India. As of December 31, 1997,
approximately 2% of Carpenter's total assets were located in Mexico. Emerging
market countries may experience social, political and economic disturbances and
instability from time to time, which could have an adverse impact on Carpenter's
operations. Carpenter does not have and does not intend to obtain political
risk insurance in the countries in which it currently conducts business.
EXCHANGE RATES AND FOREIGN SALES
Carpenter sells its products in a number of countries. For the six months ended
December 31, 1997, approximately 15% of Carpenter's net sales including export
sales were outside the United States. Approximately 8% of Carpenter's net sales
were in Canada and Europe. Carpenter's strategy is to increase sales in faster
growing markets throughout the world. Fluctuations in exchange rates could have
an adverse impact on Carpenter's sales outside the United States, and there can
be no assurance that such sales will continue at current levels, that Carpenter
will achieve its planned increase in sales outside the United States or that
profits on such sales will not be reduced.
USE OF PROCEEDS
The Selling Stockholder will receive all of the net proceeds from any sale of
the Shares offered hereby, and none of such proceeds will be available for use
by the Company or otherwise for the Company's benefit.
SELLING STOCKHOLDER
The Shares that may be offered pursuant to this Prospectus will be offered by or
for the account of the Peter C. and Ada E. Rossin 1998 Charitable Remainder
Unitrust (the "Selling Stockholder"). The Shares were acquired by Peter C.
Rossin and Ada E. Rossin, his wife, jointly on February 28, 1997, pursuant to
the Merger Agreement. Concurrently with the effectiveness of the Registration
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Statement, the Shares were contributed to the Selling Stockholder. Mr. Rossin
and his wife beneficially owned an aggregate of 2,387,494 shares of Common
Stock, including the Shares, on April 2, 1998, representing 10.39% of the shares
of Common Stock outstanding on such date. Following the offering, Mr. Rossin and
his wife will continue to beneficially own the remaining 2,108,844 shares of
Common Stock, or 9.18% of the shares outstanding on April 2, 1998 unless any
such shares are otherwise disposed of.
Mr. Rossin is a director of the Company. Pursuant to the Merger Agreement, for
a period ending on the earlier of February 28, 2007, or the date when the
aggregate voting power held by the DI Shareholders is less than 5% of the voting
power of all outstanding voting securities of the Company (the "Standstill
Term"), the Company has agreed to include Mr. Rossin or another designee of the
DI Shareholders in the slate of nominees of the Board of Directors of the
Company for election as a director on a tri-annual basis. The Standstill Term
will terminate if the Company breaches the foregoing obligation or upon a change
of control of the Company (as defined in the Merger Agreement). Each DI
Shareholder has agreed during the Standstill Term not to transfer (other than to
certain permitted transferees or in a registered offering) to a single purchaser
or related or affiliated group of purchasers more than the maximum number of
shares of Common Stock that could be sold or transferred thereto in a single
transaction in compliance with Rule 144(e)(1), unless (if capital gain treatment
would be available) that DI Shareholder has first offered the Company the
opportunity to purchase such shares at the same price. Throughout the
Standstill Term, subject to certain exceptions, the DI Shareholders have agreed
not to acquire additional shares of the Common Stock, any other voting
securities of the Company, or any rights to acquire the same. In addition,
subject to certain exceptions, the DI Shareholders have agreed during the
Standstill Term not to effect or propose any tender or exchange offer or
business combination involving the Company or any of its subsidiaries or a
recapitalization, restructuring, dissolution or other extraordinary transaction
involving the Company, nor to participate in any proxy solicitation with respect
to the Company or participate in a "group" with respect to any voting securities
of the Company or execute any written consent in lieu of a meeting of holders of
Company voting securities. Other than as described herein, neither the Selling
Stockholder nor Mr. Rossin has, or within the past three years has had, any
position, office or other material relationship with the Company or any of its
predecessors or affiliates. None of the restrictions or rights described in
this paragraph will be applicable to any person who purchases Shares pursuant to
this Prospectus.
COMPETITION
On July 30, 1997, the Company joined with three other domestic producers in
filing anti-dumping or countervailing duty trade actions against imports of
stainless steel rod from seven countries - Germany, Italy, Japan, Korea, Spain,
Sweden and Taiwan. These countries represent over 90% of current total imports
of stainless steel rod. The industry group alleges that the foreign stainless
steel rod is being subsidized or dumped into this country at prices which
require anti-dumping margins or countervailing duties ranging
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from about 10% up to about 47%.
On December 30, 1997 the U.S. Department of Commerce announced preliminary
countervailing duty rates ranging from 1.22% to 30.47% for certain Italian
companies.
On February 26, 1998, the U.S. Department of Commerce announced preliminary
dumping margins to be imposed on all stainless steel rod imports from Taiwan,
Korea, Japan, Italy, Sweden, Spain and Germany. The preliminary dumping margins
range from 1.2% to 31.4%, depending on country and producer. These seven
countries accounted for approximately 92% of stainless steel rod imports in
1997. Final determinations of the dumping margins will be made by the
Department of Commerce no later than July 20, 1998, and the dumping and
countervailing duty orders will go into effect for a period of up to five years
if injury to the domestic industry is found by the International Trade
Commission in a ruling to be made no later than September 3, 1998.
RECENT DEVELOPMENTS
On March 31, 1998, the Company commenced a public offering of its Medium-Term
Notes, Series B (the "Notes"), in the aggregate principal amount of up to
$198,000,000 with maturities ranging from nine months to 30 years from the date
of issue. Net proceeds from the sale of the Notes will be used to reduce
outstanding short-term borrowings, which were incurred principally to finance
the acquisition of Talley Industries, Inc. The Notes will be issued at 100% of
their principal amount. If the Company issues any Note at a discount from, or
at a premium over, its principal amount, the price to the public will be set
forth in a pricing supplement. The interest rate on each Note is either a fixed
rate established by the Company at the date of issue or a floating rate set
forth in the Note and specified in a pricing supplement.
The Notes are being offered on a continuing basis by the Company through J.P.
Morgan Securities Inc. and Credit Suisse First Boston Corporation.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by or for the account of
the Selling Stockholder on one or more exchanges or otherwise; directly to
purchasers in negotiated transactions; by or through brokers or dealers in
ordinary brokerage transactions or transactions in which a broker or dealer
solicits purchases; in block trades in which brokers or dealers will attempt to
sell Shares as agent but may position and resell a portion of the block as
principal; in transactions in which a broker or dealer purchases as principal
for resale for its own account; or in any combination of the foregoing methods.
Shares may be sold at a fixed offering price, which may be changed, at the
prevailing market price at the time of sale, at prices related to such
prevailing market price or at negotiated prices. Brokers or dealers may arrange
for others to participate in any such transaction and may receive compensation
in the form of
<PAGE>
discounts, commissions or concessions payable by the Selling Stockholder and/or
the purchasers of Shares. If required at the time that a particular offering of
Shares is made, a supplement to this Prospectus will be delivered that describes
any material arrangements for the distribution of Shares and the terms of the
offering, including, without limitation, any discounts, commissions or
concessions and other items constituting compensation from the Selling
Stockholder or otherwise. The Company may agree to indemnify participating
brokers or dealers against certain civil liabilities, including liabilities
under the Securities Act.
The Selling Stockholder and/or any such brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
discounts, commissions or concessions received by such brokers or dealers and
any profit on the resale of the Shares purchased by such brokers or dealers may
be deemed to be underwriting commissions or discounts under the Securities Act.
Any Shares covered by this Prospectus which qualify for sale pursuant to Rule
144 under the Securities Act may be sold under that Rule rather than pursuant to
this Prospectus. There can be no assurance that the Selling Stockholder will
sell any of the Shares. The Selling Stockholder may transfer or gift Shares by
other means not described herein.
The Selling Stockholder will reimburse the Company for all costs and expenses
incurred by the Company in connection with the offering contemplated hereby.
VALIDITY OF COMMON STOCK
The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by Dechert Price & Rhoads, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements and related consolidated financial
statement schedule of the Company, included in the Company's Annual Report on
Form 10-K for fiscal year end June 30, 1997, incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
The financial statements of Dynamet Incorporated incorporated in this Prospectus
by reference to the audited historical financial statements included in the
Company's Form 8-K/A dated May 13, 1997 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of Talley Industries, Inc. incorporated in this
Prospectus by reference to the audited historical financial statements included
in the Company's Form
<PAGE>
8-K/A dated February 12, 1998, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
