<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 1996
REGISTRATION NO. 333-00891
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ICO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
TEXAS 75-1619554
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
ICO, INC.
100 GLENBOROUGH DRIVE
SUITE 250
HOUSTON, TEXAS 77067
(713) 872-4994
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GARY P. KREIDER, ESQ.
KEATING, MUETHING & KLEKAMP
1800 PROVIDENT TOWER
ONE EAST FOURTH STREET
CINCINNATI, OHIO 45202
(513) 579-6411
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Approximate date of commencement of proposed sale to the public: As soon as
practical after the effective date of this Registration Statement.
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 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
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PROSPECTUS
ICO, INC.
311,550 SHARES OF COMMON STOCK
This Prospectus relates to an offering of 311,550 shares of Common Stock,
no par value (the "Common Stock"), of ICO, Inc., a Texas corporation ("ICO" or
the "Company"), by the holders thereof (the "Selling Stockholders").
Of the 311,550 shares of Common Stock to which this Prospectus relates, (i)
150,000 shares of Common Stock were issued to the shareholders of Permian
Enterprises, Inc., a Texas corporation ("Permian"), pursuant to a merger of
Permian with and into a wholly-owned subsidiary of ICO, (ii) 66,666 shares of
Common Stock were issued to the shareholders of B&W Equipment Sales and Mfg.,
Inc. ("B&W"), in connection with the Company's purchase of all the outstanding
shares of B&W, and (iii) 94,884 shares of Common Stock were issued to the
shareholders of R.J. Dixon, Inc. (DBA "Spinco") in connection with the purchase
of all of the outstanding capital stock of Spinco.
The Common Stock is listed on the NASDAQ National Market System under the
symbol "ICOC." On March 19, 1996, the last sale price for the Common Stock as
reported by the NASDAQ National Market System was $5.25 per share.
For a discussion of certain matters that should be considered in evaluating
an investment in the Company, see "Investment Considerations."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The Selling Stockholders may sell the Common Stock from time to time
directly or through agents, dealers or underwriters to be designated, on terms
to be determined. The Company will pay the expenses of this offering. The
Selling Stockholders will receive all of the proceeds from the offering less any
brokerage commissions or discounts to agents, dealers or underwriters. To the
extent required, the name of any such agent, dealer or underwriter, and any
applicable commissions or discounts will be described in an accompanying
prospectus supplement. The supplement will also describe any indemnification by
the Company of Selling Stockholders or any underwriter, dealer or agent against
certain liabilities, including liabilities under the Securities Act of 1933 (the
"Securities Act"). See "Plan of Distribution."
THE DATE OF THIS PROSPECTUS IS MARCH 20, 1996
<PAGE> 3
AVAILABLE INFORMATION
ICO is subject to the information reporting requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the SEC at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the SEC: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and New York Regional Office, 7 World Trade Center, New York, New
York 10048. Copies of such material also may be obtained at prescribed rates
from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Company's Common Stock is traded in the
NASDAQ National Market System and listed on the Boston Stock Exchange, and such
reports, proxy statements and other information may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006, and The Boston Stock Exchange, One Boston Place, Boston, Massachusetts
02108.
This Prospectus constitutes part of a Registration Statement on Form S-3
(No. 333-00891) filed under the Securities Act and omits certain of the
information set forth in the Registration Statement and the exhibits thereto.
Reference is made to the Registration Statement and the exhibits thereto for
further information with respect to the Company and the Common Stock. Copies of
the Registration Statement are available from the SEC. Statements contained in
this Prospectus concerning the provisions of documents filed with the
Registration Statement as exhibits are necessarily summaries of such documents,
and each such statement is qualified in its entirety by reference to the copy of
the applicable document filed with the SEC.
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INFORMATION INCORPORATED BY REFERENCE
ICO's Annual Report on Form 10-K for the fiscal year ended September 30,
1995, Quarterly Report on Form 10-Q for the quarter ended December 31, 1995 and
Form 8-K filed December 18, 1995 have been filed with the SEC and are
incorporated herein by reference.
Wedco Technology, Inc.'s Annual Report on Form 10-K for the fiscal year
ended March 31, 1995; Quarterly Reports on Form 10-Q for the quarters ended June
30, 1995, September 30, 1995 and December 31, 1995 and Reports on Form 8-K dated
August 14, 1995 and February 5, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934 subsequent to the date of this
Prospectus and prior to the termination of the offering of Common Stock to be
made hereunder shall be deemed to be incorporated herein by reference and made a
part hereof from the date of filing.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained therein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge a
copy of any document or part thereof incorporated herein by reference (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the information the Registration Statement
incorporates), upon written or oral request. Requests should be directed to
Chief Financial Officer, ICO, Inc., 100 Glenborough Drive, Suite 250, Houston,
Texas 77067, telephone (713) 872-4994.
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THE COMPANY
ICO, Inc. provides inspection, reconditioning and coating services for new
and used tubular goods and sucker rods utilized in the oil and gas industry. The
Company is the leading provider of sucker rod services and one of the largest
providers of inspection, reconditioning and coating services for tubular goods
in the United States. The Company's customers include the major domestic oil and
gas companies, as well as independent oil and gas companies, drilling
contractors and manufacturers of tubular goods.
The Company announced that it has entered into a definitive merger
agreement for the merger (the "Merger") of Wedco Technology, Inc. ("Wedco") into
a subsidiary of the Company. In the proposed Merger, Wedco shareholders will
receive the choice of either 2.2 shares of Company Common Stock and $3.50 cash
or 2.84 shares of Company Common Stock for each share of Wedco Common Stock. The
Merger is subject, among other things, to approval by Wedco's shareholders of
the Merger and approval by ICO's shareholders of the issuance of ICO's Common
Stock pursuant to the Merger. If all of the Wedco shareholders elected to
receive the all stock option, 10,132,509 shares of ICO Common Stock would be
issued in the Merger. ICO and Wedco expect to hold special shareholder meetings
for the purpose of obtaining shareholder approval of the above matters in March
or April 1996.
THE OFFERING
<TABLE>
<S> <C>
Shares to be sold by the Selling
Stockholders....................... 311,550 shares of Common Stock
Shares to be sold by the Company..... None.
Proceeds to the Company.............. None.
Common Stock outstanding (1)......... 8,927,361 shares of Common Stock were outstanding at
March 19, 1996. No additional shares of Common Stock
will become outstanding as a result of the sale of
the shares offered hereby.
NASDAQ symbol........................ ICOC
</TABLE>
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(1) Excludes 5,175,591 shares of Common Stock reserved for issuance at March 19,
1996, pursuant to outstanding stock options, convertible securities and
Common Stock purchase warrants.
INVESTMENT CONSIDERATIONS
Prior to making an investment decision, prospective investors should
carefully consider, together with the other information contained in this
Prospectus, the factors set forth below.
RISK FACTORS RELATING TO ICO
Industry Conditions
Demand for ICO's products and services depends primarily on the level of
oil and gas drilling and production activity, including the level of workover
activity. These activities have been, and will continue to be, influenced by
factors that have rendered the market for ICO's products and services somewhat
volatile; over which ICO has no control. These factors include the price and
availability of oil and gas, exploration and production capital expenditures by
major and independent oil and gas companies, the ability of the members of the
Organization of Petroleum Exporting Countries to maintain price stability
through voluntary production limits, worldwide demand for oil and gas and
general economic and political conditions. In particular, demand for ICO's
internal coating services and used tubular and sucker rod services tends to
fluctuate with the price of oil and the level of workover activity, and demand
for ICO's new tubular services tends to fluctuate with the domestic drilling rig
count. Domestic drilling activity declined significantly over the several years
culminating in June 1992 when the average monthly rig count reached a post-World
War II low of 596 rigs. Since June 1992, the rig count has tended to fluctuate
in a range of approximately 600 rigs to approximately 900 rigs,
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depending on demand, seasonal conditions and other factors. As of March 8, 1996,
the domestic rig count was 719. There can be no assurance that detrimental
industry factors will not adversely impact ICO's business.
Recent Losses and Financial Condition
ICO reported net losses in fiscal years 1991, 1992 and 1993. The
restructuring of ICO's management commenced early in fiscal year 1994. See
"-- Risk Factors Relating to the Merger -- Control of the Combined Company after
the Merger." ICO reported net income in fiscal years 1994 and 1995. ICO's net
income for the fiscal year ended September 30, 1995 was $5,790,000. There can be
no assurance that ICO will be profitable in the future.
Environmental Regulations
ICO's services routinely involve the handling of chemical substances and
waste materials, some of which may be considered to be hazardous wastes. ICO is
subject to numerous local, state and federal laws and regulations concerning the
use and handling of hazardous materials and restricting releases of pollutants
and contaminants into the environment. Many of these laws and regulations
provide for strict liability for the costs of cleaning up contamination
resulting from releases of regulated materials into the environment. ICO's
insurance policies do provide coverage for environmental or other damages caused
as a result of, among other things, defective casing or tubing inspected by ICO.
Although management of ICO believes that ICO is in substantial compliance with
these laws and regulations and also believes continued compliance with existing
laws and regulations and estimated capital expenditures for environmental
remediation will not have a material adverse effect on ICO's results of
operations or financial condition, there can be no such assurance that such an
effect will not occur. See "-- Legal Proceedings."
Competition
The principal competitive factors in ICO's business are price, availability
and quality of service. Consolidation in the tubular inspection, reconditioning
and coating industry has resulted in the elimination of many of ICO's
competitors and reduced ICO's competition in some product lines in some markets
to a single competitor. This consolidation has reduced the capacity which exists
in the domestic market to some extent, but the tubular inspection,
reconditioning and coating industry continues to be highly competitive. ICO's
ability to compete effectively is also dependent upon timely and reliable
performance of its services at competitive rates. If the level of domestic
exploration and production-related activity declines, the prices received by ICO
for its services could be adversely affected. Further, ICO's ability to use
certain technology granted under a license in connection with the acquisition of
Baker Hughes Tubular Services, Inc. ("BHTS") on September 30, 1992 is restricted
in most foreign markets. There can be no assurance ICO will not encounter
increased competition which could adversely affect its business, results and
operation or financial condition.
Legal Proceedings
ICO is a named defendant in thirteen suits involving fourteen plaintiffs,
filed between June 1988 and February 1996, for personal injury claims alleging
exposure to silica resulting in silicosis-related disease. ICO is generally
protected under workers' compensation law from claims under these suits except
to the extent a judgment is awarded against ICO for intentional tort. In 1994,
ICO was dismissed without liability from two suits alleging intentional tort
against ICO for silicosis-related disease. In fiscal 1993, ICO settled two other
suits, both of which alleged wrongful death caused by silicosis-related
diseases, which resulted in a total charge of $605,000. Two of the pending
personal injury cases involve three alleged silicosis-related deaths, which are
premised upon allegations of gross negligence. The standard of liability
applicable to the remainder of the pending cases is intentional tort, a stricter
standard than the gross negligence standard applicable to the wrongful death
case. ICO and its counsel cannot at this time predict with any reasonable
certainty the outcome of any of the remaining suits. Except as described below,
ICO does not believe, however, that such suits will have a material adverse
effect on the financial conditions or results of operations of ICO. ICO does
have in effect general liability and employer's liability insurance policies
applicable to the referenced suits;
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however, ICO has been advised by each of the involved insurance carriers of a
reservation of rights with regard to policy obligations pertaining to the suits
because of various exclusions in the policies with the exception of a
consolidated wrongful death case filed February 1996 by the heirs of two former
employees, but not yet served upon ICO, as to which no position has been
asserted by the pertinent insurance carriers. If an adverse judgment is obtained
against ICO in any of the referenced suits which is ultimately determined not to
be covered by insurance, the amount of such judgment could have a material
adverse effect on the financial condition or results of operations of ICO.
In connection with ICO's acquisition of BHTS in September 1992, Baker
Hughes, Incorporated ("Baker Hughes") agreed to reimburse ICO for 50% of BHTS
environmental remediation costs in excess of $318,000, with Baker Hughes' total
reimbursement obligation being limited to $1,000,000. BHTS is a responsible
party at two hazardous waste disposal sites that are currently undergoing
remediation pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, the French Limited site northeast of Houston, Texas, and the
Sheridan site near Hempstead, Texas. Based on the relatively advanced status of
the remediation at these sites and BHTS's minimal contribution of wastes at each
site, management believes that ICO's future liability under the agreement with
Baker Hughes with respect to these two sites will not be material to ICO.
RISK FACTORS RELATING TO WEDCO
Cyclicality of Business
Wedco's business cycles are created by changes in the cost of the plastic
pellets produced by the major petrochemical companies; as a result, the cycles
are relatively unpredictable. Because plastic pellets are fungible, the various
producers of plastic pellets tend to charge substantially similar prices. When
resin prices are increasing, users often build inventories to hedge against
further price increases, with the result that Wedco's processing activity also
increases. When prices decline, customers of the petrochemical companies often
delay purchasing resin and utilize existing inventory in the anticipation of
price reductions, thus reducing requirements for Wedco's processing. Wedco's
customers, in most cases, are the major petrochemical companies which produce
these materials.
Foreign Currency Translation
The fluctuations of the U.S. dollar against certain foreign currencies,
particularly the Dutch guilder and British pound, impact the translation of
revenue and income of Wedco's foreign subsidiaries into U.S. dollars. Such
fluctuations may be significant and may have a material effect on Wedco's
financial statements, which may be positive or negative in any given period. The
increases (decreases) in certain income statement accounts resulting from these
fluctuations as shown on Wedco's Consolidated Statements of Income over the past
two fiscal years are as follows:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-----------------------------
1995 VS. 1994 1994 VS. 1993
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<S> <C> <C>
Net revenues................................................ $ 1,183,000 $ (1,174,000)
Operating income............................................ 228,000 (197,000)
Pre-tax income.............................................. 210,000 (155,000)
Net income.................................................. 147,000 (131,000)
</TABLE>
Gains and losses from the translation of certain balance sheet accounts are
not included in determining net income, but are accumulated as a separate
component of shareholders' equity. These unrealized gains and losses are also
subject to deferred income taxes. As a result of the dollar's fluctuation
against the Dutch guilder and British pound and changes in the net assets of
foreign subsidiaries, shareholders' equity increased, net of deferred income
taxes, by $1,349,000 in fiscal 1995.
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Competition
In its basic business of plastics grinding, Wedco's primary competitors in
the U.S. are smaller, local firms that lack the multiple plant locations,
technology and/or production capacity of Wedco. More substantial competition in
size-reduction services of plastics exists in Europe. End users of ground
plastic pellets may also perform grinding services themselves rather than
purchase materials that have been ground by outside contractors. Due to Wedco's
technical expertise and equipment manufacturing capabilities, Wedco believes
that it can provide plastics grinding services at a lower cost than most of its
customers and competitors. In addition, Wedco's ability to provide convenient
service to its customers is greatly enhanced due to its network of facilities
throughout North America and Western Europe. Wedco also experiences greater
competition in its other major processing service sectors, such as cryogenic
grinding, air-jet milling and compounding.
Wedco also manufactures grinding equipment. Until recently, it supplied
virtually all of such equipment for the North American market. However,
competition in the manufacturing and sale of such equipment has developed.
Decline in Earnings in Fiscal 1996
Wedco reported an increase of less than 1% and a decrease of 13.5% in net
revenues for the nine-month and three-month periods ended December 31, 1995,
respectively, when compared to the same periods in fiscal 1995. Operating income
decreased by 43.1% and 72.6% during these same periods, respectively. The
cyclical downturn in the worldwide plastics industry experienced during the
current fiscal year resulted in declines in the utilization of machinery and
equipment and an increase in unit costs as a result of the inability to spread
certain fixed costs over as many units. Furthermore, a portion of the increase
in revenues reported during the nine-month period ended December 31, 1995, is
attributed to an increase in compounding sales rendered by Wedco's Dutch
subsidiary. Such compounding revenues yield lower margins than traditional
processing services. Income from Wedco's investment in joint ventures decreased
from $450,535 to $61,734 and increased from $94,415 to $151,325 during the
nine-month and three-month periods ended December 31, 1995, respectively, the
decrease resulting primarily from a decline in earnings experienced by Wedco's
Canadian joint venture. See "-- Recent Results of Joint Ventures." Interest
expense increased 10.7% and 12.7% during the nine-month and three-month periods,
respectively, when compared to the same periods of fiscal 1995. The decreases in
operating income and joint venture earnings, coupled with an increase in other
expenses, resulted in a 75.2% and 99.6% decline in net income for the nine-month
and three-month periods ended December 31, 1995, respectively, when compared to
the same periods of the prior fiscal year. There can be no assurance that such
decreases in operating income and joint venture earnings and increase in
expenses will not continue.
Recent Results of Joint Ventures
Income from Wedco's investment in joint ventures decreased from $450,535 to
$61,734 or 86.3% and increased from $94,415 to $151,325 or 60.3% during the
nine-month and three-month periods ended December 31, 1995, respectively, when
compared to the same periods of the prior year. The increase in income to
$151,325 for the three-month period ended December 31, 1995 from $94,415 for the
corresponding period in the prior year, an increase of approximately $57,000 or
60.3%, is not necessarily indicative of future results. Both of Wedco's joint
ventures reported a decline in earnings during the nine-month and three-month
periods. Both of Wedco's joint ventures reported a decline in earnings during
the six and three-month periods. In France, Micronyl-Wedco S.A.'s earnings have
been affected by the current decline in the plastics industry, resulting in a
decrease in the volume of materials processed during the current period. In
Canada, WedTech Inc.'s ("WedTech") earnings have been negatively impacted
significantly by ongoing costs associated with its sales, marketing and
administrative office in Toronto, Canada and repetitive monthly losses
associated with its research and production facility in Dewey, Oklahoma.
Furthermore, the current market for grinding and compounding services in Canada
has become increasingly competitive and these revenues are yielding lower
margins than in prior periods. Under the equity method of accounting, net
revenues of the joint ventures are not included in the consolidated net revenues
of the Company. There can be no assurance that such declines in earnings from
Wedco's investment in joint ventures will not continue.
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Other Contingent Liabilities
In conjunction with the sale of real estate owned by a former subsidiary,
the New Jersey Department of Environmental Protection and Energy ("DEPE") issued
an Administrative Consent Order ("ACO") to Wedco, under the New Jersey
Environmental Cleanup Responsibility Act ("ECRA"). Under ECRA, property title
cannot pass to a new owner until the DEPE is satisfied that the property meets
defined environmental standards or an ACO has been issued. Under the terms of
the ACO, Wedco is required to clean this site.
Inspections have shown the groundwater at this site contains contaminates
which must be removed. Accordingly, a remediation plan was prepared and
subsequently approved by the DEPE. Wedco has established reserves of $1,400,000
for costs related to cleanup activities, of which approximately $1,129,163 has
been paid as of December 31, 1995. Recent sampling results indicate that Wedco's
groundwater remediation program is working effectively to reduce the level of
groundwater contamination. Expenses in excess of what Wedco has recorded could
be incurred due to the inherent uncertainty surrounding the extent of
contamination, the complexity of governmental regulations and their
interpretations, and the varying costs and effectiveness of cleanup
technologies. However, Wedco believes that its reserve is sufficient.
RISK FACTORS RELATING TO THE MERGER
Control of the Combined Company After the Merger
Five of ICO's six directors are currently associated with Pacholder
Associates, Inc., an investment advisory firm headquartered in Cincinnati, Ohio
, or USF&G Pacholder Fund, Inc., an affiliate of Pacholder Associates, Inc.
After the Merger, these persons will constitute five of the combined companies
nine directors. Because they will continue to constitute a majority of the
combined company's Board of Directors after the Merger, these persons will
collectively be in a position to direct the business and policies of the
combined company and take certain actions without the necessity of obtaining the
vote of other shareholders, such as approving mergers, to the extent authorized
by the Texas Business Corporation Act.
Four of these five directors (Dr. Asher O. Pacholder, Sylvia A. Pacholder,
Robin E. Pacholder and William J. Morgan), to together with Pacholder
Associates, Inc. and certain Wedco shareholders with whom these persons will
enter into a Shareholder's Agreement, may own a number of shares of the combined
company's Common Stock sufficient to control the election of the combined
company's Board of Directors.
Management after the Merger; Competition from Former Wedco Management
The Merger involves the integration of two companies that have previously
operated independently. ICO and Wedco operate in different industries with
different operating, technical and competitive conditions. ICO's operations are
conducted primarily in the United States and Canada, whereas Wedco has
substantial European operations. Two of the six members of Wedco's senior
management, William E. Willoughby, Wedco's founder and its current Chairman of
the Board and Chief Executive Officer, and William C. Willoughby, Director and
Executive Vice President, will retire from Wedco if the Merger is approved.
Management of the combined company will be controlled by current ICO management.
There can be no assurance that management will be successful, after the Merger,
in managing the combined company or operating it in a profitable manner. See
"-- Control of the Combined Company after the Merger."
William C. Willoughby is also the owner of a company engaged in the
business of providing plastic grinding services with annual revenues estimated
by Wedco of approximately $1,600,000. Mr. Willoughby and that company will not
be subject to any restrictions concerning competition with the combined company
following the Merger.
Uncertainties of Achieving Cost Savings
In determining that the Merger is advisable and in the best interests of
its shareholders, each of the ICO Board and the Wedco Board considered
opportunities for cost savings and other benefits expected to result from the
consummation thereof. While ICO and Wedco expect to achieve cost savings as a
result of the
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Merger, no assurance can be given that difficulties will not be encountered in
integrating the operations of ICO and Wedco or that the benefits expected from
such integration will be realized. Any delays or unexpected costs incurred in
connection with such integration could have a material adverse effect on the
business, results of operations or financial condition of the combined company.
Effect of Merger on Income Statement
In fiscal year 1995, ICO recognized on its income statement significant tax
benefits relating to the reversal of the valuation allowance on certain deferred
tax assets and also relating to the utilization of net operating loss carry
forwards. See "Notes to Unaudited Pro Forma Condensed Financial Statements --
Note 3 -- Pro Forma Adjustments." As a result of the Merger, the combined
company will no longer be able to recognize these benefits on its income
statement, although this will not affect the availability of these benefits for
income tax purposes. This will reduce the combined company's net income and per
share earnings relative to ICO's recent net income and per share earnings and
such reduction will be significant. See "Unaudited Pro Forma Financial
Information."
Increased Debt Obligations
As of December 31, 1995, ICO had total indebtedness (including total
short-term and long-term debt) of approximately $1,657,000. On a pro forma basis
after giving effect to the Merger, ICO's total indebtedness as of December 31,
1995, would have been $21,894,000 and its net interest expense would have been
$143,000 for the fiscal quarter ended December 31, 1995.
Restrictions on Payment of Dividends
The ICO Common Stock to be issued in the Merger will rank junior as to
dividends and upon any liquidation, dissolution or winding up of ICO to ICO's
1,290,000 outstanding Depositary Shares, each of which represents 1/4 of a share
of $6.75 Convertible Exchangeable Preferred Stock (the "Preferred Stock").
Dividends payable on the Preferred Stock total $2,176,875 per year. Unless all
Preferred Stock dividends have been paid, no cash dividends may be paid on
shares of ICO Common Stock. Under Texas law, ICO may declare and pay dividends
or make other distributions on its capital stock only out of surplus, as defined
in the Texas Business Corporation Act. As of December 31, 1995, ICO had
available surplus of approximately $39,855,000 (or approximately $88,244,000
after giving pro forma effect to the Merger).
Shares Eligible for Future Sale
Future sales of substantial amounts of ICO Common Stock in the public
market could adversely affect the prevailing market price of the ICO Common
Stock.
Pacholder Associates, Inc. and certain of the officers, directors and
principal shareholders of ICO associated with Pacholder Associates, Inc.
beneficially own an aggregate of 1,075,213 shares of ICO Common Stock, or
approximately 5.7% and 6.4% of the outstanding ICO Common Stock, after the
Merger, assuming all Wedco shareholders elect to receive the Stock Consideration
and the Cash/Stock Consideration respectively. Additionally, William E.
Willoughby, William C. Willoughby, and members of their families will own
5,472,373 and 4,299,722 shares of ICO Common Stock, or approximately 28.9% and
25.6% of the ICO Common Stock outstanding after the Merger, assuming all Wedco
shareholders, including them, elect to receive the Stock Consideration and
Cash/Stock Consideration respectively.
ICO has outstanding the Depositary Shares as well as warrants and stock
options that are convertible or exercisable, as the case may be, into an
aggregate of 3,534,600 shares of ICO Common Stock, or approximately 15.7 and
17.4% of the ICO Common Stock outstanding after the Merger, assuming all Wedco
shareholders elect to receive the Stock Consideration and Cash/Stock
Consideration respectively. ICO has filed with the Commission registration
statements, which in the aggregate register 787,991 shares of ICO Common Stock
which may be issued pursuant to exercise of the stock options issued under ICO's
various stock option plans. To date, options to purchase 614,191 shares of ICO
Common Stock have been issued under these plans.
9
<PAGE> 11
ICO has 853,000 shares of Common Stock issuable upon the exercise of
warrants, subject to registration rights. Additional registration rights will be
granted under the terms of the Merger Agreement for up to 5,472,373 shares of
ICO Common Stock issued to certain Wedco shareholders pursuant to the Merger.
USE OF PROCEEDS
None of the proceeds of this Offering will go to the Company.
SELLING STOCKHOLDERS
The following table sets forth information with respect to the amount of
Common Stock owned and being offered by the Selling Stockholders.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP SHARES OWNERSHIP
BEFORE OFFERING* TO AFTER OFFERING*
NAME OF -------------------- BE -------------------
BENEFICIAL OWNER SHARES PERCENTAGE SOLD SHARES PERCENTAGE
- ------------------------------------------ ------- ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
John F. Armstrong......................... 99,900 1.1% 37,500 62,400 **
Donald R. Warr............................ 18,000 ** 6,757 11,243 **
Patricia Pittman Lincoln.................. 25,200 ** 9,459 15,741 **
Jimmy Burleson............................ 33,333 ** 33,333 0 **
Barney Watson............................. 33,333 ** 33,333 0 **
Texas Commerce Bank, N.A., Midland and
Patricia Pittmann Inman as Co-Trustees
under the Trust Agreement under the Will
of J.H. Pittman, Jr. ................... 144,000 1.6% 87,838 56,162 **
Judith Pittman Phillips................... 22,500 ** 8,446 14,054 **
Raymond J. Dixon.......................... 94,884 1.1% 94,884 0 **
</TABLE>
- ---------------
* Based on the number of shares outstanding at March 19, 1996 and assumes all
shares offered are sold.
** Less than 1%
PLAN OF DISTRIBUTION
The Common Stock offered hereby may be sold from time to time directly by
the Selling Stockholders. Alternatively, the Selling Stockholders may from time
to time offer the Common Stock through underwriters, dealers or agents. The
distribution of the Common Stock by the Selling Stockholders may be effected
from time to time in one or more transactions that may take place on the
over-the-counter market including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more broker/dealers
for resale of such securities as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage fees
or commissions may be paid by the holder in connection with such sales.
The Company will pay certain expenses incident to the offering. The Company
will not pay for commissions and discounts of underwriters, dealers or agents or
the fees and expenses of counsel for the Selling Stockholders.
The Company has agreed to indemnify in certain circumstances the Selling
Stockholders and any underwriter, selling brokers, dealer managers or similar
persons who participate in the distribution of the Common Stock, if any, and
certain persons related to the foregoing persons, against certain liabilities,
including liabilities under the Securities Act. The Selling Stockholders have
agreed to indemnify in certain circumstances the Company and certain persons
related to the Company against certain liabilities, including liabilities under
the Securities Act.
In order to comply with applicable states' securities laws, the Common
Stock will be sold in certain jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Common
10
<PAGE> 12
Stock may not be sold unless the Common Stock has been registered or qualifies
for sale in such state or an exemption from registration or qualification is
available and is complied with.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Common Stock
offered hereby will be passed on for the Company by Keating, Muething & Klekamp,
Cincinnati, Ohio.
EXPERTS
The consolidated financial statements of ICO as of September 30, 1994 and
1995 and for each of the three years in the period ended September 30, 1995
incorporated by reference into this Registration Statement have been so included
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated balance sheet of Wedco as of March 31, 1995 and 1994 and
the consolidated statements of income, retained earnings and cash flows for each
of the three years in the period ended March 31, 1995 incorporated by reference
into this Registration Statement, have been incorporated herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
11
<PAGE> 13
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information, including the
notes thereto, give effect to the Merger and are qualified in their entirety by
reference to, and should be read in conjunction with the historical consolidated
financial statements and the notes thereto of ICO and Wedco incorporated herein
by reference.
The pro forma combined financial statements are based on the purchase
method of accounting. The unaudited pro forma consolidated condensed balance
sheet at September 30, 1995, assumes the Merger was consummated as of September
30, 1995 and the unaudited pro forma consolidated condensed statements of
operations assume the Merger was consummated as of the beginning of each of the
periods presented.
The pro forma data is presented for informational purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred had the Merger been consummated at the dates indicated, nor is
such data necessarily indicative of future operating results or financial
position. There is no assurance that similar results will be achieved in the
future.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA
ICO WEDCO(1) ADJUSTMENTS COMBINED
--------- --------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales and services revenues.............. $ 87,887 $ 45,408 $ 133,295
--------- --------- ----------
Costs and Expenses:
Cost of sales and services................... 59,885 27,923 87,808
Selling, general and administrative.......... 17,840 8,020 (1,180)(a) 24,680
--------- --------- ----------- ----------
Income before interest, taxes depreciation
and amortization........................... 10,162 9,465 (1,180) 20,807
--------- --------- ----------- ----------
Depreciation and Amortization................ 5,112 3,786 603(b) 9,501
Interest, net................................ (1,307) 1,434 590(c) 717
Equity loss of Joint Ventures................ (179) (179)
Other, net................................... 96 96
--------- --------- ----------
Income before income taxes................... 6,357 4,328 10,672
--------- --------- ----------
Current provision for income taxes........... 2,200 1,456 (234)(d) 3,422
Deferred tax expense (benefit)............... (1,633) 198 2,751(d) 1,316
--------- --------- ----------
Total tax expense............................ 567 1,654 4,738
--------- --------- ----------- ----------
Net Income................................... $ 5,790 $ 2,674 $ 2,530 $ 5,934
======== ========= ========= =========
Earnings per common and common equivalent
share...................................... $ 0.41 $ 0.74 $ 0.21
======== ========= =========
Weighted average shares outstanding.......... 8,709,303 3,616,038 5,246,442(e) 17,571,783
======== ========= =========
</TABLE>
- ---------------
(1) Wedco historical amounts were derived from the unaudited quarterly financial
statements of Wedco for the applicable period to conform to ICO's fiscal
year-end.
12
<PAGE> 14
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA
ICO WEDCO(1) ADJUSTMENTS COMBINED
--------- --------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales and services revenues.............. $ 21,751 $ 9,992 $ 31,743
Costs and Expenses:
Cost of sales and services................... 15,145 6,578 21,723
Selling, general and administrative.......... 4,054 1,974 (325)(a) 5,703
--------- --------- ----------- ----------
Income before interest, taxes, depreciation
and amortization........................... 2,552 1,440 (325) 4,317
--------- --------- ----------- ----------
Depreciation and Amortization................ 1,339 1,022 165(b) 2,526
Interest, net................................ (376) 371 148(c) 143
Equity loss of Joint Ventures................ (151) (151)
Other, net................................... 145 145
--------- --------- ----------
Net income before income taxes............... 1,589 53 1,654
--------- --------- ----------
Current provision for income taxes........... 89 67 45(d) 201
Deferred tax expense (benefit)............... 0 (17) 583(d) 566
--------- --------- ----------- ----------
Total tax expense............................ 89 50 767
--------- --------- ----------
Net Income................................... $ 1,500 $ 3 $ 616 $ 887
======== ========= =========== =========
Earnings per common and common equivalent
share...................................... $ 0.11 $ 0.00 $ 0.02
======== ========= =========
Weighted average shares outstanding.......... 8,908,797 3,642,065 5,246,442(e) 17,797,304
======== ========= =========
</TABLE>
13
<PAGE> 15
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL
----------------- PRO FORMA
ICO WEDCO RECLASSIFICATIONS ADJUSTMENTS COMBINED
------- ------- ----------------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents..................... 24,492 148 (10,369)(f) $ 14,271
Trade Receivables, net........................ 16,172 6,669 22,841
Inventories................................... 5,277 2,055 7,332
Prepaid Expenses and Other.................... 2,975 1,019 3,994
Current deferred tax asset.................... 112(k) 1,345
1,233(j)
------- ------- ---------
Total Current Assets................ 48,916 9,891 49,783
------- ------- ---------
Property, Plant and Equipment, net............ 30,689 41,326 5,290(g) 77,305
Investment in joint ventures.................. 4,779 (1,174)(h) 3,605
Due from related parties...................... 779 779
Goodwill...................................... 4,401 25,095(i) 29,496
Deferred tax asset............................ 1,633 (2,419)(1) 2,732(j) 156
(1,790)(k)
Other assets.................................. 2,219 43 250(l) 2,512
------- ------- ---------
TOTAL ASSETS.................................. $87,858 $56,818 $ 163,636
======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable................................. $ 3,718 $ 3,718
Current portion of long-term debt............. 598 1,647 2,245
Accounts payable.............................. 7,223 2,800 10,023
Accrued Expenses and other liabilities........ 3,873 3,554 275(m) 7,702
------- ------- ---------
Total Current Liabilities........... 11,694 11,719 23,688
------- ------- ---------
Long-term debt................................ 1,059 14,872 15,931
------- ------- ---------
Deferred income taxes......................... 2,419 (2,419)(1)
Other Liabilities............................. 434 434
Stockholders Equity
Preferred stock............................. 13 13
Common stock................................ 35,237 409 89(n) 35,326
(409)(n)
Additional paid-in capital.................. 55,988 11,159 48,389(n) 104,377
(11,159)(n)
Cumulative translation adjustment........... (117) 1,650 (1,650)(n) (117)
Retained earnings (deficit)................. (16,016) 17,434 (17,434)(n) (16,016)
Treasury Stock.............................. 0 (3,278) 3,278(n) 0
------- ------- ------- ----------- ---------
Total Stockholders' Equity.......... 75,105 27,374 123,583
======= ======= ========
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.... $87,858 $56,818 $ 0 $ 0 $ 163,636
======= ======= ============ ========= ========
</TABLE>
- ---------------
(1) To net deferred tax liabilities with deferred tax assets.
14
<PAGE> 16
NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS
NOTE 1 -- PRO FORMA FINANCIAL STATEMENTS
The basis of the unaudited pro forma consolidated condensed income
statement and balance sheet reflects the assumption that Wedco shareholders
owning 60% of the outstanding shares of Wedco Common Stock will select the
Cash/Stock Consideration and the remaining shareholders of Wedco will select the
Stock Consideration. See "THE MERGER -- Merger Consideration". Regardless of
which option is selected by Wedco shareholders, the pro forma combined condensed
income statement will be materially equivalent to the pro forma income statement
presented.
In the event that approximately 48% or more of the outstanding shares of
Wedco Common Stock are exchanged for the Stock Consideration, the total number
of shares of ICO Common Stock issued to Wedco shareholders in connection with
the Merger would exceed the number of shares of ICO Common Stock outstanding
immediately prior to the consummation of the Merger. Nevertheless, management
believes the Merger will be properly accounted for as a forward merger (i.e.,
ICO being the acquirer) as opposed to a reverse merger. This conclusion is based
upon the following factors that clearly indicate ICO should be treated as the
acquirer: (i) the current chairman of ICO will be the chairman of the combined
company, (ii) the combined company's board of directors will consist of three
directors selected by former Wedco controlling shareholders and six selected by
ICO management, (iii) the execution of a shareholders agreement regarding (i)
and (ii) above (See "THE MERGER AGREEMENT -- Ancillary Agreements --
Shareholders Agreement") and (iv) the assets, revenues, recent net earnings and
current market value of ICO significantly exceeds those of Wedco.
The following summarizes the possible stock and cash consideration
combinations which could be exchanged for outstanding shares of Wedco Common
Stock:
<TABLE>
<CAPTION>
MERGER
CONSIDERATION
SELECTED ICO SHARES CASH
------------------------------------------------------------- ---------- -----------
<S> <C> <C>
100% Stock................................................... 10,132,509 $ 0
100% Cash/Stock.............................................. 7,849,127 $12,487,248
60% Cash/Stock, 40% Stock.................................... 8,762,480 $ 7,492,349
</TABLE>
Regardless of which option is selected by Wedco shareholders, the pro forma
combined condensed income statement will be materially equivalent to the pro
forma income statement presented.
The following summarizes the estimated purchase price:
<TABLE>
<S> <C>
ICO Common Stock issued to Wedco shareholders (fair value based on
most recent 30 day trading average).............................. $47,930
Cash paid to Wedco shareholders.................................... 7,492
Direct acquisition costs incurred by ICO........................... 1,172
-------
56,594
-------
Assumption of Wedco's liabilities.................................. 29,444
Liabilities assumed, pro forma adjustments......................... 2,065
-------
Total purchase price............................................... $88,103
=======
</TABLE>
NOTE 2 -- WEDCO HISTORICAL PRESENTATION
Certain amounts reported in Wedco's historical financial statements have
been reclassified to conform to the ICO presentations in the accompanying
unaudited pro forma financial statements.
15
<PAGE> 17
NOTE 3 -- PRO FORMA ADJUSTMENTS
Statements of Income:
(a) To remove merger costs expensed by Wedco ($440,000 for the twelve
months ended September 30, 1995 and $140,000 for the three months ended December
31, 1995), incremental cost savings for Wedco no longer being a separate public
company ($250,000 per year) and to reflect cost savings resulting from the
retirement of certain Wedco executives ($490,000 per year).
(b) To increase amortization for intangibles (including goodwill) and
reduce depreciation for machinery and equipment. Historically, Wedco depreciated
machinery and equipment over 10 years. Select assets which have useful lives in
excess of this time period will be depreciated over their estimated useful life
after the Merger. Goodwill is amortized over a useful life of 40 years and value
allocated to non-compete agreements is amortized over the 10-year term of the
agreement.
ICO has analyzed the past and expected future operating performance of
Wedco, the competitive and regulatory environment in which Wedco operates and
has assessed the expected future life of Wedco's basic technology concluding
that, as of the acquisition date, the future life of goodwill is forty years or
greater. Accordingly, goodwill is amortized over an estimated useful life of 40
years, the maximum allowable life under APB 17. ICO's policy is to periodically
review goodwill and other intangibles to assess recoverability and review the
impact of events and circumstances which may warrant a revision to the estimated
useful life. Impairments would be recognized in operating results if a permanent
diminution in value were to occur.
(c) To reflect the reduced interest income on cash to be used to consummate
the Merger.
(d) To reflect the tax effect of pro forma income statement adjustments and
increase income tax expense resulting from pro forma adjustments to deferred tax
balances including the reversal of ICO's valuation allowance on deferred tax
assets at September 30, 1995. In fiscal year 1995, ICO recognized a $1,633,000
($.18 per share) tax benefit as a reversal of the valuation allowance to the
extent taxes had been paid. ICO also recognized a tax benefit of $1,035,000
($.12 per share) resulting from the utilization of approximately $2.9 million of
net operating loss carry forwards in fiscal year 1995. During the quarter ended
December 31, 1995 $.06 of ICO's $.11 earnings per share were attributable to the
recognition of a net operating loss carryforward benefit. These amounts are
reversed in the pro forma income statement.
While ICO will continue to realize a cash savings from $8,085,000 (i.e., a
tax benefit of $2,830,000) in net operating loss carry forwards (at December 31,
1995) for tax purposes after the Merger, future benefits resulting from the
utilization of these loss carry forwards will no longer be recognized in the
income statements prepared in accordance with generally accepted accounting
principles.
(e) To give effect to weighted average shares issued in connection with the
Merger, including 100,000 shares issued to advisers of ICO.
Balance Sheet:
(f) To reflect estimated cash consideration and expected direct expenses to
be paid by ICO and Wedco in connection with the Merger.
(g) To increase Wedco's property, plant and equipment to estimated fair
market value.
(h) To decrease Wedco's investment in the Wedtech/Canadian joint venture to
estimated fair market value.
(i) To reflect the excess purchase price over fair value of net tangible
assets acquired allocated to goodwill.
(j) To remove ICO's December 31, 1995 valuation allowance on deferred tax
assets. In accordance with Financial Accounting Standard 109, the need for the
valuation allowance will no longer exist as of the effective date of the Merger.
(k) To increase Wedco's deferred tax balances to reflect purchase price
accounting adjustments.
16
<PAGE> 18
(l) To reflect the fair value of non-compete agreements with former Wedco
executives.
(m) ICO will incur integration costs pertaining to the management
information systems estimated to be $275,000. These costs will be recorded as
liabilities assumed and will have the effect of increasing goodwill.
(n) To eliminate Wedco stockholders' equity accounts and reflect the
estimated value of shares issued in connection with the acquisition.
17
<PAGE> 19
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SHARES OF COMMON STOCK IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
AVAILABLE INFORMATION................. 2
INFORMATION INCORPORATED BY
REFERENCE........................... 3
THE COMPANY........................... 4
THE OFFERING.......................... 4
INVESTMENT CONSIDERATIONS............. 4
USE OF PROCEEDS....................... 10
SELLING STOCKHOLDERS.................. 10
PLAN OF DISTRIBUTION.................. 10
LEGAL MATTERS......................... 11
EXPERTS............................... 11
PRO FORMA FINANCIAL INFORMATION....... 12
</TABLE>
===============================================================================
===============================================================================
311,550 SHARES
COMMON STOCK
ICO, INC.
---------------------------
PROSPECTUS
---------------------------
MARCH 20, 1996
===============================================================================
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 585.00
Accounting Fees and Expenses..................................... 3,000.00
Legal Expenses................................................... 7,000.00
Blue Sky Fees and Expenses....................................... 0
Miscellaneous.................................................... 1,000
----------
Total.................................................. $11,585.00
==========
</TABLE>
- ---------------
All amounts are estimated except for the Registration Fee.
To be completed.
All of the foregoing costs, expenses and fees will be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02-1 of the Texas Business Corporation Act provides:
(1) A corporation may indemnify any officer or director from and
against any judgments, penalties, fines, settlements, and reasonable
expenses actually incurred by him in an action, suit, investigation or
other proceeding to which he is, was, or is threatened to be a party;
provided that it is determined by the Board of Directors, a committee
thereof, special legal counsel, or a majority of the stockholders that such
officer or director: (a) acted in good faith; (b) reasonably believed that
his conduct was in the best interest of the corporation or was, in some
circumstances, not opposed to the corporation's interest; and (c) in a
criminal case, had no reasonable cause to believe his conduct was unlawful.
Such indemnity is limited to the reasonable expenses actually incurred in
matters as to which the officer or director is found liable to the
corporation or is found liable on the basis that a personal benefit was
improperly received by him. No indemnification is permitted with respect to
any proceeding in which the officer or director is found liable for willful
or intentional misconduct in the performance of his duty to the
corporation.
(2) A corporation shall indemnify a director against reasonable
expenses incurred by him in connection with an action, suit, investigation,
or other proceeding to which he is, was, or was threatened to be a party if
he has been wholly successful in its defense.
(3) A corporation may advance an officer or director the reasonable
costs of defending an action, suit, investigation or other proceeding in
certain cases.
(4) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
any liability asserted against him and incurred by him in any such capacity
or arising out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the provisions
of this Article.
Article 7, Section 7.01 of the Registrant's Bylaws provides for
indemnification of directors and officers, and such Article 7, Section 7.01 is
hereby incorporated herein by reference.
The Registrant has purchased a directors' and officers' liability and
corporation reimbursement policy in the amount of $5,000,000, which, subject to
certain exceptions, protects the officers and directors of the Registrant
against liabilities arising from any claim for breach of duty, neglect, error,
misstatement, misleading statement, omission or other act attempted, committed
or allegedly committed by reason of the director or officer acting in such
capacity.
II-1
<PAGE> 21
Article 302-7.06 of the Texas Miscellaneous Corporation Laws Act permits a
corporation to provide in its articles of incorporation that a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for an act or omission in the director's
capacity as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for any transaction from which the director
derived an improper personal benefit, or (iv) an act or omission for which
liability of a director is expressly provided by applicable statute.
Article Twelfth of the Articles of Incorporation of the Registrant provides
that to the full extent that the Texas Miscellaneous Corporation Laws Act, as it
now exists or may hereafter be amended, permits the limitation or elimination of
the liability of directors, a director of the Registrant shall not be liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director. Any amendment to or repeal of such Article Twelfth shall not
adversely affect any right or protection of a director of the Registrant for or
with respect to any acts or omissions of such director occurring prior to such
amendments or repeal.
ITEM 16. EXHIBITS
LIST OF EXHIBITS:
<TABLE>
<S> <C>
5 -- Opinion of Keating, Muething & Klekamp
23.1 -- Consent of Keating, Muething & Klekamp (contained in Exhibit 5)
23.2 -- Consent of Price Waterhouse LLP
23.3 -- Consent of Coopers & Lybrand L.L.P.
*24 -- Power of Attorney
</TABLE>
- ---------------
* Previously filed.
ITEM 17. UNDERTAKINGS
(a) 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) To reflect in the prospectus any facts or events arising after
the effective date of the 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;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose 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.
II-2
<PAGE> 22
(b) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 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 of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the SEC 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 Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the Common Stock being registered, the Company 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.
II-3
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 19th day of
March, 1996.
ICO, INC.
By: /s/ DR. ASHER O.PACHOLDER
------------------------------------
Dr. Asher O. Pacholder,
Chairman of the Board and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ DR. ASHER O. PACHOLDER Chairman of the Board and March 19, 1996
- --------------------------------------------- Chief Financial Officer
Dr. Asher O. Pacholder (Principal Financial
Officer)
/s/ SYLVIA A. PACHOLDER President and Chief March 19, 1996
- --------------------------------------------- Executive Officer
Sylvia A. Pacholder (Principal Executive
Officer)
/s/ JON C. BIRO Controller and Treasurer March 19, 1996
- --------------------------------------------- (Principal Accounting
- - Jon C. Biro Officer)
/s/ WILLIAM E. CORNELIUS Director March 19, 1996
- ---------------------------------------------
William E. Cornelius
/s/ JOHN F. WILLIAMSON Director March 19, 1996
- ---------------------------------------------
John F. Williamson
/s/ WILLIAM J. MORGAN Director March 19, 1996
- ---------------------------------------------
William J. Morgan
/s/ ROBIN E. PACHOLDER Director March 19, 1996
- ---------------------------------------------
Robin E. Pacholder
</TABLE>
II-4
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ----------
<C> <S> <C>
5 -- Opinion of Keating, Muething & Klekamp
23.1 -- Consent of Keating, Muething & Klekamp (contained in Exhibit 5)
23.2 -- Consent of Price Waterhouse LLP
23.3 -- Consent of Coopers & Lybrand L.L.P.
*24 -- Power of Attorney
</TABLE>
- ---------------
* Previously filed
<PAGE> 1
EXHIBIT 5
[KEATING, MUETHING & KLEKAMP LETTERHEAD]
March 19, 1996
Board of Directors
ICO, Inc.
100 Glenborough Drive
Suite 250
Houston, Texas 77067
Gentlemen:
RE: Form S-3 Registration Statement No. 333-891
We have represented you in connection with the above-referenced Securities
and Exchange Commission registration of outstanding shares owned by certain
shareholders. On this basis, we have made an examination as to:
1. The organization of ICO, Inc. (the "Corporation"); and
2. The legal sufficiency of all corporate proceedings taken in connection
with the authorization of the issuance of 311,550 shares of Common Stock to be
included in a Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission.
Based upon such examination, we are of the opinion that:
1. The Corporation is a duly organized and validly existing corporation
under the laws of the State of Texas;
2. The Corporation has taken all necessary and required corporate actions
in connection with the issuance of 311,550 shares of newly issued Common Stock
and the aforesaid 311,550 shares of Common Stock are validly authorized,
legally issued, fully paid and nonassessable shares of Common Stock of the
Corporation free of any preemptive rights.
<PAGE> 2
Board of Directors
Page 2
March 19, 1996
We hereby consent to be named in the aforesaid Registration Statement and
the Prospectus part thereof as the attorneys who will pass upon legal matters
in connection with the issuance of the aforesaid Common Stock and to the filing
of this opinion as an exhibit to the Registration Statement and furthermore
consent to references made to this firm in the Registration Statement.
Very truly yours,
KEATING, MUETHING & KLEKAMP
By: /s/ GARY P. KRAIDER
------------------------
Gary P. Kraider
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of ICO, Inc. of our
report dated October 31, 1995 appearing on page F-2 of the ICO, Inc. Annual
Report on Form 10-K for the year ended September 30, 1995. We also consent to
the reference to us under the heading "Experts".
PRICE WATERHOUSE LLP
Houston, Texas
March 12, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of ICO, Inc. of our report dated June 13, 1995, on our audits of the
consolidated financial statements of Wedco Technology Inc. as of March 31, 1995
and 1994, and for the years ended December 31, 1995, 1994 and 1993. We also
consent to the reference to our firm under the caption "Experts" in such
Registration Statement.
COOPERS AND LYBRAND L.L.P.
Princeton, New Jersey
March 12, 1996
