<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 2000
REGISTRATION NO. 333-
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--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INTERNATIONAL RECTIFIER CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-1528961
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
233 KANSAS STREET, EL SEGUNDO, CA 90245, (310) 726-8000
(Address, including zip code, and telephone number, including
area code, of Registrant's Principal Executive Offices)
L. MICHAEL RUSSELL, ESQ.
EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
INTERNATIONAL RECTIFIER CORPORATION
233 KANSAS STREET, EL SEGUNDO, CA 90245, (310) 726-8000
(Name and address, including zip code, and telephone number, including area
code, of Agent for Service)
------------------------------
COPIES TO:
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<S> <C>
KENDALL R. BISHOP, ESQ. BRYANT B. EDWARDS, ESQ.
O'Melveny & Myers LLP Latham & Watkins
1999 Avenue of the Stars, Suite 700 633 West Fifth Street, Suite 4000
Los Angeles, California 90067 Los Angeles, California 90071
Telephone: (310) 246-6780 Telephone: (213) 485-1234
Facsimile: (310) 246-6779 Facsimile: (213) 891-8763
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the registration statement is declared effective.
------------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box, and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
under the Securities Act please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
4 1/4% Convertible Subordinated Notes
Due 2007 $550,000,000 100% $550,000,000 $145,200
Common Stock, $1.00 par value (2) 7,438,967 Shares (3) -- -- --
</TABLE>
(1) Equals the aggregate principal amount of the notes being registered.
(2) Includes rights under the registrant's Shareholder Rights Plan.
(3) Represents the number of shares of common stock issuable upon conversion of
the notes at a conversion price of $73.935 per share. Pursuant to Rule 416
under the Securities Act, the registrant is also registering such
indeterminate number of additional shares of common stock, including the
associated rights under the registrant's Shareholder Rights Plan, as may be
issued from time to time upon conversion of the notes as a result of the
antidilution provisions relating to the notes. No additional consideration
will be received for the common stock or the associated rights under the
registrant's Shareholder Rights Plan, and therefore no registration fee is
required for these shares pursuant to Rule 457(i).
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 16, 2000
PROSPECTUS
[LOGO]
INTERNATIONAL RECTIFIER CORPORATION
$550,000,000 4 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2007
AND
7,438,967 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
The selling holders listed under the caption "Selling Holders" beginning on
page 33 may offer and resell for each of their own accounts up to an aggregate
of $550,000,000 4 1/4% Convertible Subordinated Notes Due 2007 and the 7,438,967
shares of our common stock issuable upon conversion of the notes. In July 2000,
we issued and sold these notes to the initial purchasers in a private offering.
For a more detailed description of the plan of distribution, see "Plan of
Distribution," beginning on page 42.
We will pay interest on the notes on January 15 and July 15 of each year,
commencing on January 15, 2001. The notes will mature on July 15, 2007. The
notes are subordinated to all of our existing and future senior indebtedness.
Holders may convert the notes into shares of our common stock at any time on or
before July 15, 2007, at a conversion price of $73.935 per share, subject to
adjustment in certain events. On or after July 18, 2003, we may redeem any of
the notes at the redemption prices set forth in this prospectus, plus accrued
interest. For a more detailed description of the notes, see "Description of the
Notes" beginning on page 15.
Our common stock is listed on The New York Stock Exchange ("NYSE") and the
Pacific Exchange under the symbol "IRF." On October 13, 2000, the last reported
sale price of our common stock on the NYSE was $41 1/8 per share.
We have not applied for listing of the notes on any securities exchange or
for quotation through any automated quotation system. The notes are eligible for
trading in the Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market of the NASDAQ Stock Market.
The notes and the common stock issuable upon conversion of the notes may be
offered for sale from time to time by the selling holders in brokerage
transactions at prevailing market prices, in transactions at negotiated prices
or otherwise. No representation is made that any shares of common stock will or
will not be offered for sale. We will not receive any proceeds from the sale by
the selling holders of the notes or shares of common stock issuable upon
conversion of the notes. We will pay all costs, expenses and fees in connection
with the registration of the notes and the common stock, except that all selling
commissions and fees and other expenses incurred by the selling holders will be
borne by such holders.
The selling holders and the brokers who sell our shares of common stock may
be "underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, as amended. In addition, any profits realized by the selling holders or
such brokers on the sale of any shares of common stock may constitute
underwriting commissions.
INVESTING IN THE NOTES OR OUR COMMON STOCK ISSUABLE UPON CONVERSION OF THE
NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C>
DOCUMENTS INCORPORATED BY REFERENCE......................... 1
FORWARD-LOOKING STATEMENTS.................................. 2
SUMMARY..................................................... 3
RISK FACTORS................................................ 6
RATIO OF EARNINGS TO FIXED CHARGES.......................... 14
USE OF PROCEEDS............................................. 14
DESCRIPTION OF THE NOTES.................................... 15
DESCRIPTION OF CAPITAL STOCK................................ 26
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................... 28
SELLING HOLDERS............................................. 33
PLAN OF DISTRIBUTION........................................ 42
LEGAL MATTERS............................................... 43
EXPERTS..................................................... 43
AVAILABLE INFORMATION....................................... 43
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
We incorporate by reference into this prospectus the documents listed below
and any future filings we make with the Securities and Exchange Commission,
referred to herein as the SEC, under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, including any filings after the
date of this prospectus, until the selling holders have sold all of the notes
and the common stock issuable upon conversion of the notes to which this
prospectus relates or the offering is otherwise terminated:
- our Annual Report on Form 10-K for the fiscal year ended June 30, 2000,
filed with the SEC on September 27, 2000;
- our Current Report on Form 8-K, filed with the SEC on October 10, 2000;
and
- the description of our common stock contained in our Registration
Statement on Form 8-A filed with the SEC on June 17, 1985 (which
incorporates by reference the description of our common stock contained in
our Registration Statement on Form S-3 filed with the SEC on June 14,
1985) and the description of our share purchase rights contained in our
Registration Statement on Form 8-A filed with the SEC on August 21, 1996,
and any amendment or report filed for the purpose of updating such
descriptions.
The information incorporated by reference is an important part of this
prospectus. The information incorporated by reference is considered to be part
of this prospectus and any later information that we file with the SEC will
automatically update and supersede this information.
You may request a copy of any or all of the documents referred to above
other than exhibits to such documents that are not specifically incorporated by
reference therein. Written or telephone requests should be directed to L.
Michael Russell, Executive Vice President, General Counsel and Secretary,
International Rectifier Corporation, 233 Kansas Street, El Segundo, California
90245, telephone (310) 726-8268.
1
<PAGE>
FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains and
incorporates by reference statements relating to our future business and/or
results, including, without limitation, the statements under the captions
"Summary" and "Risk Factors" contained in this prospectus and the statements
under the captions "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" incorporated by reference from our
Annual Report on Form 10-K for the fiscal year ended June 30, 2000. These
statements include certain projections and business trends which are
"forward-looking" within the meaning of the Private Securities Litigation Reform
Act of 1995. You can identify these statements by the use of words like "may,"
"will," "could," "should," "project," "believe," "anticipate," "expect," "plan,"
"estimate," "forecast," "potential," "intend," "continue" and variations of
these words or comparable words. Forward-looking statements do not guarantee
future performance and involve risks and uncertainties. Actual results may
differ materially from projected results as a result of certain risks and
uncertainties. These risks and uncertainties include, without limitation, those
described under "Risk Factors" and those detailed from time to time in our
filings with the SEC. These forward-looking statements are made only as of the
date of this prospectus. We do not undertake to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.
In making an investment decision, you must rely on your own examination of
International Rectifier Corporation and the terms of this offering, including
the merits and risks involved. These notes have not been recommended by any
federal or state securities commission or regulatory authority. Furthermore,
these authorities have not confirmed the accuracy or determined the adequacy of
this document. Any representation to the contrary is a criminal offense. The
notes and shares of common stock issuable upon conversion of the notes may not
be transferred or resold except as permitted under the Securities Act of 1933,
as amended, and applicable state securities laws. You should be aware that you
may be required to bear the financial risks of this investment for an indefinite
period of time.
Neither we, the selling holders, nor any of our respective representatives,
make any representation to you as to the legality of an investment in the notes.
You should not construe the contents of this prospectus to be legal, business or
tax advice. You should consult with your own advisors as to the legal, tax,
business, financial and related aspects of investing in the notes.
All trademarks and tradenames appearing in this prospectus are owned by
their respective holders.
2
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS, AND IT MAY
NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD READ THE
FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED INFORMATION REGARDING OUR
COMPANY AND THE NOTES BEING SOLD BY THE SELLING HOLDERS, INCLUDING "RISK
FACTORS" AND OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES,
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS FROM OUR ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
We are a leading designer, manufacturer and marketer of power semiconductors
and the leading worldwide supplier of a type of power semiconductor called a
MOSFET, a metal oxide semiconductor field effect transistor. Power
semiconductors perform a power management function by converting electricity
into a form more usable by electrical products. The technology advancements of
power semiconductors increase system efficiency, allow more compact
end-products, improve features and functionality and extend battery life. Our
products are used in a range of end-markets, including communications, consumer
electronics, information technology, automotive, industrial and government/
space.
We use our proprietary technology, comprehensive knowledge of power
management, and low cost manufacturing platforms to offer what we believe is one
of the industry's most advanced and competitive lines of power semiconductors.
Our products are broadly divided among three product categories:
- POWER INTEGRATED CIRCUITS AND ADVANCED CIRCUIT DEVICES. A Power Integrated
Circuit, or Power IC, is a semiconductor that integrates logic and power
management functions on the same chip to optimize system performance.
Advanced Circuit Devices are chipsets, multichip modules and advanced
performance discrete devices that address power management requirements in
more demanding applications. Our Power ICs and Advanced Circuit Devices
allow manufacturers to reduce the size, extend the battery life and
enhance the functionality of electronic devices. These products provide
application specific power management solutions for wireless and wireline
communication devices, Internet infrastructure equipment and appliances,
video game stations, portable electronics, including personal digital
assistants and notebook computers, as well as automotive systems and motor
control devices.
- POWER SYSTEMS. Power Systems combine power semiconductors with other power
management components in modules that improve power efficiency, provide a
cost-effective alternative to custom analog designs and enable customers
to introduce new products more quickly. We are focusing on Power Systems
for automotive electronics, including electric power steering and
integrated starter/alternator motors, as well as motor control
applications, including refrigeration and air conditioning.
- POWER COMPONENTS. Power Components are discrete devices used in general
power management applications. These include power MOSFETs, insulated gate
bipolar transistors, referred to as IGBTs, rectifiers, diodes and
thyristors. Power MOSFETs and IGBTs rapidly and efficiently switch
electricity on and off in order to supply power in a form that can be
formatted to the specific requirements of a circuit. Our power components
are used in virtually all of our end-markets.
We were founded in 1947 as a California corporation and reincorporated in
Delaware in 1979. Our principal executive offices are located at 233 Kansas
Street, El Segundo, California 90245 and our telephone number is
(310) 726-8000. Our website can be accessed at www.irf.com. Information on our
website does not constitute a part of this prospectus.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered............. Up to $550,000,000 principal amount of 4 1/4% Convertible
Subordinated Notes due 2007 and 7,438,967 shares of common
stock issuable upon conversion of the notes to be sold by
the selling holders listed under the caption "Selling
Holders" beginning on page 33.
Interest....................... 4 1/4% per annum on the principal amount, payable
semi-annually in arrears in cash on January 15 and July 15
of each year, beginning January 15, 2001.
Conversion..................... You may convert each note into our common stock at any time
on or before July 15, 2007, at a conversion price of $73.935
per share, subject to adjustment if certain events affecting
our common stock occur. See "Description of the
Notes--Conversion of Notes."
Subordination.................. The notes are subordinated to all of our existing and future
senior indebtedness and to all debt and other liabilities of
our subsidiaries. As of June 30, 2000, we had $4.6 million
of senior indebtedness outstanding and our subsidiaries had
$14.1 million of other liabilities outstanding. Neither we
nor our subsidiaries are prohibited from incurring debt,
including senior indebtedness, under the indenture.
Optional Redemption............ We may redeem any of the notes on or after July 18, 2003, by
giving you at least 30 days' notice. We may redeem the notes
either in whole or in part at the redemption prices set
forth herein, together with accrued and unpaid interest.
Fundamental Change............. If a fundamental change (as described under "Description of
the Notes--Redemption at Option of the Holder") occurs on or
before July 15, 2007, you may require us to purchase all or
part of your notes at a redemption price equal to 100% of
the outstanding principal amount of the notes being
redeemed, plus accrued and unpaid interest.
Use of Proceeds................ We will not receive any proceeds from the sale by the
selling holders of the notes or shares of common stock
issuable upon conversion of the notes.
Registration Rights............ Under the registration rights agreement we entered into with
the initial purchasers of the notes, we agreed to register
the notes and the common stock issuable upon conversion of
the notes, subject to certain conditions. For a discussion
of these conditions and the circumstances under which we are
required to pay liquidated damages to the holders of the
notes upon our failure to fulfill our registration
obligations, see "Description of the Notes--Registration
Rights of the Noteholders."
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JUNE 30,
----------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges...................... 8.3x 3.1x 2.4x -- 12.4x
The ratio of earnings to fixed charges is calculated
as (i) the sum of earnings before taxes from
continuing operations plus fixed charges and
amortization of capitalized interest less interest
capitalized, divided by (ii) fixed charges, which
include amortization of expenses related to
indebtedness, interest within rental expense and
interest expensed and capitalized. In the fiscal
year ended June 30, 1997, earnings were not adequate
to cover fixed charges by $54.6 million.
New York Stock Exchange
Symbol....................... IRF
</TABLE>
5
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR NOTES, YOU SHOULD CAREFULLY CONSIDER AND EVALUATE
ALL OF THE INFORMATION CONTAINED IN THIS PROSPECTUS AND THE INFORMATION
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, INCLUDING THE RISKS DESCRIBED
BELOW. ANY OF THESE RISKS COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, WHICH IN TURN COULD MATERIALLY
AND ADVERSELY AFFECT THE PRICE OF THE NOTES AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THE NOTES.
RISKS RELATED TO OUR BUSINESS
DOWNTURNS IN THE HIGHLY CYCLICAL SEMICONDUCTOR INDUSTRY OR CHANGES IN
END-MARKET DEMAND COULD AFFECT OUR OPERATING RESULTS AND THE VALUE OF OUR
BUSINESS.
The semiconductor industry is highly cyclical and the value of our business
may decline during the "down" portion of these cycles. During recent years, we,
as well as many others in our industry, experienced significant declines in the
pricing of our products. The pricing pressure in the semiconductor industry in
recent years was primarily due to the Asian currency crisis, industry-wide
excess manufacturing capacity and weak economic growth outside the United
States. Although markets for semiconductors have improved, we cannot assure you
that they will continue to improve or that our markets will not experience
renewed, possibly more severe and prolonged, downturns in the future. In
addition, we may experience significant changes in our profitability as a result
of variations in sales, seasonality, changes in product mix, price competition
for orders and the costs associated with the introduction of new products. The
markets for our products depend on continued demand in the communications,
consumer electronics, information technology, automotive, industrial and
government/ space markets, and these end-markets may experience changes in
demand that could adversely affect our operating results and financial
condition.
THE SEMICONDUCTOR BUSINESS IS HIGHLY COMPETITIVE AND INCREASED COMPETITION
COULD REDUCE THE VALUE OF AN INVESTMENT IN OUR COMPANY.
The semiconductor industry, including the segment in which we do business,
is highly competitive. Competition is based on price, product performance,
product availability, quality, reliability and customer service. In addition,
even in strong markets, price pressures may emerge as competitors attempt to
gain a greater market share by lowering prices. We compete in various markets
with companies of various sizes, many of which are larger and have greater
financial and other resources than we have, and thus they may be better able to
pursue acquisition candidates and to withstand adverse economic or market
conditions. In addition, companies not currently in direct competition with us
may introduce competing products in the future.
NEW TECHNOLOGIES COULD RESULT IN THE DEVELOPMENT OF NEW PRODUCTS AND A
DECREASE IN DEMAND FOR OUR PRODUCTS, AND WE MAY NOT BE ABLE TO DEVELOP NEW
PRODUCTS TO SATISFY CHANGES IN DEMAND.
Our failure to develop new technologies or react to changes in existing
technologies could materially delay our development of new products, which could
result in decreased revenues and a loss of market share to our competitors.
Rapidly changing technologies and industry standards, along with frequent new
product introductions, characterize the semiconductor industry. Hence, we must
devote significant resources to research and development. Our financial
performance depends on our ability to design, develop, manufacture, assemble,
test, market and support new products and enhancements on a timely and
cost-effective basis. We cannot assure you that we will successfully identify
new product opportunities and develop and bring new products to market in a
timely and cost-effective manner, or that products or technologies developed by
others will not render our products or technologies obsolete or noncompetitive.
A fundamental shift in technologies in our product markets could have a material
adverse effect on our competitive position within the industry. In addition, to
remain competitive, we
6
<PAGE>
must continue to reduce die sizes and improve manufacturing yields. We cannot
assure you that we can accomplish these goals.
OUR INTERNATIONAL OPERATIONS EXPOSE US TO MATERIAL RISKS.
In fiscal 2000, our product sales by region, based on the location of the
customer, were approximately 36% in North America, 24% in Europe and 40% in
Asia, which includes Japan and Asia Pacific. We expect revenues from foreign
markets to continue to represent a significant portion of total revenues. We
maintain or contract with significant operations in the Philippines, Great
Britain, Italy, Malaysia, China, Mexico, South Korea, India and Taiwan. Among
others, the following risks are inherent in doing business internationally:
- changes in, or impositions of, legislative or regulatory requirements,
including tax laws in the United States and in the countries in which we
manufacture or sell our products;
- trade restrictions;
- transportation delays;
- work stoppages;
- economic and political instability; and
- foreign currency fluctuations.
In addition, the laws of certain foreign countries may not protect our
products or intellectual property rights to the same extent as do U.S. laws.
Therefore, the risk of piracy of our technology and products may be greater in
these foreign countries. Although we have not experienced any material adverse
effect on our operating results as a result of these and other factors, we
cannot assure you that such factors will not have a material adverse effect on
our financial condition and operating results in the future.
DELAYS IN BEGINNING PRODUCTION AT NEW FACILITIES, IMPLEMENTING NEW
PRODUCTION TECHNIQUES OR IN RESOLVING PROBLEMS ASSOCIATED WITH TECHNICAL
EQUIPMENT MALFUNCTIONS COULD ADVERSELY AFFECT OUR MANUFACTURING EFFICIENCIES.
Our manufacturing efficiency will be an important factor in our future
profitability, and we cannot assure you that we will be able to maintain or
increase our manufacturing efficiency to the same extent as our competitors. Our
manufacturing processes are highly complex, require advanced and costly
equipment and are continuously being modified in an effort to improve yields and
product performance. Impurities, defects or other difficulties in the
manufacturing process can lower yields.
In addition, as is common in the semiconductor industry, we have from time
to time experienced difficulty in beginning production at new facilities or in
effecting transitions to new manufacturing processes. As a consequence, we have
experienced delays in product deliveries and reduced yields. We may experience
manufacturing problems in achieving acceptable yields or experience product
delivery delays in the future as a result of, among other things, capacity
constraints, construction delays, upgrading or expanding existing facilities or
changing our process technologies, any of which could result in a loss of future
revenues. Our operating results could also be adversely affected by the increase
in fixed costs and operating expenses related to increases in production
capacity if revenues do not increase proportionately.
Equipment in one of our wafer fabrication lines has been potentially damaged
due to a contractor error. While our facility continues to operate normally, an
inspection is underway to gauge any potential effects of exposure on the
equipment and to ensure that any remediation is performed. While we have
experienced no material adverse effect and believe any material losses would be
covered by insurance, there can be no assurance that the matter will not have a
material and adverse effect on our business, results of operations or financial
condition.
7
<PAGE>
INTERRUPTIONS, DELAYS OR COST INCREASES AFFECTING OUR MATERIALS, PARTS OR
EQUIPMENT MAY IMPAIR OUR COMPETITIVE POSITION AND OUR OPERATIONS.
Our manufacturing operations depend upon obtaining adequate supplies of
materials, parts and equipment, including silicon, mold compounds and
leadframes, on a timely basis from third parties. Our results of operations
could be adversely affected if we were unable to obtain adequate supplies of
materials, parts and equipment in a timely manner or if the costs of materials,
parts or equipment increase significantly. From time to time, suppliers may
extend lead times, limit supplies or increase prices due to capacity constraints
or other factors. We have a limited number of suppliers for some materials,
parts and equipment, and any interruption could materially impair our
operations.
We manufacture a substantial portion of our wafer product at our Temecula,
California facility. Any disruption of operations at that facility could have a
material adverse effect on our business, financial condition and results of
operations.
Also, some of our products are assembled and tested by third party
subcontractors. We do not have any long-term assembly agreements with these
subcontractors. As a result, we do not have immediate control over our product
delivery schedules or product quality. Due to the amount of time typically
required to qualify assemblers and testers, we could experience delays in the
shipment of our products if we are forced to find alternative third parties to
assemble or test them. Any product delivery delays in the future could have a
material adverse effect on our operating results and financial condition. Our
operations and ability to satisfy customer obligations could be adversely
affected if our relationships with these subcontractors were disrupted or
terminated.
OUR INTELLECTUAL PROPERTY IS ONE OF OUR PRINCIPAL ASSETS. PROTECTING THIS
ASSET MAY BE COSTLY AND UNCERTAIN.
We rely heavily on our patents and proprietary technologies. Patent
litigation settlements and royalty income substantially contribute to our
financial results. Enforcement of our intellectual property rights is costly,
risky and time-consuming. We cannot assure you that we can successfully continue
to protect our intellectual property rights, especially in foreign markets.
Our royalty income is largely dependent on the following factors:
- the remaining terms of our MOSFET patents;
- the defensibility and enforceability of our patents;
- the introduction and acceptance of power MOSFETs and IGBTs that are not
covered by our patents;
- changes in our licensees' unit sales, prices or die sizes; and
- the terms, if any, upon which expiring license agreements are
renegotiated.
Our key MOSFET patents expire between 2000 and 2010, although our broadest
MOSFET patents expire in 2007 and 2008. The U.S. Patent and Trademark Office is
currently reexamining one of our broadest MOSFET patents that expires in 2008.
Recently, the U.S. Patent and Trademark Office issued a decision upholding the
patentability of all the claims of another of our MOSFET patents and issued a
Notice of Intent to Issue a Reexamination Certificate. We cannot assure you that
the validity of the MOSFET patent presently undergoing reexamination, or others
that may be subject to future reexamination, will be upheld by the U.S. Patent
and Trademark Office.
Any decrease in our royalty income generally could have a material adverse
effect on our operating results and financial condition.
OUR FAILURE TO OBTAIN OR MAINTAIN THE RIGHT TO USE CERTAIN TECHNOLOGIES MAY
NEGATIVELY AFFECT OUR FINANCIAL RESULTS.
Our future success and competitive position may depend in part upon our
ability to obtain or maintain certain proprietary technologies used in our
principal products, which is achieved in part by
8
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defending claims by our competitors of intellectual property infringement. We
license certain patents owned by others. We have also been notified that certain
of our products may infringe the patents of third parties. Although licenses are
generally offered in such situations, we cannot eliminate the risk of litigation
alleging patent infringement. While we are not currently engaged as a defendant
in intellectual property litigation that we believe will have a material adverse
effect, we could become subject to such lawsuits or other lawsuits in which it
is alleged that we have infringed upon the intellectual property rights of
others.
Our involvement in existing and future intellectual property litigation
could result in significant expense to us, adversely affect sales of the
challenged product or technologies and divert the efforts of our technical and
management personnel, whether or not such litigation is resolved in our favor.
If any such infringements exist, arise or are claimed in the future, we may be
exposed to substantial liability for damages and may need to obtain licenses
from the patent owners, discontinue or change our processes or products or
expend significant resources to develop or acquire non-infringing technologies.
We cannot assure you that we would be successful in such efforts or that such
licenses would be available under reasonable terms. Our failure to develop or
acquire non-infringing technologies or to obtain licenses on acceptable terms or
the occurrence of related litigation itself could have a material adverse effect
on our operating results and financial condition.
WE MUST COMMIT RESOURCES TO PRODUCT PRODUCTION PRIOR TO RECEIPT OF PURCHASE
COMMITMENTS AND COULD LOSE SOME OR ALL OF THE ASSOCIATED INVESTMENT.
We sell products primarily pursuant to purchase orders for current delivery,
rather than pursuant to long-term supply contracts. Many of these purchase
orders may be revised or canceled without penalty. As a result, we must commit
resources to the production of products without any advance purchase commitments
from customers. Our inability to sell products after we devote significant
resources to them could have a material adverse effect on our business,
financial condition and results of operations.
WE RECEIVE A SIGNIFICANT PORTION OF OUR REVENUES FROM A SMALL NUMBER OF
CUSTOMERS AND DISTRIBUTORS.
Historically, a significant portion of our revenues has come from a small
number of customers and distributors. For fiscal 1999 and fiscal 2000, our top
five customers or distributors accounted for, in the aggregate, approximately
28% and 29%, respectively, of our total revenues. The loss or financial failure
of any significant customer or distributor, any reduction in orders by any of
our significant customers or distributors, or the cancellation of a significant
order, could materially and adversely affect our business.
WE MAY FAIL TO ATTRACT OR RETAIN THE QUALIFIED TECHNICAL, SALES, MARKETING
AND MANAGERIAL PERSONNEL REQUIRED TO OPERATE OUR BUSINESS SUCCESSFULLY.
Our future success depends, in part, upon our ability to attract and retain
highly qualified technical, sales, marketing and managerial personnel. Personnel
with the necessary semiconductor expertise are scarce and competition for
personnel with these skills is intense. We cannot assure you that we will be
able to retain existing key technical, sales, marketing and managerial employees
or that we will be successful in attracting, assimilating or retaining other
highly qualified technical, sales, marketing and managerial personnel in the
future. If we are unable to retain existing key employees or are unsuccessful in
attracting new highly qualified employees, our business, financial condition and
results of operations could be materially and adversely affected.
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WE ARE ACQUIRING AND MAY CONTINUE TO ACQUIRE OTHER COMPANIES AND MAY BE
UNABLE SUCCESSFULLY TO INTEGRATE SUCH COMPANIES WITH OUR OPERATIONS.
We may continue to expand and diversify our operations with additional
acquisitions. If we are unsuccessful in integrating these companies with our
operations, or if integration is more difficult than anticipated, we may
experience disruptions that could have a material adverse effect on our
business, financial condition and results of operations. Some of the risks that
may affect our ability to integrate or realize any anticipated benefits from
companies we acquire include those associated with:
- unexpected losses of key employees or customers of the acquired company;
- conforming the acquired company's standards, processes, procedures and
controls with our operations;
- coordinating our new product and process development;
- hiring additional management and other critical personnel; and
- increasing the scope, geographic diversity and complexity of our
operations.
OUR PRODUCTS MAY BE FOUND TO BE DEFECTIVE, PRODUCT LIABILITY CLAIMS MAY BE
ASSERTED AGAINST US AND WE MAY NOT HAVE SUFFICIENT LIABILITY INSURANCE.
One or more of our products may be found to be defective after we have
already shipped the products in volume, requiring a product replacement or
recall. We may also be subject to product returns that could impose substantial
costs and have a material and adverse effect on our business, financial
condition and results of operations.
Product liability claims may be asserted with respect to our products.
Although we currently have product liability insurance, we cannot assure you
that we have obtained sufficient insurance coverage, that we will have
sufficient insurance coverage in the future or that we will have sufficient
resources to satisfy any product liability claims.
LARGE POTENTIAL ENVIRONMENTAL LIABILITIES, INCLUDING THOSE RELATING TO A
FORMER OPERATING SUBSIDIARY, MAY ADVERSELY IMPACT OUR FINANCIAL POSITION.
Federal, state and local laws and regulations impose various restrictions
and controls on the discharge of materials, chemicals and gases used in our
semiconductor manufacturing processes. In addition, under some laws and
regulations, we could be held financially responsible for remedial measures if
our properties are contaminated or if we send waste to a landfill or recycling
facility that becomes contaminated, even if we did not cause the contamination.
Also, we may be subject to common law claims if we release substances that
damage or harm third parties. Further, we cannot assure you that changes in
environmental laws or regulations will not require additional investments in
capital equipment or the implementation of additional compliance programs in the
future. Any failure to comply with environmental laws or regulations could
subject us to serious liabilities and could have a material adverse effect on
our operating results and financial condition.
We and Rachelle Laboratories, Inc., a former operating subsidiary that
discontinued operations in 1986, were each named a potentially responsible
party, or PRP, in connection with the investigation by the U.S. Environmental
Protection Agency of the disposal of allegedly hazardous substances at a major
superfund site in Monterey Park, California, known as the OII Site. Although we
have settled all outstanding claims that have arisen out of this site, no claims
against Rachelle have been settled.
We received a letter dated July 25, 1995 from the U.S. Department of
Justice, directed to Rachelle, offering to settle claims against Rachelle
relating to the first elements of clean-up work at the OII Site for $4,953,148.
The offer stated that the settlement would not cover the cost of any additional
remedial actions required to finish the clean-up. This settlement offer expired
by its terms on
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September 1, 1995. On August 7, 1995, we received a Supplemental Information
Request from the EPA directed to Rachelle, to which counsel for Rachelle
responded with information regarding waste shipped to the site. Counsel for
Rachelle received a letter from the EPA dated September 30, 1997, requesting
that Rachelle participate in the final remedial actions at the site, and counsel
replied on October 21, 1997. We have taken the position that none of the wastes
generated by Rachelle were hazardous. Counsel for Rachelle received a request
from the EPA in June 2000 to update the name of the contact party for Rachelle
designated to receive information on future proposed settlements. The request
appears to have been sent to all PRPs and indicated that the EPA intends to
formulate a final settlement offer in the near future.
We cannot presently determine with accuracy the amount of the potential
demand to Rachelle for the cost of the final remedy. Any demands related to the
cost of the final remedy would be in addition to the amount demanded for earlier
phases of the OII Site clean-up. Our insurer has not yet accepted liability
although it has made payments for defense costs we have incurred in connection
with the lawsuit.
SOME OF OUR FACILITIES ARE LOCATED NEAR MAJOR EARTHQUAKE FAULT LINES.
Our corporate headquarters, our major manufacturing facility, our research
facility and certain other critical business operations are located near major
earthquake fault lines. We could be materially and adversely affected in the
event of a major earthquake. Although we maintain earthquake insurance, we can
give you no assurance that we have obtained or will maintain sufficient
insurance coverage.
CAPITAL EXPENDITURES ARE AN INTEGRAL PART OF OUR BUSINESS.
The semiconductor industry is capital intensive. Semiconductor manufacturing
requires a constant upgrading of process technology to remain competitive, as
new and enhanced semiconductor processes are developed which permit smaller,
more efficient and more powerful semiconductor devices. We maintain certain of
our own manufacturing, assembly and test facilities, which have required and
will continue to require significant investments in manufacturing technology and
equipment. There can be no assurance that we will have sufficient capital
resources to make necessary investments in manufacturing technology and
equipment. Although we believe that anticipated cash flows from operations,
existing cash reserves, proceeds of this offering and other equity or debt
financings that we may obtain will be sufficient to satisfy our future capital
expenditure requirements, there can be no assurance that this will be the case
or that alternative sources of capital will be available to us on favorable
terms or at all.
DELAWARE LAW AND OUR CHARTER DOCUMENTS CONTAIN PROVISIONS THAT COULD
DISCOURAGE OR PREVENT A POTENTIAL TAKEOVER OF OUR COMPANY THAT MIGHT OTHERWISE
RESULT IN OUR STOCKHOLDERS RECEIVING A PREMIUM OVER THE MARKET PRICE OF THEIR
SHARES.
Provisions of Delaware law and our Certificate of Incorporation and Amended
and Restated Bylaws, as such documents have been amended, could make more
difficult the acquisition of our company by means of a tender offer, a proxy
contest, or otherwise, and the removal of incumbent officers and directors.
These provisions include:
- Section 203 of the Delaware General Corporation Law, which prohibits a
merger with a 15%-or-greater stockholder, such as a party that has
completed a successful tender offer, until three years after that party
became a 15%-or-greater stockholder;
- our board of directors is divided into three classes with staggered three
year terms for each class, which could make it more difficult to gain
control of our board of directors;
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- the authorization in the certificate of incorporation of undesignated
preferred stock, which could be issued without stockholder approval in a
manner designed to prevent or discourage a takeover; and
- provisions in our bylaws eliminating stockholders' rights to call a
special meeting of stockholders, which could make it more difficult for
stockholders to wage a proxy contest for control of our board or to vote
to repeal any of the anti-takeover provisions contained in our certificate
of incorporation and bylaws.
We also have a rights agreement entered into in August 1996, and amended in
December 1998, with ChaseMellon Shareholder Services, L.L.C., as rights agent,
which gives our stockholders certain rights that could substantially increase
the cost of acquiring us in a transaction not approved by our board of
directors.
RISKS RELATED TO THIS OFFERING
THE NOTES ARE SUBORDINATED.
The notes are unsecured and subordinated in right of payment to all of our
existing and future senior indebtedness. In the event of our bankruptcy,
liquidation or reorganization or upon acceleration of the notes due to an event
of default under the indenture and in certain other events, our assets will be
available to pay obligations on the notes only after all senior indebtedness has
been paid. As a result, there may not be sufficient assets remaining to pay
amounts due on any or all of the outstanding notes. The notes are also
effectively subordinated to the liabilities, including trade payables, of any of
our subsidiaries. Neither we nor our subsidiaries are prohibited from incurring
debt under the indenture, including senior indebtedness. If we or our
subsidiaries were to incur additional debt or liabilities, our ability to pay
our obligations on the notes could be adversely affected. As of June 30, 2000,
we had approximately $4.6 million in senior indebtedness outstanding and our
subsidiaries had approximately $14.1 million of other liabilities outstanding.
We may from time to time incur additional debt, including senior indebtedness.
Our subsidiaries may also from time to time incur other additional debt and
liabilities. See "Description of the Notes."
WE MAY BE UNABLE TO REDEEM THE NOTES UPON A FUNDAMENTAL CHANGE.
Upon a fundamental change (as described under "Description of the
Notes--Redemption at Option of the Holder"), you may require us to redeem all or
a portion of your notes. If a fundamental change were to occur, we may not have
enough funds to pay the redemption price for all tendered notes. Any future
credit agreements or other agreements relating to our indebtedness may contain
similar provisions or expressly prohibit the repurchase of the notes upon a
fundamental change or may provide that a fundamental change constitutes an event
of default under that agreement. If a fundamental change occurs at a time when
we are prohibited from purchasing or redeeming the notes, we could seek the
consent of our lenders to redeem the notes or could attempt to refinance this
debt. If we do not obtain a consent, we could not purchase or redeem the notes.
Our failure to redeem tendered notes would constitute an event of default under
the indenture, which might constitute a default under the terms of our other
indebtedness. In these circumstances, or if a fundamental change would
constitute an event of default under our senior indebtedness, the subordination
provisions of the indenture would restrict our ability to make payments to the
holders of the notes. The term "fundamental change" is limited to certain
specified transactions and may not include other events that might adversely
affect our financial condition. Our obligation to offer to redeem the notes upon
a fundamental change would not necessarily afford you protection in the event of
a highly leveraged transaction, reorganization, merger or similar transaction.
See "Description of the Notes--Redemption at Option of the Holder."
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A PUBLIC MARKET MAY NOT DEVELOP FOR THE NOTES.
In July 2000, we issued the notes to the initial purchasers in a private
placement. The notes are eligible to trade on the PORTAL market. However, the
notes resold pursuant to this prospectus will no longer trade on the PORTAL
market. As a result, there may be a limited market for the notes. We do not
intend to list the notes on any national securities exchange.
A public market may not develop for the notes. Although the initial
purchasers have advised us that they intend to make a market in the notes, they
are not obligated to do so and may discontinue this market making activity at
any time without notice. In addition, market making activity by the initial
purchasers will be subject to the limits imposed by the federal securities laws.
As a result, we cannot assure you that any market for the notes will develop or,
if one does develop, that it will be maintained. If an active market for the
notes fails to develop or be sustained, the trading price of the notes could be
materially and adversely affected.
OUR STOCK PRICE MAY CONTINUE TO EXPERIENCE LARGE FLUCTUATIONS, WHICH MAY
SIGNIFICANTLY AFFECT THE TRADING PRICE OF THE NOTES.
Fluctuations in the trading price of our common stock will affect the
trading price of the notes. The trading price of our common stock fluctuates
over a wide range and is expected to continue to be extremely volatile in the
future. These price fluctuations may be rapid and severe and may leave investors
little time to react. Factors that may affect the market price of our common
stock include:
- quarterly variations in operating results;
- announcements of technological innovations or new programs and products by
us or by our competitors;
- price movements in other semiconductor or high technology stocks;
- indicators affecting the market for semiconductors or other factors; and
- general economic, political and market conditions.
In addition, the future sale of a substantial number of shares of common
stock by us or by our existing stockholders may have an adverse impact on the
market price of the shares of common stock, and consequently on the trading
price of the notes offered hereby. There can be no assurance that the trading
price of our common stock will remain at or near its current level. Because our
stock price is volatile, investing in the notes involves a significant degree of
risk.
WE MAY NOT BE ABLE TO REFINANCE THE NOTES IF REQUIRED OR IF WE SO DESIRE.
We may need or desire to refinance all or a portion of our indebtedness on
or before maturity. We cannot assure you that we will be able to refinance any
of our indebtedness on commercially reasonable terms, if at all.
THE NOTES MAY NOT BE RATED OR MAY RECEIVE A LOWER RATING THAN ANTICIPATED,
WHICH WOULD CAUSE THE MARKET PRICE OF THE NOTES AND OUR COMMON STOCK TO BE
MATERIALLY AND ADVERSELY AFFECTED.
We may not seek a rating of the notes from rating agencies. If we do seek a
rating, or if any rating agency otherwise rates the notes, one or more of these
rating agencies may assign the notes a rating lower than expected by investors.
This could cause the market price of the notes and our common stock to decline.
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RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges is as follows:
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JUNE 30,
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.......................... 8.3x 3.1x 2.4x -- 12.4x
</TABLE>
The ratio of earnings to fixed charges is calculated as (i) the sum of
earnings before taxes from continuing operations plus fixed charges and
amortization of capitalized interest less interest capitalized, divided by
(ii) fixed charges, which include amortization of expenses related to
indebtedness, interest within rental expense and interest expensed and
capitalized. Interest within rental expense is estimated at one-third of total
rent expense for the applicable period, which we believe represents a reasonable
approximation of the interest factor. In the fiscal year ended June 30, 1997,
earnings were not adequate to cover fixed charges by $54.6 million.
USE OF PROCEEDS
The selling holders will receive all of the proceeds from the sale under
this prospectus of the notes and the common stock issuable upon conversion of
the notes. We will not receive any proceeds from these sales.
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DESCRIPTION OF THE NOTES
We issued the notes under an indenture, dated as of July 19, 2000, between
us and Wells Fargo Bank Minnesota, National Association, as trustee. You may
request a copy of the indenture from the trustee.
The following description is a summary of the material provisions of the
notes and the indenture. It does not purport to be complete. This summary is
subject to and is qualified by reference to all the provisions of the indenture,
including the definitions of certain terms used in the indenture. Wherever
particular provisions or defined terms of the indenture or form of note are
referred to herein, these provisions or defined terms are incorporated in this
prospectus by reference.
As used in this "Description of the Notes" section, references to "IRF,"
"we," "our" or "us" refer solely to International Rectifier Corporation and not
our subsidiaries.
GENERAL
The notes are general unsecured obligations of IRF. Our payment obligations
under the notes are subordinated to our senior indebtedness as described under
"--Subordination of Notes." The notes are convertible into common stock as
described under "--Conversion of Notes." The notes will be limited to
$550,000,000 aggregate principal amount. The notes were issued only in
denominations of $1,000 and multiples of $1,000. The notes will mature on
July 15, 2007 unless earlier converted, redeemed at our option or redeemed at
your option upon a fundamental change.
We are not subject to any financial covenants under the indenture. In
addition, we are not restricted under the indenture from paying dividends,
incurring debt, including senior indebtedness, or issuing or repurchasing our
securities.
You are not afforded protection in the event of a highly leveraged
transaction or a change in control of IRF under the indenture except to the
extent described below under "--Redemption at Option of the Holder."
We will pay interest on January 15 and July 15 of each year, beginning
January 15, 2001, to record holders at the close of business on the preceding
January 1 and July 1, as the case may be, except:
- interest payable upon redemption will be paid to the person to whom
principal is payable, unless the redemption date is an interest payment
date; and
- as set forth in the next sentence.
In case you convert your note into common stock during the period after any
record date but prior to the next interest payment date either:
- we will not be required to pay interest on the interest payment date if
the note has been called for redemption on a redemption date that occurs
during this period; or
- we will not be required to pay interest on the interest payment date if
the note is to be redeemed in connection with a fundamental change on a
repurchase date that occurs during this period; or if otherwise, any note
not called for redemption that is submitted for conversion during this
period must also be accompanied by an amount equal to the interest due on
the interest payment date on the converted principal amount, unless at the
time of conversion there is a default in the payment of interest on the
notes. See "--Conversion of Notes."
We will maintain an office in the Borough of Manhattan, the City of New
York, New York, for the payment of interest, which will initially be an office
or agency of the trustee.
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We may pay interest either:
- by check mailed to your address as it appears in the note register,
provided that if you are a holder with an aggregate principal amount in
excess of $2.0 million, you will be paid, at your written election, by
wire transfer in immediately available funds; or
- by wire transfer to an account maintained by you in the United States.
However, payments to The Depository Trust Company, New York, New York, which
we refer to as DTC, will be made by wire transfer of immediately available funds
to the account of DTC or its nominee. Interest will be computed on the basis of
a 360-day year composed of twelve 30-day months.
FORM, DENOMINATION AND REGISTRATION
We issued the notes:
- in fully registered form;
- without interest coupons; and
- in denominations of $1,000 principal amount and integral multiples of
$1,000.
GLOBAL NOTE, BOOK-ENTRY FORM
Notes sold to "qualified institutional buyers" as defined in Rule 144A under
the Securities Act, whom we refer to as QIBs, are evidenced by one or more
global notes, which were deposited with DTC and registered in the name of
Cede & Co., as DTC's nominee. Except as set forth below, a global note may be
transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
QIBs may hold their interests in a global note directly through DTC if such
holder is a participant in DTC, or indirectly through organizations that are
participants in DTC (called "participants"). Transfers between participants will
be effected in the ordinary way in accordance with DTC rules and will be settled
in clearing house funds. The laws of some states require that certain persons
take physical delivery of securities in definitive form. As a result, the
ability to transfer beneficial interests in the global note to such persons may
be limited.
QIBs who are not participants may beneficially own interests in a global
note held by DTC only through participants, or certain banks, brokers, dealers,
trust companies and other parties that clear through or maintain a custodial
relationship with a participant, either directly or indirectly (called "indirect
participants"). So long as Cede & Co., as the nominee of DTC, is the registered
owner of a global note, Cede & Co. for all purposes will be considered the sole
holder of such global note. Except as provided below, owners of beneficial
interests in a global note will:
- not be entitled to have certificates registered in their names;
- not receive physical delivery of certificates in definitive registered
form; and
- not be considered holders of the global note.
We will pay interest on and the redemption price of a global note to Cede &
Co., as the registered owner of the global note, by wire transfer of immediately
available funds on each interest payment date or the redemption or repurchase
date, as the case may be. Neither we, the trustee nor any paying agent will be
responsible or liable:
- for the records relating to, or payments made on account of, beneficial
ownership interests in a global note; or
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- for maintaining, supervising or reviewing any records relating to the
beneficial ownership interests.
We have been informed that DTC's practice is to credit participants'
accounts on that payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount represented by a global
note as shown in the records of DTC, unless DTC has reason to believe that it
will not receive payment on that payment date. Payments by participants to
owners of beneficial interests in the principal amount represented by a global
note held through participants will be the responsibility of the participants,
as is now the case with securities held for the accounts of customers registered
in "street name."
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing its interest.
Neither we, the trustee, registrar, paying agent nor conversion agent will
have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised us that it will take any
action permitted to be taken by a holder of notes, including the presentation of
notes for exchange, only at the direction of one or more participants to whose
account with DTC interests in the global note are credited, and only in respect
of the principal amount of the notes represented by the global note as to which
the participant or participants has or have given such direction.
DTC has advised us that it is:
- a limited purpose trust company organized under the laws of the State of
New York and a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the Uniform Commercial
Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants.
Participants include securities brokers, dealers, banks, trust companies and
clearing corporations and other organizations. Some of the participants or their
representatives, together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
DTC has agreed to the foregoing procedures to facilitate transfers of
interests in a global note among participants. However, DTC is under no
obligation to perform or continue to perform these procedures, and may
discontinue these procedures at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will issue notes in certificated form in exchange for
global notes.
CERTIFICATED NOTES
QIBs may request that certificated notes be issued in exchange for notes
represented by a global note.
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CONVERSION OF NOTES
You may convert your note, in whole or in part, into common stock through
the final maturity date of the notes, subject to prior redemption of the notes.
If we call notes for redemption, you may convert the notes only until the close
of business on the business day prior to the redemption date unless we fail to
pay the redemption price. If you have submitted your notes for redemption upon a
fundamental change, you may convert your notes only if you withdraw your
redemption election. You may convert your notes in part so long as this part is
$1,000 principal amount or an integral multiple of $1,000. If any notes not
called for redemption are converted after a record date for any interest payment
date and prior to the next interest payment date, the notes must be accompanied
by an amount equal to the interest payable on the interest payment date on the
converted principal amount unless a default exists at the time of conversion.
The initial conversion price for the notes is $73.935 per share of common
stock, subject to adjustment as described below. We will not issue fractional
shares of common stock upon conversion of notes. Instead, we will pay cash equal
to the market price of the common stock on the business day prior to the
conversion date. Except as described below, you will not receive any accrued
interest or dividends upon conversion.
To convert your note into common stock you must:
- complete and manually sign the conversion notice on the back of the note
or facsimile of the conversion notice and deliver this notice to the
conversion agent;
- surrender the note to the conversion agent;
- if required, furnish appropriate endorsements and transfer documents;
- if required, pay all transfer or similar taxes; and
- if required, pay funds equal to interest payable on the next interest
payment date.
The date you comply with these requirements is the conversion date under the
indenture.
We will adjust the conversion price if the following events occur:
(1) we issue common stock as a dividend or distribution on our common
stock;
(2) we issue to all holders of common stock certain rights or warrants
to purchase our common stock;
(3) we subdivide or combine our common stock;
(4) we distribute to all common stock holders capital stock, evidences
of indebtedness or assets, including securities but excluding: rights or
warrants listed in (2) above; dividends or distributions listed in
(1) above; and cash distributions listed in (5) below;
(5) we distribute cash, excluding any quarterly cash dividend on our
common stock to the extent that the aggregate cash dividend per share of
common stock in any quarter does not exceed the greater of:
- the amount per share of common stock of the next preceding
quarterly cash dividend on the common stock to the extent that the
preceding quarterly dividend did not require an adjustment of the
conversion price pursuant to this clause (5), as adjusted to
reflect subdivisions or combinations of the common stock; and
- 3.75% of the average of the last reported sale price of the common
stock during the ten trading days immediately prior to the
declaration date of the dividend, and excluding any dividend or
distribution in connection with the liquidation, dissolution or
winding up of IRF.
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If an adjustment is required to be made under this clause (5) as a result of
a distribution that is a quarterly dividend, the adjustment would be based upon
the amount by which the distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant to this clause (5). If an adjustment
is required to be made under this clause (5) as a result of a distribution that
is not a quarterly dividend, the adjustment would be based upon the full amount
of the distribution.
(6) we or one of our subsidiaries makes a payment in respect of a tender
offer or exchange offer for our common stock to the extent that the cash and
value of any other consideration included in the payment per share of common
stock exceeds the current market price per share of common stock on the
trading day next succeeding the last date on which tenders or exchanges may
be made pursuant to such tender or exchange offer; or
(7) someone other than us or one of our subsidiaries makes a payment in
respect of a tender offer or exchange offer in which, as of the closing date
of the offer, our board of directors is not recommending rejection of the
offer. The adjustment referred to in this clause (7) will only be made if:
- the tender offer or exchange offer is for an amount that increases
the offeror's ownership of common stock to more than 25% of the
total shares of common stock outstanding; and
- the cash and value of any other consideration included in the
payment per share of common stock exceeds the current market price
per share of common stock on the business day next succeeding the
last date on which tenders or exchanges may be made pursuant to the
tender or exchange offer.
However, the adjustment referred to in this clause (7) will generally not be
made if as of the closing of the offer, the offering documents disclose a plan
or an intention to cause us to engage in a consolidation or merger of IRF or a
sale of all or substantially all of our assets.
Under our rights plan, upon conversion of the notes into common stock, to
the extent that the rights plan is still in effect upon conversion, you will
receive, in addition to the common stock, the rights under the rights plan
whether or not the rights have separated from the common stock at the time of
conversion, subject to certain limited exceptions.
In the event of:
- any reclassification of our common stock;
- a consolidation, merger or combination involving us; or
- a sale or conveyance to another person of our property and assets of us as
an entirety or substantially as an entirety,
in which holders of common stock would be entitled to receive stock, other
securities, other property, assets or cash for their common stock, holders of
notes will generally be entitled thereafter to convert their notes into the same
type of consideration received by common stockholders immediately prior to one
of these types of events.
You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of common stock or in certain other situations
requiring a conversion price adjustment. See "Certain Federal Income Tax
Considerations."
We may from time to time reduce the conversion price for a period of at
least 20 days if our board of directors has made a determination that this
reduction would be in our best interests. Any such determination by our board
will be conclusive. We would give holders at least 15 days' notice of
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<PAGE>
any reduction in the conversion price. In addition, we may reduce the conversion
price if our board of directors deems it advisable to avoid or diminish any
income tax to holders of common stock resulting from any stock or rights
distribution. See "Certain Federal Income Tax Considerations."
We will not be required to make an adjustment in the conversion price unless
the adjustment would require a change of at least 1% in the conversion price.
However, we will carry forward any adjustments that are less than one percent of
the conversion price. Except as described above in this section, we will not
adjust the conversion price for any issuance of our common stock or convertible
or exchangeable securities or rights to purchase our common stock or convertible
or exchangeable securities.
OPTIONAL REDEMPTION BY US
The notes are not entitled to any sinking fund. At any time on or after
July 18, 2003, we may redeem the notes in whole or in part at the following
prices expressed as a percentage of the principal amount.
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
Beginning on July 18, 2003 and ending on July 14, 2004...... 102.429%
Beginning on July 15, 2004 and ending on July 14, 2005...... 101.821%
Beginning on July 15, 2005 and ending on July 14, 2006...... 101.214%
Beginning on July 15, 2006 and ending on July 14, 2007...... 100.607%
</TABLE>
and 100% at July 15, 2007. In each case, we will pay interest up to, but
excluding, the redemption date. If the redemption date is an interest payment
date, interest shall be paid to the record holder on the relevant record date.
We are required to give notice of redemption by mail to holders not more than 60
but not less than 30 days prior to the redemption date.
If less than all of the outstanding notes are to be redeemed, the trustee
shall select the notes to be redeemed in principal amounts of $1,000 or integral
multiples of $1,000 by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of your notes is selected for partial
redemption and you convert a portion of your notes, the converted portion shall
be deemed to be of the portion selected for redemption.
We may not redeem the notes if we have failed to pay any interest or premium
on the notes and such failure to pay is continuing. We will issue a press
release if we redeem the notes.
REDEMPTION AT OPTION OF THE HOLDER
If a fundamental change occurs prior to July 15, 2007, you may require us to
redeem your notes, in whole or in part, on a repurchase date that is 30 days
after the date of our notice of the fundamental change. The notes will be
redeemable in multiples of $1,000 principal amount.
We shall redeem the notes at a price equal to 100% of the principal amount
to be redeemed, plus accrued interest to, but excluding, the repurchase date. If
the repurchase date is an interest payment date, we will pay interest to the
record holder on the relevant record date.
We will mail to all record holders a notice of the fundamental change within
10 days after the occurrence of the fundamental change. We are also required to
deliver to the trustee a copy of the fundamental change notice. If you elect to
redeem your notes, you must deliver to us or our designated agent, on or before
the 30th day after the date of our fundamental change notice, your redemption
notice and any notes to be redeemed, duly endorsed for transfer. We will
promptly pay the redemption price for notes surrendered for redemption following
the repurchase date.
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A "fundamental change" is any transaction or event in connection with which
all or substantially all of our common stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive, consideration,
whether by means of an exchange offer, liquidation, tender offer, consolidation,
merger, combination, reclassification, recapitalization or otherwise, which is
not all or substantially all common stock listed on, or that will be listed on
or immediately after the transaction or event on:
- a United States national securities exchange, or
- approved for quotation on the NASDAQ National Market or any similar United
States system of automated dissemination of quotations of securities
prices.
We will comply with any applicable provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act in the event of a fundamental change.
These fundamental change redemption rights could discourage a potential
acquiror of IRF. However, this fundamental change redemption feature is not the
result of management's knowledge of any specific effort to obtain control of IRF
by means of a merger, tender offer or solicitation, or part of a plan by
management to adopt a series of anti-takeover provisions. The term "fundamental
change" is limited to certain specified transactions and may not include other
events that might adversely affect our financial condition. Our obligation to
offer to redeem the notes upon a fundamental change would not necessarily afford
you protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving IRF.
We may be unable to redeem the notes in the event of a fundamental change.
If a fundamental change were to occur, we may not have enough funds to pay the
redemption price for all tendered notes. In addition, in certain situations, a
fundamental change could result in an event of default under any credit facility
into which we may enter. Any future credit agreements or other agreements
relating to our indebtedness may prohibit redemptions of the notes, or expressly
prohibit the repurchase of the notes upon a fundamental change, or may provide
that a fundamental change constitutes an event of default under that agreement.
If a fundamental change occurs at a time when we are prohibited from purchasing
or redeeming notes, we could seek the consent of our lenders to redeem the notes
or could attempt to refinance this debt. If we do not obtain a consent, we could
not purchase or redeem the notes. Our failure to redeem tendered notes would
constitute an event of default under the indenture, which might constitute a
default under the terms of our other indebtedness. In these circumstances, or if
a fundamental change would constitute an event of default order our senior
indebtedness, the subordination provisions of the indenture would restrict
payments to the holders of notes.
SUBORDINATION OF NOTES
Payment on the notes will, to the extent provided in the indenture, be
subordinated in right of payment to the prior payment in full of all of our
senior indebtedness. The notes also are effectively subordinated to all debt and
other liabilities, including trade payables and lease obligations, if any, of
our subsidiaries.
Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization, the payment of the principal of, or premium, if
any, interest, and liquidated damages, if any, on the notes will be subordinated
in right of payment to the prior payment in full in cash or other payment
satisfactory to the holders of senior indebtedness of all senior indebtedness.
In the event of any acceleration of the notes because of an event of default,
the holders of any outstanding senior indebtedness would be entitled to payment
in full in cash or other payment satisfactory to the holders of senior
indebtedness of all senior indebtedness obligations before the holders of the
notes are entitled to receive any payment or distribution. We are required under
the indenture to promptly notify holders of senior indebtedness, if payment of
the notes is accelerated because of an event of default.
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<PAGE>
We may not make any payment on the notes if:
- a default in the payment of designated senior indebtedness occurs and is
continuing beyond any applicable period of grace (called a "payment
default"); or
- a default other than a payment default on any designated senior
indebtedness occurs and is continuing that permits holders of designated
senior indebtedness to accelerate its maturity, or in the case of a lease,
a default occurs and is continuing that permits the lessor to either
terminate the lease or require us to make an irrevocable offer to
terminate the lease following an event of default under the lease, and the
trustee receives a notice of such default (called a "payment blockage
notice") from us or any other person permitted to give such notice under
the indenture (called a "non-payment default").
We may resume payments and distributions on the notes:
- in case of a payment default, upon the date on which such default is cured
or waived or ceases to exist; and
- in case of a non-payment default, the earlier of the date on which such
nonpayment default is cured or waived or ceases to exist or 179 days after
the date on which the payment blockage notice is received, if the maturity
of the designated senior indebtedness has not been accelerated, or in the
case of any lease, 179 days after notice is received if we have not
received notice that the lessor under such lease has exercised its right
to terminate the lease or require us to make an irrevocable offer to
terminate the lease following an event of default under the lease.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless 365 days have elapsed since the initial effectiveness of
the immediately prior payment blockage notice. No non-payment default that
existed or was continuing on the date of delivery of any payment blockage notice
shall be the basis for any later payment blockage notice.
If the trustee or any holder of the notes receives any payment or
distribution of our assets in contravention of the subordination provisions on
the notes before all senior indebtedness is paid in full in cash or other
payment satisfactory to holders of senior indebtedness, then such payment or
distribution will be held in trust for the benefit of holders of senior
indebtedness or their representatives to the extent necessary to make payment in
full in cash or payment satisfactory to the holders of senior indebtedness of
all unpaid senior indebtedness.
Because of the subordination provisions discussed above, in the event of our
bankruptcy, dissolution or reorganization, holders of senior indebtedness may
receive more, ratably, and holders of the notes may receive less, ratably, than
our other creditors. This subordination will not prevent the occurrence of any
event of default under the indenture.
The notes are exclusively obligations of IRF. A substantial portion of our
operations are conducted through our subsidiaries. As a result, our cash flow
and our ability to service our debt, including the notes, is dependent upon the
earnings of our subsidiaries. In addition, we arc dependent on the distribution
of earnings, loans or other payments from our subsidiaries. In addition, any
payment of dividends, distributions, loans or advances by our subsidiaries to us
could be subject to statutory or contractual restrictions. Payments to us by our
subsidiaries will also be contingent upon our subsidiaries' earnings and
business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders to
participate in those assets, will be effectively subordinated to the claims of
that subsidiary's creditors, including trade creditors. In addition, even if we
were a creditor to any of our subsidiaries, our rights as a creditor would be
subordinate to any security interest in the assets of our subsidiaries and any
indebtedness of our subsidiaries senior to that held by us.
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<PAGE>
The term "senior indebtedness" is defined in the indenture and includes
principal, premium, interest, rent, fees, costs, expenses and other amounts
accrued or due on our existing or future indebtedness, as defined below, or any
existing or future indebtedness guaranteed or in effect guaranteed by us,
subject to certain exceptions. The term does not include:
- any indebtedness that by its express terms is not senior to the notes or
is PARI PASSU or junior to the notes, or
- any indebtedness we owe to any of our majority-owned subsidiaries, or
- the notes.
The term "indebtedness" is also defined in the indenture and includes, in
general terms, our liabilities in respect of borrowed money, notes, bonds,
debentures, letters of credit, bank guarantees, bankers' acceptances, capital
and certain other leases, interest rate and foreign currency derivative
contracts or similar arrangements, guarantees and certain other obligations
described in the indenture, subject to certain exceptions. The term does not
include, for example, any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services.
The term "designated senior indebtedness" is defined in the indenture and
includes, in general terms, any senior indebtedness that by its terms expressly
provides that it is "designated senior indebtedness" for purposes of the
indenture.
As of June 30, 2000, we had $4.6 million of senior indebtedness outstanding
and our subsidiaries had $14.1 million of other liabilities outstanding. Neither
we or our subsidiaries are prohibited from incurring debt, including senior
indebtedness, under the indenture. We may from time to time incur additional
debt, including senior indebtedness. Our subsidiaries may also from time to time
incur other additional debt and liabilities.
We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by the trustee in connection with its duties relating to the notes. The
trustee's claims for these payments will generally be senior to those of
noteholders in respect of all funds collected or held by the trustee.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The following will be events of default under the indenture:
- we fail to pay principal or premium, if any, upon redemption or otherwise
on the notes, whether or not the payment is prohibited by subordination
provisions;
- we fail to pay any interest and liquidated damages, if any, on the notes,
whether or not the payment is prohibited by subordination provisions of
the indenture;
- we fail to perform or observe any of the covenants in the indenture for
60 days after notice; or
- certain events involving our bankruptcy, insolvency or reorganization.
The trustee may withhold notice to the holders of the notes of any default,
except defaults in payment of principal, premium, interest or liquidated
damages, if any, on the notes. However, the trustee must consider it to be in
the interest of the holders of the notes to withhold this notice.
If an event of default occurs and continues, the trustee or the holders of
at least 25% in principal amount of the outstanding notes may declare the
principal, premium, if any, and accrued interest and liquidated damages, if any,
on the outstanding notes to be immediately due and payable. In case of certain
events of bankruptcy or insolvency involving us, the principal, premium, if any,
and accrued interest and liquidated damages, if any, on the notes will
automatically become due and payable.
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<PAGE>
However, if we cure all defaults, except the nonpayment of principal, premium,
if any, interest or liquidated damages, if any, that became due as a result of
the acceleration, and meet certain other conditions, with certain exceptions,
this declaration may be cancelled and the holder of a majority of the principal
amount of outstanding notes may waive these past defaults. Payment of principal,
premium, if any, or interest on the notes that are not made when due will accrue
interest at the annual rate of 4 1/4% from the required payment date.
The holders of a majority of outstanding notes will have the right to direct
the time, method and place of any proceedings for any remedy available to the
trustee, subject to limitations specified in the indenture.
No holder of the notes may pursue any remedy under the indenture, except in
the case of a default in the payment of principal, premium or interest on the
notes, unless:
- the holder has given the trustee written notice of an event of default;
- the holders of at least 25% in principal amount of outstanding notes make
a written request, and offer reasonable indemnity, to the trustee to
pursue the remedy;
- the trustee does not receive an inconsistent direction from the holders of
a majority in principal amount of the notes; and
- the trustee fails to comply with the request within 60 days after receipt.
MODIFICATION OF THE INDENTURE
The consent of the holders of a majority in principal amount of the
outstanding notes is required to modify or amend the indenture. However, a
modification or amendment requires the consent of the holder of each outstanding
note if it would:
- extend the fixed maturity of any note;
- reduce the rate or extend the time for payment of interest of any note;
- reduce the principal amount or premium of any note;
- reduce any amount payable upon redemption of any note;
- adversely change our obligation to redeem any note upon a fundamental
change;
- impair the right of a holder to institute suit for payment on any note;
- change the currency in which any note is payable;
- impair the right of a holder to convert any note;
- adversely modify the subordination provisions of the indenture; or
- reduce the percentage of notes required for consent to any modification of
the indenture.
We are permitted to modify certain provisions of the indenture without the
consent of the holders of the notes.
REGISTRATION RIGHTS OF THE NOTEHOLDERS
We have entered into a registration rights agreement with the initial
purchasers. Pursuant to this agreement, we have filed a shelf registration
statement, of which this prospectus forms a part, with the SEC covering resale
of the registrable securities, and we will use reasonable efforts to keep the
shelf registration statement effective until the earlier of:
- all of the registrable securities have been sold pursuant to the shelf
registration statement; or
- the expiration of the holding period under Rule 144(k) under the
Securities Act, or any successor provision, subject to certain permitted
exceptions.
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<PAGE>
When we use the term "registrable securities" in this section, we are
referring to the notes and the common stock issuable upon conversion of the
notes until the earliest of:
- the effective registration under the Securities Act and the resale of the
securities in accordance with the registration statement;
- the expiration of the holding period under Rule 144(k); and
- the sale to the public pursuant to Rule 144 under the Securities Act, or
any similar provision then in force, but not Rule 144A.
We may suspend the use of the prospectus under certain circumstances
relating to pending corporate developments, public filings with the SEC and
similar events. Any suspension period shall not:
- exceed 30 days in any three-month period; or
- an aggregate of 90 days for all periods in any 12-month period.
However, we will be permitted to suspend the use of the prospectus not to exceed
60 days in any 3-month period under certain circumstances, relating to possible
acquisitions, financings or similar transactions.
We will pay predetermined liquidated damages if the shelf registration
statement is not timely filed or made effective or if the prospectus is
unavailable for periods in excess of those permitted above:
- on the notes at an annual rate equal to 0.5% of the principal amount of
the notes outstanding until the registration statement is filed or made
effective or during the additional period the prospectus is unavailable,
and
- on the common stock that has been converted, at an annual rate equal to
0.5% of the conversion price during such periods.
A holder who elects to sell registrable securities pursuant to the shelf
registration statement, of which this prospectus is a part, will be required to:
- be named as a selling stockholder in this prospectus or an applicable
prospectus supplement;
- deliver this prospectus and any applicable prospectus supplement to
purchasers; and
- be subject to the provisions of the registration rights agreement,
including indemnification provisions.
Under the registration rights agreement we will:
- pay all expenses of the shelf registration statement;
- provide each registered holder copies of the prospectus;
- notify holders when the shelf registration statement has become effective;
and
- take other reasonable actions as are required to permit unrestricted
resales of the registrable securities in accordance with the terms and
conditions of the registration rights agreement.
RULE 144A INFORMATION REQUEST
We will furnish to the holders or beneficial holders of the notes or the
underlying common stock and prospective purchasers, upon their request, the
information required under Rule 144A(d)(4) under the Securities Act until such
time as such securities are no longer "restricted securities" within the meaning
of Rule 144 under the Securities Act, assuming these securities have not been
owned by an affiliate of IRF.
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<PAGE>
INFORMATION CONCERNING THE TRUSTEE
We have appointed Wells Fargo Bank Minnesota, National Association, the
trustee under the indenture, as paying agent, conversion agent, note registrar
and custodian for the notes. The trustee or its affiliates may provide banking
and other services to us in the ordinary course of their business.
The indenture contains certain limitations on the rights of the trustee, as
long as it or any of its affiliates remains our creditor, to obtain payment of
claims in certain cases or to realize on certain property received on any claim
as security or otherwise. The trustee and its affiliates are permitted to engage
in other transactions with us. However, if the trustee or any affiliate
continues to have any conflicting interest and a default occurs with respect to
the notes, the trustee must eliminate such conflict or resign.
DESCRIPTION OF CAPITAL STOCK
The following description summarizes the most important terms of our capital
stock. Because it is only a summary, it does not contain all of the information
that may be important to you. For a complete description, you should refer to
our Certificate of Incorporation and Amended and Restated Bylaws, as such
documents have been amended.
Our Certificate of Incorporation authorizes us to issue 150 million shares
of common stock and 1 million shares of preferred stock. No other classes of
capital stock are authorized under our Certificate of Incorporation.
COMMON STOCK
Each share of common stock is entitled to one vote on all matters submitted
to a vote of the stockholders. Holders of common stock may receive dividends
only when our board of directors declares them. In certain cases, common
stockholders may not receive dividends until we have satisfied our obligations
to any preferred stockholders. If we liquidate, dissolve or wind-up our
business, either voluntarily or not, common stockholders will share equally in
the assets remaining after we pay our creditors and any preferred stockholders.
The common stock has no preemptive, conversion or other subscription rights, and
all outstanding shares are fully paid and non-assessable.
PREFERRED STOCK
Our board of directors may issue shares of preferred stock at any time, in
one or more series, without stockholder approval. The board of directors will
determine the designation, relative rights, preferences and limitations of each
series of preferred stock. If we issue preferred stock, it could delay a change
in control and make it harder to remove our present management. Under certain
circumstances, preferred stock could also adversely affect the voting power of
common stockholders.
RIGHTS AGREEMENT
In August 1996, our board of directors declared a distribution of one right
for each outstanding share of common stock. The distribution was made as of
August 14, 1996, to the stockholders of record on that date. Each right entitles
the registered holder to purchase from us, initially, one one-thousandth of a
share of junior participating preferred stock at a purchase price of $135.00,
subject to adjustment. The description and terms of the rights are set forth in
a rights agreement between ChaseMellon Shareholder Services as rights agent and
us. You should refer to the rights agreement for a more detailed description of
the terms and provisions of the rights. You may obtain a copy of the rights
agreement from us free of charge by contacting our transfer agent. See
"Available Information." Any certificates representing shares of common stock we
issue in this offering will contain a notation incorporating the rights
agreement by reference.
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<PAGE>
POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS
In addition to the authorized preferred stock, other provisions of our
Certificate of Incorporation and Bylaws may make it more difficult for a third
party to acquire, or may discourage a third party from attempting to acquire
control of us.
In accordance with provisions contained in our Certificate of Incorporation
and Bylaws, our board of directors is divided into three classes with staggered
three year terms for each class. The Certificate of Incorporation and Bylaws
provide that the directors have the right to increase (with certain
restrictions) or decrease the number of directors. The Certificate of
Incorporation provides that vacancies for newly created directorships may be
filled by a majority vote of the remaining directors and removal for cause may
only be made by the vote of a majority of the outstanding shares.
Amendment of any of the foregoing provisions of our Certificate of
Incorporation requires the approval of the holders of at least 66 2/3% of our
stock issued and outstanding having voting power, given at a duly convened
stockholders meeting upon a proposal adopted by our board.
Under our Bylaws, a special meeting of stockholders may be called only by
certain officers or a majority of the board.
CERTAIN PROVISIONS OF DELAWARE LAW
We are a Delaware corporation and are subject to Section 203 of the Delaware
General Corporation Law, or DGCL. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined therein) with a Delaware corporation for three years
following the date of the transaction in which the person became an interested
stockholder, unless
(a) before such date, the board of directors of the corporation approved
either the business combination or the transaction in which the
stockholder became an interested stockholder;
(b) upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced (excluding shares owned by persons who are both
officers and directors of the corporation and shares held by certain
employee stock plans); or
(c) on or after the date of the proposed action, the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative
vote of the holders of at least two-thirds of the outstanding voting
stock of the corporation not owned by the interested stockholder.
LIMITATION OF LIABILITY AND INDEMNIFICATION AGREEMENTS
Our Certificate of Incorporation provides that to the fullest extent
permitted by the DGCL, our directors will not be liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director.
Under the DGCL, liability of a director may not be limited
(a) for any breach of the director's duty of loyalty to us or our
stockholders,
(b) for acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law,
(c) in respect of certain unlawful dividend payments or stock redemptions or
repurchases, and
(d) for any transaction from which the director derives an improper personal
benefit.
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The effect of the provisions of our Certificate of Incorporation is to
eliminate our rights and the rights of our stockholders (through stockholders'
derivative suits on our behalf) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior), except in the
situations described in clauses (a) through (d) above. This provision does not
limit or eliminate our rights or the rights of any stockholder to seek
nonmonetary relief, such as an injunction or rescission, in the event of a
breach of a director's duty of care. In addition, our Certificate of
Incorporation provides that we will indemnify our directors, officers, employees
and agents against losses incurred by any such person because such person was
acting in such capacity.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, 400 South Hope Street, Fourth Floor, Los Angeles,
California 90071.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax considerations
relating to the purchase, ownership and disposition of the notes and common
stock into which notes may be converted, but does not purport to be a complete
analysis of all the potential tax considerations relating thereto. This summary
is based on laws, regulations, rulings and decisions now in effect, all of which
are subject to change or differing interpretation possibly with retroactive
effect. Except as specifically discussed below with regard to Non-U.S. Holders
(as defined below), this summary applies only to U.S. Holders (as defined below)
that are beneficial owners of notes and that will hold notes and common stock
into which notes may be converted as "capital assets" (within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code")). For
purposes of this summary, "U.S. Holders" include (i) individual citizens or
residents of the U.S., (ii) corporations, partnerships or other entities created
or organized in or under the laws of the U.S. or of any political subdivision
thereof (unless, in the case of a partnership, Treasury Regulations otherwise
provide), (iii) estates, the incomes of which are subject to U.S. federal income
taxation regardless of the source of such income or (iv) trusts subject to the
primary supervision of a U.S. court and the control of one or more U.S. persons.
Persons other than U.S. Holders ("Non-U.S. Holders") are subject to special U.S.
federal income tax considerations, some of which are discussed below. This
discussion does not address tax considerations applicable to an investor's
particular circumstances or to investors that may be subject to special tax
rules such as banks, holders subject to the alternative minimum tax, tax-exempt
organizations, insurance companies, foreign persons or entities (except to the
extent specifically set forth below), dealers in securities or currencies,
persons that will hold notes as a position in a hedging transaction, "straddle"
or "conversion transaction" for tax purposes or persons deemed to sell notes or
common stock under the constructive sale provisions of the Code. This summary
discusses the tax considerations applicable to the initial purchasers of the
notes who purchase the notes at their "issue price" as defined in Section 1273
of the Code and does not discuss the tax considerations applicable to subsequent
purchasers of the notes. We have not sought any ruling from the Internal Revenue
Service (the "IRS") or an opinion of counsel with respect to the statements made
and the conclusions reached in the following summary, and there can be no
assurance that the IRS will agree with such statements and conclusions. In
addition, the IRS is not precluded from successfully adopting a contrary
position. This summary does not consider the effect of the federal estate or
gift tax laws (except as set forth below with respect to Non-U.S. Holders) or
the tax laws of any applicable foreign, state, local or other jurisdiction.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY
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TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE
LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE
TAX TREATY.
U.S. HOLDERS
TAXATION OF INTEREST
Interest paid on the notes will be included in the income of a U.S. Holder
as ordinary income at the time it is treated as received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. Under Treasury Regulations, the possibility of an
additional payment under a note may be disregarded for purposes of determining
the amount of interest or original issue discount income to be recognized by a
holder in respect of such note (or the timing of such recognition) if the
likelihood of the payment, as of the date the notes are issued, is remote. Our
failure to file or cause to be declared effective a shelf registration statement
as described under "Description of Notes-Registration Rights of the Noteholders"
may result in the payment of predetermined liquidated damages in the manner
described therein. In addition, a holder may require us to redeem any and all of
his notes in the event of a fundamental change. We believe that the likelihood
of a liquidated damages payment with respect to the notes is remote and do not
intend to treat such possibility as affecting the yield to maturity of any note.
Similarly, we intend to take the position that a "fundamental change" is remote
under the Treasury Regulations, and likewise do not intend to treat the
possibility of a "fundamental change" as affecting the yield to maturity of any
note. In the event either contingency occurs, it would affect the amount and
timing of the income that must be recognized by a U.S. Holder of notes. There
can be no assurance that the IRS will agree with such positions.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange (other than a conversion) or redemption of a note, a
U.S. Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash proceeds and the fair market value of
any property received on the sale, exchange or redemption (except to the extent
such amount is attributable to accrued interest income not previously included
in income, which will be taxable as ordinary income, or is attributable to
accrued interest that was previously included in income, which amount may be
received without generating further income) and (ii) such holder's adjusted tax
basis in the note. A U.S. Holder's adjusted tax basis in a note generally will
equal the cost of the note to such holder. Such capital gain or loss will be
long-term capital gain or loss if the U.S. Holder's holding period in the note
is more than one year at the time of sale, exchange or redemption. Long-term
capital gains recognized by certain noncorporate U.S. Holders, including
individuals, will generally be subject to a maximum rate of tax of 20%. The
deductibility of capital losses is subject to limitations.
CONVERSION OF THE NOTES
A U.S. Holder generally will not recognize any income, gain or loss upon
conversion of a note into common stock except with respect to cash received in
lieu of a fractional share of common stock. A U.S. Holder's tax basis in the
common stock received on conversion of a note will be the same as such holder's
adjusted tax basis in the note at the time of conversion (reduced by any basis
allocable to a fractional share interest), and the holding period for the common
stock received on conversion will generally include the holding period of the
note converted. However, a U.S. Holder's tax basis in shares of common stock
considered attributable to accrued interest generally will equal the amount of
such accrued interest included in income, and the holding period for such shares
shall begin on the date of conversion.
29
<PAGE>
Cash received in lieu of a fractional share of common stock upon conversion
will be treated as a payment in exchange for the fractional share of common
stock. Accordingly, the receipt of cash in lieu of a fractional share of common
stock generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the holder's adjusted tax
basis in the fractional share).
SALE OF COMMON STOCK
Upon the sale or exchange of common stock a U.S. Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) such U.S. Holder's adjusted tax basis in the common stock.
Such capital gain or loss will be long-term capital gain or loss if the U.S.
Holder's holding period in the common stock is more than one year at the time of
the sale or exchange. Long-term capital gains recognized by certain
non-corporate U.S. Holders, including individuals, will generally be subject to
a maximum rate of tax of 20%. A U.S. Holder's basis and holding period in common
stock received upon conversion of a note are determined as discussed above under
"Conversion of the Notes." The deductibility of capital losses is subject to
limitations.
DIVIDENDS
Distributions, if any, made on the common stock after a conversion generally
will be included in the income of a U.S. Holder as ordinary dividend income to
the extent of our current or accumulated earnings and profits. Distributions in
excess of our current and accumulated earnings and profits will be treated as a
return of capital to the extent of the U.S. Holder's basis in the common stock
and thereafter as capital gain.
Holders of convertible debt instruments such as the notes may, in certain
circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. Adjustments to the conversion
price made pursuant to a bona fide reasonable adjustment formula which has the
effect of preventing the dilution of the interest of the holders of the debt
instruments, however, will generally not be considered to result in a
constructive distribution of stock. Certain of the possible adjustments provided
in the notes (including, without limitation, adjustments in respect of taxable
dividends to our stockholders) will not qualify as being pursuant to a bona fide
reasonable adjustment formula. If such adjustments are made, the U.S. Holders of
the notes may be deemed to have received constructive distributions taxable as
dividends to the extent of our current and accumulated earnings and profits even
though they have not received any cash or property as a result of such
adjustments. In certain circumstances, the failure to provide for such an
adjustment may result in taxable dividend income to the U.S. Holders of common
stock.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
In general, subject to the discussion below concerning backup withholding:
(a) Payments of principal or interest on the notes by us or any
paying agent to a beneficial owner of a note that is a Non-U.S. Holder
will not be subject to U.S. federal income tax or U.S. withholding tax,
provided that, in the case of interest, (i) such Non-U.S. Holder does not
own, actually or constructively, 10% or more of the total combined voting
power of all classes of our stock entitled to vote within the meaning of
Section 871(h)(3) of the Code, (ii) such Non-U.S. Holder is not a
"controlled foreign corporation" within the meaning of Section 957(a) of
the Code with respect to which we are a "related person" within the
meaning of Section 864(d)(4) of the Code, (iii) such Non-U.S. Holder is
not a bank receiving interest described in Section 881(c)(3)(A) of the
Code, and (iv) the certification
30
<PAGE>
requirements under Section 871(h) or Section 881(c) of the Code and
Treasury Regulations thereunder (discussed below) are satisfied;
(b) A Non-U.S. Holder of a note or common stock will not be subject
to U.S. federal income tax on gains realized on the sale, exchange or
other disposition of such note or common stock unless (i) such Non-U.S.
Holder is an individual who is present in the U.S. for 183 days or more
in the taxable year of sale, exchange or other disposition, and certain
conditions are met, (ii) such gain is effectively connected with the
conduct by the Non-U.S. Holder of a trade or business in the U.S. and, if
certain U.S. income tax treaties apply, is attributable to a U.S.
permanent establishment maintained by the Non-U.S. Holder, (iii) the
Non-U.S. Holder is subject to Code provisions applicable to certain U.S.
expatriates, or (iv) in the case of common stock held by a person who
holds more than 5% of such stock, we are or have been, at any time within
the shorter of the five-year period preceding such sale or other
disposition or the period such Non-U.S. Holder held the common stock, a
U.S. real property holding corporation (a "USRPHC") within the meaning of
Section 897(c)(2) of the Code for U.S. federal income tax purposes. We do
not believe that we are currently a USRPHC or that we will become one in
the future; and
(c) Interest on notes not excluded from U.S. federal income tax or
U.S. withholding tax as described in (a) above and dividends on common
stock after conversion generally will be subject to U.S. withholding tax
at a 30% rate, except where an applicable U.S. income tax treaty provides
for the reduction or elimination of such withholding tax.
To satisfy the certification requirements referred to in (a)(iv) above,
Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that either (i) the beneficial owner of a note certify, under penalties
of perjury, to us or our paying agent, as the case may be, that such owner is a
Non-U.S. Holder, or (ii) a securities clearing organization, bank or other
financial institution that holds customer securities in the ordinary course of
its trade or business (a "Financial Institution") and holds the note on behalf
of the beneficial owner thereof certify, under penalties of perjury, to us or
our paying agent, as the case may be, that such certificate has been received
from the beneficial owner and furnish the payor with a copy thereof. Such
requirement will be fulfilled if the beneficial owner of a note certifies on IRS
Form W-8 BEN, under penalties of perjury, that it is a Non-U.S. Holder or any
Financial Institution holding the note on behalf of the beneficial owner files a
statement with the withholding agent to the effect that it has received such a
statement from the beneficial owner (and furnishes the withholding agent with a
copy thereof).
If a Non-U.S. Holder of a note or common stock is engaged in a trade or
business in the U.S. and if interest on the note, dividends on the common stock,
or gain realized on the sale, exchange or other disposition of the note or
common stock is effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a U.S. permanent
establishment maintained by the Non-U.S. Holder in the U.S.), the Non-U.S.
Holder, although exempt from U.S. withholding tax (provided that the
certification requirements discussed in the next sentence are met), will
generally be subject to U.S. federal income tax on such interest, dividends or
gain on a net income basis in the same manner as if it were a U.S. Holder. In
lieu of the certificate described above, such a Non-U.S. Holder will be
required, under currently effective Treasury Regulations, to provide us with a
properly executed IRS Form W-8ECI in order to claim an exemption from U.S. tax
withholding. In addition, if such Non-U.S. Holder is a foreign corporation, it
may be subject to a branch profits tax equal to 30% (or such lower rate provided
by an applicable U.S. income tax treaty) of a portion of its effectively
connected earnings and profits for the taxable year.
31
<PAGE>
U.S. FEDERAL ESTATE TAX
A note held by an individual who at the time of death is not a citizen or
resident of the U.S. (as specially defined for U.S. federal estate tax purposes)
will not be subject to U.S. federal estate tax if the individual did not
actually or constructively own 10% or more of the total combined voting power of
all classes of our stock and, at the time of the individual's death, payments
with respect to such note would not have been effectively connected with the
conduct by such individual of a trade or business in the U.S. Common stock held
by an individual who at the time of death is not a citizen or resident of the
U.S. (as specially defined for U.S. federal estate tax purposes) will be
included in such individual's estate for U.S. federal estate tax purposes,
unless an applicable U.S. estate tax treaty otherwise applies.
Non-U.S. Holders should consult with their tax advisors regarding U.S. and
foreign tax consequences with respect to the notes and common stock.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of U.S. federal income tax at a rate of 31% may apply to
payments pursuant to the terms of a note or common stock to a U.S. Holder that
is not an "exempt recipient" and that fails to provide certain identifying
information (such as the holder's TIN) in the manner required. Generally,
individuals are not exempt recipients, whereas corporations and certain other
entities are exempt recipients. Payments made in respect of a note or common
stock must be reported to the IRS, unless the U.S. Holder is an exempt recipient
or otherwise establishes an exemption.
In the case of payments of interest on a note to a Non-U.S. Holder, backup
withholding and information reporting will not apply to payments with respect to
which either requisite certification has been received or an exemption has
otherwise been established (provided that neither we nor a paying agent has
actual knowledge (or, for payments made after December 31, 2000, actual
knowledge or reason to know) that the holder is a U.S. Holder or that the
conditions of any other exemption are not in fact satisfied).
Dividends on the common stock paid to Non-U.S. Holders that are subject to
U.S. withholding tax, as described above, generally will be exempt from U.S.
backup withholding tax but will be subject to certain information reporting
requirements.
Payments of the proceeds of the sale of a note or common stock to or through
a foreign office of a U.S. Holder or a foreign office of a broker that is a U.S.
related person (either a "controlled foreign corporation" or a foreign person,
50% or more of whose gross income from all sources for the three-year period
ending with the close of its taxable year preceding the payment was effectively
connected with the conduct of a trade or business within the U.S.) or, effective
January 1, 2001, a foreign partnership, if at any time during its tax year, one
or more of its partners are U.S. persons who in the aggregate hold more than 50%
of the income or capital interests in the partnership, or such foreign
partnership is engaged in a U.S. trade or business, are subject to certain
information reporting requirements, unless the payee is an exempt recipient or
such broker has evidence in its records that the payee is a Non-U.S. Holder and
no actual knowledge (or, for payments made after December 31, 2000, no actual
knowledge or reason to know) that such evidence is false and certain other
conditions are met. Such payments are not currently subject to backup
withholding.
Payments of the proceeds of a sale of a note or common stock to or through
the U.S. office of a broker will be subject to information reporting and backup
withholding unless the payee certifies under penalties of perjury as to his or
her status as a Non-U.S. Holder and satisfies certain other qualifications (and
no agent of the broker who is responsible for receiving or reviewing such
statement has actual knowledge (or, for payments made after December 31, 2000,
actual knowledge or reason to know) that it is incorrect) and provides his or
her name and address or the payee otherwise establishes an exemption.
32
<PAGE>
Any amounts withheld under the backup withholding rules from a payment to a
holder of a note or common stock will be allowed as a refund or credit against
such holder's U.S. federal income tax provided that the required information is
furnished to the IRS in a timely manner.
The Treasury Regulations that become effective for payments made after
December 31, 2000 do not significantly alter the substantive withholding and
information reporting requirements discussed herein. In general, these
regulations unify current certification procedures and forms and clarify
reliance standards. Under these new regulations, special rules apply which
permit the shifting of primary responsibility for withholding to certain
financial intermediaries acting on behalf of beneficial owners. A holder of a
note or common stock should consult with its tax advisor regarding the
application of the backup withholding rules to its particular situation, the
availability of an exemption therefrom, the procedure for obtaining such an
exemption, if available, and the impact of these new regulations on payments
made with respect to notes or common stock after December 31, 2000.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH
PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR U.S.
FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING
OF THE NOTES AND OUR COMMON STOCK. TAX ADVISORS SHOULD ALSO BE CONSULTED AS TO
THE U.S. ESTATE AND GIFT TAX CONSEQUENCES AND THE FOREIGN TAX CONSEQUENCES OF
PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND OUR COMMON STOCK, AS WELL AS
THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
SELLING HOLDERS
The notes were originally issued by us and sold by Morgan Stanley & Co.
Incorporated, J.P. Morgan & Co. and Banc of America Securities LLC, as initial
purchasers, in a transaction exempt from the registration requirements of the
Securities Act to persons reasonably believed by the initial purchasers to be
qualified institutional buyers. Selling holders, including their transferees,
pledges or donees or their successors, may from time to time offer and sell any
or all the notes and common stock into which the notes are convertible.
The selling holders have represented to us that they purchased the notes and
the common stock issuable upon conversion of the notes for their own account for
investment only and not with a view toward selling or distributing them, except
through sales registered under the Securities Act or exemptions therefrom. We
agreed with the selling holders to file this registration statement to register
the resale of the notes and the common stock. We agreed to prepare and file all
necessary amendments and supplements to the registration statement to keep it
effective until the date on which the notes and the common stock issuable upon
their conversion no longer qualify as "registrable securities" under our
registration rights agreement.
The following table sets forth, as of October 16, 2000, information
regarding the beneficial ownership of the notes and our common stock by the
selling holders. The information is based on information provided by or on
behalf of the selling holders.
The selling holders may offer all, some or none of the notes or common stock
into which the notes are convertible. Thus, we cannot estimate the amount of the
notes or the common stock that will be held by the selling holders upon
termination of any sales. The column showing ownership after completion of the
offering assumes that the selling holders will sell all of the securities
offered by this prospectus. In addition, the selling holders identified below
may have sold, transferred or otherwise disposed of all or a portion of their
notes since the date on which they provided the information about their notes in
transactions exempt from the registration requirements of the Securities Act.
Except as indicated below, none of the selling holders has had any material
relationship with us or our affiliates
33
<PAGE>
within the past three years. This table assumes that other holders of notes or
any future transferees from any such holder do not beneficially own any common
stock other than common stock into which the notes are convertible.
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
AIG/National Union Fire Insurance........... $ 1,325,000 17,921 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Aloha Airlines Non-Pilots Pension Trust..... $ 180,000 2,435 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Aloha Airlines Pilots Retirement Trust...... $ 100,000 1,353 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Argent Classic Convertible Arbitrage Fund
(Bermuda) L.P............................. $ 7,000,000 94,678 0 *
73 Front Street
P.O. Box HM 3013
Hamilton HMMX, Bermuda
Argent Convertible Arbitrage Fund Ltd....... $ 2,000,000 27,051 0 *
73 Front Street
P.O. Box 3013
Hamilton HMMX, Bermuda
Arkansas PERS............................... $ 2,880,000 38,953 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Associated Electric & Gas Insurance Services
Limited................................... $ 800,000 10,820 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Aventis Pension Master Trust................ $ 240,000 3,246 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Banc of America Securities LLC(2)........... $ 8,300,000 112,261 0 *
9 West 57 Street, 29th Floor
New York, NY 10003
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
Bank Austria Cayman Island, Ltd............. $ 4,460,000 60,323 0 *
666 Third Ave., 26th Fl.
New York, NY 10017
BBT Fund, L.P............................... $ 12,500,000 169,067 0 *
201 Main St., Suite 3200
Fort Worth, TX 76102
Bear, Stearns & Co.......................... $ 3,850,000 52,073 0 *
245 Park Ave., 13th Fl.
New York, NY 10167
Boilermaker-Blacksmith Pension Trust........ $ 1,480,000 20,018 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Boilermakers Blacksmith Pension Trust....... $ 2,075,000 28,065 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
BS Debt Income Fund--Class A................ $ 20,000 271 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
C&H Sugar Company, Inc...................... $ 275,000 3,719 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
CALAMOS-Registered Trademark- Convertible
Fund--CALAMOS-Registered Trademark-
Investment Trust.......................... $ 2,170,000 29,350 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
CALAMOS-Registered Trademark- Convertible
Growth and Income
Fund--CALAMOS-Registered Trademark-
Investment Trust.......................... $ 700,000 9,468 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
CALAMOS-Registered Trademark- Convertible
Portfolio--CALAMOS-Registered Trademark-
Advisors Trust............................ $ 80,000 1,082 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
CALAMOS-Registered Trademark- Convertible
Technology Fund--
CALAMOS-Registered Trademark- Investment
Trust c/o CALAMOS-Registered Trademark-... $ 60,000 812 0 *
Asset Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
CALAMOS-Registered Trademark- Global
Convertible Fund--
CALAMOS-Registered Trademark- Investment
Trust..................................... $ 75,000 1,014 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
CALAMOS-Registered Trademark- Market Neutral
Fund--CALAMOS-Registered Trademark-
Investment Trust.......................... $ 1,250,000 16,907 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Canyon Value Realization (Cayman) Ltd....... $ 19,015,000 257,185 0 *
Canyon Capital Advisors
9665 Wilshire Blvd., Suite 200
Beverly Hills, CA 90212
Champion International Corporation Master
Retirement Trust.......................... $ 640,000 8,656 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Chrysler Corporation Market Retirement
Trust..................................... $ 9,095,000 123,013 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
City of Knoxville Pension System............ $ 350,000 4,734 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
CIBC World Markets.......................... $ 9,695,000 131,129 0 *
1 World Financial Center, 8th Floor
200 Liberty Street
New York, NY 10281
Class 1C Company Ltd., The.................. $ 1,500,000 20,288 0 *
c/o PRS International (Cayman) Ltd.
701 Brickell Ave., Ste. 850
Miami, FL 33131
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
Consulting Group Capital Markets Funds...... $ 325,000 4,396 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Deam Convertible Arbitrage FD............... $ 2,500,000 33,813 0 *
195 Maplewood Avenue
Maplewood, NJ 07040
Deephaven Domestic Convertible Trading
Ltd....................................... $ 4,500,000 60,864 0 *
130 Cheshire Lane, Ste. 102
Minnetonka, MN 55305
Delaware PERS............................... $ 3,325,000 44,972 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Delphi Financial Group, Inc................. $ 480,000 6,492 0 *
Canyon Capital Advisors
9665 Wilshire Blvd., Suite 200
Beverly Hills, CA 90212
Delta Airlines Master Trust................. $ 2,720 37 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Delta Airlines Master Trust................. $ 3,315,000 44,837 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
Dow Chemical Company Employees'
Retirement Plan, The...................... $ 2,920,000 39,494 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Federated Equity Funds, on behalf of its
Federated Capital Appreciation Fund....... $ 9,500,000 128,491 0 *
c/o Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779.................
Grace Brothers, Ltd......................... $ 3,000,000 40,576 0 *
1560 Sherman Ave., Suite 900
Evanston, IL 60201
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
Hawaiian Airlines Employees Pension Plan--
IAM....................................... $ 85,000 1,150 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Hawaiian Airlines Pension Plan for Salaried
Employees................................. $ 20,000 271 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Hawaiian Airlines Pilots Retirement Plan.... $ 165,000 2,232 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Highbridge International LLC................ $ 20,000,000 270,508 0 *
P.O. Box 30554 SMB
Grand Cayman, Cayman Islands BWI
ICI American Holdings Trust................. $ 1,775,000 24,008 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Island Holdings............................. $ 75,000 1,014 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
JMG Capital Partners, LP.................... $ 1,000,000 13,525 0 *
1999 Avenue of the Stars, Ste. 2530
Los Angeles, CA 90067
Kentfield Trading Ltd....................... $ 2,850,000 38,547 0 *
300 Drakes Landing Road, Ste. 180
Greenbrae, CA 94904
Knoxville Utilities Board Retirement
System.................................... $ 220,000 2,976 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Lancer Securities........................... $ 750,000 10,144 0 *
195 Maplewood Avenue
Maplewood, NJ 07040
Lipper Convertibles Series II, L.P.......... $ 1,000,000 13,525 0 *
101 Park Avenue, 6th Floor
New York, NY 10178
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
Lipper Offshore Convertibles, L.P........... $ 1,500,000 20,288 0 *
101 Park Avenue, 6th Floor
New York, NY 10178
Lipper Offshore Convertibles, L.P. #2....... $ 1,000,000 13,525 0 *
101 Park Avenue, 6th Floor
New York, NY 10178
McMahan Securities Co. L.P.................. $ 569,000 7,696 0 *
181 Harbor Drive
Stamford, CT 06902-7474
Motion Picture Industry Health Plan--Active
Member Fund............................... $ 1,060,000 14,337 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
Motion Picture Industry Health Plan--Retiree
Member Fund............................... $ 530,000 7,168 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
Nalco Chemical Company...................... $ 500,000 6,763 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
OCM Convertible Trust....................... $ 3,840,000 51,938 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
Partner Reinsurance Company Ltd............. $ 1,790,000 24,210 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
PEGP III LLC................................ $ 250,000 3,381 0 *
195 Maplewood Avenue
Maplewood, NJ 07040
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees Represented by Local 85
of the Amalgamated Transit Union.......... $ 1,550,000 20,964 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
PRIM Board.................................. $ 4,375,000 59,174 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Queens Health Plan.......................... $ 60,000 812 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Ramius Capital Group Holdings, Ltd.......... $ 1,160,000 15,689 0 *
666 Third Ave., 26th Fl.
New York, NY 10017
RCG Latitude Master Fund.................... $ 200,000 2,705 0 *
666 Third Ave., 26th Fl.
New York, NY 10017
SC Cowen Securities......................... $ 15,000,000 202,881 0 *
Financial Square--27th Floor
New York, NY 10005
SPT......................................... $ 615,000 8,318 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Starvest Combined Portfolio................. $ 1,625,000 21,979 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
State Employees' Retirement Fund of the
State of Delaware......................... $ 4,595,000 62,149 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
State of Connecticut Combined Investment
Funds..................................... $ 10,185,000 137,756 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
State of Oregon Equity...................... $ 7,350,000 99,412 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
State of Oregon/SAIF Corporation............ $ 7,250,000 98,059 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
Tribeca Investments LLC..................... $ 24,500,000 331,372 0 *
399 Park Avenue, 7th Floor
New York, NY 10022
UBKAM Arbitrage Fund........................ $ 500,000 6,763 0 *
7 Baker Street
London, WIM 1AB
Value Realization Fund, LP.................. $ 8,005,000 108,271 0 *
Canyon Capital Advisors
9665 Wilshire Blvd., Suite 200
Beverly Hills, CA 90212
Value Realization Fund B, LP................ $ 500,000 6,763 0 *
Canyon Capital Advisors
9665 Wilshire Blvd., Suite 200
Beverly Hills, CA 90212
Van Waters & Rogers, Inc. Retirement Plan... $ 430,000 5,816 0 *
(f.k.a. Univar Corporation)
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
Vanguard Convertible Securities Fund,
Inc....................................... $ 11,090,000 149,997 0 *
c/o Oaktree Capital Management, LLC
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
White River Securities...................... $ 3,850,000 52,073 0 *
245 Park Ave.
Global Fund Management--13th Fl.
New York, NY 10167
Zeneca Holdings Trust....................... $ 1,350,000 18,259 0 *
c/o Froley, Revy Investment Company
10900 Wilshire Blvd., Suite 900
Los Angeles, CA 90024
ZCM/HFR Index Management, L.L.C............. $ 115,000 1,555 0 *
c/o CALAMOS-Registered Trademark- Asset
Management, Inc.
1111 E. Warrenville Rd.
Naperville, IL 60563-1493
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
NOTES AND
COMMON STOCK
BENEFICIALLY
OWNED AFTER
PRINCIPAL AMOUNT OF COMMON STOCK OFFERING
NOTES BENEFICIALLY BENEFICIALLY OWNED -------------------
NAME AND ADDRESS OWNED AND OFFERED AND OFFERED(1) AMOUNT %
---------------- ------------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
Any other holder of notes or future
transferee, pledgee, donee or successor of
any holder(3)(4).......................... $284,733,280 3,851,130 0 *
TOTAL....................................... $550,000,000 7,438,967 0 *
</TABLE>
------------------------
* Less than 1%.
(1) Assumes conversion of all the holder's notes at a conversion price of
$73.935 per share of common stock and resale of all shares of common stock
offered hereby.
(2) Banc of America Securities LLC was a co-manager of the Company's private
placement of the notes in July 2000 pursuant to Rule 144A of the Securities
Act of 1933, as amended.
(3) Information about other selling security holders will be set forth in
prospectus supplements, if required.
(4) Assumes that any other holders of notes, or any future transferees, pledges,
donees or successors of or from any such other holders of notes, do not
beneficially own any common stock other than the common stock issuable upon
conversion of the notes at the initial conversion rate.
Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this prospectus if
necessary. In addition, the per share conversion price, and therefore the number
of shares of common stock issuable upon conversion of the notes, is subject to
adjustment. As a result, the aggregate principal amount of the notes and the
number of shares of common stock into which the notes convertible may increase
or decrease.
PLAN OF DISTRIBUTION
The selling holders and any of their pledges, assignees, donees, other
transferees and successors-in-interest may, from time to time, sell any or all
of their notes or shares of the common stock issuable upon conversion of the
notes at fixed prices, at prevailing market prices at the time of sale, at
prices related to such prevailing market prices, at varying prices determined at
the time of sale or at negotiated prices. These sales may be effected in
transactions on any national securities exchange or quotation service on which
the notes or the common stock may be listed or quoted at the time of the sale.
The selling holders may use any one or more of the following methods when
selling the notes or the shares of our common stock issuable upon conversion of
the notes:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the notes or
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchase by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling holders to sell a specified
number of shares at a stipulated price per share;
42
<PAGE>
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling holders may also sell notes or shares of our common stock
issuable upon conversion of the notes under Rule 144A of the Securities Act, if
available, rather than under the prospectus.
The selling holders may also engage in short sales against the box, puts and
calls and other transactions in our securities or derivatives of our securities
and may sell or deliver shares in connection with these trades. The selling
holders may pledge their shares to their brokers under the margin provisions of
customer agreements. If a selling holder defaults on a margin loan, the broker
may, from time to time, offer and sell the pledged shares.
Our outstanding common stock is listed for trading on The New York Stock
Exchange and the Pacific Exchange. While the notes are eligible for trading in
the PORTAL market, we do not expect the notes to remain eligible for trading on
that market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market. We cannot assure you that
a trading market for the notes will develop. If a trading market for the notes
fails to develop, the trading price of the notes may decline.
Broker-dealers engaged by the selling holders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling holders (or, if any broker-dealer acts as agent
for the purchaser of notes or shares, from the purchaser) in amounts to be
negotiated.
The selling holders and any broker-dealers or agents that are involved in
selling the notes or the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the notes or shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration of
the notes or the shares, except that all selling commissions and fees and other
expenses incurred by the selling holders will be borne by such holders.
LEGAL MATTERS
The validity of the issuance of the notes and the common stock issuable on
conversion of the notes will be passed upon for us by our counsel, O'Melveny &
Myers LLP, Los Angeles, California.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K for the year ended June 30, 2000, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports, proxy
statements and other information with the SEC. These reports, proxy statements
and other information may be inspected and copied at the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549-1004. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Reports, proxy and information
statements and other information filed electronically with the SEC are available
at the SEC's website at http://www.sec.gov.
43
<PAGE>
[LOGO]
$550,000,000 4 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2007
AND
7,438,967 SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THE NOTES
------------------
PROSPECTUS
, 2000
------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated fees and expenses payable by the registrant in connection with
the sale of the 4 1/4% Convertible Subordinated Notes Due 2007 and the common
stock being registered are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
SEC Registration Fee........................................ $145,200
NYSE and Pacific Exchange Additional Listing Fees........... $ 9,000
Printing Expenses*.......................................... $
Legal Fees and Expenses*.................................... $
Accounting Fees and Expenses*............................... $
Miscellaneous Expenses*..................................... $
Total*...................................................... $
</TABLE>
------------------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the General Corporation Law of Delaware, our
bylaws provide for indemnification of our directors, employees and agents
against expenses (including attorneys' fees) and other amounts paid in
settlement actually and reasonably incurred by them in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the company), in which any such person was or is a party or is
threatened to be made a party. However, indemnification is only permitted if
(a) such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to our best interest and (b) with respect to
any criminal action or proceeding, if such person had no reasonable cause to
believe his conduct was unlawful. In the case of an action or suit by or in the
right of the company, we may not indemnify such person in respect of any claim,
issue or matter as to which he has been adjudged liable for negligence or
misconduct in the performance of his duty to us, unless and only to the extent
the court in which such action or suit was brought or the Court of Chancery
determines that such person is fairly and reasonably entitled to indemnity for
such expenses as such court may deem proper. In each case, indemnification will
be made only upon specific authorization of a majority of disinterested
directors, by written opinion of independent legal counsel or by the
stockholders, unless the director, officer, employee or agent has been
successful on the merits or otherwise in defense of any action or suit, in which
case he will be indemnified without such authorization. Our bylaws (a) require
us to pay the expenses incurred by a director or officer in defending or
investigating a threatened or pending action, suit or proceeding in advance of
the final disposition of such action, suit or proceeding upon our receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it is ultimately determined that he is not entitled to indemnification and
(b) permit us to advance such expenses to other of our employees and agents upon
such terms and conditions specified by our board of directors. The advancement
of expenses, as well as indemnification, pursuant to our bylaws, is not
exclusive of any other rights which those seeking indemnification or advancement
of expenses from us may have.
Our certificate of incorporation eliminates personal liability of our
directors to us or our stockholders for monetary damages for breach of fiduciary
duty as director, except for:
(a) any breach of the duty of loyalty to us or our stockholders;
(b) acts or omissions not in good faith or which involve intentional
misconduct or knowing violations of law;
II-1
<PAGE>
(c) liability under Section 174 of the Delaware General Corporation Law
relating to unlawful dividends and stock repurchases; or
(d) any transaction from which the director derived an improper personal
benefit.
Our bylaws permit us to purchase and maintain insurance on behalf of our
directors, officers, employees or agents against liability asserted against such
person in any such capacity, whether or not we would have the power to indemnify
him or her against such liability under the provisions of our bylaws. However,
we maintain liability insurance providing coverage only with respect to claims
made against officers and directors as to which they are entitled to be
indemnified by us.
We have a policy of directors and officers liability insurance which insures
our directors and officers against the costs of defense, settlement or payment
of a judgment under specified circumstances.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------
<C> <S>
4.1* Indenture, dated as of July 19, 2000, between International
Rectifier Corporation and Wells Fargo Bank Minnesota,
National Association, as Trustee, including the form of
4 1/4% Convertible Subordinated Note Due 2007 attached as
Exhibit A thereto.
4.2* Registration Rights Agreement, dated as of July 19, 2000, by
and among International Rectifier Corporation, as Issuer,
and Morgan Stanley & Co. Incorporated, J.P. Morgan & Co. and
Banc of America Securities LLC.
4.6** Amended and Restated Rights Agreement between International
Rectifier Corporation and ChaseMellon Shareholder Services,
LLC, dated as of December 15, 1998.
5.1 Opinion of O'Melveny & Myers LLP as to the legality of the
securities being registered.
12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.2 Consent of O'Melveny & Myers LLP (included in its opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of Wells Fargo
Bank Minnesota, National Association, trustee under the
Indenture.
</TABLE>
------------------------
* Incorporated by reference to the registrant's Current Report on Form 8-K
filed July 28, 2000.
** Incorporated by reference to the registrant's Annual Report on Form 10-K for
the Fiscal Year Ended June 30, 1999, SEC File No. 1-7935.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-2
<PAGE>
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Securities
Act") each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement will be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon II-2 Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
Rule 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of El Segundo, State of California on the 16th day
of October, 2000.
<TABLE>
<S> <C> <C>
INTERNATIONAL RECTIFIER CORPORATION
By: /s/ MICHAEL P. MCGEE
-----------------------------------------
Michael P. McGee
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Michael P. McGee as his attorney in fact
and agent, with full power of substitution, for him in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ERIC LIDOW
-------------------------------------- Chairman of the Board October 16, 2000
Eric Lidow
/s/ ALEXANDER LIDOW
-------------------------------------- Director, Chief Executive Officer October 16, 2000
Alexander Lidow
/s/ ROBERT J. MUELLER
-------------------------------------- Director, Executive Vice President October 16, 2000
Robert J. Mueller
/s/ DEREK B. LIDOW
-------------------------------------- Director October 16, 2000
Derek B. Lidow
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE KRSEK
-------------------------------------- Director October 16, 2000
George Krsek
/s/ JACK O. VANCE
-------------------------------------- Director October 16, 2000
Jack O. Vance
/s/ ROCHUS E. VOGT
-------------------------------------- Director October 16, 2000
Rochus E. Vogt
/s/ DONALD S. BURNS
-------------------------------------- Director October 16, 2000
Donald S. Burns
/s/ JAMES D. PLUMMER
-------------------------------------- Director October 16, 2000
James D. Plummer
/s/ MINORU MATSUDA
-------------------------------------- Director October 16, 2000
Minoru Matsuda
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------
<C> <S>
4.1* Indenture, dated as of July 19, 2000, between International
Rectifier Corporation and Wells Fargo Bank Minnesota,
National Association, as Trustee, including the form of
4 1/4% Convertible Subordinated Note Due 2007 attached as
Exhibit A thereto.
4.2* Registration Rights Agreement, dated as of July 19, 2000, by
and among International Rectifier Corporation, as Issuer,
and Morgan Stanley & Co. Incorporated, J.P. Morgan & Co. and
Banc of America Securities LLC.
4.6** Amended and Restated Rights Agreement between International
Rectifier Corporation and ChaseMellon Shareholder Services,
LLC, dated as of December 15, 1998.
5.1 Opinion of O'Melveny & Myers LLP as to the legality of the
securities being registered.
12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.2 Consent of O'Melveny & Myers LLP (included in its opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of Wells Fargo
Bank Minnesota, National Association, trustee under the
Indenture.
</TABLE>
------------------------
* Incorporated by reference to the registrant's Current Report on Form 8-K
filed July 28, 2000.
** Incorporated by reference to the registrant's Annual Report on Form 10-K for
the Fiscal Year Ended June 30, 1999, SEC File No. 1-7935.
