<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
COOPER INDUSTRIES, INC.
(NAME OF ISSUER)
COOPER INDUSTRIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $5.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
216669101
(CUSIP NUMBER OF CLASS OF SECURITIES)
DIANE K. SCHUMACHER, ESQ.
COOPER INDUSTRIES, INC.
1001 FANNIN, SUITE 4000
HOUSTON, TEXAS 77002
(713) 739-5400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF
OF THE PERSON(S) FILING STATEMENT)
COPY TO:
MARGARET L. WOLFF, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
MAY 31, 1995
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN
TO SECURITY HOLDERS)
------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
TRANSACTION VALUATION: $364,562,500(1) AMOUNT OF FILING FEE: $125,712
- --------------------------------------------------------------------------------
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: $172,476 Filing Party: Cooper Cameron Corporation
Form or Registration No.: Date Filed: March 14, 1995
Registration Statement on
Form S-4 of Cooper Cameron
Corporation (No. 33-90288)
</TABLE>
- ---------------
(1) Estimated solely for purposes of calculating the filing fee and computed
pursuant to Rule 0-11(a)(4) of the Securities Exchange Act of 1934, as
amended. This amount assumes the acquisition by Cooper Industries, Inc. of
9,500,000 shares of its Common Stock, par value $5.00 per share, for $38.375
per share, the average of the high and low sales prices of a share of such
common stock, as reported by the New York Stock Exchange Composite Tape on
May 25, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) The Issuer of the securities to which this Issuer Tender Offer
Statement on Schedule 13E-4 (this "Statement") relates is Cooper Industries,
Inc., an Ohio corporation ("Cooper"), and the address of its principal executive
office is 1001 Fannin, Suite 4000, Houston, Texas 77002.
(b) This Statement relates to an offer by Cooper to exchange 2.25 shares of
Common Stock, par value $.01 per share, of Cooper Cameron Corporation, a newly
formed Delaware corporation and a wholly owned subsidiary of Cooper ("CCC Common
Stock"), for each share of Common Stock, par value $5.00 per share, of Cooper
("Cooper Common Stock"), up to a maximum of 9,500,000 shares of Cooper Common
Stock (approximately 8% of the outstanding shares of Cooper Common Stock as of
May 1, 1995), validly tendered and not properly withdrawn, upon the terms and
subject to the conditions set forth in the Offering Circular-Prospectus, dated
May 30, 1995 (the "Offering Circular-Prospectus"), the form of which is attached
hereto as Exhibit 99.1, and in the related Letter of Transmittal, the form of
which is attached hereto as Exhibit 99.2 (which together constitute the
"Exchange Offer"). The information set forth on the front cover page of the
Offering Circular-Prospectus and in the sections thereof entitled "THE EXCHANGE
OFFER -- Terms of the Exchange Offer" and "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL HOLDERS" is incorporated herein by reference.
(c) The information set forth in the section of the Offering
Circular-Prospectus entitled "MARKET PRICES, TRADING AND DIVIDEND
INFORMATION -- Cooper Common Stock" is incorporated herein by reference.
(d) This Statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The consideration for the purchase of the maximum amount of Cooper
Common Stock for which the Exchange Offer is being made consists of 21,375,000
shares of CCC Common Stock. The information set forth on the front cover page of
the Offering Circular-Prospectus and in the sections thereof entitled "THE
EXCHANGE OFFER -- Terms of the Exchange Offer" and "-- Exchange of Shares of
Cooper Common Stock."
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(d) The information set forth in the sections of the Offering
Circular-Prospectus entitled "OFFERING CIRCULAR-PROSPECTUS SUMMARY -- The
Transaction -- Purpose and Effects of the Transaction," "SPECIAL
CONSIDERATIONS -- Tendering and Nontendering Shareholders Affected Differently
by the Transaction," "THE TRANSACTION -- Purpose and Effects of the
Transaction," "THE DISTRIBUTION," "CERTAIN TRANSACTIONS; RELATIONSHIP BETWEEN
COOPER AND CCC -- Asset Transfer Agreement," "-- Registration Rights" and
"-- Other Matters" is incorporated herein by reference.
(e) The information set forth in the section of the Offering
Circular-Prospectus entitled "MARKET PRICES, TRADING AND DIVIDEND
INFORMATION -- Cooper Common Stock" is incorporated herein by reference.
(f)-(j) Not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
On April 3, 1995, (i) Mr. Frank A. Olson, a director of Cooper, acquired
2,000 shares of Cooper Common Stock upon the exercise of a stock option which
was granted under Cooper's 1989 Director Stock Option Plan (the "Director Plan")
at an exercise price of $25.4375 per share and (ii) Sir Ralph H. Robins, a
director of Cooper, acquired 2 shares of Cooper Common Stock at a price of
$38.875 per share pursuant to Cooper's Dividend Reinvestment Plan. On April 5,
1995, Mr. Warren L. Batts, a director of Cooper, acquired
2
<PAGE> 3
2,000 shares of Cooper Common Stock upon the exercise of a stock option which
was granted under the Director Plan at an exercise price of $25.4375 per share.
On April 25, 1995, Mr. John D. Ong, a director of Cooper, acquired 2,000 shares
of Cooper Common Stock upon the exercise of a stock option which was granted
under the Director Plan at an exercise price of $25.4375 per share. On April 26,
1995, each of Mr. Batts and Mr. Clifford J. Grum, a director of Cooper, was
granted an option to purchase 2,000 shares of Cooper Common Stock at an exercise
price of $17.31 per share under the Director Plan. On May 23, 1995, Mr. Michael
J. Sebastian, Executive Vice President, Operations of Cooper, made gifts of an
aggregate of 2,500 shares of Cooper Common Stock. The information set forth in
the section of the Offering Circular-Prospectus entitled "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL HOLDERS" is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in the sections of the Offering
Circular-Prospectus entitled "SPECIAL CONSIDERATIONS -- Shares Available for
Future Sale," "THE DISTRIBUTION," "CERTAIN TRANSACTIONS; RELATIONSHIP BETWEEN
COOPER AND CCC -- Registration Rights" and "-- Other Matters" is incorporated
herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offering Circular-Prospectus in the
sections entitled "THE TRANSACTION -- Opinions of Advisors" and "THE EXCHANGE
OFFER -- Fees and Expenses" is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth in the sections of the Offering
Circular-Prospectus entitled "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE,"
"OFFERING CIRCULAR - PROSPECTUS SUMMARY -- Summary Financial Information of
Cooper" and "SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF COOPER" is
incorporated herein by reference.
(b) The information set forth in the section of the Offering
Circular-Prospectus entitled "PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF
COOPER" is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) The information set forth in the section of the Offering
Circular-Prospectus entitled "CERTAIN TRANSACTIONS; RELATIONSHIP BETWEEN COOPER
AND CCC -- Asset Transfer Agreement" is incorporated herein by reference.
(b) The information set forth in the section of the Offering
Circular-Prospectus entitled "THE TRANSACTION -- Regulatory Approvals" is
incorporated herein by reference.
(c) Not applicable.
(d) There are no material pending legal proceedings relating to the
Exchange Offer.
(e) Reference is hereby made to the Offering Circular-Prospectus and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
99.1 and 99.2, respectively, and incorporated herein by reference in their
entirety. Cooper is not aware of any jurisdiction in which the making of the
Exchange Offer or the acceptance thereof would not be in compliance with
applicable law. However, Cooper reserves the right to exclude holders in any
jurisdiction in which it is asserted that the Exchange Offer cannot lawfully be
made. So long as Cooper makes a good faith effort to comply with any state law
deemed applicable to the Exchange Offer, if it cannot do so, Cooper believes
that the exclusion of holders residing in such state(s) is permitted under Rule
13e-4(f)(9) promulgated under the Securities Exchange Act of 1934, as amended.
3
<PAGE> 4
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)
Exhibit 99.1 Offering Circular-Prospectus, dated May 30, 1995.
Exhibit 99.2 Letter of Transmittal.
Exhibit 99.3 Notice of Guaranteed Delivery.
Exhibit 99.4 Letter from CS First Boston Corporation to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees, including form of letter to recordholders
in certain states.
Exhibit 99.5 Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
Exhibit 99.6 Letter to and Direction Forms for participants in the Cooper Savings Plans and
Stock Ownership Plan and the Cooper Cameron Corporation Retirement Savings
Plan.
Exhibit 99.7 Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
Exhibit 99.8 Press Release issued by Cooper Industries, Inc. on May 26, 1995.
Exhibit 99.9 Press Release issued by Cooper Industries, Inc. on May 31, 1995.
Exhibit 99.10 Summary Advertisement, dated May 31, 1995.
Exhibit 99.11 Letter to Shareholders from Robert Cizik.
(b) Not applicable.
(c)
Exhibit 99.12 Registration Rights Agreement by and between Cooper Industries, Inc. and
Cooper Cameron Corporation.
(d) Not applicable.
(e) Offering Circular-Prospectus, dated May 30, 1995 (see Exhibit 99.1 above).
(f) Not applicable.
</TABLE>
4
<PAGE> 5
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 31, 1995
COOPER INDUSTRIES, INC.
By: /s/ Diane K. Schumacher
Name: Diane K. Schumacher
Title: Sr. Vice President,
General Counsel and
Secretary
5
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Exhibit 99.1 Offering Circular-Prospectus, dated May 30, 1995.
Exhibit 99.2 Letter of Transmittal.
Exhibit 99.3 Notice of Guaranteed Delivery.
Exhibit 99.4 Letter from CS First Boston Corporation to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees, including
form of letter to recordholders in certain states.
Exhibit 99.5 Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
Exhibit 99.6 Letter to and Direction Forms for participants in the Cooper
Savings Plans and Stock Ownership Plan and the Cooper Cameron
Corporation Retirement Savings Plan.
Exhibit 99.7 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Exhibit 99.8 Press Release issued by Cooper Industries, Inc. on May 26, 1995.
Exhibit 99.9 Press Release issued by Cooper Industries, Inc. on May 31, 1995.
Exhibit 99.10 Summary Advertisement, dated May 31, 1995.
Exhibit 99.11 Letter to Shareholders from Robert Cizik.
Exhibit 99.12 Registration Rights Agreement by and between Cooper Industries,
Inc. and Cooper Cameron Corporation.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
[COOPER LOGO]
[COOPER CAMERON LOGO]
COOPER INDUSTRIES, INC.
OFFERING CIRCULAR
------------------
COOPER CAMERON CORPORATION
PROSPECTUS
OFFER TO EXCHANGE 2.25 SHARES OF COMMON STOCK OF COOPER CAMERON CORPORATION FOR
EACH SHARE OF COMMON STOCK OF COOPER INDUSTRIES, INC. UP TO 9,500,000 SHARES
OF COMMON STOCK OF COOPER INDUSTRIES, INC.
------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JUNE 30, 1995, UNLESS THE
EXCHANGE OFFER IS EXTENDED.
------------------
Cooper Industries, Inc., an Ohio corporation ("Cooper"), has determined to
distribute shares of Cooper Cameron Corporation, a Delaware corporation
("CCC"), it owns to Cooper shareholders by offering to exchange 2.25
shares of Common Stock, par value $.01 per share, of CCC ("CCC
Common Stock") for each share of Common Stock, par value $5.00
per share, of Cooper ("Cooper Common Stock"), up to a maximum
of 9,500,000 shares of Cooper Common Stock (approximately
8% of the outstanding Cooper Common Stock as of May 1,
1995), validly tendered and not properly withdrawn,
upon the terms and subject to the conditions set
forth herein and in the related Letter of
Transmittal (which together constitute
the "Exchange Offer").
Cooper currently holds 25,000,000 shares of CCC Common Stock, 85.5% of which
will be distributed pursuant to the Exchange Offer. If all such shares are
not exchanged in the Exchange Offer and the Exchange Offer is consummated,
the remaining shares will be distributed by Cooper on a pro rata basis
to the Cooper shareholders remaining after the Exchange Offer (the
"Distribution"). If more than 9,500,000 shares of Cooper Common
Stock are validly tendered and not properly withdrawn on or
prior to the Expiration Date (as defined herein) of the
Exchange Offer, Cooper will accept such shares for
exchange on a pro rata basis, except that any holder
of Cooper Common Stock who beneficially owns an
aggregate of fewer than 100 shares of Cooper
Common Stock and who validly tenders and does
not properly withdraw all such shares on or
prior to the Expiration Date will not be
subject to proration, as described
herein.
The Exchange Offer is subject to certain conditions as set forth under "The
Exchange Offer -- Certain Conditions of the Exchange Offer," including at
least 8,550,000 shares of Cooper Common Stock (approximately 7% of the
outstanding Cooper Common Stock and a sufficient number of shares to
result in at least 90% of the CCC Common Stock to be distributed
being exchanged pursuant to the Exchange Offer) being validly
tendered and not properly withdrawn prior to the Expiration
Date of the Exchange Offer.
The CCC Common Stock has been approved for quotation on the National Association
of Securities Dealers Automated Quotation/National Market System
("NASDAQ/NMS") under the symbol "CRON."
------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH THE EXCHANGE OFFER, SEE "SPECIAL CONSIDERATIONS."
(Continued on following page)
------------------
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
OFFERING CIRCULAR - PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The Dealer Manager for the Exchange Offer is:
CS FIRST BOSTON
The date of this Offering Circular - Prospectus is May 30, 1995.
<PAGE> 2
(Cover continued from previous page)
The shares of Cooper Common Stock are listed and principally traded on the New
York Stock Exchange (the "NYSE"). On September 16, 1994, the last trading
day before Cooper announced the Transaction (as defined herein), the
closing sale price per share of Cooper Common Stock as reported on the
NYSE Composite Tape was $39.25. On May 25, 1995, the last trading
day before Cooper disclosed the terms of the Exchange Offer, the
closing sale price per share of Cooper Common Stock as reported
on the NYSE Composite Tape was $38.125. As of May 1, 1995,
there were 117,052,876 shares of Cooper Common Stock
outstanding.
Any shareholder desiring to accept the Exchange Offer should follow the
procedures set forth in "The Exchange Offer -- Procedures for Tendering
Shares of Cooper Common Stock." Shareholders having shares of Cooper
Common Stock registered in the name of a broker, dealer, commercial
bank, trust company or nominee must contact such person if they
desire to tender their shares of Cooper Common Stock.
Shareholders who wish to tender shares of Cooper Common
Stock and whose certificates for such shares are not
immediately available should tender such shares by
following the procedures for guaranteed delivery set
forth in "The Exchange Offer -- Guaranteed
Delivery Procedure."
Questions and requests for assistance or for additional copies of this Offering
Circular - Prospectus and the Letter of Transmittal should be directed to the
Information Agent, Georgeson & Company Inc., or the Dealer Manager, CS
First Boston Corporation, at their respective addresses and telephone
numbers set forth on the back cover hereof.
No person has been authorized to give any information or to make any
representations other than those contained in this Offering Circular
- Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized
by Cooper or CCC or any other person. This Offering Circular -
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 any 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 Offering
Circular - Prospectus nor any sale made hereunder
shall, under any circumstances, create any
implication that there has been no change in
the affairs of Cooper or CCC since the date
hereof or that the information contained
herein is correct as of any time
subsequent to its date.
In those jurisdictions where securities, blue sky or other laws require the
Exchange Offer to be made by a licensed broker or dealer, the Exchange
Offer shall be deemed to be made on behalf of Cooper by CS First Boston
Corporation, as Dealer Manager, or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
(End of Cover Page)
<PAGE> 3
CCC was organized on November 10, 1994 as a Delaware corporation to hold
the Petroleum & Industrial Equipment segment of Cooper as of September 30, 1994.
Unless the context otherwise requires, all references herein to "CCC" include
Cooper Cameron Corporation and its subsidiaries and their respective
predecessors, including the Petroleum & Industrial Equipment segment of Cooper
as of September 30, 1994, and all references herein to "Cooper" include its
predecessors, affiliates and subsidiaries other than CCC. The address of CCC's
principal executive office is 515 Post Oak Blvd., Suite 1200, Houston, Texas
77027, and its telephone number at such address is (713) 513-3300. The address
of Cooper's principal executive office is 1001 Fannin, Suite 4000, Houston,
Texas 77002, and its telephone number at such address is (713) 739-5400.
UNTIL JUNE 25, 1995 ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
AVAILABLE INFORMATION
CCC has filed a Registration Statement on Form S-4 under the Securities Act
of 1933, as amended (the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") with respect to the CCC Common Stock offered
hereby (together with any amendments thereto, the "Registration Statement").
Cooper has filed a Schedule 13E-4 Issuer Tender Offer Statement (together with
any amendments thereto, the "Schedule 13E-4") under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), with the Commission with respect to
the Exchange Offer. This Offering Circular - Prospectus does not contain all the
information set forth or incorporated by reference in the Registration
Statement, the Schedule 13E-4 and their respective exhibits, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and the Schedule 13E-4 and the exhibits filed or incorporated as a
part thereof, which are on file at the offices of the Commission and may be
inspected and copied as set forth below.
Cooper is subject to the informational requirements of the Exchange Act and
in accordance therewith files reports, proxy statements and other information
with the Commission. The Registration Statement, the Schedule 13E-4, reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices at
Northwest Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, reports and other material concerning Cooper can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Cooper with the Commission
pursuant to the Exchange Act and are incorporated herein by reference and made a
part of the Offering Circular - Prospectus: (i) Annual Report on Form 10-K for
the fiscal year ended December 31, 1994; (ii) Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1994; (iii) Proxy Statement dated March 17,
1995 for the 1995 Annual Meeting of Shareholders; (iv) Current Report on Form
8-K filed on April 28, 1995; (v) Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995 filed on May 15, 1995; and (vi) the descriptions of the
Cooper Common Stock and the Cooper Rights (as defined herein) set forth in the
Registration Statements on Form 8-A filed December 23, 1974 and February 23,
1987, respectively.
All documents and reports filed by Cooper with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Offering Circular - Prospectus and prior to the termination of the offering
of the shares of CCC Common Stock shall be deemed to be incorporated herein by
reference and made a part of this Offering Circular - Prospectus from the date
of filing of such documents or
1
<PAGE> 4
reports. Any statement contained in a document or report incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Offering Circular - Prospectus to the extent
that a statement contained herein or in any other subsequently filed document or
report that also is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Offering Circular - Prospectus.
This Offering Circular - Prospectus incorporates documents by reference
that are not presented herein or delivered herewith. Copies of such documents
incorporated by reference (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents) are
available without charge to any person, including any beneficial owner, to whom
this Offering Circular - Prospectus is delivered upon written or oral request to
(i) Cooper Cameron Corporation, 515 Post Oak Blvd., Suite 1200, Houston, Texas
77027, Attention: Corporate Secretary, telephone number (713) 513-3300 or (ii)
Cooper Industries, Inc., 1001 Fannin, Suite 4000, Houston, Texas 77002,
Attention: Corporate Secretary's Department, telephone number (713) 739-5400.
Requests may also be made to the Information Agent, Georgeson & Company Inc.,
telephone number (800) 223-2064.
2
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE........................... 1
OFFERING CIRCULAR - PROSPECTUS
SUMMARY............................. 5
SPECIAL CONSIDERATIONS................ 14
Industry Conditions................. 14
Unavailability of Cooper's Financial
and Other Resources.............. 14
Liquidity and Working Capital
Requirements..................... 14
Market Uncertainties with Respect to
CCC Common Stock................. 15
Foreign Operations and Exports...... 15
Possible Product Liability Claims
and Insurance.................... 15
Environmental Matters............... 15
Shares Available for Future Sale.... 16
Tendering and Nontendering
Shareholders Affected Differently
by the Transaction............... 16
Tax Treatment of Exchange Offer..... 16
Anticipated Future Dividend
Policy........................... 16
Certain Differences in Shareholders'
Rights........................... 17
Antitakeover Provisions and Other
Matters.......................... 17
THE TRANSACTION....................... 18
General............................. 18
Purpose and Effects of the
Transaction...................... 18
Opinions of Advisors................ 19
No Appraisal Rights................. 23
Regulatory Approvals................ 23
Anticipated Accounting
Treatment........................ 24
THE EXCHANGE OFFER.................... 25
Terms of the Exchange Offer......... 25
Tenders for Exchange by Holders of
Fewer Than 100 Shares of Cooper
Common Stock..................... 27
Exchange of Shares of Cooper Common
Stock............................ 27
Procedures for Tendering Shares of
Cooper Common Stock.............. 28
Guaranteed Delivery Procedure....... 30
Withdrawal Rights................... 31
Extension of Tender Period;
Termination; Amendment........... 32
Certain Conditions of the Exchange
Offer............................ 33
Fees and Expenses................... 35
<CAPTION>
PAGE
----
<S> <C>
Miscellaneous....................... 35
THE DISTRIBUTION...................... 35
CERTAIN TRANSACTIONS; RELATIONSHIP
BETWEEN COOPER AND CCC.............. 36
Asset Transfer Agreement............ 36
Financing Arrangements.............. 38
Registration Rights................. 40
Intercompany Transactions........... 41
Other Matters....................... 41
MARKET PRICES, TRADING AND DIVIDEND
INFORMATION......................... 42
Cooper Common Stock................. 42
CCC Common Stock.................... 43
SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA OF COOPER............ 44
PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS OF COOPER................ 45
BUSINESS OF COOPER.................... 48
SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA OF CCC............... 49
PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS
OF CCC.............................. 51
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF CCC.......... 54
BUSINESS OF CCC....................... 63
The Company......................... 63
Markets and Products................ 64
Aftermarket Services................ 68
Business Strategy................... 68
Competition......................... 70
Research and Development............ 70
Manufacturing....................... 71
International Operations and
Exports.......................... 71
Supplies and Raw Materials.......... 71
Backlog............................. 72
Patents, Trademarks and Other
Intellectual Property............ 72
Employees........................... 72
Properties.......................... 73
Environmental Matters............... 74
Legal Proceedings................... 75
MANAGEMENT............................ 76
Directors, Nominees and Executive
Officers......................... 76
Board of Directors.................. 77
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Executive Compensation.............. 78
Long-Term Incentive Plan............ 79
Federal Income Tax Consequences of
the Incentive Plan............... 81
Stock Option Plan for Nonemployee
Directors........................ 83
Federal Income Tax Consequences of
the Director Plan................ 84
CCC Savings Plan.................... 84
Retirement Plans.................... 85
Employee Stock Purchase Plan........ 85
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL
HOLDERS............................. 86
DESCRIPTION OF CCC CAPITAL STOCK...... 88
Common Stock........................ 88
Rights Plan......................... 88
Preferred Stock..................... 91
Delaware Law and Certain Certificate
of Incorporation and Bylaw
Provisions....................... 92
COMPARISON OF RIGHTS OF SHAREHOLDERS
OF COOPER
AND CCC............................. 94
Special Meetings of Shareholders.... 94
Action by Written Consent........... 94
Shareholder Nominations and
Proposals........................ 95
<CAPTION>
PAGE
----
<S> <C>
Number of Directors................. 95
Removal of Directors................ 95
Amendment of Bylaws................. 95
Amendment of Charter................ 96
State Antitakeover Statutes......... 96
Mergers and Acquisitions............ 97
Appraisal Rights.................... 97
Director and Officer Liability and
Indemnification.................. 97
Business Judgment Rule.............. 98
Rights Plans........................ 98
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES........................ 99
LIMITATIONS ON LIABILITY AND
INDEMNIFICATION OF DIRECTORS AND
OFFICERS............................ 100
LEGAL OPINIONS........................ 101
EXPERTS............................... 101
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS.......................... F-i
ANNEX A -- Opinion of American
Appraisal Associates
ANNEX B -- Opinion of CS First Boston
Corporation
ANNEX C -- Opinion of CS First Boston
Corporation
</TABLE>
4
<PAGE> 7
OFFERING CIRCULAR - PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere in
this Offering Circular - Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information included or
incorporated by reference in this Offering Circular - Prospectus and the Annexes
hereto. Capitalized terms used but not defined in this summary have the meanings
assigned to them elsewhere in this Offering Circular - Prospectus. Shareholders
are urged to read this Offering Circular - Prospectus and the Annexes hereto in
their entirety.
COOPER INDUSTRIES, INC.
Cooper Industries, Inc., an Ohio corporation, is a diversified, worldwide
manufacturing company doing business in three primary industry segments:
Electrical Products, Automotive Products and Tools & Hardware.
The ELECTRICAL PRODUCTS segment manufactures and markets electrical and
circuit protection products for use in residential, commercial and industrial
construction, maintenance and repair applications. In addition, the segment
produces and markets products for use by utilities and industries for primary
electrical power transmission and distribution. Some of the major products
include Buss(R) and Edison(R) fuses; Crouse-Hinds(R) electrical construction
materials; Crouse-Hinds(R), Fail-Safe(TM), Halo(R) and Metalux(R) lighting
fixtures; Kyle(R) distribution switchgear; and McGraw-Edison(TM) and RTE(R)
power and distribution transformers and related products.
The AUTOMOTIVE PRODUCTS segment manufactures and distributes spark plugs,
brake components, wiper blades, lighting products, heating and air conditioning
parts, steering and suspension components and other products for use by the
automotive aftermarket and in automobile assemblies. Products include Abex(R),
Lee(TM), Gibson(R) and Wagner(R) brake components; Anco(R) windshield wiper
products; automotive wire and cable; Champion(R) spark plugs and igniters;
Everco(R) and Murray(R) heating and air conditioning parts; Moog(R) steering and
suspension products; Precision(R) universal joint products; and Wagner(R) and
Zanxx(R) lighting products.
The TOOLS & HARDWARE segment produces and markets tools and hardware items
for use in residential, commercial and industrial construction, maintenance and
repair applications and for other general industrial and consumer uses. Some of
the well-known products include Campbell(R) chain; Crescent(R) wrenches;
Diamond(R) horseshoes and farrier tools; Lufkin(R) measuring tapes; Nicholson(R)
files and saws; Plumb(R) hammers; Weller(R) soldering equipment; Wiss(R)
scissors; Xcelite(R) screwdrivers; Buckeye(R), DGD(TM) and Dotco(R) power tools;
and Kirsch(R) drapery hardware and custom window coverings.
Most of Cooper's products are sold through distributors and wholesalers. In
addition, some products are sold directly to end-users and to manufacturers for
incorporation into consumer and industrial products.
The principal executive offices of Cooper are located at 1001 Fannin, Suite
4000, Houston, Texas 77002, and its telephone number at that address is (713)
739-5400. For a further description of Cooper, see "Business of Cooper."
COOPER CAMERON CORPORATION
Cooper Cameron Corporation designs, manufactures, markets and services
equipment used by the oil and gas drilling, production and transmission markets
and the industrial and process markets. CCC is one of the world's leading
manufacturers of oil and gas pressure control equipment, including valves,
wellheads, chokes, blowout preventers ("BOPs") and assembled systems for oil and
gas drilling, production and transmission used in onshore, offshore and subsea
applications. CCC is also a leading manufacturer of gas turbines, centrifugal
compressors, integral and separable reciprocating engines and compressors and
turbochargers utilized principally in oil and gas production, transmission,
industrial, process and nonutility power generation applications. In addition,
CCC manufactures integral gear centrifugal air compressors that provide oil-free
air for use in a variety of industrial and process applications. CCC operates on
a worldwide basis with its
5
<PAGE> 8
equipment and services being sold or utilized in approximately 115 countries.
Approximately 59% of CCC's total sales in 1994 were to international markets.
CCC has manufacturing plants and service centers in many international
locations, including the United Kingdom, Norway, Ireland, France, Germany, The
Netherlands, Singapore, Australia, Canada, Mexico and Argentina.
CCC's businesses are organized into two segments -- the Petroleum
Production Equipment segment and the Compression and Power Equipment
segment -- and include the former Cooper Oil Tool, Cooper Energy Services,
Cooper Turbocompressor and Wheeling Machine Products divisions of Cooper. For
the year ended December 31, 1994, the Petroleum Production Equipment segment and
the Compression and Power Equipment segment generated approximately 51% and 49%,
respectively, of CCC's total revenues. For the quarter ended March 31, 1995,
approximately 58% of CCC's total revenues were derived from the Petroleum
Production Equipment segment while 42% were from the Compression and Power
Equipment segment.
PETROLEUM PRODUCTION EQUIPMENT. CCC's Petroleum Production Equipment
segment provides pressure control equipment primarily for oil and gas drilling,
production and transmission used in onshore, offshore and subsea applications.
This equipment includes valves, wellheads, chokes, BOPs and assembled systems
marketed under some of the best known brand names in the oil and gas industry,
such as Cameron(R), W-K-M(R), McEvoy(R), Demco(R), Willis(TM), Thornhill
Craver(TM) and Wheeling Machine Products(TM). Through its Cameron(R) product
line, CCC has been one of the industry leaders in pressure control equipment
for several years.
CCC markets approximately 80% of its petroleum production equipment
directly to end-users through a worldwide network of sales and marketing
employees supported by agents in selected international locations. Due to the
extremely technical nature of many of the products, the marketing effort is
further supported by a staff of engineering employees. The balance of these
products are sold through established independent distributors.
The Petroleum Production Equipment segment's primary customers include
major and independent oil and gas exploration and production companies, foreign
national oil and gas companies, engineering and construction companies, pipeline
companies, drilling contractors and rental equipment companies.
COMPRESSION AND POWER EQUIPMENT. CCC's Compression and Power Equipment
segment provides products and services to the oil and gas production and
transmission, industrial, process and nonutility power generation markets. Such
products include gas turbines, centrifugal compressors, integral and separable
reciprocating engines and compressors and turbochargers. The products are
marketed under various well-known brand names including Ajax(R), Superior(R),
Coberra(R), Cooper-Bessemer(R) and Pennsylvania Process(TM) and are recognized
throughout the industry for their reliability and innovation. This segment also
manufactures En-Tronic(R) control systems for controlling and monitoring
equipment manufactured by CCC as well as other manufacturers. In addition, CCC's
Compression and Power Equipment segment manufactures integral gear centrifugal
air compressors that provide oil-free air for general industrial and process
applications. General industrial plant applications include sourcing of power
for operating hand-tools, actuating control devices and automatic and
semi-automatic production equipment. Compressors are an integral part of the
industrial process in industries such as air separation, pharmaceutical,
fermentation, petrochemical, refining and synthetic fuel. CCC markets its
centrifugal air compressors under the brand names Joy(R) and Turbo-Air(R), both
of which are well-known throughout the industry.
CCC primarily sells its compression and power equipment directly to
end-users through a worldwide network of sales and marketing employees supported
by agents in some international locations. Due to the extremely technical nature
of many of the products, the marketing effort is further supported by a staff of
engineering employees. The balance of this equipment is sold through independent
distributors, packagers and rental companies.
CCC's primary customers for compression and power equipment include the
major oil and gas companies, large independent oil and gas producers, gas
transmission companies, equipment leasing companies, petrochemical and refining
divisions of oil companies and chemical companies. Industrial and process
compressors are sold to durable goods manufacturers and process industries.
6
<PAGE> 9
AFTERMARKET SERVICES. Sales of aftermarket services, including replacement
parts, field service, major repairs and rebuilds and total vendor maintenance
contracts for all products, constituted approximately 34% of CCC's total sales
during 1994. Customer requirements, from emergency parts and repairs to
scheduled maintenance programs, are satisfied around the clock through an
integrated worldwide network of service and repair centers and parts warehouses.
CCC's large population of installed equipment provides a solid base of business
that is less cyclical than demand for new equipment.
BUSINESS STRATEGY. Over the years, CCC has achieved a leading position in
each of the major markets in which it participates. CCC's core strategy is to
maintain its leading market positions, while at the same time pursuing cost
reduction, product development and selected market extension opportunities.
CCC believes that the competitive strengths discussed below are an integral
part of this core strategy and should provide a foundation for growth in
revenues and earnings.
EXTENSIVE INTERNATIONAL PRESENCE AND EXPERIENCE. CCC's long history and
substantial experience in diverse international markets provides a strong
foundation to meet the growing demand from oil and gas producing countries
and developing economies throughout the world. CCC has been a leader for
many years in providing equipment and service to major international energy
markets, including the North Sea, the former Soviet Union, the Middle East,
the Pacific Rim, Canada, Mexico and South America. CCC believes this
experience and its strong international presence are major strengths.
STRONG BRAND RECOGNITION. CCC's brand names are among the best recognized
in the markets served. In the oil and gas production and transmission
markets, CCC's Cameron(R) products have been among the industry leaders in
pressure control equipment for many years. In addition, CCC's gas turbines,
centrifugal compressors and integral and separable reciprocating engines
and compressors are marketed under the well-known Cooper-Bessemer(R) name
and other industry-wide recognized brand names. CCC's products are known
for quality and dependable performance.
PRODUCT DEVELOPMENT/NEW TECHNOLOGY. Over the years, CCC has developed new
products on a cost efficient basis as markets have continued to change and
technological requirements have increased. CCC introduced a subsea
production system in 1993 called the SpoolTree(TM), which offers
substantial cost reduction to the customer by eliminating the need for an
expensive workover riser and removal of the christmas tree during
workover. CCC has developed the CleanBurn(R) system, a technology that
significantly reduces engine emissions. In conjunction with Rolls-Royce
plc of England, CCC has developed, and is in the process of marketing, new
Dry Low Emissions(TM) technology for gas turbines, which significantly
reduces emissions produced by gas turbine drivers. In late 1994, CCC's
centrifugal air compressor line was expanded to include the new
Turbo-Air(R) 2000 compressor, which extended the product line down to the
150 horsepower range. These compressors have low energy consumption, low
cost package installation and maintenance, ease of automation and
environmentally friendly oil-free air delivery.
FLEXIBILITY TO CHANGING MARKETS. As market conditions continue to change,
particularly in the oil and gas production and transmission markets, CCC
will continue to adjust to changing customer requirements. As certain
customers have reduced their staffing levels and shifted more
responsibility to vendors, total vendor maintenance contracts have become
increasingly popular. Under such contracts, CCC offers all maintenance
services for a customer's equipment in a particular area from one service
center. CCC also offers an inventory of repair parts, service personnel,
planning services and inventory and storage of the customer's idle
equipment. Another recent change in the market is the increasingly popular
trend toward partnerships and alliances between customers and suppliers.
This concept enhances the normal customer/supplier relationship and results
in cost reductions and delivery performance improvements on major projects.
CCC is among the industry leaders in alliance and partnership arrangements.
VALUE DELIVERED TO CUSTOMERS. CCC believes it delivers exceptional value
to its customers through a combination of new technology, cost, quality,
reliability and service. CCC has continued to reduce its cost structure by
reengineering business practices, value engineering products, consolidating
facilities and implementing a fully integrated worldwide business system in
the Petroleum Production Equipment segment to enhance information flow.
Capital expenditures have totaled approximately $310 million over
7
<PAGE> 10
the past five years, predominately for cost reduction and manufacturing
improvement programs. Additionally, during the same period, CCC has spent
approximately $140 million which was accrued at the time of the acquisition
of the businesses now comprising the Petroleum Production Equipment segment
as costs for major improvement programs. These improvement programs are
nearly complete and have allowed CCC to remain a market leader and provide
long-term value to its customers.
The principal executive offices of CCC are located at 515 Post Oak Blvd.,
Suite 1200, Houston, Texas 77027, and its telephone number at that address is
(713) 513-3300. For a further description of CCC, see "Business of CCC."
THE TRANSACTION
Purpose and Effects of the
Transaction.............. Cooper believes that the creation of a separate
public market for the equity of CCC through the
Transaction will allow the financial markets to
evaluate more effectively the respective values of
Cooper's remaining manufacturing businesses and
CCC's petroleum and industrial equipment business,
thereby enhancing overall shareholder value. Cooper
also believes that the Transaction should enhance
the ability of Cooper and CCC to maximize the value
of their respective operations for the benefit of
their respective shareholders by permitting each
company (i) to focus its managerial and financial
resources on the growth of its businesses and (ii)
to implement more focused incentive compensation
programs designed to better attract, retain and
motivate its employees by offering economic rewards
that are tied more directly to the results of such
employees' efforts. In addition, Cooper believes
that the Transaction will allow CCC to compete more
effectively in those segments of its markets where
a premium is placed on personal marketing efforts
of senior management. See "The
Transaction -- Purpose and Effects of the
Transaction."
NEITHER COOPER NOR THE BOARD OF DIRECTORS OF COOPER
MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER WHETHER
TO TENDER OR REFRAIN FROM TENDERING SHARES OF
COOPER COMMON STOCK PURSUANT TO THE EXCHANGE OFFER.
EACH SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION
WHETHER TO TENDER SHARES OF COOPER COMMON STOCK
PURSUANT TO THE EXCHANGE OFFER AND, IF SO, HOW MANY
SHARES TO TENDER AFTER READING THIS OFFERING
CIRCULAR - PROSPECTUS AND CONSULTING WITH HIS OR
HER ADVISORS.
Certain Federal Income Tax
Consequences of the
Exchange Offer and the
Distribution............. Cooper has received the Private Letter Ruling from
the IRS to the effect that, among other things,
both the Exchange Offer and the Distribution will
qualify as tax-free distributions under Section 355
of the Code. See "Certain Federal Income Tax
Consequences."
No Appraisal Rights........ No appraisal rights are available to Cooper
shareholders in connection with the Transaction.
THE EXCHANGE OFFER
Terms of the Exchange
Offer...................... Cooper is offering, upon the terms and subject to
the conditions of the Exchange Offer, to exchange
2.25 shares of CCC Common Stock for each share of
Cooper Common Stock up to a maximum of 9,500,000
shares of Cooper Common Stock. If fewer than
9,500,000 shares of Cooper Common Stock (but at
least 8,550,000 shares) are validly tendered and
not properly withdrawn
8
<PAGE> 11
pursuant to the Exchange Offer and the Exchange
Offer is consummated, Cooper will distribute the
remaining shares of CCC Common Stock that Cooper
does not intend to retain pro rata to the holders
of Cooper Common Stock as soon as practicable after
consummation of the Exchange Offer. See "The
Distribution." If more than 9,500,000 shares of
Cooper Common Stock are validly tendered and not
properly withdrawn, then Cooper will accept all of
such shares on a pro rata basis (except with
respect to odd lot tenders) as described herein in
exchange for the shares of CCC Common Stock. Cooper
intends to announce publicly at approximately 12:00
Noon and 3:00 P.M., New York City time, on the
Expiration Date, on a preliminary basis, the number
of shares of Cooper Common Stock that have been
tendered and not withdrawn prior to such times. The
Exchange Offer, proration period and withdrawal
rights will expire at 5:00 P.M., New York City
time, on Friday, June 30, 1995, unless the Exchange
Offer is extended. To be eligible to receive CCC
Common Stock pursuant to the Exchange Offer, a
holder of Cooper Common Stock must validly tender
and not properly withdraw Cooper Common Stock on or
prior to the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Expiration Date............ 5:00 P.M., New York City time, on Friday, June 30,
1995, unless extended, in which case the term
"Expiration Date" shall mean the last date and time
to which the Exchange Offer is extended. See "The
Exchange Offer -- Extension of Tender Period;
Termination; Amendment."
Conditions of the
Exchange Offer........... The Exchange Offer is subject to certain conditions
including at least 8,550,000 shares of Cooper
Common Stock (approximately 7% of the outstanding
Cooper Common Stock and a sufficient number of
shares of Cooper Common Stock to result in at least
90% of the CCC Common Stock to be distributed being
exchanged pursuant to the Exchange Offer) being
validly tendered and not properly withdrawn prior
to the Expiration Date. See "The Exchange
Offer -- Certain Conditions of the Exchange Offer."
Procedures for Tendering... To be tendered properly, certificates for shares of
Cooper Common Stock, together with a properly
completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) or an
Agent's Message in connection with a book-entry
transfer of shares, and any other documents
required by the Letter of Transmittal must be
received by the Exchange Agent at one of the
addresses set forth on the back cover of this
Offering Circular - Prospectus prior to 5:00 P.M.
on the Expiration Date, or shareholders must comply
with the specific procedures for guaranteed
delivery described herein. Certain financial
institutions may also effect tenders by book-entry
transfer through a Book-Entry Transfer Facility.
Holders of Cooper Common Stock having shares
registered in the name of a broker, dealer,
commercial bank, trust company or nominee are urged
to contact such person promptly if they wish to
tender any shares of Cooper Common Stock pursuant
to the Exchange Offer. See "The Exchange
Offer -- Procedures for Tendering Shares of Cooper
Common Stock" and "-- Guaranteed Delivery
Procedure."
9
<PAGE> 12
Proration.................. If more than 9,500,000 shares of Cooper Common
Stock have been validly tendered for exchange and
not properly withdrawn on or prior to the
Expiration Date, subject to the terms and
conditions of the Exchange Offer, Cooper will
accept such shares on a pro rata basis, except that
any holder of shares of Cooper Common Stock who
beneficially owns an aggregate of fewer than 100
shares of Cooper Common Stock (an "odd lot") and
who validly tenders and does not properly withdraw
all such shares of Cooper Common Stock prior to the
Expiration Date shall not be subject to proration.
See "The Exchange Offer -- Terms of the Exchange
Offer" and "-- Tenders for Exchange by Holders of
Fewer Than 100 Shares of Cooper Common Stock."
Withdrawal Rights.......... Subject to the conditions set forth herein, tenders
of Cooper Common Stock may be withdrawn at any time
on or prior to the Expiration Date and, unless
theretofore accepted for exchange, after July 26,
1995. See "The Exchange Offer -- Withdrawal
Rights."
No Fractional Shares....... No fractional shares of CCC Common Stock will be
distributed. Holders of Cooper Common Stock who
would otherwise be entitled to receive a fractional
share of CCC Common Stock will be paid cash in lieu
of such fractional share. See "The Exchange
Offer -- Terms of the Exchange Offer."
Delivery of CCC
Common Stock............. Cooper will deliver shares of CCC Common Stock and
cash in lieu of fractional shares as soon as
practicable after acceptance of Cooper Common Stock
for exchange. See "The Exchange Offer -- Exchange
of Shares of Cooper Common Stock."
Exchange Agent............. First Chicago Trust Company of New York is serving
as the Exchange Agent in connection with the
Exchange Offer. Its telephone number is (201)
324-0137.
Information Agent.......... Georgeson & Company Inc. is serving as the
Information Agent in connection with the Exchange
Offer. Its telephone number is (800) 223-2064.
PRICE RANGE OF SHARES AND DIVIDENDS
Cooper..................... The Cooper Common Stock is listed on the NYSE. From
May 1, 1994 to May 1, 1995, the high and low sales
prices per share of Cooper Common Stock as reported
on the NYSE Composite Tape were $42.125 and
$31.625, respectively. Cooper has paid quarterly
cash dividends of $.33 per share since the quarter
ended March 31, 1993. The payment of future
dividends, if any, on Cooper Common Stock will be
subject to the discretion of the Board of Directors
of Cooper and will depend upon, among other things,
Cooper's financial condition, capital requirements,
funds from operations, future business prospects
and such other factors as the Board may deem
relevant. See "Special
Considerations -- Anticipated Future Dividend
Policy" and "Market Prices, Trading and Dividend
Information -- Cooper Common Stock."
CCC........................ The CCC Common Stock has been approved for
quotation on the NASDAQ/NMS under the symbol
"CRON." No current public trading market for the
CCC Common Stock exists. CCC does not anticipate
paying cash dividends in the foreseeable future.
See "Special Considerations -- Anticipated Future
Dividend Policy" and "Market Prices, Trading and
Dividend Information -- CCC Common Stock."
10
<PAGE> 13
SUMMARY FINANCIAL INFORMATION OF COOPER
The following table sets forth certain summary financial data of Cooper.
The table is based on and should be read in conjunction with the historical
audited consolidated financial statements and notes thereto and the unaudited
financial information of Cooper for the quarters ended March 31, 1994 and 1995
incorporated by reference in this Offering Circular - Prospectus and Cooper's
pro forma consolidated financial statements included elsewhere herein. See
"Incorporation of Certain Documents by Reference" and "Pro Forma Consolidated
Financial Statements of Cooper."
<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- ---------------------
1992(1) 1993(1) 1994 1994(1) 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS EXCEPT PER SHARE DATA)
OPERATING DATA
Revenues.............................................. $4,468.4 $4,776.4 $4,588.0 $1,037.8 $1,123.2
-------- -------- -------- -------- --------
Cost of sales......................................... 2,969.4 3,163.0 3,026.4 692.3 748.3
Depreciation and amortization......................... 211.8 215.9 199.0 48.0 51.5
Selling and administrative expenses................... 759.1 810.6 784.6 189.7 190.9
Interest expense...................................... 92.5 80.9 73.3 16.2 38.3
Nonoperating gain on 1993 IPO of Belden Inc. and
other............................................... (6.6) (273.8) -- -- --
Nonrecurring expense.................................. 50.1 273.8 -- -- --
-------- -------- -------- -------- --------
Total Costs and Expenses........................ 4,076.3 4,270.4 4,083.3 946.2 1,029.0
-------- -------- -------- -------- --------
Income from continuing operations before income taxes
and cumulative effect of changes in accounting
principles.......................................... 392.1 506.0 504.7 91.6 94.2
Income taxes.......................................... (152.5) (207.0) (211.9) (39.4) (38.9)
-------- -------- -------- -------- --------
Income from continuing operations..................... 239.6 299.0 292.8 52.2 55.3
Income from discontinued operations, net of taxes..... 121.7 68.1 .3 (3.8) --
Charge for discontinued operations(2)................. -- -- (313.0) -- --
Cumulative effect on prior years of changes in
accounting principles(3)............................ (590.0) -- -- -- --
-------- -------- -------- -------- --------
Net Income (Loss)............................... $ (228.7) $ 367.1 $ (19.9) $ 48.4 $ 55.3
======== ======== ======== ======== ========
PER SHARE DATA
Primary --
Income from continuing operations before cumulative
effect of changes in accounting principles........ $ 1.64 $ 2.15 $ 2.10 $ .34 $ .48
Income (loss) from discontinued operations.......... 1.07 .60 (2.74) (.03) --
Cumulative effect on prior years of changes in
accounting principles(3).......................... (5.19) -- -- -- --
-------- -------- -------- -------- --------
Net Income (Loss)............................... $ (2.48) $ 2.75 $ (.64) $ .31 $ .48
======== ======== ======== ======== ========
Fully diluted --
Income from continuing operations before cumulative
effect of changes in accounting principles........ $ 1.64 $ 2.15 $ 2.10 .34 $ .47
Income (loss) from discontinued operations.......... 1.07 .60 (2.74) (.03) --
Cumulative effect on prior years of changes in
accounting principles(3).......................... (5.19) -- -- -- --
-------- -------- -------- -------- --------
Net Income (Loss)............................... $ (2.48) $ 2.75 $ (.64) $ .31 $ .47
======== ======== ======== ======== ========
Pro forma income from continuing operations........... $ 2.29 $ .51
======== ========
Average Common Shares Outstanding
Primary............................................... 113.8 114.2 114.2 114.4 116.2
Fully diluted......................................... 113.8 114.2 114.2 114.4 132.9(4)
Pro forma fully diluted............................... 104.7 123.4
BALANCE SHEET DATA
Total Assets.......................................... $6,551.4 $6,361.7 $6,400.7 $6,186.3 $6,351.6
Long-term debt........................................ 1,369.8 883.4 1,361.9 1,185.5 2,072.1
Total Shareholders' Equity............................ 2,862.6 3,009.6 2,741.1 2,897.6 2,081.5
</TABLE>
- ---------------
(1) Restated to exclude discontinued operations.
(2) See "The Transaction -- Anticipated Accounting Treatment."
(3) In the first quarter of 1992, Cooper adopted the following accounting
standards: SFAS No. 106 (Employers' Accounting for Postretirement Benefits
Other Than Pensions); SFAS No. 109 (Accounting for Income Taxes); and SFAS
No. 112 (Employers' Accounting for Postemployment Benefits). See Note 4 of
the Notes to Consolidated Financial Statements of Cooper incorporated herein
by reference for further information regarding Cooper's adoption of these
accounting standards.
(4) Assumes conversion of the 7.05% Convertible Subordinated Debentures into
Cooper Common Stock, effective January 1, 1995. As a result, interest on the
debentures ($7.3 million, net of tax) was added back to net income in the
computation of fully diluted earnings per share.
11
<PAGE> 14
SUMMARY FINANCIAL INFORMATION OF CCC
The following table sets forth certain summary financial data of CCC. The
table is based on and should be read in conjunction with CCC's historical
audited consolidated financial statements and notes thereto, the unaudited
financial information for the quarters ended March 31, 1994 and 1995 and pro
forma consolidated financial statements included elsewhere in this Offering
Circular - Prospectus. See "Consolidated Financial Statements of CCC" and "Pro
Forma Consolidated Financial Statements of CCC."
<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------------------------
1992 1993 1994 1994 1994 1995 1995
---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PRO PRO
FORMA(1) FORMA(1)
(IN THOUSANDS EXCEPT PER SHARE DATA)
Income Statement Data(2):
Revenues................... $1,438,189 $1,340,778 $1,110,076 $1,110,076 $ 240,208 $ 254,576 $254,576
---------- ---------- ---------- ---------- ---------- ---------- --------
Costs and Expenses:
Cost of sales............ 1,007,748 970,944 838,575 839,275 186,113 201,497 201,672
Depreciation and
amortization........... 61,776 70,413 70,233 70,233 16,488 17,385 17,385
Selling and
administrative
expenses............... 191,958 194,242 177,902 178,302 41,295 40,094 40,194
Interest expense......... 20,361 15,852 20,023 18,613 4,099 6,000 6,182
Nonrecurring income,
net.................... (12,200) -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- --------
1,269,643 1,251,451 1,106,733 1,106,423 247,995 264,976 265,433
---------- ---------- ---------- ---------- ---------- ---------- --------
Income (loss) before
income taxes and
cumulative effect of
changes in accounting
principles........... 168,546 89,327 3,343 3,653 (7,787) (10,400) (10,857)
Income taxes............. (57,575) (38,138) (7,089) (7,208) 16,512 6,148 6,323
---------- ---------- ---------- ---------- ---------- ---------- --------
Income (loss) before
cumulative effect of
changes in accounting
principles........... 110,971 51,189 (3,746) (3,555) 8,725 (4,252) (4,534)
Cumulative effect on
prior years of
changes in accounting
principles(3)........ (108,048) -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- --------
Net Income (Loss).... $ 2,923 $ 51,189 $ (3,746) $ (3,555) $ 8,725 $ (4,252) $ (4,534)
========== ========== ========== ========== ========== ========== ========
Net loss per share of CCC
Common Stock............... $ (.14) $ (.18)
========== ========
Balance Sheet Data (at the
end of period)(2):
Total assets............... $1,725,385 $1,713,668 $1,710,380(4) $1,686,790 $1,731,000(4)
Net assets................. 807,167 841,955 878,129(4) 805,451 895,428(4)
Long-term debt............. 375,000 374,815 374,800 374,815 375,000
Other long-term
obligations.............. 234,226 193,666 181,043 190,525 173,827
</TABLE>
- ---------------
(1) For a discussion of the pro forma data, see "Pro Forma Consolidated
Financial Statements of CCC."
(2) For the historical periods presented all of the excess cash generated by
CCC's operations was regularly remitted to Cooper pursuant to Cooper's
centralized cash management program. As a result, total indebtedness has
been held constant from year to year for such periods.
(3) In the first quarter of 1992, CCC adopted the following accounting
standards: SFAS No. 106 (Employers' Accounting for Postretirement Benefits
Other Than Pensions); SFAS No. 109 (Accounting for Income Taxes); and SFAS
No. 112 (Employers' Accounting for Postemployment Benefits). See Note 4 of
the Notes to Consolidated Financial Statements of CCC included elsewhere in
this Offering Circular - Prospectus for further information regarding CCC's
adoption of these accounting standards.
(4) Includes a $36,607 and $10,155 receivable from Cooper at December 31, 1994
and March 31, 1995, respectively.
12
<PAGE> 15
COMPARATIVE PER SHARE DATA
The following table presents historical per share data for Cooper and pro
forma per share data giving effect to the Transaction at the exchange ratio of
2.25 shares of CCC Common Stock for each share of Cooper Common Stock. The table
should be read in conjunction with the historical audited consolidated financial
statements and notes thereto and the unaudited financial information for the
quarter ended March 31, 1995 of Cooper incorporated by reference in this
Offering Circular - Prospectus and the historical audited consolidated financial
statements and notes thereto and the unaudited financial information for the
quarter ended March 31, 1995 of CCC and the pro forma consolidated financial
statements of CCC and Cooper included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994 QUARTER ENDED MARCH 31, 1995
---------------------------- ----------------------------
EQUIVALENT EQUIVALENT
PRO FORMA PRO FORMA(a) PRO FORMA PRO FORMA(a)
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Per Share of CCC Common Stock:
Net Loss........................... $ (.14) $ (.06) $ (.18) $ (.08)
Dividends.......................... $ -- $ -- $ -- $ --
Book Value(b)...................... $ 35.13 $15.61 $ 35.82 $15.92
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED QUARTER ENDED
DECEMBER 31, 1994 MARCH 31, 1995
-------------------------- --------------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Per Share of Cooper Common Stock:
Fully diluted income from continuing
operations......................... $ 2.10 $ 2.29 $ .47 $ .51
Dividends............................. $ 1.32 $ 1.32 $ .33 $ .33
Book Value............................ $17.50 $ 13.60 $17.79 $ 13.92
</TABLE>
- ---------------
(a) CCC equivalent pro forma data are equal to CCC pro forma per share data
divided by the exchange ratio of 2.25 shares of CCC Common Stock per share
of Cooper Common Stock.
(b) Book value per share of CCC Common Stock after the anticipated $450 million
write-down of goodwill described in Note 2 of the Notes to Consolidated
Financial Statements of CCC would have been $17.13 at December 31, 1994 and
$17.82 at March 31, 1995. Equivalent Pro Forma book value after the
anticipated write-down would have been $7.61 at December 31, 1994 and 7.92
at March 31, 1995.
13
<PAGE> 16
SPECIAL CONSIDERATIONS
In considering whether or not to accept the Exchange Offer, holders of
Cooper Common Stock should carefully consider all information contained in this
Offering Circular - Prospectus and the Annexes hereto, especially the matters
described or referred to in the following paragraphs.
INDUSTRY CONDITIONS
A significant portion of CCC's business and operations is dependent upon
conditions over which CCC has no control, including the state of the oil and gas
industry and capital expenditures for exploration, production and transmission
activities. The level of such capital expenditures is generally dependent upon
the prevailing prices for oil and natural gas, which are affected by numerous
factors such as the ability of the Organization of Petroleum Exporting Countries
("OPEC") to maintain price stability through voluntary production limits, the
level of production by non-OPEC countries, demand for oil and gas by end-users,
general economic conditions in the United States and internationally, interest
rates and the cost of capital, costs of exploration and production, tax
policies, environmental regulation and political conditions in foreign
countries. Approximately 85% of CCC's revenues are derived from sales to
customers in the oil and gas industry.
In addition, oil and natural gas prices have shown significant volatility
over the last several years. To the extent that oil prices decline or natural
gas prices remain at present levels or decline further for an extended period of
time, producers are likely to keep expenditures at current levels or possibly
reduce such expenditures, which could adversely affect CCC's business. The
oilfield services and equipment industry has been and will likely continue to be
cyclical in nature and subject to overcapacity. No assurance can be given as to
the likelihood, timing or extent of any improvement of current conditions in the
oil and gas industry, as to the level of future demand for CCC's products and
services or that conditions will not worsen. In addition, CCC competes in all
areas of its operations with a number of other companies, some of which have
financial and other resources comparable to or greater than those of CCC.
UNAVAILABILITY OF COOPER'S FINANCIAL AND OTHER RESOURCES
Prior to the consummation of the Exchange Offer, the businesses of CCC have
been operated under the control of Cooper. Following the consummation of the
Exchange Offer, such businesses will no longer be able to rely on Cooper for
financial support or benefit from their relationship with Cooper to obtain
credit or receive favorable terms for the purchase or sale of certain goods and
services. Following the consummation of the Exchange Offer, CCC will be
responsible for obtaining its own sources of financing and for its own treasury,
cash management, accounting, legal, risk management and other administrative
activities. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition of CCC," "Pro Forma Consolidated Financial Statements of
CCC" and "Certain Transactions; Relationship Between Cooper and CCC."
LIQUIDITY AND WORKING CAPITAL REQUIREMENTS
While CCC has generated positive operating cash flow in the past three
years, CCC's future cash flow is subject to a number of variables, including the
level of oil and gas exploration and development expenditures. CCC can provide
no assurance that its operations will continue to generate, or that it will have
access to, cash sufficient to fund its anticipated research and development,
capital expenditures, working capital and debt service requirements. During the
last several years, CCC has funded its cash requirements through cash generated
from operations and, when necessary, advances from Cooper. Upon consummation of
the Exchange Offer, Cooper will no longer be a source of advances for funding
CCC's cash requirements. Following consummation of the Exchange Offer, CCC will
have a $475 million credit facility, of which approximately $375 million will
have been drawn by CCC. The Commitment Letter (as defined herein) with respect
to the Credit Facility (as defined herein) provides that the Credit Agreement
(as defined herein) will contain certain financial covenants, including a
Leverage Covenant, a Cash Flow Covenant and a Net Worth Covenant (each as
defined herein). For CCC to meet the Cash Flow Covenant, CCC's financial
performance must improve over current levels. Should such improvement not occur,
CCC would be in default under the Credit Facility
14
<PAGE> 17
and, unless a waiver could be obtained, all outstanding indebtedness would
become due and payable. Such an event would have a material adverse effect on
CCC and on the market value of the CCC Common Stock. Although CCC believes that
such improvement will occur, there can be no assurance that any improvement over
1994 levels will occur. See "Certain Transactions; Relationship Between Cooper
and CCC -- Financing Arrangements" and "Management's Discussion and Analysis of
Results of Operations and Financial Condition of CCC -- March 31, 1995 Compared
to March 31, 1994 -- Effect of Iranian Boycott" and "-- Liquidity After the
Exchange Offer." In addition, pursuant to the Asset Transfer Agreement (as
defined herein), CCC has agreed to certain restrictions on its operations,
including issuing equity securities, for a two-year period following
consummation of the Exchange Offer. See "Certain Transactions; Relationship
Between Cooper and CCC -- Asset Transfer Agreement."
MARKET UNCERTAINTIES WITH RESPECT TO CCC COMMON STOCK
Prior to the Exchange Offer, there has been no public market for the CCC
Common Stock. Although the CCC Common Stock has been approved for quotation on
the National Association of Securities Dealers Automated Quotation/National
Market System ("NASDAQ/NMS"), there can be no assurance that an active trading
market for the CCC Common Stock will be established or maintained after the
Exchange Offer. The prices at which the CCC Common Stock trades will be
determined by the marketplace and could be subject to significant fluctuations
in response to many factors, including, among other things, variations in CCC's
quarterly operating results, changes in economic conditions in the industries in
which CCC participates and changes in government regulations. In addition, the
stock market often experiences significant price fluctuations that are unrelated
to the operating performance of the specific companies whose stock is traded.
Market fluctuations as well as economic conditions may adversely affect the
market price of the CCC Common Stock.
FOREIGN OPERATIONS AND EXPORTS
Foreign operations and exports from the United States represent a
significant portion of CCC's business. Approximately 59% of CCC's total sales in
1994 were to international markets, and 44% of CCC's total 1994 sales were
shipped from CCC's international locations. As a result, CCC is exposed to
certain political, economic and other uncertainties not encountered in domestic
activities, including risks of war and civil disturbances or other risks that
may limit or disrupt markets, the imposition of trade barriers by either the
U.S. or foreign governments, expropriation and nationalization, the imposition
of foreign exchange restrictions and currency fluctuations. Although to date CCC
has experienced no material loss as a result of any of these factors, there can
be no assurance that such problems will not arise in the future. In order to
mitigate the impact of currency fluctuations, CCC from time to time enters into
foreign currency hedging transactions. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition of CCC -- March 31, 1995
Compared to March 31, 1994 -- Effect of Iranian Boycott"; "Business of CCC --
International Operations and Exports"; and Notes 13 and 16 of the Notes to
Consolidated Financial Statements of CCC.
POSSIBLE PRODUCT LIABILITY CLAIMS AND INSURANCE
Certain of CCC's products are used in potentially hazardous applications.
Litigation arising from a catastrophic occurrence at a location where CCC's
products are used may result in CCC being named as a defendant in lawsuits
asserting large claims. Although CCC believes its insurance coverage is adequate
for its current operations and its uninsured losses to date from product
liability claims have not been significant, a successful liability claim for
which CCC is underinsured or uninsured could have a material adverse effect on
CCC. See Note 8 of the Notes to Consolidated Financial Statements of CCC.
ENVIRONMENTAL MATTERS
CCC's business is affected by governmental regulations relating to
environmental and safety regulations. CCC believes that the trend of more
expansive and stricter environmental laws and regulations will continue, and
there can be no assurance that future changes in such laws and regulations or
stricter enforcement of existing laws and regulations will not have a material
effect on CCC's operations. See "Management's
15
<PAGE> 18
Discussion and Analysis of Results of Operations and Financial Condition of
CCC -- Environmental Remediation" and "Business of CCC -- Environmental
Matters."
SHARES AVAILABLE FOR FUTURE SALE
Upon completion of the Transaction (as defined herein), Cooper will hold an
aggregate of 3,625,000 shares of CCC Common Stock (14.5% of the shares of CCC
Common Stock that will be outstanding at such time). In connection with the
Transaction, Cooper and CCC have entered into an agreement that provides Cooper
with certain rights to have the shares of CCC Common Stock owned by it after the
Transaction registered by CCC under the Securities Act in order to permit the
public sale of such shares. See "Certain Transactions; Relationship Between
Cooper and CCC -- Registration Rights." In connection with obtaining the Private
Letter Ruling (as defined herein), Cooper has committed, among other things, to
dispose of any shares of CCC Common Stock retained by it as soon as practicable,
but in no event later than five years after the Expiration Date (as defined
herein). See "Certain Federal Income Tax Consequences." No prediction can be
made as to the effect, if any, that future sales of CCC Common Stock or the
availability of CCC Common Stock for future sales will have on the market price
of the CCC Common Stock prevailing from time to time. Sales of substantial
amounts of CCC Common Stock or the perception that such sales could occur may
adversely affect prevailing market prices for the CCC Common Stock.
TENDERING AND NONTENDERING SHAREHOLDERS AFFECTED DIFFERENTLY BY THE TRANSACTION
Holders of shares of Cooper Common Stock will be affected by the
Transaction regardless of whether such holders tender their shares of Cooper
Common Stock for exchange pursuant to the Exchange Offer. Holders of shares of
Cooper Common Stock who tender all of their shares for exchange pursuant to the
Exchange Offer will no longer have an ownership interest in Cooper unless more
than 9,500,000 shares of Cooper Common Stock are tendered for exchange, in which
event such holders' tendered shares will be prorated. Holders of shares of
Cooper Common Stock who do not tender any of their shares for exchange pursuant
to the Exchange Offer will not receive shares of CCC Common Stock as a result of
the Exchange Offer (unless the Distribution (as defined herein) is effected).
Such holders will continue to have an ownership interest in Cooper, which
percentage interest will have been increased as a result of the Exchange Offer.
The magnitude of such increase will depend upon the number of shares of Cooper
Common Stock tendered pursuant to the Exchange Offer and accepted for exchange
by Cooper. If the Exchange Offer is fully subscribed (i.e., 9,500,000 or more
shares of Cooper Common Stock are tendered and accepted for exchange by Cooper),
the ownership interest in Cooper represented by each outstanding share of Cooper
Common Stock would be increased by approximately 9% based upon the shares of
Cooper Common Stock outstanding on May 1, 1995.
TAX TREATMENT OF EXCHANGE OFFER
Cooper has received a ruling (the "Private Letter Ruling") from the
Internal Revenue Service (the "IRS") to the effect that, among other things, the
Exchange Offer and the Distribution, if any, will qualify as tax-free
distributions to Cooper and its shareholders under Section 355 of the Internal
Revenue Code of 1986, as amended (the "Code"). See "Certain Federal Income Tax
Consequences."
CCC has agreed to indemnify Cooper for any taxes which may arise from the
Exchange Offer and the Distribution subsequently being treated as taxable
transactions as a result of any acts or omissions on the part of CCC or any of
its affiliates. See "Certain Transactions; Relationship Between Cooper and
CCC -- Asset Transfer Agreement."
ANTICIPATED FUTURE DIVIDEND POLICY
Cooper paid quarterly cash dividends on the Cooper Common Stock of $.27 per
share in 1990, $.29 per share in 1991 and $.31 per share in 1992. Cooper has
paid quarterly cash dividends of $.33 per share on the Cooper Common Stock since
the quarter ended March 31, 1993. The payment of future dividends will be
subject to the discretion of the Board of Directors of Cooper and will depend
upon, among other things,
16
<PAGE> 19
Cooper's financial condition, capital requirements, funds from operations,
future business prospects and such other factors as the Board may deem relevant.
CCC presently intends to retain earnings for use in its business and does
not anticipate paying cash dividends in the foreseeable future. Any future
determination relating to dividend policy will be at the discretion of the Board
of Directors of CCC. Such determination will depend on a number of factors,
including CCC's financial condition, capital requirements, funds from
operations, future business prospects and such other factors as the Board of CCC
may deem relevant. See "Market Prices, Trading and Dividend Information -- CCC
Common Stock."
The Commitment Letter with respect to the Credit Facility provides that the
Credit Agreement will contain certain financial covenants, in addition to
customary restrictions on, among other things, the payment of dividends. See
"Certain Transactions; Relationship Between Cooper and CCC -- Financing
Arrangements."
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS
Upon consummation of the Exchange Offer, shareholders of Cooper who
exchange their shares of Cooper Common Stock for CCC Common Stock will become
shareholders of CCC and their rights as shareholders of CCC will be governed by
the corporate law of the State of Delaware rather than the State of Ohio, which
is Cooper's jurisdiction of incorporation, the Amended CCC Certificate (as
defined herein) and the Amended CCC Bylaws (as defined herein). The corporate
law of the State of Delaware applicable to CCC differs in certain respects from
the corporate law of the State of Ohio applicable to Cooper, including with
respect to certain transactions with "interested shareholders," appraisal rights
and the standard of proof required to overcome the presumption created by the
business judgment rule. In addition, the rights of shareholders of CCC differ
from the rights of shareholders of Cooper with respect to certain important
matters, including, among others, the calling of special meetings of
shareholders, the nomination and removal of directors by shareholders, the
proposal by shareholders of any business before any annual meeting of
shareholders and the amendment of the certificate of incorporation and bylaws.
For a summary of these differences, see "Comparison of Rights of Shareholders of
Cooper and CCC."
ANTITAKEOVER PROVISIONS AND OTHER MATTERS
Certain provisions of the Amended CCC Certificate and the Amended CCC
Bylaws, including provisions classifying the board of directors, prohibiting
shareholder action by written consent and imposing certain supermajority voting
requirements and certain provisions of Delaware law could discourage potential
acquisition proposals and could delay or prevent a change in control of CCC. In
addition, the CCC Rights (as defined herein) could have similar antitakeover
effects. Such charter and bylaw provisions and the CCC Rights could diminish the
opportunities for a shareholder to participate in certain tender offers,
including tender offers at a price above the then current market value of the
CCC Common Stock and may also inhibit fluctuations in the market price of the
CCC Common Stock that could result from takeover attempts. See "Description of
CCC Capital Stock -- Delaware Law and Certain Certificate of Incorporation and
Bylaw Provisions" and " -- Rights Plan." In addition, the Board of Directors of
CCC, without further shareholder approval, may issue preferred stock that could
have the effect of delaying, deterring or preventing a change in control of CCC.
The issuance of preferred stock could also adversely affect the voting power of
the holders of CCC Common Stock, including the loss of voting control to others.
CCC has no present plans to issue any preferred stock. See "Description of CCC
Capital Stock -- Preferred Stock." In connection with the Transaction, CCC has
agreed to indemnify Cooper for certain taxes resulting from the failure of the
Exchange Offer and the Distribution to qualify as tax-free distributions if such
failure is attributable to certain actions by or relating to CCC, including
certain change of control transactions involving CCC occurring prior to the
second anniversary of the Expiration Date. See "Certain Transactions;
Relationship Between Cooper and CCC -- Asset Transfer Agreement." Such agreement
may have the effect of discouraging or preventing an acquisition of CCC, which
may in turn depress the market price for the CCC Common Stock.
17
<PAGE> 20
THE TRANSACTION
GENERAL
Cooper intends to implement a split-off reorganization (the "Transaction")
pursuant to the terms and conditions of (i) the Amended and Restated Asset
Transfer Agreement, dated as of January 1, 1995 (the "Asset Transfer
Agreement"), by and between Cooper and CCC, (ii) the Exchange Offer and (iii)
the Distribution, if any. For a description of the Asset Transfer Agreement, see
"Certain Transactions; Relationship Between Cooper and CCC -- Asset Transfer
Agreement."
PURPOSE AND EFFECTS OF THE TRANSACTION
Cooper believes that the creation of a separate public market for the
equity of CCC through the Exchange Offer will allow the financial markets to
evaluate more effectively the respective values of Cooper's remaining
manufacturing businesses and CCC's petroleum and industrial equipment business,
thereby enhancing overall shareholder value. Cooper also believes that the
Transaction should enhance the ability of each of Cooper and CCC to maximize the
value of its respective operations for the benefit of its respective
shareholders by permitting each company to (i) focus its managerial and
financial resources on the growth of its businesses and (ii) implement more
focused incentive compensation systems designed to better attract, retain and
motivate its respective employees by offering economic rewards that are tied
more directly to the results of such employees' efforts and are not distorted by
the differing economics of the other company. In addition, Cooper believes that
the Transaction will allow CCC to compete more effectively in those segments of
its markets where a premium is placed on the personal marketing efforts of
senior management.
Moreover, Cooper is pursuing the Transaction because it believes that the
Cooper Common Stock currently represents an attractive investment and in order
to reduce the number of outstanding shares of Cooper Common Stock. This
reduction will increase the proportionate ownership in Cooper of shareholders
who do not tender pursuant to the Exchange Offer. The Exchange Offer will also
provide Cooper's shareholders with an opportunity to adjust, on a tax-free
basis, their investment between Cooper's remaining manufacturing businesses and
CCC's petroleum and industrial equipment business. See "Certain Federal Income
Tax Consequences." To the extent that a holder exchanges all of such holder's
Cooper Common Stock pursuant to the Exchange Offer, the holder will no longer
participate in any increase in the value of such Cooper Common Stock.
Furthermore, any Cooper shareholder owning an aggregate of less than 100 shares
of Cooper Common Stock whose shares of Cooper Common Stock are accepted for
exchange pursuant to the Exchange Offer will avoid the applicable odd lot
discounts payable on sales of odd lots on the NYSE. In addition, to the extent
that the exchange of shares of Cooper Common Stock pursuant to the Exchange
Offer results in a reduction in the number of shareholders of record, the costs
incurred by Cooper for services to shareholders will be reduced.
Holders of shares of Cooper Common Stock will be affected by the
Transaction regardless of whether such holders tender their shares of Cooper
Common Stock for exchange pursuant to the Exchange Offer. Holders of shares of
Cooper Common Stock who tender all of their shares for exchange pursuant to the
Exchange Offer will no longer have an ownership interest in Cooper unless more
than 9,500,000 shares of Cooper Common Stock are tendered for exchange and such
holders' tendered shares are accordingly prorated. Holders of shares of Cooper
Common Stock who do not tender any of their shares for exchange pursuant to the
Exchange Offer will not receive shares of CCC Common Stock as a result of the
Exchange Offer, although such shareholders will receive shares of CCC Common
Stock pursuant to the Distribution if fewer than 9,500,000 shares of Cooper
Common Stock are tendered pursuant to the Exchange Offer and the Exchange Offer
is consummated. Such holders will continue to have an ownership interest in
Cooper, which percentage interest will have been increased as a result of the
Exchange Offer.
Any Cooper Common Stock acquired by Cooper pursuant to the Exchange Offer
will become treasury shares and will be available for issuance by Cooper without
further shareholder action (except as required by applicable law or the rules of
national securities exchanges on which the Cooper Common Stock is listed) for
general or other corporate purposes, including stock splits or dividends,
acquisitions, the raising of additional capital for use in Cooper's business and
pursuant to employee benefit plans.
18
<PAGE> 21
Except for the Transaction and except as otherwise described in this
Offering Circular - Prospectus, Cooper does not have any present plans or
proposals that relate to or would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, sale or transfer of
a material amount of assets involving Cooper or any of its subsidiaries, or any
changes in Cooper's capitalization or any other change in Cooper's corporate
structure or business or the composition of its management.
NEITHER COOPER NOR THE BOARD OF DIRECTORS OF COOPER MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER WHETHER TO TENDER OR REFRAIN FROM TENDERING
SHARES OF COOPER COMMON STOCK PURSUANT TO THE EXCHANGE OFFER. EACH SHAREHOLDER
MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES OF COOPER COMMON
STOCK PURSUANT TO THE EXCHANGE OFFER AND, IF SO, HOW MANY SHARES TO TENDER AFTER
READING THIS OFFERING CIRCULAR - PROSPECTUS AND CONSULTING WITH HIS OR HER
ADVISORS.
OPINIONS OF ADVISORS
American Appraisal Associates, Inc. Pursuant to an engagement letter,
dated March 29, 1995, the Board of Directors of Cooper retained American
Appraisal Associates, Inc. ("American Appraisal"), a nationally recognized
independent valuation firm, to render advisory services to Cooper in connection
with the Transaction.
In a written opinion, dated April 25, 1995, delivered to the Board of
Directors of Cooper, American Appraisal stated that, based upon the
considerations and assumptions set forth therein, it was American Appraisal's
opinion that, assuming the Transaction is consummated as proposed, both
immediately before and after, and giving effect to, the consummation of the
Transaction: (a) the fair value of the aggregate assets of CCC exceed its total
liabilities (including, without limitation, subordinated, unmatured,
unliquidated, disputed and contingent liabilities); (b) the present fair
saleable value of the aggregate assets of CCC is greater than the amount that
will be required to pay probable liabilities on its debts as such debts become
absolute and matured; (c) CCC after consummation of the Transaction will be able
to pay its debts and other liabilities, including contingent liabilities and
other commitments, as they mature; (d) CCC after consummation of the Transaction
will not have unreasonably small capital for the businesses in which it is
engaged, as now conducted and as such businesses are proposed to be conducted
following the consummation of the Transaction; (e) after consummation of the
Transaction, CCC's remaining assets will not be unreasonably small in relation
to its business as it is now conducted or as such business is proposed to be
conducted following consummation of the Transaction; and (f) the excess of the
value of the aggregate assets of CCC over its total identified liabilities,
including contingent liabilities, is equal to or exceeds the value of the stated
capital of CCC.
The full text of American Appraisal's opinion, which sets forth the
assumptions made, the matters considered and the review undertaken with regard
to such opinion, is included as Annex A to this Offering Circular - Prospectus.
Shareholders are urged to read carefully the opinion of American Appraisal in
its entirety.
In rendering its opinion, American Appraisal valued the assets of CCC, as a
going concern, both immediately before and after, and giving effect to, the
Transaction. The valuation included the aggregate assets of the business
enterprise of CCC or total invested capital as represented by the total net
working capital, tangible plant, property and equipment and intangible assets of
the business enterprise. American Appraisal stated that it believed this to be a
reasonable basis on which to value CCC and that nothing came to its attention
that caused it to believe that CCC, before and after the Transaction, will not
be a going concern.
American Appraisal's opinion of fair value and present fair saleable value
is subject to the assumptions that any sale of CCC (i) would be completed as the
sale of an ongoing business entity and (ii) would occur within a "commercially
reasonable period" of time, which means at least twelve months for a willing
buyer and a willing seller to agree on price and terms and to complete the sale
of CCC. In connection with the opinion of the fair value and present fair
saleable value of CCC, American Appraisal was provided historical and projected
operating results and balance sheets. In addition to this information, American
Appraisal was provided with other operating data and information, all of which
was accepted by American Appraisal, without independent verification, as
representing a fair statement of historical and projected results of CCC in the
opinion of the management of each of Cooper and CCC.
19
<PAGE> 22
American Appraisal's determination of the fair value and present fair
saleable value of CCC was based on generally accepted valuation principles used
in the market and income (discounted cash flow) approaches, described as
follows:
Market Approach -- Based on current stock market prices of publicly
held companies with businesses that are similar to those of CCC and
premiums paid over market price by acquirors of total or controlling
ownership in such businesses.
Income Approach -- Based on the present value of CCC's future
debt-free operating cash flow as estimated by the management of CCC and
contained in the financial projections provided to American Appraisal. The
present value is determined by discounting the projected operating cash
flow at a rate of return that American Appraisal believes reflects the
financial and business risks of CCC.
In determining the amount that would be required to pay CCC's total
probable liabilities on the dates that the liabilities become absolute and
matured, for purposes of its opinion of fair value, American Appraisal applied
valuation techniques, including present value analysis, using appropriate rates
over appropriate periods to the amounts that will be required from time to time
to pay such liabilities and contingent liabilities as they become absolute and
matured based on their scheduled maturities.
In the course of its investigation of identified contingent liabilities,
the areas brought to the attention of American Appraisal by the management of
CCC included (i) environmental matters, (ii) the adequacy of the corporate
insurance program, (iii) tax audit exposure, (iv) the liability for the pension
and welfare benefits program, (v) labor and collective bargaining issues, and
(vi) various lawsuits and claims filed and/or pending against CCC.
Reserves for contingent liabilities have been included in the pro forma
consolidated balance sheet as of December 31, 1994 prepared and furnished to
American Appraisal by the management of CCC, and provisions for the ongoing
expenses related to these issues have been included in the projection of income
and expenses presented in the financial projections, and are considered in
American Appraisal's valuation study as ongoing business operating expenses.
American Appraisal has taken these identified contingent liabilities into
account in rendering its opinion and has concluded that such liabilities and
ongoing expenses do not require any qualification of the opinion. American
Appraisal's conclusion is based on: (i) its review of various acquisition
transactions, including leveraged transactions and significant debt-financed
recapitalization transactions, involving corporations engaged in businesses
similar to those of CCC, (ii) the opinion of the management of CCC that the
issues concerning various lawsuits, claims and other identified contingent
liabilities do not and are not reasonably likely to have a material adverse
effect on the consolidated financial position of CCC, and (iii) its discussions
with the management of CCC, its accountants, consultants and in-house counsel
concerning, and its investigation of, the various lawsuits, claims and other
contingent liabilities and the possible effect of the foregoing on CCC.
American Appraisal assumed that the total liabilities of CCC will be only
those liabilities set forth in the financial projections and the pro forma
balance sheet as of December 31, 1994 of CCC and the identified contingent
liabilities referred to in American Appraisal's opinion. The pro forma balance
sheet used by American Appraisal was the unaudited pro forma condensed balance
sheet as of December 31, 1994 for CCC, adjusted to give effect to the planned
financing contemplated by the Credit Facility and the application of the
proceeds thereof and restated by American Appraisal to reflect the fair value
and present fair saleable value of CCC.
CCC's management has represented to American Appraisal, and American
Appraisal has relied on the representations of the management of CCC, that no
adverse changes have occurred since the preparation of CCC's pro forma balance
sheet and financial projections that would materially affect their content.
In connection with its opinion, American Appraisal made such reviews,
analyses and inquiries as it deemed necessary and appropriate under the
circumstances. Among other things, American Appraisal (i) reviewed the documents
related to the Transaction and reporting documents filed with the Commission,
(ii) reviewed financial analyses and inquired of management of CCC as to the
foundation for any such analyses and the basic assumptions made in the
preparation of projections relating to the type of business,
20
<PAGE> 23
geographic markets, domestic and international economic conditions and capital
facilities and working capital requirements, (iii) reviewed audited and
unaudited historical income statements, balance sheets and statements of sources
and uses of funds of CCC as provided by management and its accountants, (iv)
visited CCC's headquarters and selected facilities to discuss historical and
projected operating results and industry data, including the impact of future
trends on the industry and CCC, as well as the effects of the Transaction and
other matters, (v) reviewed the anticipated terms of the Credit Facility, (vi)
reviewed internal financial analyses and other internally generated data of CCC,
(vii) inquired of management of CCC and its financial advisors as to estimated
levels of cash and working capital required by CCC, (viii) reviewed certain
publicly available economic, financial and market information as it relates to
the business operations of CCC, (xi) reviewed information regarding businesses
similar to CCC and investigated the financial terms and post-transaction
performance of recent acquisitions, (x) consulted with industry, economic and
statistical experts, as necessary, (xi) discussed all of the foregoing
information, where appropriate, with management of CCC and its employees,
agents, accountants and financial advisors, and (xii) conducted such other
studies, analyses and investigations as American Appraisal deemed relevant or
necessary for purposes of the opinion.
American Appraisal assumed, without independent verification, that the pro
forma balance sheet and financial analyses provided to American Appraisal were
reasonably prepared and reflect the best available estimates, at the time they
were prepared, of the future financial results and condition of CCC, and that
there has been no material adverse change in the assets, financial condition,
business or prospects of CCC since the date of the most recent financial
statements made available to American Appraisal.
In rendering its opinion, American Appraisal also assumed that: (i) the
aggregate market value of the shares of CCC Common Stock to be distributed in
the Distribution will not exceed $150 million; (ii) the Credit Facility will
consist of (a) a $200 million five-year unsecured term loan and (b) a $275
million line of credit, with $175 million drawn down at closing (American
Appraisal also assumed that the interest rate will be an average corporate base
rate as announced by a major bank as of April 25, 1995); (iii) CCC will have the
ability to refinance the Credit Facility at the end of the five-year term; and
(iv) the Exchange Offer and the Distribution qualify as a tax-free distribution
under Section 355 of the Code and will remain as such.
Although American Appraisal did not independently verify the accuracy and
completeness of the financial projections and forecasts, or any of the
assumptions, estimates or judgments referred to therein, or the basis therefor,
and although no assurances can be given that such projections and forecasts can
be realized or that actual results will not vary materially from those
projected, American Appraisal stated that nothing had come to its attention
during the course of its engagement that lead it to believe that any information
reviewed by it or presented to it in connection with rendering its opinion was
unreasonable or inaccurate in any material respect or that it was unreasonable
for it to utilize and rely upon the financial projections, financial statements,
assumptions, description of the business and liabilities, estimates and
judgments or statements of the management of CCC and its respective counsel,
accountants and financial advisors. American Appraisal's opinion is based on
business, economic, market and other conditions as they existed at the time of
the opinion and as they could be evaluated by American Appraisal at such time.
American Appraisal's opinion will not be binding on creditors of CCC.
Accordingly, there can be no assurance that a court would value CCC's assets on
a going-concern basis in order to determine whether CCC was insolvent at the
time of the Exchange Offer or that, regardless of the method of valuation, a
court would not determine that CCC was insolvent at such time.
As compensation for its services, American Appraisal has received $20,000
and will receive an additional $25,000 payment from Cooper plus reimbursement
for its reasonable out-of-pocket expenses. In addition, Cooper agreed to
indemnify and hold harmless American Appraisal with respect to any claim arising
from (i) any untrue statement of a material fact contained in information
furnished by Cooper or CCC or the omission therefrom of a material fact
necessary to make the statements therein not misleading in light of
circumstances under which they were made or (ii) any services performed by
American Appraisal or by rendering its opinion or any use of such opinion,
except in connection with clause (ii) for any losses resulting from American
Appraisal's gross negligence or willful misfeasance.
21
<PAGE> 24
CS First Boston Corporation. Cooper engaged CS First Boston Corporation
("CS First Boston") to act as its financial advisor in connection with the
Transaction. Representatives of CS First Boston assisted Cooper in structuring
the Transaction and in analyzing the potential effect of the Transaction on
shareholder values of both Cooper and CCC following consummation of the
Transaction. In particular, CS First Boston gave advice to Cooper regarding the
proposed number of shares of CCC Common Stock to be issued in the Transaction
and with respect to other terms and conditions of the Exchange Offer.
CS First Boston has delivered to the Board of Directors of Cooper CS First
Boston's written opinions, each dated April 25, 1995, to the effect that, based
upon and subject to the conditions stated in each such opinion and then current
market conditions, as of the date of the opinions, (i) following the
consummation of the Exchange Offer, Cooper will have the ability to finance its
anticipated operating and capital requirements through the end of fiscal year
1996, as those operating and capital requirements were projected in the
financial forecasts prepared by the management of Cooper and delivered to CS
First Boston prior to the date of the opinion (the "Cooper Opinion"), and (ii)
following the consummation of the Exchange Offer, CCC will have the ability to
finance its anticipated operating and capital requirements through the end of
fiscal year 1996, as those operating and capital requirements were projected in
the financial forecasts prepared by the management of CCC and delivered to CS
First Boston prior to the date of the opinion (the "CCC Opinion" and together
with the Cooper Opinion, the "Opinions").
The full text of each of the Opinions, which sets forth the assumptions
made, matters considered and limits on the reviews undertaken, is included as
Annexes B and C, respectively, to this Offering Circular - Prospectus.
Shareholders are urged to read carefully the Opinions in their entirety. CS
First Boston's engagement by Cooper was not on behalf of nor intended to create
any relationship with or any duty to any other person (including any creditors
of Cooper or CCC).
In arriving at the Opinions, CS First Boston reviewed the Asset Transfer
Agreement and certain publicly available business and financial information
relating to each of Cooper and CCC. CS First Boston also reviewed other
information provided to it by Cooper and CCC, including financial forecasts and
the Registration Statement and, with respect to the Cooper Opinion, Cooper's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the
"Cooper 10-K"), and CS First Boston met with Cooper management and CCC
management to discuss the business and prospects of Cooper and CCC,
respectively.
CS First Boston also considered certain financial and stock market data of
Cooper and certain financial data of CCC, in each case compared that data with
similar data for other publicly held companies in businesses similar to those of
Cooper and CCC, respectively, and considered the financial terms of certain
other transactions similar to the Exchange Offer which have recently been
effected. In addition, CS First Boston considered prevailing market conditions
and such other information, financial studies, analyses and investigations and
financial, economic and market criteria which it deemed relevant. For purposes
of the Opinions CS First Boston assumed that the Exchange Offer and the
Distribution qualify as a tax-free distribution under Section 355 of the Code
and will remain as such and, with respect to the CCC Opinion, that not later
than the consummation of the Exchange Offer, CCC will have entered into the
Credit Agreement and will have available to it the financing arrangements
provided thereby.
In connection with its reviews, CS First Boston did not assume any
responsibility for independent verification of any of the foregoing information
(including the information contained in the Cooper 10-K, in
the case of the Cooper Opinion, and the Registration Statement) and relied on
its being complete and accurate in all material respects. CS First Boston relied
solely upon the information developed and provided to it by Cooper, in the case
of the Cooper Opinion, and Cooper and CCC, in the case of the CCC Opinion, and
did not engage independent consultants or advisors to confirm the accuracy and
completeness of such information. With respect to the financial forecasts
referred to above, the managements of Cooper, in the case of the Cooper Opinion,
and Cooper and CCC, in the case of the CCC Opinion, have advised CS First Boston
that such financial forecasts have been reasonably prepared on bases reflecting
the best currently available estimates and judgments of such managements as to
the future financial performance of Cooper and CCC, respectively.
22
<PAGE> 25
CS First Boston did not make an independent evaluation or appraisal of the
assets or liabilities of either of Cooper or CCC, nor was it furnished with any
such appraisal. Further, each of the Opinions is based on economic, monetary and
market conditions existing on the date of such Opinion. The Opinions do not
represent CS First Boston's opinions as to what the value of the securities of
Cooper or CCC actually will be following the consummation of the Exchange Offer.
CS First Boston and its affiliates may in the future act as underwriters
for, or participate as members of underwriting syndicates with respect to,
offerings of Cooper or CCC securities, and CS First Boston may effect securities
transactions for Cooper or CCC or perform financial advisory services in
connection with certain acquisitions and dispositions by Cooper or CCC. In
addition, in the ordinary course of its business, CS First Boston actively
trades the equity securities of Cooper, and may actively trade the equity
securities of CCC following the consummation of the Exchange Offer, for its own
account and for the accounts of others, and, accordingly, CS First Boston may at
any time hold a long or short position in the securities of Cooper and/or CCC.
CS First Boston is a nationally recognized investment banking firm and is
actively engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, leveraged buy-outs, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
As financial advisor to Cooper in connection with the Transaction, CS First
Boston has been paid an advisory fee of $250,000, and upon completion of the
Exchange Offer will be paid an additional fee of $1.5 million for its services,
including its role as Dealer Manager in connection with the Exchange Offer (the
"Dealer Manager"). In addition, Cooper will reimburse CS First Boston for
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of its counsel, and will indemnify CS First Boston against certain
liabilities in connection with such services, including certain liabilities
under the Federal securities laws.
NO APPRAISAL RIGHTS
No appraisal rights are available to Cooper shareholders in connection with
the Transaction.
REGULATORY APPROVALS
No filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act") are required in connection with the Exchange Offer generally. To
the extent certain shareholders of Cooper decide to participate in the Exchange
Offer and to acquire a number of shares of CCC Common Stock that exceeds one of
the thresholds stated in the regulations under the HSR Act, and if an exemption
under those regulations does not apply, such shareholders and Cooper would be
required to make filings under the HSR Act, and the waiting period under the HSR
Act would have to expire or be terminated prior to such shareholder receiving
shares of CCC Common Stock. In order to enable the Exchange Offer to be
consummated in accordance with its terms, should the HSR Act filing requirements
be applicable to any shareholder participating in the Exchange Offer, Cooper
presently intends to place such shareholder's shares of CCC Common Stock to be
received in the Exchange Offer in escrow with First Chicago Trust Company of New
York, as Exchange Agent (the "Exchange Agent"), following consummation of the
Exchange Offer. Upon expiration or earlier termination of the HSR Act waiting
period, the shares of CCC Common Stock would be distributed to the shareholder.
Should an enforcement agency make a second request for information or should the
shareholder otherwise so elect, the Exchange Agent will sell such shares of CCC
Common Stock at prevailing market prices. A check for the proceeds from such
sale will be sent to the shareholder by the Exchange Agent as promptly as
possible following the settlement of such sale. NONE OF THE EXCHANGE AGENT,
COOPER, CCC OR THE DEALER MANAGER WILL GUARANTEE ANY MINIMUM SALE PRICE FOR THE
SHARES OF CCC COMMON STOCK.
Except as stated above, Cooper and CCC do not believe that any material
Federal or state regulatory approval will be necessary in connection with the
Transaction.
23
<PAGE> 26
ANTICIPATED ACCOUNTING TREATMENT
In the third quarter of 1994, Cooper recorded an estimated loss on the
disposal of its Petroleum & Industrial Equipment segment (which at September 30,
1994 included only the assets and operations of CCC) as a result of Cooper's
Board of Directors' decision to pursue the Transaction. Although the Exchange
Offer was not expected to be completed until the second quarter of 1995, Cooper
determined at that time that the Exchange Offer would, in all likelihood, result
in a significant loss for financial reporting purposes and that there was a
reasonable basis for estimating the loss. The estimated loss, which was
determined to be $313 million, net of taxes (the "Estimated Loss"), included
three components: (i) an estimated CCC operating loss of $9.8 million for the
period from October 1, 1994 through the Expiration Date (the "Period"); (ii)
anticipated transaction costs of $15.2 million and (iii) a $288 million loss
representing the difference between the estimated market value of the shares of
CCC Common Stock and the book value of Cooper's investment in the net assets of
CCC. The actual loss (the "Actual Loss") will be determined following
consummation of the Transaction. The actual market value of the CCC Common Stock
will be subject to a number of factors, including general market conditions,
market value and financial performance of "peer companies," and the anticipated
financial performance of CCC. Cooper believes that market conditions have shown
little improvement since it calculated the Estimated Loss in September 1994. If
conditions do not improve, Cooper may receive fewer shares of Cooper Common
Stock than it originally estimated, although the final number cannot be
determined until Cooper's Board of Directors establishes the ratio for the
exchange of Cooper Common Stock for CCC Common Stock. The recent announcement of
a U.S. embargo on commercial trade activities with Iran may also have a negative
impact on the market value of the CCC Common Stock. While the difference between
the Estimated Loss and the Actual Loss is not determinable at this time, Cooper
currently anticipates that the Actual Loss will be higher resulting in an
additional noncash charge for a loss on discontinued operations upon completion
of the Exchange Offer.
The Estimated Loss was determined assuming that there was no Distribution.
If the Distribution occurs, the Actual Loss would be reduced because the portion
of CCC being transferred in the Exchange Offer would be reduced. Any shares of
CCC Common Stock distributed in the Distribution will be accounted for as a
dividend, with the historical book value thereof being charged directly to
retained earnings.
The historical financial statements of Cooper present its financial
position, results of operations and cash flows as if CCC were a separate
subsidiary included in the Petroleum & Industrial Equipment segment for all
periods presented. See "Selected Consolidated Historical Financial Data of
Cooper." The financial statements of CCC reflect the assets that were
transferred to CCC pursuant to the Asset Transfer Agreement at their historical
book value. See "Pro Forma Consolidated Financial Statements of CCC."
24
<PAGE> 27
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in the Exchange
Offer, Cooper hereby offers to exchange, and Cooper will exchange, 2.25 shares
of CCC Common Stock for each share of Cooper Common Stock, up to a maximum of
9,500,000 shares of Cooper Common Stock, that is validly tendered by the
Expiration Date and not properly withdrawn. See "The Exchange
Offer -- Withdrawal Rights" below. The term "Expiration Date" shall mean 5:00
P.M., New York City time, on Friday, June 30, 1995, unless Cooper, in its sole
discretion, shall have extended the period of time for which the Exchange Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Exchange Offer, as so extended by Cooper, shall expire.
The proration period will also expire on the Expiration Date.
The exchange ratio of 2.25 shares of CCC Common Stock for each share of
Cooper Common Stock exchanged was established by Cooper. The principal factors
considered by Cooper in determining the exchange ratio were (i) recent market
prices for Cooper Common Stock and (ii) a presentation by, and the advice of,
its financial advisor regarding CCC and the Transaction, including advice with
respect to the advisability of including a premium in the determination of the
exchange ratio in order to induce a sufficient number of Cooper shareholders to
participate in the Exchange Offer. See "The Transaction -- Opinions of
Advisors."
It is a condition to the Exchange Offer that at least 8,550,000 shares of
Cooper Common Stock (approximately 7% of the outstanding Cooper Common Stock as
of May 1, 1995 and a sufficient number of shares of Cooper Common Stock to
result in at least 90% of the CCC Common Stock intended to be distributed by
Cooper being exchanged pursuant to the Exchange Offer) be validly tendered and
not properly withdrawn prior to the Expiration Date (the "Minimum Condition").
If fewer than 9,500,000 shares of Cooper Common Stock are validly tendered
pursuant to the Exchange Offer and not properly withdrawn and the Minimum
Condition is satisfied, subject to the other conditions of the Exchange Offer,
Cooper intends to exchange all such tendered shares of Cooper Common Stock for
shares of CCC Common Stock and to distribute the remaining shares of CCC Common
Stock intended to be distributed by Cooper to the holders of Cooper Common Stock
remaining following consummation of the Exchange Offer pro rata based on their
respective holdings of Cooper Common Stock (the "Distribution"). See "The
Distribution." Upon the terms and subject to the conditions of the Exchange
Offer, if more than 9,500,000 shares of Cooper Common Stock have been validly
tendered for exchange and not properly withdrawn prior to the Expiration Date,
Cooper will exchange shares of CCC Common Stock for shares of Cooper Common
Stock in the following order of priority:
(a) all shares of Cooper Common Stock tendered for exchange and not
properly withdrawn prior to the Expiration Date by or on behalf of any
shareholder who beneficially owned an aggregate of fewer than 100 shares of
Cooper Common Stock as of the close of business on May 25, 1995 and who
validly tenders all of such shares of Cooper Common Stock (partial tenders
for exchange will not qualify for this preference) and completes the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on
the Notice of Guaranteed Delivery; and
(b) after exchange of all of the foregoing shares of Cooper Common
Stock, all other shares of Cooper Common Stock validly tendered and not
properly withdrawn prior to the Expiration Date on a pro rata basis, if
necessary (with appropriate adjustments to avoid purchases of fractional
shares of Cooper Common Stock).
AS A RESULT OF SUCH ORDER OF PRIORITY, SHARES OF COOPER COMMON STOCK DESCRIBED
IN CLAUSE (a) WILL NOT BE SUBJECT TO PRORATION. Shares of Cooper Common Stock
not exchanged for shares of CCC Common Stock because of proration will be
returned.
25
<PAGE> 28
Cooper intends to announce publicly at approximately 12:00 Noon and 3:00
P.M., New York City time, on the Expiration Date, on a preliminary basis, the
number of shares of Cooper Common Stock that have been tendered and not
withdrawn prior to such times. The Exchange Offer, proration period and
withdrawal rights will expire at 5:00 P.M., New York City time, on Friday, June
30, 1995, unless the Exchange Offer is extended.
Cooper does not expect that it would be able to announce the final
proration factor or to commence delivery of any shares of CCC Common Stock
exchanged pursuant to the Exchange Offer until approximately seven NYSE trading
days after the Expiration Date if proration of tendered shares of Cooper Common
Stock is required. This delay results from the difficulty in determining the
number of shares of Cooper Common Stock validly tendered for exchange (including
shares of Cooper Common Stock tendered for exchange pursuant to the guaranteed
delivery procedure described in "The Exchange Offer -- Guaranteed Delivery
Procedure" below) and not properly withdrawn prior to the Expiration Date and as
a result of the "odd lot" procedure described herein. Preliminary results of
proration will be announced by press release as promptly as practicable after
the Expiration Date. Holders of shares of Cooper Common Stock may obtain such
preliminary information from the Dealer Manager or the Information Agent (as
defined herein) and may also be able to obtain such information from their
brokers.
No fractional shares of CCC Common Stock will be distributed. The Exchange
Agent, acting as agent for Cooper shareholders otherwise entitled to receive
fractional shares, will aggregate all fractional shares and sell them for the
accounts of such shareholders. Proceeds from sales of fractional shares will be
paid by the Exchange Agent based upon the average gross selling price per share
of all such sales. Any such cash payments will be made through the Exchange
Agent if such shares of Cooper Common Stock are tendered to the Exchange Agent
or, if such shares of Cooper Common Stock are tendered through a Book-Entry
Transfer Facility (as defined herein), through such Book-Entry Transfer
Facility. NONE OF THE EXCHANGE AGENT, COOPER, CCC OR THE DEALER MANAGER WILL
GUARANTEE ANY MINIMUM SALE PRICE FOR THE SHARES OF CCC COMMON STOCK.
On February 17, 1987, Cooper's Board of Directors declared a dividend
distribution of one Preferred Stock Purchase Right ("Cooper Right") for each
share of Cooper Common Stock outstanding on February 27, 1987. Shares of Cooper
Common Stock outstanding on or issued subsequent to February 27, 1987
automatically include these Cooper Rights. The Cooper Rights expire on February
27, 1997 unless redeemed earlier by Cooper. Each Cooper Right entitles its
holder to purchase from Cooper a unit consisting of one one-hundredth of a share
of Series A Participating Preferred Stock of Cooper at a purchase price of
$87.50 per unit subject to adjustment. The Cooper Rights are not currently
exercisable and trade together with the shares of Cooper Common Stock associated
therewith. The Cooper Rights will not become exercisable or separately tradeable
as a result of the Exchange Offer. Absent circumstances causing the Cooper
Rights to become exercisable or separately tradeable prior to the Expiration
Date, the tender of any shares of Cooper Common Stock pursuant to the Exchange
Offer will include the tender of the associated Cooper Rights. No separate
consideration will be paid for such Cooper Rights. Upon the exchange of shares
of Cooper Common Stock pursuant to the Exchange Offer, the holders of the shares
so exchanged will no longer own the Cooper Rights associated with such shares.
The Exchange Offer is subject to certain conditions set forth in "The
Exchange Offer -- Certain Conditions of the Exchange Offer" below, including the
Minimum Condition. If any such conditions are not satisfied, Cooper may (w)
terminate the Exchange Offer and promptly return all tendered shares of Cooper
Common Stock to tendering shareholders, (x) extend the Exchange Offer and,
subject to the withdrawal rights described in "The Exchange Offer -- Withdrawal
Rights" below, retain all such shares of Cooper Common Stock until the
expiration of the Exchange Offer as so extended, (y) waive such condition and,
subject to any requirement to extend the period of time during which the
Exchange Offer is open, exchange all shares of Cooper Common Stock validly
tendered for exchange by the Expiration Date and not properly withdrawn or (z)
delay acceptance for exchange of or exchange for any shares of Cooper Common
Stock until satisfaction or waiver of such conditions to the Exchange Offer.
Cooper's right to delay acceptance for exchange of, or exchange for, shares of
Cooper Common Stock tendered for exchange pursuant to the Exchange Offer is
subject to the provisions of applicable law, including, to the extent
applicable,
26
<PAGE> 29
Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that Cooper
pay the consideration offered or return the shares of Cooper Common Stock
deposited by or on behalf of Cooper's shareholders promptly after the
termination or withdrawal of the Exchange Offer. For a description of Cooper's
right to extend the period of time during which the Exchange Offer is open and
to amend, delay or terminate the Exchange Offer, see "The Exchange
Offer -- Extension of Tender Period; Termination; Amendment" below.
This Offering Circular - Prospectus and the Letter of Transmittal are being
sent to persons who were holders of record of Cooper Common Stock at the close
of business on May 25, 1995. As of May 1, 1995, 117,052,876 shares of Cooper
Common Stock were outstanding. This Offering Circular - Prospectus and related
Letter of Transmittal also will be furnished to brokers, banks and similar
persons whose names or the names of whose nominees appear on the Cooper
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of shares of Cooper Common Stock.
TENDERS FOR EXCHANGE BY HOLDERS OF FEWER THAN 100 SHARES OF COOPER COMMON STOCK
Upon consummation of the Exchange Offer, all shares of Cooper Common Stock
validly tendered for exchange and not properly withdrawn by or on behalf of
persons who beneficially owned an aggregate of fewer than 100 shares of Cooper
Common Stock as of the close of business on May 25, 1995, and who validly tender
for exchange all such shares of Cooper Common Stock and do not properly withdraw
any of such shares of Cooper Common Stock on or before the Expiration Date, will
be accepted for exchange before proration, if any, of the exchange of other
shares of Cooper Common Stock tendered for exchange. See "The Exchange
Offer -- Terms of the Exchange Offer" and "-- Exchange of Shares of Cooper
Common Stock." Partial tenders will not qualify for this preference, and it is
not available to beneficial holders of 100 or more shares of Cooper Common
Stock, even if such holders have separate stock certificates for fewer than 100
shares of Cooper Common Stock. Any shareholder wishing to tender all of his
shares of Cooper Common Stock pursuant to this provision must complete the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery.
EXCHANGE OF SHARES OF COOPER COMMON STOCK
Upon the terms (including, without limitation, the proration provisions of
the Exchange Offer) and subject to the satisfaction or waiver of the conditions
of the Exchange Offer, Cooper will accept for exchange, and will transfer shares
of CCC Common Stock in exchange for, shares of Cooper Common Stock that have
been validly tendered and not properly withdrawn by the Expiration Date. In
addition, Cooper reserves the right, in its sole discretion (subject to Rule
13e-4(f)(5) under the Exchange Act), to delay the acceptance for exchange or
delay exchange of any shares of Cooper Common Stock in order to comply in whole
or in part with any applicable law. For a description of Cooper's right to
terminate the Exchange Offer and not accept for exchange or exchange any shares
of Cooper Common Stock or to delay acceptance for exchange or exchange any
shares of Cooper Common Stock, see "The Exchange Offer -- Extension of Tender
Period; Termination; Amendment" below.
For purposes of the Exchange Offer, Cooper shall be deemed, subject to the
proration provisions of the Exchange Offer, to have accepted for exchange and
exchanged shares of Cooper Common Stock validly tendered for exchange when, as
and if Cooper gives oral or written notice to the Exchange Agent of its
acceptance of the tenders of such shares of Cooper Common Stock for exchange.
Exchange of shares of Cooper Common Stock accepted for exchange pursuant to the
Exchange Offer will be made by deposit of tendered shares of Cooper Common Stock
with the Exchange Agent, which will act as agent for the tendering shareholders
for the purpose of receiving shares of CCC Common Stock from Cooper and
transmitting such shares of CCC Common Stock to tendering shareholders. In all
cases, exchange of shares of Cooper Common Stock accepted for exchange pursuant
to the Exchange Offer will be made only after timely receipt by the Exchange
Agent of (i) certificates for such shares of Cooper Common Stock (or of a
confirmation of a book-entry transfer of such shares of Cooper Common Stock into
the Exchange Agent's account at one of the Book-Entry Transfer Facilities) and
(ii) a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) or an Agent's Message (as defined herein) in
connection with a book-entry transfer
27
<PAGE> 30
of shares, together with any other documents required by the Letter of
Transmittal. For a description of the procedures for tendering shares of Cooper
Common Stock pursuant to the Exchange Offer, see "The Exchange
Offer -- Procedures for Tendering Shares of Cooper Common Stock" below. Under no
circumstances will interest be paid by Cooper pursuant to the Exchange Offer,
regardless of any delay in making such exchange.
The exchange of shares of CCC Common Stock for shares of Cooper Common
Stock may be delayed in the event of difficulty in determining the number of
shares of Cooper Common Stock validly tendered or if proration is required. See
"The Exchange Offer -- Terms of the Exchange Offer" above. In addition, if
certain events occur, Cooper may not be obligated to exchange shares of CCC
Common Stock for shares of Cooper Common Stock pursuant to the Exchange Offer.
See "The Exchange Offer -- Certain Conditions of the Exchange Offer" below. As
provided in Rules 13e-4(f)(4) and (8)(ii) under the Exchange Act, Cooper will
exchange the same number of shares of CCC Common Stock for each share of Cooper
Common Stock accepted for exchange pursuant to the Exchange Offer.
If any tendered shares of Cooper Common Stock are not exchanged pursuant to
the Exchange Offer for any reason, or if certificates are submitted for more
shares of Cooper Common Stock than are (i) tendered for exchange or (ii)
accepted for exchange due to the proration provisions, certificates for such
unexchanged or untendered shares of Cooper Common Stock will be returned (or, in
the case of shares of Cooper Common Stock tendered by book-entry transfer, such
shares of Cooper Common Stock will be credited to an account maintained at one
of the Book-Entry Transfer Facilities), without expense to the tendering
shareholder, as promptly as practicable following the expiration or termination
of the Exchange Offer.
Cooper will pay all stock transfer taxes, if any, payable on the transfer
to it of shares of Cooper Common Stock and the transfer to tendering
shareholders of shares of CCC Common Stock pursuant to the Exchange Offer. If,
however, the exchange of shares is to be made to, or (in the circumstances
permitted by the Exchange Offer) if shares of Cooper Common Stock that are not
tendered or are not accepted for exchange are to be registered in the name of or
delivered to any person other than the registered owner, or if tendered
certificates are registered in the name of any person other than the person
signing the Letter of Transmittal, the amount of all stock transfer taxes, if
any (whether imposed on the registered owner or such other person), payable on
account of the transfer to such person must be paid by the tendering shareholder
unless evidence satisfactory to Cooper of the payment of such taxes or exemption
therefrom is submitted.
PROCEDURES FOR TENDERING SHARES OF COOPER COMMON STOCK
To tender shares of Cooper Common Stock pursuant to the Exchange Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's Message in the case of a
book-entry transfer of shares, and any other documents required by the Letter of
Transmittal must be received by the Exchange Agent at one of its addresses set
forth on the back cover of this Offering Circular - Prospectus prior to 5:00
P.M., New York City time, on the Expiration Date, and either (a) certificates
for the shares of Cooper Common Stock to be tendered must be received by the
Exchange Agent at one of such addresses prior to such time or (b) such shares of
Cooper Common Stock must be delivered pursuant to the procedures for book-entry
transfer described below (and a confirmation of such delivery received by the
Exchange Agent), in each case by the Expiration Date, or (ii) the guaranteed
delivery procedure described below must be complied with. LETTERS OF TRANSMITTAL
AND CERTIFICATES FOR SHARES OF COOPER COMMON STOCK SHOULD NOT BE SENT TO COOPER
OR THE INFORMATION AGENT OR THE DEALER MANAGER.
Any shareholder wishing to tender all of his shares of Cooper Common Stock
pursuant to the procedures described above under "The Exchange Offer -- Tenders
for Exchange by Holders of Fewer Than 100 Shares of Cooper Common Stock" must
complete the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery.
It is a violation of Rule 14e-4 promulgated under the Exchange Act for a
person to tender shares of Cooper Common Stock for such person's own account
unless the person so tendering (i) owns such shares of Cooper Common Stock or
(ii) owns other securities convertible into or exchangeable for such shares of
28
<PAGE> 31
Cooper Common Stock or owns an option, warrant or right to purchase such shares
of Cooper Common Stock and intends to acquire shares of Cooper Common Stock for
tender by conversion or exchange of such securities or by exercise of such
option, warrant or right. Rule 14e-4 provides a similar restriction applicable
to the tender or guarantee of a tender on behalf of another person.
A tender of shares of Cooper Common Stock made pursuant to any method of
delivery set forth herein will constitute a binding agreement between the
tendering shareholder and Cooper upon the terms and subject to the conditions of
the Exchange Offer, including the tendering shareholder's representation that
(i) such shareholder owns the shares of Cooper Common Stock being tendered
within the meaning of Rule 14e-4 promulgated under the Exchange Act and (ii) the
tender of such shares of Cooper Common Stock complies with Rule 14e-4.
The Exchange Agent will establish accounts with respect to the shares of
Cooper Common Stock at The Depository Trust Company ("DTC"), the Midwest
Securities Trust Company ("MSTC") and the Philadelphia Depository Trust Company
("PHILADEP," and together with DTC and MSTC, the "Book-Entry Transfer
Facilities") for purposes of the Exchange Offer within two business days after
the date of this Offering Circular - Prospectus, and any financial institution
that is a participant in the system of any Book-Entry Transfer Facility may make
delivery of shares of Cooper Common Stock by causing such Book-Entry Transfer
Facility to transfer such shares of Cooper Common Stock into the Exchange
Agent's account in accordance with the procedures of such Book-Entry Transfer
Facility. Although delivery of shares of Cooper Common Stock may be effected
through book-entry transfer to the Exchange Agent's account at DTC, MSTC or
PHILADEP, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other required documents, or an Agent's Message must,
in any case, be transmitted to and received or confirmed by the Exchange Agent
at one of its addresses set forth on the back cover of this Offering Circular -
Prospectus on or prior to 5:00 P.M. on the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. "Agent's Message"
means a message transmitted through electronic means by a Book-Entry Transfer
Facility to and received by the Exchange Agent and forming a part of a
book-entry confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the shares that such participant has received and
agrees to be bound by the Letter of Transmittal. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT AS REQUIRED HEREBY.
Signatures on a Letter of Transmittal must be guaranteed by an Eligible
Institution unless the shares of Cooper Common Stock tendered pursuant to the
Letter of Transmittal are tendered (i) by the registered holder of the shares of
Cooper Common Stock tendered therewith and such holder has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution. An
"Eligible Institution" means a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program. A verification by a notary
public alone is not acceptable. If a certificate representing shares of Cooper
Common Stock is registered in the name of a person other than the signer of a
Letter of Transmittal, or if delivery of shares of CCC Common Stock is to be
made or shares of Cooper Common Stock not exchanged or tendered are to be issued
to a person other than the registered owner, the certificate must be endorsed or
accompanied by an appropriate stock power, in either case signed exactly as the
name of the registered owner appears on the certificate with the signature on
the certificate or stock power guaranteed by an Eligible Institution.
Cooper shareholders who are participants in Cooper's Dividend Reinvestment
Plan (the "DRP") and who wish to tender shares of Cooper Common Stock held in
their account under the DRP ("DRP Shares") pursuant to the Exchange Offer must
so indicate by checking the box captioned "Tender of Dividend Reinvestment Plan
Shares" in the section of the Letter of Transmittal captioned "Description of
Certificate(s)" and returning to the Exchange Agent the properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature guarantees and any other documents required by the Letter
of Transmittal. If a participant authorizes the tender of his DRP Shares, all
shares of Cooper Common Stock beneficially owned by him in the DRP, including
fractional shares of Cooper
29
<PAGE> 32
Common Stock, will be tendered. In addition, if a participant authorizes the
tender of his DRP Shares and such DRP Shares are exchanged under the terms and
subject to the conditions of the Exchange Offer, First Chicago Trust Company of
New York will, as agent under the DRP, reduce the number of shares of Cooper
Common Stock in the participant's DRP account by the number of DRP Shares that
are accepted for exchange. Any DRP Shares tendered but not exchanged will be
returned to the participant's DRP account.
Each participant or, where applicable, beneficiary under the Cooper Savings
Plans and Stock Ownership Plan (collectively the "Plans") is a "named fiduciary"
of the number of equivalent shares of Cooper Common Stock credited to the
participant's (or beneficiary's) account ("Allocated Shares") and of the shares
of Cooper Common Stock not yet allocated to participants' (or beneficiaries')
accounts ("Unallocated Shares"). A participant or beneficiary who wishes to have
the Trustee of such Plans tender some or all of his or her Allocated Shares must
indicate by completing, executing and returning to such Trustee the instruction
form included in the notice sent to each participant or beneficiary under the
Plans. The participants and beneficiaries under the Plans may not use the Letter
of Transmittal to direct the tender of Cooper Common Stock, but must use the
separate instruction forms. The Trustee will tender the same percentage of the
Unallocated Shares as the percentage of the Allocated Shares directed to be
tendered by the participants and beneficiaries of the Plans. The Trustee shall
tender such number of Allocated Shares for which instructions are received and
such number of Unallocated Shares as is calculated in accordance with the
preceding sentence, subject to the limitation that no more than 50% of the total
number of shares of Cooper Common Stock held by the Trustee for the Plans may be
tendered. To the extent possible, the Trustee will follow the instructions
received as to the Allocated Shares and tender fewer Unallocated Shares in order
not to exceed the 50% limitation.
Each participant or, where applicable, beneficiary under the Cooper Cameron
Corporation Retirement Savings Plan (the "CCC Savings Plan") is a "named
fiduciary" of the number of equivalent shares of Cooper Common Stock credited to
the participant's (or beneficiary's) account. A participant or beneficiary who
wishes to have the Trustee of the CCC Savings Plan tender some or all of his or
her allocated shares must indicate by completing, executing and returning to
such Trustee the instruction form included in the notice sent to each
participant or beneficiary. The participants and beneficiaries under the CCC
Savings Plan may not use the Letter of Transmittal to direct the tender of
Cooper Common Stock, but must use the separate instruction forms. The Trustee
shall tender such number of shares of Cooper Common Stock for which instructions
are received from participants or beneficiaries of the CCC Savings Plan.
If the Letter of Transmittal or Notice of Guaranteed Delivery or any
certificates or stock powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by Cooper, proper evidence satisfactory to Cooper of
their authority so to act must be submitted.
If any certificate representing shares of Cooper Common Stock has been
mutilated, destroyed, lost or stolen, the shareholder must (i) furnish to the
Exchange Agent evidence, satisfactory to it in its discretion, of the ownership
of and the destruction, loss or theft of such certificate, (ii) furnish to the
Exchange Agent indemnity, satisfactory to it in its discretion and (iii) comply
with such other reasonable regulations as the Exchange Agent may prescribe.
GUARANTEED DELIVERY PROCEDURE
If a shareholder desires to tender shares of Cooper Common Stock pursuant
to the Exchange Offer and cannot deliver such shares of Cooper Common Stock and
all other required documents to the Exchange Agent by the Expiration Date, such
shares of Cooper Common Stock may nevertheless be tendered if all of the
following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Cooper setting forth the
name and address of the holder and the number of shares of Cooper Common
Stock tendered, stating that the tender is being made thereby and
guaranteeing that,
30
<PAGE> 33
within five NYSE trading days after the date of the Notice of Guaranteed
Delivery, the certificate(s) representing the shares of Cooper Common Stock
accompanied by all other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent, is
received by the Exchange Agent (as provided below) by the Expiration Date;
and
(iii) the certificate(s) for such shares of Cooper Common Stock (or a
confirmation of a book-entry transfer of such shares of Cooper Common Stock
into the Exchange Agent's account at one of the Book-Entry Transfer
Facilities), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within five NYSE trading days after the
date of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, telegram,
facsimile transmission or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such Notice.
* * *
THE METHOD OF DELIVERY OF SHARES OF COOPER COMMON STOCK AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF
CERTIFICATES REPRESENTING SHARES OF COOPER COMMON STOCK ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED
AND SUFFICIENT TIME TO ENSURE TIMELY RECEIPT SHOULD BE ALLOWED.
All questions as to the form of documents (including notices of withdrawal)
and the validity, form, eligibility (including time of receipt) and acceptance
for exchange of any tender of shares of Cooper Common Stock will be determined
by Cooper in its sole discretion, which determination will be final and binding
on all tendering shareholders. Cooper reserves the absolute right to reject any
or all tenders of shares of Cooper Common Stock determined by it not to be in
proper form or the acceptance for exchange of shares of Cooper Common Stock
which may, in the opinion of Cooper's counsel, be unlawful. Cooper also reserves
the absolute right to waive any defect or irregularity in any tender of shares
of Cooper Common Stock. None of Cooper, the Dealer Manager, the Exchange Agent,
the Information Agent or any other person will be under any duty to give
notification of any defect or irregularity in tenders or notices of withdrawal
or incur any liability for failure to give any such notification.
* * *
Cooper intends to announce publicly at approximately 12:00 Noon and 3:00
P.M., New York City time, on the Expiration Date, on a preliminary basis, the
number of shares of Cooper Common Stock that have been tendered and not
withdrawn prior to such times. The Exchange Offer, proration period and
withdrawal rights will expire at 5:00 P.M., New York City time, on Friday, June
30, 1995, unless the Exchange Offer is extended.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, any tender of shares of Cooper Common
Stock made pursuant to the Exchange Offer is irrevocable. Tenders of shares of
Cooper Common Stock made pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date and may also be withdrawn after the expiration
of 40 business days from the commencement of the Exchange Offer, unless
theretofore accepted for exchange as provided in this Offering
Circular - Prospectus. If Cooper (i) extends the period of time during which the
Exchange Offer is open, (ii) is delayed in its acceptance of shares of Cooper
Common Stock for exchange or (iii) is unable to accept shares of Cooper Common
Stock for exchange pursuant to the Exchange Offer for any reason, then, without
prejudice to Cooper's rights under the Exchange Offer, the Exchange Agent may,
on behalf of Cooper, retain all shares of Cooper Common Stock tendered, and such
shares of Cooper Common Stock may not be withdrawn except as otherwise provided
herein, subject to
31
<PAGE> 34
Rule 13e-4(f)(5) under the Exchange Act, which provides that the person making
an issuer exchange offer shall either pay the consideration offered or return
tendered securities promptly after the termination or withdrawal of the offer.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth on the back cover of this Offering Circular - Prospectus and must
specify the name of the person who tendered the shares of Cooper Common Stock to
be withdrawn and the number of shares of Cooper Common Stock to be withdrawn
precisely as they appear in the Letter of Transmittal. If the shares of Cooper
Common Stock to be withdrawn have been delivered to the Exchange Agent, a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution must
be submitted prior to the release of such shares of Cooper Common Stock (except
that such signature guarantee requirement is not applicable in the case of
shares of Cooper Common Stock tendered by an Eligible Institution). In addition,
such notice must specify, in the case of shares of Cooper Common Stock tendered
by delivery of certificates, the name of the registered holder (if different
from that of the tendering shareholder) and the serial numbers shown on the
particular certificates evidencing the shares of Cooper Common Stock to be
withdrawn or, in the case of shares of Cooper Common Stock tendered by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility from which the shares were transferred. Withdrawals may not be
rescinded, and shares of Cooper Common Stock withdrawn will thereafter be deemed
not validly tendered for purposes of the Exchange Offer. However, withdrawn
shares of Cooper Common Stock may be retendered by again following one of the
procedures described above in "The Exchange Offer -- Procedures for Tendering
Shares of Cooper Common Stock" at any time prior to the Expiration Date.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT
Cooper expressly reserves the right, at any time or from time to time, in
its sole discretion and regardless of whether any of the conditions specified in
"The Exchange Offer -- Certain Conditions of the Exchange Offer" below shall
have been satisfied, (i) to extend the period of time during which the Exchange
Offer is open by giving oral or written notice of such extension to the Exchange
Agent and by making a public announcement of such extension or (ii) to amend the
Exchange Offer in any respect by making a public announcement of such amendment.
There can be no assurance that Cooper will exercise its right to extend or amend
the Exchange Offer.
If Cooper materially changes the terms of the Exchange Offer or the
information concerning the Exchange Offer, Cooper will extend the Exchange Offer
to the extent required by the Exchange Act. Certain rules promulgated under the
Exchange Act provide that the minimum period during which an offer must remain
open following material changes in the terms of the offer or information
concerning the offer (other than a change in price, change in the dealer's
soliciting fee or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. The Commission has stated that, as a general rule, it is of the
view that an offer should remain open for a minimum of five business days from
the date that notice of such material change is first published, sent or given,
and that if material changes are made with respect to information that
approaches the significance of price and share levels, a minimum of ten business
days may be required to allow adequate dissemination and investor response. If
(i) Cooper increases or decreases (x) the number of shares of CCC Common Stock
offered in exchange for shares of Cooper Common Stock pursuant to the Exchange
Offer, (y) the number of shares of Cooper Common Stock eligible for exchange or
(z) the Minimum Condition, and (ii) the Exchange Offer is scheduled to expire at
any time earlier than the expiration of a period ending on the tenth business
day from and including the date that notice of such increase or decrease is
first published, sent or given, the Exchange Offer will be extended until the
expiration of such period of ten business days. The term "business day" shall
mean any day other than Saturday, Sunday or a Federal holiday and shall consist
of the time period from 12:01 a.m. through 12:00 Midnight, New York City time.
Cooper also reserves the right, in its sole discretion, in the event any of
the conditions specified in "The Exchange Offer -- Certain Conditions of the
Exchange Offer" below shall not have been satisfied and so long as shares of
Cooper Common Stock have not theretofore been accepted for exchange, to delay
(except as
32
<PAGE> 35
otherwise required by applicable law) acceptance for exchange of or exchange for
any shares of Cooper Common Stock or to terminate the Exchange Offer and not
accept for exchange of or exchange for any shares of Cooper Common Stock.
If Cooper (i) extends the period of time during which the Exchange Offer is
open, (ii) is delayed in accepting for exchange of or exchange for any shares of
Cooper Common Stock or (iii) is unable to accept for exchange of or exchange for
any shares of Cooper Common Stock pursuant to the Exchange Offer for any reason,
then, without prejudice to Cooper's rights under the Exchange Offer, the
Exchange Agent may, on behalf of Cooper, retain all shares of Cooper Common
Stock tendered and such shares of Cooper Common Stock may not be withdrawn
except as otherwise provided in "The Exchange Offer -- Withdrawal Rights" above.
The reservation by Cooper of the right to delay acceptance for exchange of or
exchange for any shares of Cooper Common Stock is subject to applicable law,
which requires that Cooper pay the consideration offered or return the shares of
Cooper Common Stock deposited by or on behalf of shareholders promptly after the
termination or withdrawal of the Exchange Offer.
Any extension, termination or amendment of the Exchange Offer will be
followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which Cooper may choose to make any public announcement,
Cooper will have no obligation (except as otherwise required by applicable law)
to publish, advertise or otherwise communicate any such public announcement
other than by making a release to the Dow Jones News Service. In the case of an
extension of the Exchange Offer, Commission regulations require a public
announcement of such extension no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer and without
prejudice to Cooper's other rights under the Exchange Offer, Cooper shall not be
required to accept for exchange of or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
relating to Cooper's obligation to exchange or return tendered shares of Cooper
Common Stock promptly after termination or withdrawal of the Exchange Offer,
exchange for any shares of Cooper Common Stock, and may terminate the Exchange
Offer as provided in "The Exchange Offer -- Extension of Tender Period;
Termination; Amendment" above, if prior to the acceptance for exchange of any
shares of Cooper Common Stock (i) at least 8,550,000 shares of Cooper Common
Stock (approximately 7% of the outstanding shares of Cooper Common Stock as of
May 1, 1995 and a sufficient number of shares of Cooper Common Stock to result
in at least 90% of the CCC Common Stock intended to be distributed by Cooper
being exchanged pursuant to the Exchange Offer) shall not have been validly
tendered and not withdrawn, or (ii) at any time on or after May 30, 1995, any of
the following conditions exist:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, before any court
or governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, to delay or otherwise directly or indirectly to
restrain or prohibit the making of the Exchange Offer or any other element
of the Transaction or the acceptance for exchange of or exchange for some
or all of the shares of Cooper Common Stock by Cooper or seeking to obtain
material damages or otherwise directly or indirectly relating to the
Transaction, (ii) seeking any material diminution in the benefits expected
to be derived by Cooper or any of its affiliates as a result of the
Exchange Offer or any other element of the Transaction or (iii) that
otherwise, in the good faith reasonable judgment of Cooper, has or may have
material adverse significance with respect to the value of Cooper or any of
its subsidiaries or affiliates (including CCC); or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to the Exchange Offer or any other element of
the Transaction by any court, government or governmental authority or
agency, domestic or foreign, that, in the good faith reasonable judgment of
Cooper, might, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (iii) of paragraph (a) above; or
33
<PAGE> 36
(c) there shall have occurred (i) any general suspension of or
limitation on times for trading in, or limitation on prices for, securities
on any national securities exchange or in the over-the-counter market in
the United States, (ii) any declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) any
material adverse change (or development or threatened development involving
a prospective material adverse change) in United States or any other
currency exchange rates or a suspension of, or a limitation on, the markets
therefor, (iv) the commencement or material escalation of war, armed
hostilities or other international or national calamities directly or
indirectly involving the United States, (v) any limitation (whether or not
mandatory) by any governmental authority or agency on, or any other event
that, in the good faith reasonable judgment of Cooper, might adversely
affect, the extension of credit by banks or other financial institutions,
or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof; or
(d) there shall have occurred any material change (i) in the business,
financial condition, results of operations or prospects of CCC or Cooper or
(ii) in the market price of the shares of Cooper Common Stock; or
(e) a tender or exchange offer for some or all of the shares of Cooper
Common Stock shall have been publicly proposed to be made or shall have
been made by another person or it shall have been publicly disclosed or
Cooper shall have otherwise learned that (i) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) shall have acquired or
proposed to acquire beneficial ownership of more than 5% of any class or
series of capital stock of Cooper (including the shares of Cooper Common
Stock), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
of any class or series of capital stock of Cooper (including the shares of
Cooper Common Stock) other than acquisitions for bona fide arbitrage
purposes only and other than as disclosed in a Schedule 13D or 13G on file
with the Commission on May 30, 1995, (ii) any such person or group which,
prior to May 30, 1995, had filed such a Schedule with the Commission shall
have acquired or proposed to acquire beneficial ownership of additional
shares of any class or series of capital stock of Cooper (including the
shares of Cooper Common Stock), through the acquisition of stock, the
formation of a group or otherwise, constituting 1% or more of any such
class or series, (iii) any person or group shall have made a proposal with
respect to a tender or exchange offer or a merger, consolidation or other
business combination with or involving Cooper, or (iv) any person shall
have filed a Notification and Report Form under the HSR Act or made a
public announcement reflecting an intent to acquire Cooper or any assets or
securities of Cooper;
which in the good faith reasonable judgment of Cooper, in any such case, and
regardless of the circumstances (including any action or omission by Cooper)
giving rise to any such condition, makes it inadvisable to proceed with (i) such
acceptance for exchange of or exchange for any shares of Cooper Common Stock or
(ii) any other element of the Transaction.
The foregoing conditions are for the sole benefit of Cooper and may be
asserted by Cooper regardless of the circumstances (including any act or
omission by Cooper) giving rise to any such conditions or may be waived (except
as set forth in this paragraph) by Cooper in whole at any time or in part from
time to time, in each case in the good faith reasonable judgment of Cooper. If
the Minimum Condition is changed and the Exchange Offer is scheduled to expire
at any time earlier than the expiration of a period ending on the tenth business
day from and including the date that notice of such change is first published,
sent or given, the Exchange Offer will be extended until the expiration of such
period of ten business days. See "The Exchange Offer -- Extension of Tender
Period; Termination; Amendment" above. The failure by Cooper at any time to
exercise its rights under any of the foregoing conditions shall not be deemed a
waiver of any such right; the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances; and each such right shall be deemed an
ongoing right which may be asserted at any time or from time to time. Any
determination by Cooper concerning the events described above will be final and
binding upon all parties.
34
<PAGE> 37
In addition, Cooper will not accept any shares of Cooper Common Stock
tendered, and no shares of CCC Common Stock will be exchanged for any shares of
Cooper Common Stock, at any time at which there shall be a stop order issued by
the Commission which shall remain in effect with respect to the Registration
Statement.
FEES AND EXPENSES
Cooper has retained Georgeson & Company Inc. to act as the Information
Agent (the "Information Agent") and First Chicago Trust Company of New York to
act as the Exchange Agent in connection with the Exchange Offer. The Information
Agent may contact holders of shares of Cooper Common Stock by mail, telephone,
facsimile transmission and personal interviews and may request brokers, dealers
and other nominee shareholders to forward materials relating to the Exchange
Offer to beneficial owners. The Information Agent and the Exchange Agent each
will receive reasonable and customary compensation for their respective
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities in connection therewith,
including certain liabilities under the Federal securities laws. Neither the
Information Agent nor the Exchange Agent has been retained to make solicitations
or recommendations in their respective roles as Information Agent and Exchange
Agent, and the fees to be paid to them will not be based on the number of shares
of Cooper Common Stock tendered pursuant to the Exchange Offer; however, the
Exchange Agent will be compensated in part on the basis of the number of Letters
of Transmittal received and the number of stock certificates distributed
pursuant to the Exchange Offer.
For a discussion of the fees and expenses to be paid to American Appraisal
and CS First Boston, see "The Transaction -- Opinions of Advisors."
Cooper will not pay any fees or commissions to any broker or dealer or any
other person (other than the Dealer Manager, the Information Agent and the
Exchange Agent) for soliciting tenders of shares of Cooper Common Stock pursuant
to the Exchange Offer. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by Cooper for reasonable and necessary costs
and expenses incurred by them in forwarding materials to their customers.
MISCELLANEOUS
The Exchange Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Cooper Common Stock in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. Cooper is not aware of any
jurisdiction where the making of the Exchange Offer or the acceptance thereof
would not be in compliance with applicable law. If Cooper becomes aware of any
jurisdiction where the making of the Exchange Offer or acceptance thereof would
not be in compliance with any valid applicable law, Cooper will make a good
faith effort to comply with such law. If, after such good faith effort, Cooper
cannot comply with such law, the Exchange Offer will not be made to, nor will
tenders be accepted from or on behalf of, holders of shares of Cooper Common
Stock in any such jurisdiction.
THE DISTRIBUTION
If fewer than 9,500,000 shares of Cooper Common Stock (but at least
8,550,000 shares) are validly tendered pursuant to the Exchange Offer and not
properly withdrawn, and the Exchange Offer is consummated, Cooper will
distribute all remaining shares of CCC Common Stock intended by Cooper to be
distributed pro rata to remaining holders of record of shares of Cooper Common
Stock at the close of business on a record date as soon as practicable after
consummation of the Exchange Offer. Such record date and the date of the
Distribution (which will be as soon as practicable after such record date) will
be publicly announced by Cooper when they have been determined. No payment will
be made to Cooper by holders of Cooper Common Stock for shares of CCC Common
Stock received in the Distribution. If at least 9,500,000 shares of Cooper
Common Stock are exchanged pursuant to the Exchange Offer, the Distribution will
not be effected.
35
<PAGE> 38
No fractional shares of CCC Common Stock will be distributed pursuant to
the Distribution. The Exchange Agent, acting as agent for Cooper shareholders
otherwise entitled to receive fractional shares, will aggregate all fractional
shares and sell them for the accounts of such shareholders. Proceeds from sales
of fractional shares will be paid by the Exchange Agent based upon the average
gross selling price per share of all such sales. NONE OF THE EXCHANGE AGENT,
COOPER, CCC OR THE DEALER MANAGER WILL GUARANTEE ANY MINIMUM SALE PRICE FOR THE
SHARES OF CCC COMMON STOCK AND NO INTEREST WILL BE PAID ON THE PROCEEDS.
CERTAIN TRANSACTIONS; RELATIONSHIP BETWEEN COOPER AND CCC
CCC was incorporated on November 10, 1994. As of January 1, 1995, pursuant
to the Asset Transfer Agreement, CCC succeeded to the businesses that comprised
Cooper's former Petroleum & Industrial Equipment segment at September 30, 1994.
These businesses included the Cooper Oil Tool, Cooper Energy Services, Cooper
Turbocompressor and Wheeling Machine Products operations of Cooper.
The discussion below is a summary of the material provisions of the Asset
Transfer Agreement and the Registration Rights Agreement (as defined herein),
copies of which are filed as exhibits to the Registration Statement of which
this Offering Circular - Prospectus forms a part. Each of the Asset Transfer
Agreement and the Registration Rights Agreement has been structured and
documented by Cooper without independent representation of CCC, and neither has
been negotiated on an arm's-length basis.
ASSET TRANSFER AGREEMENT
Pursuant to the Asset Transfer Agreement, Cooper transferred, and agreed to
cause certain of its subsidiaries to transfer, to CCC or its subsidiaries, all
of the assets used exclusively in the businesses that comprised Cooper's former
Petroleum & Industrial Equipment segment at September 30, 1994 in exchange for
common stock of CCC and the assumption of certain liabilities, including (i) all
of the obligations and liabilities, including any environmental liabilities,
resulting from, arising out of or relating to the businesses transferred to CCC
or the transferred assets, as if CCC had operated such businesses from their
commencement and such businesses had never been owned by Cooper and (ii) certain
promissory notes in the aggregate face amount of $375 million, payable to third
party lenders and which are guaranteed by Cooper (the "Note"), subject to
adjustment as described below. Pursuant to the Asset Transfer Agreement, certain
subsidiaries of Cooper entered into agreements with subsidiaries of CCC
providing for the transfer of the assets and liabilities of the Petroleum &
Industrial Equipment segment at September 30, 1994 that are located in Canada,
Germany, Norway and the United Kingdom. In addition, the Asset Transfer
Agreement provides that prior to consummation of the Exchange Offer Cooper shall
transfer, or cause to be transferred, to CCC all of the stock of Wheeling
Machine Products Company, Cooper Turbocompressor, Inc. and various other
domestic and foreign subsidiaries that were part of Cooper's Petroleum &
Industrial Equipment segment at September 30, 1994 and held by Cooper or any of
its subsidiaries.
CCC currently participates and, until consummation of the Exchange Offer
will participate, in Cooper's centralized cash management program, pursuant to
which cash receipts are remitted to Cooper and CCC's cash disbursements are
funded by Cooper, with Cooper retaining any excess cash. The Asset Transfer
Agreement provides for certain settlement payments to be made between Cooper and
CCC following consummation of the Exchange Offer. Pursuant to the Asset Transfer
Agreement, following the consummation of the Exchange Offer, CCC shall prepare
certain financial statements as of the Expiration Date and for the period from
October 1, 1994 until such date. Following the acceptance of Cooper and CCC of
such financial statements or the resolution of any disputes regarding such
statements as provided in the Asset Transfer Agreement, the parties are required
to make payments as follows: (i) if (a) the net asset value of CCC as of the end
of the Period (the "Final Net Asset Value") has increased over the net asset
value of CCC as of the beginning of the Period (the "Beginning Net Asset
Value"), then CCC shall pay to Cooper the amount of such increase or (b) the
Final Net Asset Value is less than the Beginning Net Asset Value, then Cooper
shall pay to CCC the amount of such decrease; and (ii) if (a) the Final Net
Profit/Loss Amount (defined as the after-tax earnings (or loss) of CCC during
the Period calculated in accordance with the Asset Transfer Agreement) is
positive (representing a profit) or, if negative, is a loss that is less than
the Estimated Loss Amount (as defined in the Asset Transfer Agreement), then
Cooper shall pay to CCC an amount equal
36
<PAGE> 39
to the amount by which the Final Net Profit/Loss Amount exceeds the Estimated
Loss Amount, or (b) the Final Net Profit/Loss Amount is a loss that is greater
than the Estimated Loss Amount, then CCC shall pay to Cooper the amount of such
loss in excess of the Estimated Loss Amount.
The Asset Transfer Agreement provides that (i) all intercompany payables
and receivables between Cooper or its U.S. affiliates and CCC, including the
Cooper Energy Services division ("CES") or the Cooper Oil Tool division ("COT"),
shall be forgiven and (ii) all intercompany payables and receivables between
Cooper or its affiliates and CCC's affiliates (other than CES and COT) or
between Cooper's foreign affiliates and CCC, CES or COT shall be settled prior
to the Expiration Date. Cooper may, however, in its sole discretion, determine
that any such intercompany payable owed by CCC or one of its U.S. affiliates
shall remain outstanding (a "Remaining Payable"). The outstanding principal
balance of the Note shall be reduced by the aggregate amount of all Remaining
Payables.
During the two year period following consummation of the Exchange Offer,
the Asset Transfer Agreement prohibits CCC from (i) entering into any
transaction involving a reorganization, merger, share exchange, consolidation or
liquidation, (ii) ceasing actively to conduct its business, (iii) issuing any
CCC Common Stock or any other securities convertible into or exchangeable for
CCC Common Stock except for the issuance of CCC Common Stock pursuant to the
Asset Transfer Agreement or the Incentive Plan (as defined herein), the Director
Plan (as defined herein) and the Stock Purchase Plan (as defined herein) or to
the ESOP (as defined herein), and (iv) selling its assets, except in the
ordinary course of business (the transactions described in each of clauses (i)
through (iv) are hereinafter referred to as "Prohibited Transactions"), unless
(a) CCC delivers to Cooper an opinion of counsel, which counsel and opinion are
reasonably satisfactory to Cooper, to the effect that such Prohibited
Transaction will not cause the Exchange Offer to fail to qualify as a
reorganization within the meaning of Section 368(a)(1)(D) of the Code, (b)
Cooper waives such prohibition, (c) the assets to be disposed of were not
acquired pursuant to the Asset Transfer Agreement, (d) the assets to be disposed
of were not used in the active conduct of a trade or business as of the
Expiration Date or (e) the assets to be disposed of do not, in the aggregate,
have a value in excess of the lesser of (x) 10% of the market value of the
outstanding equity securities of CCC or (y) $30,000,000, as of the date of such
disposition. The Asset Transfer Agreement provides that CCC shall retain Ernst &
Young LLP as accountants for CCC for the years ending December 31, 1995 and
1996. The Asset Transfer Agreement further provides that CCC will indemnify
Cooper for any taxes arising from the Exchange Offer being treated as a taxable
transaction as a result of any Prohibited Transaction, regardless of whether
such transaction was permitted as described above.
Under the Asset Transfer Agreement, Cooper will pay all of the fees and
expenses (other than any value added taxes) incurred prior to the first
anniversary of the Expiration Date in connection with the transfer of assets and
liabilities to CCC. Cooper will also pay the fees and expenses incurred prior to
the first anniversary of the Expiration Date for obtaining any consent or
approval required to transfer any asset.
The Asset Transfer Agreement prohibits CCC and its affiliates from using or
adopting the names "Cooper Industries," "Cooper Industries, Inc.," or the
corporate or trade name of Cooper or any of Cooper's affiliates following
consummation of the Exchange Offer. In addition, the Asset Transfer Agreement
provides that within one year of a "Change of Control" of CCC, CCC shall, and
shall cause its affiliates to, discontinue their use of, and to change their
corporate names to a name that does not include, the word "Cooper," or if such
word is used or included, then only in either of the word combinations "Cooper
Rolls" or "Cooper Bessemer," although no such combination may be used with the
word "Industries." For purposes of this provision, "Change of Control" means (i)
the acquisition by any person, group or entity of 50% or more of the outstanding
shares of CCC Common Stock or the combined voting power of CCC's outstanding
voting securities; (ii) a reorganization, merger, share exchange or
consolidation involving CCC or any of its subsidiaries unless immediately
following the transaction more than 50% of the then outstanding shares of CCC
Common Stock and more than 50% of CCC's then outstanding voting securities are
beneficially owned by persons or entities that were beneficial owners,
respectively, of such stock and securities prior to such transaction and no
Acquiring Person (as defined in the Asset Transfer Agreement) beneficially owns
25% or more of the then outstanding shares of CCC Common Stock or CCC's then
outstanding voting securities; (iii) the persons who constitute CCC's Board of
Directors as of the Expiration Date (the "Existing
37
<PAGE> 40
Directors") cease to constitute a majority of the Board (subject to certain
exceptions for certain persons whose election or nomination was approved by a
majority of the Existing Directors); or (iv) the approval by CCC's shareholders
of the liquidation or dissolution of CCC or the sale or other disposition of all
or substantially all of the assets of CCC, other than to a corporation with
respect to which, following such transaction, more than 50% of the then
outstanding shares of CCC Common Stock and more than 50% of CCC's then
outstanding voting securities are beneficially owned by all or substantially all
of the persons or entities that were beneficial owners, respectively, of such
stock and securities prior to such transaction in substantially the same
proportion as their ownership immediately prior to such transaction.
The Asset Transfer Agreement governs certain tax matters between Cooper and
CCC. Cooper will pay all sales, use, transfer, stamp, stamp duty, stamp duty
reserve, conveyance, documentary or similar taxes, duties, excises or
governmental charges incurred in connection with the transfer of assets under
the Asset Transfer Agreement to CCC or one of its affiliates, except for value
added tax or its equivalent in any taxing jurisdiction.
Pursuant to the Asset Transfer Agreement, Cooper will be responsible for
(i) all U.S. Federal, state and local income and franchise taxes with respect to
CCC and all foreign taxes in respect of CCC and its domestic subsidiaries, in
each case, for all periods prior to the Expiration Date, (ii) taxes attributable
to any individual item of adjustment to the transferred assets for periods after
the Expiration Date that is due to timing differences in income or expense
recognition to the extent that the tax liability for such individual item of
adjustment (exclusive of interest and penalties) exceeds $5,000,000 and (iii)
taxes arising from the Exchange Offer and the Distribution subsequently being
treated as a taxable transaction, except where such taxability is the result of
any act or omission of CCC or any of its affiliates. The Asset Transfer
Agreement provides that Cooper has no indemnification obligation for taxes to
the extent that (a) CCC or any of its affiliates has a net operating loss or
credit carryover as of the close of business on the Expiration Date which loss
carryover can be, or, if not for events occurring on or after such date, could
have been, used to reduce or eliminate any such tax liability or (b) the taxes
are for any affiliate of CCC for any claim made after such affiliate ceases to
be an affiliate of CCC.
The Asset Transfer Agreement provides that CCC will be responsible for (i)
any tax liabilities relating to CCC not expressly assumed by Cooper under the
Asset Transfer Agreement, (ii) taxes arising from the Exchange Offer and the
Distribution being treated as a taxable transaction as a result of any act or
omission of CCC or any of its affiliates and (iii) $5,000,000 of taxes
attributable to any individual item of adjustment to the transferred assets for
periods prior to the Expiration Date if (a) such adjustment is due to timing
differences in income recognition and (b) the tax liability for such individual
item of adjustment (exclusive of interest and penalties) exceeds $5,000,000. The
Asset Transfer Agreement also requires that CCC and its affiliates waive the
carryback of certain tax benefits (including net operating losses) arising after
the Expiration Date to any tax period of the affiliated group of corporations of
which Cooper is the common parent that file consolidated United States Federal
income tax returns (the "Cooper Group") in which the Cooper Group filed a
consolidated, combined or unitary tax return with CCC or such affiliate of CCC.
The Asset Transfer Agreement provides that until December 31, 1996, or such
earlier date as Cooper shall elect, CCC shall continue to provide to Cooper
certain pension administration services relating to pension disbursements. These
services were previously provided to Cooper by CES.
The Asset Transfer Agreement also provides that for a reasonable period of
time following the Expiration Date, Cooper will cooperate, at CCC's expense,
with CCC in providing to CCC the benefit of Cooper's existing rights to conduct
business in Moscow.
FINANCING ARRANGEMENTS
Pursuant to the Asset Transfer Agreement, CCC has assumed liability for
repayment of the Note. CCC has received commitments (the "Commitment Letter")
from a group of banks (the "Banks") for a credit facility (the "Credit
Facility") of up to $475 million. The First National Bank of Chicago will act as
agent (the "Agent") under the Credit Facility.
38
<PAGE> 41
The Commitment Letter provides that the Credit Facility will be unsecured
and will consist of two tranches: A $275 million five year revolving credit
facility with $100 million allocated for multicurrency borrowings (the
"Revolving Credit Facility") and a $200 million five-year term loan (the "Term
Loan"). The Revolving Credit Facility may be used for general corporate and
working capital purposes and to repay the Note. The Term Loan may also be used
for general corporate purposes and to repay the Note.
Pursuant to the Commitment Letter, the Revolving Credit Facility will
mature and be repayable in a single installment five years after the date of the
Credit Agreement. The Term Loan will have a maturity five years after the date
of the Credit Agreement and will be repaid in 16 quarterly installments,
commencing at the end of the first to occur of March, June, September or
December following the first anniversary of the Credit Agreement and to be paid
as follows: four quarterly installments of $10 million; eight quarterly
installments of $12.5 million; and four quarterly installments of $15 million.
The Commitment Letter contemplates that in addition to the scheduled
installments due on the Term Loan, until CCC's Total Debt to Capital Ratio (as
described below) is less than .40, mandatory prepayments will be required equal
to 50% of the proceeds from the issuance of any equity securities or debt
outside of the Credit Facility having an initial maturity of more than 364 days
and 50% of "Excess Cash Flow," defined as earnings before interest, taxes,
depreciation and amortization minus the sum of scheduled and optional repayments
under the Credit Facility or other permitted debt, scheduled payments under
capitalized lease obligations, taxes, capital expenditures and cash interest
expense. In addition, cash proceeds from certain sales of assets in excess of
$10 million annually are to be used to prepay the Term Loan. Any mandatory
prepayments are due within 100 days following the end of each calendar year.
The amounts outstanding under the Revolving Credit Facility and the Term
Loan will bear interest equal to, at CCC's option: (i) the "alternate base
rate," which is the higher of (a) the Agent's corporate base rate and (b) the
federal funds rate determined by the Agent pursuant to a formula set forth in
the Commitment Letter plus .50% per annum; or (ii) the rate offered by the Agent
in the London interbank market plus an applicable margin (the "Interest
Margin"). The Interest Margin will depend on CCC's Total Debt to Capital Ratio
and will range from 0.375% if such ratio is less than .35 to 0.75% if such ratio
is greater than or equal to .50. For the first six months after the Credit
Agreement becomes effective the Interest Margin will be no less than 0.675%. In
addition, once CCC's Total Debt to Capital Ratio is less than .40, CCC may
request that the Agent solicit competitive bids from the Banks at a margin over
or under LIBOR or at any absolute rate, for interest periods of 30 days or more.
Any advance under such a bid will be deemed part of the Revolving Credit
Facility. The interest rate on amounts due after maturity will be the "alternate
base rate" plus 2% per annum.
A commitment fee on the unused portion of the Revolving Credit Facility,
which ranges from 0.15% to 0.25% depending on CCC's Total Debt to Capital Ratio,
will be payable quarterly in arrears.
The definitive credit agreement contemplated by the Commitment Letter (the
"Credit Agreement") will contain customary provisions relating to yield
protection, availability, increased costs (including capital cost increases
imposed by regulatory authorities) and tax indemnification.
The Credit Agreement will also contain certain financial covenants,
including, without limitation, covenants pertaining to (i) CCC's Total Debt to
Capital Ratio, where "Total Debt" means the consolidated indebtedness and
capitalized leases of CCC and its subsidiaries and "Capital" means Total Debt
plus CCC's shareholders' equity (the "Leverage Covenant"); (ii) the ratio of
CCC's consolidated net income or loss plus interest expense, depreciation,
amortization and taxes, less the amount of potential charges of up to $40
million, if any, in connection with the rationalization of CCC's operations
during the first year following the Expiration Date ("EBITDA") less CCC's total
capital expenditures to CCC's interest expense (the "Cash Flow Covenant"); and
(iii) CCC's consolidated net worth (the "Net Worth Covenant"). The Leverage
Covenant requires that at all times the Total Debt to Capital Ratio not exceed
(a) 55% from the date of the Credit Agreement to and including June 30, 1996;
(b) 50% from July 1, 1996 to and including June 30, 1997; (c) 45% from July 1,
1997 to and including June 30, 1998; and (d) 40% at all times after June 30,
1998. The Cash Flow Covenant requires that the ratio of EBITDA less CCC's total
capital expenditures to CCC interest expense be not less than (a) 1.8 computed
for the quarter ended September 30, 1995, the six month period ended December
31, 1996, the nine month period ended March 31, 1996 and the
39
<PAGE> 42
twelve month period ended June 30, 1996; (b) 2.2 as of the end of each fiscal
quarter, computed on a four quarter trailing basis, for each fiscal quarter
ending after June 30, 1996 to and including June 30, 1997; and (c) 2.5 as of the
end of each fiscal quarter, computed on a four quarter trailing basis, for each
fiscal quarter ending June 30, 1997. The Net Worth Covenant requires minimum
consolidated net worth at least equal to the sum of 85% of CCC's consolidated
net worth as of April 30, 1995 plus 50% of CCC's positive net income for each
fiscal quarter after June 30, 1995 plus 50% of net proceeds from sales of equity
securities of CCC. For CCC to meet the Cash Flow Covenant, CCC's financial
performance must improve over current levels. Should such improvement not occur,
CCC would be in default under the Credit Facility and, unless a waiver could be
obtained, all outstanding indebtedness would become due and payable. Such an
event would have a material adverse effect on CCC and on the market value of the
CCC Common Stock. Although CCC believes that such improvement will occur, there
can be no assurance that any improvement over 1994 levels will occur.
The Credit Agreement also will contain customary restrictions on liens;
investments; consolidations; mergers and sales of assets; conduct of business
other than in the ordinary course; maintenance of existence; prepayment of other
debt; payment of dividends and retirement of stock; and subsidiary indebtedness.
In addition, the Credit Agreement will contain other covenants customary for
such a credit facility.
The Credit Agreement will contain customary events of default including,
without limitation: (i) failure to pay principal when due; (ii) failure to pay
interest or fees within three business days after being due; (iii) material
breach of representations or warranties; (iv) commencement of any voluntary or
involuntary bankruptcy or similar proceeding; (v) failure to meet covenants;
(vi) a change in control; and (vii) cross-default to other indebtedness for
borrowed money of CCC or its subsidiaries, in an aggregate principal amount
greater than $10 million, after the applicable grace period. CCC anticipates
that these financing arrangements will be finalized prior to the Expiration
Date. See "Special Considerations -- Liquidity and Working Capital
Requirements."
REGISTRATION RIGHTS
Upon completion of the Transaction, Cooper will hold an aggregate of
3,625,000 shares of CCC Common Stock (14.5% of the shares of CCC Common Stock
that will be outstanding at such time). Such shares owned by Cooper will be
restricted securities within the meaning of Rule 144 under the Securities Act
and will not be eligible for sale in the public market until January 1, 1997,
except pursuant to an effective registration statement or an applicable
exemption from the registration requirements of the Securities Act.
Pursuant to a Registration Rights Agreement between Cooper and CCC (the
"Registration Rights Agreement"), Cooper will be entitled to certain rights with
respect to the registration under the Securities Act of any shares of CCC Common
Stock owned by it after the consummation of the Transaction (the "Registrable
Shares"). The Registration Rights Agreement provides that in the event CCC
proposes to register any of its securities under the Securities Act for its own
account or otherwise at any time or times prior to the fifth anniversary of the
Expiration Date, Cooper will be entitled to include Registrable Shares in such
registration, subject to certain conditions and limitations. These conditions
and limitations include (i) the right of the managing underwriters of any such
offering to exclude for marketing reasons some or all of the Registrable Shares
from such registration and (ii) the right of CCC to abandon any such proposed
offering, in its sole discretion, at any time prior to the effectiveness of the
registration statement relating to such offering. Furthermore, Cooper will not
be entitled to include Registrable Shares in any offering by CCC of securities
of CCC in connection with certain business combination transactions, dividend
reinvestment plans or stock option or other director or employee benefit plans.
In addition, until the fifth anniversary of the Expiration Date, Cooper will
have the right, subject to certain conditions and limitations, to require CCC to
register such Registrable Shares on up to two occasions, not to exceed one per
year. Pursuant to the Registration Rights Agreement, CCC has the right to defer
the filing of any such registration statement required by Cooper for up to 60
days under certain circumstances, including where CCC is (i) conducting or is
about to conduct an underwritten public offering of its securities, if the CCC
Board of Directors determines in good faith that CCC's offering would be
materially adversely affected by the registration of the Registrable Shares,
(ii) pursuing an acquisition, merger, reorganization, disposition or other
similar transaction, if the CCC Board
40
<PAGE> 43
determines in good faith that such registration would materially adversely
affect such transaction or (iii) in possession of material nonpublic information
concerning CCC, if the CCC Board determines in good faith that disclosure of
such information in a registration statement would have a material adverse
effect on CCC. In connection with any such demand registration, CCC and any
person who acquires restricted CCC Common Stock from CCC will be obligated not
to sell any shares of CCC Common Stock for a period commencing 14 days prior to
the filing of such demand registration statement and ending 90 days after such
registration statement is declared effective. CCC will be obligated to pay all
expenses associated with the exercise of such registration rights other than
underwriting discounts or commissions and the fees and expenses of separate
counsel, if any, of Cooper incurred in connection with such registration. In
addition, Cooper has agreed not to sell any shares of CCC Common Stock for a
period commencing 14 days prior to the filing of such registration statement and
ending 90 days after such registration statement is declared effective in
connection with certain registrations of shares of CCC Common Stock. The rights
of Cooper under the Registration Rights Agreement are transferable to affiliates
of Cooper and to any nonaffiliate that acquires all the remaining Registrable
Shares.
Pursuant to the Registration Rights Agreement, Cooper has agreed not to
sell or otherwise dispose of any Registrable Shares for a period of 120 days
after the date of this Offering Circular - Prospectus.
INTERCOMPANY TRANSACTIONS
During the years ended December 31, 1992, 1993, and 1994, CCC had sales to
other Cooper divisions or subsidiaries of $440,000, $344,000 and $469,000,
respectively. Subsequent to the Exchange Offer, Cooper may purchase products
from CCC on an arm's-length basis, but CCC will have no obligation to supply
such products and Cooper will have no obligation to purchase such products.
CCC has received certain services from Cooper including employee benefits
administration, cash management, legal and accounting services, public
relations, tax reporting, risk management and audit services for which an
expense has been allocated in CCC's financial statements. See Notes 1 and 15 of
the Notes to Consolidated Financial Statements of CCC. Cooper will cease
providing such services on or prior to the Expiration Date. CCC will establish
its own internal capabilities or engage external sources to provide such
services to the extent its management deems advisable.
OTHER MATTERS
Mr. Robert Cizik, Chairman of the Board of CCC, is Chairman of the Board
and Chief Executive Officer of Cooper. Mr. Michael J. Sebastian, a director of
CCC, is Executive Vice President, Operations of Cooper. See
"Management -- Directors, Nominees and Executive Officers."
In connection with obtaining the Private Letter Ruling, Cooper has
committed, among other things, that, with respect to the shares of CCC Common
Stock retained by it following consummation of the Transaction, it will (i) vote
all such shares of CCC Common Stock in proportion to the votes cast by the other
shareholders of CCC on all matters submitted to such shareholders for approval
and (ii) dispose of such shares as soon as practicable, but in no event later
than five years after the Expiration Date.
In connection with the assignment to CCC and one of its subsidiaries of the
agreements relating to Cooper's joint venture arrangement ("Cooper Rolls") with
Rolls-Royce plc and Rolls-Royce Industries Canada Inc. (collectively,
"Rolls-Royce"), Cooper has guaranteed to Rolls-Royce that CCC and its subsidiary
will fully perform all obligations arising (i) at any time during the period of
Cooper's participation in Cooper Rolls and (ii) at any time during the period of
CCC's and its subsidiary's participation in Cooper Rolls from January 1, 1995 up
to and including December 31, 1998. The guarantees described in clauses (i) and
(ii) will expire on January 1, 2002 and December 31, 1998, respectively.
41
<PAGE> 44
MARKET PRICES, TRADING AND DIVIDEND INFORMATION
COOPER COMMON STOCK
The Cooper Common Stock is listed on the New York Stock Exchange, Inc.
("NYSE") and the Pacific Stock Exchange and traded under the ticker symbols
"CBE." The following table sets forth for the periods indicated the high and low
sales prices per share of the Cooper Common Stock as reported on the NYSE
Composite Tape, and the quarterly dividends per share paid on the Cooper Common
Stock.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------
HIGH LOW DIVIDEND(1)
------- ------- -----------
<S> <C> <C> <C>
1993
1st Quarter............................... $54.750 $46.625 $ .33
2nd Quarter............................... $51.875 $45.625 $ .33
3rd Quarter............................... $52.875 $47.250 $ .33
4th Quarter............................... $54.125 $47.125 $ .33
1994
1st Quarter............................... $52.250 $35.875 $ .33
2nd Quarter............................... $38.750 $34.875 $ .33
3rd Quarter............................... $42.125 $35.500 $ .33
4th Quarter............................... $40.375 $31.625 $ .33
1995
1st Quarter............................... $39.875 $34.000 $ .33
2nd Quarter (through May 25, 1995)........ $40.375 $37.250 $ .33(2)
</TABLE>
- ---------------
(1) Cooper paid quarterly cash dividends on the Cooper Common Stock of $.27 per
share in 1990, $.29 per share in 1991 and $.31 per share in 1992.
(2) On April 25, 1995, the Board of Directors of Cooper declared a regular
quarterly dividend of $.33 per share of Cooper Common Stock payable on July
3, 1995 to shareholders of record on June 13, 1995.
------------------------
The number of holders of record of Cooper Common Stock as of May 1, 1995
was 35,013.
On September 16, 1994, the last full day of trading prior to the
announcement of the Transaction, the last reported sales price per share of
Cooper Common Stock as reported on the NYSE Composite Tape was $39.25. On May
25, 1995, the last full day of trading prior to the disclosure of the terms of
the Exchange Offer, the last reported sales price per share of Cooper Common
Stock as reported on the NYSE Composite Tape was $38.125. SHAREHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES OF COOPER COMMON STOCK. NO
ASSURANCE CAN BE GIVEN CONCERNING THE MARKET PRICE OF COOPER COMMON STOCK BEFORE
OR AFTER THE DATE ON WHICH THE EXCHANGE OFFER IS CONSUMMATED. The market price
of Cooper Common Stock will fluctuate between the date of this Offering
Circular - Prospectus and the date on which the Exchange Offer is consummated
and thereafter. Because the exchange ratio for the Exchange Offer is fixed and
because the market price of the Cooper Common Stock is subject to fluctuation,
the market value of shares of Cooper Common Stock tendered for exchange may
increase or decrease prior to consummation of the Exchange Offer.
The payment of future dividends on Cooper Common Stock will be subject to
the discretion of the Board of Directors of Cooper and will depend upon, among
other things, Cooper's financial condition, capital requirements, funds from
operations, future business prospects and such other factors as the Board may
deem relevant.
42
<PAGE> 45
CCC COMMON STOCK
The CCC Common Stock has been approved for quotation on the NASDAQ/NMS
under the symbol "CRON."
No current public trading market for the CCC Common Stock exists. The
extent of the market for the CCC Common Stock and the prices at which the CCC
Common Stock may trade prior to or after the Exchange Offer cannot be predicted.
NOTHING HEREIN SHOULD BE CONSTRUED TO SUGGEST THAT THE TRADING PRICE OF COOPER
COMMON STOCK AT ANY POINT IN TIME MAY BE USED AS A SUBSTITUTE FOR THE TRADING
PRICE OF CCC COMMON STOCK. No assurance can be given that CCC Common Stock will
trade at a price per share reflecting the earnings per share or other multiple
or other attributes of CCC. See "Special Considerations -- Market Uncertainties
with Respect to CCC Common Stock" and "-- Shares Available for Future Sale."
Shares of CCC Common Stock distributed to Cooper shareholders will be
freely transferable, except for shares received by persons who may be deemed to
be "affiliates" of CCC under the Securities Act. Persons who may be deemed to be
affiliates of CCC after the expiration of the Exchange Offer generally include
individuals or entities that control, are controlled by or are under common
control with CCC, and will include the directors and principal executive
officers of CCC as well as any principal shareholder of CCC. Persons who are
affiliates of CCC will be permitted to sell their shares of CCC Common Stock
only pursuant to an effective registration statement under the Securities Act or
an exemption from the registration requirements of the Securities Act, such as
the exemptions afforded by Section 4(2) of the Securities Act and Rule 144
thereunder.
It is believed that directors and executive officers of CCC will own less
than 1% of the outstanding shares of CCC Common Stock following the consummation
of the Exchange Offer and the Distribution, if any.
CCC presently intends to retain earnings for use in its business. CCC does
not anticipate paying cash dividends in the foreseeable future. Any future
determination relating to dividend policy will be at the discretion of the Board
of Directors of CCC. Such determinations will depend on a number of factors,
including CCC's financial condition, capital requirements, funds from
operations, future business prospects and such other factors as the Board of CCC
may deem relevant. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition of CCC."
The Commitment Letter with respect to the Credit Facility provides that the
Credit Agreement will contain certain financial covenants, including a Leverage
Covenant, a Cash Flow Covenant and a Net Worth Covenant in addition to customary
restrictions on, among other things, the payment of dividends. For a description
of the Commitment Letter with respect to the Credit Facility, see "Certain
Transactions; Relationship Between Cooper and CCC -- Financing Arrangements."
43
<PAGE> 46
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF COOPER
The following table sets forth selected historical financial data for
Cooper for each of the five years in the period ended December 31, 1994 and for
the quarters ended March 31, 1994 and 1995. The selected historical financial
information for Cooper for the years ended December 31, 1990, 1991, 1992, 1993
and 1994 shown below has been derived from the audited consolidated financial
statements of Cooper. The selected historical financial data for the quarters
ended March 31, 1994 and 1995 have been derived from Cooper's unaudited
consolidated financial statements and include, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the data for such periods. This information should be read in
conjunction with the consolidated financial statements and notes thereto and
other historical financial information of Cooper incorporated by reference in
this Offering Circular - Prospectus. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
QUARTER ENDED MARCH
YEARS ENDED DECEMBER 31, 31,
---------------------------------------------------- -------------------
1990(1) 1991(1) 1992(1) 1993(1) 1994 1994(1) 1995
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues............................................ $4,570.8 $4,307.6 $4,468.4 $4,776.4 $4,588.0 $1,037.8 $1,123.2
-------- -------- -------- -------- -------- -------- --------
Cost of sales..................................... 3,031.5 2,862.2 2,969.4 3,163.0 3,026.4 692.3 748.3
Depreciation and amortization..................... 165.3 186.6 211.8 215.9 199.0 48.0 51.5
Selling and administrative expenses............... 745.5 726.7 759.1 810.6 784.6 189.7 190.9
Interest expense.................................. 170.9 125.4 92.5 80.9 73.3 16.2 38.3
Nonoperating gain on 1993 IPO of
Belden Inc. and other........................... -- -- (6.6) (273.8) -- -- --
Nonrecurring expense.............................. -- -- 50.1 273.8 -- -- --
-------- -------- -------- -------- -------- -------- --------
Total Costs and Expenses...................... 4,113.2 3,900.9 4,076.3 4,270.4 4,083.3 946.2 1,029.0
-------- -------- -------- -------- -------- -------- --------
Income from continuing operations before income
taxes and cumulative effect of changes in
accounting principles........................... 457.6 406.7 392.1 506.0 504.7 91.6 94.2
Income taxes...................................... (192.3) (175.5) (152.5) (207.0) (211.9) (39.4) (38.9)
Income from discontinued operations, net of
taxes........................................... 96.1 162.0 121.7 68.1 .3 (3.8) --
Charge for discontinued operations(2)............. -- -- -- -- (313.0) -- --
Cumulative effect on prior years of changes in
accounting principles(3)........................ -- -- (590.0) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Income (Loss)............................. $ 361.4 $ 393.2 $ (228.7) $ 367.1 $ (19.9) $ 48.4 $ 55.3
======= ======= ======= ======= ======= ======= =======
PER SHARE DATA
Primary --
Income from continuing operations before
cumulative effect of changes in accounting
principles...................................... $ 1.94 $ 1.60 $ 1.64 $ 2.15 $ 2.10 $ .34 $ .48
Income (loss) from discontinued operations........ .87 1.44 1.07 .60 (2.74) (.03) --
Cumulative effect on prior years of changes in
accounting principles(3)........................ -- -- (5.19) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Income (Loss)............................. $ 2.81 $ 3.04 $ (2.48) $ 2.75 $ (.64) $ .31 $ .48
======= ======= ======= ======= ======= ======= =======
Fully diluted --
Income from continuing operations before
cumulative effect of changes in accounting
principles...................................... $ 1.94 $ 1.60 $ 1.64 $ 2.15 $ 2.10 $ .34 $ .47
Income (loss) from discontinued operations........ .87 1.41 1.07 .60 (2.74) (.03) --
Cumulative effect on prior years of changes in
accounting principles(3)........................ -- -- (5.19) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Income (Loss)............................. $ 2.81 $ 3.01 $ (2.48) $ 2.75 $ (.64) $ .31 $ .47
======= ======= ======= ======= ======= ======= =======
Average Common Shares Outstanding
Primary........................................... 110.8 112.5 113.8 114.2 114.2 114.4 116.2
Fully diluted..................................... 110.9 131.1 113.8 114.2 114.2 114.4 132.9(4)
BALANCE SHEET DATA
Total Assets........................................ $6,019.1 $5,951.1 $6,551.4 $6,361.7 $6,400.7 $6,186.3 $6,351.6
Long-term debt...................................... 1,238.5 1,033.3 1,369.8 883.4 1,361.9 1,185.5 2,072.1
Total Shareholders' Equity.......................... 3,042.0 3,319.0 2,862.6 3,009.6 2,741.1 2,897.6 2,081.5
</TABLE>
- ---------------
(1) Restated to exclude discontinued operations.
(2) See "The Transaction -- Anticipated Accounting Treatment."
(3) In the first quarter of 1992, Cooper adopted the following accounting
standards: SFAS No. 106 (Employers' Accounting for Postretirement Benefits
Other Than Pensions); SFAS No. 109 (Accounting for Income Taxes); and SFAS
No. 112 (Employers' Accounting for Postemployment Benefits). See Note 4 of
the Notes to Consolidated Financial Statements of Cooper incorporated herein
by reference for further information regarding Cooper's adoption of these
accounting standards.
(4) Assumes conversion of the 7.05% Convertible Subordinated Debentures to
Cooper Common Stock, effective January 1, 1995. As a result, interest on the
debentures ($7.3 million, net of tax) was added back to net income in the
computation of fully diluted earnings per share.
44
<PAGE> 47
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF COOPER
Cooper's pro forma consolidated earnings per share for the year ended
December 31, 1994 and the quarter ended March 31, 1995 and its pro forma
consolidated summary balance sheet as of March 31, 1995, presented below,
reflect the effects of adjustments to the historical consolidated financial
statements of Cooper necessary to give pro forma effect to the Transaction as if
it had occurred at the beginning of each of the periods presented for purposes
of the pro forma consolidated earnings per share and as of March 31, 1995, for
purposes of the pro forma consolidated summary balance sheet. The pro forma
consolidated financial statements of Cooper and accompanying notes should be
read in conjunction with the historical consolidated financial statements of
Cooper and notes thereto and the unaudited financial information of Cooper for
the three-month period ended March 31, 1995 incorporated by reference in this
Offering Circular - Prospectus.
Management believes that the assumptions used provide a reasonable basis on
which to present the pro forma financial data. The pro forma consolidated
financial statements are provided for informational purposes only and should not
be construed to be indicative of Cooper's results of operations or financial
position had the Transaction and events described above been consummated on or
as of the dates assumed and are not intended to project Cooper's results of
operations or its financial position for any future period or as of any future
date. In addition, the estimated market value of CCC used in the preparation of
the pro forma financial data is subject to uncertainties, contingencies and
various judgments, all of which are difficult to predict and beyond the control
of Cooper and CCC. Accordingly, shareholders should not rely on the market value
assumption used in the preparation of the pro forma financial data for purposes
of estimating the trading value of the CCC Common Stock following the
Transaction. The actual market value of the shares of CCC Common Stock following
the Transaction could be higher or lower than such assumption, depending on
variations in CCC's quarterly operating results or cash flows and changes in
interest rates, government regulations, market conditions, general economic
conditions and other factors which generally influence the price of securities.
See "Special Considerations -- Market Uncertainties with Respect to CCC Common
Stock."
The following assumptions have been utilized to determine the adjustments
included in the pro forma consolidated financial statements of Cooper which
follow:
(a) The exchange ratio is one share of Cooper Common Stock for 2.25
shares of CCC Common Stock.
(b) 21,375,000 shares of CCC Common Stock are exchanged for 9,500,000
shares of Cooper Common Stock with Cooper retaining as an investment
3,625,000 shares of CCC Common Stock or 14.5% of the total outstanding
shares of CCC Common Stock.
45
<PAGE> 48
PRO FORMA CONSOLIDATED EARNINGS PER SHARE OF COOPER
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(SHARES IN MILLIONS)
<S> <C> <C> <C>
Income Per Common Share
Fully diluted --
Income from continuing operations..................... $ 2.10 $ .19(a) $ 2.29
---------- ----------- ---------
Shares utilized in earnings per share calculation.......... 114.218 (9.500)(a) 104.718
======= ========= ========
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1995
----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(SHARES IN MILLIONS)
<S> <C> <C> <C>
Income Per Common Share
Fully diluted --
Income from continuing operations..................... $ .47 $ .04(a) $ .51
---------- ----------- ---------
Shares utilized in earnings per share calculation.......... 132.934(b) (9.500)(a) 123.434
======= ========= ========
</TABLE>
- ---------------
(a) Adjusted to reduce outstanding shares in the calculation by the shares of
Cooper Common Stock assumed to be exchanged.
(b) Assumes conversion of the 7.05% Convertible Subordinated Debentures into
Cooper Common Stock, effective January 1, 1995. As a result, interest on the
debentures ($7.3 million, net of tax) was added back to net income in the
computation of fully diluted earnings per share.
46
<PAGE> 49
PRO FORMA CONSOLIDATED SUMMARY BALANCE SHEET OF COOPER
<TABLE>
<CAPTION>
MARCH 31, 1995
----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Total Current Assets.................................. $2,109.6 $ -- $2,109.6
Net assets of discontinued operations................. 646.4 (221.4)(a) --
(61.6)(b)
(363.4)(c)
Plant and equipment, at cost less accumulated
depreciation........................................ 1,187.8 -- 1,187.8
Intangibles, less accumulated amortization............ 2,128.9 -- 2,128.9
Investment in CCC Common Stock........................ -- 61.6(b) 61.6
Other................................................. 278.9 -- 278.9
---------- ----------- ---------
Total Assets................................ $6,351.6 $(584.8) $5,766.8
========= =========== =========
Total Liabilities..................................... $4,270.1 $ -- $4,270.1
---------- ----------- ---------
Common stock and other equity......................... 910.0 -- 910.0
Retained earnings..................................... 1,171.5 (221.4)(a) 950.1
Common stock held in treasury, at cost................ -- (363.4)(c) (363.4 )
---------- ----------- ---------
Total Shareholders' Equity.................. 2,081.5 (584.8) 1,496.7
---------- ----------- ---------
Total Liabilities and Shareholders'
Equity.................................... $6,351.6 $(584.8) $5,766.8
========= =========== =========
Book Value per Share of Cooper Common Stock........... $ 17.79 $ 13.92 (d)
========= =========
</TABLE>
- ---------------
(a) Record adjustment to $313 million estimated loss on discontinued operations
recorded at September 30, 1994 composed of the following:
<TABLE>
<CAPTION>
PRO FORMA 9/30/94
ESTIMATE ESTIMATE DIFFERENCE
--------- -------- ----------
<S> <C> <C> <C>
Estimated difference between historical cost of
Cooper's investment in CCC and market value of
CCC's equity during first few days following the
Expiration Date.................................... $ 509.4 $288.0 $221.4
CCC operating loss during period of October 1, 1994
through the Expiration Date........................ 9.8 9.8 --
Transaction costs.................................... 15.2 15.2 --
--------- -------- ----------
Total...................................... $ 534.4 $313.0 $221.4
======== ====== =======
</TABLE>
The loss will be reflected in the quarter that the Exchange Offer is
completed as an adjustment to the loss on discontinued operations. Each $1
increase or decrease in the value of CCC Common Stock from the $17.00
assumed market price per share during the first few days following the
Expiration Date will have a $25 million effect on the estimated loss.
(b) Adjusted to record an investment in 3.625 million shares of CCC Common
Stock, based on an assumed market price of CCC Common Stock during the first
few days following the Expiration Date.
(c) Adjusted to reflect recognition of the treasury stock resulting from
completion of the Exchange Offer.
(d) Pro forma book value per share is computed by dividing pro forma
shareholders' equity by 117.033 million shares outstanding at March 31, 1995
less 9.500 million shares assumed to be exchanged.
47
<PAGE> 50
BUSINESS OF COOPER
Cooper is a diversified, worldwide manufacturing company doing business in
three primary business segments: Electrical Products, Automotive Products and
Tools & Hardware.
The Electrical Products segment manufactures and markets electrical and
circuit protection products for use in residential, commercial and industrial
construction, maintenance and repair applications. In addition, the segment
produces and markets products for use by utilities and industries for primary
electrical power transmission and distribution. Some of the major products
include Buss(R) and Edison(R) fuses; Crouse-Hinds(R) electrical construction
materials; Crouse-Hinds(R), Fail-SafeTM, Halo(R) and Metalux(R) lighting
fixtures; Kyle(R) distribution switchgear and McGraw-EdisonTM and RTE(R) power
and distribution transformers and related products.
The Automotive Products segment manufactures and distributes spark plugs,
brake components, wiper blades, lighting products, heating and air conditioning
parts, steering and suspension components and other products for use by the
automotive aftermarket and in automobile assemblies. Products include Abex(R),
LeeTM, Gibson(R) and Wagner(R) brake components; Anco(R) windshield wiper
products; automotive wire and cable; Champion(R) spark plugs and igniters;
Everco(R) and Murray(R) heating and air conditioning parts; Moog(R) steering and
suspension products; Precision(R) universal joint products; and Wagner(R) and
Zanxx(R) lighting products.
The Tools & Hardware segment produces and markets tools and hardware items
for use in residential, commercial and industrial construction, maintenance and
repair applications, and for other general industrial and consumer uses. Some of
the well-known products include Campbell(R) chain; Crescent(R) wrenches;
Diamond(R) horseshoes and farrier tools; Lufkin(R) measuring tapes; Nicholson(R)
files and saws; Plumb(R) hammers; Weller(R) soldering equipment; Wiss(R)
scissors; Xcelite(R) screwdrivers; Buckeye(R), DGDTM and Dotco(R) power tools;
and Kirsch(R) drapery hardware and custom window coverings.
Cooper has over 125 manufacturing facilities and approximately 40,800
employees in the United States and more than 23 foreign countries.
For additional information with respect to Cooper, see the documents
specified under "Incorporation of Certain Documents by Reference."
48
<PAGE> 51
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF CCC
The following tables set forth selected historical financial data for CCC
for each of the five years in the period ended December 31, 1994 and for the
quarters ended March 31, 1994 and 1995. The selected historical financial
information for CCC for the years ended December 31, 1992, 1993 and 1994 shown
below has been derived from the audited consolidated financial statements of
CCC. The selected historical financial data for the years ended December 31,
1990 and 1991 and for the quarters ended March 31, 1994 and 1995 have been
derived from CCC's unaudited consolidated financial statements and include, in
the opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the data for such periods. The
financial information included herein may not necessarily be indicative of the
financial position or results of operations of CCC in the future or of the
financial position or results of operations of CCC that would have been obtained
if CCC had been a separate, stand-alone company during the periods presented.
This information should be read in conjunction with the consolidated financial
statements of CCC and notes thereto included elsewhere in this Offering
Circular - Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income Statement Data(1):
Revenues..................................... $1,398,586 $1,612,502 $1,438,189 $1,340,778 $1,110,076
---------- ---------- ---------- ---------- ----------
Costs and Expenses
Cost of sales (exclusive of depreciation
and amortization)........................ 977,597 1,092,307 1,007,748 970,944 838,575
Depreciation and amortization.............. 58,290 57,456 61,776 70,413 70,233
Selling and administrative expenses........ 178,902 189,766 191,958 194,242 177,902
Interest expense........................... 37,326 31,271 20,361 15,852 20,023
Nonrecurring income, net................... -- -- (12,200) -- --
---------- ---------- ---------- ---------- ----------
1,252,115 1,370,800 1,269,643 1,251,451 1,106,733
---------- ---------- ---------- ---------- ----------
Income before income taxes and cumulative
effect of changes in accounting
principles............................ 146,471 241,702 168,546 89,327 3,343
Income taxes............................... (63,432) (91,164) (57,575) (38,138) (7,089)
---------- ---------- ---------- ---------- ----------
Income (loss) before cumulative effect of
changes in accounting principles...... 83,039 150,538 110,971 51,189 (3,746)
Cumulative effect on prior years of
changes in accounting principles(2)... -- -- (108,048) -- --
---------- ---------- ---------- ---------- ----------
Net Income (Loss)..................... $ 83,039 $ 150,538 $ 2,923 $ 51,189 $ (3,746)
========== ========== ========== ========== ==========
Balance Sheet Data (at the end of period)(1):
Total assets............................... $1,936,000 $1,971,333 $1,725,385 $1,713,668 $1,710,380(3)
Net assets................................. 900,664 1,003,420 807,167 841,955 878,129(3)
Long-term debt............................. 375,000 375,000 375,000 374,815 374,800
Other long-term obligations................ 173,650 150,568 234,226 193,666 181,043
</TABLE>
(Continued on next page)
49
<PAGE> 52
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
-------------------------
1994 1995
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
Income Statement Data(1):
Revenues.................................................................... $ 240,208 $ 254,576
---------- ----------
Costs and Expenses
Cost of sales (exclusive of depreciation and amortization)................ 186,113 201,497
Depreciation and amortization............................................. 16,488 17,385
Selling and administrative expenses....................................... 41,295 40,094
Interest expense.......................................................... 4,099 6,000
---------- ----------
247,995 264,976
---------- ----------
Loss before income taxes................................................ (7,787) (10,400)
Income tax benefit........................................................ 16,512 6,148
---------- ----------
Net Income (Loss).................................................... $ 8,725 $ (4,252)
========== ==========
Balance Sheet Data (at the end of period)(1):
Total assets................................................................ $1,686,790 $1,731,000(3)
Net assets.................................................................. 805,451 895,428(3)
Long-term debt.............................................................. 374,815 375,000
Other long-term obligations................................................. 190,525 173,827
</TABLE>
- ---------------
(1) For the historical periods presented, all of the excess cash generated by
CCC's operations was regularly remitted to Cooper pursuant to Cooper's
centralized cash management program. As a result, total indebtedness has
been held constant from year to year for such periods. See the final
paragraph of Note 1 of the Notes to Consolidated Financial Statements of CCC
for further information regarding the long-term debt.
(2) In the first quarter of 1992, CCC adopted the following accounting
standards: SFAS No. 106 (Employers' Accounting for Postretirement Benefits
Other Than Pensions); SFAS No. 109 (Accounting for Income Taxes); and SFAS
No. 112 (Employers' Accounting for Postemployment Benefits). See Note 4 of
the Notes to Consolidated Financial Statements of CCC for further
information regarding CCC's adoption of these accounting standards.
(3) Includes a $36,607 and $10,155 receivable from Cooper at December 31, 1994
and March 31, 1995, respectively.
50
<PAGE> 53
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF CCC
BALANCE SHEET
Following the completion of the Transaction (including refinancing pursuant
to the Credit Facility) there is not expected to be any change in the net assets
of CCC from those presented at March 31, 1995, other than the write-down of
goodwill described in Note 2 of the Notes to Consolidated Financial Statements
of CCC, foreign currency translation effects and the effect of certain income or
expense items that are not covered by the provisions of the Asset Transfer
Agreement. This write-down is currently estimated at $450 million. The March 31,
1995 debt to capitalization ratio would have been 45.71%, compared to 29.52%,
had the write-down been made prior to March 31, 1995. The pro forma book value
per share would have been $17.82 at March 31, 1995 based on an assumption of
25,000,000 shares of CCC Common Stock outstanding at March 31, 1995, as
indicated in Note (e) to the Pro Forma Consolidated Results of Operations of
CCC. The Commitment Letter provides that the Credit Agreement will contain
various covenants, including, among other things, customary restrictions on the
payment of dividends and various financial ratio requirements. See "Certain
Transactions; Relationship Between Cooper and CCC -- Financing Arrangements" for
discussion of the terms of the Commitment Letter.
RESULTS OF OPERATIONS
The Pro Forma Consolidated Results of Operations of CCC for the year ended
December 31, 1994, and for the quarter ended March 31, 1995, presented below,
reflects the effects of adjustments to the historical consolidated financial
statements of CCC necessary to give pro forma effect to the Transaction as if it
had occurred at the beginning of the periods presented. The Pro Forma
Consolidated Results of Operations of CCC and accompanying notes thereto should
be read in conjunction with the consolidated financial statements of CCC and
notes thereto and the unaudited financial information of CCC for the three-month
period ended March 31, 1995 included elsewhere in this Offering Circular -
Prospectus.
Management believes that the assumptions used provide a reasonable basis on
which to present the pro forma results of operations. The Pro Forma Consolidated
Results of Operations of CCC are provided for informational purposes only and
should not be construed to be indicative of CCC's results of operations had the
Transaction and events described above been consummated on the dates assumed and
are not intended to project CCC's results of operations for any future period.
51
<PAGE> 54
PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS OF CCC
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues............................................. $1,110,076 $ -- $1,110,076
Costs and Expenses
Cost of sales (exclusive of depreciation and
amortization)................................... 838,575 700(a) 839,275
Depreciation and amortization...................... 70,233 -- 70,233
Selling and administrative expenses................ 177,902 400(a) 178,302
Interest expense................................... 20,023 (1,410)(b) 18,613
---------- ----------- ----------
Income before income taxes...................... 3,343 310 3,653(c)
Income taxes....................................... (7,089) (119)(d) (7,208)
---------- ----------- ----------
Net Income (Loss).......................... $ (3,746) $ 191 $ (3,555)(c)
========= =========== ==========
Net Loss per share of CCC Common Stock............... $ (.14)(e)
==========
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1995
-------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA(f)
---------- ----------- ------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues........................................... $254,576 $ -- $254,576
Costs and Expenses
Cost of sales (exclusive of depreciation and
amortization)................................. 201,497 175(a) 201,672
Depreciation and amortization.................... 17,385 -- 17,385
Selling and administrative expenses.............. 40,094 100(a) 40,194
Interest expense................................. 6,000 182(b) 6,182
---------- ----------- ------------
Loss before income taxes...................... (10,400) (457) (10,857)(c)
Income tax benefit............................... 6,148 175(d) 6,323
---------- ----------- ------------
Net Loss................................. $ (4,252) $(282) $ (4,534)(c)
========= =========== ============
Net Loss per share of CCC Common Stock............. $ (.18)(e)
============
</TABLE>
(Notes on next page)
52
<PAGE> 55
NOTES TO PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994 AND QUARTER ENDED MARCH 31, 1995
(a) Adjusted to reflect historical cost of sales and selling and
administrative expenses for management's estimate of additional workers'
compensation, product liability, property and other insurance costs that would
have been incurred by CCC on a stand-alone basis. The estimates were based on
insurance quotations received with respect to CCC's stand-alone business.
(b) Adjusted historical interest expense to reflect the net effect of: (i)
a higher interest rate on $375,000 of all domestic borrowings under the Credit
Facility assumed to be incurred as of the beginning of the periods presented,
(ii) debt increases/decreases assumed to be generated ratably over the periods
presented by the cash flow from operations of CCC (note the historical financial
statements did not reflect a change in debt and therefore such changes are
included here), and (iii) interest savings as a result of not having any foreign
debt that had higher rates than U.S. rates during the periods presented.
Interest expense with respect to the $375,000 was calculated by CCC based on the
terms of the Credit Facility applied to the periods presented. As a result, for
the year ended December 31, 1994, an interest rate of 5.17% was used and for the
quarter ended March 31, 1995, an interest rate of 6.37% was used. Interest rates
under the Credit Facility will be variable, with each 1/8-percentage point
movement in the interest rate resulting in a change in annual interest expense
of $469 ($289 net of tax) based on current debt levels. Interest expense was
calculated as follows:
<TABLE>
<CAPTION>
YEAR ENDED QUARTER ENDED
DECEMBER 31, MARCH 31,
1994 1995
------------ -------------
<S> <C> <C>
Credit Facility debt outstanding at beginning of
period.......................................... $375,000 $ 375,000
50% of estimated debt increase (decrease) during
the period(1)................................... (14,971) 13,426
------------ -------------
Average Credit Facility debt outstanding during
the period...................................... 360,029 388,426
Interest expense on Credit Facility debt for the
period.......................................... 18,613 6,182
Historical interest expense....................... 20,023 6,000
------------ -------------
Pro forma interest expense adjustment........... $ (1,410) $ 182
========== ==========
</TABLE>
-----------------------
(1) Estimated debt changes equal cash flow provided to/from Cooper
adjusted for the pro forma change to net income. As discussed under
"Certain Transactions; Relationship Between Cooper and
CCC -- Financing Arrangements," following the Expiration Date CCC
will have a $475 million Credit Facility, which would be sufficient
to cover the additional borrowings set forth under "Quarter Ended
March 31, 1995."
(c) If the anticipated goodwill write-down of $450,000 which CCC
anticipates recording immediately after the consummation of the Exchange Offer
had been recorded as of the beginning of the periods presented, earnings before
tax and net income would be increased by approximately $13,500 for the year
ended December 31, 1994 and approximately $3,375 for the quarter ended March 31,
1995 in comparison to the amounts reflected in the Pro Forma Results above. See
Note 2 of the Notes to Consolidated Financial Statements of CCC for the
estimated effect of the anticipated goodwill reduction on 1995 and future years.
(d) Represents the income tax effect of the adjustments described in (a)
and (b) above.
(e) Pro forma earnings per share for the year ended December 31, 1994 and
for the quarter ended March 31, 1995 have been computed based on an assumption
of 25,000 shares of CCC Common Stock being outstanding during the year and
quarter, respectively. See "Pro Forma Consolidated Financial Statements of
Cooper" for determination of the number of outstanding shares of CCC Common
Stock.
(f) The pro forma results for the quarter ended March 31, 1995 reflect the
effect of pro forma adjustments comparable to those included for the year ended
December 31, 1994 but as if the Exchange Offer had occurred at January 1, 1995.
53
<PAGE> 56
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION OF CCC
The following discussion of CCC's historical results of operations and
financial condition should be read in conjunction with CCC's consolidated
financial statements and notes thereto included elsewhere in this Offering
Circular - Prospectus.
OVERVIEW
CCC's operations are organized into two separate and distinct business
segments -- Petroleum Production Equipment and Compression and Power Equipment.
Petroleum Production Equipment, which includes Cooper Oil Tool (consisting of
the petroleum operations of Cameron Iron Works, Inc., acquired in a purchase
acquisition in 1989 as well as product lines acquired as part of 1987 and 1979
purchase acquisitions) and Wheeling Machine (acquired as part of a 1987 purchase
acquisition), manufactures and markets a wide variety of equipment for use in
oil and natural gas production, transmission and drilling including valves,
wellhead equipment, blowout preventers ("BOPs") and control systems for land,
platform and subsea applications. Compression and Power Equipment, which
includes Cooper Energy Services (originally Cooper Bessemer -- the founding
company of Cooper) and Cooper Turbocompressor (acquired in a 1987 purchase
acquisition), manufactures and markets engines, gas turbines and centrifugal gas
and air compressors for use in oil and natural gas production and transmission
as well as a wide variety of other industrial applications.
During the period from 1990 through 1994, excluding a one-time charge
associated with adopting new accounting principles in 1992, CCC's consolidated
net income has increased from $83.0 million in 1990 to $150.5 million in 1991
and then declined dramatically to 1994's net loss of $3.7 million. The
discussion that follows will focus on the three-year period from 1992 to 1994
and the three-month periods ended March 31, 1994 and 1995.
The following table sets forth the percentage relationship to revenues of
certain income statement items for the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- ----------------
1992 1993 1994 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues.............................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and Expenses
Cost of sales, exclusive of depreciation and
amortization...................................... 70.1 72.3 75.6 77.5 79.2
Depreciation and amortization....................... 4.3 5.3 6.3 6.8 6.8
Selling and administrative expenses................. 13.3 14.5 16.0 17.2 15.7
Interest expense.................................... 1.4 1.2 1.8 1.7 2.4
Nonrecurring income, net............................ (0.8) -- -- -- --
----- ----- ----- ----- -----
Total Costs and Expenses..................... 88.3 93.3 99.7 103.2 104.1
----- ----- ----- ----- -----
Income before income taxes and cumulative effect of
changes in accounting principles.................. 11.7 6.7 0.3 (3.2) (4.1)
Income taxes.......................................... (4.0) (2.9) (0.6) 6.8 2.4
----- ----- ----- ----- -----
Income (loss) before cumulative effect of changes in
accounting principles............................. 7.7 3.8 (0.3) 3.6 (1.7)
Cumulative effect on prior years of changes in
accounting principles............................. (7.5) -- -- -- --
----- ----- ----- ----- -----
Net Income (Loss)............................ 0.2% 3.8% (0.3)% 3.6% (1.7)%
====== ====== ====== ====== ======
</TABLE>
MARCH 31, 1995 COMPARED TO MARCH 31, 1994
CCC had a net loss of $4.3 million for the first quarter of 1995, which was
a $13.0 million decline from the $8.7 million of net income for the first
quarter of 1994. This result is attributable to a $2.6 million increase in CCC's
year-to-year loss before taxes in addition to a decrease in the estimated
effective tax rate from 212% in 1994 to 59.1% in 1995, which caused a $10.4
million reduction in the income tax benefit from 1994 to 1995. The loss before
income taxes was largely caused by a reduction in gross sales margins and an
increase in interest expense due to higher interest rates on CCC's allocated
debt from Cooper.
54
<PAGE> 57
Revenues
Revenues for the first quarter of 1995 totaled $254.6 million, an increase
of 6% from $240.2 million in the first quarter of 1994. This increase was due
primarily to the effect of an increase in oil prices that started during the
second half of 1994 and continued through the first quarter of 1995. This
improved pricing resulted in stronger international markets in the Petroleum
Production Equipment segment.
The Petroleum Production Equipment segment's revenues of $147.8 million
represented an increase of 15% over the first quarter of 1994 with international
market strength being particularly notable in the North Sea area. While major
project activity was strong in the first quarter of 1995, delivery of these
orders is not scheduled to begin until late 1995, with most of the equipment to
be delivered in 1996. Although major project activity did not contribute to the
first quarter revenue improvement, demand for valves and wellheads improved due
to stronger international market fundamentals.
Revenues in the Compression and Power Equipment segment of $106.8 million
declined by 4% from the first quarter of 1994. This decline was primarily the
result of the steep drop in natural gas prices in the second half of 1994 and
the continued low price level in the first quarter of 1995. The depressed price
of natural gas reduced demand for natural gas compression equipment and
aftermarket services in the United States and Canada. Additionally, customer
delays in placing major international orders during 1994 negatively affected
large turbine-compression equipment shipments in the first quarter of 1995. On
the positive side, centrifugal air compressor demand improved in the second half
of 1994 and continued to be strong in the first quarter of 1995. Improved
economic conditions, particularly in the developing economic areas of the world,
have increased demand in both the air separation and industrial air compressor
markets.
Costs and Expenses
Cost of sales (exclusive of depreciation and amortization) was $201.5
million in the first quarter of 1995 representing an increase of $15.4 million,
or 8%, compared with $186.1 million in the first quarter of 1994. The increase,
which exceeded the revenue increase, was the result of the revenue improvement
discussed above and a product mix shift between segments. Revenues increased in
the relatively lower margin Petroleum Production Equipment segment while there
was a revenue decline in the higher margin Compression and Power Equipment
segment. For the Petroleum Production Equipment segment, the gross margin
percent (defined as revenues less cost of sales as a percentage of revenues)
increased from 19.4% in the first quarter of 1994 to 19.7% in the first quarter
of 1995. This improvement was primarily the result of cost reduction programs,
including plant consolidations, implemented in prior periods. For the
Compression and Power Equipment segment, the gross margin percent decreased from
26.1% in the first quarter of 1994 to 22.5% in the first quarter of 1995. This
decline was partially due to a reduction in the higher margin aftermarket
business from lower customer spending related to weak natural gas prices. Also
contributing to the decline were lower production levels caused by reduced
orders in the second half of 1994 and the first quarter of 1995, due to the weak
price of natural gas. These lower production levels resulted in less absorption
of costs that are relatively fixed.
Depreciation and amortization increased by $.9 million, from $16.5 million
in the first quarter of 1994 to $17.4 million in the first quarter of 1995. This
increase was primarily in the Petroleum Production Equipment segment and
resulted from depreciation and amortization expense on capital additions for
manufacturing improvements during 1994.
Selling and administrative expenses declined 3%, from $41.3 million in the
first quarter of 1994 to $40.1 million in the first quarter of 1995. As a
percent of revenues, selling and administrative costs decreased by 1.5
percentage points. The decline occurred in both segments and was the result of
cost control programs, including lower employment levels.
Operating income (defined as earnings before corporate general expenses,
interest and taxes) improved in the Petroleum Production Equipment segment but
declined in the Compression and Power Equipment segment, for a combined decrease
of $1.0 million. These results reflect the various factors discussed above.
55
<PAGE> 58
Interest expense increased 46%, from $4.1 million in the first quarter of
1994 to $6.0 million in the first quarter of 1995. This increase was entirely
the result of higher interest rates on CCC's fixed debt allocated from Cooper.
The income tax benefit was $10.4 million lower in the first quarter of 1995
than the first quarter of 1994. A tax benefit of $16.5 million on an effective
tax rate of 212% in the first quarter of 1994 declined to a tax benefit of $6.1
million on an effective tax rate of 59.1% in the first quarter of 1995. This
primarily reflects the effect of relatively fixed amounts of nondeductible
goodwill on lower estimated full year income for 1994 compared to 1995.
Effect of Iranian Boycott
On May 8, 1995, President Clinton signed an Executive Order implementing an
economic embargo against Iran. As a result, CCC is in the process of evaluating
its potential loss exposure with respect to receivables and certain inventory
usable exclusively for its customers in Iran. Such evaluation includes, among
other things, a review of the implementing regulations when issued, the response
of the governments in the countries where CCC's non-U.S. subsidiaries operate
and Iranian reactions to the embargo. If CCC concludes, which currently appears
likely, that the embargo would make recording a reserve against the receivables
and inventories appropriate, such reserve would total approximately $23 million
pre-tax ($15 million net of tax). The receivables for which reserves may be
appropriate are those not covered by a third-party guarantee or letter of credit
or those that have not been previously reserved. Further information regarding
the receivables with Iran is set forth in Note 16 of the Notes to Consolidated
Financial Statements of CCC. As a result of the foregoing, if CCC were to record
such reserves, CCC currently anticipates it could have a loss for the year 1995
in excess of the loss for 1994. Of this $23 million pre-tax charge,
approximately $10 million would reduce anticipated cash flows for the year 1995
with the remainder in subsequent periods. CCC anticipates that the financial
covenants under the Credit Facility will not be breached by the establishment of
any reserves in the second quarter of 1995 with respect to the Iranian embargo.
CCC intends to ensure that the Credit Facility will not be breached by the
establishment of any such reserves in the third quarter of 1995.
For the remainder of 1995 following the effective date of the embargo, CCC
had anticipated sales to Iran of approximately $30 million and related earnings
before taxes of approximately $11 million, divided approximately evenly between
its two segments. Since the anticipated sales in the Compression and Power
Equipment segment were being manufactured entirely in the United States, it is
likely that the embargo will eliminate such sales. In the Petroleum Production
Equipment segment, the anticipated sales were from CCC's non-U.S. subsidiaries
operating in countries that are not currently participating in the embargo. As a
result, the final effect of the embargo remains uncertain pending the issuance
of implementing regulations and the response of the governments in the countries
where CCC's foreign subsidiaries operate.
Sales to Iran during each of the prior three years were approximately $1
million in each of 1994 and 1993 and $2 million in 1992 for the Compression and
Power Equipment segment and $8 million in 1994, $45 million in 1993 and $38
million in 1992 for the Petroleum Production Equipment segment.
1994 COMPARED TO 1993
REVENUES
Revenues for 1994 totaled $1,110.1 million, a decrease of 17% from $1,340.8
million in 1993. This decline was due primarily to the weakness in worldwide
petroleum markets, generally during the latter half of 1993 and in 1994. The
decline in oil prices beginning in the latter half of 1993 had a negative impact
on orders that typically would have shipped during the 1994 period. The
generally lower order rates during the latter half of 1993 and early 1994,
coupled with customer delays in placing several major orders, resulted in lower
revenues during the 1994 period. Also contributing to the revenue decline was
the steep drop in natural gas prices during the second half of 1994 and the
resulting impact on CCC's shorter-cycle products. In addition, 1993's revenues
included approximately $80 million relating to shipments of turbine-compression
equipment for government-sponsored oil and gas production projects in India that
did not recur in 1994. The order related to these sales in India was received in
June 1992 and involved 16 large units that were produced during the
56
<PAGE> 59
balance of 1992 and throughout 1993 with deliveries and related sales primarily
in the first, second and fourth quarters of 1993. CCC historically has bid on
large multi-unit projects and participated in similar large projects which
benefited 1990 and 1991. During 1994, however, there were no comparable large
multi-unit sales.
Revenues in the Petroleum Production Equipment segment of $562.7 million in
1994 declined 17% from 1993 revenues of $679.5 million. Although market activity
increased in the North Sea and the Gulf of Mexico during the latter part of the
year, much of the equipment will not be delivered until after 1994. CCC's sales
of oil-related petroleum equipment, particularly for delivery in international
markets, are still being negatively affected by the late-1993 decline in oil
prices and political instability in some areas. Outside of major project
activity, demand for valves and wellheads continued to weaken in 1994 as
customers utilized existing inventories and used equipment, and gas prices
declined during the second half of the year.
Revenues in the Compression and Power Equipment segment also declined 17%
from $660.4 million in 1993 to $546.0 million in 1994 and represented about half
of CCC's consolidated revenues. The single largest cause of lower revenues in
1994 was the 1993 completion and shipment of approximately $80 million of
projects in India noted above. This reduction in revenues also resulted from
order delays due to uncertainty in international petroleum markets and the
decline in natural gas prices. During 1994, demand for industrial air
compressors was mixed as strong demand for large air separation equipment more
than offset the effects of sluggish demand for plant air applications. The North
American air separation business was particularly active, with industrial gas
companies adding capacity in response to steel industry demand. International
markets for centrifugal air compressors improved during 1994, particularly in
developing economic areas of the world.
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization) of $838.6
million in 1994 decreased $132.3 million or 14% compared with cost of sales of
$970.9 million in 1993. The decline was primarily a result of the revenue
declines discussed above. For the Petroleum Production Equipment segment, the
year-to-year cost of sales change resulted in a gross margin percentage (defined
as revenues less cost of sales as a percentage of revenues) of 19.3% in 1994
compared with 24.1% in 1993. This result reflects a combination of less
favorable product mix and competitive pricing pressure as companies struggled to
maintain market share in a declining and uncertain market. For the Compression
and Power Equipment segment, this decrease translated into a 1994 gross margin
percentage of 29.6% compared to 31.1% in 1993. Excluding the effects of lower
LIFO income in 1994 compared to 1993 and the favorable effects resulting from
employee benefit plan changes that did not recur in 1994, this percentage
relationship would have remained essentially unchanged year-to-year.
Depreciation and amortization remained essentially unchanged year-to-year
at approximately $70 million. This result reflects lower depreciation expense
offset by higher amortization expense. The lower depreciation expense reflects
CCC's change in the depreciable life for machinery and equipment from 10 to 12
years effective mid-year 1993. Higher amortization expense is related to
capitalized software and higher goodwill amortization as a result of translation
effects on goodwill denominated in other than U.S. dollars. The lower
depreciation expense occurred in both segments, while the higher amortization
expense was almost entirely related to the Petroleum Production Equipment
segment.
Selling and administrative expenses declined 8% to $177.9 million in 1994
compared with $194.2 million in 1993. Both segments had year-to-year declines in
absolute dollars, but did not reduce costs to match the steep revenue declines
such that these costs as a percentage of revenues increased by approximately 1.5
percentage points.
From an overall operating income (defined as earnings before corporate
general expenses, nonrecurring income and expense, interest and taxes)
perspective, the Petroleum Production Equipment segment declined from a profit
of $9.6 million in 1993 to a loss of $35.6 million in 1994 while the Compression
and Power Equipment segment had a $37.1 million or 36% decrease in 1994 compared
with 1993. These results reflect the various factors discussed above.
57
<PAGE> 60
Interest expense increased from $15.9 million in 1993 to $20.0 million in
1994. This increase resulted entirely from higher interest rates on the debt
allocated to CCC (as discussed in the Notes to Consolidated Financial Statements
of CCC, all cash flows are transferred to Cooper such that outstanding debt,
other than with respect to a minor amount of industrial revenue bonds, remains
unchanged from year-to-year). Average interest rates in 1994 were 5.2% compared
to 4.2% in 1993.
Income taxes declined from $38.1 million in 1993 to $7.1 million in 1994.
Tax expense measured as a percentage of pre-tax income, however, increased from
42.7% in 1993 to 212% in 1994. This result primarily reflects the increasing
effect, as income becomes lower, of relatively fixed amounts of nondeductible
goodwill.
1993 COMPARED TO 1992
REVENUES
Revenues of $1,340.8 million in 1993 decreased 7% from $1,438.2 million in
1992. The decline in the Petroleum Production Equipment segment, resulting from
weakness in worldwide petroleum markets, more than offset a modest improvement
in the Compression and Power Equipment segment during the year.
Petroleum Production Equipment revenues declined $129.9 million to $679.5
million in 1993, representing a 16% decline from 1992 revenues of $809.4
million. Sales of oil-related petroleum equipment, particularly for
international markets, were negatively affected by a decline in world oil prices
resulting from global oversupply of crude oil. In addition, orders for several
major projects that were expected to be released during 1993 were delayed by
customers as a result of uncertainty in the world oil markets.
Revenues in the Compression and Power Equipment segment improved 5.5% from
$626.0 million in 1992 to $660.4 million in 1993 and represented about half of
CCC's consolidated revenues. Demand for natural gas increased compared with the
prior year, resulting in higher gas prices and stronger gas production markets.
As a result, CCC experienced higher demand for engines and compressors used in
gas storage, gathering and secondary recovery. In addition, shipments of major
gas turbine/compressor projects increased in 1993. Shipments of air compression
equipment also improved, led by demand for large air separation units, as a
result of an upturn in industrial demand and economic development activity in
Asia and the Pacific Rim.
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation and amortization) of $970.9
million decreased $36.8 million or 4% compared with cost of sales of $1,007.7
million in 1992 reflecting although not matching the revenue declines discussed
above. The gross margin percentage for the Petroleum Production Equipment
segment declined four and one-half percentage points from 28.6% in 1992 to 24.1%
in 1993. This decline was attributable to the steep revenue decline discussed
above. Depressed market conditions and consequent pricing pressures caused
revenues to decline faster than management's ability to adjust operating costs;
in the short-term, many of these costs tend to be relatively fixed. The gross
margin percentage for the Compression and Power Equipment segment decreased very
slightly from 31.4% in 1992 to 31.1% in 1993. This small decline resulted from
the favorable effects of 1993 employee benefit plan changes and higher income
from LIFO inventory liquidations. Absent these favorable items, the gross margin
percentage would have declined by approximately two percentage points. This
decline was caused by lower parts sales in 1993 versus 1992. Parts sales
normally carry a higher margin than finished "unit" sales.
Depreciation and amortization expense increased to $70.4 million in 1993
compared with $61.8 million in 1992. This increase reflected the magnitude of
capital additions during 1992 and 1993 partially offset by the effect of CCC's
mid-year 1993 change in the depreciable life of machinery and equipment from 10
to 12 years. Approximately 60% of the year-to-year increase occurred in the
Petroleum Production Equipment segment with the balance of 40% in the
Compression and Power Equipment segment.
Selling and administrative expense increased $2.2 million or 1% from $192.0
million in 1992 to $194.2 million in 1993. In the case of the Petroleum
Production Equipment segment, these expenses increased slightly in spite of the
sharp decline in revenues. This resulted from a combination of factors including
a $3.6 million earnings credit in 1992 with respect to a change in vacation
policy, an increase in 1993 in the
58
<PAGE> 61
receivable reserve of $4.0 million related to a third world national oil company
and a limitation, in the short term, on management's ability to reduce costs in
1993 to match the steep decline in revenues. For the Compression and Power
Equipment segment, a small increase in selling and administrative expense was in
line with the revenue increase.
There was no nonrecurring income or expense in either segment during 1993,
while in 1992 the Petroleum Production Equipment segment had nonrecurring income
of $18 million partially offset by $5.8 million of nonrecurring expense in the
Compression and Power Equipment segment. See Note 5 of the Notes to Consolidated
Financial Statements of CCC for further information regarding the nonrecurring
income and expense.
From an overall operating income (defined as earnings before corporate
general expenses, nonrecurring income and expense, interest and taxes)
perspective, the Petroleum Production Equipment segment declined by $75.1
million or nearly 90% while the Compression and Power Equipment segment had a
$2.7 million or 3% increase in 1993 compared with 1992. These results reflect
the various factors discussed above.
Interest expense decreased from $20.4 million in 1992 to $15.9 million in
1993. This decrease resulted entirely from lower interest rates on the debt
allocated to CCC (as discussed in the Notes to Consolidated Financial Statements
of CCC, all cash flows are transferred to Cooper such that outstanding debt,
other than with respect to a minor amount of industrial revenue bonds, remains
unchanged from year-to-year). Average interest rates in 1993 were 4.2% compared
to 5.5% in 1992.
Income taxes declined from $57.6 million in 1992 to $38.1 million in 1993.
Tax expense measured as a percentage of pre-tax income, however, increased from
34.2% in 1992 to 42.7% in 1993. This result primarily reflects the increasing
effect, as income becomes lower, of relatively fixed amounts of nondeductible
goodwill.
Net income in 1992 included a $108.0 million, net of tax, expense related
to the adoption of SFAS Nos. 106, 109 and 112. These changes were adopted
effective January 1, 1992. As a consequence, CCC's results of operations for
1992, 1993 and 1994 are determined on a consistent basis including the
post-adoption effects of the new standards. See Note 4 of the Notes to
Consolidated Financial Statements of CCC.
PRICING AND VOLUME
CCC believes that during 1994 unit volumes decreased in both the Petroleum
Production Equipment and Compression and Power Equipment segments. During 1993,
unit volumes are estimated to have decreased in the Petroleum Production
Equipment segment, but increased in the Compression and Power Equipment segment.
In the Petroleum Production Equipment segment, prices deteriorated slightly
during both years due to the very competitive condition of the markets. Small
price increases that generally recovered cost increases were implemented in the
Compression and Power Equipment segment in both 1993 and 1994.
LIQUIDITY AND CAPITAL RESOURCES
Because the various businesses comprising CCC historically participated in,
and until the consummation of the Exchange Offer will continue to participate
in, Cooper's consolidated worldwide debt and cash management system, CCC's
financial statements reflect the transfer to Cooper of all funds not otherwise
utilized by the businesses and a constant $375 million of allocated
indebtedness. The $375 million Note became a direct obligation of CCC,
guaranteed by Cooper, effective January 1, 1995, pursuant to the Asset Transfer
Agreement. At the time of the Exchange Offer, CCC will enter into the Credit
Agreement with the Banks that will be used to repay the Note and to provide
additional working capital and letters of credit. (See "Certain Transactions;
Relationship Between Cooper and CCC -- Financing Arrangements" and Note 12 of
the Notes to Consolidated Financial Statements of CCC for additional
information). As discussed in Note 16 of the Notes to Consolidated Financial
Statements of CCC, CCC is in the final stages of negotiating a guarantee from
the Central Bank of Iran with respect to virtually all of its Iranian
receivables. The collections pursuant to the proposed agreement are spread over
the next three to four years. While CCC believes that it will be successful in
finalizing this agreement, failure to enter into the agreement and further
delays in the
59
<PAGE> 62
collection of the receivables, would adversely affect CCC's future cash flows,
although not to a material degree in any one year.
WORKING CAPITAL
Operating working capital is defined as receivables and inventories less
accounts payable and accrued liabilities, excluding the effect of foreign
currency translation and the cumulative effect of changes in accounting
principles.
During the first quarter of 1995, operating working capital increased by
$13.9 million. Increases in trade receivables and inventories were partially
offset by an increase in accounts payable and accrued liabilities. The increase
in trade receivables was due to heavy shipments at the end of the first quarter
that are expected to be collected in the second quarter. Inventories and
accounts payable and accrued liabilities were higher as a result of improved
orders received for which the products will not be delivered until later in 1995
or 1996.
During 1994, operating working capital decreased $5.7 million. The decline
in receivables was the result of lower revenues discussed above and an unusually
high receivable balance in 1993 due to the completion in the latter part of that
year of shipments of compression equipment for government-sponsored oil and gas
production projects in India. This decline more than offset increases in
inventories and decreases in accounts payable and accrued liabilities. The
increases in inventories and decreases in accounts payable and accrued
liabilities were due to the timing and stage of completion of various customer
orders.
During 1993, operating working capital increased $2.9 million. A decrease
in inventories partially offset an increase in receivables while accounts
payable and accrued liabilities were relatively unchanged. The decrease in
inventories was due to the decline in backlog experienced by CCC between 1992
and 1993, whereas the increase in receivables was due to the significant sale
discussed in the preceding paragraph.
During 1992, operating working capital decreased $64.1 million. Decreases
in receivables and inventories were partially offset by a decrease in accounts
payable and accrued liabilities. The decreases in all areas were due to the
decline in revenues resulting from lower volumes and backlogs in 1992 as
compared to 1991.
CASH FLOWS
During the first quarter of 1995, cash flows utilized in operating
activities totaled $15.8 million and proceeds from sales of plant and equipment
totaled $2.9 million. CCC expended $14.1 million on capital projects and Cooper
provided $26.5 million to CCC.
During 1994, cash flows from operating activities totaled $87.0 million and
proceeds from sales of plant and equipment totaled $5.8 million. CCC expended
$63.5 million on capital projects and transferred $30.6 million to Cooper.
During 1993, cash flows from operating activities totaled $76.4 million and
proceeds from sales of plant and equipment totaled $4.5 million. CCC expended
$74.4 million on capital projects and transferred $4.2 million to Cooper.
During 1992, cash flows from operating activities totaled $195.7 million
and proceeds from sales of plant and equipment totaled $8.3 million. CCC
expended $68.7 million on capital projects and transferred $134.7 million to
Cooper.
60
<PAGE> 63
In connection with accounting for purchase business combinations, CCC
records, to the extent appropriate, accruals for the costs of closing duplicate
facilities, severing redundant personnel and integrating the acquired business
into existing CCC operations. Cash flow from operating activities for each of
the three years in the period ended December 31, 1994 is reduced by the amounts
actually expended and charged against the various accruals established in
connection with these activities. The following table reflects the remaining
accruals at the end of each period and the activity in the three year period
ended December 31, 1994 with respect to Cooper's acquisition of Cameron Iron
Works in 1989 which included the Cameron Oil Tool operations that represent the
major portion of the business constituting the Oil Tool Division of CCC:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1992 1993 1994
------ ------ ------
(MILLIONS)
<S> <C> <C> <C>
Systems Integration:
Beginning of period................................ $ 3.2 $ .8 $ 1.3
Spending........................................... (2.9) (2.7) (1.6)
Reclassifications.................................. .6 3.4 1.5
Translation........................................ (.1) (.2) .1
------ ------ ------
End of Period...................................... $ .8 $ 1.3 $ 1.3
====== ====== ======
Plant Shut-down and Realignment:
Beginning of period................................ $ 57.9 $ 38.0 $ 22.3
Spending........................................... (14.4) (20.0) (14.7)
Reclassifications.................................. (.7) 4.1 .3
Translation........................................ (4.8) .2 2.5
------ ------ ------
End of Period...................................... $ 38.0 $ 22.3 $ 10.4
====== ====== ======
Other Facility Relocations and Severance:
Beginning of period................................ $ 13.2 $ 8.9 $ 1.2
Spending........................................... (2.2) (.8) (.9)
Reclassifications.................................. (1.0) (5.1) .1
Translation........................................ (1.1) (1.8) --
------ ------ ------
End of Period...................................... $ 8.9 $ 1.2 $ .4
====== ====== ======
Other Realignment and Integration:
Beginning of period................................ $ 1.6 $ 1.1 $ .4
Spending........................................... (.4) (1.5) (.6)
Reclassifications.................................. (.1) .8 .3
Translation........................................ -- -- --
------ ------ ------
End of Period...................................... $ 1.1 $ .4 $ .1
====== ====== ======
</TABLE>
Systems Integration accruals represent costs for consolidation and
integration of the Oil Tool Division's computer hardware and software systems
into existing systems. Spending since acquisition has been for contract
programming, education and training, consulting and other implementation related
projects. Capitalized costs, including purchased and internally developed
software, are amortized or depreciated over their useful lives. Such costs are
not included in the above table.
Plant Shut-down and Realignment accruals represent the costs for
consolidating facilities in order to eliminate excess manufacturing capacity in
both North America and Europe. The North American consolidation included
facilities in Mexico; Tyler, Texas; and Houston, Texas. In Europe, two
facilities were closed in the United Kingdom and consolidated into a third
facility as well as into operations in France. Spending since acquisition has
primarily been for employee severance or relocation, equipment and inventory
relocation and costs associated with plant closure and preparation for sale of
the associated redundant property.
Other Facility Relocations and Severance accruals primarily represent the
cost of employee severance or relocation relating to sales and marketing staff
and other headquarters personnel of the Oil Tool Division, including expatriates
and sales agents. Other realignment and integration costs during the three year
period
61
<PAGE> 64
were not material. Amounts with respect to other acquisitions during the three
year period were not material to CCC.
During the three year period ended December 31, 1994, none of these
accruals were reversed to income. Reclassifications represent revisions to the
initial accruals based on updated estimates of the actual costs to be incurred
in each project. The reclassifications include excess amounts of $3.2 million in
1993 and $2.2 million in 1994 and a deficit amount of $1.2 million in 1992, in
each case reclassified from other accrued liability accounts. Substantially all
spending related to these accruals represented cash outlays by CCC.
Over the last three years, CCC has spent $63 million in the consolidation
and integration of its domestic and international operations with an additional
$12 million yet to be spent. These expenditures, as well as amounts spent in
prior years, have significantly reduced excess capacity and positioned the
business to be able to profitably participate in the growth of its primary
markets. The $12 million yet to be spent, as well as additional amounts which
may be necessary to further rationalize CCC's operations once CCC is a stand-
alone company, while initially providing a strain on CCC's financial resources,
will, in management's judgment, provide both incremental earnings and cash flows
over the longer term.
CAPITAL EXPENDITURES AND COMMITMENTS
Capital projects to reduce product costs, improve product quality, increase
manufacturing efficiency and operating flexibility or expand production capacity
resulted in expenditures of $63.5 million in 1994 compared with $74.4 million in
1993 and $68.7 million in 1992. Expenditures for 1995 are currently expected to
be approximately $46 million.
At December 31, 1994, commitments for capital expenditures amounted to $34
million compared with $53 million at year-end 1993. The actual 1994 expenditures
in excess of year-end 1993 commitments relate to projects carried over from
1993. The commitments for 1995 include approximately $3 million for capacity
expansion, $21 million for machinery and equipment modernization and
enhancement, $2 million for various computer hardware and software projects, $4
million for environmental projects and $4 million for other items.
EFFECT OF INFLATION
During each year, inflation has had a relatively minor effect on CCC's
reported results of operations. This is true primarily for three reasons. First,
in recent years, the rate of inflation in CCC's primary markets has been fairly
low. Second, CCC makes extensive use of the LIFO method of accounting for
inventories. The LIFO method results in current inventory costs being matched
against current sales dollars, such that inflation affects earnings on a current
basis. Finally, many of the assets and liabilities included in CCC's
Consolidated Balance Sheet were recorded in business combinations that were
accounted for as purchases. At the time of such acquisitions, the assets and
liabilities were adjusted to a fair market value and, therefore, the cumulative
long-term effect of inflation is reduced.
LIQUIDITY AFTER THE EXCHANGE OFFER
As a stand-alone entity commencing upon consummation of the Exchange Offer
(based on an estimated 250 basis point increase in market interest rates,
anticipated initial borrowing levels and other factors), CCC currently estimates
that during the first 12 months following its separation from Cooper it would
incur approximately $12.4 million pre-tax ($7.4 million net of tax) of higher
corporate administrative, insurance and interest costs than reflected in the
historical financial statements for 1994. (See Notes 1 and 12 of the Notes to
Consolidated Financial Statements of CCC for further information). These higher
costs will reduce CCC's cash flows and results of operations in the future by
comparison to the amounts reflected in the historical financial statements.
Management currently expects that CCC's future cash flows will be
sufficient to fund the higher expenses as well as other normal working capital
and other operating requirements of the business including an estimated $46
million of 1995 capital expenditures. These expectations are based on CCC's
budgeted earnings and cash flows for 1995 which include a modest improvement in
revenues attributable primarily to price
62
<PAGE> 65
realization. The budgets also assume that CCC's operating costs, except as noted
above, will increase in line with inflation. While there can be no guarantee
that the budgets will be achieved, management believes that the estimates are
reasonable. The budgets are based on current views from both internal and
external sources of expected activity in the markets served by CCC, relatively
stable oil and gas prices and the increase noted above in interest rates. Under
the Commitment Letter, CCC will have a total credit line of $475 million with
anticipated initial borrowings of approximately $375 million and there will be
no mandatory scheduled debt repayments during the first year following the
closing of the Credit Facility. Interest rates under the Credit Facility will be
variable with LIBOR and other market rate indicators, and the Credit Facility
will be unsecured. In the event that CCC's future cash flow from operations does
not improve over 1994 levels, CCC would be in default under the Credit Facility
and, unless a waiver could be obtained, all outstanding indebtedness would
become due and payable. Such an event would have a material adverse effect on
CCC and on the market value of the CCC Common Stock. There can be no assurances
that any improvement over 1994 levels will occur. See "Special Considerations --
Liquidity and Working Capital Requirements."
In connection with negotiating the Commitment Letter, CCC received the
right to exclude a charge of up to $40 million related to the rationalization of
CCC's operations in the computation of certain of its financial covenant tests.
Although CCC believes that there are actions that should be considered that
would, once completed, benefit the long-term results of CCC, no specific
actions, nor the possible costs of these actions, have as yet been identified or
quantified.
ENVIRONMENTAL REMEDIATION
The cost of environmental remediation and compliance generally has not been
an item of material expense for CCC during any of the periods presented, other
than with respect to the Osborne Landfill described in more detail under
"Business of CCC -- Environmental Matters." CCC's balance sheet at December 31,
1994 includes accruals totaling approximately $11.4 million for environmental
matters. CCC has been identified as a potentially responsible party with respect
to 12 sites designated for cleanup under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") or similar state laws.
Although estimated cleanup costs have not yet been made for certain of these
sites, CCC believes, based on its preliminary review and other factors, that the
costs relating to these sites will not have a material adverse effect on CCC's
results of operations, financial condition or liquidity. However, no assurance
can be given that the actual costs will not exceed the estimates of the cleanup
costs once determined. See "Business of CCC -- Environmental Matters."
BUSINESS OF CCC
CCC designs, manufactures, markets and services petroleum production
equipment and compression and power equipment for the oil and gas drilling,
production and transmission markets and for the nonutility power generation,
process and industrial markets.
For the year ended December 31, 1994, CCC had sales of $1,110.1 million of
which approximately 51% were derived from sales of Petroleum Production
Equipment while approximately 49% were from sales of Compression and Power
Equipment. For the quarter ended March 31, 1995, approximately 58% of CCC's
total revenues were derived from the Petroleum Production Equipment segment
while 42% were from the Compression and Power Equipment segment. Approximately
41% of total revenues in 1994 were derived from sales in the United States and
approximately 59% were from sales in or to various countries outside the United
States.
THE COMPANY
CCC, a Delaware corporation, was incorporated on November 10, 1994. Cooper
has transferred to CCC all the assets used exclusively by, and the liabilities
of, the four businesses that comprised Cooper's former Petroleum & Industrial
Equipment segment at September 30, 1994. The businesses included the Cooper Oil
Tool, Cooper Energy Services, Cooper Turbocompressor and Wheeling Machine
Products operations of
63
<PAGE> 66
Cooper. CCC will operate as a wholly-owned subsidiary of Cooper until completion
of the Exchange Offer. See "Certain Transactions; Relationship between Cooper
and CCC -- Asset Transfer Agreement."
CCC's business of manufacturing petroleum production equipment and
compression and power equipment began in the mid-1800's with the manufacture of
steam engines that provided power for plants and textile or rolling mills. By
1900, with the discovery of oil and gas, CCC moved into the production of
natural gas internal combustion engines and gas compressors. CCC added to its
product offering through various acquisitions, in particular the acquisitions of
The Bessemer Gas Engine Company (gas engines and compressors); Pennsylvania Pump
and Compressor (reciprocating air and gas compressors); Ajax Iron Works
(compressors); Superior (engines and compressors); Joy Petroleum Equipment Group
(valves, couplings and wellheads); Joy Industrial Compressor Group
(compressors); and Cameron Iron Works (blowout preventers, ball valves, control
equipment and McEvoy-Willis wellhead equipment and choke valves).
MARKETS AND PRODUCTS
PETROLEUM PRODUCTION EQUIPMENT SEGMENT
CCC manufactures pressure control equipment used at the wellhead in the
drilling for and production and transmission of oil and gas, both onshore and
offshore. The primary products include wellheads, gate valves and ball valves,
BOPs and control systems and are marketed under the well-known brand names
Cameron(R), W-K-M(R), McEvoy(R), Demco(R), Willis(TM), Thornhill Craver(TM) and
Wheeling Machine Products(TM). The equipment is manufactured in a variety of
sizes and to various specifications with working pressure ratings up to 30,000
pounds per square inch ("p.s.i."). The wellhead equipment is designed to
support the casing and production pipe and includes casing head housings,
casing heads and tubing heads. Valves of different sizes and design are
assembled with other components into an assembly known as a "christmas tree,"
which is mounted on the wellhead equipment and is used to control the flow of
oil and gas from a producing well. Most christmas trees are custom designed to
meet individual customer requirements. During the second quarter of 1995, CCC
received previously anticipated orders in excess of $72 million from McDermott
Marine Construction Ltd. and Shell U.K. Exploration and Production ("Shell
Expro") for new subsea wellhead and production equipment to be delivered
beginning in the latter part of 1995 for installation in the North Sea.
CCC also manufactures subsea production systems, which consist of equipment
used to complete an oil or gas well on the sea floor. Subsea systems tend to be
highly sophisticated and generally require a high degree of technological
innovation. Subsea production systems fall into two general categories -- wet or
dry. Wet systems are designed to withstand exposure to seawater, may be diver or
remotely operated and are located on or below the ocean floor. Dry systems are
fully enclosed in a one-atmosphere capsule and are accessible by service
vehicles, including submarines.
In 1993, CCC introduced its SpoolTree(TM) subsea production system for
use in oil and gas fields with subsea completions that require frequent
retrieval of downhole equipment. With the SpoolTree(TM) system, well completion
and workover activities can be performed without a workover riser and removal
of the christmas tree and under conventional blowout preventer control, thereby
reducing the time and equipment needed to perform such activities.
CCC's drilling-related equipment includes ram and annular BOPs. The
drilling of an oil or gas well is done through BOPs located under the rig floor
and on top of the wellhead. The primary function of a BOP is to maintain well
control under all conditions. Ram-type preventers have two hydraulically
actuated steel rams with rubber inserts that are designed to close around the
drill pipe, sealing off the space below or, in the case of blind rams, to close
off the open hole. The annular-type BOP is attached above the ram BOPs and is
used to close off the well-bore using a donut-shaped rubber packer with steel
inserts that are compressed together by a hydraulically actuated piston. The
workover-type preventer is attached to the top of completed oil or gas wells to
control pressures when a variety of work is being performed through christmas
trees. CCC manufactures BOPs to meet pressure requirements of up to 25,000
p.s.i. and in diameters from 3 1/16 inches to 26 3/4 inches.
CCC also produces other drilling-related equipment, the most important of
which are choke manifolds and control systems. Choke manifolds are arrangements
of piping, valves and special valves, called chokes,
64
<PAGE> 67
which control pressures during drilling and, in the event of BOP closure, bleed
off excessive pressures. Control systems monitor well pressures and activate the
chokes, valves and BOPs.
CCC also manufactures ball valves and underwater pipeline tie-in and
pipeline repair equipment. A ball valve consists of a spherical plug, or ball,
with a hole running axially through it to allow the passage of gas or fluid.
Sealing surfaces are arranged so that a 90-degree turn of the plug will shut off
the flow. Ball valve sizes range from two inches to 56 inches in diameter with
working pressures of up to 6,000 p.s.i. Large diameter valves are used primarily
in natural gas transmission lines. Smaller valves are used in oil and gas
gathering and processing systems and in various types of industrial processes in
refineries and petrochemical plants. Subsea pipeline tie-in systems are used in
the connection of subsea pipelines to one another and to offshore platforms.
Pipeline repair systems are used in the repair of subsea pipelines.
CCC manufactures gate valves and butterfly valves for use in oil and gas
gathering and processing systems such as refineries and petrochemical plants.
Sizes range from two to 56 inches and pressures range up to 6,250 p.s.i. CCC
recently introduced the Cameron(R) Hi-Lo Trip Mechanical Pilot for Emergency
Shutdown valves that are designed for use in oil and gas production, pipelines,
plants and other areas where emergency shutdown is required.
CCC manufactures production chokes, control valves, drilling choke systems,
actuators, and pigging and production automation systems. A choke is a type of
valve which restricts and regulates the flow of a product through a flowline or
pipeline. Designs include a multiple orifice valve, needle and seat chokes, cage
style control chokes, rotary chokes and subsea chokes and actuators. The unique
multiple orifice valve design uses two adjacent discs, each with a pair of
openings. Cage style control chokes are used to solve erosion problems while
improving the precision of flow control. CCC recently introduced its new
Willis(TM) Stepping Linear Control Actuator, which is designed to provide remote
operation of certain Willis(TM) control chokes. CCC produces subsea chokes and
actuators used on subsea production equipment, including state-of-the-art subsea
retrievable chokes. Choke sizes range from one inch to six inches in diameter
with working pressures of up to 20,000 p.s.i. CCC recently introduced two new
actuators, the Cameron(R) AP and Compact Modular Actuators, designed for use on
its line of subsea gate valves. These valves are fail-close hydraulically
activated and are manufactured for operating pressures between 1,500 p.s.i. and
3,000 p.s.i.
CCC also manufactures threaded steel couplings for tubular products used in
the completion of oil, gas and water wells. These couplings are used to connect
lengths of well casing, production tubing and line pipe. Couplings are
manufactured to both industry and customer specifications, in sizes ranging from
one inch to 20 inches, utilizing a variety of grades of steel and thread types.
CCC provides complete integrated elastomer research, development and
manufacturing. These products are used in pressure and flow control equipment in
the Petroleum Production Equipment segment. This technology also supports the
petroleum, petrochemical, rubber molding and plastics industries in the
development and testing of elastomer and plastic products.
CCC markets approximately 80% of its petroleum production equipment
products directly to end-users through a worldwide network of sales and
marketing employees supported by agents in some international locations. Due to
the extremely technical nature of many of the products, the marketing effort is
further supported by a staff of engineering employees. The balance of CCC's
products are sold through established independent distributors.
The Petroleum Production Equipment segment's primary customers include
major oil and gas exploration and production companies, independent oil and gas
exploration and production companies, foreign national oil and gas companies,
engineering and construction companies, pipeline companies, drilling contractors
and rental equipment companies. Some valves are sold to various types of process
plants, such as refining and petrochemical, chemical and power generation.
Couplings are sold primarily to steel mills, threaders and distributors.
65
<PAGE> 68
COMPRESSION AND POWER EQUIPMENT SEGMENT
CCC's Compression and Power Equipment segment provides products and
services to the oil and gas production and transmission, industrial, process and
nonutility power generation markets. The primary products include engines,
reciprocating compressors, centrifugal air and gas compressors, gas turbines,
turbochargers, control systems and aftermarket parts and service. CCC markets
its products worldwide under the well-known brand names Ajax(R), Superior(R),
Cooper-Bessemer(R), Coberra(R), Pennsylvania Process(TM), En-Tronic(R) and
Joy(R).
Manufactured under the Cooper-Bessemer(R), Ajax(R) and Superior(R) brand
names, CCC's reciprocating products include both "integral" and "separable"
units. The integral gas engine-compressor concept, pioneered by CCC in the
1930s, is a unique two-cycle design that combines the unit's engine and
compressor on a single crankshaft. Integral engine-compressors can accommodate
wide swings in gas transmission pressure conditions and are frequently used in
single-stage transmission, multiple-stage boosting or gas injection/withdrawal
applications. CCC's Cooper-Bessemer(R) and Ajax(R) integral units range in power
from 30 to 13,500 horsepower. Over the past 50 years, more than 4,400
Cooper-Bessemer(R) integral engine-compressors, totaling over 6,500,000
horsepower, have been installed in 35 countries worldwide.
CCC manufactures four-cycle reciprocating power engines ranging from small,
six-cylinder "in-line" units, to large, 20-cylinder "V" configuration models.
They are available in spark-ignited (gas-fueled), diesel and dual-fuel (gas and
diesel-fueled) versions. Marketed under the Cooper-Bessemer(R) and Superior(R)
brand names, CCC power engines are used to drive reciprocating separable
compressors in natural gas gathering, boosting, injecting, processing and
storage/withdrawal applications. CCC's four-cycle engines range in power from
500 to 8,700 horsepower. CCC also manufactures its own lines of Superior(R) and
Pennsylvania Process(TM) reciprocating separable gas compressors. In addition,
CCC power engines drive electric generators in industrial, commercial,
municipal and government-operated independent power (nonutility) applications,
and pumps in both oil and gas related services. In 1988, CCC acquired the
Enterprise(R) engine aftermarket product line from IMO Delaval Inc., and today
provides parts, maintenance, overhaul and engineering services for previously
installed Enterprise(R) power engines in nuclear, oil and gas, marine and
municipal power applications.
All CCC integral gas engine-compressors and power engines are available
with state-of-the-art technology designed for reduced emissions to meet or
exceed government-regulated clean air standards. The CleanBurn(R) concept, which
was first developed and introduced by CCC in 1977, features a pre-ignition
firing chamber to reduce engine exhaust emissions without sacrificing fuel
economy. CleanBurn(R) "conversion kits" are also available to enable CCC
customers to maximize their original equipment investment by incorporating these
latest technological advancements into their previously installed Ajax(R),
Cooper-Bessemer(R), Enterprise(R) and Superior(R) engines.
For natural gas applications, CCC manufactures two types of rotating gas
compressors under the Cooper-Bessemer(R) brand name: pipeline centrifugal
compressors, which handle pressures up to 2,200 p.s.i.; and multi-stage barrel
compressors, designed for pressures to 6,500 p.s.i. The Cooper-Bessemer(R)
pipeline centrifugal compressor is recognized worldwide as one of the most
efficient high-flow compressors in gas transmission service. Cooper-Bessemer(R)
multi-stage barrel compressors are vertically split and sized to meet a wide
combination of flow and pressure requirements at continuous, full-load operation
in natural gas gathering, production, storage, artificial lift and reinjection
applications.
CCC provides gas turbines and gas turbine-driven compression and power
generation packages to the worldwide oil and gas related markets through Cooper
Rolls, its joint venture company with Rolls-Royce plc of London, England.
Marketed under the Coberra(R) brand name, Cooper Rolls(TM) gas turbines combine
a Rolls-Royce industrial gas generator and a Cooper-Bessemer(R) power turbine
to provide a compact, aero-derivative power source with high
horsepower-to-weight ratios. With over 23,000,000 hours of operating
experience, Coberra(R) gas turbines are one of the world market leaders in
their size range for oil and gas related applications. They provide up to
40,000 horsepower with high, simple-cycle thermal efficiencies and are commonly
installed both onshore and offshore as drivers for Cooper-Bessemer(R) rotating
gas compressors, water and oil pumps and electric generators.
66
<PAGE> 69
CCC manufactures turbochargers under the Cooper-Bessemer(R) brand name for
new CCC reciprocating engines and also provides factory repair of its own and
other manufacturers' turbochargers in a dedicated facility. High performance
turbochargers are necessary to achieve required exhaust emissions while
maintaining desired efficiency and operational flexibility. CCC is one of the
few engine manufacturers to design, produce and repair turbochargers.
CCC manufactures En-Tronic(R) control and analysis equipment for many of
its compression and power products, as well as for products produced by other
manufacturers. En-Tronic(R) controls provide state-of-the-art solutions to
advanced system requirements such as calculating and controlling low emissions
on gas turbines and engines, and all-electronic fuel control of gas turbine and
engine packages. En-Tronic(R) products use advanced, field-proven hardware and
software technology, utilizing microprocessors, cathode ray tubes and liquid
crystal displays, to optimize equipment reliability, safety and efficiency.
CCC manufactures Joy(R) integrally geared centrifugal air compressors used
by industrial plants as a source of power for the operation of hand tools,
actuation of control devices and to power automatic and semi-automatic
production equipment. These compressors are used in industries such as
automotive, container, textile, chemical, food and beverage and general
manufacturing. CCC serves the plant air market with two product lines of
compressors. The C-8 series covers the 300 to 1,250 horsepower range at
discharge pressures from 50 to 125 p.s.i. CCC's newest machine designed
specifically for industrial air applications is the Turbo-Air(R) 2000, which was
introduced in 1994. This machine provides the centrifugal compressor advantage
of higher efficiency with reliable and unattended operation down to a 150
horsepower unit. The larger Turbo-Air(R) series covers a horsepower range from
350 to 4,500 and is for plant air applications above 1,250 horsepower or where
the customer requires greater customization to meet particular specifications.
All components of the Turbo-Air(R) and C-8 series machines, including the
compressor, driver, lubrication system, control system and intercoolers, are
grouped on a common base into a ready-to-install package. This configuration
provides easy installation on a simple slab foundation at the customer's plant
location.
CCC's Compression and Power Equipment segment manufactures integral gear
centrifugal compressors for process applications where the air is used for its
content of oxygen, nitrogen, argon or other elements. In these cases, the
compressor is an integral part of the industrial process in industries, such as
air separation, pharmaceutical, fermentation, petrochemical, refining and
synthetic fuel. CCC serves the process air market with two product lines of
centrifugal compressors. The Joy(R) MSG(R) or Multi Stage Geared(TM) series
covers a range of 1,000 to 14,000 horsepower, handling air or nitrogen to
pressures up to 750 p.s.i. and volume flows up to 60,000 cubic feet per minute.
The Joy(R) MSG(R) series is a flexible modular design that can be customized in
aerodynamic components, materials of construction and packaging scope, thereby
providing an optimized compressor to meet a customer's unique requirements. The
Turbo-Air(R) series is a fully packaged unit that uses the modular and
customizing concepts of the Joy(R) MSG(R) series in the process air market from
350 to 4,500 horsepower.
The process and plant air centrifugal compressors manufactured by CCC
deliver oil-free compressed air to the customer, thus preventing oil
contamination of the manufactured products. Industrial markets worldwide are
increasingly requiring oil-free air for safety, operational and environmental
reasons.
CCC primarily sells its compression and power equipment direct to end-users
through a worldwide network of sales and marketing employees supported by agents
in some international locations. Due to the extremely technical nature of many
of the products, the marketing effort is further supported by a staff of
engineering employees. In addition, Ajax(R) integral engine-compressor units are
sold through independent distributors in North America and to rental companies.
Superior(R) engines and compressors are sold to independent packagers and
distributors in North America. Some Joy(R) and Turbo-Air(R) industrial
compressors are sold through sales representatives and independent distributors.
CCC's primary customers for compression and power equipment include the
major oil and gas companies, large independent oil and gas producers, gas
transmission companies, equipment leasing companies, petrochemical and refining
divisions of oil companies and chemical companies. Industrial and process
compressors are sold to durable goods manufacturers and process industries.
67
<PAGE> 70
AFTERMARKET SERVICES
CCC has a comprehensive worldwide aftermarket organization that provides
replacement parts, field service, major repairs and overhauls, unit installation
assistance and total vendor maintenance contracts. Customer requirements are
satisfied around the clock through a worldwide network of service and repair
centers and parts warehouses. As customers have drastically reduced their
staffing and shifted more responsibility to vendors, total vendor maintenance
contracts have become increasingly popular and CCC's aftermarket organizations
have responded. CCC provides all maintenance services for a customer's equipment
in a particular area from one service center. CCC also provides an inventory of
repair parts, service personnel, planning services and inventory and storage of
customers' idle equipment. CCC's large population of installed equipment
provides a solid base of business that is less cyclical than demand for new
equipment. Sales of aftermarket services constituted approximately 34% of CCC's
total sales in 1994. During the second quarter of 1995, CCC was awarded total
vendor maintenance contracts in excess of $58 million (over a five-year period,
with more than $13.5 million in the first year) by BP Exploration, Shell Expro
and Shell Petroleum Development Company of Nigeria for long-term maintenance of
oil and gas wellhead equipment in the North Sea and Nigeria.
BUSINESS STRATEGY
Over the years, CCC has achieved a leading position in each of the major
markets in which it participates. CCC's core strategy is to maintain its leading
positions as its markets grow, while at the same time pursuing cost reduction,
product development and selected market extension opportunities. An integral
part of this strategy is leveraging the benefits from the major cost reduction
and improvement programs implemented over the past five years. These programs
include facility rationalization and consolidation, product rationalization and
value engineering, upgraded manufacturing processes, new fully integrated
business systems and reengineering of business practices. Capital expenditures
for these programs have totaled approximately $310 million over the past five
years. Additionally, during the same period CCC has spent approximately $140
million which was reserved at the time of the acquisition of the businesses now
comprising the Petroleum Production Equipment segment as costs for major
improvement programs. These cost reduction and improvement programs are nearly
complete and have allowed CCC to remain a market leader and provide long-term
value to its customers. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition of CCC -- Liquidity After the Exchange
Offer."
MARKET GROWTH
CCC is one of the market leaders in the global market for petroleum
production equipment. CCC expects that near-term growth will be predominately in
the international sector. Countries around the world are seeking to reduce their
dependence on petroleum imports through onshore and offshore petroleum
exploration activities. CCC believes that it is well positioned in the North
Sea, the Middle East, the Commonwealth of Independent States and the Pacific Rim
to serve these growing markets. Plant and service center facilities in the
United States, Canada, the United Kingdom, France, Germany, Ireland, Norway,
Singapore, Mexico, Venezuela and Argentina provide CCC a broad, global breadth
of market coverage.
The international market is expected to be a major source of growth for the
CCC Compression and Power Equipment segment. The desire of both the developed
and the developing countries to expand their respective oil and gas transmission
capacity for both economic and political reasons will be one of the primary
factors affecting market demand. Additional establishment of industrial
infrastructure in the developing countries will necessitate the growth of basic
industries that require process compression equipment for air separation
facilities. Production and service facilities in the United States, Canada, the
United Kingdom, The Netherlands, Singapore and Venezuela provide this business
segment with the ability to serve the global marketplace.
In both of CCC's business segments, a large population of installed
engines, compression, and gas and oil production equipment exists in both the
U.S. and international market segments. The rugged, long-lived nature of the
equipment that exists in the field provides a more predictable and highly
profitable repair parts
68
<PAGE> 71
and service business. CCC expects that as increasing quantities of new units are
sold into the international markets, there should be a continuing growth in
market demand for aftermarket parts and service.
MARKET EXTENSION ACTIVITIES
In the U.S. markets, many oil and gas transmission companies and petroleum
exploration and production companies are seeking to downsize their maintenance
and service overhead structure. In response to this customer trend, both
segments of CCC are offering total vendor maintenance contracts to provide all
maintenance services for a significant amount of a customer's equipment situated
in a limited geographic area that can be served from one service center. Under
such contracts, CCC offers a readily available inventory of repair parts,
service personnel, planning services and inventory and storage of a customer's
idle equipment. A similar concept is being offered in those developing countries
where there is inadequate technical infrastructure to maintain the complex
equipment sold by CCC.
Another recent trend in the market is the increasing popularity of
partnerships and alliances between customers and suppliers. This concept
eliminates the normal, sometimes adversarial, customer/supplier relationship and
has resulted in significant cost reductions and delivery performance
improvements on major projects. CCC is among the industry leaders in alliance
and partnership arrangements and is actively pursuing these relationships.
NEW PRODUCT DEVELOPMENT
As petroleum exploration activities have increasingly been focused on
subsea locations, CCC's Petroleum Production Equipment segment has directed
much of its new product development efforts toward this market. In subsea
exploration, customers are particularly concerned about safety, environmental
protection and ease of installation and maintenance. CCC's reputation for high
quality and high dependability has given it a competitive advantage in the
areas of safety and environmental protection. A subsea production system called
the SpoolTree(TM), which was introduced in 1993, offers substantial cost
reduction to the customer because it is based upon a novel concept that
eliminates the need for a workover riser or removal of the christmas tree
during workover. CCC has pioneered this concept and has developed similar
products for land and platform applications, which significantly reduce
customer costs. In another development, CCC has introduced modular subsea
production systems consisting of several standard modules that can be assembled
into a customer-specific system significantly reducing engineering costs for a
project.
In the Compression and Power Equipment segment, CCC has developed a number
of new products to serve the oil and gas transmission market and the industrial
air compression market. An area of increasing importance in the oil and gas
transmission market is the reduction of environmentally harmful emissions from
the engines and turbines that drive the compression equipment. Building on its
20 years of experience with its CleanBurn(R) technology, and in conjunction
with Rolls-Royce plc, CCC has developed and is in the process of marketing new
Dry Low Emissions(TM) gas turbines, as well as conversion kits for the existing
Cooper Rolls(TM) units in the field. This technology significantly reduces the
level of emissions produced by gas turbine drivers. Additionally, in 1995, a
new line of En-Tronic(R) performance and monitoring control systems will be
introduced to aid in optimizing the performance and emission parameters of
engines and turbines. Over the past three years CCC has also introduced new
high speed reciprocating engines and compressors with improved reliability,
fuel efficiency and emissions performance. These new units utilize En-Tronic(R)
state-of-the-art CleanBurn(R) III micro-processor-based control systems. In
late 1994, CCC's centrifugal air compressor product line was expanded to
include the Turbo-Air(R) 2000 compressor, which extended the product line down
to the 150 horsepower range. CCC is able to offer lower horsepower users the
technological advantages of a centrifugal compressor. Chief among these
advantages are low energy consumption, low cost package installation and
maintenance, ease of automation and environmentally friendly oil-free air
delivery.
COST-REDUCTION OPPORTUNITIES
Over the past three years, manufacturing facilities in both the Petroleum
Production Equipment segment and the Compression and Power Equipment segment
have been rationalized, resulting in six plant closings, the
69
<PAGE> 72
movement of product lines to achieve economies of scale and the upgrading of the
remaining facilities. As production volumes increase to match rising market
demands, CCC has an opportunity to achieve considerable cost-reduction leverage.
There are also significant opportunities to achieve additional cost reductions
through business reengineering that is taking place in four major areas:
implementation of a fully integrated worldwide business system in the Petroleum
Production Equipment segment to enhance information flow aimed at optimizing the
global production planning, inventory management and capacity utilization; value
analysis/value engineering of all products to enhance customer acceptance while
significantly reducing the cost of manufacturing; reengineering of the order
fulfillment process to make it simpler, more focused and more responsive while
reducing administrative costs; and reengineering of the purchased materials
process to reduce the costs of procurement and of the materials procured.
COMPETITION
CCC competes in all areas of its operations with a number of other
companies, some of which have financial and other resources comparable to or
greater than those of CCC.
CCC believes it has a leading position in the petroleum production
equipment markets, particularly with respect to its high pressure products. In
these markets, CCC competes principally with Vetco Gray Inc. (a subsidiary of
Asea Brown Boveri) and FMC Corp. The principal competitive factors in the
petroleum production equipment markets are technology, quality, service and
price. CCC believes that several factors give it a strong competitive position
in these markets. Most significant are CCC's broad product offering, its
worldwide presence and reputation, its service and repair capabilities, its
expertise in high pressure technology and its experience in alliance and
partnership arrangements with customers and other suppliers.
CCC believes it also has a leading position in the compression and power
equipment markets. In these markets, CCC competes principally with General
Electric Company, Dresser-Rand Company, European Gas Turbines Inc., Ariel
Corporation, Caterpillar Inc., Waukesha-Pearce Industries Inc., Atlas-Copco AB,
Mannesmann Demag AG and Ingersoll-Rand Company. The principal competitive
factors in the compression and power equipment markets are engineering and
design capabilities, product performance, reliability and quality, service and
price. CCC believes that its strong competitive position is based on several
factors. CCC has a broad product offering and, unlike any of its competitors,
manufactures and sells both engines and compressors (both as separate units and
packaged together as a single unit). CCC led the industry in the introduction of
low engine emission technology and continues today as an industry leader in this
technology. CCC has a highly competent engineering staff and skilled technical
and service representatives, with service centers located throughout the world.
In all of its markets, CCC has strong brand recognition and an established
reputation for quality and service. CCC has a significant base of
previously-installed products, which provides a strong demand for aftermarket
parts and service. CCC has modern manufacturing facilities and state-of-the-art
testing capabilities. CCC is the only manufacturer of stationary engines and
compressors in the United States that operates its own cast and ductile iron
foundry, which gives CCC flexibility and total control of the metallurgy and
casting process for many of its products.
RESEARCH AND DEVELOPMENT
CCC actively engages in a continuing research and development program. CCC
also conducts research and development activities jointly with its customers.
Research and development activities include new and existing product development
testing and analysis, process and equipment development and testing and product
performance improvement. CCC continues to develop low engine emission
technology, where it is the recognized industry leader with its CleanBurn(R)
design. CCC also focuses its activities on reducing the overall cost to the
customer, which includes both the initial capital cost of the equipment and the
operating costs associated with the equipment, including energy consumption,
maintenance costs and environmental emissions. Examples of this work are the
Turbo-Air(R) 2000 compressor, which is an easily-installed packaged compressor
unit, and the SpoolTree(TM) subsea system, which significantly reduces the cost
and time required for well completion and workover activities.
70
<PAGE> 73
CCC actively participates in several national and international standards
organizations, including the American Petroleum Institute (API), International
Organization for Standardization (ISO), and American Society of Mechanical
Engineers (ASME). CCC personnel maintain leadership positions in both the API
and ISO. Involvement with these and other organizations is important in setting
the direction of the industry. CCC also participates in several research
consortiums in the areas of aerodynamics, rotor dynamics and bearing dynamics.
These include projects with the University of Virginia, Northern Research and
Engineering Corporation, Concepts International and Romac.
CCC's products are designed to satisfy the safety and performance standards
set by various industry groups such as API, ASME and Det Norske Veritas (DNV) or
by CCC's customers. Care is exercised throughout the manufacturing and final
testing process to ensure that products conform to industry, government and
customer specifications.
Expenditures for research and development sponsored by CCC were $8,546,000
for the year ended December 31, 1994, as compared to $9,752,000 in 1993 and
$10,554,000 in 1992.
MANUFACTURING
CCC has 19 manufacturing facilities in nine countries that conduct a broad
variety of processes, including machining, fabrication, assembly and testing
using a variety of forged and cast alloyed steels and stainless steel as the
primary raw materials. See "Business of CCC -- Properties" below. Over the past
three years, CCC has rationalized plants and products, closed six manufacturing
facilities, moved product lines to achieve economies of scale and upgraded the
remaining facilities. Manufacturing processes have been dramatically improved
and capital expenditures have totalled approximately $310 million over the past
five years. CCC maintains advanced manufacturing, quality assurance and testing
equipment geared to the specific products that it manufactures and uses
extensive process automation in its manufacturing operations. The manufacturing
facilities utilize computer aided numerical control tools and manufacturing
techniques that concentrate the equipment necessary to produce similar products
in one area of the plant in a configuration commonly known as a manufacturing
cell. One operator using cell manufacturing can monitor and operate several
machines, as well as assemble and test products made by such machines, thereby
improving operating efficiency and product quality while reducing the amount of
work-in-process and finished product inventories.
CCC believes that its test capabilities are critical to its overall
process. CCC has capabilities to test most equipment at full load, measuring all
operating parameters, efficiency and emissions. All process compressors for air
separation and all plant air compressors are given a mechanical and aerodynamic
test in a dedicated test center prior to shipment.
All of CCC's European manufacturing plants are ISO certified and API
licensed. Most of the U.S. plants are ISO certified or, if not, such
certification is in process. ISO is an internationally recognized verification
system for quality management.
INTERNATIONAL OPERATIONS AND EXPORTS
CCC markets and services its products worldwide, in substantially all of
the petroleum and gas producing, industrialized and emerging economic areas of
the world, including Canada, the North Sea/Europe, the Middle East, Latin
America, the Far East/Asia and Africa. CCC believes its significant presence,
experience and reputation in the international markets is a competitive
strength. CCC has nine manufacturing facilities and five service facilities
outside the United States. Approximately 59% of CCC's total 1994 sales were to
international markets. CCC's operations outside the United States are subject to
the usual risks of such operations, including changes in governmental policies,
foreign exchange restrictions and currency fluctuations. See "Special
Considerations -- Foreign Operations and Exports."
SUPPLIES AND RAW MATERIALS
The principal raw materials used by CCC are cast or forged iron and steel.
Such materials are generally available from a number of suppliers, and
accordingly, CCC is not dependent on any particular supplier. CCC
71
<PAGE> 74
currently does not have long-term contracts with its suppliers of raw materials,
but believes its sources of raw materials are reliable and adequate for its
needs. CCC has not experienced any significant supply problems in its operations
and does not anticipate any significant supply problems in the foreseeable
future.
BACKLOG
CCC's backlog was approximately $464 million at December 31, 1994 as
compared to approximately $455 million at December 31, 1993 and approximately
$665 million at December 31, 1992. CCC's backlog was approximately $538.0
million at March 31, 1995 as compared to $487.5 million at March 31, 1994.
Backlog consists of firm customer orders for which a purchase order has been
received, satisfactory credit or financing arrangements exist and delivery is
scheduled.
PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY
CCC believes that the success of its business depends more on the technical
competence, creativity and marketing abilities of its employees than on any
individual patent, trademark or copyright. Nevertheless, as part of its ongoing
research, development and manufacturing activities, CCC has a policy of seeking
patents when appropriate on inventions concerning new products and product
improvements. CCC owns 418 United States patents, which expire beginning in 1995
through 2011. In addition, CCC owns 973 foreign patents, which expire beginning
in 1995 through 2012.
Although in the aggregate these patents and CCC's trademarks are of
considerable importance to the manufacturing and marketing of many of its
products, CCC does not consider any single patent or trademark or group of
patents or trademarks to be material to its business as a whole, except the
Cameron(R), Cooper-Bessemer(R), Coberra(R) and Cooper Rolls(TM) trademarks.
Other important trademarks used by CCC include Ajax(R), Superior(R),
En-Tronic(R), Enterprise(R), W-K-M(R), McEvoy(R), Willis(TM), Demco(R),
Pennsylvania Process(TM) and Thornhill Craver(TM). CCC has the right to use
the trademark Joy(R) on centrifugal air compressors until November 1995 and on
aftermarket parts until November 2027. CCC has registered its trademarks in
the countries where such registration is deemed material.
CCC also relies on trade secret protection for its confidential and
proprietary information. CCC routinely enters into confidentiality agreements
with its employees and suppliers. There can be no assurance, however, that
others will not independently obtain similar information or otherwise gain
access to CCC's trade secrets.
EMPLOYEES
As of May 1, 1995, CCC had approximately 8,000 employees, of which
approximately 2,800 were represented by labor unions. CCC believes its current
relations with employees are good. The only significant labor contract expiring
during 1995 covers 447 employees at the Compression and Power Equipment plant in
Grove City, Pennsylvania.
72
<PAGE> 75
PROPERTIES
CCC has 19 manufacturing plants, two foundries, seven warehouse and
distribution centers, 19 service and repair centers and 86 sales offices. CCC
leases its corporate headquarters space in Houston, Texas. The significant
facilities are as follows:
PETROLEUM PRODUCTION EQUIPMENT
<TABLE>
<CAPTION>
LEASE
SQUARE OR
LOCATION FACILITY TYPE FEET OWNED
- -------------------------------- ----------------------------------- ------- -------
<S> <C> <C> <C>
Missouri City, TX............... Manufacturing -- industrial valves; 600,000 Owned
gate and ball valves
Ville Platte, LA................ Manufacturing -- land and marine 284,890 Owned
wellheads; ball valves; subsea 68,282 Leased
trees
Oklahoma City, OK............... Manufacturing -- butterfly, gate 218,939 Owned
and ball valves; chokes
Brookshire, TX.................. Manufacturing -- elastomer seals 82,500 Owned
Pine Bluff, AR.................. Manufacturing -- couplings 153,000 Owned
Richmond, TX.................... Foundry 256,475 Leased
Buenos Aires, Argentina......... Manufacturing -- land wellheads; 44,300 Owned
drilling products; control systems;
gate and ball valves
Beziers, France................. Manufacturing -- land wellheads; 420,765 Owned
drilling products; gate and ball
valves
Celle, Germany.................. Manufacturing -- control systems; 81,022 Owned
land and marine wellheads; drilling
products
Longford, Ireland............... Manufacturing -- chokes 42,000 Leased
Jurong Town, Singapore.......... Manufacturing -- land and marine 114,800 Owned
wellheads; repair services
Leeds, England.................. Manufacturing -- land and marine 335,000 Owned
wellheads; gate valves; subsea
trees
Aberdeen, Scotland.............. Distribution and Aftermarket 141,500 Owned
Services -- subsea and platform
wellheads; gate valves; drilling
equipment
Berwick, LA..................... Distribution, Aftermarket Services 212,800 Owned
and Warehousing -- wellheads; gate
valves; drilling equipment
Edmonton, Alberta, Canada....... Manufacturing, Distribution and 79,000 Owned
Aftermarket Services -- land
wellheads; gate and ball valves;
chokes
Hoogezand, The Netherlands...... Distribution and Aftermarket 17,200 Owned
Services -- wellheads; gate valves
Liberty, TX..................... Manufacturing, Distribution and 126,000 Owned
Aftermarket Services -- drilling
and production risers; land and
marine wellheads; gate valves;
drilling equipment
</TABLE>
(Table continued on following page)
73
<PAGE> 76
<TABLE>
<CAPTION>
LEASE
SQUARE OR
LOCATION FACILITY TYPE FEET OWNED
- -------------------------------- ----------------------------------- ------- -------
<S> <C> <C> <C>
Stavanger, Norway............... Distribution and Aftermarket 44,000 Owned
Services -- subsea and platform
wellheads; gate valves; drilling
equipment
Houston, TX..................... Offices 270,363 Leased
COMPRESSION AND POWER EQUIPMENT
Mount Vernon, OH................ Manufacturing -- gas turbines and 858,372 Owned
centrifugal compressors;
turbochargers; reciprocating
compressors; controls
Springfield, OH................. Manufacturing -- engines; 541,492 Owned
reciprocating compressors
Grove City, PA.................. Manufacturing -- engines; 685,193 Owned
reciprocating compressors; foundry
Oklahoma City, OK............... Manufacturing -- engine assembly 170,992 Owned
and packaging of engines and
compressors
Buffalo, NY..................... Manufacturing -- centrifugal air 192,835 Owned
compressors
Bootle, England................. Manufacturing -- assembly; 160,700 Leased
packaging and testing of engines
and compressors
Hengelo, The Netherlands........ Manufacturing, Sales and 14,000 Leased
Aftermarket Services -- controls
Grand Prairie, TX............... Aftermarket Services, Distribution 40,053 Leased
Center and Sales
East Kilbride, Scotland......... Distribution, Packaging and 16,800 Leased
Aftermarket Services -- centrifugal
air compressors
Jurong Town, Singapore.......... Aftermarket Services, Branch Office 14,400 Owned
and Warehouse
</TABLE>
CCC believes its facilities are suitable for their present and intended
purposes and are adequate for CCC's current and anticipated level of operations.
ENVIRONMENTAL MATTERS
CCC is subject to numerous Federal, state, local and foreign laws and
regulations relating to the storage, handling, emission and discharge of
materials into the environment, including CERCLA, the Clean Water Act, the Clean
Air Act (including the 1990 Amendments) and the Resource Conservation and
Recovery Act. CCC believes that its existing environmental control procedures
are adequate and it has no current plans for substantial capital expenditures in
this area. As part of Cooper, CCC has had an environmental policy that confirms
its commitment to a clean environment and to compliance with environmental laws.
CCC has an active environmental management program aimed at compliance with
existing environmental regulations and elimination or significant reduction in
the generation of pollutants in the manufacturing processes. CCC's management
intends to continue these policies and programs.
CCC has been identified as a potentially responsible party ("PRP") with
respect to 12 sites designated for cleanup under CERCLA or similar state laws,
which impose liability for cleanup of certain waste sites and for related
natural resource damages without regard to fault or the legality of waste
generation or disposal. Persons liable for such costs and damages generally
include the site owner or operator and persons that
74
<PAGE> 77
disposed or arranged for the disposal of hazardous substances found at those
sites. Although CERCLA imposes joint and several liability on all PRPs, in
application, the PRPs typically allocate the investigation and cleanup costs
based upon the volume of waste contributed by each PRP. Settlements often can be
achieved through negotiations with the appropriate environmental agency or the
other PRPs. PRPs that contributed less than 1% of the waste are often given the
opportunity to settle as "de minimis" parties, resolving liability for a
particular site.
CCC does not own or operate any of the sites with respect to which it has
been identified as a PRP; in each case, CCC is identified as a party that
disposed of waste at the site. With respect to 11 of the sites, CCC's share of
the waste volume is estimated to be less than 1%. CCC is the major PRP at one
site, the Osborne Landfill in Grove City, Pennsylvania. CCC's facility in Grove
City disposed of wastes at the Osborne Landfill from the early 1950s until 1978.
Cooper, on behalf of CCC, developed a remedial plan, which was accepted by the
U.S. Environmental Protection Agency (the "EPA") as the preferred remedy for the
site. The EPA issued an order to Cooper in 1991 and remediation is in process.
Pursuant to the Asset Transfer Agreement, CCC has assumed responsibility for the
remedial plan and compliance with the EPA order.
CCC has an accrued liability on its balance sheet to the extent costs are
known for the 12 sites. Although estimates of the cleanup costs have not yet
been made for certain of these sites, CCC believes, based on its preliminary
review and other factors, that the costs to CCC relating to these sites will not
have a material adverse effect on its results of operations, financial condition
or liquidity. However, no assurance can be given that the actual costs will not
exceed the estimates of the cleanup costs once determined. Pursuant to the Asset
Transfer Agreement, CCC assumed liability with respect to, and has agreed to
indemnify Cooper for, the cleanup costs associated with the 12 sites.
CCC also has ongoing activities at various owned properties relating to
environmental compliance. CCC has an accrued liability on its balance sheet for
the known costs associated with these activities.
CCC does not currently anticipate any material adverse effect on its
results of operations, financial condition or competitive position as a result
of compliance with Federal, state, local or foreign environmental laws or
regulations or cleanup costs of the sites discussed above. However, some risk of
environmental liability and other costs is inherent in the nature of CCC's
business, and there can be no assurance that material environmental costs will
not arise. Moreover, it is possible that future developments, such as
promulgation of regulations implementing the 1990 amendments to the Clean Air
Act and other increasingly strict requirements of environmental laws and
enforcement policies thereunder, could lead to material costs of environmental
compliance and cleanup by CCC.
LEGAL PROCEEDINGS
CCC is a party to various other legal proceedings and administrative
actions in addition to those discussed under "Business of CCC -- Environmental
Matters" above, all of which are of an ordinary or routine nature incidental to
the operations of CCC. In the opinion of CCC's management, such proceedings and
actions should not, individually or in the aggregate, have a material adverse
effect on CCC's results of operations or financial condition.
75
<PAGE> 78
MANAGEMENT
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth as of May 1, 1995, information as to the
directors, director nominees and executive officers of CCC.
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------------- --- --------------------------------------
<S> <C> <C>
Robert Cizik.......................... 64 Chairman of the Board
Sheldon R. Erikson.................... 53 President and Chief Executive Officer
and Director
Michael J. Sebastian.................. 64 Director
Nathan M. Avery....................... 59 Director Nominee
Grant A. Dove......................... 66 Director Nominee
David Ross............................ 54 Director Nominee
Thomas R. Hix......................... 47 Senior Vice President, Finance and
Chief Financial Officer
Franklin Myers........................ 42 Senior Vice President, General Counsel
and Secretary
</TABLE>
Robert Cizik has been Chairman of the Board of CCC since November 1994 and
continues to serve as Chairman and Chief Executive Officer of Cooper. He joined
Cooper in 1961 and was named President and Chief Operating Officer in 1973. In
1975 he was elected Chief Executive Officer and in 1983 he was elected Chairman
of the Board of Cooper. He graduated with honors from the University of
Connecticut, received an M.B.A. degree from the Harvard Graduate School of
Business Administration and was awarded an Honorary LL.D from Kenyon College. He
is a member of the Board of Directors of Air Products and Chemicals Company;
Harris Corporation; Panhandle Eastern Corporation; and Temple-Inland Inc.
Sheldon R. Erikson has been President and Chief Executive Officer of CCC
since January 1995. He was Chairman of the Board from 1988 to 1995 and President
and Chief Executive Officer from 1987 to 1995 of The Western Company of North
America, an international petroleum service company engaged in pressure pumping,
well stimulating and cementing. Previously, he was President of Joy Petroleum
Equipment Group of Joy Manufacturing Company. Prior to joining Joy, he served as
President of the Petroleum Services Group and the Oilfield Services Group of NL
Industries, Inc., as well as Executive Vice President and Chief Operating
Officer of Digicon, Inc., Group Vice President of the Plastic and Chemicals
Group of Hoover Universal Corporation and General Manager of the Mining Products
Department of General Electric Company. Mr. Erikson has an M.B.A. degree from
the Harvard Graduate School of Business Administration and studied engineering
and economics at the University of Illinois. He is a member of the Board of
Directors of The Bettis Corporation and Triton Energy Corporation.
Michael J. Sebastian has been Executive Vice President, Operations for
Cooper since February 1982, responsible for Cooper's former Petroleum &
Industrial Equipment segment. Mr. Sebastian has a B.S.M.E. degree from Santa
Clara University and has completed the Advanced Management Program at the
Harvard Graduate School of Business Administration. Mr. Sebastian is a director
of Quanex Corporation and Gardner Denver Machinery Inc.
Nathan M. Avery has been Chairman of the Board, President and Chief
Executive Officer of Galveston-Houston Company since 1972. He has a B.S. in
Petroleum Engineering from the Colorado School of Mines.
Grant A. Dove has been since 1991 a Managing Partner of Technology
Strategies and Alliances, which performs strategic planning and investment
banking services. He was Chief Executive Officer of Microelectronics and
Computer Technology Corporation from 1987 to 1991 and currently serves as
Chairman and Director. From 1982 until 1987 he was Executive Vice President of
Texas Instruments Incorporated and previously served as Senior Vice President.
He is Chairman and Director of Optek Technology, Inc., Director
76
<PAGE> 79
of U.S. West Inc., Control Data Systems, Inc., Net Worth, Inc., and Pinpoint
Communications Inc. He has a B.S. degree in Electrical Engineering from the
Virginia Polytechnic Institute and State University.
David Ross III is an Adjunct Professor and member of the Board of Overseers
of the Jesse H. Jones Graduate School of Administration at Rice University. From
1987 until 1993 he was Chairman and Chief Executive Officer of the Sterling
Consulting Group, a firm which provides analytical research, planning and
evaluation services to companies in the oil and gas industry. Between 1984 and
1987 he was a principal in the Sterling Group, a firm which participates in
leveraged buyouts, primarily in the chemical industry, and Camp, Ross, Santoski
& Hanzlik, Inc., which provides planning and consulting services to the oil and
gas industry. He has a B.A. degree in mathematics from Yale and an M.B.A. degree
from the Harvard Graduate School of Business Administration.
Thomas R. Hix has been Senior Vice President, Finance and Chief Financial
Officer of CCC since January 1995. He was Senior Vice President of Finance,
Treasurer and Chief Financial Officer of The Western Company of North America
from 1993 to 1995. He was Executive Vice President and Chief Financial Officer
of Oceaneering International from 1986 to 1993 and Executive Vice President in
1993. Previously, he was Controller and Vice President of Administration for the
Western Oceanic Drilling unit of The Western Company of North America as well as
an audit manager for Coopers & Lybrand. He has a B.B.A. degree in accounting
from Texas Tech University, an M.B.A. degree from Pepperdine University and is a
Certified Public Accountant.
Franklin Myers has been Senior Vice President, General Counsel and
Secretary of CCC since April 1995. He was Vice President and General Counsel
from 1988 to 1994, Secretary from 1988 to 1992, and Senior Vice President and
General Counsel from 1994 to April 1995 of Baker Hughes Incorporated. Prior to
joining Baker Hughes he served for 10 years as an attorney at the law firm of
Fulbright & Jaworski, the last three years as a partner. He holds a B.S. degree
in industrial engineering from Mississippi State University and a J.D. degree
from the University of Mississippi.
BOARD OF DIRECTORS
Prior to completion of the Exchange Offer, the Board of Directors of CCC
will be composed of three directors: Messrs. Cizik, Erikson and Sebastian. The
number of directors on the Board will increase to six upon consummation of the
Exchange Offer. The Amended CCC Certificate, which will be filed with the
Secretary of State of the State of Delaware prior to the Expiration Date,
provides that the Board of Directors shall have no less than five and no more
than 15 members and shall be divided into three classes. The members of each
class of directors will serve for staggered three-year terms. Following the
Exchange Offer, the Board will be composed of two Class I directors (Mr. Dove
and Mr. Ross), two Class II directors (Mr. Erikson and Mr. Cizik) and two Class
III directors (Mr. Avery and Mr. Sebastian), whose initial terms will expire
upon the election and qualification of directors at the annual meetings of
shareholders to be held in 1996, 1997 and 1998, respectively. At each annual
meeting of shareholders, directors will be elected for a full term of three
years to succeed those directors whose terms are expiring.
CCC intends to establish an Audit Committee and a Compensation Committee.
The Audit Committee will be composed of independent directors. The Compensation
Committee will be composed only of members of CCC's Board of Directors who are
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act,
as amended from time to time, and "outside directors" within the meaning of
Section 162(m) of the Code, as amended from time to time.
CCC's nonemployee directors each will receive an annual retainer of
$30,000, one-third of which will be paid in stock options and the remainder, at
the election of the director, in cash or additional stock options. See
"Management -- Stock Option Plan for Nonemployee Directors." In addition,
nonemployee directors each will receive meeting attendance fees of $1,000 per
meeting for board meetings and $500 per committee meeting not held in
conjunction with a regular board meeting. All directors will be reimbursed for
expenses incurred in connection with attending board and committee meetings.
77
<PAGE> 80
EXECUTIVE COMPENSATION
Messrs. Erikson, Hix and Myers have entered into employment agreements in
respect of their employment with CCC. The following discussion is a summary of
the material provisions of the employment agreements, copies of which are filed
as exhibits to the Registration Statement of which this Offering
Circular - Prospectus forms a part. The terms of the employment agreements are
subject to approval by the Compensation Committee of the Board of Directors of
CCC.
Mr. Erikson has entered into an employment agreement with Cooper pursuant
to which he has accepted the position of President, Chief Executive Officer and
Director of CCC effective January 2, 1995 (the "Erikson Employment Agreement").
The Erikson Employment Agreement provides that Mr. Erikson's base salary will be
$500,000 per year and future increases will be subject to the discretion of the
CCC Board of Directors. Mr. Erikson will receive a guaranteed bonus of $250,000
for calendar year 1995, payable at the first CCC Board of Directors meeting in
1996, provided Mr. Erikson is an employee of CCC on December 31, 1995.
The Erikson Employment Agreement provides for the grant of an option to
purchase shares of CCC Common Stock in an amount equal to an initial market
value of $2.5 million with an exercise price (the "Exercise Price") equal to the
average market price per share of Cooper Common Stock on the NYSE during the
pendency of the Exchange Offer multiplied by a fraction the numerator of which
is one and the denominator of which is the number of shares of CCC Common Stock
to be received for each share of Cooper Common Stock in the Exchange Offer. The
option expires ten years following the Expiration Date. The shares of CCC Common
Stock subject to the option vest in three equal installments on the first,
second and third anniversaries of the Expiration Date.
If Mr. Erikson's employment is terminated prior to the completion of the
Exchange Offer for any reason other than "Cause" (as defined below) or
abandonment of the Exchange Offer, Mr. Erikson will be paid $750,000 pursuant to
the terms of the Erikson Employment Agreement conditioned upon Mr. Erikson
signing a waiver and release of all claims in respect of his employment under
the employment agreement and his subsequent termination (the "Waiver and
Release"). The Erikson Employment Agreement provides that in the event the
Exchange Offer is abandoned or not completed prior to December 31, 1995, Mr.
Erikson shall be entitled to receive a separation payment of $750,000,
conditioned upon signing the Waiver and Release, which if accepted by Mr.
Erikson shall be deemed a voluntary termination of his employment. "Cause" is
defined in the Erikson Employment Agreement as (i) acts of dishonesty
constituting a felony and resulting or intended to result directly or indirectly
in substantial gain or personal enrichment at the expense of Cooper; and (ii)
the willful and continued failure substantially to perform his duties with
Cooper (other than as a result of incapacity due to mental or physical illness)
after a demand in writing for substantial performance, which identifies the
manner in which Mr. Erikson's performance is deficient, and such failure to
perform results in demonstrably material injury to Cooper. The Erikson
Employment Agreement provides that termination shall not be for Cause if such
termination took place as a result of (a) bad judgment or negligence; (b) any
act or omission without the intention of gaining therefrom directly or
indirectly a profit to which he was not legally entitled; (c) any act or
omission believed to have been in or not opposed to the interest of Cooper; or
(d) any act or omission in respect of which a determination is made that the
applicable standard of conduct prescribed for indemnification or reimbursement
or payment of expenses under the Cooper Regulations or the laws of the State of
Texas was met.
Upon termination, Mr. Erikson is entitled to receive medical benefits for a
period of up to one year following the date of termination (unless provided by
another employer) and coverage under Cooper's Officers and Directors Indemnity
Insurance Policy for actions taken on behalf of Cooper.
The Erikson Employment Agreement provides that any dispute or controversy
arising under or in connection with the agreement will be settled exclusively by
arbitration in Houston, Texas in accordance with the rules of the American
Arbitration Association then in effect. All expenses incurred in connection with
such arbitration will be paid by Cooper. CCC intends to enter into an agreement
with Mr. Erikson substantially similar to the Erikson Employment Agreement.
78
<PAGE> 81
Mr. Hix has entered into an employment agreement with CCC pursuant to which
he accepted the position of Senior Vice President, Finance and Chief Financial
Officer effective January 4, 1995 (the "Hix Employment Agreement"). The Hix
Employment Agreement provides that Mr. Hix's base salary will be $240,000 per
year, and he will receive a guaranteed bonus of $100,000 for calendar year 1995,
payable at the first CCC Board meeting in 1996, provided he is an employee of
CCC on December 31, 1995.
In addition, the Hix Employment Agreement provides for the grant of an
option to purchase shares of CCC Common Stock in an amount equal to an initial
market value of $1.0 million with an exercise price determined in the same
manner as in the Erikson Employment Agreement. The option expires ten years
following the Expiration Date. The shares of CCC Common Stock subject to the
option vest in three equal installments on the first, second and third
anniversaries of the Expiration Date.
The other terms and conditions contained in the Hix Employment Agreement
are substantially similar to those contained in the Erikson Employment
Agreement, except that Mr. Hix will receive $340,000 upon termination for any
reason other than Cause or in the event that the Exchange Offer is abandoned or
not completed prior to December 31, 1995, and Mr. Hix exercises his right to
terminate his employment with CCC.
Mr. Myers has entered into an employment agreement with CCC pursuant to
which he accepted the position of Senior Vice President, General Counsel and
Secretary effective April 1, 1995 (the "Myers Employment Agreement"). The Myers
Employment Agreement provides that Mr. Myers' base salary will be $240,000 per
year, and he will receive a guaranteed bonus of $100,000 for calendar year 1995
in addition to $100,000 in payment of a bonus which he would have received from
his prior employer, in each case payable at the first CCC Board meeting in 1996,
provided he is an employee of CCC on December 31, 1995. The other terms and
conditions contained in the Myers Employment Agreement are substantially similar
to those contained in the Hix Employment Agreement.
LONG-TERM INCENTIVE PLAN
The Board of Directors of CCC has adopted and Cooper as sole shareholder
has approved the Cooper Cameron Corporation Long-Term Incentive Equity Plan (the
"Incentive Plan"). Under the Incentive Plan, designated employees of CCC and its
subsidiaries, including executive officers, will be eligible from time to time
to receive awards in the form of stock options, stock appreciation rights,
restricted stock grants or performance shares as determined by the Compensation
Committee. The Incentive Plan is intended to promote the long-term financial
interests of CCC by encouraging employees to acquire an ownership position in
CCC and to provide incentives for employee performance.
An aggregate of 2,500,000 shares of CCC Common Stock has been reserved for
issuance under the Incentive Plan, subject to adjustment in the event of a stock
split, stock dividend or other change in the CCC Common Stock or the capital
structure of CCC. The maximum number of shares which may be covered by awards
granted under the Incentive Plan during any calendar year to any individual who
is an "Executive Officer" of CCC, as that term is defined in Rule 3b-7 under the
Exchange Act, is 500,000 shares.
The Incentive Plan will be administered by the Compensation Committee of
the Board of Directors. Subject to the provisions of the Incentive Plan, the
Compensation Committee will be authorized to determine who may participate in
the Incentive Plan, the number and types of awards made to each participant and
the terms, conditions and limitations applicable to each award. In addition, the
Compensation Committee will have the exclusive power to interpret the Incentive
Plan and to adopt such rules and regulations as it may deem necessary or
appropriate for purposes of administering the Incentive Plan. Subject to certain
limitations, the Board of Directors will be authorized to amend, modify or
terminate the Incentive Plan to meet any changes in legal requirements or for
any other purpose permitted by law; provided, however, that no amendment which
requires shareholder approval in order for the Incentive Plan to continue to
comply with either Rule 16b-3 under the Exchange Act or Section 162(m) of the
Code (each as amended from time to time) shall be effective unless the same
shall be approved by the requisite vote of the shareholders of CCC.
79
<PAGE> 82
Stock Options. Under the Incentive Plan, the Committee is authorized to
grant options to purchase shares of CCC Common Stock, including options
qualifying as "incentive stock options" under Section 422 of the Code, to
employees as additional compensation for their services to CCC. After the
Exchange Offer, options granted will be subject to adjustment in the event of a
stock split, stock dividend or other change in the CCC Common Stock or the
capital structure of CCC.
Options shall be exercisable over such period as may be determined by the
Compensation Committee, but no incentive stock option may be exercised after ten
years from the date of grant. Options may be exercisable in installments as
determined by the Compensation Committee. Options will be evidenced by option
agreements. No option will be transferable other than by will or by the laws of
descent and distribution. The exercisability of options (or lack thereof)
following termination of service shall be determined by the Compensation
Committee, subject in any case to the foregoing limitation of the maximum term
of stock options granted under the Incentive Plan. The purchase price of CCC
Common Stock subject to an option shall not be less than 100% of the fair market
value of such CCC Common Stock (as defined in the Incentive Plan) on the date of
grant. Such purchase price shall be paid in full in cash, CCC Common Stock, or
such other consideration as the Compensation Committee deems appropriate.
The Board of Directors of CCC has authorized the issuance of options to
certain officers and other key employees of CCC. The options will vest one-sixth
on the first anniversary date of the Expiration Date, one-third on each of the
second and third anniversary dates of the Expiration Date and one-sixth on the
fourth anniversary date of the Expiration Date. The term of the options is ten
years. The aggregate number of options will be the number which equals
$18,970,000 divided by the Exercise Price (as defined in the Erikson Employment
Agreement). Such grants are intended to represent the grant of options for key
employees for the initial two years of operations of CCC. The grant of options
is subject to approval by the Compensation Committee of the Board of Directors
once the entire board has been constituted. Messrs. Erikson, Hix and Myers will
be entitled to options equaling $5,000,000, $2,000,000 and $2,000,000,
respectively, divided by the Exercise Price. The exercise price of the options
is the Exercise Price, and the grants to Messrs. Erikson, Hix and Myers will be
made in lieu of and in satisfaction of the options described in their respective
employment agreements.
The Board of Directors of CCC has also authorized certain key officers and
employees to receive options in lieu of all or part of their salary for the year
beginning July 1. Messrs. Erikson, Hix and Myers may elect to take all or part
of their salary in options for such year. Six other key employees may elect to
receive options for up to $60,000 of each of their annual salaries. The options
will be exercisable on the first anniversary of the Expiration Date and are not
terminable upon leaving the employment of CCC. The term of the options will be
ten years. The options will be priced at 27.5% of the Exercise Price, which
percentage was determined to be fair based on independent valuation advice
received by the Board of Directors. The employees will receive the number of
options determined by dividing the salary foregone by such price. The grant of
the options is subject to approval by the Compensation Committee of the Board of
Directors once the entire board has been constituted. The exercise price of the
options will be the Exercise Price.
Stock Appreciation Rights. Under the Incentive Plan, the Compensation
Committee also may grant stock appreciation rights either in tandem with an
option or alone. Stock appreciation rights granted in tandem with a stock option
may be granted at the same time as the stock option or at a later time. A stock
appreciation right shall entitle the participant to receive from CCC an amount
payable in cash, in shares of CCC Common Stock or a combination of cash and CCC
Common Stock equal to the positive difference between the fair market value of a
share of CCC Common Stock on the date of exercise of such right and the grant
price of such right. No stock appreciation rights will be transferable other
than by will or by the laws of descent and distribution. The exercisability of a
stock appreciation right (or lack thereof) upon a termination of the holder's
employment shall be determined by the Compensation Committee.
Restricted Stock Awards. Under the Incentive Plan, the Compensation
Committee may grant shares of restricted stock, which are subject to forfeiture
to CCC under such conditions and for such period of time as the Compensation
Committee may determine. The Compensation Committee shall determine the
conditions or restrictions of any restricted stock awards, which may include
restrictions on transferability, requirements of continued employment,
individual performance or CCC's financial performance.
80
<PAGE> 83
Performance Shares. Under the Incentive Plan, the Compensation Committee
may grant performance shares that are earned only after the attainment of
predetermined performance targets during a performance period as established by
the Compensation Committee. Performance shares are convertible into CCC Common
Stock, cash or a combination of both as determined by the Award Agreement. At
the end of the performance cycle, the Compensation Committee shall determine the
number of performance shares that have been earned on the basis of CCC's
performance in relation to the performance goals. A participant must be an
employee at the end of the performance cycle to receive the performance shares
or units; provided, however, that if a participant who is not an Executive
Officer dies, retires, becomes disabled or ceases to be an employee with the
Compensation Committee's consent prior to the end of the cycle, the Compensation
Committee may authorize total or partial payment to him or his legal
representative and if a participant who is an Executive Officer dies or becomes
disabled, the Compensation Committee may authorize total or partial payment to
him or his legal representative. Performance shares may not be sold,
transferred, assigned, pledged or otherwise encumbered so long as such
performance shares remain restricted.
In accordance with Section 162(m) of the Code, the Compensation Committee
will establish the performance goals that must be met in order for performance
share awards granted to Executive Officers to become payable and the amount
payable, or the formula for determining the amount payable, to each Executive
Officer if the performance share award granted to such Executive Officer becomes
payable. Performance criteria for performance share awards to Executive Officers
may include any or all of the following: (i) CCC's return on equity, assets,
capital or investment, (ii) pre-tax or after-tax profit levels of CCC or any
subsidiary or business segment of CCC, or any combination of the forgoing,
and/or (iii) changes in the market price of CCC Common Stock. The performance
goals established by the Committee for each performance share award will specify
achievement targets with respect to each applicable performance criterion
(including a threshold level of performance below which no amount will become
payable with respect to such award). To the extent applicable, any such
performance goal shall be determined in accordance with generally accepted
accounting principles and reported upon by CCC's independent accountants. Each
award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
performance goals established by the Compensation Committee may be (but need not
be) different for each performance period, and different goals may be applicable
to awards to different Executive Officers. Payment shall be made with respect to
a performance share award to an Executive Officer only after the attainment of
the applicable performance goals has been certified by the Compensation
Committee.
No Executive Officer may receive a performance share payment with respect
to any calendar year which exceeds $2,000,000 or, if greater, the fair market
value of 500,000 shares of CCC Common Stock, as of the payment date of such
award. If a performance period is longer than one year, the performance share
payment with respect to any calendar year which is partially or wholly included
in the performance period shall be deemed to be a prorated portion of the
performance share payment with respect to the complete performance period. If
two or more performance periods run concurrently during any calendar year, the
performance share payment with respect to such calendar year shall be deemed to
be the aggregate of the allocable performance share payments with respect to
each such performance period.
Effect of Change of Control. The Incentive Plan provides that the
Compensation Committee shall have discretion to accelerate the vesting of
certain benefits in the event of a "Change of Control" (other than the Exchange
Offer) of CCC. A Change of Control will be deemed to have occurred if either (i)
any person or group acquires beneficial ownership of 20% of the voting
securities of CCC, (ii) there is a change in the composition of a majority of
the Board of Directors within any two-year period which change is not approved
by certain of the directors who were directors at the beginning of such two-year
period, or (iii) a change in control of CCC (as such term is used in Schedule
14A promulgated under the Exchange Act) otherwise occurs.
FEDERAL INCOME TAX CONSEQUENCES OF THE INCENTIVE PLAN
The following is a summary of the principal Federal income tax consequences
associated with the Incentive Plan. This summary is based on the provisions of
the Code, the Treasury regulations promulgated thereunder, and administrative
and judicial interpretations thereof, all as in effect as of the date of this
81
<PAGE> 84
Offering Circular - Prospectus. They do not describe all Federal income tax
consequences under the Incentive Plan, nor do they describe foreign, state or
local tax consequences.
Stock Options. In general, a grant of a stock option will not be a taxable
event to a recipient and it will not result in a deduction to CCC. The tax
consequences associated with the exercise of a stock option granted under the
Incentive Plan, and the subsequent disposition of CCC Common Stock acquired on
exercise of such an option, will depend in part on whether the option is an
incentive stock option (within the meaning of Section 422 of the Code) or a
nonqualified stock option.
Upon the exercise of a nonqualified stock option, the participant will
recognize ordinary taxable income equal to the excess of the fair market value
of the CCC Common Stock received upon exercise over the exercise price. CCC will
generally be able to claim a deduction in an equivalent amount, unless the
deduction is limited by Section 162(m) or 280G of the Code. Any gain or loss
upon a subsequent sale or exchange of the CCC Common Stock generally will be
capital gain or loss, long-term or short-term, depending on the holding period
for the CCC Common Stock.
Generally, a participant will not recognize ordinary taxable income at the
time of exercise of an incentive stock option and no deduction will be available
to CCC, provided the option is exercised while the participant is an employee
or, in certain circumstances, for a limited period of time thereafter. If an
incentive stock option granted under the Incentive Plan is exercised after these
periods, the exercise will be treated for Federal income tax purposes as the
exercise of a nonqualified stock option. Also, incentive stock options granted
under the Incentive Plan will be treated as nonqualified stock options to the
extent they first become exercisable in any calendar year for CCC Common Stock
having a fair market value, determined as of the date of grant, in excess of
$100,000.
If CCC Common Stock acquired upon exercise of an incentive stock option is
sold or exchanged more than one year after the date of exercise and more than
two years from the date of grant of the option, any gain or loss will be
long-term capital gain or loss. If CCC Common Stock acquired upon exercise of an
incentive stock option is disposed of prior to the expiration of these one-year
or two-year holding periods (a "Disqualifying Disposition"), the participant
will recognize ordinary income at the time of disposition, and CCC will be able
to claim a deduction, in an amount equal to the excess of the fair market value
of the CCC Common Stock at the date of exercise over the exercise price. Any
additional gain will be treated as capital gain, long-term or short-term,
depending on how long the CCC Common Stock has been held. Where CCC Common Stock
is sold or exchanged in a Disqualifying Disposition (other than certain related
party transactions) for an amount less than its fair market value at the date of
exercise, any ordinary income recognized in connection with the Disqualifying
Disposition will be limited to the amount of gain, if any, recognized on the
sale or exchange, and any loss will be a long-term or short-term capital loss,
depending on how long the CCC Common Stock has been held.
Although the exercise of an incentive stock option as described above would
not produce ordinary taxable income to the participant, it would result in an
increase in the participant's alternative minimum taxable income and may result
in an alternative minimum tax liability.
Restricted Stock. A participant who receives shares of restricted stock
will generally recognize ordinary income at the time the restrictions on
transferability lapse. The amount of ordinary income so recognized will be the
fair market value of the CCC Common Stock at the time the income is recognized,
determined without regard to any restrictions other than restrictions which by
their terms will never lapse. This amount is generally deductible for Federal
income tax purposes by CCC, unless the deduction is limited by Section 162(m) or
280G of the Code. Dividends paid with respect to CCC Common Stock that is
nontransferable will be ordinary compensation income to the participant (and
generally deductible by CCC).
In lieu of the treatment described above, a participant may elect immediate
recognition of income under Section 83(b) of the Code. In such event, the
participant will recognize as income the fair market value of the restricted
stock at the time of grant (determined without regard to any restrictions other
than restrictions which by their terms will never lapse), and CCC will be
generally entitled to a corresponding deduction. Dividends paid with respect to
shares as to which a proper Section 83(b) election has been made will not be
82
<PAGE> 85
deductible by CCC. If a Section 83(b) election is made and the restricted stock
is subsequently forfeited, the participant will not be entitled to any
offsetting tax deduction.
Stock Appreciation Rights and Other Awards. With respect to stock
appreciation rights and other awards under the Incentive Plan not described
above, generally, when a participant receives payment with respect to an award
granted to him or her under the Incentive Plan, the amount of cash and the fair
market value of the CCC Common Stock received will be ordinary income to such
participant and will be allowed as a deduction for Federal income tax purposes
to CCC, unless the deduction is limited by Section 162(m) or 280G of the Code.
Payment of Withholding Taxes. CCC may withhold, or require a participant
to remit to CCC, an amount sufficient to satisfy any Federal, state or local
withholding tax requirements associated with awards under the Incentive Plan.
Special Rules. Special rules may apply to a participant who is subject to
Section 16(b) of the Exchange Act (generally directors, executive officers and
10% shareholders). For example, the grant of an option to a participant who is
subject to Section 16(b) begins the six-month period of potential short-swing
liability imposed by Section 16(b). The taxable event for a nonqualified option
ordinarily would be the date of exercise. However, if a participant who is
subject to Section 16(b) exercises such an option within six months of its
grant, the tax consequences of such exercise would generally be postponed until
six months after the date of grant, unless the participant has filed an election
pursuant to Section 83(b) of the Code to be taxed on the date of exercise.
Certain additional special rules apply if the exercise price for an option is
paid for in CCC Common Stock previously owned by the optionee rather than in
cash.
Compliance with Section 162(m) of the Code. The Incentive Plan is designed
and intended to comply with Section 162(m) of the Code in order to maximize the
deductibility to CCC for Federal income tax purposes of certain awards made
thereunder and the provisions of the Incentive Plan will be construed in a
manner to so comply.
Additional Information Regarding Incentive Plan. Since the participants
and the amount of benefits to be received by each participant in the Incentive
Plan are both determined pursuant to either the discretion of the Compensation
Committee or the achievement of certain performance goals, the amount of future
benefits to be allocated to any individual or group of individuals under the
Incentive Plan is not determinable.
STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
The Board of Directors of CCC has adopted, and Cooper as sole shareholder
has approved, the Cooper Cameron Corporation Stock Option Plan for Nonemployee
Directors (the "Director Plan"). An aggregate of 250,000 shares of CCC Common
Stock has been reserved for issuance under the Director Plan, subject to
adjustment in the event of a stock split, stock dividend or other change in the
CCC Common Stock or the capital structure of CCC. Under the Director Plan, each
nonemployee director automatically will be granted, in lieu of one-third of the
director's annual retainer otherwise payable in cash, an option to purchase
shares of CCC Common Stock. An initial grant (prorated in the event of a partial
year) shall be made on the first trading date after which an individual becomes
a nonemployee director. Additional options shall be granted to nonemployee
directors in each subsequent year on the first trading date following CCC's
annual meeting of shareholders. The number of shares subject to each automatic
option grant under the Director Plan shall be equal to one-third of the amount
of the annual retainer on the grant date divided by the fair market value (as
defined in the Director Plan) of a share of CCC Common Stock on the grant date.
The exercise price per share shall be equal to 100% of the fair market value of
a share of CCC Common Stock on the date of grant.
Under the Director Plan, nonemployee directors may make an annual election
to receive stock options in lieu of all or a portion of the balance of the
nonemployee's annual cash retainer. The number of shares subject to each
elective option and the exercise price shall be determined on the same basis as
for the automatic option grants.
Options under the Director Plan will generally become exercisable on the
first anniversary of the date of the grant and will expire as of the earlier of
10 years and one day after the date of grant or five years after the
83
<PAGE> 86
nonemployee director ceases to be a nonemployee director for any reason. The
option price may be paid in cash, shares of CCC Common Stock, or a combination
of cash and shares. All options granted to nonemployee directors are
nontransferable, other than by will or the laws of descent and distribution, and
each option is exercisable, during the lifetime of the optionee, only by the
optionee. If a person ceases to be a nonemployee director due to death or
disability, his or her options generally will be exercisable for a period of one
year following such death or disability (but not later than the expiration date
of the option). The Director Plan is designed to operate automatically and not
require administration. Upon the occurrence of a Change of Control, all
outstanding options granted under the Director Plan shall become exercisable
immediately.
FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTOR PLAN
The Federal income tax consequences associated with the Director Plan are
the same as those described for nonqualified stock options under
"Management -- Federal Income Tax Consequences of the Incentive Plan" above.
CCC SAVINGS PLAN
The Cooper Cameron Corporation Retirement Savings Plan (the "CCC Savings
Plan"), which is intended to qualify for favorable tax treatment under Section
401(a) of the Code, will be administered by the Compensation Committee. All
employees, including officers, of CCC are eligible to participate in the CCC
Savings Plan, provided however, that employees covered by a collective
bargaining agreement may participate only if such agreement specifically
provides for participation in the CCC Savings Plan. Under the CCC Savings Plan,
each participating employee may direct CCC to make, on behalf of the
participant, elective contributions to the CCC Savings Plan of up to 16% of the
participant's annual compensation, subject to certain limitations set forth in
the Code. CCC is obligated to make matching contributions to the CCC Savings
Plan in an amount equal to 100% of each participant's elective contributions, to
the extent that such elective contributions do not exceed 3% of such
participant's compensation, and in an amount equal to 50% of each participant's
elective contributions over 3% to the extent that such elective contributions do
not exceed 6% of the participant's annual compensation. Contributions by
participants in excess of 6% of annual compensation are not matched by CCC.
A participant's pre-tax contributions and CCC's contributions are not
taxable to the participant in the year in which the contributions are made. CCC
must make contributions without regard to its current or accumulated net
profits. A participant's contributions and matching contributions are fully
vested when they are made. Participants will be able to direct their
contributions to be invested among three investment funds, while CCC's matching
contributions will be in the form of CCC Common Stock that has been authorized
for issuance under the CCC Savings Plan. CCC also may purchase shares of CCC
Common Stock in the market to meet its obligations under the CCC Savings Plan.
CCC's matching contributions of CCC Common Stock will constitute an employee
stock ownership plan ("ESOP") within the CCC Savings Plan. CCC intends to issue
shares of CCC Common Stock to the ESOP and to allocate such shares to
participants' accounts as participants make contributions under the CCC Savings
Plan. Within two years after consummation of the Exchange Offer, the ESOP shall
purchase additional shares which, when added to certain prior transfers and
allocations of shares to participants' accounts, will equal at least 5% of CCC's
outstanding shares as of the Expiration Date (counting as outstanding any shares
that the ESOP purchases from CCC). It is presently intended that a maximum of
6.5% of CCC's outstanding shares as of the Expiration Date (on a fully diluted
basis) will be held by the ESOP.
The Cooper Cameron Corporation Supplemental Excess Defined Contribution
Plan is an unfunded, nonqualified plan that provides to certain employees
(including the executive officers) benefits of the CCC Savings Plan that cannot
be provided by a qualified defined contribution plan due to Code provisions.
84
<PAGE> 87
RETIREMENT PLANS
Salaried employees, including executive officers, of CCC may upon
retirement be entitled to benefits from the Cooper Cameron Corporation Salaried
Employees' Retirement Plan (the "Retirement Plan") and the Cooper Cameron
Corporation Supplemental Excess Defined Benefit Plan (the "Supplemental Plan").
Pursuant to the Retirement Plan, CCC credits to each individual's account
thereunder 4% of each year's total compensation up to the Social Security wage
base for the year, plus 8% of each year's total compensation that exceeds the
Social Security wage base. For this purpose, total compensation is cash
remuneration paid by CCC to or for the benefit of a participant in the
Retirement Plan for services rendered while an employee. Employees who were
formerly employees of Cooper, including the four businesses now constituting CCC
(Cooper Oil Tool, Cooper Energy Services, Cooper Turbocompressor and Wheeling
Machine Products), will be credited for service while employed by Cooper.
Benefits for service through December 31, 1994 will be determined under the
Cooper Salaried Employees' Retirement Plan then in effect and converted to
initial balances under the Retirement Plan. Funds equal to the actuarial value
of accrued liabilities for all participants plus a pro rata portion of the
Cooper plan excess assets will be transferred from the Cooper pension trust to a
trust established by CCC for the Retirement Plan. Benefits at retirement are
payable, as the participant elects, in the form of an escalating annuity, a
level annuity with or without survivorship or a lump-sum payment. CCC will
contribute to a trust fund sufficient to meet the minimum requirements under the
Code to maintain the status of the plan as a qualified defined benefit plan.
The Supplemental Plan is an unfunded, nonqualified plan that provides to
certain employees, including executive officers, Retirement Plan benefits that
cannot be paid from a qualified defined benefit plan due to provisions of the
Code.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of CCC has adopted, and Cooper as the sole
shareholder of CCC has approved, the Cooper Cameron Corporation Employee Stock
Purchase Plan (the "Stock Purchase Plan"), which is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Code. All full-time U.S.
and Canadian employees of CCC (including officers), other than employees on
probationary status, are eligible to participate in the Stock Purchase Plan.
Directors who are not employees are not eligible. An aggregate of 1,250,000
shares of CCC Common Stock has been reserved for issuance under the Stock
Purchase Plan, subject to adjustment in the event of a stock split, stock
dividend or other similar change in the CCC Common Stock or the capital
structure of CCC.
Under the Stock Purchase Plan, the Board of Directors may determine an
offering date and establish a maximum number of shares that each eligible
employee may purchase, which number will be based on a percentage of the
employee's compensation with a maximum individual investment as specified in the
Code. Offerings may be made from time to time prior to May 1, 2005.
All eligible employees who enroll in an offering receive options to
purchase shares of CCC Common Stock at a price that is the lesser of 85% of the
fair market price of the stock on the offering date or 100% of such fair market
price on the exercise date. At the conclusion of a 12-month payroll deduction
period, a participant may purchase the shares for which deductions have been
made or have the deductions refunded. Provisions allow for withdrawals,
terminations and reductions in amounts being deducted.
CCC will make no cash contributions to the Stock Purchase Plan, but will
bear the expense of administration. The Stock Purchase Plan will be administered
by the Compensation Committee, which will have authority to determine the terms
and conditions under which shares are to be offered and options granted under
the Stock Purchase Plan for any offering period during the term of the Stock
Purchase Plan, and to resolve all questions relating to the administration of
the plan.
A participating employee will not recognize income at the time options are
granted to him or her at the commencement of an offering or when he or she
exercises such options and purchases shares of CCC Common Stock at the end of an
offering. If an employee does not dispose of the shares of CCC Common Stock
purchased pursuant to the Stock Purchase Plan until more than two years after
the date of grant of the
85
<PAGE> 88
options and one year after the issuance of the shares to the employee, or if he
or she dies without having disposed of such shares, he or she must include in
his or her gross income as compensation (as ordinary income and not as capital
gain) for the taxable year of disposition or death an amount equal to the lesser
of (i) the excess of the fair market value of the shares at the time of
disposition or death over the amount paid for the shares, or (ii) the excess of
the fair market value of the shares at the date of grant of the options over the
option price for such options.
If the amount realized upon such disposition by way of sale or exchange of
the shares exceeds the purchase price plus the amount, if any, included in
income as compensation, such excess will be a capital gain. CCC will not be
entitled to any deduction in respect of options granted under the Stock Purchase
Plan or shares of CCC Common Stock issued and delivered pursuant to the exercise
of such options, if the holding period requirements are met or the employee dies
prior to disposing of the shares acquired upon exercise of the option.
If an employee disposes of the shares of CCC Common Stock within one year
from the date of exercise (an "Early Disposition"), the employee will recognize
ordinary income at the time of disposition, which will equal the excess, if any,
of the fair market value of the shares on the date of exercise of the option
over the amount paid for such shares. CCC will be entitled to a deduction in an
amount equal to such income. The excess, if any, of the amount realized on
disposition of such shares over the fair market value of such shares on the date
of exercise will be long- or short-term capital gain, depending upon the holding
periods of the shares. If an employee disposes of such shares for less than his
or her basis in the shares, the difference between the amount realized and such
basis will be a long- or short-term capital loss, depending upon the holding
period of the shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
As of May 1, 1995, each director and the five most highly compensated
executive officers of Cooper beneficially owned the number of shares of Cooper
Common Stock set forth in the table on the following page. Each of the named
individuals and all directors and executive officers as a group beneficially
owned less than 1% of the outstanding Cooper Common Stock as of such date.
Cooper knows of no person who was the beneficial owner as of May 1, 1995, of
more than 5% of the outstanding shares of any class of voting securities of
Cooper, other than the following, which have filed statements of ownership on
Schedule 13G with the Commission:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------------- ---------------------------------- ------------ ----------
<S> <C> <C> <C>
Common Stock................... J.P. Morgan & Co. Incorporated 10,086,053(1) 8.6%
60 Wall Street
New York, New York 10260
Common Stock................... FMR Corp. 6,439,780(2) 5.5%
Edward C. Johnson 3d
(Chairman of FMR Corp.)
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Shares are held by J.P. Morgan & Co. Incorporated directly or through its
affiliates, Morgan Guaranty Trust Company of New York, J.P. Morgan
Investment Management, Inc. and Morgan Trust Company of Florida N.A.
(2) Shares are held by FMR Corp. directly or through its affiliates, Fidelity
Management & Research Company, Fidelity Management Trust Company and
Fidelity International Limited. Mr. Johnson and his family form a
controlling group with respect to FMR Corp.
------------------------
86
<PAGE> 89
The Chase Manhattan Bank, N.A., as Trustee of the Cooper Savings and Stock
Ownership Plan and the Cooper Cameron Retirement Savings Plan, holds of record
7,719,597 shares of Cooper Common Stock, which is 6.6% of the outstanding shares
of Cooper Common Stock as of May 1, 1995. The participants in the plans have
voting rights with respect to all such shares.
In addition, assuming (i) the Exchange Offer is fully subscribed and (ii)
none of the directors or executive officers of Cooper tenders any shares of
Cooper Common Stock in the Exchange Offer, each of the named individuals and all
directors and executive officers as a group will beneficially own less than 1%
of the outstanding Cooper Common Stock following consummation of the Exchange
Offer.
<TABLE>
<CAPTION>
SHARES WHICH MAY
BE ACQUIRED WITHIN
NAME OF SHARES OWNED 60 DAYS OF
BENEFICIAL OWNER DIRECTLY AND INDIRECTLY MAY 1, 1995
----------------------------------------------------------------------- -----------------------
<S> <C> <C>
Robert Cizik.................................... 254,306(1)(2) 24,999
Warren L. Batts................................. 6,000(3) 8,000
Clifford J. Grum................................ 8,000 8,000
Linda A. Hill................................... -0- -0-
Harold S. Hook.................................. 8,000 -0-
Constantine S. Nicandros........................ 2,500 -0-
Frank A. Olson.................................. 5,000 4,000
John D. Ong..................................... 4,400(4) -0-
H. John Riley, Jr............................... 79,636(2) 13,333
Sir Ralph H. Robins............................. 216 -0-
A. Thomas Young................................. 200 2,000
Michael J. Sebastian............................ 72,453(2) 8,333
Ralph E. Jackson, Jr............................ 7,903(2) 8,333
Larry W. McCurdy................................ 4,041(2) 13,666
All Directors and Executive Officers as a
Group......................................... 592,920(5) 189,842(6)
</TABLE>
- ---------------
(1) Includes 520 shares owned by a family member.
(2) Includes shares held in the Cooper Savings and Stock Ownership Plan.
(3) All of these shares are held in a trust for which Mr. Batts is the settlor
and trustee and for which a member of his family is the beneficiary. Mr.
Batts has sole voting and investment power with respect to the shares.
(4) Includes 400 shares owned by a family member.
(5) Includes shares held in the Cooper Savings and Stock Ownership Plan by
executive officers of Cooper in addition to those listed for the named
executive officers.
(6) Includes 4,385 shares that may be acquired by conversion of Cooper's 7.05%
Convertible Subordinated Debentures due 2015.
87
<PAGE> 90
DESCRIPTION OF CCC CAPITAL STOCK
The authorized stock of CCC consists of 75,000,000 shares of CCC Common
Stock, 25,000,000 of which are outstanding and held by Cooper, and 10,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock"),
none of which are issued or outstanding. Immediately prior to the Expiration
Date, CCC intends to file the Amended and Restated Certificate of Incorporation
of CCC (the "Amended CCC Certificate") with the Secretary of State of the State
of Delaware, and the Board of Directors of CCC intends to adopt the Amended and
Restated Bylaws of CCC (the "Amended CCC Bylaws"). As of the Expiration Date,
25,000,000 shares of CCC Common Stock will be issued and outstanding and held by
Cooper, approximately 4,000,000 shares of CCC Common Stock will be reserved for
issuance under various employee benefit plans and 750,000 shares of Series A
Preferred Stock (as defined herein) will be reserved for issuance pursuant to
the CCC Rights Agreement as described under "Description of CCC Capital
Stock -- Rights Plan" below. The following description of the capital stock of
CCC is a summary of the material terms thereof. Copies of the Amended CCC
Certificate and the Amended CCC Bylaws are filed as exhibits to the Registration
Statement of which this Offering Circular - Prospectus is a part.
COMMON STOCK
Holders of CCC Common Stock will be entitled to one vote per share with
respect to all matters required by law to be submitted to holders of CCC Common
Stock. The CCC Common Stock will not have cumulative voting rights.
Subject to the prior rights of holders of Preferred Stock, if any, holders
of CCC Common Stock will be entitled to receive such dividends as may be
lawfully declared by the Board of Directors of CCC. Upon any dissolution,
liquidation or winding up of CCC, whether voluntary or involuntary, holders of
CCC Common Stock are entitled to share ratably in all assets remaining after the
liquidation payments have been made on all outstanding shares of Preferred
Stock, if any.
Upon consummation of the Exchange Offer and the Distribution, if any, the
shares of CCC Common Stock offered hereby will be fully paid and nonassessable.
The CCC Common Stock will not have any preemptive, subscription or conversion
rights. Additional shares of CCC Common Stock may be issued without shareholder
approval, other than such approval as may be required by applicable stock
exchange rules. The transfer agent and registrar for the CCC Common Stock is
First Chicago Trust Company of New York.
RIGHTS PLAN
On May 23, 1995, the Board of Directors of CCC declared a dividend
distribution of one Right for each outstanding share of CCC Common Stock ("CCC
Right") to shareholders of record at the close of business the date immediately
prior to the Expiration Date. Each CCC Right entitles the registered holder to
purchase from CCC one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"), of
CCC at a purchase price of $75, subject to adjustment (the "Purchase Price").
The following description of the CCC Rights is a summary of the material terms
thereof. A copy of the Rights Agreement (the "CCC Rights Agreement") between CCC
and First Chicago Trust Company of New York, as Rights Agent, is filed as an
exhibit to the Registration Statement of which this Offering
Circular - Prospectus is a part.
Immediately following the Expiration Date, the CCC Rights will be attached
to all outstanding shares of CCC Common Stock and will be represented by the
certificates representing such shares. No separate Rights Certificates will be
distributed. The CCC Rights will separate from the CCC Common Stock and a
"Distribution Date" will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (a "CCC Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 20% or more of the outstanding shares
of CCC Common Stock (the "Stock Acquisition Date"), or (ii) 10 business days (or
such later date as the Board of Directors of CCC shall determine) following the
commencement of a tender or exchange offer that would result in a person or
group beneficially owning 20% or more of such outstanding shares of CCC Common
Stock (the "Tender Offer Date"). Notwithstanding the foregoing, a CCC Acquiring
Person shall not include (i) Cooper at all times
88
<PAGE> 91
prior to the Expiration Date and following the Expiration Date if as a result
thereof Cooper, together with its affiliates and associates, beneficially owns
20% or more of the outstanding shares of CCC Common Stock (until such time as
Cooper, its affiliates and associates shall have distributed, sold, transferred
or otherwise disposed of a number of shares of CCC Common Stock, such that
immediately following such distribution, sale, transfer or other disposition
Cooper, its affiliates and associates shall beneficially own less than 20% of
the CCC Common Stock) or (ii) any person or group of affiliated or associated
persons who has acquired beneficial ownership of 20% or more of the outstanding
shares of CCC Common Stock solely as a result of participating in the Exchange
Offer and the Distribution, if any, unless and until such person or group
purchases or otherwise becomes the beneficial owner of additional shares of CCC
Common Stock constituting 1% or more of the outstanding shares of CCC Common
Stock. Until the Distribution Date, (a) the CCC Rights will be evidenced by the
CCC Common Stock certificates and will be transferred with and only with such
CCC Common Stock certificates, (b) CCC Common Stock certificates will contain a
notation incorporating the CCC Rights Agreement by reference and (c) the
surrender for transfer of any certificates for CCC Common Stock outstanding will
also constitute the transfer of the CCC Rights associated with the CCC Common
Stock represented by such certificates. Pursuant to the CCC Rights Agreement,
CCC reserves the right to require prior to the occurrence of a Triggering Event
(as defined herein) that, upon any exercise of CCC Rights, a number of CCC
Rights be exercised so that only whole shares of Series A Preferred Stock will
be issued (or fractions that are integral multiples of one one-hundreth of a
share).
The CCC Rights are not exercisable until the Distribution Date and, unless
earlier redeemed by CCC as described below, will expire at the close of business
on April 30, 2005, or such later date as the Board of Directors of CCC
establishes under certain circumstances.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of CCC Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the CCC Rights. Except as otherwise determined
by the Board of Directors of CCC, only shares of CCC Common Stock issued prior
to the Distribution Date will be issued with CCC Rights.
Each share of Series A Preferred Stock purchased upon exercise of the CCC
Rights will be entitled to a minimum preferential quarterly dividend payment
equal to the greater of (i) $2.00 per share, and (ii) 100 times the dividend, if
any, declared per share of CCC Common Stock. In the event of liquidation, the
holders of the Series A Preferred Stock will be entitled to a minimum
preferential liquidation payment equal to the greater of (a) $100 per share and
(b) 100 times the payment made per share of CCC Common Stock. Each share of
Series A Preferred Stock will have 100 votes and will vote together with the CCC
Common Stock. In the event of any merger, consolidation or other transaction in
which shares of CCC Common Stock are exchanged, each share of Series A Preferred
Stock will be entitled to receive 100 times the amount per share of CCC Common
Stock received in such merger, consolidation or other transaction. These rights
are protected by customary antidilution provisions. The shares of Series A
Preferred Stock will, if issued, be junior to any other series of Preferred
Stock which may be authorized and issued by CCC, unless the terms of any such
other series provide otherwise. Because of the nature of the Series A Preferred
Stock's dividend, liquidation and voting rights, the value of one one-hundredth
of a share of Series A Preferred Stock purchasable upon the exercise of each CCC
Right should approximate the value of one share of CCC Common Stock.
In the event that (i) CCC is the surviving corporation in a merger or other
business combination with a CCC Acquiring Person (or any associate or affiliate
thereof) and the CCC Common Stock remains outstanding and unchanged, (ii) any
person shall become the beneficial owner of more than 20% of the outstanding
shares of CCC Common Stock (except (A) (i) Cooper at all times prior to the
Expiration Date and following the Expiration Date if as a result thereof Cooper,
together with its affiliates and associates, beneficially owns 20% or more of
the outstanding shares of CCC Common Stock (until such time as Cooper, its
affiliates and associates shall have distributed, sold, transferred or otherwise
disposed of a number of shares of CCC Common Stock, such that immediately
following such distribution, sale, transfer or other disposition Cooper, its
affiliates and associates shall beneficially own less than 20% of the CCC Common
Stock) or (ii) any person or group of affiliated or associated persons who has
acquired beneficial ownership of 20% or
89
<PAGE> 92
more of the outstanding shares of CCC Common Stock solely as a result of
participating in the Exchange Offer and the Distribution, if any, unless and
until such person or group purchases or otherwise becomes the beneficial owner
of additional shares of CCC Common Stock constituting 1% or more of the
outstanding shares of CCC Common Stock, or (B) pursuant to certain
consolidations or mergers involving CCC or sales or transfers of the combined
assets or earning power of CCC and its subsidiaries, or (C) pursuant to an offer
for all outstanding shares of CCC Common Stock at a price and upon terms and
conditions which a majority of the Continuing Directors (as defined below)
determines to be in the best interests of CCC and its shareholders) or (iii)
there occurs a reclassification of securities, a recapitalization of CCC or any
of its subsidiaries or certain business combinations or other transactions
(other than certain consolidations and mergers involving CCC and sales or
transfers of the combined assets or earning power of CCC and its subsidiaries)
involving CCC or any of its subsidiaries which has the effect of increasing by
more than 1% the proportionate share of any class of the outstanding equity
securities of CCC or any of its subsidiaries beneficially owned by a CCC
Acquiring Person (or any associate or affiliate thereof), each holder of a CCC
Right (other than the CCC Acquiring Person, certain related parties and
transferees) will thereafter have the right to receive, upon exercise, CCC
Common Stock (or, in certain circumstances, cash, property or other securities
of CCC) having a value equal to two times the exercise price of the CCC Right.
For example, at an exercise price of $50 per Right, each CCC Right not owned by
a CCC Acquiring Person (or by certain related parties and transferees) following
an event set forth above would entitle its holder to purchase $100 worth of CCC
Common Stock (or other consideration, as noted above) for $50. Assuming that the
CCC Common Stock had a per share market price of $10 at such time, the holder of
each valid CCC Right would be entitled to purchase 10 shares of CCC Common Stock
for $50. CCC Rights are not exercisable following the occurrence of any of the
events described above until such time as the CCC Rights are no longer
redeemable by CCC as described below. Notwithstanding any of the foregoing,
following the occurrence of any of the events described in this paragraph, all
CCC Rights that are, or (under certain circumstances specified in the CCC Rights
Agreement) were, beneficially owned by any CCC Acquiring Person will be null and
void.
In the event that, at any time following the Stock Acquisition Date, (i)
CCC is acquired in a merger or other business combination transaction in which
CCC is not the surviving corporation, (ii) CCC is the surviving corporation in a
consolidation or merger pursuant to which all or part of the outstanding shares
of CCC Common Stock are changed into or exchanged for stock or other securities
of any other person or cash or any other property or (iii) more than 50% of the
combined assets or earning power of CCC and its subsidiaries is sold or
transferred (in each case other than certain consolidations with, mergers with
and into, or sales of assets or earning power by or to subsidiaries of CCC as
specified in the CCC Rights Agreement), each holder of a CCC Right (except CCC
Rights that previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the CCC Right. The
events described in this paragraph and in the preceding paragraph are referred
to as the "Triggering Events."
In order to prevent dilution, the Purchase Price payable, the number and
kind of shares covered by each CCC Right and the number of CCC Rights
outstanding are subject to adjustment from time to time (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Series A Preferred Stock, (ii) if holders of the Series A Preferred Stock are
granted certain rights or warrants to subscribe for Series A Preferred Stock or
securities convertible into Series A Preferred Stock at less than the current
market price of the Series A Preferred Stock, or (iii) upon the distribution to
holders of the Series A Preferred Stock of evidences of indebtedness, cash
(excluding regular quarterly cash dividends), assets (other than dividends
payable in Series A Preferred Stock) or subscription rights or warrants (other
than those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Series A Preferred Stock are required to be
issued (other than fractions that are integral multiples of one one-hundredth of
a share of Series A Preferred Stock) and, in lieu thereof, CCC may make an
adjustment in cash based on the market price of the Series A Preferred Stock on
the trading day immediately prior to the date of exercise.
90
<PAGE> 93
At any time until ten business days following the Stock Acquisition Date,
CCC may redeem the Rights in whole, but not in part, at a price of $.01 per CCC
Right (payable in cash, shares of CCC Common Stock or other consideration deemed
appropriate by the Board of Directors of CCC). Immediately upon the action of
the Board of Directors ordering redemption of the CCC Rights, the CCC Rights
will terminate and the only right of the holders of CCC Rights will be to
receive the $.01 redemption price.
For purposes of the CCC Rights Agreement, the term "Continuing Director"
means any member of the Board of Directors of CCC who was a member of the Board
prior to the date of the CCC Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended or approved by a
majority of the Continuing Directors, but shall not include a CCC Acquiring
Person, or an affiliate or associate of a CCC Acquiring Person, or any
representative of the foregoing entities.
Until a CCC Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of CCC, including, without limitation, the right to vote
or to receive dividends.
Any of the provisions of the CCC Rights Agreement may be amended by the
Board of Directors of CCC prior to the Distribution Date, other than the
redemption price, a reduction of the Purchase Price and the number of one
one-hundredths of a share of Series A Preferred Stock for which a CCC Right is
exercisable. After the Distribution Date, the provisions of the CCC Rights
Agreement may be amended by the Board in order to cure any ambiguity, to make
changes that do not adversely affect the interests of holders of CCC Rights, or
to shorten or lengthen any time period under the CCC Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the CCC Rights are not redeemable. The Final Expiration
Date (as defined in the CCC Rights Agreement) may be extended and the Purchase
Price may be increased at any time prior to a Stock Acquisition Date or a Tender
Offer Date.
The CCC Rights have certain anti-takeover effects. They may reduce or
eliminate (i) "two-tiered" or other partial offers which do not offer fair value
for all of the CCC Common Stock; (ii) the accumulation by a third party of 20%
or more of the CCC Common Stock in open-market or private purchases in order to
influence or control the business and affairs of CCC without paying an
appropriate premium for a controlling position in CCC; and (iii) the
accumulation of shares of CCC Common Stock by third parties in market
transactions for the primary purpose of attempting to cause CCC to be sold. In
addition, the CCC Rights will cause substantial dilution to a person or group
that attempts to acquire CCC in a manner defined as a Triggering Event unless
the offer is conditioned on a substantial number of CCC Rights being acquired.
The CCC Rights, however, should not affect any prospective offeror willing to
make an offer for all outstanding shares of CCC Common Stock and other voting
securities at a price and on other terms which are in the best interests of CCC
and its shareholders as determined by the CCC Board or affect any prospective
offeror willing to negotiate with the CCC Board because as part of any
negotiated transaction the CCC Rights would either be redeemed or otherwise made
inapplicable to the transaction. The CCC Rights should not interfere with any
merger or other business combination approved by the CCC Board since the CCC
Board may, at its option, at any time until ten business days following the
Stock Acquisition Date, redeem all, but not less than all, of the then
outstanding CCC Rights at the $.01 redemption price.
PREFERRED STOCK
The Amended CCC Certificate authorizes CCC to issue up to 10,000,000 shares
of Preferred Stock without further shareholder approval (except as may be
required by applicable law or stock exchange rules). A total of 750,000 shares
of Series A Preferred Stock will be reserved for issuance upon exercise of the
CCC Rights. The shares of Preferred Stock may be issued in one or more series or
classes, which may have such distinctive designation, voting powers, preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereon, including voting rights,
dividends, rights on liquidation, dissolution or winding up, conversion or
exchange rights and redemption provisions, as are set forth in the resolutions
adopted by the CCC Board of Directors providing for the issuance of such stock
and as permitted by the Delaware General Corporation Law (the "DGCL").
91
<PAGE> 94
Although CCC has no current plans to issue Preferred Stock, the issuance of
shares of Preferred Stock, or the issuance of securities convertible into or
exchangeable for such shares, could be used to discourage an unsolicited
acquisition proposal that some or a majority of the shareholders might believe
to be in their interests or in which shareholders might receive a premium for
their stock over the then market price of such stock. For instance, the issuance
of a series of Preferred Stock might impede a business combination by including
class voting rights that would enable the holder to block such a transaction or
facilitate a business combination by including voting rights that would provide
a required percentage vote of the shareholders. In addition, under certain
circumstances, the issuance of Preferred Stock could adversely affect the voting
power of the holders of the CCC Common Stock. The Board of Directors of CCC does
not at the present intend to seek shareholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or stock exchange
rules.
DELAWARE LAW AND CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS
Certain provisions of Delaware law, the Amended CCC Certificate and the
Amended CCC Bylaws could make more difficult the acquisition of CCC by means of
a tender offer, a proxy contest or otherwise and the removal of incumbent
officers and directors. These provisions are intended to discourage certain
types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of CCC to negotiate first with CCC.
The following discussion is a summary of the material provisions of the
Amended CCC Certificate and the Amended CCC Bylaws, copies of which are filed as
exhibits to the Registration Statement of which this Offering
Circular - Prospectus is a part.
Number of Directors; Classified Board of Directors. The Amended CCC
Certificate provides that the number of directors shall not be fewer than five
nor more than fifteen, with the exact number of directors to be determined from
time to time by a majority of the entire Board of Directors, and that the Board
of Directors will be classified, consisting of three classes as nearly equal in
size as practicable. Each class will hold office until the third annual
shareholders' meeting for election of directors, following the most recent
election of such class, except that the initial terms of the three classes
expire in 1996, 1997 and 1998, respectively. See "Management -- Board of
Directors." As a result, approximately one-third of CCC's Board of Directors
will be elected each year. CCC believes that a classified board of directors
will help to assure the continuity and stability of the Board and of CCC's
business strategies and policies as determined by the Board.
Filling Vacancies; Removal of Directors. Subject to rights of holders of
Preferred Stock, if any, vacancies on the Board of Directors may be filled only
by a majority of the directors then in office, even if less than a quorum, or by
the sole remaining director. The Amended CCC Certificate provides that directors
may be removed only for cause and only by the affirmative vote of the holders of
a majority of the outstanding shares of CCC then entitled to vote generally in
the election of directors, voting as a class.
Special Meetings; No Action by Written Consent. The Amended CCC
Certificate provides that special meetings of shareholders can be called only by
a majority of the entire Board of Directors, the Chairman of the Board of
Directors or the President of CCC. In addition, the Amended CCC Certificate
provides that no action required or permitted to be taken at an annual or
special meeting of shareholders may be taken by written consent in lieu of a
meeting of shareholders.
Advance Notice for Raising Business or Making Nominations at Annual
Meetings. The Amended CCC Bylaws contain provisions requiring that advance
notice be delivered to CCC of any business to be brought by a shareholder before
an annual meeting of shareholders, and providing for certain procedures to be
followed by shareholders in nominating persons for election to the Board of
Directors of CCC. Generally, such advance notice provisions provide that the
shareholder must give timely written notice to the Secretary of CCC. To be
timely, such notice must be delivered to or mailed to and received at the
principal executive offices of CCC not less than 60 days nor more than 90 days
prior to the anniversary of the date of the prior year's annual meeting, unless
the annual meeting is called for a date that is not within 30 days before or
after such anniversary date, in which case such notice must be received not
later than the close of business on the tenth day following the day on which
notice of the date of the meeting was mailed to shareholders or public
92
<PAGE> 95
disclosure of the date of the meeting was made, whichever occurs first. The
notice must set forth specific information regarding such shareholder and such
business or director nominee, as described in the Amended CCC Bylaws.
Certain Business Combinations. The Amended CCC Certificate provides that
any "Business Combination" involving CCC and a person who beneficially owns 20%
or more of the CCC Common Stock (such person, together with the affiliates and
associates of such person, is hereinafter referred to as a "Related Person")
must be approved by the holders of at least 80% of the voting power of the
outstanding shares of CCC capital stock (the "Voting Requirement"), voting
together as a single class. The Voting Requirement does not apply if either (i)
the Business Combination is approved by a two-thirds vote of the Continuing
Directors (defined for purposes of the Amended CCC Certificate to include any
person who either (x) was a director immediately prior to the time the Related
Person in the Business Combination became such a person or (y) was designated,
prior to his or her initial election as a director, as a Continuing Director by
two-thirds of the Continuing Directors then in office) or (ii) certain "fair
price" and disclosure conditions are met. The fair price condition requires that
the consideration to be received by shareholders in the Business Combination be
at least equal to the highest per share price paid by the Related Person for any
of the CCC Common Stock held by such person, as determined by two-thirds of the
Continuing Directors. The disclosure condition requires that the proxy statement
to be mailed to CCC's shareholders in connection with the Business Combination
include (x) the position of the Continuing Directors with respect to the
advisability of the proposed Business Combination, and (y) if required by
two-thirds of the Continuing Directors, the opinion of an investment banking
firm selected by such directors as to the fairness of the proposed Business
Combination. As defined in the Amended CCC Certificate, a Business Combination
includes, among other things, (i) any merger or consolidation of CCC with any
Related Person, regardless of which entity survives, (ii) the sale, lease,
mortgage, pledge or other disposition by CCC or any of its subsidiaries of
assets having a fair market value equal to 20% or more of the total consolidated
assets ("Substantial Assets") of CCC to a Related Person, (iii) the acquisition
(including, without limitation, by sale, lease, mortgage, pledge or other
transaction) by CCC or any of its subsidiaries of Substantial Assets from a
Related Person, (iv) the adoption of a plan or proposal for the liquidation or
dissolution of CCC proposed by or on behalf of a Related Person, (v) any
transaction that has the effect of increasing the voting power of a Related
Person, (vi) the issuance or transfer of any securities of CCC or any of its
subsidiaries by CCC or any of its subsidiaries to a Related Person (other than
pro-rata issuances or transfers to all CCC shareholders) and (vii) any agreement
or arrangement providing for any of the foregoing. This provision of the Amended
CCC Certificate can only be amended or repealed upon the vote of at least 80% of
the outstanding voting stock of CCC entitled to vote unless such amendment or
repeal is recommended by at least two-thirds of the Continuing Directors, in
which case, any such amendment shall require only the vote required under
applicable provisions of the DGCL or otherwise required by the Amended CCC
Certificate.
Amendment of Certain Certificate Provisions. In addition to the
requirements applicable to any amendment of the provision of the Amended CCC
Certificate regarding the approval of certain Business Combinations described
above under "-- Certain Business Combinations," certain provisions of the
Amended CCC Certificate, including those relating to the prohibition of
shareholder action by written consent, the removal of directors only for cause,
the calling of special meetings of shareholders, the classification of the Board
of Directors, the filling of director vacancies and the number of directors, may
be amended only by the vote of the holders of at least 80% of the outstanding
voting stock of CCC entitled to vote.
Amendment of Bylaws. The Amended CCC Certificate provides that the CCC
Bylaws may be amended by a majority of the entire Board of Directors or by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
stock of CCC entitled to vote unless a higher vote is expressly required with
respect to certain provisions. See "Comparison of Rights of Shareholders of
Cooper and CCC -- Amendment of Bylaws."
Section 203 of the Delaware General Corporation Law. CCC is a Delaware
corporation and subject to Section 203 of the DGCL. Generally, Section 203
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested shareholder" for a period of three years after
the date of the transaction in which the person became an interested
shareholder, unless (i) prior to such date,
93
<PAGE> 96
either the business combination or the transaction which resulted in the
shareholder becoming an interested shareholder is approved by the board of
directors of the corporation, (ii) upon consummation of the transaction that
resulted in the shareholder's becoming an interested shareholder, the interested
shareholder owns at least 85% of the voting power of the outstanding CCC capital
stock entitled to vote not owned by (x) directors who are also officers or (y)
employee stock plans where the participants do not have the right to determine
confidentially whether shares subject to the plan will be tendered in a tender
or exchange offer, or (iii) on or after such date the business combination is
approved by the board and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested shareholder. For
purposes of Section 203, the term "business combination" includes mergers, asset
sales and other transactions resulting in a financial benefit to the interested
shareholder. An "interested shareholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's outstanding voting stock.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF COOPER AND CCC
Upon consummation of the Exchange Offer, shareholders of Cooper who
exchange their shares of Cooper Common Stock for CCC Common Stock will become
shareholders of CCC. The rights of a CCC shareholder will be defined and
governed by the corporate law of Delaware, the State in which CCC is
incorporated, and by the Amended CCC Certificate and the Amended CCC Bylaws,
rather than by the corporate law of Ohio, the State in which Cooper is
incorporated, and by the Twenty-Fifth Amended Articles of Incorporation of
Cooper (the "Cooper Articles") and the Amended Code of Regulations of Cooper
(the "Cooper Regulations"). Certain provisions of Delaware law, the Amended CCC
Certificate and the Amended CCC Bylaws alter the rights of shareholders of CCC
from those that Cooper shareholders presently have. The following is a summary
of the material differences.
SPECIAL MEETINGS OF SHAREHOLDERS
Cooper. Pursuant to the Cooper Regulations, special meetings of
shareholders may be called by the Chairman of the Board, the President, any Vice
President, the Board of Directors or by shareholders holding 25% or more of the
outstanding shares entitled to vote at such a meeting.
CCC. Pursuant to the Amended CCC Certificate and the Amended CCC Bylaws,
special meetings of shareholders may be called only by the Chairman of the
Board, the President or a majority of the Board of Directors. Thus, holders of
CCC Common Stock will not have the power to call special meetings of
shareholders. See "Description of CCC Capital Stock -- Delaware Law and Certain
Certificate of Incorporation and Bylaw Provisions -- Special Meetings; No Action
by Written Consent."
ACTION BY WRITTEN CONSENT
Cooper. Under Ohio law, Cooper shareholders are entitled to take any
action which may otherwise be taken or authorized at a meeting of shareholders
without a meeting upon the written consent of all of the shareholders entitled
to notice of such meeting.
CCC. The DGCL provides that the right of shareholders to act by written
consent may be eliminated in the certificate of incorporation. The Amended CCC
Certificate provides that shareholders may not act by written consent.
Accordingly, CCC shareholders may only take formal action at (i) an annual
meeting of shareholders (see "Comparison of Rights of Shareholders of Cooper and
CCC -- Shareholder Nominations and Proposals" below and "Description of CCC
Capital Stock -- Delaware Law and Certain Certificate of Incorporation and Bylaw
Provisions -- Advance Notice for Raising Business or Making Nominations at
Annual Meetings") or (ii) a special meeting of shareholders which has been
called by the Chairman of the Board, the President or a majority of the Board of
Directors. See "Description of CCC Capital Stock -- Delaware Law and Certain
Certificate of Incorporation and Bylaw Provisions -- Special Meetings; No Action
by Written Consent."
94
<PAGE> 97
SHAREHOLDER NOMINATIONS AND PROPOSALS
Cooper. Neither the Cooper Articles nor the Cooper Regulations contain any
provision regarding the ability of shareholders to nominate individuals for
election to the Board of Directors of Cooper or to bring before any annual
meeting of shareholders any business.
CCC. The Amended CCC Bylaws establish procedures that must be followed for
shareholders to nominate directly individuals for election to the Board of
Directors of CCC or to bring any business before any annual meeting of
shareholders. For a brief description of such procedures, see "Description of
CCC Capital Stock -- Delaware Law and Certain Certificate of Incorporation and
Bylaw Provisions -- Advance Notice for Raising Business or Making Nominations at
Annual Meetings."
NUMBER OF DIRECTORS
Cooper. The Cooper Regulations provide that the number of directors shall
be not less than nine nor more than 15, as determined by the shareholders of
Cooper. The Cooper Regulations also empower the Cooper Board to change the
number of directors.
CCC. The Amended CCC Certificate and the Amended CCC Bylaws provide that
the number of directors shall be not less than five nor more than 15, with the
exact number of directors to be determined from time to time by the CCC Board.
Under the Amended CCC Certificate and the Amended CCC Bylaws, shareholders do
not have the authority to change the size of the CCC Board. See "Description of
CCC Capital Stock -- Delaware Law and Certain Certificate of Incorporation and
Bylaw Provisions -- Number of Directors; Classified Board of Directors." This
provision would prevent CCC shareholders from voting to increase the size of the
CCC Board of Directors and electing additional directors to fill any vacancies
created by such increase.
REMOVAL OF DIRECTORS
Cooper. Under the Cooper Regulations, directors may only be removed by the
vote of at least 80% of the voting power of Cooper unless a majority of the
Cooper Board has previously voted in favor of such removal, in which case a
director may be removed by a majority vote of the shareholders who would be
entitled to elect a director in place of the director being removed.
CCC. Under the Amended CCC Certificate, directors may be removed only for
cause and only by the affirmative vote of the holders of a majority of the
voting power of the outstanding shares of CCC capital stock then entitled to
vote generally in the election of directors, voting as a class. See "Description
of CCC Capital Stock -- Delaware Law and Certain Certificate of Incorporation
and Bylaw Provisions -- Removal of Directors; Filling Vacancies."
AMENDMENT OF BYLAWS
Cooper. The Cooper Regulations provide that such regulations may be
amended by the affirmative vote of the holders of record of shares entitling
them to exercise a majority of the voting power of Cooper at an annual or
special meeting or without a meeting by the written consent of the holders of
record of shares entitling them to exercise two-thirds of the voting power with
respect thereto, except that any amendment to the provisions of the Cooper
Regulations relating to the size and classification of the Cooper Board, the
removal of directors and the filling of vacancies will require the affirmative
vote of the holders of at least 80% of Cooper's voting power.
CCC. The Amended CCC Certificate and the Amended CCC Bylaws provide that
such bylaws may be amended by a majority of the entire CCC Board or by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
stock of CCC, except that any amendment to the provisions of the Amended CCC
Bylaws relating to the CCC Board, calling special shareholder meetings, no
action by written consent of shareholders and amending the amendment provision
requires the approval of the holders of at least 80% of the outstanding voting
stock of CCC entitled to vote. See "Description of CCC Capital Stock -- Delaware
Law and Certain Certificate of Incorporation and Bylaw Provisions -- Amendment
of Bylaws."
95
<PAGE> 98
AMENDMENT OF CHARTER
Cooper. Certain provisions of the Cooper Articles relating to the approval
of certain Business Combinations may be amended only by the vote of the holders
of at least 80% of the voting power of all of the capital stock entitled to
vote. Other amendments to the Cooper Articles may be approved by the vote of
the holders of at least two-thirds of the voting power of all of the capital
stock entitled to vote.
CCC. Certain provisions of the Amended CCC Certificate, including those
relating to the approval of certain Business Combinations, the prohibition of
shareholder action by written consent, the removal of directors only for cause,
the calling of special meetings of shareholders, the classification of the Board
of Directors, the filling of director vacancies and the number of directors may
be amended only by the vote of the holders of at least 80% of the outstanding
voting stock of CCC entitled to vote. See "Description of CCC Capital
Stock -- Delaware Law and Certain Certificate of Incorporation and Bylaw
Provisions -- Amendment of Certain Certificate Provisions."
STATE ANTITAKEOVER STATUTES
Cooper. Chapter 1704 of the Ohio Revised Code prohibits certain
transactions, including mergers, consolidations, majority share acquisitions,
sales of assets and dissolutions, between an Ohio corporation (such as Cooper)
and any person with the right to exercise 10% or more of the voting power of
such corporation. Such prohibition lasts for three years following the date on
which such person first became a 10% shareholder unless, prior to the time such
person first became a 10% shareholder, the board of directors of the corporation
approved either the business combination in question or the purchase of shares
that resulted in such person first becoming a 10% shareholder. After the initial
three-year moratorium, Chapter 1704 continues to prohibit such a business
combination unless (i) one of the above exceptions is available, (ii) the
holders of at least 66-2/3% of the voting shares and of at least a majority of
the voting shares not beneficially owned by the 10% shareholder approve the
business combination, or (iii) the business combination meets certain statutory
criteria designed to ensure that the corporation's remaining shareholders
receive fair consideration for their shares.
Ohio law also provides that a "control share acquisition" of shares of
certain Ohio corporations (including Cooper) may be made only with prior
shareholder approval, as discussed below. A "control share acquisition" is any
acquisition, whether by tender offer, open market purchase, privately negotiated
transaction, or otherwise, of shares of the corporation which, when added to all
other shares of the corporation owned or controlled by the acquiror, would
entitle the acquiror to exercise voting power in the election of directors
within any of the following ranges: 1/5 or more but less than 1/3; 1/3 or more
but less than a majority; or a majority or more. Under Ohio's control share
statute, a control share acquisition must be approved by the affirmative vote of
(i) a majority of the voting power of the corporation represented in person or
by proxy at the meeting of shareholders held to consider such approval and (ii)
a majority of such voting power excluding shares that may be voted by the
acquiring person, any executive officer of the corporation or any employee of
the corporation who is also a director.
Ohio law also provides that, for the express purpose of "preventing
manipulative practices," an Ohio corporation may recover from a person who makes
a tender offer to acquire control of the corporation, any profit realized by
such person from the disposition of the shares of the corporation within 18
months after the tender offer.
CCC. Under the DGCL, "business combinations" with "interested
shareholders" are prohibited unless certain exceptions are met. See "Description
of CCC Capital Stock -- Delaware Law and Certain Certificate of Incorporation
and Bylaw Provisions -- Section 203 of the Delaware General Corporation Law" for
a brief description of this provision of Delaware law.
Delaware law does not regulate control share acquisitions or provide for
the recovery of profits from a person who makes a tender offer to acquire
control of a Delaware corporation.
96
<PAGE> 99
MERGERS AND ACQUISITIONS
Cooper. Under Ohio law, mergers where the corporation is not the surviving
corporation, sales of assets, and similar transactions require approval of the
holders of 66 2/3% of the outstanding shares entitled to vote. Ohio law also
requires that the holders of 66 2/3% of the outstanding voting shares approve
any acquisition by an Ohio corporation that involves the issuance of shares by
that corporation if such shares would entitle the holders thereof to exercise at
least 1/6 of the voting power of the corporation in the election of directors
immediately after the consummation of such transaction.
CCC. Under the DGCL, mergers, consolidations and dispositions of all or
substantially all the assets of a corporation require the approval of the
holders of a majority of the outstanding shares entitled to vote thereon or of
such greater percentage as provided in the certificate of incorporation. The
Amended CCC Certificate does not require a greater vote. Under the DGCL the
separate vote of any class of shares is not required. In addition, under the
DGCL, no vote of the shareholders of the surviving corporation in a merger is
required to approve the merger if (i) the merger agreement does not amend in any
respect the corporation's certificate of incorporation, (ii) each share of stock
outstanding immediately prior to the effective date of the merger is to be an
identical outstanding or treasury share of the surviving corporation after the
effective date, and (iii) either no shares of common stock of the surviving
corporation and no shares, securities or obligations convertible into such stock
are to be issued under the plan of merger, or the number of shares of the
surviving corporation's common stock to be issued in the merger plus the number
of shares of common stock into which any other securities to be issued in the
merger are initially convertible does not exceed 20% of the common stock of the
surviving corporation outstanding immediately prior to the effective date of the
merger.
APPRAISAL RIGHTS
Cooper. Shareholders of an Ohio corporation who follow prescribed
statutory procedures are entitled to appraisal rights in connection with (i) the
lease, sale or other disposition of all or substantially all of the
corporation's assets, (ii) certain amendments to the corporation's articles of
incorporation, (iii) mergers where the corporation is not the surviving
corporation, and (iv) certain mergers or other transactions where such
shareholders are entitled to voting rights (see "-- Mergers and
Acquisitions -- Cooper" above).
CCC. Under the DGCL, the shareholders of a constituent corporation in a
merger or consolidation generally are not entitled to appraisal rights in
connection with a business combination transaction if the shares of stock they
own are, as of the record date fixed to determine shareholders entitled to
notice of and to vote at the meeting held to act upon the agreement providing
for such merger or consolidation, either listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. (a
"NASDAQ/NMS Security"), or held of record by more than 2,000 shareholders.
However, shareholders that would otherwise not have appraisal rights pursuant to
the provisions described in the previous sentence are entitled to appraisal
rights if such shareholders are required by the terms of the merger or
consolidation to accept for their stock any consideration other than (i) shares
of the corporation surviving the merger or depositary receipts in respect
thereof, (ii) shares of stock or depositary receipts in respect thereof which
are either listed on a national securities exchange or designated as a
NASDAQ/NMS Security or held of record by more than 2,000 shareholders, (iii)
cash in lieu of fractional shares of stock described in (i) and (ii) above or
depositary receipts in respect thereof, or (iv) any combination thereof.
In addition, holders of CCC Common Stock will not be entitled to appraisal
rights with respect to amendments to the Amended CCC Certificate or sales of all
or substantially all of the assets of CCC.
DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION
Cooper. Ohio law provides for mandatory advancement of expenses incurred
in defending any action, including those by or on behalf of the corporation,
brought against a director so long as the director agrees to cooperate with the
corporation and to repay the amounts advanced if it is proven by clear and
convincing evidence that the act or omission was committed with deliberate
intent to injure the corporation or with reckless disregard for the best
interests of the corporation. In addition, the Cooper Articles provide for
97
<PAGE> 100
indemnification of, and advancement of expenses to, the officers and directors
of Cooper in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, to
which any such officer or director was, is or is threatened to be made, a party
by reason of the fact that he holds or held such position, provided (i) it is
determined (as provided in the Cooper Articles) (a) that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of Cooper and (b) that, with respect to any
criminal action or proceeding, such officer or director had no reasonable cause
to believe his conduct was unlawful and (ii) in the case of any such action or
suit by or in the right of Cooper, no indemnification is available if such
officer or director has been held liable for negligence or misconduct in the
performance of his duty to Cooper unless and to the extent that the court in
which such action or suit was brought determines that such officer or director
is fairly and reasonably entitled to such indemnity.
CCC. Pursuant to the Amended CCC Certificate, the directors of CCC will
not be personally liable for monetary damages for breaches of the fiduciary duty
of care. The Amended CCC Certificate also provides certain mandatory
indemnification rights to the officers and directors of CCC in certain
circumstances which are substantially similar to those described above under
"Cooper," except that the Amended CCC Certificate does not outline specific
procedures for making the determinations referred to in clause (i) of such
description. See "Limitation on Liability and Indemnification of Directors and
Officers."
BUSINESS JUDGMENT RULE
Under both Ohio and Delaware law, the directors of a corporation are
entitled to the benefits of the presumption that, in making a business decision,
the directors acted on an informed basis, in good faith, and in the honest
belief that the action taken was in the best interests of the corporation.
Absent an abuse of discretion, the judgment of the directors will be respected
by the court. Known as the "business judgment rule," it may be rebutted in
Delaware upon a showing of a "preponderance of the evidence" that the directors'
actions constituted "gross negligence."
Ohio law provides that the business judgment presumption of good faith may
only be overcome by "clear and convincing evidence" rather than the
preponderance of the evidence standard applicable in Delaware. Further, Ohio law
provides specific statutory authority for directors to consider, in addition to
the interests of the corporation's shareholders, other factors such as the
interests of the corporation's employees, suppliers, creditors and customers;
the economy of the state and nation; community and societal considerations; the
long-term and short-term interests of the corporation and its shareholders; and
the possibility that these interests may be best served by the continued
independence of the corporation.
RIGHTS PLANS
Each Cooper Right entitles the registered holder to purchase from Cooper a
unit consisting of one one-hundredth of a share of Cooper's Series A
Participating Preferred Stock, no par value, at a purchase price of $87.50 per
unit, subject to adjustment. The description and terms of the Cooper Rights are
set forth in the Rights Agreement, dated as of February 17, 1987, as amended
(the "Cooper Rights Agreement"), between Cooper and First Chicago Trust Company
of New York (appointed as successor to First City National Bank of Houston), as
Rights Agent. Although the terms of the Cooper Rights and the Cooper Rights
Agreement are similar in many respects to the CCC Rights and the CCC Rights
Agreement (see "Description of CCC Capital Stock -- Rights Plan"), there are
certain significant differences.
The first significant difference between the CCC and Cooper rights plans
involves the events that trigger the "flip-in" provisions of the respective
rights. Under each rights agreement, upon the occurrence of certain "flip-in"
events, the respective rights (other than certain rights that are, or under
certain circumstances, were, beneficially owned by a person or group of
associated or affiliated persons who has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the then outstanding shares of
common stock of the company (a "Cooper Acquiring Person" or a "CCC Acquiring
Person," as the case may be)), will "flip-in" and become exercisable for Cooper
Common Stock or CCC Common Stock, as the case may be (or, in certain
circumstances, cash, property or other securities of Cooper or CCC,
respectively), having a value equal
98
<PAGE> 101
to two times the exercise price of the respective rights. Under the Cooper
Rights Agreement, the flip-in events include (i) a merger of Cooper with a
Cooper Acquiring Person where Cooper is the surviving corporation and the Cooper
Common Stock is not changed or exchanged, (ii) the acquisition by a person of
30% or more of the then outstanding shares of Cooper Common Stock (except
pursuant to an offer for all shares of Cooper Common Stock that the independent
directors of Cooper determine to be fair to and otherwise in the best interests
of Cooper and its shareholders), (iii) the occurrence of certain specified
"self-dealing" transactions involving a Cooper Acquiring Person and (iv) the
occurrence, during such time as there is a Cooper Acquiring Person, of an event
(such as a reverse stock split) which results in an increase of more than 1% in
the proportionate share of the outstanding shares of any class of equity
securities of Cooper or any of its subsidiaries beneficially owned by such
Cooper Acquiring Person. The "flip-in" events under the CCC Rights Agreement are
similar to those set forth in the Cooper Rights Agreement, except that (a) the
threshold described in clause (ii) of the immediately preceding sentence is more
than 20%, (b) the "flip-in" event described in clause (ii) of the immediately
preceding sentence contains certain exceptions for (x) the acquisition of CCC
Common Stock pursuant to the Exchange Offer and the Distribution, if any, and
(y) Cooper's ownership of CCC Common Stock, and (c) the CCC Rights Agreement
does not include among the flip-in triggering events the self-dealing
transactions of clause (iii) in the immediately preceding sentence. See
"Description of CCC Capital Stock -- Rights Plan."
The second significant difference between the Cooper Rights Agreement and
the CCC Rights Agreement relates to the circumstances under which the holders of
the respective rights will be entitled to exercise the rights following the
occurrence of a "flip-over" event. Under each of the rights agreements, upon the
occurrence of certain circumstances (which are substantially similar), each
right will become exercisable for common stock of the company which has acquired
Cooper or CCC, as the case may be, with a value equal to two times the exercise
price of the respective right; however, under the Cooper Rights Agreement, the
Cooper Rights will not be exercisable for the common stock of such acquiror if
(i) such transaction is consummated with a person who acquired shares of Cooper
Common Stock pursuant to a cash tender offer for all outstanding shares of
Cooper Common Stock that the independent directors of Cooper determine to be
fair to and otherwise in the best interests of Cooper and its shareholders and
(ii) certain conditions relating to the form and amount of consideration offered
to the Cooper shareholders in such transaction are satisfied. The CCC Rights
Agreement does not contain a similar limitation on the "flip-over" of the CCC
Rights.
The third significant difference between the Cooper Rights Agreement and
the CCC Rights Agreement involves the ability to amend the terms of the
respective rights agreement which relate to the purchase price of the rights and
the final expiration date of the rights. Under the CCC Rights Agreement, CCC may
increase the Purchase Price, or extend the Final Expiration Date, of the CCC
Rights provided that no Stock Acquisition Date or Tender Offer Date has
occurred. The Cooper Rights Agreement does not contain a similar provision;
accordingly, the purchase price and final expiration date of the Cooper Rights
may not be amended.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Cooper has received the Private Letter Ruling from the IRS to the effect
that, among other things, the Exchange Offer and the Distribution, if any, will
qualify as tax-free distributions to Cooper and its shareholders under Section
355 of the Code and that, accordingly, for Federal income tax purposes:
1. A Cooper shareholder will not recognize any income, gain or loss as
a result of the Exchange Offer and the Distribution, except, as described
below, in connection with cash received in lieu of fractional shares of CCC
Common Stock.
2. A Cooper shareholder's tax basis in any CCC Common Stock received
pursuant to the Exchange Offer will equal such holder's tax basis in the
Cooper Common Stock considered exchanged therefor. If Cooper distributes
any CCC Common Stock pro rata to holders of Cooper Common Stock pursuant to
the Distribution, then a holder's tax basis in the Cooper Common Stock not
exchanged pursuant to the Exchange Offer will be allocated, based on
relative fair market values at the time of the Distribution, between such
Cooper Common Stock and the CCC Common Stock received in the Distribution.
99
<PAGE> 102
3. A Cooper shareholder's holding period for the CCC Common Stock
received in the Exchange Offer and the Distribution will include the period
during which such shareholder held the Cooper Common Stock with respect to
which the CCC Common Stock is received, provided that such Cooper Common
Stock is held as a capital asset by such shareholder.
4. A Cooper shareholder who receives cash in lieu of fractional shares
of CCC Common Stock will recognize gain or loss equal to the difference
between the cash so received and the portion of the tax basis in its Cooper
Common Stock that is allocable to such fractional shares. Such gain or loss
will be capital gain or loss, provided that such fractional shares would
have been held by such shareholder as a capital asset.
5. Neither Cooper nor CCC will recognize gain or loss as a result of
the Exchange Offer and the Distribution.
Current Treasury regulations require each Cooper shareholder who receives
CCC Common Stock pursuant to the Exchange Offer and the Distribution to attach
to his or her Federal income tax return for the year in which the Exchange Offer
and Distribution occur a detailed statement setting forth such data as may be
appropriate in order to show the applicability of Section 355 of the Code to the
Exchange Offer and the Distribution. Cooper will convey the appropriate
information to each Cooper shareholder receiving CCC Common Stock in the
Exchange Offer and the Distribution, if any.
In connection with obtaining the Private Letter Ruling, Cooper has
committed to take certain actions with respect to the shares of CCC Common Stock
that it retains following consummation of the Transaction. For a brief
description of such commitments, see "Certain Transactions; Relationship Between
Cooper and CCC -- Other Matters."
The foregoing summary of Federal income tax consequences is included herein
for general information only and does not address the Federal income tax
consequences to all categories of Cooper shareholders, including those who
acquired shares of Cooper Common Stock pursuant to the exercise of employee
stock options or otherwise as compensation. EACH COOPER SHAREHOLDER IS URGED TO
CONSULT HIS OR HER TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER
OF THE EXCHANGE OFFER AND THE DISTRIBUTION, INCLUDING THE APPLICATION AND EFFECT
OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION
OF DIRECTORS AND OFFICERS
Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their shareholders for monetary
damages for breaches of directors' fiduciary duty of care. The Amended CCC
Certificate limits the liability of directors of CCC to CCC or its shareholders
to the fullest extent permitted by Delaware law. Specifically, directors of CCC
will not be personally liable for monetary damages for breaches of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to CCC or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the DGCL or (iv) for
any transaction from which the director derived an improper personal benefit.
The inclusion of this provision in the Amended CCC Certificate may have the
effect of reducing the likelihood of derivative litigation against directors and
may discourage or deter shareholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefited CCC and its shareholders.
The Amended CCC Certificate provides mandatory indemnification rights to
any officer or director of CCC who, by reason of the fact that he or she is an
officer or director of CCC, is involved in a legal proceeding of any nature.
Such indemnification rights include reimbursement for expenses incurred by such
officer or
100
<PAGE> 103
director in advance of the final disposition of such proceeding in accordance
with the applicable provisions of the DGCL.
CCC intends to enter into indemnification agreements with each of its
directors and executive officers providing specific procedures to better assure
the right of such persons to indemnification, including procedures for
submitting claims, for determining such person's entitlement to indemnification
(including the allocation of the burden of proof and selection of a reviewing
party) and for enforcing such indemnification rights.
CCC intends to maintain insurance for each director and officer of CCC
covering certain expenses, liabilities or losses he or she may incur that arise
by reason of his or her being a director or officer of CCC or a subsidiary
company, whether or not CCC would have the power to indemnify such person
against such expense, liability or loss under the DGCL. In addition, pursuant to
the Asset Transfer Agreement, Cooper has agreed to indemnify the directors and
officers of CCC against, among other things, certain liabilities retained by
Cooper, including liabilities, if any, arising under the litigation entitled
Frank, et al. v. Cooper Industries, Inc., et al., filed in the United States
District Court for the Southern District of Texas (Houston Division).
LEGAL OPINIONS
Certain legal matters in connection with CCC Common Stock offered hereby
are being passed upon for CCC by Skadden, Arps, Slate, Meagher & Flom, New York,
New York.
EXPERTS
The consolidated financial statements of Cooper Cameron Corporation and
Cooper Industries, Inc. appearing or incorporated by reference in this Offering
Circular - Prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent auditors, to the extent indicated in their reports
thereon also appearing elsewhere herein and in the Registration Statement or
incorporated by reference for the periods indicated in their reports. Such
consolidated financial statements have been included herein or incorporated
herein by reference in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
101
<PAGE> 104
COOPER CAMERON CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors........................................................ F-1
Audited Consolidated Financial Statements:
Consolidated Results of Operations for the years ended December 31, 1992, 1993 and
1994............................................................................. F-2
Consolidated Balance Sheet as of December 31, 1993 and 1994......................... F-3
Consolidated Cash Flows for the years ended December 31, 1992, 1993 and 1994........ F-4
Notes to Consolidated Financial Statements.......................................... F-5
Unaudited Interim Consolidated Financial Statements:
Consolidated Results of Operations for the three months ended March 31, 1994 and
1995............................................................................. F-25
Consolidated Balance Sheet as of December 31, 1994 and March 31, 1995............... F-26
Consolidated Cash Flows for the three months ended March 31, 1994 and 1995.......... F-27
Notes to Consolidated Financial Statements.......................................... F-28
</TABLE>
F-i
<PAGE> 105
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Cooper Cameron Corporation
We have audited the accompanying consolidated balance sheets of Cooper
Cameron Corporation (successor to four separate divisions formerly included in
the Petroleum & Industrial Equipment segment of Cooper Industries, Inc. -- see
Note 1) as of December 31, 1993 and 1994, and the related statements of
consolidated results of operations and consolidated cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1, these financial statements reflect the operations
of four separate divisions formerly included in the Petroleum & Industrial
Equipment segment of Cooper Industries, Inc. Cooper Cameron Corporation was
incorporated on November 10, 1994 and prior to the completion of the exchange
offer, and effective as of January 1, 1995, Cooper Industries, Inc. will
transfer all of the assets and liabilities of these divisions to Cooper Cameron
Corporation. Transactions with Cooper Industries, Inc. are described in Note 15.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cooper Cameron
Corporation (successor to four separate divisions formerly included in the
Petroleum & Industrial Equipment segment of Cooper Industries, Inc. -- see Note
1) as of December 31, 1993 and 1994, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 4, in 1992 the Company changed its methods of
accounting for postretirement benefits other than pensions, income taxes and
postemployment benefits.
/s/ ERNST & YOUNG LLP
Houston, Texas
February 28, 1995
F-1
<PAGE> 106
COOPER CAMERON CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1992 1993 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues............................................... $1,438,189 $1,340,778 $1,110,076
---------- ---------- ----------
Costs and Expenses
Cost of sales (exclusive of depreciation and
amortization)..................................... 1,007,748 970,944 838,575
Depreciation and amortization........................ 61,776 70,413 70,233
Selling and administrative expenses.................. 191,958 194,242 177,902
Interest expense..................................... 20,361 15,852 20,023
Nonrecurring income, net............................. (12,200) -- --
---------- ---------- ----------
1,269,643 1,251,451 1,106,733
---------- ---------- ----------
Income before income taxes and cumulative effect
of changes in accounting principles............. 168,546 89,327 3,343
Income taxes........................................... (57,575) (38,138) (7,089)
---------- ---------- ----------
Income (loss) before cumulative effect of changes in
accounting principles............................. 110,971 51,189 (3,746)
Cumulative effect on prior years of changes in
accounting principles............................. (108,048) -- --
---------- ---------- ----------
Net Income (Loss)................................. $ 2,923 $ 51,189 $ (3,746)
========= ========= =========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-2
<PAGE> 107
COOPER CAMERON CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Receivables (net of allowance for doubtful accounts of $11,365,000
and $11,241,000 at December 31, 1993 and 1994, respectively)... $ 298,903 $ 230,647
Receivable from Cooper Industries, Inc............................ -- 36,607
Inventories....................................................... 319,613 352,420
Other............................................................. 17,918 8,734
---------- ----------
Total Current Assets...................................... 636,434 628,408
---------- ----------
Plant and equipment, at cost less accumulated depreciation.......... 386,048 384,098
Intangibles, less accumulated amortization.......................... 661,785 668,249
Other assets........................................................ 29,401 29,625
---------- ----------
$1,713,668 $1,710,380
========= =========
LIABILITIES AND NET ASSETS
Current Liabilities:
Current maturities of long-term debt.............................. $ 185 $ 200
Accounts payable and accrued liabilities.......................... 301,815 274,207
Accrued income taxes.............................................. 1,232 2,001
---------- ----------
Total Current Liabilities................................. 303,232 276,408
---------- ----------
Long-term debt...................................................... 374,815 374,800
Postretirement benefits other than pensions......................... 108,607 107,717
Deferred income taxes............................................... 21,437 21,253
Other long-term liabilities......................................... 63,622 52,073
Net assets.......................................................... 841,955 878,129
---------- ----------
$1,713,668 $1,710,380
========= =========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-3
<PAGE> 108
COOPER CAMERON CORPORATION
CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1992 1993 1994
--------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................... $ 2,923 $ 51,189 $ (3,746)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation......................................... 37,459 46,426 43,505
Amortization......................................... 24,317 23,987 26,728
LIFO liquidation income.............................. (4,890) (11,653) (2,675)
Allocation of general and administrative expenses
from Cooper Industries, Inc. (net of tax).......... 6,792 5,077 5,116
Nonrecurring income, net............................. (12,200) -- --
Deferred income taxes................................ 17,649 20,433 24,828
Cumulative effect of changes in accounting
principles......................................... 108,048 -- --
Changes in assets and liabilities:(1)
Receivables........................................ 97,989 (57,253) 76,110
Inventories........................................ 59,951 49,346 (23,839)
Accounts payable and accrued liabilities........... (93,798) 5,049 (46,522)
Other assets and liabilities, net.................. (48,569) (56,247) (12,480)
--------- -------- --------
Net cash provided by operating activities....... 195,671 76,354 87,025
--------- -------- --------
Cash flows from investing activities:
Capital expenditures.................................... (68,709) (74,404) (63,510)
Proceeds from sales of plant and equipment.............. 8,308 4,497 5,754
--------- -------- --------
Net cash used for investing activities.......... (60,401) (69,907) (57,756)
--------- -------- --------
Cash flows from financing activities:
Transferred to Cooper Industries, Inc................... (134,700) (4,242) (30,613)
--------- -------- --------
Net cash used for financing activities.......... (134,700) (4,242) (30,613)
--------- -------- --------
Effect of translation on cash............................. (570) (2,205) 1,344
Increase (decrease) in cash retained...................... -- -- --
--------- -------- --------
Cash retained, beginning of year.......................... -- -- --
--------- -------- --------
Cash retained, end of year................................ $ -- $ -- $ --
========= ======== ========
</TABLE>
- ---------------
(1) Net of the effects of the cumulative effect of changes in accounting
principles, LIFO liquidation income and nonrecurring income.
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-4
<PAGE> 109
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: COOPER CAMERON CORPORATION
The accompanying financial statements reflect a consolidation of the
assets, liabilities and operations of four separate divisions of Cooper
Industries, Inc. ("Cooper"), which were transferred to a newly formed
corporation, Cooper Cameron Corporation (hereinafter referred to as "CCC") on
January 1, 1995. CCC was incorporated in Delaware on November 10, 1994 and is a
wholly-owned U.S. subsidiary of Cooper. CCC in turn has several wholly-owned
U.S. subsidiaries and foreign subsidiaries operating in Canada, Mexico, the
United Kingdom, France, Germany, Australia, the Netherlands and other countries.
Prior to the transfer on January 1, 1995, CCC did not have any assets (other
than for its initial capitalization of $1,000) or liabilities, nor did it
conduct any business for any period prior to January 1, 1995. The four former
divisions of Cooper that comprise CCC are Cooper Energy Services, headquartered
in Mount Vernon, Ohio; Cooper Oil Tool, headquartered in Houston, Texas; Cooper
Turbocompressor, headquartered in Buffalo, New York and Wheeling Machine
Products, located in Pine Bluff, Arkansas. At September 30, 1994, these four
divisions comprised the remaining operations of Cooper's Petroleum & Industrial
Equipment segment, which effective on that date became a discontinued operation
of Cooper pursuant to Accounting Principles Board Opinion No. 30. Although CCC
did not legally exist until November 10, 1994, for simplicity the term "CCC"
will be used throughout these financial statements to refer to the assets,
liabilities and results of the four divisions that now operate as CCC.
The accompanying financial statements include the accounts of CCC as
described above. These statements are presented as if CCC had existed as an
entity separate from its parent, Cooper, during the periods presented and
include the assets, liabilities, revenues and expenses that are directly related
to CCC's operations. All transactions among the four divisions and the separate
subsidiaries that comprise CCC have been eliminated. Because the majority of
CCC's domestic results and, in certain cases, foreign results were included in
the consolidated financial statements of Cooper on a divisional basis, there are
no separate meaningful historical equity accounts for CCC. Additionally, amounts
of Cooper general corporate, accounting, tax, legal and other administrative
costs that are not directly attributable to the operations of CCC have been
allocated to CCC based on (1) appropriate percentages of certain departments
that comprise Cooper's Corporate Office and (2) a ratio of CCC's revenues to the
consolidated revenues of Cooper (including CCC) for other Corporate departments.
Management believes that this allocation method provides CCC with a reasonable
amount of such expenses. The difference for each of the years presented between
the selling and administrative expenses calculated utilizing the method
described above and the actual cost of such expenses that CCC anticipates it
would have incurred on a stand-alone basis is not material.
In addition to a small amount of domestic debt related to an industrial
revenue bond, approximately $370,000,000 of Cooper's long-term debt and related
interest expense have been allocated to CCC in its historical financial
statements. Because CCC is fully integrated into Cooper's worldwide cash
management system, all of its cash requirements are provided by Cooper and any
excess cash generated by CCC is transferred to Cooper. As a result, the
$375,000,000 of total indebtedness has been held constant from year to year in
CCC's consolidated financial statements. The financial information included
herein may not necessarily be indicative of the balance sheet, results of
operations or cash flows of CCC in the future or what the balance sheet, results
of operations or cash flows of CCC would have been if it had been a separate,
stand-alone company during the periods presented.
F-5
<PAGE> 110
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2: PLANNED CHANGE IN METHOD OF EVALUATING GOODWILL FOR IMPAIRMENT
In connection with the split-off of CCC pursuant to the Exchange Offer,
Cooper recorded a $313,000,000 charge against its third quarter results of
operations. This charge included a $288,000,000 reduction in the historical book
value of CCC's net assets as reflected in Cooper's consolidated balance sheet at
December 31, 1994.
Because management believes that the amount of goodwill reflected in CCC's
consolidated financial statements with respect to the Cooper Oil Tool business
as of December 31, 1994 is in excess of the fair market value of this business'
actual going concern goodwill, CCC will change its method of evaluating goodwill
for impairment for all of its operations from an undiscounted to a discounted
cash flow approach during the first quarter following completion of the Exchange
Offer. The analysis for impairment will continue to be made on a division by
division basis. While CCC is still a subsidiary of Cooper, it cannot elect a
method of evaluating goodwill that is different from Cooper's evaluation
methods. CCC's auditors concur that the new method is preferable for CCC. The
amount of calculated impairment will be charged against CCC's results of
operations with an offsetting reduction in goodwill. This charge is non-cash and
will be considered by the banks in the course of establishing CCC's new credit
facility. Based on preliminary calculations, it is anticipated that the goodwill
reduction that will result from this change in methodology will be approximately
$450,000,000 and is related entirely to the Cooper Oil Tool business. This
reduction will be recorded as a separate line item in CCC's consolidated
statement of results of operations immediately following the caption "Interest
Expense." Goodwill related to the Cooper Energy Services and Cooper
Turbocompressor businesses is not impaired based on the new discounted cash flow
evaluation method. The Wheeling Machine Products business has no goodwill. Based
on the estimated $450 million reduction, the effect on 1995's results of
operations for this anticipated change will be to decrease depreciation and
amortization expense and increase pre-tax income as well as net income (because
the goodwill amortization is not deductible for tax purposes) by approximately
$8,500,000 (assuming the change is effective for seven and one-half months). In
future years the effect will be approximately $13,500,000.
NOTE 3: SUMMARY OF MAJOR ACCOUNTING POLICIES
Principles of Consolidation The consolidated financial statements include
the accounts of CCC and all majority-owned subsidiaries, except for certain
insignificant subsidiaries, the investments in which are recorded under the cost
method because of restrictions upon the transfer of earnings and other economic
uncertainties. Investments of 50% or less in affiliated companies are accounted
for on the equity method, unless significant economic or political
considerations indicate that the cost method is appropriate.
Inventories Inventories are carried at cost or, if lower, net realizable
value. On the basis of current costs, 66% of inventories in 1994 and 1993 are
carried on the last-in, first-out (LIFO) method. The remaining inventories are
carried on the first-in, first-out (FIFO) method.
Plant and Equipment Depreciation is provided over the estimated useful
lives of the related assets using primarily the straight-line method. This
method is applied to group asset accounts which in general have the following
lives: buildings -- 10 to 40 years; machinery and equipment -- 3 to 18 years;
and tooling, dies, patterns, etc. -- 5 to 10 years. Prior to the fourth quarter
of 1992, no provision was made for depreciation of tooling, dies, patterns and
similar assets related to general operations, as replacement of these items was
charged to expense. Effective with the third quarter of 1993, CCC changed the
depreciable life of existing and future machinery and equipment additions from
10 years to 12 years. This change, which reflected a return to the 12-year
depreciable life used until the mid-1980s, resulted from a review by CCC that
indicated the useful life of its machinery and equipment was longer than the
current depreciable life of 10 years for a number of reasons, including lower
utilization rates and maturing technology for computer numerically controlled
machinery and equipment. Consequently, the depreciable life has been changed to
more nearly reflect the actual period of time during which the machinery and
equipment will be utilized by the business.
F-6
<PAGE> 111
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3: SUMMARY OF MAJOR ACCOUNTING POLICIES (CONTINUED)
Intangibles Intangibles consist primarily of goodwill related to purchase
acquisitions. With minor exceptions, the goodwill is being amortized over 40
years from respective acquisition dates. The carrying value of CCC's goodwill is
reviewed by division at least annually or whenever there are indications that
the goodwill may be impaired. If this review indicates that goodwill will not be
recoverable, as determined based on undiscounted cash flows over the remaining
amortization periods, the carrying value of the goodwill will be reduced by the
estimated shortfall in cash flows. See Note 2 for pending change in method of
evaluating goodwill.
Income Taxes Income taxes are provided as if CCC was a stand-alone
business filing a separate tax return. Beginning with the year 1992, CCC
determined tax expense and other deferred tax information in compliance with
Statement of Financial Accounting Standards (SFAS) No. 109 (Accounting for
Income Taxes). Income tax expense includes U.S. and foreign income taxes,
including U.S. Federal taxes on undistributed earnings of foreign subsidiaries
to the extent such earnings are planned to be remitted.
Postretirement Benefits Other Than Pensions Beginning with the year 1992,
CCC determined the accounting effect of postretirement benefits other than
pensions (primarily retiree medical costs) in accordance with the provisions of
SFAS No. 106 (Employers' Accounting for Postretirement Benefits Other Than
Pensions).
Postemployment Benefits Beginning with the year 1992, CCC accounted for
the benefits payable to employees when they leave CCC other than by reason of
retirement in accordance with the provisions of SFAS No. 112 (Employers'
Accounting for Postemployment Benefits).
Environmental Remediation and Compliance Environmental remediation costs
are accrued, except to the extent costs can be capitalized, based on estimates
of known environmental remediation exposures. Environmental compliance costs
include maintenance and operating costs with respect to pollution control
facilities, costs of ongoing monitoring programs and similar costs. Such costs
are expensed as incurred. Capitalized environmental costs are depreciated
generally utilizing a 15-year life.
Product Warranty Estimated warranty expense is accrued at the time of sale
as appropriate for each product line. Adjustments to the accrual are made
periodically to reflect actual experience.
Earnings Per Share Earnings per share have been omitted from the statement
of results of operations because CCC was comprised of operating divisions of
Cooper with no meaningful equity securities outstanding during the periods
presented.
NOTE 4: CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1992, CCC adopted the accounting provisions of SFAS
No. 106 (Employers' Accounting for Postretirement Benefits Other Than Pensions),
SFAS No. 109 (Accounting for Income Taxes) and SFAS No. 112 (Employers'
Accounting for Postemployment Benefits). Net income for 1992 included the
cumulative effect ($108,048,000, net of tax) as of January 1, 1992, necessary to
adjust CCC's net assets for compliance with the new standards. The results of
operations for 1993 and 1994 have also been determined in accordance with the
new standards. Each of these changes is discussed in greater detail below.
SFAS No. 106 -- Employers' Accounting for Postretirement Benefits Other Than
Pensions
SFAS No. 106 provides that CCC follow an accrual method of accounting for
the benefits other than pensions (primarily medical costs) provided to employees
after retirement. Net income for 1992 included a charge of $105,500,000 pretax
($64,355,000, net of tax), for the immediate recognition of the net transition
obligation with respect to benefits earned by active and retired employees prior
to January 1, 1992.
F-7
<PAGE> 112
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4: CHANGES IN ACCOUNTING PRINCIPLES (CONTINUED)
Additionally, ongoing postretirement costs were recorded based on an actuarially
determined accrual method as opposed to CCC's previous pay-as-you-go method of
accounting for such costs. The remaining disclosure information required by SFAS
No. 106 is set forth in Note 10.
SFAS No. 109 -- Accounting for Income Taxes
SFAS No. 109 requires a liability, as opposed to a deferred method of
accounting for income taxes. Net income for 1992 included a one-time net of tax
charge of $39,434,000 in order to provide a net deferred tax credit with respect
to the aggregate of the differences between the book and tax basis of CCC's
assets and liabilities and the recording of a related valuation allowance
pertaining to certain deferred tax assets. The direction and magnitude of this
adjustment resulted from the large fair market value adjustments recorded for
book purposes, but not for tax purposes, with respect to certain acquisitions,
including Cameron Iron Works, Inc. Additionally, income tax expense and certain
other adjustments for 1992 were determined in accordance with the provisions of
the new standard. The remaining disclosure information required by SFAS No. 109
is set forth in Note 14.
SFAS No. 112 -- Employers' Accounting for Postemployment Benefits
SFAS No. 112 provides that CCC follow an accrual method of accounting for
the benefits payable to employees when they leave CCC other than by reason of
retirement. Because most of these benefits were already accounted for by CCC on
an accrual method, this new standard had a relatively small cumulative effect,
$6,982,000 ($4,259,000, net of tax) upon adoption of the standard in 1992.
NOTE 5: NONRECURRING ITEMS
CCC's results for the year 1992 included $18,000,000 of income recognition
with respect to investments made during the 1982 downturn in the petroleum
sector. These investments were made under unusually favorable circumstances,
which ultimately resulted in dispositions at a profit. Although portions of the
profit were recognized previously, a significant amount was deferred pending the
resolution of various uncertainties that were resolved during 1992. This income
was partially offset by $5,800,000 of accruals with respect to the closure of
the Compression and Power Equipment segment's Pennsylvania Process compressor
operations in Easton, Pennsylvania. At the end of 1994, this closure was
essentially completed.
F-8
<PAGE> 113
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6: INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1994
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Raw materials.................................................. $ 61,525 $ 60,496
Work-in-process................................................ 146,550 144,262
Finished goods, including parts and subassemblies.............. 231,941 242,749
Perishable tooling and supplies................................ 4,800 4,908
-------- --------
444,816 452,415
Excess of current standard costs over LIFO costs............... (96,349) (90,994)
Allowance for obsolete and slow-moving inventory............... (28,854) (9,001)
-------- --------
Net inventories.............................................. $319,613 $352,420
======== ========
</TABLE>
During 1992, 1993 and 1994, reductions in inventory quantities resulted in
liquidations of LIFO inventory layers carried at lower costs prevailing in prior
years. The effect was to increase net income by $2,983,000, $6,992,000 and
$1,605,000 in 1992, 1993 and 1994, respectively.
NOTE 7: PLANT AND EQUIPMENT AND INTANGIBLES
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1994
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Plant and equipment:
Land and land improvements................................. $ 40,272 $ 31,521
Buildings.................................................. 152,913 165,920
Machinery and equipment.................................... 329,243 350,963
Tooling, dies, patterns, etc............................... 24,118 28,956
All other.................................................. 83,519 89,103
Construction in progress................................... 23,035 23,011
--------- ---------
653,100 689,474
Accumulated depreciation................................... (267,052) (305,376)
--------- ---------
$ 386,048 $ 384,098
========= =========
Intangibles:
Goodwill................................................... $ 751,449 $ 783,221
Assets related to pension plans............................ 1,881 1,564
Other...................................................... 35,736 40,542
--------- ---------
789,066 825,327
Accumulated amortization................................... (127,281) (157,078)
--------- ---------
$ 661,785 $ 668,249
========= =========
</TABLE>
F-9
<PAGE> 114
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1994
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Trade accounts and accruals.................................... $160,817 $171,896
Salaries, wages and related fringe benefits.................... 43,917 28,616
Payroll and other taxes........................................ 19,095 13,557
Estimated costs of facility relocation, realignment and other
nonrecurring items........................................... 25,573 6,609
Product and environmental liability accruals................... 22,855 17,208
Accrued warranty............................................... 16,400 14,511
Deferred taxes................................................. -- 13,478
Other (individual items less than 5% of total current
liabilities)................................................. 13,158 8,332
-------- --------
$301,815 $274,207
======== ========
</TABLE>
At December 31, 1994, CCC had accruals of $5,858,000 with respect to
potential product liability claims and accruals of $11,350,000 with respect to
potential environmental liabilities based on CCC's current estimate of the most
likely amount of liabilities that it believes will be incurred.
Of the $5,858,000 of product liability accruals, $3,329,000 relate to known
claims with respect to ongoing operations and $2,529,000 relate to a minimum
estimate of claims that have been incurred but not yet reported. While CCC is
generally self-insured with respect to product liability claims, CCC had
insurance coverage for individual 1994 claims in excess $1,000,000 for products
utilized in oilfield applications and in excess of $3,000,000 for all other
products. Insurance levels have remained consistent in the past several years.
The recorded product liability accruals are net of amounts covered under
insurance policies.
Of the $11,350,000 of environmental liability accruals, $2,521,000 relate
to sites owned by CCC and $8,829,000 relate to third party sites where CCC was a
contributor. Third party sites usually involve multiple contributors where CCC's
liability will be determined based on an estimate of CCC's proportionate
responsibility for the total cleanup. The amount actually accrued for such sites
is based on these estimates as well as an assessment of the financial capacity
of the other potentially responsible parties. Environmental liabilities are not
generally subject to insurance recovery. In addition, CCC has capitalized a
total of $323,000 with respect to environmental matters with an undepreciated
net book value of $256,000 at December 31, 1994.
It has been CCC's consistent practice to include the entire accrual for
these liabilities as a current liability although only approximately 10 to 20%
of the balance will be spent on an annual basis. The annual effect on earnings
for product liability is essentially equal to the amounts disbursed. In the case
of environmental liability, the annual expense is considerably smaller than the
disbursements, since the vast majority of CCC's environmental liability has been
recorded in connection with acquired companies. The changes in the accrual
balance from year to year reflect this normal expensing and funding.
In establishing its accruals for both product liability and environmental
liability, CCC has not utilized any form of discounting. While both product
liability and environmental liability accruals involve estimates that can have
wide ranges of potential liability, CCC has taken a proactive approach and has
managed the costs in both of these areas over the years such that the actual
liabilities, absent law changes, have generally been lower than the estimates.
CCC does not believe that the nature of its products, its production processes,
or the materials or other factors involved in the manufacturing process, subject
CCC to unusual risks or exposures for product or environmental liability. CCC's
greatest exposure to inaccuracy in its estimates is with respect to
F-10
<PAGE> 115
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (CONTINUED)
the constantly changing definitions of what constitutes an environmental
liability or an acceptable level of cleanup.
The caption "Estimated costs of facility relocation, realignment and other
nonrecurring items" relates primarily to accruals established by CCC as part of
the purchase price allocation with respect to its 1989 acquisition of the "oil
tool" business (included in CCC's Petroleum Production Equipment segment) of
Cameron Iron Works, Inc. Many of the projects covered by these accruals were
originally slated for 1991 and 1992 but were deferred as a result of the
dramatic upturn in the Petroleum Production Equipment business starting in 1991
and carrying through the end of 1992. As a consequence, many projects were
started in late 1992 or early 1993 and then largely completed in 1994. The most
significant component of the accrual ($10,200,000 at December 31, 1993 and
$3,100,000 at December 31, 1994) related to manufacturing operations in the
United Kingdom, that at the time of the acquisition were conducted from three
separate manufacturing facilities. When fully completed during 1995, those three
facilities will have been consolidated into a completely re-engineered and
efficiently laid-out facility located in Leeds, England. During 1994, CCC also
completed major non-capital modifications to its manufacturing operations in
France (spending of $2,200,000), the United States (spending of $1,700,000) and
Mexico (spending of $1,400,000), as well as the completion of the shut-down of
Compression and Power Equipment segment's Penn Compressor operations. The
accrual for this shut-down was established as part of 1992's nonrecurring income
and expense. In addition to accruals related to the United Kingdom, the December
31, 1994 reserve balance includes the remaining accruals with respect to a
two-year program providing for the rationalization of compression products as
well as an organizational realignment within the Compression & Power Equipment
segment.
NOTE 9: EMPLOYEE BENEFIT PLANS
<TABLE>
<CAPTION>
COMPONENTS OF DEFINED BENEFIT
PLAN PENSION EXPENSE
------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------
1992 1993 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year............. $ 9,040 $ 8,767 $ 9,042
Interest cost on projected benefit obligation............ 17,965 16,634 15,068
Actual return on assets.................................. (15,447) (25,050) 204
Net amortization and deferral............................ (5,683) 5,767 (19,055)
-------- -------- --------
Net pension cost............................... $ 5,875 $ 6,118 $ 5,259
======== ======== ========
</TABLE>
F-11
<PAGE> 116
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9: EMPLOYEE BENEFIT PLANS (CONTINUED)
<TABLE>
<CAPTION>
FUNDED STATUS OF DEFINED BENEFIT PLANS
-------------------------------------------------
PLANS WITH
PLANS WITH ASSETS IN ACCUMULATED
EXCESS BENEFITS IN EXCESS OF
OF ACCUMULATED BENEFITS ASSETS
----------------------- ---------------------
DECEMBER 31, DECEMBER 31,
----------------------- ---------------------
1993 1994 1993 1994
--------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation................... $(156,537) $(149,080) $(36,025) $(36,393)
========= ========= ======== ========
Accumulated benefit obligation.............. $(165,015) $(157,519) $(38,518) $(38,922)
========= ========= ======== ========
Projected benefit obligation................ $(173,824) $(165,206) $(39,384) $(39,556)
Plan assets at fair value..................... 189,039 182,293 27,093 29,279
--------- --------- -------- --------
Plan assets in excess of (less than) projected
benefit obligation.......................... 15,215 17,087 (12,291) (10,277)
Unrecognized net loss......................... 7,856 10,444 7,210 6,611
Unrecognized net (asset) obligation from
adoption date............................... (4,139) (3,441) 1,790 1,549
Unrecognized prior service cost............... 253 (1,306) 74 70
Other......................................... -- -- -- (345)
Adjustment required to recognize
minimum liability........................... -- -- (8,199) (7,703)
--------- --------- -------- --------
Pension asset (liability) at end of year...... $ 19,185 $ 22,784 $(11,416) $(10,095)
========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
COMPUTATIONAL ASSUMPTIONS
------------------------------------------------------
PROJECTED BENEFIT
NET PENSION COST OBLIGATION
-------------------------------- -----------------
1992 1993 1994 1993 1994
-------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Discount rate:
Domestic............................. 9% 8 1/2% 7% 7% 8%
International........................ 7 1/2 - 9 7 1/2 - 9 6 - 7 3/4 6 - 7 3/4 7 1/2 - 9
Rate of increase in compensation
levels:
Domestic............................. 6 5 1/2 5 5 5
International........................ 4 - 6 4 - 6 4 - 5 1/2 4 - 5 1/2 4 - 6
Expected long-term rate of return on
assets:
Domestic............................. 9 1/2 9 8 1/2 -- --
International........................ 7 1/2 - 10 7 1/2 - 10 6 - 9 1/2 -- --
Benefit basis:
Salaried plans -- earnings during
career
Hourly plans -- dollar units,
multiplied by years of service
Funding policy: 5 - 30 years
</TABLE>
F-12
<PAGE> 117
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9: EMPLOYEE BENEFIT PLANS (CONTINUED)
As part of Cooper, the domestic salaried employees of CCC participated in
the Salaried Employees' Plan of Cooper Industries, Inc., while the United
Kingdom (U.K.) salaried and hourly employees participated in a combined plan
along with certain other Cooper employees in the U.K. The domestic hourly
employees of CCC participate in the various hourly plans. Under the hourly plans
employee savings deferrals are partially matched with company contributions of
cash. The amounts shown in the preceding table reflect an allocation to CCC
calculated by Cooper's actuaries. The methodology used to allocate these figures
was as follows: the liabilities and service cost directly attributable to CCC's
actual employees were isolated; other components of expense were allocated in
the same proportion as the liabilities; year-end assets, as well as return
during the year, were also allocated in proportion to liabilities. Because CCC
has established a stand-alone salaried pension plan, which was designed as a
mirror image of the Cooper Salaried Plan and which will be funded by a transfer
of assets, including overfunding, from the Cooper Salaried Plan, management
believes that the amounts derived from these calculations and allocations are
reasonable. Aggregate pension expense amounted to $12,562,000 in 1992,
$13,628,000 in 1993 and $13,737,000 in 1994. CCC's expense with respect to the
defined benefit pension plans is set forth in the table above. Expense with
respect to the domestic defined contribution plan for the years ended December
31, 1992, 1993 and 1994 amounted to $6,687,000, $7,510,000 and $8,383,000,
respectively. Gains and losses on curtailments and settlements were not material
in 1992 or 1993. CCC had a net loss of $95,000 on settlements and curtailments
in 1994. The assets of the domestic and foreign plans are maintained in various
trusts and consist primarily of equity and fixed income securities.
CCC's minimum liability for pension plans with accumulated benefits in
excess of assets of $8,199,000 in 1993 and $7,703,000 in 1994 has been recorded
in CCC's Balance Sheet as a long-term liability with a $1,881,000 offsetting
intangible asset in 1993 and $1,564,000 in 1994. In addition, CCC has recorded a
$6,318,000 reduction in the caption "Net Assets" in 1993 and a $6,139,000
reduction in 1994.
CCC's full-time domestic employees who are not covered by a bargaining unit
are also eligible to participate in the Cooper Savings and Stock Ownership Plan.
Under the Cooper Savings and Stock Ownership Plan, employee's savings deferrals
are partially matched with an allocation of shares in Cooper's Employee Stock
Ownership Plan (ESOP). No assets or liabilities with respect to Cooper's ESOP
have been included in CCC's consolidated financial statements, because CCC's
newly created savings plans, which replace the Cooper plans, will provide for
matching contributions of CCC's, and not Cooper's, Common stock. CCC's
management has determined that the required matching shares will be handled
through an ESOP. CCC's expense equals the matching contribution under the Plan's
formula adjusted to reflect CCC's proportionate participation in Cooper's ESOP.
Expense for the years ended December 31, 1992, 1993 and 1994 amounted to
$4,298,000, $4,211,000 and $6,983,000, respectively.
During 1992 for the domestic operations of the Petroleum Production
Equipment segment and 1993 for the domestic operations of the Compression and
Power Equipment segment, CCC changed its salaried and hourly vacation policies
to eliminate carryover vacation rights. No approval was required in the case of
the salaried changes and appropriate labor union approvals were obtained in the
case of hourly employees. This change resulted in one time expense reductions of
$4,200,000 in 1992 and $3,500,000 in 1993.
Prior to the completion of the Exchange Offer, CCC will be adopting various
new benefit plans to replace certain of the Cooper plans in which CCC employees
have historically participated. In certain cases those plans will be mirror
images of the current Cooper plans while in other cases the plans will be
customized to the needs and objectives of CCC. Separate historical plans that
related exclusively to the operations of CCC, including those related to
bargaining unit employees and separate plans in certain international locations,
will continue. Any trust fund assets pertaining to such separate plans will
remain with the plans. In addition, CCC will receive a proportionate share of
any trust fund assets relating to the various Cooper plans in which it has been
a participant. It is management's judgment that the annual cost of any new plans
that will be adopted will
F-13
<PAGE> 118
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9: EMPLOYEE BENEFIT PLANS (CONTINUED)
not exceed the cost of the current Cooper plans that they replace and may in
fact be less since it is management's intention to utilize CCC Common stock as
opposed to cash as a way of both compensating and incentivizing management.
Various plans adopted during 1995, including a long-term incentive plan and a
retirement savings plan that includes an employee stock ownership plan are
discussed elsewhere in this Offering Circular -- Prospectus.
NOTE 10: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
As part of Cooper, CCC's salaried employees participate in various domestic
employee welfare benefit plans, including medical, dental and prescriptions
among other benefits for active employees. Salaried employees who retired prior
to 1989, as well as certain other employees who were near retirement and elected
to receive certain benefits, have retiree medical, prescription and life
insurance benefits, while active salaried employees will not have postretirement
medical benefits.
The hourly employees have separate plans with varying benefit formulas. In
all cases, however, currently active employees, except for certain employees who
are near retirement and previously elected to receive certain benefits, will not
receive health care benefits after retirement. All of Cooper's plans and
therefore CCC's portion of such plans are unfunded.
As described in Note 3 of the Notes to the Consolidated Financial
Statements, Cooper, and therefore CCC, elected for the year 1992 and future
years to follow the provisions of SFAS No. 106 (Employers' Accounting for
Postretirement Benefits Other Than Pensions). The amounts reflected in the table
that follows represent CCC's portion of Cooper's overall salaried employee
retiree liability as well as CCC's proportionate amounts in various plan
groupings that were actuarially evaluated in arriving at Cooper's overall
expense in accordance with SFAS No. 106.
F-14
<PAGE> 119
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
<TABLE>
<CAPTION>
AMOUNTS PER
CONSOLIDATED
FINANCIAL STATEMENTS
ITEMS NOT YET RECORDED -----------------------
ACCUMULATED IN CONSOLIDATED LIABILITY FOR
POSTRETIREMENT FINANCIAL STATEMENTS POSTRETIREMENT
BENEFIT ------------------------ BENEFITS NET
OBLIGATION PRIOR ACTUARIAL OTHER ANNUAL
(APBO) SERVICE COST NET GAIN THAN PENSIONS EXPENSE
-------------- ------------ --------- ------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance -- December 31, 1991........... $ (2,800) $ -- $ -- $ (2,800) $ --
Adoption of SFAS No. 106 effective
January 1, 1992...................... (105,500) (105,500)
Benefit payments....................... 5,406 5,406
Plan expense:
Service cost......................... (800) 800
Interest cost........................ (8,000) 8,000
-------
Net annual expense..................... (8,800) $ 8,800
=======
-------------- ------------ --------- -------------
Balance -- December 31, 1992........... (111,694) -- -- (111,694)
Benefit payments....................... 3,887 3,887
Plan amendments........................ 1,000 (1,000)
Actuarial net gain..................... 20,500 (20,500)
Plan expense:
Service cost......................... (200) $ 200
Interest cost........................ (6,100) 6,100
Amortization of prior service cost... 100 (100)
Curtailment gains (three plans)...... 5,400 (5,400)
-------
Net annual expense..................... (800) $ 800
=======
-------------- ------------ --------- -------------
Balance -- December 31, 1993........... (87,207) (900) (20,500) (108,607)
Plan amendments........................ 2,600 (2,600)
Benefit payments....................... 3,908 3,908
Actuarial net gain..................... 21,800 (21,800)
Plan expense:
Service cost......................... (300) $ 300
Interest cost........................ (5,000) 5,000
Amortization of prior service cost... 600 (600)
Amortization of actuarial net gain... 1,682 (1,682)
-------
Net annual expense..................... (3,018) $ 3,018
=======
-------------- ------------ --------- -------------
Balance -- December 31, 1994........... $ (64,199) $ (2,900) $ (40,618) $(107,717)
========== ========= ======== ==========
</TABLE>
F-15
<PAGE> 120
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1994
-------- --------
<S> <C> <C>
Amount of APBO related to:
Retired employees............................................ $(75,407) $(55,699)
Employees eligible to retire................................. (6,100) (4,400)
Other employees.............................................. (5,700) (4,100)
Actuarial assumptions:
Discount rate................................................ 7.58% 6.87%
Ensuing year to 2002 --
healthcare cost trend rate................................ 17% 15%
ratable ratable
to 5.5% to 5.5%
Effect of 1% change in healthcare cost trend rate:...........
Increase year-end APBO.................................... 9% 8%
Increase expense.......................................... 10% 13%
</TABLE>
NOTE 11: NET ASSETS
Changes in net assets during the three years ended December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
NET ASSETS
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Balance at December 31, 1991...................................... $1,003,420
Adjustment required to recognize minimum pension liability........ 221
Translation adjustment............................................ (71,489)
Free cash flow transferred to Cooper.............................. (134,700)
Allocation of administrative expenses, net of tax, from Cooper.... 6,792
Net income........................................................ 2,923
----------------------
Balance at December 31, 1992...................................... 807,167
Adjustment required to recognize minimum pension liability........ 6,097
Translation adjustment............................................ (23,333)
Free cash flow transferred to Cooper.............................. (4,242)
Allocation of administrative expenses, net of tax, from Cooper.... 5,077
Net income........................................................ 51,189
----------------------
Balance at December 31, 1993...................................... 841,955
Adjustment required to recognize minimum pension liability........ (179)
Translation adjustment............................................ 28,989
Receivable from Cooper............................................ 36,607
Free cash flow transferred to Cooper.............................. (30,613)
Allocation of administrative expenses, net of tax, from Cooper.... 5,116
Net loss.......................................................... (3,746)
----------------------
Balance at December 31, 1994...................................... $ 878,129
================
</TABLE>
Intercompany transactions are principally cash transfers between CCC and
Cooper.
F-16
<PAGE> 121
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12: LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1994
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Debt allocated by Cooper....................................... $370,500 $370,685
5.9% industrial revenue bonds, due 2002........................ 4,500 4,315
-------- --------
375,000 375,000
Current maturities............................................. (185) (200)
-------- --------
Long-term portion.............................................. $374,815 $374,800
======== ========
</TABLE>
Cooper's cash and indebtedness is managed on a worldwide basis from the
Cooper Corporate Office in Houston, Texas. All of the cash provided by or used
by a particular division, including the former CCC divisions, is provided
through this consolidated cash and debt management system. As a result, the
amount of cash or debt historically related to CCC is not determinable. For
purposes of CCC's historical financial statements, a fixed $375,000,000 of debt
was allocated to CCC during each year with all of CCC's positive or negative
cash flows being treated as cash transferred to or from Cooper. The
$375,000,000, which includes the specifically identifiable 5.9% industrial
revenue bonds (the "IRB"), is the same amount of debt that was assigned to CCC
in connection with the Asset Transfer Agreement executed between CCC and Cooper
effective January 1, 1995. Under an adjustment mechanism contained in the Asset
Transfer Agreement, CCC's debt when any adjustment between Cooper and CCC is
paid, which should be within 60 days following the completion of the Exchange
Offer, will be increased or decreased as a result of the change in CCC's assets
and liabilities as well as its earnings or loss, in excess of or less than an
estimated amount of loss that Cooper has agreed to absorb, during the period
from October 1, 1994 through the completion of the Exchange Offer. Through
December 31, 1994, this adjustment mechanism resulted in Cooper owing
$36,607,000 to CCC, which total has been reflected as a receivable from Cooper
in the consolidated financial statements. Current projections indicate that,
while the cash requirements of CCC during the period from January 1, 1995
through the completion of the Exchange Offer will use most if not all of the
$36,607,000 owed by Cooper, CCC's total indebtedness as of the time of the
Exchange Offer will not be significantly above or below the $375,000,000.
For purposes of CCC's historical financial statements, interest expense has
been computed by using the actual interest rate with respect to the IRB and a
Cooper interest rate that includes both domestic and foreign interest costs
believed to be reflective of where CCC carries out its primary business
functions. For the years 1992, 1993 and 1994, aggregate interest rates amounted
to 5.5%, 4.2% and 5.2%, respectively. The entire $375,000,000 has been reflected
as long-term, except for the annual current maturities with respect to the IRB,
because with Cooper's guarantee the debt could be refinanced on a long-term
basis. On a separate company basis, CCC's annual interest rate will be higher
than the rate based on the allocation from Cooper. See "Pro Forma Financial
Statements of CCC" for further information. Prior to the completion of the
Exchange Offer, CCC will enter into a multi-year credit agreement with a group
of banks that will replace the current $375,000,000 bank facility that is
guaranteed by Cooper. The credit agreement is expected to contain covenants and
other provisions including a restriction on CCC's ability to pay dividends and
requiring that CCC maintain certain financial ratios.
Maturities of long-term debt (excluding the $370,685,000 of debt allocated
by Cooper) for the five years subsequent to December 31, 1994 are $200,000,
$215,000, $230,000, $245,000 and $260,000, respectively.
Total interest expense during 1992, 1993 and 1994 was $20,361,000,
$15,852,000 and $20,023,000, respectively. Interest paid on CCC's behalf by
Cooper is not materially different from amounts expensed.
F-17
<PAGE> 122
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12: LONG-TERM DEBT (CONTINUED)
At December 31, 1994, CCC had 17 years remaining under a 25-year lease with
respect to office facilities in Houston, Texas that are currently utilized as
the domestic selling, marketing and administrative offices of the Cooper Oil
Tool Division and will in addition become the future Corporate offices of CCC.
Rental expense is approximately $2,000,000 per year. Under the terms of the
lease, CCC can be required to continue leasing the entire facility for the next
seven years with a renewal option for 10 additional years during which CCC can
lease some or none of the available space. In addition, Cooper Energy Services'
United Kingdom manufacturing facilities are leased for approximately $1,100,000
per year with 22 years remaining under the terms of the lease. CCC can terminate
this lease without penalty in 2007. CCC also has numerous other operating leases
pertaining to sales offices, office equipment, data processing equipment and
other items. The obligations with respect to these leases are generally for less
than three years and are not considered to be material individually or in the
aggregate.
NOTE 13: INDUSTRY SEGMENTS
<TABLE>
<CAPTION>
REVENUES OPERATING EARNINGS IDENTIFIABLE ASSETS
------------------------------------ ------------------------------ ------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------------------ ------------------------------ ------------------------------------
1992 1993 1994 1992(1) 1993 1994 1992 1993 1994
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Petroleum
Production
Equipment........ $ 809,384 $ 679,461 $ 562,680 $102,661 $ 9,575 $(35,553) $1,276,657 $1,252,563 $1,286,749
Compression and
Power
Equipment........ 626,024 660,361 546,028 94,599 103,110 66,060 430,991 441,186 379,933
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
1,435,408 1,339,822 1,108,708 197,260 112,685 30,507 1,707,648 1,693,749 1,666,682
Equity income...... 2,781 956 1,368 2,781 956 1,368
---------- ---------- ----------
Total
revenues... $1,438,189 $1,340,778 $1,110,076
========== ========== ==========
Interest expense... (20,361) (15,852) (20,023)
General
corporate........ (11,134) (8,462) (8,509) 9,907 11,708 36,607
-------- -------- --------
Consolidated income
before income
taxes(2)......... $168,546 $ 89,327 $ 3,343
========= ========= =========
Investment in
unconsolidated
subsidiaries..... 7,830 8,211 7,091
---------- ---------- ----------
Total
assets... $1,725,385 $1,713,668 $1,710,380
========== ========== ==========
</TABLE>
- ---------------
(1) See Note 5 of the Notes to Consolidated Financial Statements for further
information. In 1992, the operating earnings of the Petroleum Production
Equipment segment were $84,661,000 before inclusion of $18,000,000 of
nonrecurring income. The operating earnings of the Compression and Power
Equipment segment were $100,399,000 before the deduction of $5,800,000 of
nonrecurring expense.
(2) Before the cumulative effect of changes in accounting principles in 1992.
F-18
<PAGE> 123
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13: INDUSTRY SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
REVENUES OPERATING EARNINGS IDENTIFIABLE ASSETS
------------------------------------ ------------------------------ ------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------------------ ------------------------------ ------------------------------------
1992 1993 1994 1992(1) 1993 1994 1992 1993 1994
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic........... $ 894,196 $ 860,139 $ 769,676 $116,571 $ 85,526 $ 24,448 $ 983,430 $ 949,510 $ 902,895
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
International:
Europe........... 497,332 433,324 302,933 64,753 30,630 (3,140) 636,774 664,354 692,880
Canada........... 84,451 76,475 108,106 586 (2,257) 154 30,968 38,655 46,096
Other............ 97,309 104,036 87,035 16,301 2,297 4,612 105,907 101,618 118,983
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Sub-total
International... 679,092 613,835 498,074 81,640 30,670 1,626 773,649 804,627 857,959
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Eliminations:
Transfers to
International... (112,536) (118,158) (148,639) (18,887) (23,481) (49,681)
Transfers to
Domestic....... (25,344) (15,994) (10,403) (22,121) (28,475) (32,095)
Other............ (951) (3,511) 4,433 (8,423) (8,432) (12,396)
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
1,435,408 1,339,822 1,108,708 197,260 112,685 30,507 1,707,648 1,693,749 1,666,682
Equity income...... 2,781 956 1,368 2,781 956 1,368
---------- ---------- ----------
Consolidated
revenues....... $1,438,189 $1,340,778 $1,110,076
========== ========== ==========
Interest expense... (20,361) (15,852) (20,023)
General
corporate........ (11,134) (8,462) (8,509) 9,907 11,708 36,607
-------- -------- --------
Consolidated
income before
income
taxes(2)....... $168,546 $ 89,327 $ 3,343
========= ========= =========
Investment in
unconsolidated
subsidiaries..... 7,830 8,211 7,091
---------- ---------- ----------
Consolidated
assets......... $1,725,385 $1,713,668 $1,710,380
========== ========== ==========
</TABLE>
- ---------------
(1) See Note 5 of the Notes to Consolidated Financial Statements for further
information. In 1992, nonrecurring income of $18,000,000 related to the
Petroleum Production Equipment segment and nonrecurring expense of
$5,800,000 related to the Compression and Power Equipment segment are
included in domestic operating earnings.
(2) Before the cumulative effect of changes in accounting principles in 1992.
F-19
<PAGE> 124
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13: INDUSTRY SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1992 1993 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
LIFO Income:
Petroleum Production Equipment................... $ 1,338 $ 49 $ --
Compression and Power Equipment.................. 3,552 11,604 2,675
-------- -------- --------
Total......................................... $ 4,890 $ 11,653 $ 2,675
======== ======== ========
Research and Development Expense:
Petroleum Production Equipment................... $ 3,160 $ 2,395 $ 1,266
Compression and Power Equipment.................. 7,394 7,357 7,280
-------- -------- --------
Total......................................... $ 10,554 $ 9,752 $ 8,546
======== ======== ========
Depreciation and Amortization:
Petroleum Production Equipment................... $ 38,776 $ 44,181 $ 46,118
Compression and Power Equipment.................. 23,000 26,232 24,115
-------- -------- --------
Total......................................... $ 61,776 $ 70,413 $ 70,233
======== ======== ========
Capital Expenditures:
Petroleum Production Equipment................... $ 35,074 $ 47,214 $ 43,156
Compression and Power Equipment.................. 33,635 27,190 20,354
-------- -------- --------
Total......................................... $ 68,709 $ 74,404 $ 63,510
======== ======== ========
Operating earnings before nonrecurring income
(expense):
Petroleum Production Equipment................... $ 84,661 $ 9,575 $(35,553)
Compression and Power Equipment.................. 100,399 103,110 66,060
-------- -------- --------
Total......................................... $185,060 $112,685 $ 30,507
======== ======== ========
</TABLE>
CCC's operations are organized into two segments, Petroleum Production
Equipment and Compression and Power Equipment.
The Petroleum Production Equipment segment manufactures, markets and
services valves, wellhead equipment, blowout preventers, chokes and control
systems, couplings and other components for oil and gas drilling, production and
transmission activities.
The Compression and Power Equipment segment manufactures, markets and
services engines and centrifugal gas and air compressors used in the production,
transmission, storage and processing of natural gas and oil as well as a variety
of other industrial applications.
Intersegment sales and related receivables for each of the years shown were
immaterial.
Export sales to unaffiliated companies were $244,972,000 in 1992,
$297,631,000 in 1993 and $172,436,000 in 1994. Of total export sales,
approximately 49% in 1992, 71% in 1993 and 60% in 1994 were to Asia, Africa,
Australia and the Middle East; 16% in 1992, 12% in 1993 and 11% in 1994 were to
Canada and Europe; and 35% in 1992, 17% in 1993 and 29% in 1994 were to Latin
America. Foreign currency transaction gains and losses were insignificant for
all of the years shown.
F-20
<PAGE> 125
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14: INCOME TAXES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1992 1993 1994
-------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Income before income taxes and cumulative effect of changes
in accounting principles:
U.S. operations........................................... $ 83,076 $62,606 $ 348
Foreign operations........................................ 85,470 26,721 2,995
-------- ------- --------
Income before income taxes and cumulative effect of
changes in accounting principles..................... $168,546 $89,327 $ 3,343
======== ======= ========
Income taxes:
Currently payable (receivable):
U.S. Federal........................................... $ 20,064 $14,212 $(15,740)
U.S. state and local................................... 8,249 5,021 (2,168)
Foreign................................................ 16,167 (828) 169
-------- ------- --------
44,480 18,405 (17,739)
-------- ------- --------
Deferred:
U.S. Federal........................................... 4,868 6,216 17,221
U.S. state and local................................... 1,138 1,453 4,026
Foreign................................................ 11,643 12,764 3,581
-------- ------- --------
17,649 20,433 24,828
-------- ------- --------
Other:
U.S. Federal adjustment of foreign unremitted earnings
accrual.............................................. (4,554) -- --
Effect of change in U.S. Federal tax rate on recorded
tax balances......................................... -- (700) --
-------- ------- --------
(4,554) (700) --
-------- ------- --------
Income tax expense..................................... $ 57,575 $38,138 $ 7,089
======== ======= ========
Items giving rise to deferred income taxes:
Excess of tax over book depreciation...................... $ 2,410 $ 5,269 $ (298)
Reserves and accruals..................................... 21,733 22,008 17,775
Inventory allowances, full absorption and LIFO............ (8,445) (3,837) 8,509
Other..................................................... 1,951 (3,007) (1,158)
-------- ------- --------
Deferred income taxes.................................. $ 17,649 $20,433 $ 24,828
======== ======= ========
The differences between the provision for income taxes and
income taxes using the U.S. Federal income tax rate were
as follows:
U.S. Federal statutory rate............................... 34.00% 35.00% 35.00%
Nondeductible goodwill.................................... 4.92 8.93 241.24
State and local income taxes.............................. 4.46 3.97 13.25
Tax exempt income......................................... (1.70) (2.78) (58.35)
Effect of change in U.S. tax rate on recorded deferred tax
balances............................................... -- (0.78) --
Foreign statutory rate differential....................... (0.74) (1.15) (17.67)
Nontaxable investment income.............................. (4.17) -- --
Unremitted earnings accrual adjustment.................... (2.70) -- --
All other (individually less than 5% of the expected tax
provision)............................................. 0.09 (0.50) (1.41)
-------- ------- --------
Total.................................................. 34.16% 42.69% 212.06%
======== ======= ========
Total income taxes paid*.................................... $ 4,416 $12,724 $ 7,201
======== ======= ========
</TABLE>
- ---------------
* CCC pays taxes to, and is refunded from, Cooper who in turn pays or receives
the taxes from the various taxing authorities.
F-21
<PAGE> 126
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14: INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1994
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Components of deferred tax balances:
Deferred tax liabilities:
Plant and equipment and intangibles..................... $ (47,516) $ (47,218)
Inventory............................................... (33,805) (42,314)
Pensions................................................ (6,135) (6,676)
Other................................................... (14,918) (8,570)
--------- ---------
Total deferred tax liabilities..................... (102,374) (104,778)
--------- ---------
Deferred tax assets:
Postretirement benefits other than pensions............. 43,443 43,086
Reserves and accruals................................... 49,277 31,502
Other................................................... 14,751 10,459
--------- ---------
Total deferred tax assets.......................... 107,471 85,047
--------- ---------
Valuation allowance........................................ (15,000) (15,000)
--------- ---------
Net deferred tax liabilities....................... $ (9,903) $ (34,731)
========= =========
</TABLE>
CCC's operations were included in the consolidated U.S. Federal and certain
combined and separate state income tax returns of Cooper. The tax provisions and
tax liabilities presented have been determined as if CCC's operations were a
stand-alone business filing a separate tax return. Deferred income taxes have
been determined from temporary differences between financial statement income
and taxable income.
The balance of accrued taxes for CCC's operations is included in CCC's
intercompany/equity balance with Cooper, since Cooper pays all taxes and
receives all tax refunds on CCC's behalf.
The U.S. Federal portion of the above provision includes U.S. tax expected
to be payable on the foreign portion of CCC's income before income taxes when
such earnings are remitted. During the third quarter of 1992, CCC completed its
assessment of the effects of various legal entity restructurings, capital
investment alterations and other actions that have been taken over the last
three to five years as part of efforts to optimize CCC's foreign tax structure.
The effect of CCC's assessment was a $4,000,000 reduction in CCC's income tax
accrual with respect to the unremitted earnings of its foreign subsidiaries.
CCC's remaining accruals for continuing operations at December 31, 1993 and
December 31, 1994 are sufficient to cover the additional U.S. tax estimated to
be payable on the earnings that CCC anticipates will be remitted. Through
December 31, 1994, this amounted to essentially all unremitted earnings of CCC's
foreign subsidiaries.
NOTE 15: RELATED PARTY TRANSACTIONS
CCC receives services provided by Cooper including employee benefits
administration, cash management, risk management, certain legal services, public
relations, domestic tax reporting and internal and domestic external audit. The
costs associated with these services allocated to CCC amounted to $11,134,000,
$8,462,000 and $8,509,000 in 1992, 1993 and 1994, respectively.
For purposes of CCC's consolidated financial statements, the intercompany
account between CCC and Cooper has been included as an element of CCC's net
assets. All free cash flows and cash requirements of CCC are considered to be
transferred to or provided by Cooper and are included in this intercompany
account.
F-22
<PAGE> 127
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15: RELATED PARTY TRANSACTIONS (CONTINUED)
CCC has included in receivables at December 31, 1994 a $36,607,000
receivable due from Cooper representing the excess of free cash flows of CCC,
which were transferred to Cooper, over CCC's net loss for the period October 1,
1994 to December 31, 1994. See Note 12 for additional details.
CCC sells, on third-party terms, small amounts of CCC's products to Cooper.
The amounts involved in these transactions are insignificant to CCC.
NOTE 16: OFF-BALANCE-SHEET RISK, CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE
OF FINANCIAL INSTRUMENTS
Off-Balance-Sheet Risk
As a result of having sales and purchases denominated in currencies other
than the functional currencies used by CCC's divisions and foreign subsidiaries,
CCC is exposed to the effect of foreign exchange rate fluctuations on the U.S.
dollar value of its cash flows. To the extent possible, CCC utilizes natural
hedges to minimize the effect on cash flows of fluctuating foreign currencies.
When natural hedges are not sufficient, it is CCC's policy to enter into forward
foreign exchange contracts to hedge all significant transactions for periods
consistent with the terms of the underlying transactions. CCC does not engage in
speculation or hedge nontransaction-related balance sheet exposure. While
forward contracts affect CCC's results of operations, they do so only in
connection with the underlying transactions. As a result, they do not subject
CCC to uncertainty from exchange rate movements, because gains and losses on
these contracts offset losses and gains on the transactions being hedged. The
volume of forward activity engaged in by CCC from year to year fluctuates in
proportion to the level of worldwide cross-border transactions, and contracts
generally have maturities that do not exceed one year.
The table below summarizes, by currency, the contractual amounts of CCC's
forward exchange contracts at December 31, 1993 and 1994.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Pound Sterling.................................................. $10,100 $10,900
French Franc.................................................... 17,100 13,300
Canadian Dollar................................................. 27,400 20,000
Other........................................................... 1,800 3,400
------- -------
$56,400 $47,600
======= =======
</TABLE>
Deferred gains and losses on forward foreign exchange contracts based upon
anticipated transactions were not material at December 31, 1993 and 1994.
At December 31, 1994, CCC was contingently liable with respect to
approximately $93,000,000 of standby letters of credit ("Letters") issued in
connection with the delivery, installation and performance of CCC's products
under contracts with customers throughout the world. Of the outstanding total,
approximately 30% relates to the Petroleum Production Equipment segment and the
balance or 70% to the Compression and Power Equipment segment. While certain of
the Letters do not have a fixed expiration date, the majority expire in 1995 or
1996. At December 31, 1994, these Letters had all been issued in the name of
Cooper Industries, Inc. As part of the Asset Transfer Agreement, CCC has
indemnified Cooper with respect to these Letters. Additionally, CCC has agreed
that it will endeavor to have CCC substituted for Cooper as the obligor with
respect to these Letters. If, one year after the Exchange Date, CCC has been
unable to substitute itself in
F-23
<PAGE> 128
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16: OFF-BALANCE-SHEET RISK, CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE
OF FINANCIAL INSTRUMENTS (CONTINUED)
place of Cooper on any remaining Letter, then CCC will provide Cooper with a
Letter matching the terms and provisions of the Letter issued to CCC's customer.
CCC's other off-balance-sheet risks are not material.
Concentrations of Credit Risk
CCC had $29,917,000 and $27,147,000 in outstanding accounts receivable from
its customers in the country of Iran at December 31, 1993 and 1994. Accounts
receivable from Iranian customers are subject to increased credit risk because
the country's foreign currency reserves are inadequate to meet its external
obligations. As of December 31, 1994, approximately $6,600,000 of the accounts
receivable from Iranian customers were insured or secured by irrevocable
confirmed letters of credit from prime commercial banks. In early 1995, CCC
entered the final stages of a negotiation with the Central Bank of Iran pursuant
to which the Central Bank would guarantee essentially all of the outstanding
receivable balances in exchange for CCC's agreement to accept repayment of the
outstanding balances over a three to four year period, plus interest at a
slightly below market rate. Assuming this agreement is completed, CCC's credit
risk with respect to Iran will be greatly diminished. CCC's other concentrations
of credit risk are not significant.
Fair Value of Financial Instruments
CCC's financial instruments consist primarily of cash and cash equivalents,
trade receivables, trade payables, debt instruments and foreign currency forward
contracts. The book values of cash and cash equivalents, trade receivables and
trade payables and floating rate debt instruments are considered to be
representative of their respective fair values. CCC had $4,500,000 and
$4,315,000 of fixed rate debt instruments at December 31, 1993 and 1994,
respectively. The fair value of these instruments was approximately $4,831,000
and $4,328,000 at December 31, 1993 and 1994, respectively. Based on year-end
exchange rates and the various maturity dates of the foreign currency forward
contracts, CCC estimates that the contract value is representative of the fair
value of these items at December 31, 1993 and 1994.
NOTE 17: UNAUDITED QUARTERLY OPERATING RESULTS
<TABLE>
<CAPTION>
1993 (BY QUARTER)
-----------------------------------------------
1 2 3 4(2)
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues................................ $285,167 $336,672 $321,691 $397,248
Gross margin(1)......................... 75,457 97,068 79,663 117,646
Net income.............................. 5,165 17,204 6,205 22,615
</TABLE>
<TABLE>
<CAPTION>
1994 (BY QUARTER)
-----------------------------------------------
1 2 3 4(2)
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues................................ $240,208 $291,970 $283,403 $294,495
Gross margin(1)......................... 54,095 72,487 69,610 75,309
Net income (loss)....................... 8,725 (7,968) (2,958) (1,545)
</TABLE>
- ---------------
(1) Gross margin equals revenues less cost of sales before depreciation and
amortization.
(2) Includes income of $6,992,000 in 1993 and $1,605,000 in 1994 related to LIFO
inventory liquidations.
F-24
<PAGE> 129
COOPER CAMERON CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1994 1995
-------- --------
(UNAUDITED)
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Revenues............................................................... $240,208 $254,576
-------- --------
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)........... 186,113 201,497
Depreciation and amortization........................................ 16,488 17,385
Selling and administrative expenses.................................. 41,295 40,094
Interest expense..................................................... 4,099 6,000
-------- --------
247,995 264,976
-------- --------
Loss before income taxes............................................. (7,787) (10,400)
Income tax benefit..................................................... 16,512 6,148
-------- --------
Net Income (Loss)............................................ $ 8,725 $ (4,252)
======== ========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-25
<PAGE> 130
COOPER CAMERON CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Receivables, net of allowance for doubtful accounts of
$11,241,000 and $11,280,000 at December 31, 1994 and March 31,
1995, respectively............................................ $ 230,647 $ 238,073
Receivable from Cooper Industries, Inc........................... 36,607 10,155
Inventories...................................................... 352,420 375,245
Other............................................................ 8,734 12,432
------------ -----------
Total Current Assets..................................... 628,408 635,905
------------ -----------
Plant and equipment, at cost less accumulated depreciation......... 384,098 384,812
Intangibles, less accumulated amortization......................... 668,249 677,503
Other assets....................................................... 29,625 32,780
------------ -----------
$1,710,380 $ 1,731,000
========== =========
LIABILITIES AND SHAREHOLDER'S EQUITY/NET ASSETS
Current Liabilities:
Current maturities of long-term debt............................. $ 200 $ --
Accounts payable and accrued liabilities......................... 274,207 282,881
Accrued income taxes............................................. 2,001 3,864
------------ -----------
Total Current Liabilities................................ 276,408 286,745
------------ -----------
Long-term debt..................................................... 374,800 375,000
Postretirement benefits other than pensions........................ 107,717 106,708
Deferred income taxes.............................................. 21,253 16,743
Other long-term liabilities........................................ 52,073 50,376
------------ -----------
Total Liabilities........................................ 832,251 835,572
------------ -----------
Shareholder's Equity/Net Assets:
Net assets....................................................... 878,129 --
Common stock, par value $.01 per share, 1,000 shares authorized,
200 shares issued and outstanding............................. -- --
Capital in excess of par value................................... -- 878,408
Minimum pension liability (($6,139,000) included in net assets at
December 31, 1994)............................................ -- (6,139)
Translation component ($10,795,000 included in net assets at
December 31, 1994)............................................ -- 27,411
Retained deficit................................................. -- (4,252)
------------ -----------
Total Shareholder's Equity/Net Assets.................... 878,129 895,428
------------ -----------
Total Liabilities and Shareholder's Equity/Net Assets.... $1,710,380 $ 1,731,000
========== =========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-26
<PAGE> 131
COOPER CAMERON CORPORATION
CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1994 1995
-------- --------
(UNAUDITED)
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................... $ 8,725 $ (4,252)
Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities:
Depreciation...................................................... 10,404 10,836
Amortization...................................................... 6,084 6,549
Allocation of general and administrative expenses from Cooper
Industries, Inc. (net of tax).................................... 1,276 1,105
Deferred income taxes............................................. (1,619) (8,149)
Changes in assets and liabilities:
Receivables..................................................... 53,476 (4,674)
Inventories..................................................... (15,900) (18,474)
Accounts payable and accrued liabilities........................ 14,960 9,279
Other assets and liabilities, net............................... (16,072) (8,035)
-------- --------
Net cash provided by (used for) operating activities......... 61,334 (15,815)
-------- --------
Cash flows from investing activities:
Capital expenditures................................................. (10,912) (14,065)
Proceeds from sales of plant and equipment........................... 1,094 2,919
-------- --------
Net cash used for investing activities....................... (9,818) (11,146)
-------- --------
Cash flows from financing activities:
Transferred (to) from Cooper Industries, Inc......................... (51,891) 26,452
-------- --------
Net cash (used for) provided by financing activities......... (51,891) 26,452
-------- --------
Effect of translation on cash.......................................... 375 509
-------- --------
Increase (decrease) in cash retained................................... -- --
-------- --------
Cash retained, beginning of year....................................... -- --
-------- --------
Cash retained, end of year............................................. $ -- $ --
======== ========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
F-27
<PAGE> 132
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ADJUSTMENTS
The financial information presented as of March 31, 1995 and for the three
months ended March 31, 1994 and 1995 has been prepared from the books and
records without audit. Financial information as of December 31, 1994, has been
derived from the audited financial statements of CCC, but does not include all
disclosures required by generally accepted accounting principles. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial information for the periods
indicated, have been included. For further information regarding CCC's
accounting policies, refer to the Consolidated Financial Statements and related
notes for the year ended December 31, 1994 included on pages F-1 to F-24.
NOTE 2. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ ---------
<S> <C> <C>
Raw materials........................................................ $ 60,496 $ 62,917
Work-in-process...................................................... 144,262 160,319
Finished goods, including parts and subassemblies.................... 242,749 255,852
Perishable tooling and supplies...................................... 4,908 5,328
------------ ---------
452,415 484,416
Excess of current standard costs over LIFO costs..................... (90,994) (98,145)
Allowance for obsolete and slow-moving inventory..................... (9,001) (11,026)
------------ ---------
Net inventories............................................ $352,420 $ 375,245
========== ========
</TABLE>
NOTE 3. CAPITAL STOCK
Effective April 27, 1995, CCC increased the number of authorized shares of
its common stock, par value $.01 per share, from 1,000 shares to 75,000,000
shares. In addition, CCC authorized the issuance of 10,000,000 shares of
preferred stock, par value $.01 per share.
On April 28, 1995, the Board of Directors of CCC declared and issued a
stock dividend of 124,999 shares of common stock, par value $.01 per share, for
each share of common stock issued and outstanding as of that date. Immediately
following the dividend, a total of 25,000,000 shares of common stock were held
by Cooper, CCC's sole shareholder.
F-28
<PAGE> 133
ANNEX A
[AMERICAN APPRAISAL 100 East Wisconsin Avenue
ASSOCIATES LOGO] Suite 2100
P.O. Box 664
Milwaukee, Wisconsin 53201-0664
Telephone 414/271-7240
April 25, 1995
Board of Directors
Cooper Industries, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Ladies and Gentlemen:
This letter is furnished at the request of Cooper Industries, Inc.
("Cooper"), an Ohio corporation regarding a proposed exchange (the "Exchange")
of common stock of Cooper Cameron Corporation ("CCC"), a Delaware Corporation
100% owned by Cooper, for common stock of Cooper pursuant to the Exchange Offer
(the "Exchange Offer") as further described below.
We understand the Exchange will consist of the distribution of a
to-be-determined number of shares of common stock, par value $.01 per share, of
CCC for each share of common stock, par value $5.00 per share, of Cooper.
Approximately 85.5% of the shares of CCC Common Stock held by Cooper will be
distributed pursuant to the Exchange Offer. If all such shares are not exchanged
in the Exchange Offer and the Exchange Offer is consummated, the remaining
shares will be distributed by Cooper on a pro rata basis to the Cooper
shareholders remaining after the Exchange Offer (the "Distribution"). We also
understand that pursuant to the Amended and Restated Asset Transfer Agreement
dated as of January 1, 1995 between Cooper and CCC, Cooper transferred, and
agreed to cause certain subsidiaries to transfer, to CCC or its subsidiaries, in
exchange for common stock of CCC, all of the assets used exclusively in the
businesses that comprised Cooper's former Petroleum & Industrial Equipment
Segment at September 30, 1994 and certain liabilities including (i) all of the
obligations and liabilities, including any environmental liabilities, resulting
from, arising out of or relating to the businesses transferred to CCC or the
transferred assets, as if CCC had operated such businesses from their
commencement and such businesses had never been owned by Cooper and (ii) certain
promissory notes in the aggregate face amount of $375 million, payable to third
party lenders and which are guaranteed by Cooper (the "Note"). We understand
that CCC is discussing with several commercial lenders permanent debt financing
arrangements in the aggregate amount of approximately $475 million (the "Credit
Facility") which will be used to repay the Note and to provide additional
working capital and letters of credit (the "Financing").
The transactions contemplated by the Exchange Offer, the Distribution, any
changes in CCC's assets and liabilities required to effect the Exchange Offer,
any refinancing or repayment of existing indebtedness of CCC, any guaranties
made in connection with effecting the Exchange Offer and the Financing and the
payment of related fees and expenses are collectively referred to as the
"Transaction".
In connection with the Transaction, you have requested that we render a
written opinion (the "Opinion") addressed to the Board of Directors of Cooper,
as to whether, both immediately before and after, and giving effect to, the
consummation of the Transaction:
(a) The fair value of the aggregate assets of CCC will exceed its
total liabilities (including without limitation, subordinated, unmatured,
unliquidated, disputed and contingent liabilities);
(b) The present fair saleable value of the aggregate assets of CCC
will be greater than the amount that will be required to pay probable
liabilities on its debts as such debts become absolute and matured;
A-1
WE VALUE YOUR BUSINESS.(SM)
<PAGE> 134
American Appraisal Associates
Board of Directors
Cooper Industries, Inc. April 25, 1995
(c) CCC after consummation of the Transaction will be able to pay its
debts and other liabilities, including contingent liabilities and other
commitments, as they mature;
(d) CCC after consummation of the Transaction will not have
unreasonably small capital for the businesses in which it is engaged, as
now conducted by CCC and as such business is proposed to be conducted
following the consummation of the Transaction;
(e) After consummation of the Transaction, CCC's remaining assets will
not be unreasonably small in relation to its business as it is now
conducted or as such business is proposed to be conducted following
consummation of the Transaction; and
(f) The excess of the value of the aggregate assets of CCC over its
total identified liabilities, including contingent liabilities, of CCC is
equal to or exceeds the value of the stated capital of CCC.
In rendering our Opinion, we have valued the assets of CCC as a going
concern, both immediately before and after, and giving effect to, the
Transaction. The valuation included the aggregate assets of the business
enterprise of CCC, or total invested capital as represented by the total net
working capital, tangible plant, property and equipment, and intangible assets
of the business enterprise. We believe this is a reasonable basis to value CCC.
Nothing has come to our attention that causes us to believe that CCC, before and
after the Transaction, will not be a going concern. For purposes of the Opinion,
the following terms will have the meanings as set forth below:
(1) "Fair value" means the amount at which the assets would change
hands between a willing buyer and a willing seller, within a commercially
reasonable period of time, each having reasonable knowledge of the relevant
facts, neither being under any compulsion to act, with equity to both;
(2) "Present fair saleable value" means the amount that may be
realized if the assets are sold in their entirety with reasonable
promptness in an arm's-length transaction under present market conditions
for the sale of comparable business enterprises;
(3) "Contingent liabilities" means the maximum estimated amount of
contingent liabilities, which contingent liabilities have been identified
to us by responsible officers and employees of Cooper and CCC, their
respective accountants and financial advisors, and such other experts as we
deemed necessary to consult, and valued by AAA after consultation with
responsible officers and employees of CCC and/or such industry, economic
and other experts as we deemed necessary to consult (the valuation of
contingent liabilities to be computed in light of all the facts and
circumstances existing at the time of such valuation as the maximum amount
that can reasonably be expected to become an actual or matured liability),
which contingent liabilities may not meet the criteria for accrual under
Statement of Financial Accounting Standards No. 5 and therefore may not be
recorded as liabilities under GAAP;
(4) "Able to pay its debts as they mature" means that, assuming the
Transaction has been consummated as proposed (and taking into consideration
additional borrowing capacity under the Credit Facility), during the period
1995-1999 covered by the financial projections, dated March 22, 1995 (the
"Financial Projections") prepared by management of CCC, CCC will have net
positive cash flow after paying its scheduled anticipated indebtedness; the
realization of current assets in the ordinary course of business will be
sufficient to pay current debt, short-term debt, long-term debt service and
other contractual obligations, including contingent liabilities, as such
obligations mature; and the cash flow will be sufficient to provide cash
necessary to repay CCC's long-term indebtedness as such debt matures; and
(5) "Will not have unreasonably small capital with which to conduct
its business" means that CCC will not lack sufficient capital for the needs
and anticipated needs for capital of the business, including
A-2
<PAGE> 135
American Appraisal Associates
Board of Directors
Cooper Industries, Inc. April 25, 1995
contingent liabilities, as management of CCC has indicated that CCC's
business is proposed to be conducted following the consummation of the
Transaction.
Our Opinion of fair value and present fair saleable value is subject to the
following assumptions, which we believe to be reasonable in the context of the
Transaction:
(i) Any sale of CCC will be completed as the sale of an ongoing
business entity; and
(ii) A "commercially reasonable period" of time means within twelve
months for a willing buyer and a willing seller to agree on price and terms
and to complete the sale of CCC;
In connection with our Opinion of the fair value and present fair saleable
value of CCC, we were provided historical and projected operating results and
balance sheets. In addition to this information, we were provided other
operating data and information all of which has been accepted, without
independent verification, as representing a fair statement of historical and
projected results of CCC in the opinion of the management of each of Cooper and
CCC. However, in the course of our investigation, nothing has led us to believe
that our acceptance and reliance on such operating data and information was
unreasonable.
The determination of the fair value and present fair saleable value of CCC
was based on the generally accepted valuation principles used in the market and
income (discounted cash flow) approaches, described as follows:
Market Approach -- Based on current stock market prices of publicly held
companies whose businesses are similar to that of CCC and premiums paid
over market price by acquirers of total or controlling ownership in such
businesses.
Income Approach -- Based on the present value of CCC's future debt-free
operating cash flow as estimated by the management of CCC and contained
in the Financial Projections. The present value is determined by
discounting the projected operating cash flow at a rate of return that
we believe reflects the financial and business risks of CCC.
In determining the amount that would be required to pay CCC's total
probable liabilities on the dates the liabilities become absolute and matured
for purposes of opinion (a) below, we have applied valuation techniques,
including present value analysis, using appropriate rates over appropriate
periods to the amounts that will be required from time to time to pay such
liabilities and contingent liabilities as they become absolute and matured based
on their scheduled maturities.
In the course of our investigation of identified contingent liabilities,
the areas brought to our attention by the management of CCC included: (i)
environmental matters; (ii) the adequacy of the corporate insurance program;
(iii) tax audit exposure; (iv) the liability for the pension and welfare
benefits program; (v) labor and collective bargaining issues; and (vi) various
lawsuits and claims filed and/or pending against CCC.
Reserves for contingent liabilities have been included in the pro forma
consolidated balance sheet (the "Pro Forma Balance Sheet") as of December 31,
1994, prepared and furnished to us by the management of CCC, and provisions for
the ongoing expenses related to these issues have been included with the
projection of income and expenses presented in the Financial Projections, and
are considered in our valuation study as ongoing business operating expenses. We
have taken these identified contingent liabilities into account in rendering our
Opinion and have concluded that such liabilities and ongoing expenses do not
require any qualification of our Opinion. Our conclusion is based on: (i) our
review of various acquisition transactions, including leveraged transactions and
significant debt-financed recapitalization transactions, involving corporations
engaged in businesses similar to those of CCC; (ii) the opinion of the
management of CCC that the issues concerning various lawsuits, claims and other
identified contingent liabilities do not and are not
A-3
<PAGE> 136
American Appraisal Associates
Board of Directors
Cooper Industries, Inc. April 25, 1995
reasonably likely to have a material adverse effect on the consolidated
financial position of CCC and (iii) our discussions with the management of CCC,
its accountants, consultants and in-house counsel concerning, and our
investigation of, the various lawsuits, claims and other contingent liabilities
identified to us and the possible effect of the foregoing on CCC.
We have assumed that the total liabilities of CCC will be only those
liabilities set forth in the Financial Projections and the Pro Forma Balance
Sheet of CCC, and the identified contingent liabilities referred to herein. In
the course of our investigation, nothing came to our attention which caused us
to believe such assumptions to be unreasonable. The Pro Forma Balance Sheet is
the audited Balance Sheet as of December 31, 1994, adjusted to give effect to:
(a) the Financing of the Transaction; and (b) the application of the proceeds of
the Financing and restated by us to reflect the fair value and present fair
saleable values of CCC.
CCC's management has represented to us, and we have relied on the
management of CCC's representation that no adverse changes have occurred since
their preparation which would materially impact the content of the Pro Forma
Balance Sheet and Financial Projections. Nothing has come to our attention which
would lead us to believe our reliance on such representations to be
unreasonable.
In connection with our Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
(i) Reviewed the Transaction documents and SEC reporting documents,
including the CCC Registration Statement on Form S-4 filed with the SEC on
March 14, 1995 (Registration No. 33-20988) and the exhibits thereto and
documents incorporated therein by reference (the "Registration Statement");
(ii) Reviewed the Financial Projections, dated March 22, 1995, and
inquired of management of CCC as to the foundation for any such projections
and the basic assumptions made in the preparation of projections relating
to the type of business, geographic markets, domestic and international
economic conditions, and capital facilities and working capital
requirements;
(iii) Reviewed audited and unaudited historical income statements,
balance sheets and statements of sources and uses of funds of CCC as
provided by management and its accountants;
(iv) Reviewed the December 31, 1994 Pro Forma Balance Sheet of CCC, as
provided by management.
(v) Visited CCC's headquarters to discuss historical and projected
operating results and industry data, including the impact of future trends
on the industry and CCC, as well as the effects of the Transaction;
(vi) Visited the Mt. Vernon, Ohio manufacturing plant and discussed
with management such topics as age of facility, capital expenditures,
employee relations and production capacity.
(vii) Reviewed "Summary of Indicative Terms and Conditions" for the
Financing;
(viii) Reviewed internal financial analyses and other internally
generated data of CCC;
(ix) Inquired of management of CCC and their respective financial
advisors as to the estimated levels of cash and working capital required by
CCC;
(x) Reviewed certain publicly available economic, financial and market
information as it relates to the business operations of CCC;
A-4
<PAGE> 137
American Appraisal Associates
Board of Directors
Cooper Industries, Inc. April 25, 1995
(xi) Reviewed information regarding business similar to CCC, and
investigated the financial terms and post-transaction performance of recent
acquisitions;
(xii) Consulted with industry, economic and statistical experts, as
necessary;
(xiii) Discussed all of the foregoing information, where appropriate,
with management of CCC, and its respective employees, agents, accountants
and financial advisors; and
(xiv) Conducted such other studies, analyses and investigations as we
deem relevant or necessary for purposes of the Opinions.
We have assumed, without independent verification, that the Pro Forma
Balance Sheet and Financial Projections provided to us have been reasonably
prepared and reflect the best available estimates, at the time they were
prepared, of the future financial results and condition of CCC, and that there
has been no material adverse change in the assets, financial condition, business
or prospects of CCC since the date of the most recent financial statements made
available to us. Nothing has come to our attention which would lead us to
believe that the foregoing assumption is unreasonable.
Further since (i) the exchange ratio, offering price and the number of
shares assumed to be issued as a result of the Exchange Offer and the
Distribution are not yet known, (ii) the Private Letter Ruling has not yet been
received from the IRS and (iii) terms of the Financing have not been confirmed,
our Opinion assumes the following:
(i) The aggregate market price of the shares issued in the
Distribution, defined as the number of shares issued pursuant to the
Distribution, if any, multiplied by the yet-to-be determined market price,
will not exceed $150 million.
(ii) The stated capital of CCC, defined as the number of shares of CCC
issued and outstanding as a result of the Exchange Offer and Distribution,
multiplied by par value of $.01 per share, is $250,000.
(iii) The Financing at closing will consist of (i) a $200.0 million
five year unsecured term loan and (ii) to a $275 million line of credit
with a $175 million drawn down at closing. The interest rate used will be
an average corporate base rate as announced by a major bank as of the date
of April 25, 1995.
(iv) CCC will have the ability to refinance the Credit Facility at the
end of the five year term. Nothing has come to our attention to lead us to
believe that the foregoing assumption is unreasonable.
(v) The Exchange Offer and the Distribution qualify as a tax-free
distribution under Section 355 of the Internal Revenue Code and will remain
as such.
Although we have not independently verified the accuracy and completeness
of the Financial Projections and forecasts, or any of the assumptions,
estimates, or judgements referred to therein, or the basis therefor, and
although no assurances can be given that such Financial Projections and
forecasts can be realized or that actual results will not vary materially from
those projected, nothing has come to our attention during the course of our
engagement which lead us to believe that any information reviewed by us or
presented to us in connection with our rendering of the Opinion is unreasonable
or inaccurate in any material respect or that it was unreasonable for us to
utilize and rely upon the Financial Projections, financial statements,
assumptions, description of the business and liabilities, estimates and
judgments or statements of the management of CCC and their respective counsel,
accountants and financial advisors. Our Opinion is necessarily based on
business, economic, market and other conditions as they currently exist and as
they can be evaluated by us at the date of this Opinion.
A-5
<PAGE> 138
American Appraisal Associates
Board of Directors
Cooper Industries, Inc. April 25, 1995
Based upon the foregoing, and in reliance thereon, it is our opinion as of
this date that, assuming the Transaction is consummated as proposed, both
immediately before and after, and giving effect to, the consummation of the
Transaction.
(a) The fair value of the aggregate assets of CCC exceed its total
liabilities (including, without limitation, subordinated, unmatured,
unliquidated, disputed and contingent liabilities);
(b) The present fair saleable value of the aggregate assets of CCC is
greater than the amount that will be required to pay probable liabilities
on its debts as such debts become absolute and matured;
(c) CCC after consummation of the Transaction will be able to pay its
debts and other liabilities, including contingent liabilities and other
commitments, as they mature;
(d) CCC after consummation of the Transaction will not have
unreasonably small capital for the businesses in which it is engaged, as
now conducted by CCC and as such business is proposed to be conducted
following the consummation of the Transaction;
(e) After consummation of the Transaction, CCC's remaining assets will
not be unreasonably small in relation to its business as it is now
conducted or as such business is proposed to be conducted following
consummation of the Transaction; and
(f) The excess of the value of the aggregate assets of CCC over its
total identified liabilities, including contingent liabilities, of CCC is
equal to or exceeds the value of the stated capital of CCC.
It is understood that the Opinion is solely for the information of the
above mentioned addressees, their successors or assignees, and is not to be
quoted, or referred to, in whole or in part, in any written document other than
(i) a reference in the filing and disclosure of the Opinion with the Securities
and Exchange Commission (the "SEC") and any state securities commission or blue
sky authority, or other governmental authority or agency if such filing or
disclosure is required pursuant to the rules and regulations thereof, or
otherwise required by applicable law in the opinion of CCC's counsel; (ii) the
disclosure of the Opinion upon the demand, order or request of any court,
administrative or governmental agency or regulatory body (whether or not such
demand, order or request has the force of law) or as may be required or
appropriate in response to any summons, subpoena, or discovery requests, (iii)
the attachment of the Opinion as an exhibit to the loan documents governing any
financing by banks, who, in the future, may extend credit to CCC, or as an
exhibit to any documents governing debt financing by other financing sources,
(iv) the disclosure of the Opinion in connection with (A) the prospective sale,
assignment, participation or any other disposition by any bank or other
financing source of any right or interest in the debt financing by such bank or
other financing source, (B) an audit or any bank or other financing source by an
independent public accountant or any administrative agency or regulatory body or
(C) the exercise of any right or remedy by a bank or other financing source in
connection with the debt financing, (v) the disclosure of the Opinion as may be
requested, required or ordered in, or to protect a bank's or other financing
source's interest in, any litigation, governmental proceeding or
A-6
<PAGE> 139
American Appraisal Associates
Board of Directors
Cooper Industries, Inc. April 25, 1995
investigation to which any bank or other financing source is subject or
purported to be subject, (vi) the disclosure of the Opinion as otherwise
required by, or as reasonably determined by any bank or financing source to be
required by, any law, order, regulation or ruling applicable to such bank or
other financing course, and (vii) the attachment of this letter to the Exchange
Offer.
Very truly yours,
AMERICAN APPRAISAL ASSOCIATES, INC.
("AAA")
By /s/ RONALD M. GOERGEN
----------------------------------
Ronald M. Goergen
President
A-7
<PAGE> 140
ANNEX B
(CS FIRST BOSTON LOGO)
CS FIRST BOSTON CORPORATION 3030 TEXAS COMMERCE TOWER
HOUSTON, TX 77002-3003
TELEPHONE 713 220 6700
April 25, 1995
Board of Directors
Cooper Industries, Inc.
1001 Fannin, Suite 4000
P.O. Box 4446
Houston, Texas 77210-4446
Dear Sirs:
You have asked us to advise you, from a financial point of view, with
respect to the ability of Cooper Industries, Inc. ("Cooper"), to finance its
currently anticipated operating and capital requirements following the exchange
offer (the "Exchange Offer") to the stockholders of Cooper of approximately
85.5% of the outstanding common shares of Cooper Cameron Corporation ("Cooper
Cameron"). If all such shares are not exchanged in the Exchange Offer and the
Exchange Offer is consummated, the remaining shares will be distributed by
Cooper on a pro rata basis to the Cooper shareholders remaining after the
Exchange Offer (the "Distribution"). Information about the Exchange Offer and
the Distribution is included in the S-4 Registration Statement (File No.
33-90288) of Cooper Cameron (the "S-4 Registration Statement") initially filed
with the Securities and Exchange Commission on March 14, 1995. The final
prospectus included in the S-4 Registration Statement will be sent to Cooper
stockholders in connection with the Exchange Offer.
In arriving at our opinion, we have reviewed the Asset Transfer Agreement
described in the S-4 Registration Statement and certain publicly available
business and financial information relating to Cooper. We have also reviewed
other information provided to us by Cooper, including financial forecasts,
Cooper's annual report on form 10-K for the fiscal year ended December 31, 1994
("Cooper 10-K") and the S-4 Registration Statement, and we have met with Cooper
management to discuss the business and prospects of Cooper.
We have also considered certain financial and stock market data of Cooper,
compared that data with similar data for other publicly held companies in
businesses similar to those of Cooper, and considered the financial terms of
certain other transactions similar to the Exchange Offer which have recently
been effected. In addition, we have considered prevailing market conditions and
such other information, financial studies, analyses and investigations, and
financial, economic and market criteria which we deemed relevant. For purposes
of this opinion we have assumed that the Exchange Offer and the Distribution
qualify as a tax-free distribution under Section 355 of the Internal Revenue
Code and will remain as such.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information (including the
information contained in the Cooper 10-K and the S-4 Registration Statement) and
have relied on its being complete and accurate in all material respects. We have
relied solely upon the information developed and provided to us by Cooper and
have not engaged independent consultants or advisors to confirm the accuracy and
completeness of such information. With respect to the financial forecasts
referred to above, the management of Cooper has advised us that such financial
forecasts have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of management as to the future financial
performance of Cooper.
B-1
<PAGE> 141
Board of Directors
Cooper Industries, Inc.
April 25, 1995
Page 2
In addition, we have not made an independent evaluation or appraisal of the
assets or liabilities of Cooper, nor have we been furnished with any such
appraisals. Further, our opinion is based on economic, monetary and market
conditions existing on the date of this opinion. This opinion does not represent
our opinion as to what the value of the securities of Cooper actually will be
following the consummation of the Exchange Offer.
We are acting as financial advisor to Cooper and as dealer manager in
connection with the Exchange Offer and will receive a fee for our services, a
substantial portion of which is contingent upon the consummation of the Exchange
Offer. CS First Boston and its affiliates may in the future act as underwriters
for, or participate as members of underwriting syndicates with respect to,
offerings of Cooper or Cooper Cameron securities, and CS First Boston may effect
securities transactions for Cooper or Cooper Cameron or perform financial
advisory services in connection with certain acquisitions and dispositions by
Cooper or Cooper Cameron.
In the ordinary course of our business, we actively trade the equity
securities of Cooper, and we may actively trade the equity securities of Cooper
Cameron following the consummation of the Exchange Offer, for our own account
and for the accounts of others, and, accordingly, we may at any time hold a long
or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of Cooper only and our engagement hereunder is not on behalf of nor
intended to create any relationship with or duty to any other person (including
any creditors of Cooper). Neither this letter nor our advice is to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
proxy statement, or in any other written document used in connection with the
offering or sale of securities, nor shall this letter or our advice be used for
any other purposes, without our prior written consent.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that following the consummation of the Exchange Offer Cooper will have
the ability to finance its currently anticipated operating and capital
requirements through the end of fiscal year 1996 (as those operating and capital
requirements are currently projected in the financial forecasts prepared by the
management of Cooper and delivered to us prior to the date of this opinion).
Very truly yours,
CS FIRST BOSTON CORPORATION
B-2
<PAGE> 142
ANNEX C
(CS FIRST BOSTON LOGO)
CS FIRST BOSTON CORPORATION 3030 TEXAS COMMERCE TOWER
HOUSTON, TX 77002-3003
TELEPHONE 713 220 6700
April 25, 1995
Board of Directors
Cooper Industries, Inc.
1001 Fannin, Suite 4000
P.O. Box 4446
Houston, Texas 77210-4446
Dear Sirs:
You have asked us to advise you, from a financial point of view, with
respect to the ability of Cooper Cameron Corporation ("Cooper Cameron"), a
wholly owned subsidiary of Cooper Industries, Inc. ("Cooper"), to finance its
currently anticipated operating and capital requirements following the exchange
offer (the "Exchange Offer") to the stockholders of Cooper of approximately
85.5% of the outstanding common shares of Cooper Cameron. If all such shares are
not exchanged in the Exchange Offer and the Exchange Offer is consummated, the
remaining shares will be distributed by Cooper on a pro rata basis to the Cooper
shareholders remaining after the Exchange Offer (the "Distribution").
Information about the Exchange Offer and the Distribution is included in the S-4
Registration Statement (File No. 33-90288) of Cooper Cameron (the "S-4
Registration Statement") initially filed with the Securities and Exchange
Commission on March 14, 1995. The final prospectus included in the S-4
Registration Statement will be sent to Cooper stockholders in connection with
the Exchange Offer.
In arriving at our opinion, we have reviewed the Asset Transfer Agreement
described in the S-4 Registration Statement and certain publicly available
business and financial information relating to Cooper Cameron. We have also
reviewed other information provided to us by Cooper and Cooper Cameron,
including financial forecasts and the S-4 Registration Statement, and we have
met with Cooper Cameron management to discuss the business and prospects of
Cooper Cameron.
We have also considered certain financial data of Cooper Cameron, compared
that data with similar data for other publicly held companies in businesses
similar to those of Cooper Cameron, and considered the financial terms of
certain other transactions similar to the Exchange Offer which have recently
been effected. In addition, we have considered prevailing market conditions and
such other information, financial studies, analyses and investigations, and
financial, economic and market criteria which we deemed relevant. For purposes
of this opinion we have assumed that the Exchange Offer and the Distribution
qualify as a tax-free distribution under Section 355 of the Internal Revenue
Code and will remain as such and that not later than the consummation of the
Exchange Offer, Cooper Cameron will have entered into the Credit Facility (as
defined in the S-4 Registration Statement) and will have available to it the
financing arrangements provided thereby.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information (including the
information contained in the S-4 Registration Statement) and have relied on its
being complete and accurate in all material respects. We have relied solely upon
the information developed and provided to us by Cooper and Cooper Cameron and
have not engaged independent consultants or advisors to confirm the accuracy and
completeness of such information. With respect to the financial forecasts
referred to above, the managements of Cooper and Cooper Cameron have advised us
that
C-1
<PAGE> 143
Board of Directors
Cooper Industries, Inc.
April 25, 1995
Page 2
such financial forecasts have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of management as to the future
financial performance of Cooper Cameron.
In addition, we have not made an independent evaluation or appraisal of the
assets or liabilities of Cooper Cameron, nor have we been furnished with any
such appraisals. Further, our opinion is based on economic, monetary and market
conditions existing on the date of this opinion. This opinion does not represent
our opinion as to what the value of the securities of Cooper Cameron actually
will be following the consummation of the Exchange Offer.
We are acting as financial advisor to Cooper and as dealer manager in
connection with the Exchange Offer and will receive a fee for our services, a
substantial portion of which is contingent upon the consummation of the Exchange
Offer. CS First Boston and its affiliates may in the future act as underwriters
for, or participate as members of underwriting syndicates with respect to,
offerings of Cooper or Cooper Cameron securities, and CS First Boston may effect
securities transactions for Cooper or Cooper Cameron or perform financial
advisory services in connection with certain acquisitions and dispositions by
Cooper or Cooper Cameron.
In the ordinary course of our business, we actively trade the equity
securities of Cooper, and we may actively trade the equity securities of Cooper
Cameron following the consummation of the Exchange Offer, for our own account
and for the accounts of others, and, accordingly, we may at any time hold a long
or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of Cooper only and our engagement hereunder is not on behalf of nor
intended to create any relationship with or duty to any other person (including
any creditors of Cooper Cameron). Neither this letter nor our advice is to be
quoted or referred to, in whole or in part, in any registration statement,
prospectus or proxy statement, or in any other written document used in
connection with the offering or sale of securities, nor shall this letter or our
advice be used for any other purposes, without our prior written consent.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that following the consummation of the Exchange Offer Cooper Cameron
will have the ability to finance its currently anticipated operating and capital
requirements through the end of fiscal year 1996 (as those operating and capital
requirements are currently projected in the financial forecasts prepared by the
management of Cooper Cameron and delivered to us prior to the date of this
opinion).
Very truly yours,
CS FIRST BOSTON CORPORATION
C-2
<PAGE> 144
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for shares of Cooper Common
Stock and any other required documents should be sent or delivered by each
shareholder of Cooper or his or her broker, dealer, commercial bank, trust
company or other nominee to the Exchange Agent at one of the addresses set forth
below:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
P.O. Box 2559 (201) 222-4720 or 14 Wall Street, 8th Floor
Mail Suite 4660 (201) 222-4721 Attn: Tenders and Exchanges
Jersey City, New Jersey Confirmation of Facsimile Suite 4680
07303-2559 Transmission ONLY: New York, New York 10005
(201) 222-4707
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of this Offering Circular - Prospectus, the
Letter of Transmittal and other Exchange Offer materials may be obtained from
the Information Agent or the Dealer Manager as set forth below. You may also
contact your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Exchange Offer.
The Information Agent for the Exchange Offer is:
[GEORGESON & COMPANY LOGO]
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Exchange Offer is:
[CS FIRST BOSTON LOGO]
3030 Texas Commerce Tower
Houston, TX 77002-3003
(713) 220-6774 (call collect)
or
(212) 909-2000 (call collect)
<PAGE> 1
Exhibit 99.2
LETTER OF TRANSMITTAL
TO ACCOMPANY CERTIFICATES OF
COMMON STOCK OF
COOPER INDUSTRIES, INC.
TENDERED PURSUANT TO THE OFFERING CIRCULAR-PROSPECTUS DATED MAY 30, 1995
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY,
JUNE 30, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
First Chicago Trust Company (201) 222-4720 or First Chicago Trust Company
of New York (201) 222-4721 of New York
P. O. Box 2559 14 Wall Street, 8th Floor
Mail Suite 4660 Confirmation of Facsimile Attn: Tenders and Exchanges
Jersey City, New Jersey Transmission ONLY: Suite 4680
07303-2559 (201) 222-4707 New York, New York 10005
</TABLE>
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
------------------------
<PAGE> 2
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
Reference is made to the Offering Circular-Prospectus, dated May 30, 1995
(the "Offering Circular-Prospectus") of Cooper Industries, Inc. ("Cooper"), and
this Letter of Transmittal (the "Letter of Transmittal"), receipt of which is
hereby acknowledged, which together constitute Cooper's offer (the "Exchange
Offer") to exchange 2.25 shares of common stock, par value $. 01 per share ("CCC
Common Stock"), of Cooper Cameron Corporation for each share of common stock,
par value $5.00 per share ("Cooper Common Stock"), of Cooper, up to a maximum of
9,500,000 shares of Cooper Common Stock, that is validly tendered by the
Expiration Date (as defined herein) and not properly withdrawn.
The Exchange Offer will expire at 5:00 P.M., New York City time, on Friday,
June 30, 1995 (the "Expiration Date"), unless Cooper, in its sole discretion,
shall have extended the period of time for which the Exchange Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Exchange Offer, as so extended by Cooper, shall expire. Cooper intends
to announce publicly at approximately 12:00 Noon and 3:00 P.M., New York City
time, on the Expiration Date, on a preliminary basis, the number of shares of
Cooper Common Stock that have been tendered and not withdrawn prior to such
times. The Exchange Offer, proration period and withdrawal rights will expire at
5:00 P.M., New York City time, on Friday, June 30, 1995, unless the Exchange
Offer is extended.
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Cooper the shares of Cooper Common Stock
represented by the certificate(s) described above. Subject to, and effective
upon, the acceptance for exchange of the shares of Cooper Common Stock tendered
herewith, the undersigned hereby sells, assigns and transfers to, or upon the
order of, Cooper, all right, title and interest in and to such shares. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent as
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent also acts as the agent of Cooper) with
respect to the shares of Cooper Common Stock tendered herewith, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) (a) to deliver stock certificates representing the
shares of Cooper Common Stock tendered herewith or transfer ownership of such
shares on the account books maintained by The Depository Trust Company ("DTC"),
the Midwest Securities Trust Company ("MSTC") or the Philadelphia Depository
Trust Company ("PHILADEP," and together with DTC and MSTC, the "Book-Entry
Transfer Facilities"), together, in any such case, with all accompanying
evidences of transfer and authenticity, to or upon the order of Cooper upon
receipt by the Exchange Agent, as the undersigned's agent, of certificate(s)
representing shares of CCC Common Stock ("CCC Certificate(s)") to which the
undersigned is entitled upon the acceptance for exchange by Cooper of the shares
of Cooper Common Stock tendered herewith under the Exchange Offer; (b) to
present certificate(s) representing such shares of Cooper Common Stock for
transfer on the books of Cooper and (c) to receive all benefits and otherwise
exercise all rights of beneficial ownership of such shares, all in accordance
with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the shares of
Cooper Common Stock tendered hereby and that when such shares of Cooper Common
Stock are accepted by Cooper for exchange pursuant to the Exchange Offer, Cooper
will acquire good, marketable and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances and that none of such shares
of Cooper Common Stock will be subject to any adverse claim when the same are
accepted for exchange by Cooper. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or Cooper to be
necessary or desirable to complete the sale, assignment and transfer of the
shares of Cooper Common Stock tendered hereby. All authority conferred or agreed
to be conferred in this Letter of Transmittal and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in the Offering Circular-Prospectus and the
Instructions contained in this Letter of Transmittal.
The undersigned understands that if more than 9,500,000 shares of Cooper
Common Stock are validly tendered and not properly withdrawn in the Exchange
Offer as provided in the Offering Circular-Prospectus, the shares of Cooper
Common Stock so tendered and not properly withdrawn shall be accepted for
exchange on a pro rata basis in accordance with the terms set forth in the
Offering Circular-Prospectus under "The Exchange Offer -- Terms of the Exchange
Offer," except for odd lot tenders as described in the Offering
Circular-Prospectus under "The Exchange Offer -- Tenders for Exchange by Holders
of Fewer than 100 Shares of Cooper Common Stock." The undersigned understands
that, upon acceptance by Cooper of the shares of Cooper Common Stock tendered
herewith, the undersigned will be deemed to have accepted the shares of CCC
Common Stock exchanged therefor and will be deemed to have relinquished all
rights with respect to the shares of Cooper Common Stock so accepted.
<PAGE> 3
The undersigned recognizes that, under certain circumstances and subject to
certain conditions to the Exchange Offer (which Cooper may waive) set forth in
the Offering Circular-Prospectus, Cooper may not be required to accept for
exchange any of the shares of Cooper Common Stock tendered herewith or any
shares of Cooper Common Stock tendered after the Expiration Date. The shares of
Cooper Common Stock delivered to the Exchange Agent and not accepted for
exchange will be returned to the undersigned as promptly as practicable
following expiration or termination of the Exchange Offer at the address set
forth above under "Description of Certificate(s)" unless otherwise indicated
under "Special Delivery Instructions" above.
Unless otherwise indicated under "Special Issuance Instructions" above,
please issue (i) the CCC Certificate(s) to which the undersigned is entitled;
(ii) if applicable, a check in lieu of a fractional share equal to such fraction
multiplied by the average gross selling price per share of CCC Common Stock
obtained by the Exchange Agent upon the sale of all fractional shares on behalf
of those tendering Cooper shareholders otherwise entitled to receive fractional
shares (a "Fractional Share Check"); and/or (iii) the certificate(s)
representing any shares of Cooper Common Stock not tendered by the undersigned
or any shares of Cooper Common Stock tendered herewith that are not accepted for
exchange, in such case in the name(s) of the registered holder(s) shown above
under "Description of Certificate(s)." Unless otherwise indicated in the box
entitled "Special Delivery Instructions," please send (i) CCC Certificate(s) to
which the undersigned is entitled, and (ii) if applicable, a Fractional Share
Check, in each case issued in the name(s) of the registered holder(s) shown
above under "Description of Certificate(s)" together with, if applicable,
certificate(s) representing any shares of Cooper Common Stock not tendered by
the undersigned or any shares of Cooper Common Stock tendered herewith not
accepted for exchange by Cooper (and accompanying documents, as appropriate) to
the address(es) of the registered holder(s) shown above under "Description of
Certificate(s)." Any shares of Cooper Common Stock delivered by book-entry
transfer that are not tendered or any shares of Cooper Common Stock tendered
herewith delivered by book-entry transfer that are not accepted for exchange
will be credited to the account at the Book-Entry Transfer Facility designated
above in the box under the box entitled "Description of Certificate(s)." The
undersigned recognizes that Cooper has no obligation pursuant to the "Special
Issuance Instructions" to transfer any shares of Cooper Common Stock from the
name of the registered holder hereof if Cooper does not accept for exchange such
shares. In the event that the boxes entitled "Special Issuance Instructions" and
"Special Delivery Instructions" are both completed, please issue (i) CCC
Certificate(s) to which the undersigned is entitled; (ii) if applicable, a
Fractional Share Check; and/or (iii) the certificate(s) representing any shares
of Cooper Common Stock not tendered by the undersigned or any shares of Cooper
Common Stock tendered herewith that are not accepted for exchange in the name(s)
of, and mail such certificate(s) and check (and accompanying documents, as
appropriate) to, the person(s) so indicated.
The undersigned understands that the delivery and surrender of the shares
of Cooper Common Stock tendered herewith are not effective, and the risk of loss
of the shares of Cooper Common Stock (including shares of Cooper Common Stock
tendered herewith) does not pass to the Exchange Agent, until receipt by the
Exchange Agent of this Letter of Transmittal, or a manually signed facsimile
hereof, duly completed and signed, or an Agent's Message (as defined in the
Offering Circular-Prospectus in "The Exchange Offer -- Procedures for Tendering
Shares of Cooper Common Stock") in connection with a book-entry transfer of
shares, together with all accompanying evidences of authority in form
satisfactory to Cooper and any other required documents. ALL QUESTIONS AS TO
VALIDITY, FORM AND ELIGIBILITY AND ACCEPTANCE FOR EXCHANGE OF ANY SURRENDER OF
SHARES OF COOPER COMMON STOCK TENDERED HEREWITH WILL BE DETERMINED BY COOPER IN
ITS SOLE DISCRETION AND SUCH DETERMINATION SHALL BE FINAL AND BINDING UPON ALL
TENDERING HOLDERS.
The undersigned understands that a tender of shares of Cooper Common Stock
and the acceptance by Cooper for exchange of such shares pursuant to the
procedures described in the Offering Circular-Prospectus under "The Exchange
Offer -- Procedures for Tendering Shares of Cooper Common Stock" and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Cooper upon the terms and subject to the conditions of the Exchange Offer,
including the tendering shareholder's representation that (i) such shareholder
owns the shares of Cooper Common Stock being tendered within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended, and
(ii) the tender of such shares of Cooper Common Stock complies with Rule 14e-4.
<PAGE> 4
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
This Letter of Transmittal is to be used either if the certificate(s)
representing shares of Cooper Common Stock are to be forwarded herewith or,
unless an Agent's Message is utilized, if tenders are to be made by book-entry
transfer to the account maintained by the Exchange Agent at DTC, MSTC or
PHILADEP. Delivery of documents to DTC, MSTC or PHILADEP does not constitute
delivery to the Exchange Agent.
Your bank or broker can assist you in completing this form. The Instructions
included with this Letter of Transmittal must be followed. Questions and
requests for assistance or for additional copies of the Offering
Circular-Prospectus and this Letter of Transmittal may be directed to the
Information Agent at the address indicated below.
List below the certificate(s) representing shares of Cooper Common Stock to
which this Letter of Transmittal relates. If the space provided below is
inadequate, the certificate number(s) and number of shares represented thereby
should be listed on a separate signed schedule affixed hereto.
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW AND SIGNING THIS LETTER OF
TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED SHARES OF COOPER COMMON STOCK
REPRESENTED BY THE CERTIFICATE(S) DESCRIBED BELOW.
<TABLE>
<CAPTION>
DESCRIPTION OF CERTIFICATE(S)
------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESSES(ES) OF REGISTERED HOLDER(S) NUMBER OF SHARES NUMBER OF
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON STOCK CERTIFICATE REPRESENTED BY SHARES
CERTIFICATE(S)) NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
TOTAL
------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Holders (see below).
** Unless otherwise indicated in this column, a holder will be deemed to have tendered all of the shares of Cooper Common
Stock represented by the certificate(s) indicated in the second column. See Instruction 2.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
- -------------------------------------------------------------------------------
/ /CHECK HERE IF THE CERTIFICATE(S) REPRESENTING TENDERED SHARES OF COOPER
COMMON STOCK ARE ENCLOSED HEREWITH.
/ /CHECK HERE IF TENDERED SHARES OF COOPER COMMON STOCK ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------
Name of Book-Entry Transfer Facility (check one):
/ / DTC / / MSTC / / PHILADEP Account Number:
-----------------------
Transaction Code Number:
--------------------------------------------------
/ /CHECK HERE IF THE CERTIFICATE(S) REPRESENTING TENDERED SHARES OF COOPER
COMMON STOCK ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING
(See Instruction 1):
Name(s) of Registered Holder(s):
------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------
Window Ticket No. (if any):
-----------------------------------------------
Name of Institution that Guaranteed Delivery:
-----------------------------
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer
Facility (check one):
/ / DTC / / MSTC / / PHILADEP Account Number:
----------------------
Transaction Code Number:
-------------------------------------------------
- --------------------------------------------------------------------------------
TENDER OF DIVIDEND REINVESTMENT PLAN SHARES
/ / CHECK HERE IF YOU ARE A PARTICIPANT IN COOPER'S DIVIDEND
REINVESTMENT PLAN (THE "DRP") AND WISH TO TENDER SHARES OF COOPER COMMON
STOCK HELD IN YOUR ACCOUNT UNDER THE DRP. See Instruction 5.
- --------------------------------------------------------------------------------
ODD LOTS
(See Instruction 6)
To be completed ONLY if shares of Cooper Common Stock are being
tendered by or on behalf of a person owning beneficially, as of the
close of business on May 25, 1995, an aggregate of fewer than 100
shares of Cooper Common Stock.
The undersigned either (check one):
/ / was the beneficial owner, as of the close of business on May 25,
1995, of an aggregate of fewer than 100 shares of Cooper Common
Stock, all of which are being tendered, or
/ / is a broker, dealer, commercial bank, trust company or other
nominee which (i) is tendering, for the beneficial owners thereof,
shares of Cooper Common Stock with respect to which it is the
record owner, and (ii) believes, based upon representations made
to it by each such beneficial owner, that such person was the
beneficial owner, as of the close of business on May 25, 1995, of
an aggregate of fewer than 100 shares of Cooper Common Stock and
is tendering all of such shares.
- --------------------------------------------------------------------------------
<PAGE> 6
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if shares of Cooper Common Stock not tendered or any
shares of Cooper Common Stock not accepted for exchange, CCC Certificate(s)
and/or any Fractional Share Check issued in connection therewith are to be
ISSUED in the name of someone other than the undersigned.
Issue:
(check appropriate box(es)):
/ / CCC Certificate(s) to:
/ / Fractional Share Check to:
/ / Cooper Certificate(s) to:
Name(s)
-------------------------------------------------------------------------
(Please Print)
-------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Zip Code
- --------------------------------------------------------------------------------
Employer Identification or Social Security Number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if shares of Cooper Common Stock not tendered or any
shares of Cooper Common Stock not accepted for exchange, CCC Certificate(s)
and/or any Fractional Share Check issued in connection therewith are to be SENT
to someone other than the undersigned, or to the undersigned at an address other
than that shown in the box entitled "Description of Certificate(s)."
Mail:
(check appropriate box(es)):
/ / CCC Certificate(s) to:
/ / Fractional Share Check to:
/ / Cooper Certificate(s) to:
Name(s)
-------------------------------------------------------------------------
(Please Print)
-------------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Zip Code
- --------------------------------------------------------------------------------
Employer Identification or Social Security Number
- --------------------------------------------------------------------------------
<PAGE> 7
- --------------------------------------------------------------------------------
IMPORTANT
ALL TENDERING SHAREHOLDERS PLEASE SIGN HERE
(Please Complete Substitute Form W-9 on Reverse)
(See Instructions 1 and 3)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
(Must be signed by the registered holder(s) as the name(s) appear(s) on the
Cooper stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by endorsements and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 3.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
Date: , 1995
SIGNATURE GUARANTEE
(If required -- See Instructions 1 and 3)
FOR USE BY ELIGIBLE INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Signature(s) Guaranteed by an Eligible Institution:
- --------------------------------------------------------------------------------
(Authorized Signature)
Name:
- --------------------------------------------------------------------------------
(Please Print)
Title:
- --------------------------------------------------------------------------------
Name of
Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
Date: , 1995
- --------------------------------------------------------------------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND COOPER STOCK CERTIFICATE(S).
This Letter of Transmittal is to be completed by shareholders either if the
certificate(s) representing shares of Cooper Common Stock tendered herewith are
to be forwarded herewith or, unless an Agent's Message (as defined in the
Offering Circular-Prospectus in "The Exchange Offer -- Procedures for Tendering
Shares of Cooper Common Stock") is utilized, if tenders are to be made pursuant
to the procedures for book-entry transfer set forth in the Offering
Circular-Prospectus under "The Exchange Offer -- Procedures for Tendering Shares
of Cooper Common Stock" or if the shares of Cooper Common Stock will be tendered
pursuant to the guaranteed delivery procedures set forth in the Offering
Circular-Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedure."
The certificate(s) representing shares of Cooper Common Stock tendered herewith,
or confirmation of any book-entry transfer into the Exchange Agent's account at
DTC, MSTC or PHILADEP of shares of Cooper Common Stock tendered electronically,
as well as a properly completed and duly executed copy of this Letter of
Transmittal or a manually signed facsimile hereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at one of its addresses set forth herein on or prior to the Expiration Date. THE
METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE(S)
REPRESENTING SHARES OF COOPER COMMON STOCK TENDERED HEREWITH AND ANY OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, BUT,
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF CERTIFICATE(S)
REPRESENTING SHARES OF COOPER COMMON STOCK TENDERED HEREWITH ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED
AND SUFFICIENT TIME TO ENSURE TIMELY RECEIPT SHOULD BE ALLOWED.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
No alternative, conditional or contingent tenders will be accepted for
exchange in the Exchange Offer. All tendering shareholders, by execution of this
Letter of Transmittal or a manually signed facsimile hereof, waive any right to
receive any notice of the acceptance of their shares of Cooper Common Stock for
exchange.
Holders whose stock certificate(s) representing shares of Cooper Common
Stock are not immediately available or who cannot deliver their certificate(s)
and all other required documents to the Exchange Agent on or prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their shares of Cooper Common Stock
pursuant to the guaranteed delivery procedure set forth in the Offering
Circular-Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedure."
Pursuant to such procedure: (i) such tender must be made by or through a
participant in the Security Transfer Agents Medallion Program or the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"); (ii) prior to the Expiration
Date, the Exchange Agent must have received from such Eligible Institution a
properly completed and duly executed Notice of Guaranteed Delivery (by telegram,
facsimile transmission, mail or hand delivery) substantially in the form
provided by Cooper setting forth the name and address of the holder and the
number of shares of Cooper Common Stock tendered, stating that the tender is
being made thereby and guaranteeing that, within five New York Stock Exchange
trading days after the date of the Notice of Guaranteed Delivery, the
certificate(s) representing such shares of Cooper Common Stock, accompanied by
all other documents required by this Letter of Transmittal, will be deposited by
the Eligible Institution with the Exchange Agent; and (iii) the certificate(s)
representing the shares of Cooper Common Stock tendered herewith (or a
confirmation of a book-entry transfer of such shares of Cooper Common Stock into
the Exchange Agent's account at DTC, MSTC or PHILADEP as described above),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile hereof) and any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer of shares, and any
other documents required hereby, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the date of the Notice of
Guaranteed Delivery, all as provided in the Offering Circular-Prospectus
under "The Exchange Offer -- Guaranteed Delivery Procedure."
See "The Exchange Offer" section of the Offering Circular-Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER); WITHDRAWALS.
If less than all of the shares of Cooper Common Stock evidenced by any
certificate(s) are to be tendered, the tendering holder should fill in the
number of shares to be tendered in the box entitled "Number of Shares Tendered."
A reissued certificate representing the number of shares of Cooper Common Stock
not tendered will be issued in the name of, and sent to, such registered holder,
unless otherwise indicated under "Special Issuance Instructions" or "Special
Delivery Instructions," as soon as practicable after the Expiration Date. THE
ENTIRE NUMBER OF SHARES OF COOPER
<PAGE> 9
COMMON STOCK REPRESENTED BY ANY CERTIFICATE(S) DELIVERED TO THE EXCHANGE AGENT
WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
Any holder of shares of Cooper Common Stock who has tendered shares of
Cooper Common Stock may withdraw the tender at any time prior to 5:00 P.M., New
York City time, on the Expiration Date, and may also withdraw such tender after
the expiration of 40 business days from the commencement of the Exchange Offer,
unless theretofore accepted for exchange as provided in the Offering
Circular-Prospectus.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth on the reverse side of this Letter of Transmittal, and must comply
with the requirements set forth in the Offering Circular-Prospectus under "The
Exchange Offer -- Withdrawal Rights." Withdrawals may not be rescinded, and
shares of Cooper Common Stock withdrawn will thereafter be deemed not validly
tendered for purposes of the Exchange Offer. Withdrawn shares of Cooper Common
Stock, however, may be retendered by again following one of the procedures
described in the Offering Circular-Prospectus under the caption "The Exchange
Offer -- Procedures for Tendering Shares of Cooper Common Stock" at any time on
or prior to 5:00 P.M., New York City time, on the Expiration Date.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered holder(s) of the
shares of Cooper Common Stock tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the certificate(s)
representing the shares of Cooper Common Stock without alteration, enlargement
or any other change whatsoever.
If any of the shares of Cooper Common Stock tendered hereby are registered
in the name of two or more joint owners, all such owners must sign this Letter
of Transmittal.
If any tendered shares of Cooper Common Stock are registered in the names
of different holders, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
shares of Cooper Common Stock listed and tendered hereby, no endorsements of
certificates or separate stock powers are required, unless CCC Certificate(s)
are to be issued, or certificate(s) for any untendered shares of Cooper Common
Stock or for any shares of Cooper Common Stock not accepted for exchange are to
be reissued, in the name of a person other than the registered holder(s), in
which case, the stock certificate(s) evidencing the shares of Cooper Common
Stock tendered hereby must be endorsed or accompanied by appropriate stock
power(s), in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on such stock certificate(s). Signatures on such stock
certificate(s) and stock power(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the shares of Cooper Common Stock listed and tendered
hereby, the certificate(s) representing such shares of Cooper Common Stock must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on such
certificate(s), and such signatures must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of a corporation or others acting in a fiduciary or representative
capacity, such persons should indicate when signing, and proper evidence
satisfactory to Cooper of their authority to so act must be submitted.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the shares of Cooper Common Stock are tendered:
(i) by a registered holder of such shares of Cooper Common Stock (which term,
for purposes of this Letter of Transmittal, shall include any participant in
DTC, MSTC or PHILADEP whose name appears on a security position listing as the
owner of shares of Cooper Common Stock) who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions"
on this Letter of Transmittal; or (ii) for the account of an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders should indicate in the applicable box the name and
address to which CCC Certificate(s), a Fractional Share Check, if any, and/or
substitute certificate(s) for shares of Cooper Common Stock not tendered or any
shares of Cooper Common Stock not accepted for exchange are to be issued or
sent, if different from the name and address of the person signing this Letter
of Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated.
<PAGE> 10
5. DIVIDEND REINVESTMENT PLAN SHARES.
Cooper shareholders who are participants in Cooper's Dividend Reinvestment
Plan (the "DRP") and who wish to tender shares of Cooper Common Stock held in
their account under the DRP ("DRP Shares") pursuant to the Exchange Offer must
so indicate by checking the box captioned "Tender of Dividend Reinvestment Plan
Shares" in the section of this Letter of Transmittal captioned "Description of
Certificate(s)" and returning to the Exchange Agent a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile hereof) with
any required signature guarantees and any other documents required by this
Letter of Transmittal. IF A PARTICIPANT AUTHORIZES THE TENDER OF HIS DRP SHARES,
ALL SHARES OF COOPER COMMON STOCK BENEFICIALLY OWNED BY HIM IN THE DRP,
INCLUDING FRACTIONAL SHARES OF COOPER COMMON STOCK, WILL BE TENDERED. In
addition, if a participant authorizes the tender of his DRP Shares and such DRP
Shares are exchanged under the terms and subject to the conditions of the
Exchange Offer, First Chicago Trust Company of New York will, as agent under the
DRP, reduce the number of shares of Cooper Common Stock in the participant's DRP
account by the number of DRP Shares that are accepted for exchange. Any DRP
Shares tendered but not exchanged will be returned to the participant's DRP
account.
6. ODD LOTS.
As described in the Offering Circular-Prospectus, if fewer than all shares
of Cooper Common Stock tendered on or prior to the Expiration Date are to be
exchanged by Cooper, Cooper will first exchange all shares of Cooper Common
Stock tendered for exchange and not properly withdrawn prior to the Expiration
Date by or on behalf of any shareholder who beneficially owned an aggregate of
fewer than 100 shares of Cooper Common Stock as of the close of business on
Thursday, May 25, 1995 and who validly tenders all of such shares of Cooper
Common Stock. PARTIAL TENDERS WILL NOT QUALIFY FOR THIS PREFERENCE, AND IT IS
NOT AVAILABLE TO BENEFICIAL HOLDERS OF 100 OR MORE SHARES OF COOPER COMMON
STOCK, EVEN IF SUCH HOLDERS HAVE SEPARATE STOCK CERTIFICATES FOR FEWER THAN 100
SHARES OF COOPER COMMON STOCK. This preference will not be available unless the
box captioned "Odd Lots" on this Letter of Transmittal and the Notice of
Guaranteed Delivery, if any, is completed.
7. STOCK TRANSFER TAXES.
Cooper will pay all transfer taxes, if any, applicable to the transfer and
sale of shares of Cooper Common Stock to it or its order pursuant to the
Exchange Offer. If, however, certificate(s) for shares of Cooper Common Stock
not tendered or not accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the shares of Cooper Common Stock tendered hereby, or if tendered shares of
Cooper Common Stock are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the transfer and sale of shares of Cooper Common Stock to
Cooper or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes whether imposed on the registered holder or any other persons
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefor is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) representing shares of
Cooper Common Stock listed in this Letter of Transmittal.
8. MUTILATED, LOST, STOLEN OR DESTROYED COOPER STOCK CERTIFICATES.
If any stock certificate(s) representing shares of Cooper Common Stock have
been mutilated, lost, stolen or destroyed the shareholder must (i) furnish to
the Exchange Agent evidence, satisfactory to it in its discretion, of the
ownership of and the destruction, loss or theft of such certificate(s), (ii)
furnish to the Exchange Agent indemnity, satisfactory to it in its discretion
and (iii) comply with such other reasonable regulations as the Exchange Agent
may prescribe. Any holder whose stock certificate(s) representing shares of
Cooper Common Stock have been mutilated, lost, stolen or destroyed should
promptly contact the Exchange Agent at the address indicated on the reverse side
of this Letter of Transmittal for further instructions.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
assistance or additional copies of the Offering Circular-Prospectus, this Letter
of Transmittal and the Notice of Guaranteed Delivery, may be directed to the
Information Agent at the address indicated below. Additional copies of the
Offering Circular-Prospectus, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from brokers, dealers, commercial banks
or trust companies.
10. IMPORTANT TAX INFORMATION; SUBSTITUTE FORM W-9.
Federal income tax law requires that a holder whose tendered shares of
Cooper Common Stock are accepted for exchange must provide the Exchange Agent
(as payor) with his or her correct taxpayer identification number ("TIN"),
<PAGE> 11
on Substitute Form W-9 below, which, in the case of a holder who is an
individual, is his or her social security number. If the Exchange Agent is not
provided with the correct TIN or an adequate basis for exemption, the holder may
be subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS")
in addition to backup withholding in an amount equal to 31% of the gross
proceeds resulting from the Exchange Offer. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed Guidelines for Certification of Taxpayer
Identification Number and Substitute Form W-9 for additional instructions.
To prevent backup withholding, each tendering holder must provide his or
her correct TIN by completing the "Substitute Form W-9" set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of the failure to report all interest or
dividends or (iii) the IRS has notified the holder that he or she is no longer
subject to backup withholding. In order to satisfy the Exchange Agent that a
foreign individual qualifies as an exempt recipient, such holders must submit a
statement signed under penalty of perjury attesting to such exempt status. Such
statements may be obtained from the Exchange Agent. If the certificate(s)
representing shares of Cooper Common Stock are in more than one name or are not
in the name of the actual owner, consult the enclosed guidelines for information
on which TIN to report. If you do not have a TIN, consult the enclosed
guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9, and complete the Certificate of Awaiting Taxpayer
Identification Number in order to avoid backup withholding. Notwithstanding that
the box in Part 2 is checked and the Certificate of Awaiting Taxpayer
Identification Number is completed, the Exchange Agent will withhold 31% of all
reportable payments made prior to the time a properly certified TIN is provided
to the Exchange Agent, and if the TIN is provided within 60 days, such amount
will be refunded.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any such payments made to the shareholder or other payee. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.
Holders of shares of Cooper Common Stock who acquired their shares at
different times may have different tax bases in their shares of Cooper Common
Stock, and may wish to consult with their own tax advisors as to the possibility
of identifying the specific shares of Cooper Common Stock surrendered in the
Exchange Offer in order to establish the basis of the shares of CCC Common Stock
received in exchange for shares of Cooper Common Stock surrendered.
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(See Instruction 10)
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN Social Security Number
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY
DEPARTMENT OF THE TREASURY, BY SIGNING AND DATING BELOW. OR
INTERNAL REVENUE SERVICE ------------------------------------
PAYOR'S REQUEST FOR TAXPAYER IN THE BOX AT RIGHT AND CERTIFY Employer Identification Number
IDENTIFICATION NUMBER (TIN) -------------------------------------------------------------------------------
Part 2 -- Awaiting TIN [ ]
- ---------------------------------------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number shown on this form is my correct
taxpayer identification number (or I am waiting for a number to be issued to me) and (2) I am not subject to
backup withholding either because (a) I am exempt from backup withholding, (b) I have not been notified by the
Internal Revenue Service that I am subject to backup withholding as a result of the failure to report all
interest or dividends, or (c) the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
- --------------------------------------------------------------------------------------------------------------
Signature Date
----------------------------------------------- --------------------------------------------------
You must cross out item (2) if above if you have been notified by the Internal Revenue Service that you are
currently subject to backup withholding because of under reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup withholding, you received another
notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2).
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
<PAGE> 12
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER
IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either that (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(ii) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
Signature___________________________________________ Date _________________
- --------------------------------------------------------------------------------
The Information Agent for the Exchange Offer is:
(GEORGESON & COMPANY LOGO)
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
<PAGE> 1
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
COOPER INDUSTRIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Exchange Offer (as defined herein) of Cooper
Industries, Inc., an Ohio corporation ("Cooper"), made pursuant to the Offering
Circular-Prospectus, dated May 30, 1995 (the "Offering Circular-Prospectus"), by
holders whose stock certificate(s) representing shares of Common Stock, par
value $5.00 per share ("Cooper Common Stock"), of Cooper are not immediately
available or who cannot deliver the certificate(s) and all other required
documents to First Chicago Trust Company of New York (the "Exchange Agent") on
or prior to the Expiration Date (as defined in the Offering Circular-Prospectus)
or who cannot complete the procedure for book-entry transfer on a timely basis.
This Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Exchange Agent. See "The
Exchange Offer -- Guaranteed Delivery Procedure" in the Offering
Circular-Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight
Courier:
First Chicago Trust Company (201) 222-4720 or First Chicago Trust Company
of New York (201) 222-4721 of New York
P. O. Box 2559 14 Wall Street, 8th Floor
Mail Suite 4660 Confirmation of Facsimile Attn: Tenders and Exchanges
Jersey City, New Jersey Transmission ONLY: Suite 4680
07303-2559 (201) 222-4707 New York, New York 10005
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the Instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions set forth in the Offering
Circular-Prospectus, dated May 30, 1995 (the "Offering Circular-Prospectus"),
and the related Letter of Transmittal (which together constitute the "Exchange
Offer"), the receipt of which is hereby acknowledged, the undersigned hereby
tenders to Cooper Industries, Inc., an Ohio corporation ("Cooper"), the number
of shares of Common Stock, par value $5.00 per share ("Cooper Common Stock"), of
Cooper set forth below, pursuant to the guaranteed delivery procedure set forth
in "The Exchange Offer -- Guaranteed Delivery Procedure" in the Offering
Circular-Prospectus.
- -------------------------------------------------------------------------------
ODD LOTS
To be completed ONLY if shares of Cooper Common Stock are being tendered by or
on behalf of a person owning beneficially, as of the close of business on May
25, 1995, an aggregate of fewer than 100 shares of Cooper Common Stock.
The undersigned either (check one):
/ / was the beneficial owner, as of the close of business on May 25, 1995, of an
aggregate of fewer than 100 shares of Cooper Common Stock, all of which are
being tendered, or
/ / is a broker, dealer, commercial bank, trust company or other nominee which
(i) is tendering, for the beneficial owners thereof, shares of Cooper Common
Stock with respect to which it is the record owner, and (ii) believes, based
upon representations made to it by each such beneficial owner, that such
person was the beneficial owner, as of the close of business on May 25,
1995, of an aggregate of fewer than 100 shares of Cooper Common Stock and is
tendering all of such shares.
- -------------------------------------------------------------------------------
(Please Type or Print)
<TABLE>
<S> <C>
Signature(s): _____________________________________ Number of Shares of Cooper Common Stock Tendered:
___________________________________________________ _________________________________________________
Certificate No(s). (if available):
Name(s) of
Record Holders(s):_________________________________ _________________________________________________
___________________________________________________ _________________________________________________
Address(es): ______________________________________ Total Number of Shares Represented by Cooper
Common Stock Certificate(s):
___________________________________________________
___________________________________________________ _________________________________________________
(Zip Code)
Area Code and Tel. No(s).: IF SHARES OF COOPER COMMON STOCK WILL BE TENDERED BY
BOOK-ENTRY TRANSFER, CHECK ONE BOX AND PROVIDE ACCOUNT
___________________________________________________ NUMBER
Dated:_____________________________________________ / / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: _________________________________
</TABLE>
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby (i) guarantees that either the
certificates representing the shares of Cooper Common Stock tendered hereby in
proper form for transfer (or a confirmation of a book-entry of such shares of
Cooper Common Stock into the Exchange Agent's account at The Depository Trust
Company, the Midwest Securities Trust Company or the Philadelphia Depository
Trust Company together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any required signature
guarantees, or an Agent's Message (as defined in the Offering
Circular-Prospectus) in connection with a book-entry transfer of shares, and any
other documents required by the Letter of Transmittal will be received by the
Exchange Agent at one of its addresses set forth above, within five New York
Stock Exchange, Inc. trading days after the date hereof, (ii) represents that
the holder on whose behalf this tender is being made owns the shares of Cooper
Common Stock being tendered within the meaning of Rule 14e-4 promulgated under
the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), and (iii)
represents that the tender of such shares of Cooper Common Stock complies with
Rule 14e-4.
<TABLE>
<S> <C>
- ------------------------------------------------ ------------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------------ ------------------------------------------------
Address Title
Name:
- ------------------------------------------------ -------------------------------------------
(Zip Code) (Please Type or Print)
- ------------------------------------------------ Dated:
Area Code and Tel. No. ------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OF COOPER COMMON STOCK WITH THIS
NOTICE. STOCK CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT 99.4
[CS FIRST BOSTON LOGO]
CS FIRST BOSTON CORPORATION 3030 TEXAS COMMERCE TOWER
HOUSTON, TX 77002-3003
TELEPHONE 713 220 6700
OFFER TO EXCHANGE
2.25 SHARES OF COMMON STOCK OF COOPER CAMERON CORPORATION FOR EACH
SHARE, UP TO 9,500,000 SHARES, OF COMMON STOCK OF COOPER INDUSTRIES, INC.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY,
JUNE 30, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
May 30, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Cooper Industries, Inc., an Ohio corporation
("Cooper"), to act as the Dealer Manager in connection with its offer to
exchange 2.25 shares of Common Stock, par value $.01 per share ("CCC Common
Stock"), of Cooper Cameron Corporation, a newly formed Delaware corporation and
a wholly-owned subsidiary of Cooper, for each share of Common Stock, par value
$5.00 per share ("Cooper Common Stock"), of Cooper, up to a maximum of 9,500,000
shares of Cooper Common Stock, that is validly tendered by the Expiration Date
(as defined herein) and not properly withdrawn, upon the terms and subject to
the conditions set forth in the enclosed Offering Circular-Prospectus, dated May
30, 1995 (the "Offering Circular-Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer").
COOPER INTENDS TO ANNOUNCE PUBLICLY AT APPROXIMATELY 12:00 NOON AND 3:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE, ON A PRELIMINARY BASIS, THE
NUMBER OF SHARES OF COOPER COMMON STOCK THAT HAVE BEEN TENDERED AND NOT
WITHDRAWN PRIOR TO SUCH TIMES. THE EXCHANGE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JUNE
30, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
Cooper currently holds 25,000,000 shares of CCC Common Stock, 85.5% of
which will be distributed pursuant to the Exchange Offer. If all such shares are
not exchanged in the Exchange Offer and the Exchange Offer is consummated, the
remaining shares will be distributed by Cooper on a pro rata basis to the Cooper
shareholders remaining after the Exchange Offer (the "Distribution"). As
described under "The Exchange Offer -- Terms of the Exchange Offer" in the
Offering Circular-Prospectus, if more than 9,500,000 shares of Cooper Common
Stock are validly tendered for exchange and not properly withdrawn on or prior
to 5:00 P.M., New York City time, on Friday, June 30, 1995, unless extended (the
"Expiration Date"), Cooper will exchange shares of CCC Common Stock for shares
of Cooper Common Stock in the following order of priority:
(a) all shares of Cooper Common Stock tendered for exchange and not
properly withdrawn on or prior to the Expiration Date by or on behalf of
any shareholder who beneficially owned an aggregate of fewer than 100
shares of Cooper Common Stock as of the close of business on May 25, 1995
and who validly tenders all of such shares of Cooper Common Stock (partial
tenders for exchange will not qualify for this preference) and completes
the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, the Notice of Guaranteed Delivery; and
(b) after exchange of all of the foregoing shares of Cooper Common
Stock, all other shares of Cooper Common Stock validly tendered and not
properly withdrawn on or prior to the Expiration Date on a pro rata basis,
if necessary (with appropriate adjustments to avoid purchases of fractional
shares of Cooper Common Stock).
THE EXCHANGE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, AT LEAST
8,550,000 SHARES OF COOPER COMMON STOCK (APPROXIMATELY 7% OF THE OUTSTANDING
COOPER COMMON STOCK AS OF MAY 1, 1995 AND A SUFFICIENT NUMBER OF SHARES TO
RESULT IN AT LEAST 90% OF THE CCC COMMON STOCK TO BE DISTRIBUTED BEING EXCHANGED
PURSUANT TO THE EXCHANGE OFFER) BEING VALIDLY TENDERED AND NOT PROPERLY
WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER. See "The Exchange
Offer -- Certain Conditions of the Exchange Offer" in the Offering
Circular-Prospectus.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
shares of Cooper Common Stock registered in your name or in the name of your
nominee or who hold shares of Cooper Common Stock registered in their own names,
we are enclosing the following documents:
1. The Offering Circular-Prospectus;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A letter that may be sent to your clients for whose account you
hold shares of Cooper Common Stock registered in your name or the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer;
4. Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if the certificates for shares of Cooper Common Stock are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents
to reach First Chicago Trust Company of New York, the Exchange Agent, prior
to the Expiration Date;
5. The Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9; and
6. A return envelope addressed to the Exchange Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JUNE 30, 1995, UNLESS
EXTENDED BY COOPER AS PROVIDED IN THE OFFERING CIRCULAR-PROSPECTUS. EXCEPT AS
OTHERWISE PROVIDED IN THE OFFERING CIRCULAR-PROSPECTUS OR THE LETTER OF
TRANSMITTAL, TENDERS ARE IRREVOCABLE.
Cooper will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Information Agent and the
Exchange Agent as described in "The Exchange Offer -- Fees and Expenses" in the
Offering Circular-Prospectus) in connection with soliciting tenders of shares of
Cooper Common Stock pursuant to the Exchange Offer. Cooper will, however, upon
request reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. Cooper will pay
all transfer taxes, if any, applicable to the transfer and sale of Cooper Common
Stock to it or its order pursuant to the Exchange Offer, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
To participate in the Exchange Offer, certificate(s) for shares of Cooper
Common Stock or a confirmation of any book-entry transfer into the Exchange
Agent's account at The Depository Trust Company, the Midwest Securities Trust
Company or the Philadelphia Depository Trust Company of shares of Cooper Common
Stock tendered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) and any required
signature guarantees, or an Agent's Message (as defined in the Offering
Circular-Prospectus) in connection with a book-entry transfer of shares, and any
other documents required by the Letter of Transmittal must be received by the
Exchange Agent as indicated in the Letter of Transmittal and the Offering
Circular-Prospectus on or prior to the Expiration Date.
Holders whose stock certificate(s) representing shares of Cooper Common
Stock are not immediately available or who cannot deliver their certificate(s)
and all other required documents to the Exchange Agent on or prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their shares of Cooper Common Stock
pursuant to the guaranteed delivery procedure set forth in the Offering
Circular-Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedure."
<PAGE> 3
Any inquiries you may have with respect to the Exchange Offer should be
addressed to the Dealer Manager or the Information Agent at their respective
addresses and telephone numbers set forth on the back cover page of the Offering
Circular-Prospectus. Additional copies of the enclosed material may be obtained
from the undersigned, CS First Boston Corporation, telephone (212)909-2000
(collect) or the Information Agent, Georgeson & Company Inc., at (212)440-9800
(collect), or from brokers, dealers, commercial banks or trust companies.
Very truly yours,
CS FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF COOPER, THE EXCHANGE AGENT, THE INFORMATION
AGENT, THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE OFFER, OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 4
[CS FIRST BOSTON LOGO]
CS First Boston Corporation 55 East 52nd Street
New York, NY 10055-0186
Telephone 212 909 2000
To Shareholders in Arizona, Florida, Nebraska, North Carolina, North Dakota,
Oklahoma and Vermont:
Enclosed on behalf of Cooper Industries, Inc. ("Cooper") is certain
information with respect to the Exchange Offer by Cooper. In order to comply
with the securities laws and regulations of your state, CS First Boston
Corporation ("CS First Boston") is mailing the enclosed materials on behalf of
Cooper.
CS First Boston is forwarding the enclosed materials as an accommodation to
Cooper and is not by this letter making a solicitation or recommendation with
respect to the matters set forth in the enclosed materials, nor does CS First
Boston assume any responsibility for the accuracy or completeness of the
statements made therein.
CS FIRST BOSTON CORPORATION
<PAGE> 1
Exhibit 99.5
OFFER TO EXCHANGE
2.25 SHARES OF COMMON STOCK OF COOPER CAMERON CORPORATION FOR EACH
SHARE, UP TO 9,500,000 SHARES, OF COMMON STOCK OF COOPER INDUSTRIES, INC.
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY,
JUNE 30, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
May 30, 1995
To Our Clients:
Enclosed for your consideration is the Offering Circular-Prospectus, dated
May 30, 1995 (the "Offering Circular-Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), relating to the
offer by Cooper Industries, Inc., an Ohio corporation ("Cooper"), to exchange
2.25 shares of Common Stock, par value $.01 per share ("CCC Common Stock"), of
Cooper Cameron Corporation, a newly formed Delaware corporation and a
wholly-owned subsidiary of Cooper, for each share of Common Stock, par value
$5.00 per share ("Cooper Common Stock"), of Cooper, up to a maximum of 9,500,000
shares of Cooper Common Stock, that is validly tendered by the Expiration Date
(as defined herein) and not properly withdrawn, upon the terms and subject to
the conditions set forth in the Exchange Offer.
Cooper currently holds 25,000,000 shares of CCC Common Stock, 85.5% of
which will be distributed pursuant to the Exchange Offer. If all such shares are
not exchanged in the Exchange Offer and the Exchange Offer is consummated, the
remaining shares will be distributed by Cooper on a pro rata basis to the Cooper
shareholders remaining after the Exchange Offer (the "Distribution"). If more
than 9,500,000 shares of Cooper Common Stock are validly tendered and not
properly withdrawn in the Exchange Offer on or prior to 5:00 P.M., New York City
time, on Friday, June 30, 1995 (the "Expiration Date," unless Cooper, in its
sole discretion, shall have extended the period of time for which the Exchange
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Exchange Offer, as so extended by Cooper, shall
expire), then, upon the terms and subject to the conditions set forth in the
Offering Circular-Prospectus and the Letter of Transmittal, Cooper will accept
such shares for exchange on a pro rata basis as described in the Offering
Circular-Prospectus, except for "odd lot" tenders as described below.
This material is being forwarded to you as the beneficial owner of shares
of Cooper Common Stock held by us for your account but not registered in your
name. A TENDER OF SUCH SHARES OF COOPER COMMON STOCK MAY ONLY BE MADE BY US AS
THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES OF COOPER COMMON STOCK HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish us to tender
any or all such shares of Cooper Common Stock held by us for your account,
pursuant to the terms and conditions set forth in the Exchange Offer.
Your attention is invited to the following:
1. The exchange ratio is 2.25 shares of CCC Common Stock for each
share of Cooper Common Stock up to an aggregate of 9,500,000 shares of
Cooper Common Stock (approximately 8% of the outstanding Cooper Common
Stock as of May 1, 1995).
2. Cooper currently holds 25,000,000 shares of CCC Common Stock, 85.5%
of which will be distributed pursuant to the Exchange Offer. If all such
shares are not exchanged in the Exchange Offer and the Exchange Offer is
consummated, the remaining shares will be distributed by Cooper on a pro
rata basis to the Cooper shareholders remaining after the Exchange Offer.
3. If you owned beneficially, as of the close of business on May 25,
1995, an aggregate of fewer than 100 shares of Cooper Common Stock and you
instruct us to tender on your behalf all such shares before the Expiration
Date by checking the box captioned "Odd Lots" in the attached instruction
form, Cooper will accept all such shares for exchange before proration, if
any, of the other shares of Cooper Common Stock validly tendered and not
properly withdrawn prior to the Expiration Date.
4. Cooper intends to announce publicly at approximately 12:00 Noon and
3:00 P.M., New York City time, on the Expiration Date, on a preliminary
basis, the number of shares of Cooper Common Stock that have been tendered
and not withdrawn prior to such times. The Exchange Offer, proration period
and withdrawal rights will expire at 5:00 P.M., New York City time, on
Friday, June 30, 1995, unless the Exchange Offer is extended.
<PAGE> 2
5. The Exchange Offer is conditioned upon, among other things, at
least 8,550,000 shares of Cooper Common Stock (approximately 7% of the
outstanding Cooper Common Stock as of May 1, 1995 and a sufficient number
of shares to result in at least 90% of the CCC Common Stock to be
distributed being exchanged pursuant to the Exchange Offer) being validly
tendered and not properly withdrawn on or prior to the Expiration Date of
the Exchange Offer.
6. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 7 of the
Letter of Transmittal, stock transfer taxes with respect to the exchange of
shares in the Exchange Offer.
As described under "The Exchange Offer -- Terms of the Exchange Offer" in
the Offering Circular-Prospectus, if more than 9,500,000 shares of Cooper Common
Stock are validly tendered for exchange and not properly withdrawn on or prior
to the Expiration Date, Cooper will exchange shares of CCC Common Stock for
shares of Cooper Common Stock in the following order of priority:
(a) all shares of Cooper Common Stock tendered for exchange and not
properly withdrawn prior to the Expiration Date by or on behalf of any
shareholder who beneficially owned an aggregate of fewer than 100 shares of
Cooper Common Stock as of the close of business on May 25, 1995 and who
validly tenders all of such shares of Cooper Common Stock (partial tenders
for exchange will not qualify for this preference); and
(b) after exchange of all of the foregoing shares of Cooper Common
Stock, all other shares of Cooper Common Stock validly tendered and not
properly withdrawn prior to the Expiration Date on a pro rata basis, if
necessary (with appropriate adjustments to avoid purchases of fractional
shares of Cooper Common Stock).
The Exchange Offer is made solely by the Offering Circular - Prospectus and
the related Letter of Transmittal and is being made to all holders of shares of
Cooper Common Stock. Cooper is not aware of any state where the making of the
Exchange Offer is prohibited by administrative or judicial action pursuant to
any valid state statute. If Cooper becomes aware of any valid state statute
prohibiting the making of the Exchange Offer or the acceptance of shares of
Cooper Common Stock pursuant thereto, Cooper will make a good faith effort to
comply with such state statute. If, after such good faith effort, Cooper cannot
comply with such state statute, the Exchange Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of shares of Cooper Common
Stock in such state. In any jurisdiction where the securities, blue sky or other
laws require the Exchange Offer to be made by a licensed broker or dealer, the
Exchange Offer shall be deemed to be made on behalf of Cooper by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your shares of Cooper Common
Stock, please so instruct us by completing, executing and returning to us the
attached instruction form. An envelope to return your instructions is enclosed.
Please forward your instructions to us in ample time to permit us to submit a
tender on your behalf on or prior to the Expiration Date. IF YOU AUTHORIZE THE
TENDER OF YOUR SHARES OF COOPER COMMON STOCK, ALL SUCH SHARES WILL BE TENDERED
UNLESS OTHERWISE SPECIFIED ON THE ATTACHED INSTRUCTION FORM.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO EXCHANGE 2.25 SHARES
OF COMMON STOCK OF COOPER CAMERON CORPORATION FOR EACH
SHARE, UP TO 9,500,000 SHARES, OF COMMON STOCK OF
COOPER INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offering Circular-Prospectus, dated May 30, 1995 (the "Offering
Circular-Prospectus"), and the related Letter of Transmittal (which together
constitute the "Exchange Offer"), relating to the offer by Cooper Industries,
Inc., an Ohio corporation ("Cooper"), to exchange 2.25 shares of Common Stock,
par value $.01 per share ("CCC Common Stock"), of Cooper Cameron Corporation, a
newly formed Delaware corporation and a wholly-owned subsidiary of Cooper, for
each share of Common Stock, par value $5.00 per share ("Cooper Common Stock"),
of Cooper, up to a maximum of 9,500,000 shares of Cooper Common Stock, validly
tendered and not properly withdrawn, upon the terms and conditions set forth in
the Exchange Offer.
This will instruct you to tender the number of shares of Cooper Common
Stock indicated below (or, if no number is indicated below, all shares) held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offering Circular-Prospectus and the related Letter
of Transmittal.
- --------------------------------------------------------------------------------
ODD LOTS
/ / By checking this box, the undersigned represents that the undersigned was
the beneficial owner, as of the close of business on May 25, 1995, of an
aggregate of fewer than 100 shares of Cooper Common Stock and is
instructing the holder to tender all such shares.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- ---------------------
NUMBER OF SHARES OF SIGN HERE
COOPER COMMON STOCK TO
BE TENDERED:* ------------------------------------------------
___________________ SHARES
------------------------------------------------
Account Number: _________ Signature(s)
Dated: ________________ , 1995 ------------------------------------------------
------------------------------------------------
Please type or print name(s) here
------------------------------------------------
Please type or print address(es) here
------------------------------------------------
Area Code and Telephone Number
------------------------------------------------
Taxpayer Identification or Social Security
Number(s)
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all shares of Cooper
Common Stock held by us for your account are to be tendered.
<PAGE> 1
EXHIBIT 99.6
[COOPER LETTERHEAD]
IMMEDIATE ATTENTION REQUIRED
MAY 31, 1995
RE: DIRECTION CONCERNING TENDER OF SHARES
DEAR SAVINGS PLAN PARTICIPANT:
Enclosed are materials that require your immediate attention. They
describe matters directly affecting your interest in the Cooper Industries,
Inc. Savings and Stock Ownership Plan ("CO-SAV") or the Cooper Cameron
Corporation Retirement Savings Plan ("CCC Savings Plan," together with CO-SAV,
the "Savings Plans"). Read all of the materials carefully. If you want to
participate in the Exchange Offer, you will need to complete the enclosed
Direction Form and return it in the envelope provided. THE DEADLINE FOR
RECEIPT OF YOUR COMPLETED DIRECTION FORM IS 5:00 P.M., EST, WEDNESDAY, JUNE 28,
1995 (UNLESS EXTENDED). If you do not want to participate in the Exchange
Offer, do not return the enclosed Direction Form.
The remainder of this letter summarizes the transaction and your
rights and options under the Savings Plans, but you also should review the more
detailed explanation provided in the Offering Circular - Prospectus.
BACKGROUND
Cooper Industries, Inc. ("Cooper") has made an offer to exchange 2.25
shares of Cooper Cameron Corporation Common Stock ("CCC Stock") for each share
of Cooper Common Stock ("Cooper Stock"). Financial and other information
relating to the offer are described in detail in the enclosed Offering Circular
- - Prospectus, which is being provided to all Cooper shareholders.
As a Participant in CO-SAV or the CCC Savings Plan, you are directly
affected, because Cooper's Exchange Offer extends to the shares of Cooper Stock
currently held by the Savings Plans. Only The Chase Manhattan Bank, N.A., as
Trustee of the Savings Plans, can tender these shares for exchange. However,
as a CO-SAV or CCC Savings Plan Participant, you have the right pursuant to the
provisions of the Savings Plans to direct the Trustee whether or not to tender
the shares that are allocated to your Cooper Stock Account as of February 28,
1995.
<PAGE> 2
Cooper has retained First Chicago Trust Company of New York ("First
Chicago") to tabulate the directions of Savings Plan Participants. You will
note from the enclosed envelope that your Direction Form is to be returned to
First Chicago.
HOW THE EXCHANGE OFFER WORKS
The details of the Exchange Offer are described in the enclosed
materials, which you should review carefully. However, in broad outline, the
transaction will work as follows with respect to CO-SAV or CCC Savings Plan
Participants.
. Cooper has offered to exchange up to 9,500,000 shares of
Cooper Stock for 21,375,000 shares of CCC Stock at a ratio of
2.25 shares of CCC Stock for each share of Cooper Stock
exchanged.
. If you want to exchange any of the shares that are allocated
to your Cooper Stock Account, you need to complete the
Direction Form, thereby directing the Trustee to offer (or
"tender") those shares of Cooper Stock for exchange.
. First Chicago will tabulate all directions submitted by the
Savings Plans Participants and advise the Trustee as to how
many shares to tender on behalf of the Participants.
After the deadline for the tender of shares by all Cooper
shareholders, including CO-SAV and CCC Savings Plan Participants, First
Chicago, as Exchange Agent, will determine the total number of shares of Cooper
Stock properly tendered for exchange. Provided that at least 8,500,000 shares
of Cooper Stock are tendered and the other conditions to the Exchange Offer are
satisfied, Cooper will accept the shares and issue CCC Stock in exchange.
If more than 9,500,000 shares of Cooper Stock are tendered, Cooper
will accept such shares on a pro rata basis, except that any holder of Cooper
Stock who owns fewer than 100 shares as of the close of business on May 25,
1995 and tenders all such shares, will not be subject to proration. Thus, if
you held fewer than 100 shares in total as of the close of business on May 25,
1995, including your Cooper Stock Account, any shares held through a broker or
in an individual retirement account, and you tender all of your shares, Cooper
will accept all of your shares for exchange.
Acceptance of any shares by Cooper is subject to the conditions
described in the Offering Circular - Prospectus.
SHARES OF CCC STOCK ISSUED
Shares of CCC Stock received in exchange for shares of Cooper Stock will be
2
<PAGE> 3
credited to your Savings Plan Account as follows:
FOR CO-SAV PARTICIPANTS: The CCC Stock will be held in a separate
investment account called "Cooper Cameron Stock Fund." You can choose
to hold this stock or, on a quarterly basis, decide to sell the CCC
Stock and invest the proceeds in one or more of the other investment
funds --- the Stock Market Fund, the Money Market Fund or the Fixed
Income Fund.
FOR CCC SAVINGS PLAN PARTICIPANTS: The CCC Stock will be held in the
"Company Stock Fund."
PROCEDURE FOR DIRECTING TRUSTEE
A Direction Form for making your direction is enclosed. You must
complete this form and return it in the envelope provided in time to be
received no later than 5:00 P.M., EST, on Wednesday, June 28, 1995 (unless the
Exchange Offer is extended). If your form is not received by this deadline, or
if it is not fully and properly completed, the shares in your Cooper Stock
Account will not be tendered. If the Exchange Offer is extended, Cooper will
publicly announce the new Exchange Offer expiration date, and you will have
until TWO BUSINESS DAYS prior to this new date to submit your Direction Form.
To properly complete your Direction Form, you must do the following:
(1) On the face of the form, check Box 1 or 2. CHECK
ONLY ONE BOX. Make your decision which box to check as follows:
. CHECK BOX 1 if you want the Trustee to tender for
exchange all of the shares allocated to your Cooper
Stock Account.
. CHECK BOX 2 if you want the Trustee to tender some,
but not all, of the shares allocated to your Cooper
Stock Account. Specify the number of whole shares
that you want to tender.
(2) CHECK BOX 3 if as of the close of business on May 25,
1995 you owned fewer than 100 shares of Cooper Stock, including those
held in your Cooper Stock Account, through a broker or in an
individual retirement account, and you are tendering for exchange all
of your shares.
(3) Sign and date the Direction Form and include your
daytime telephone number in the spaces provided.
(4) Return the Direction Form in the envelope provided no
later than 5:00 P.M., EST, on Wednesday, June 28, 1995 (unless this
deadline is extended).
3
<PAGE> 4
Your direction to tender some or all of the Cooper Stock in your
Cooper Stock Account will be final unless withdrawn by 5:00 P.M., EST, on
Wednesday, June 28, 1995 (unless the Exchange Offer is extended, in which event
you will have until TWO BUSINESS DAYS prior to the new Exchange Offer
expiration date to withdraw your direction). To be effective, a notice of
withdrawal of your direction must be in writing and must be received by First
Chicago as follows:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT DELIVERY:
P.O. Box 2559 (201) 222-4720 or 14 Wall Street, 8th Floor
Mail Suite 4660 (201) 222-4721 Attn: Tenders and Exchanges
Jersey City, NJ 07303 Suite 4680
New York, New York 10005
Confirmation of Facsimile
Transmission ONLY:
(201) 222-4707
Your withdrawal notice must include your name, address, Social
Security number and the number of shares allocated to your Cooper Stock
Account. Upon receipt of your notice by First Chicago, your previous direction
will be deemed cancelled. You may direct the retendering of any shares in your
Cooper Stock Account by repeating the previous instructions for directing the
tendering set forth in this letter.
NO RECOMMENDATION
NONE OF COOPER, ITS BOARD OF DIRECTORS, THE CHASE MANHATTAN BANK,
N.A., AS TRUSTEE, NOR ANY OTHER PARTY MAKES ANY RECOMMENDATIONS TO PARTICIPANTS
WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH PARTICIPANT MUST MAKE
HIS OR HER OWN DECISION ON THESE MATTERS.
FURTHER INFORMATION
If you have any questions about completion of the Direction Form,
please contact your Employee Relations Manager or Georgeson & Company Inc. at
800-223-2064.
Your ability to instruct the Trustee concerning whether or not to
tender shares allocated to your Cooper Stock Account is an important part of
your rights as a CO-SAV or CCC Savings Plan Participant. Please consider this
letter and the enclosed materials carefully.
Sincerely,
Pension Administration Committee
4
<PAGE> 5
COOPER INDUSTRIES, INC.
SAVINGS AND STOCK OWNERSHIP PLAN ("CO-SAV")
DIRECTION FORM
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY
THE ACCOMPANYING OFFERING CIRCULAR - PROSPECTUS
The number to the right of your name represents the Cooper Shares allocated
to your CO-SAV Account as of February 28, 1995.
In accordance with the Cooper Industries, Inc. Savings and Stock Ownership
Plan ("Plan") and the Cooper Industries, Inc. Offering Circular and Cooper
Cameron Corporation Prospectus for the Exchange Offer made by Cooper
("Prospectus"), a copy of which I have received and read, I hereby direct the
Plan's Trustee, The Chase Manhattan Bank, N.A., as follows:
BOX 1
/ / To tender all Cooper Shares allocated to my CO-SAV Account.
BOX 2
/ / To tender of the Cooper Shares allocated to my CO-SAV Account.
---------------
(fill in number-
whole shares only)
BOX 3
/ / I own beneficially an aggregate of fewer than 100 Cooper Shares, all of
which are being tendered in connection with the Exchange Offer.
, 1995
- ------------------------- -------------------------------------------
Date Your Signature
(Please sign as your name appears above.)
-------------------------------------------
Daytime Telephone No. (including Area Code)
This direction, along with all other directions received from CO-SAV
participants, will instruct the Trustee to tender the Cooper Shares not yet
allocated to participants' accounts in the same proportion as the number of
allocated Cooper Shares tendered to the total number of allocated Cooper Shares.
<PAGE> 6
INSTRUCTIONS
- --------------------------------------------------------------------------------
Your Direction Form must be in the possession of the Exchange
Agent, First Chicago Trust Company of New York, no later than
5:00 p.m. Eastern Standard Time, two business days prior to the
Expiration Date of the Exchange Offer as shown in the Prospectus.
- --------------------------------------------------------------------------------
As of February 28, 1995, there were allocated to your CO-SAV Account the
number of shares of Cooper Industries, Inc. common stock ("Cooper Shares") shown
to the right of your name on the reverse side of this Form.
Carefully complete the other side of this Direction Form. Then in the spaces
provided insert today's date and a daytime telephone number at which you may be
reached in the event of questions concerning your completion of the Form and
sign your name. Return the Form promptly to First Chicago Trust Company of New
York by mail in the enclosed return envelope or by one of the alternative
delivery methods set forth below. Your Direction Form must be received no later
than 5:00 p.m., Eastern Standard Time, two business days prior to the Expiration
Date of the Exchange Offer as shown in the Prospectus. Direction Forms that are
not fully or properly completed, dated, and signed, or that are received after
the deadline, will be ignored, and the shares allocated to your CO-SAV Account
will remain in your CO-SAV Account.
- --------------------------------------------------------------------------------
Neither Cooper Industries, Inc., its Board of Directors, The
Chase Manhattan Bank, N.A., nor any other party makes any
recommendation to participants as to whether to tender shares
or to refrain from tendering shares. Each participant must
make his or her own decision on these matters.
- --------------------------------------------------------------------------------
In lieu of using the return envelope enclosed, you may return the completed
Direction Form to First Chicago Trust Company of New York by mail, overnight
courier or facsimile transmission, as follows:
By Mail: By Facsimile Transmission: Overnight Delivery:
P.O. Box 2559 (201) 222-4720 or 14 Wall Street,
Mail Suite 4660 (201) 222-4721 8th Floor
Jersey City, New Jersey 07303 Attn: Tenders and
Confirmation of Facsimile Exchanges
Transmission ONLY: Suite 4680
New York, New York
(201) 222-4707 10005
<PAGE> 7
COOPER CAMERON CORPORATION
RETIREMENT SAVINGS PLAN
DIRECTION FORM
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY
THE ACCOMPANYING OFFERING CIRCULAR - PROSPECTUS
The number to the right of your name represents the Cooper Shares allocated
to your Savings Plan Account as of February 28, 1995.
In accordance with the Cooper Cameron Corporation Retirement Savings Plan
(the "Savings Plan") and the Cooper Industries, Inc. Offering Circular and
Cooper Cameron Corporation Prospectus for the Exchange Offer made by Cooper
("Prospectus"), a copy of which I have received and read, I hereby direct the
Plan's Trustee, The Chase Manhattan Bank, N.A., as follows:
BOX 1
/ / To tender all Cooper Shares allocated to my Savings Plan Account.
BOX 2
/ / To tender of the Cooper Shares allocated to my Savings Plan
Account. ---------------
(fill in number-
whole shares only)
BOX 3
/ / I own beneficially an aggregate of fewer than 100 Cooper Shares, all of
which are being tendered in connection with the Exchange Offer.
, 1995
- ------------------------- -------------------------------------------
Date Your Signature
(Please sign as your name appears above.)
-------------------------------------------
Daytime Telephone No. (including Area Code)
This direction, along with all other directions received from Savings Plan
participants, will instruct the Trustee to tender the Cooper Shares not yet
allocated to participants' accounts in the same proportion as the number of
allocated Cooper Shares tendered to the total number of allocated Cooper Shares.
<PAGE> 8
INSTRUCTIONS
- -------------------------------------------------------------------------------
Your Direction Form must be in the possession of the Exchange
Agent, First Chicago Trust Company of New York, no later than
5:00 p.m. Eastern Standard Time, two business days prior to the
Expiration Date of the Exchange Offer as shown in the Prospectus.
- -------------------------------------------------------------------------------
As of February 28, 1995, there were allocated to your Savings Plan Account
the number of shares of Cooper Industries, Inc. common stock ("Cooper Shares")
shown to the right of your name on the reverse side of this Form.
Carefully complete the other side of this Direction Form. Then in the spaces
provided insert today's date and a daytime telephone number at which you may be
reached in the event of questions concerning your completion of the Form and
sign your name. Return the Form promptly to First Chicago Trust Company of New
York by mail in the enclosed return envelope or by one of the alternative
delivery methods set forth below. Your Direction Form must be received no later
than 5:00 p.m., Eastern Standard Time, two business days prior to the Expiration
Date of the Exchange Offer as shown in the Prospectus. Direction Forms that are
not fully or properly completed, dated, and signed, or that are received after
the deadline, will be ignored, and the shares allocated to your Savings Plan
Account will remain in your Savings Plan Account.
- -------------------------------------------------------------------------------
Neither Cooper Industries, Inc., its Board of Directors, The
Chase Manhattan Bank, N.A., nor any other party makes any
recommendation to participants as to whether to tender shares
or to refrain from tendering shares. Each participant must
make his or her own decision on these matters.
- -------------------------------------------------------------------------------
In lieu of using the return envelope enclosed, you may return the completed
Direction Form to First Chicago Trust Company of New York by mail, overnight
courier or facsimile transmission, as follows:
By Mail: By Facsimile Transmission: By Overnight Delivery:
P.O. Box 2559 (201) 222-4720 or 14 Wall Street,
Mail Suite 4660 (201) 222-4721 8th Floor
Jersey City, New Jersey 07303 Attn: Tenders and
Confirmation of facsimile Exchanges
Transmission ONLY: Suite 4680
New York, New York
(201) 222-4707 10005
<PAGE> 1
Exhibit 99.7
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
IMPORTANT NOTICE
(Please Read Both Sides)
PURPOSE OF FORM. - A person who is required to file an information return with
the IRS must obtain your correct TIN to report: income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an IRA. Use Form W-9 to furnish
your correct TIN to us and, when applicable, (1) to certify that the TIN you
are furnishing is correct (or that you are waiting for a number to be issued),
(2) to certify that you are not subject to backup withholding, and (3) to claim
exemption from backup withholding if you are an exempt payee. Furnishing your
correct TIN and making the appropriate certifications will prevent certain
payments from being subject to backup withholding.
HOW TO OBTAIN A TIN. - If you do not have a TIN, apply for one immediately. To
apply, get FORM SS-5, Application for a Social Security Number Card (for
individuals), from your local office of the Social Security Administration, or
FORM SS-4, Application for Employer Identification Number (for businesses and
all other entities), from you local IRS office.
To complete Form W-9 if you do not have a TIN, sign and date the form,
write "Applied For" next to your signature, and send us the form. Generally,
you will then have 60 days to obtain a TIN and furnish it to us. If we do not
receive your TIN within 60 days, backup withholding, if applicable, will begin
and continue until you furnish your TIN to us. For reportable interest or
dividend payments, we must exercise one of the following options concerning
backup withholding during this 60-day period. Under option (1), we must backup
withhold on any withdrawals you make from your account after 7 business days
after we receive this form back from you. Under option (2), we must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after we receive this form
back. Under option (2), we are required to refund the amounts withheld if your
certified TIN is received within the 60-day period and you were not subject to
backup withholding during that period.
NOTE: Writing "Applied for" on the forms means that you have already applied
for a TIN OR that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another FORM W-9, include
your TIN, sign and date the form, and send it to us.
WHAT IS BACKUP WITHHOLDING? - Persons making certain payments to you are
required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding". Payments that could be subject
to backup withholding include interest, dividends, broker and barter exchange
transactions, rent, royalties, nonemployee compensation, and certain payments
from fishing boat operators, but do not include real estate transactions.
If you; (1) give us your correct TIN, (2) make the appropriate
certifications, and (3) report all your taxable interest and dividends on your
tax return, your payments will not be subject to backup withholding. Payments
you receive will be subject to backup withholding if:
1. You do not furnish your TIN to us or
2. The IRS notifies us that you furnished an incorrect TIN or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax return
(for reportable interest and dividends only), or
4. You fail to certify to us that you are not subject to backup withholding
under (3) above (for reportable interest and dividend accounts opened after
1983 only) or
5. You fail to certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Except as explained in (5), other reportable payments are subject to backup
withholding only if (1) or (2) applies. Certain payees and payments are exempt
from backup withholding and information reporting. See PAYEES AND PAYMENTS
EXEMPT FOR BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS under
SPECIFIC INSTRUCTIONS, below, if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. - The following is
a list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except item (9). For broker transactions, payees listed in (1) through (13) and
a person registered under the Investment Advisers Act of 1940 who regularly
acts as a broker are exempt. Payments subject to reporting under sections 6041
and 6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), "except" a corporation that provides
medical and health care services or a corporation that bills and collects
payments for such services. Such corporations are not exempt from backup
withholding or information reporting. Only payees described in items (2)
through (6) are exempt from backup withholding for barter exchange
transactions, patronage dividends, and payments by certain fishing boat
operators.
(1) A corporation. (2) An organization exempt from tax under section
501(a), or an IRA, or a custodial account under section 403(b)(7). (3) The
United States or any of its agencies or instrumentalities. (4) A state, the
District of Columbia, a possession of the United States, or any of their
political subdivisions, agencies, or instrumentalities. (5) A foreign
government or any of its political subdivisions, agencies, or
instrumentalities. (6) An international organization or any of its agencies or
instrumentalities. (7) A foreign central bank of issue. (8) A dealer in
securities or commodities required to register in the United States or a
possession of the United States. (9) A futures commission merchant registered
with the Commodity Futures Trading Commission. (10) A real estate investment
trust. (11) An entity registered at all times during the tax year under the
Investment Company Act of 1940. (12) A common trust fund operated by a bank
under section 584(a). (13) A financial institution. (14) A middleman known in
the investment community as a nominee or listed in the most recent publication
of American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust
exempt from tax under section 664 or described in section 4947.
Payments of DIVIDENDS and PATRONAGE DIVIDENDS generally not subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section
1441.
- - Payments to partnerships not engaged in a trade or business in the
United States and that have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
Payments of INTEREST generally not subject to backup withholding
include the following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct TIN to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not
subject to backup withholding. For details, see sections 6041, 6041A(a), 6042,
6044, 6045, 6049, 6050A, and 6050N, and their regulations.
<PAGE> 2
PENALTIES
FAILURE TO FURNISH TIN. - If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. - If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. - Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. - If the requester discloses or uses TINs in violation of
Federal Law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME. - If you are an individual, you must generally provide the name shown on
your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card, and your new last name.
If you are sole proprietor, you must furnish your INDIVIDUAL name and
either your SSN or EIN. Enter your name(s) as shown on your social security
card and/or as it was used to apply for your EIN on Form SS-4.
SIGNING THE CERTIFICATION. -
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE
1984 AND BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. - You are requested to
furnish your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED
AFTER 1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. - You must sign
the certification or backup withholding will apply. If you are subject to
backup withholding and you are merely providing your correct TIN to the
requester, you must cross out item (2) on the certification before signing the
form.
(3) REAL ESTATE TRANSACTIONS. - You must sign the certification. You
may cross out item (2) on the certificaiton.
(4) OTHER PAYMENTS. - You are required to furnish your correct TIN,
but you are not required to sign the certification unless you have been
notified of an incorrect TIN. Other payments include payments made in the
course of the requester's trade or business for rents, royalties, goods (other
than bills for merchandise), medical and health care services, payments to a
nonemployee for services (including attorney and accounting fees), and payments
to certain fishing boat crew members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF
SECURED PROPERTY, OR IRA CONTRIBUTIONS. - You are required to furnish your
correct TIN, but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. - If you are exempt from backup
withholding, you should complete this form to avoid possible erroneous backup
withholding. Enter your correct TIN in the grid, sign and date the form, and
write "EXEMPT" next to your signature. If you are a nonresident alien or
foreign entity not subject to backup withholding, give us a completed Form W-8,
Certificate of Foreign Status.
(7) TIN "APPLIED FOR." - Follow the instructions under HOW TO OBTAIN A
TIN, on page 1.
SIGNATURE. - For a joint account, only the person whose TIN is shown on the W-9
form should sign the form.
PRIVACY ACT NOTICE. - Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report: interest,
dividends, and certain other income paid to you; mortgage interest you paid;
the acquisition or abandonment of secured property; or contributions you made
to an IRA. The IRS uses the numbers for identificaiton purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or
not you are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
For this type of account: Give name and SSN of:
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, the first individual on the account(1)
3. Custodian account of a minor (Uniform Gift The minor(2)
to Minors Act) The grantor-trustee(1)
4. a. The usual revocable savings trust (grantor
is also trustee)
b. So called trust account that is not a The actual owner(1)
legal or valid trust under state law.
5. Sole Proprietorship The owner(3)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
For this type of account: Give name and EIN of:
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension trust Legal entity(4)
8. Corporate The corporation
9. Association, club, religious, charatible, The organization
educational, or other tax-exempt
organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a
state or local government, school
district, or prison) that receives
agricultural program payments
</TABLE>
(1) The name of the person whose number you furnish should be listed on
the account.
(2) Furnish the minor's social security number.
(3) Show the individual's name. See item 5 or 6. You may also enter your
business name.
(4) Furnish the name of the legal trust, estate, or pension trust (Do not
furnish the identification number of the personal representative or
trustee unless the legal entity itself is not designated in the
account title).
<PAGE> 1
Exhibit 99.8
FOR IMMEDIATE RELEASE
May 26, 1995
Contact: Ellen H. Orsburn
Director, Corporate Communications
(713) 739-5423
COOPER INDUSTRIES SETS THE PRICE
FOR COOPER CAMERON CORPORATION OFFER
HOUSTON, May 26 -- Cooper Industries, Inc. (NYSE-CBE) announced
today that its board of directors has set the terms of its proposed exchange
offer for Cooper Cameron Corporation. Under the terms of the exchange offer,
Cooper shareholders will be offered the opportunity to receive 2.25 shares of
Cooper Cameron Corporation common stock for each share of common stock of
Cooper Industries, up to 9,500,000 Cooper shares (approximately 8.1 percent of
the Cooper shares currently outstanding). Following the exchange offer, Cooper
will hold 14.5 percent of the Cooper Cameron shares. The offer, which is being
made only by means of an offering circular - prospectus, is expected to
commence next week.
Cooper announced last September that it intended to separate its
petroleum and industrial equipment business into an independent, publicly
traded company -- Cooper Cameron Corporation. The Cooper Cameron shares have
been approved for trading on the Nasdaq National Market under the symbol
"CRON."
Cooper Industries is a diversified, worldwide manufacturer of
electrical products, tools and hardware, and automotive products. Cooper
Cameron Corporation manufactures, markets and services machinery and equipment
used in oil and gas exploration, drilling, production, transmission, storage
and processing, as well as compression equipment for industrial applications.
<PAGE> 1
Exhibit 99.9
FOR IMMEDIATE RELEASE
May 31, 1995
Contact: Ellen H. Orsburn
Director, Corporate Communications
(713) 739-5423
COOPER INDUSTRIES COMMENCES COOPER CAMERON CORPORATION EXCHANGE OFFER
HOUSTON, May 31 -- Cooper Industries, Inc. (NYSE-CBE) today commenced the offer
to Cooper shareholders to exchange shares of Cooper common stock for shares of
common stock of Cooper Cameron Corporation, the new company that was
established for the split-off of Cooper's petroleum and industrial equipment
business.
Under the terms of the exchange offer, Cooper shareholders will
receive 2.25 common shares of Cooper Cameron Corporation for each share of
common stock of Cooper Industries, up to 9,500,000 Cooper shares (approximately
8 percent of the Cooper shares currently outstanding). Following the exchange
offer, Cooper will hold 14.5 percent of the Cooper Cameron shares. The
exchange offer is conditioned upon, among other things, a minimum of 8,550,000
shares of Cooper Common Stock being validly tendered and not withdrawn prior to
the expiration of the exchange offer.
The exchange offer, which is being made only by means of a prospectus,
will expire at 5 p.m. (EST) on Friday, June 30, 1995. The expiration date was
determined in order to facilitate the quarter-end closings of both companies.
Upon consummation of the exchange offer, Cooper Cameron Corporation will be
an independent, publicly traded company. The Cooper Cameron shares have been
approved for trading on the Nasdaq National Market under the symbol "CRON."
-more-
<PAGE> 2
Cooper Industries, Inc. Page 2
The dealer manager for the exchange offer is CS First Boston, and the
information agent is Georgeson & Company Inc. The Exchange Agent is First
Chicago Trust Company of New York.
Cooper Industries is a diversified, worldwide manufacturer of
electrical products, tools and hardware, and automotive products. Cooper
Cameron Corporation manufactures, markets and services machinery and equipment
used in oil and gas exploration, drilling, production, transmission, storage
and processing, as well as compression equipment for industrial applications.
# # #
<PAGE> 1
EXHIBIT 99.10
This announcement is neither an offer to exchange nor a solicitation of an
offer to exchange the securities. The Exchange Offer is made solely by
the Offering Circular--Prospectus dated May 30, 1995 and the related
Letter of Transmittal and is not being made to Cooper Industries,
Inc. shareholders in any jurisdiction in which the making of the
Exchange Offer or acceptance thereof would not be in compliance
with the securities, blue sky or other laws of such
jurisdiction. In those jurisdictions where the
securities, blue sky or other laws require the
Exchange Offer to be made by a licensed broker
or dealer, the Exchange Offer shall be deemed
to be made on behalf of Cooper Industries,
Inc. by CS First Boston Corporation ("CS
First Boston") or one or more registered
brokers or dealers licensed under the
laws of such jurisdiction.
Notice of Offer to Exchange
2.25 Shares of Common Stock of
COOPER CAMERON CORPORATION
for each share of Common Stock of
COOPER INDUSTRIES, INC.
up to 9,500,000 shares of Common Stock of
COOPER INDUSTRIES, INC.
***************************************************************************
* *
* THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL *
* EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JUNE 30, 1995, *
* UNLESS THE EXCHANGE OFFER IS EXTENDED. *
* *
***************************************************************************
Cooper Industries, Inc., an Ohio corporation ("Cooper"), hereby offers
to exchange, and Cooper will exchange, 2.25 shares of Common Stock, par value
$.01 per share, of Cooper Cameron Corporation, a Delaware corporation ("CCC"
and such shares, "CCC Common Stock"), for each share of Common Stock, par value
$5.00 per share, of Cooper ("Cooper Common Stock"), up to a maximum of
9,500,000 shares of Cooper Common Stock, that is validly tendered and not
properly withdrawn by 5:00 P.M., New York City time, on Friday, June 30, 1995,
unless the Exchange Offer is extended (the "Expiration Date"), upon the terms
and subject to the conditions set forth in the Offering Circular--Prospectus
dated May 30, 1995 (the "Offering Circular--Prospectus") and in the related
Letter of Transmittal (which together constitute the "Exchange Offer"). Cooper
is pursuing the Exchange Offer because, among other things, it wants to create
a separate public market for the equity of CCC in order to allow the financial
markets to evaluate more effectively the respective values of Cooper's
remaining manufacturing businesses and CCC's petroleum and industrial equipment
business, thereby enhancing overall shareholder value, and it believes that the
Cooper Common Stock currently represents an attractive investment. The Exchange
Offer also provides Cooper's shareholders with an opportunity to adjust, on a
tax-free basis, their investment between Cooper's remaining manufacturing
businesses and CCC's petroleum and industrial equipment business.
<PAGE> 2
THE EXCHANGE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, AT LEAST
8,550,000 SHARES OF COOPER COMMON STOCK (APPROXIMATELY 7% OF THE OUTSTANDING
COOPER COMMON STOCK AND A SUFFICIENT NUMBER OF SHARES TO RESULT IN AT LEAST
90% OF THE CCC COMMON STOCK TO BE DISTRIBUTED BEING EXCHANGED PURSUANT TO
THE EXCHANGE OFFER) BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN ON OR
PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER.
Cooper currently holds 25,000,000 shares of CCC Common Stock, 85.5% of
which will be distributed pursuant to the Exchange Offer. If all such shares
are not exchanged in the Exchange Offer and the Exchange Offer is consummated,
the remaining shares will be distributed by Cooper on a pro rata basis to the
Cooper shareholders remaining after the Exchange Offer. If more than 9,500,000
shares of Cooper Common Stock are validly tendered and not properly withdrawn
on or prior to the Expiration Date, Cooper will accept such shares for exchange
on a pro rata basis, except that any holder of Cooper Common Stock who
beneficially owns an aggregate of fewer than 100 shares of Cooper Common Stock
and who validly tenders and does not properly withdraw all such shares on or
prior to the Expiration Date will not be subject to proration, as described in
the Offering Circular--Prospectus.
NEITHER COOPER NOR THE BOARD OF DIRECTORS OF COOPER MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER WHETHER TO TENDER OR REFRAIN FROM TENDERING
SHARES OF COOPER COMMON STOCK PURSUANT TO THE EXCHANGE OFFER. EACH SHAREHOLDER
MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES OF COOPER COMMON
STOCK PURSUANT TO THE EXCHANGE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
<PAGE> 3
For purposes of the Exchange Offer, Cooper shall be deemed, subject to
the proration provisions of the Exchange Offer, to have accepted for exchange
and exchanged shares of Cooper Common Stock validly tendered for exchange when,
as and if Cooper gives oral or written notice thereof to First Chicago Trust
Company of New York (the "Exchange Agent"). Exchange of shares of Cooper
Common Stock accepted for exchange pursuant to the Exchange Offer will be made
by deposit of tendered shares of Cooper Common Stock with the Exchange Agent,
which will act as agent for the tendering shareholders for the purpose of
receiving shares of CCC Common Stock from Cooper and transmitting such shares
to tendering shareholders. In all cases, exchange of shares of Cooper Common
Stock will be made only after timely receipt by the Exchange Agent of (i)
certificates for such shares of Cooper Common Stock (or timely confirmation of
a book-entry transfer of such Cooper Common Stock into the Exchange Agent's
account at a Book-Entry Transfer Facility (as defined in the Offering
Circular--Prospectus)) and (ii) a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof) or an Agent's Message (as
defined in the Offering Circular--Prospectus) in connection with a book-entry
transfer of shares, together with any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid by Cooper pursuant to
the Exchange Offer, regardless of any delay in making such exchange.
Cooper expressly reserves the right, at any time or from time to time,
in its sole discretion and regardless of whether any of the conditions
specified in the Offering Circular--Prospectus under the caption "The Exchange
Offer--Certain Conditions of the Exchange Offer" have been satisfied, (i) to
extend the period of time during which the Exchange Offer is open by giving
oral or written notice of such extension to the Exchange Agent and by making a
public announcement of such extension or (ii) to amend the Exchange Offer in
any respect by making a public announcement of such amendment.
Tenders of shares of Cooper Common Stock made pursuant to the Exchange
Offer are irrevocable provided that tenders of shares may be withdrawn at any
time prior to the Expiration Date and may also be withdrawn after the
expiration of 40 business days from the commencement of the Exchange Offer,
unless theretofore accepted for exchange. To be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth on the back
cover page of the Offering Circular--Prospectus and must specify the name of
the person who tendered the shares of Cooper Common Stock to be withdrawn and
the number of shares of Cooper Common Stock to be withdrawn precisely as they
appear in the Letter of Transmittal. If the shares of Cooper Common Stock to be
withdrawn have been delivered to the Exchange Agent, a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution (as defined in
the Offering Circular--Prospectus) must be submitted prior to the release of
such shares of Cooper Common Stock (except that such signature guarantee
requirement is not applicable in the case of shares of Cooper Common Stock
tendered by an Eligible Institution). In addition, such notice must specify, in
the case of shares of Cooper Common Stock tendered by delivery of certificates,
the name of the registered holder (if different from that of the tendering
shareholder) and the serial numbers shown on the particular certificates
evidencing the shares of Cooper Common Stock to be withdrawn or, in the case of
shares of Cooper Common Stock tendered by book-entry transfer, the name and
number of the account at the Book-Entry Transfer Facility from which the shares
were transferred. All questions as to the form of documents (including notices
of withdrawal) and the validity, form, eligibility (including time of receipt)
and acceptance for exchange of any tender of shares of Cooper Common Stock will
be determined by Cooper in its sole discretion, which determination will be
final and binding on all tendering shareholders. None of Cooper, the Dealer
Manager, the Exchange Agent, the Information Agent or any other person will be
under any duty to give notification of any defect or irregularity in tenders or
notices of withdrawal or incur any liability for failure to give any such
notification.
<PAGE> 4
The information required to be disclosed by Rule 13e-4(d)(1) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offering Circular--Prospectus and is incorporated
herein by reference.
The Offering Circular--Prospectus, the Letter of Transmittal and other
relevant materials are being mailed to record holders of Cooper Common Stock
and furnished to brokers, dealers, banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the shareholder list of
Cooper or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Cooper Common Stock. THE OFFERING CIRCULAR--PROSPECTUS AND THE RELATED
MATERIALS CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE EXCHANGE OFFER.
Questions and requests for assistance or for additional copies of the
Offering Circular--Prospectus, the Letter of Transmittal and other Exchange
Offer materials should be directed to the Information Agent or the Dealer
Manager, at their respective addresses and telephone numbers as set forth
below, and copies will be furnished promptly at Cooper's expense.
The Information Agent for the Exchange Offer is:
[GEORGESON LOGO]
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Exchange Offer is:
CS FIRST BOSTON
3030 Texas Commerce Tower
Houston, TX 77002-3003
(713) 220-6774 (Call Collect)
or
(212) 909-2000 (Call Collect)
May 31, 1995
<PAGE> 1
Exhibit 99.11
[COOPER LOGO]
May 30, 1995
Dear Shareholder:
It is our pleasure to enclose for your consideration a copy of the Offering
Circular-Prospectus describing the transaction in which Cooper Cameron
Corporation ("Cooper Cameron") will become a separate, publicly-traded company.
The transaction has been structured as an exchange offer so that Cooper
Industries, Inc. ("Cooper") shareholders desiring to invest in Cooper Cameron
may exchange shares of Cooper common stock for shares of Cooper Cameron common
stock on a 1-for-2.25 basis, up to a maximum of 9.5 million shares of Cooper
common stock, resulting in 85.5% of the Cooper Cameron stock being distributed
in the Exchange Offer. All Cooper shareholders are being allowed an opportunity
to participate in this offer.
Cooper has transferred to Cooper Cameron the four former divisions that
comprised the remaining operations of Cooper's Petroleum & Industrial Equipment
segment: Cooper Energy Services, headquartered in Mount Vernon, Ohio; Cooper Oil
Tool, headquartered in Houston, Texas; Cooper Turbocompressor, headquartered in
Buffalo, New York; and Wheeling Machine Products headquartered in Pine Bluff,
Arkansas.
If more than 9.5 million shares of Cooper common stock are tendered for
exchange, shares will be accepted for exchange on a pro rata basis, except that
any holder of less than 100 Cooper shares who validly tenders all such shares
will not be subject to proration. If less than 9.5 million shares of Cooper
Cameron common stock are exchanged in the offer for shares of Cooper common
stock, the remaining shares of Cooper Cameron (up to a maximum of 85.5% shares)
will be distributed by Cooper on a pro rata basis to all holders of record of
Cooper common stock as of a date following the expiration of the offer.
The attached Offering Circular-Prospectus provides you with detailed
information regarding the transaction. We urge you to read it carefully.
NEITHER COOPER NOR THE BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES OF COOPER COMMON
STOCK PURSUANT TO THE EXCHANGE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN
DECISION WHETHER TO TENDER SHARES OF COOPER COMMON STOCK PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
Sincerely,
/s/ Robert Cizik
Robert Cizik
Chairman and Chief Executive
Officer
<PAGE> 1
Exhibit 99.12
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of May 25,
1995, between Cooper Industries, Inc., an Ohio corporation ("Cooper"), and
Cooper Cameron Corporation, a Delaware corporation (the "Company").
In connection with the execution and delivery of the Stock Agreement,
the Company has agreed to enter into this Agreement granting Cooper the
registration rights set forth below with respect to all shares of common stock,
par value $.01 per share ("CCC Common Stock"), of the Company that Cooper will
own after the consummation of the offer being made by Cooper to its
shareholders to exchange shares of Cooper Common Stock for shares of CCC Common
Stock (the "Exchange Offer") and any securities received thereafter in respect
of such shares of CCC Common Stock (collectively, the "Cooper Securities").
Accordingly, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties agree as follows:
1. Registration Rights.
(a) Demand Registration. Subject to Section 1(d), if Cooper
shall, at any time or from time to time prior to the fifth anniversary of the
execution of this Agreement, request the Company in writing to register under
the Securities Act of 1933, as amended (the "Act"), all or part of the Cooper
Securities, the Company shall as expeditiously as reasonably possible (but in
any event not later than 45 days after receipt of a request to file a demand
registration) prepare and file, and use its best efforts to cause to become
effective as soon as practicable a registration statement under the Act to
effect the offering of the Cooper Securities specified in such request in an
underwritten public offering. Notwithstanding the foregoing, the Company shall
be entitled to defer for a reasonable period of time, but not in excess of 60
days, the filing of any registration statement otherwise required to be prepared
and filed by it under this Section 1(a) if (i) (A) the Company is at such time
conducting or about to conduct an underwritten public offering of its securities
for its own account and the Board of Directors of the Company determines in good
faith that such offering by the Company would be materially adversely affected
by such registration requested by Cooper, (B) the Company is pursuing an
acquisition, merger, reorganization, disposition or other similar transaction
and the Board of Directors of the Company determines in good faith that the
Company's ability to pursue or consummate such a transaction would be materially
adversely affected by such registration requested by Cooper, or (C) the Company
is in possession of material nonpublic information concerning it or its business
and affairs and the Board of Directors of the Company determines in good faith
that the prompt public disclosure of such information in a registration
statement would have a material adverse effect on the Company; and (ii) the
Company so notifies Cooper within five days after Cooper so requests. The
Company's right to defer the filing of a registration statement pursuant to the
provisions of the preceding sentence may not be exercised more than once during
any 12 month period. Cooper will select and obtain the investment banker or
investment bankers and manager or managers that will administer the underwritten
offerings made pursuant to this Section 1(a). In connection with any such
underwritten offering, the Company shall enter into underwriting agreements
-1-
<PAGE> 2
with the underwriter(s) of such offering, which agreements shall contain such
representations and warranties by the Company, and such other terms,
conditions, indemnities and contribution as are at the time customarily
contained in underwriting agreements for similar offerings by such
underwriters. Cooper may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters also be made to and for the
benefit of Cooper, and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement also be
conditions precedent to the obligations of Cooper.
(b) Piggyback Registration. If at any time or from time to time
prior to the fifth anniversary of the execution of this Agreement, the Company
shall propose to register any common equity securities for public sale under the
Act, then the Company shall give Cooper prompt notice of the proposed
registration and shall include in such registration on the same terms and
conditions as the other securities included in such registration such number of
Cooper Securities as Cooper shall request within 15 business days after the
giving of such notice; provided, however, that the Company may at any time prior
to the effectiveness of any such registration statement, in its sole discretion
and without the consent of Cooper, abandon the proposed offering in which Cooper
had requested to participate. Notwithstanding the foregoing, (i) the Company
shall not be obligated to include such Cooper Securities in such offering if the
Company is advised by the managing underwriter or underwriters of such offering
that such offering would in its or their good faith judgment be materially
adversely affected by such inclusion; provided, however, that the Company shall
in any case be obligated to include such number or amount of Cooper Securities
in such offering, if any, as such underwriter or underwriters shall determine
will not materially adversely affect such offering, and (ii) the Company shall
not be obligated to effect any registration of such Cooper Securities incidental
to the registration by the Company of any of its securities in connection with
mergers, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other director or employee benefit plans.
Cooper shall be entitled to withdraw any or all of its Cooper Securities
included in a registration subject to this Section 1(b) at any time before its
agreement to sell such securities. As a condition to pursuing its rights under
this Section 1(b), Cooper agrees to enter into customary agreements (including
an underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the sale of the Cooper
Securities.
(c) Limitation on Other Securities to be Registered. In case of
any registration, offering or sale contemplated by Section 1(a), the Company
shall not, without the consent of Cooper, include in such registration, offering
or sale any securities other than those beneficially owned by Cooper. In case of
any registration, offering or sale contemplated by Section 1(b), the Company may
include in such registration, offering or sale securities other than those being
offered by the Company and Cooper; provided that, if the amount of CCC Common
Stock or other securities to be sold by Cooper is to be reduced because of the
views of the managing underwriter or underwriters, then the securities, if any,
to be sold by Cooper and all other holders of securities participating in such
offering shall be reduced by allocating the
-2-
<PAGE> 3
securities to be sold by Cooper and such other holders in proportion to the
number of securities of the class proposed to be sold in such offering then
owned by Cooper and such holders.
(d) Number of Demand Registrations. The Company shall be
obligated to effect up to two registrations pursuant to Section 1(a), provided
that the Company shall not be obligated to effect more than one such
registration during any period of 12 consecutive months. Notwithstanding the
foregoing, the Company shall not be deemed to have effected a registration
pursuant to Section 1(a) in connection with any registration with respect to
which Cooper has withdrawn or cancelled its demand registration request prior
to the sale of Cooper Securities pursuant to such registration if Cooper has
learned, prior to such withdrawal or cancellation, of a material adverse change
in the condition, business or prospects of the Company from that known by
Cooper at the time of its request.
2. Covenants of the Company. In connection with any offering of Cooper
Securities pursuant to this Agreement, the Company shall:
(a) furnish to Cooper and to each managing underwriter, if any,
a reasonable time in advance of their filing with the Securities and Exchange
Commission (the "SEC") any registration statement, amendment or supplement
thereto, and any prospectus used in connection therewith, which documents will
be subject to the reasonable review of Cooper and such underwriter; and furnish
a copy of any and all transmittal letters or other correspondence with the SEC
or any other governmental agency or self- regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering of Cooper Securities;
(b) furnish to Cooper and each managing underwriter, if any,
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein) and the prospectus included in such
registration statement (including each preliminary prospectus and prospectus
supplement) as Cooper or such underwriter may reasonably request in order to
facilitate the sale of the Cooper Securities;
(c) after the filing of the registration statement promptly
notify Cooper of any stop order issued or, to the knowledge of the Company,
threatened to be issued by the SEC and promptly take all necessary actions
required to prevent the entry of such stop order or to remove it if entered;
(d) use its best efforts to qualify such Cooper Securities for
offer and sale under the securities, "blue sky" or similar laws of such
jurisdictions (including any foreign country or any political subdivision
thereof) as Cooper or any underwriter shall reasonably request and use its best
efforts to obtain all appropriate registrations, permits and consents required
in connection therewith, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified, or to subject
-3-
<PAGE> 4
itself to taxation in any such jurisdiction, or to consent to general service
of process in any such jurisdiction;
(e) furnish to Cooper and to each managing underwriter, if any,
addressed to each of them, an opinion of counsel for the Company, dated the date
of the closing of the offering of Cooper Securities, and a "cold comfort" letter
or letters signed by the Company's independent public accountants, each in
reasonable and customary form and covering such matters of the type customarily
covered by opinions or comfort letters delivered to such parties;
(f) furnish unlegended certificates representing ownership of
the Cooper Securities being sold in such denominations as shall be requested by
Cooper or the lead underwriter;
(g) promptly inform Cooper (i) in the case of any offering of
Cooper Securities in respect of which a registration statement is filed under
the Act, of the date on which such registration statement or any post-effective
amendment thereto becomes effective and if applicable, of the date of filing a
Rule 430A prospectus and (ii) of any request by the SEC, any securities
exchange, government agency, self-regulatory body or other body having
jurisdiction for any amendment of or supplement to any registration statement or
preliminary prospectus or prospectus included therein or any offering memorandum
or other offering document relating to such offering;
(h) until the earlier of (i) such time as all of the Cooper
Securities being offered have been disposed of in accordance with the intended
method of disposition by Cooper set forth in the registration statement or other
offering document (and the expiration of any prospectus delivery requirements in
connection therewith) or (ii) the expiration of 90 days (or such longer period
set forth in any underwriting agreement relating to the offering of the Cooper
Securities) after such registration statement or other offering document becomes
effective; provided, however, that such 90-day (or longer) period shall be
extended for such number of days that equals the number of days elapsing from
(x) the date the notice contemplated by Section 2(j) hereof is given by the
Company to (y) the date on which the Company delivers to Cooper and each
managing underwriter, if any, the supplement or amendment contemplated by such
Section 2(j), keep effective and maintain any registration, qualification or
approval obtained in connection with the offering of the Cooper Securities, and
amend or supplement the registration statement or prospectus or other offering
document used in connection therewith to the extent necessary in order to comply
with applicable securities laws;
(i) use its best efforts to have such Cooper Securities listed
on any domestic and foreign securities exchanges on which such securities are
then listed;
(j) as promptly as practicable notify Cooper, at any time when
a prospectus relating to the sale of the Cooper Securities is required by law to
be delivered in connection with sales by an underwriter or dealer, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
-4-
<PAGE> 5
Cooper Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and as promptly as practicable make
available to Cooper and to each managing underwriter, if any, any such
supplement or amendment; in the event the Company shall give such notice, the
Company shall extend the period during which such registration statement shall
be maintained effective as provided in Section 2(h) hereof by the number of
days during the period from and including the date of the giving of such notice
to the date when the Company shall make available to Cooper such supplemented
or amended prospectus;
(k) make available for inspection during the normal business
hours of the Company by any seller of Cooper Securities, any underwriter
participating in such offering, and any attorney, accountant or other agent
retained by any such seller or underwriter in connection with the sale of the
Cooper Securities (collectively, the "Inspectors"), all relevant financial and
other records, pertinent corporate documents and properties of the Company as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such Inspector in
connection with such registration statement; and
(l) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the sale of the Cooper Securities.
3. Restrictions on Public Sale by the Company and Others. The Company
agrees:
(a) not to effect any public sale or distribution of any
securities during the period commencing 14 days prior to filing of a
registration statement pursuant to Section 1(a) hereof through the 90-day period
beginning on the date that the registration statement filed pursuant to Section
1(a) hereof becomes effective; and
(b) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any privately
placed securities shall contain a provision under which holders of such
privately placed securities agree, to the extent not inconsistent with
applicable laws, not to effect any public sale or distribution of any such
securities (excluding any sale in accordance with Rule 144 under the Act) during
the period commencing 14 days prior to filing of a registration statement
pursuant to Section 1(a) hereof through the 90-day period beginning on the date
that the registration statement filed pursuant to Section 1(a) hereof becomes
effective.
4. Certain Cooper Obligations. Cooper agrees:
(a) that upon receipt of any notice from the Company of the
happening of any event described in Section 2(j), it will forthwith discontinue
disposition of Cooper Securities until it receives copies of the
-5-
<PAGE> 6
supplemented or amended prospectus contemplated by Section 2(j) or until it is
advised by the Company that the use of the prospectus may be resumed; and
(b) prior to the fifth anniversary of this Agreement, not to
effect any public sale or distribution of any Cooper Securities during the
period commencing 14 days prior to the filing of, and through the 90-day period
beginning on the effective date of, a registration statement filed by the
Company relating to an underwritten public offering of CCC Common Stock for the
account of the Company, but only if and to the extent requested (with reasonable
prior notice) by the managing underwriter or underwriters in such underwritten
public offering; provided, however, that during such period Cooper may effect a
public sale or distribution of Cooper Securities (i) as part of such offering to
the extent provided for herein or (i) in accordance with Rule 144 under the Act.
(c) not to sell or otherwise dispose of any Cooper Securities
for a period of 120 days after the date of the Offering Circular - Prospectus
for the Exchange Offer.
5. Expenses.
All expenses incurred in complying with Sections 1(a) or 1(b)
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to any filing with the National Association of
Securities Dealers, Inc. or listing on any domestic or foreign securities
exchange), accounting expenses, fees and expenses of complying with securities
and blue sky laws (including those of counsel retained to effect such
compliance) and printing expenses (collectively "Registration Expenses"), shall
be paid by the Company, except that (i) Cooper shall pay all underwriting
discounts and commissions attributable to the sale of the Cooper Securities and
(ii) Cooper shall pay the fees and expenses of its separate counsel.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless Cooper, its officers, directors and agents, each
underwriter of Cooper Securities, and each person, if any, who controls any of
the foregoing persons within the meaning of either Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
arising from or caused by (x) any untrue statement or alleged untrue statement
of a material fact contained in any registration statement or prospectus
relating to the Cooper Securities (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (y) any violation or alleged violation by the
Company of the Act, any blue sky laws, securities laws or other applicable laws
of any state or country in which the Cooper Securities are offered and relating
to action or inaction required of the Company in connection with such offering;
and will reimburse each such person for any
-6-
<PAGE> 7
legal or other out-of-pocket expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage or liability (or any
proceeding in respect thereof), subject to the provisions of Section 6(c),
except that the indemnification agreement contained in this Section shall not
apply to such losses, claims, damages or liabilities that are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon and in conformity with information furnished in writing to the Company by
or on behalf of Cooper expressly for use therein.
(b) Indemnification by Cooper. Cooper agrees to indemnify and
hold harmless the Company, its officers and directors, and each person, if any,
who controls the Company within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the indemnity made pursuant
to clause (x) of Section 6(a) above from the Company to Cooper, but only with
reference to information furnished in writing by or on behalf of Cooper
expressly for use in any registration statement or prospectus relating to the
Cooper Securities, or any amendment or supplement thereto, or any preliminary
prospectus. In no event shall the liability of Cooper hereunder be greater in
amount than the dollar amount of the proceeds received by Cooper upon the sale
of Cooper Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 6(a) or 6(b), such person (the "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Party") in writing, provided that the omission to so notify the Indemnifying
Party will not relieve the Indemnifying Party of any liability it may have under
this Agreement or otherwise except to the extent of any loss, damage, liability
or expense arising from such omission. The Indemnifying Party, upon the request
of the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel, (ii) the
Indemnifying Party shall have failed to comply with its obligations under the
preceding sentence or (iii) in the reasonable judgment of the Indemnified Party
actual or potential differing interests exist between the Indemnifying Party and
the Indemnified Party. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, which consent
shall not be unreasonably withheld. The Indemnifying Party shall not agree to
any settlement as the result of which any remedy or relief, other than monetary
damages for which the Indemnifying Party shall be fully responsible, shall be
applied to or against an Indemnified Party without the prior written consent of
such Indemnified Party.
-7-
<PAGE> 8
(d) Contribution. If the indemnification provided for in this
Section 6 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 6(c), any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding. No party shall be liable for contribution with respect to any
action or claim settled without its written consent, which consent shall not be
unreasonably withheld.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable consideration referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
7. Available Information. The Company shall take such measures and file
such information, documents and reports as shall be required by the SEC as a
condition to the availability of Rule 144 and Rule 144A, or any successor
provisions.
8. Transfer of Rights.
(a) Subject to paragraph (b) below, the rights of Cooper under
this Agreement with respect to any Cooper Securities may be transferred to (i)
any affiliate of Cooper or (ii) to any one transferee of such Cooper Securities
if such transferee acquires from Cooper all of the Cooper Securities then held
by Cooper. Any transfer of registration rights pursuant to this Section shall be
effective upon receipt by the Company of written notice from Cooper stating the
name and address of any transferee and identifying the Cooper Securities with
respect to which the rights under this Agreement are being transferred.
(b) The rights of a transferee under paragraph (a) above shall
be the same rights granted to Cooper under this Agreement. In connection with
any such transfer, the term "Cooper" as used herein shall, where appropriate
-8-
<PAGE> 9
to assign the rights and obligations of Cooper hereunder to such transferee, be
deemed to refer to the transferee holder of the Cooper Securities. Upon the
request of Cooper, the Company shall execute a Registration Rights Agreement
with such transferee or a proposed transferee essentially the same as this
Agreement.
9. Miscellaneous.
(a) Provisions of Information. Cooper shall, and shall cause
its officers, directors, employees and agents to, complete and execute all such
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents as the Company shall reasonably request in connection with any
registration pursuant to this Agreement.
(b) Injunctions. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. Therefore, the parties
hereto shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court having jurisdiction, such remedy being in
addition to any other remedy to which they may be entitled at law or in equity.
(c) Severability. If any term or provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void, or unenforceable,
the remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
(d) Further Assurances. Subject to the specific terms of this
Agreement, each of Cooper and the Company shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.
(e) Entire Agreement; Modification. This Agreement contains the
entire understanding of the parties with respect to the subject matter hereof.
This Agreement may be modified only by a written instrument duly executed by or
on behalf of each party. No breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing or on
behalf of the party who might assert such breach.
(f) Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
-9-
<PAGE> 10
(g) Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be in writing and
shall be deemed to have been validly given, made or served, when delivered
personally against receipt or sent by telex or facsimile (confirmed by first
class mail), on the next business day at the place of receipt when sent by
Federal Express or similar overnight delivery service or on the third business
day at the place of receipt when sent by certified mail, postage prepaid, in any
case as follows:
(i) If to Cooper, to
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Vice President, Administration and
Corporate Secretary
Telecopy: 713-739-5886
(ii) If to the Company, to
13013 NW Freeway
Houston, Texas 77040
Attention: President
Telecopy: 713-939-2938
or such other address as any party may, from time to time, designate in a
written notice in a like manner.
(h) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas without
giving effect to the principles of conflicts of law thereof.
(i) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by and against the
successors and assigns of the parties hereto. Except as provided herein, the
parties may not assign their rights under this Agreement and the Company may not
delegate its obligations under this Agreement. Any attempted assignment or
delegation prohibited hereby shall be void.
(j) Parties in Interest. Except as otherwise specifically
provided herein, nothing in this Agreement expressed or implied is intended or
shall be construed to confer any right or benefit to any person, firm or
corporation other than Cooper and the Company and their respective successors
and permitted assigns.
-10-
<PAGE> 11
IN WITNESS WHEREOF, Cooper and the Company have caused this Agreement
to be duly executed as of the date first above written.
COOPER INDUSTRIES, INC.
By:
-------------------------------------
Title:
COOPER CAMERON CORPORATION
By:
-------------------------------------
Title:
-11-
