<PAGE> 1
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT COMPLETE
AND MAY BE CHANGED. THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Filed pursuant to Rule 424(b)(2)
Registration No. 333-94091
SUBJECT TO COMPLETION. DATED JANUARY 24, 2000
9,000,000 Shares
Kerr-McGee Logo
KERR-MCGEE CORPORATION
Common Stock
- --------------------------------------------------------------------------------
We are offering 9,000,000 shares of our common stock. Our common stock is
listed on The New York Stock Exchange under the symbol "KMG." The last sale
price of our common stock on The New York Stock Exchange on January 21, 2000 was
$63 15/16 per share.
We are also offering $300,000,000 of our % convertible subordinated
debentures due 2010 in a separate offering. The common stock offering and the
convertible subordinated debenture offering are not conditioned on each other.
See "Risk Factors" beginning on page S-5 of this prospectus supplement and
on page 4 in the accompanying prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- --------
<S> <C> <C>
Initial price to public..................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Kerr-McGee.................... $ $
</TABLE>
The underwriters may, under certain circumstances, purchase up to an
additional 1,350,000 shares of common stock from us at the initial price to
public less the underwriting discount.
- --------------------------------------------------------------------------------
The underwriters expect to deliver the shares against payment in New York,
New York, on , 2000.
Joint Book-Running Managers
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
---------------------
ABN AMRO ROTHSCHILD
A DIVISION OF ABN AMRO
INCORPORATED
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
J.P. MORGAN & CO.
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY
---------------------
Prospectus Supplement dated , 2000
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT
RELY ON ANY OTHER REPRESENTATIONS. OUR AFFAIRS MAY CHANGE AFTER THIS PROSPECTUS
SUPPLEMENT IS DISTRIBUTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THIS DOCUMENT.
------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Summary............................... S-3
Risk Factors.......................... S-5
Price Range of Common Stock........... S-7
Use of Proceeds....................... S-7
Capitalization........................ S-8
Selected Financial and Operating Data
of Kerr-McGee....................... S-9
Certain United States Federal Tax
Consequences to Non-U.S. Holders of
Common Stock........................ S-11
Underwriting.......................... S-14
Legal Matters......................... S-15
Experts............................... S-16
Forward-Looking Statements............ S-16
PROSPECTUS
About This Prospectus................. 3
Where You Can Find Information........ 3
Risk Factors.......................... 4
The Company........................... 5
Use of Proceeds....................... 6
Ratio of Earnings to Fixed Charges And
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividend
Requirements........................ 6
Description of Debt Securities........ 6
Description of Preferred Stock........ 12
Description of Common Stock........... 14
Description of Warrants............... 15
Plan of Distribution.................. 15
Legal Matters......................... 16
Experts............................... 16
</TABLE>
S-2
<PAGE> 3
SUMMARY
The following summary contains basic information about us and our common
stock. It does not contain all the information that is important to you. You
should read the following summary together with the more detailed information
and financial statements and notes to the financial statements appearing
elsewhere in this prospectus supplement or incorporated by reference into the
attached prospectus. References to "$" in this prospectus supplement and in the
accompanying prospectus are to U.S. dollars. Unless we say otherwise, we assume
in this prospectus supplement that the underwriters will not exercise their
over-allotment option with respect to the convertible subordinated debenture or
common stock offerings.
KERR-MCGEE CORPORATION
We are one of the largest U.S.-based independent exploration and production
companies with proved reserves in excess of one billion barrels of oil
equivalent. During 1999, we replaced 117% of our 1999 worldwide production of
108 million barrels of oil equivalent at an average finding and development cost
of $4.90 per barrel of oil equivalent. These reserve additions and development
costs do not include any reserves associated with our recent discoveries in the
greater Boomvang and Nansen areas in the deepwater Gulf of Mexico, our recently
announced discovery at Bohai Bay, China or the recently announced acquisition of
Repsol S.A.'s oil and natural gas properties in the U.K. sector of the North
Sea. We are also the world's fifth largest producer of titanium dioxide pigment
(TiO(2)) supplying approximately 10% of the world's demand. We were formed in
1929 as Anderson & Kerr Drilling Company and have been listed on The New York
Stock Exchange since 1956.
We have oil and natural gas exploration and production activities in 13
countries on six continents. Since pioneering the modern offshore drilling
business in 1947, we have become one of the premier independent exploration and
production companies focused on offshore activities primarily in the Gulf of
Mexico and the North Sea. We have had significant recent drilling success and
own a large inventory of deepwater prospects in the Gulf of Mexico and in
selected international basins. In addition, we have mature U.S. onshore
operations that provide a consistent source of cash flow.
Our chemical business consists primarily of the production and marketing of
TiO(2) pigment. Titanium dioxide is the world's preferred opacifier and
whitening agent for paint, coatings and plastics. We are one of only four
companies that own proprietary chloride technology for producing TiO(2) pigment
and we are among the lowest-cost producers of TiO(2), both of which give us a
competitive advantage in this business.
COMPANY TRANSFORMATION
During the past five years we have transformed the company from a domestic
integrated energy company to one focused on two core businesses: exploration and
production of oil and natural gas and production and marketing of TiO(2). Our
transformation is evidenced by:
- March 1998 -- Acquired 80% interest in Bayer AG's European TiO(2)
operations
- April 1998 -- Acquired Gulf Canada's U.K. North Sea oil and natural gas
assets
- July 1998 -- Completed divestiture of coal operations
- February 1999 -- Merged with Oryx Energy Company
- September 1999 -- Completed a 25% expansion of U.S. TiO(2) capacity
Most recently, on January 18, 2000, we closed the acquisition of Repsol
S.A.'s oil and natural gas operations in the U.K. sector of the North Sea. The
transaction, valued at $555 million, increases our production and reserves in
the North Sea, where we already have significant operations. This transaction
includes proved reserves estimated at approximately 96 million barrels of oil
equivalent and is expected to increase daily production by approximately 30,000
barrels of oil equivalent from two producing fields. Two
S-3
<PAGE> 4
additional fields, which are in the development planning stage, are expected to
further increase production volumes. The acquisition also provides additional
opportunities from 11 exploratory blocks.
From time to time we may consider the acquisition of additional
complementary businesses.
THE COMMON STOCK OFFERING
Common stock offered............ 9,000,000 shares(1)
Common stock outstanding after
the offering.................... 95,483,396 shares(1)
Use of proceeds................. We estimate that we will receive net proceeds
from the common stock offering of $
. We are also offering $300,000,000
of our % convertible subordinated
debentures due 2010 in a separate offering
and we estimate that we will receive net
proceeds of approximately $ from that
offering. The net proceeds of both offerings
are expected to be used:
- to redeem on May 1, 2000 our $150,000,000
floating rate notes due November 1, 2001.
These notes currently have an interest rate
of 6.7%. The proceeds of these notes were
used for general corporate purposes,
- to redeem on May 1, 2000 our $400,000,000
floating rate notes due August 1, 2001.
These notes currently have an interest rate
of 6.4%. The proceeds of these notes were
used in the Repsol North Sea acquisition,
- to repay $25,000,000 of debt borrowed under
a credit line with a maturity of February
14, 2000 and an interest rate of 6.3%,
- repay up to $425,000,000 of commercial
paper with maturities ranging from February
10, 2000 to May 3, 2000 and interest rates
currently ranging from 6.0% to 6.8%, and
- for general corporate purposes, which may
include the acquisition of complementary
businesses.
Net proceeds will be invested in short-term
eurodollar time deposits until they are used.
NYSE symbol..................... KMG
- ---------------
(1) Does not include shares that may be issued to the underwriters pursuant to
their over-allotment option. If the underwriters exercise their
over-allotment option in full, the total number of shares of common stock
offered will be 10,350,000 and the total number of outstanding shares of our
common stock will be 96,833,396. We had 86,483,396 shares of common stock
outstanding on December 31, 1999.
OTHER OFFERING
We are also offering $300,000,000 of our % convertible subordinated
debentures due 2010 (plus up to an additional $45,000,000 pursuant to an
over-allotment option) in a separate offering. The common stock offering and the
convertible subordinated debenture offering are not conditioned on each other.
S-4
<PAGE> 5
RISK FACTORS
You should carefully consider the following risk factors and other
information in this prospectus supplement and the attached prospectus before
deciding to purchase the common stock.
OUR NON-U.S. OPERATIONS ARE SUBJECT TO RISKS OF DOING BUSINESS ABROAD.
We have offshore oil and natural gas operations in the Gulf of Mexico,
United Kingdom, China, Thailand, Gabon, Australia, and Brazil, and we conduct
onshore oil and natural gas operations in Ecuador, Algeria, Indonesia, United
Kingdom, Kazakhstan and Yemen, as well as the United States. In addition to the
United States, we have chemical production facilities in Australia, Germany and
Belgium. The non-U.S. activities are subject to various political and economic
risks including (a) expropriation or nationalization of property, (b) currency
fluctuations, (c) changes in foreign laws or regulations, (d) risks of loss due
to civil strife, acts of war, guerilla activities and insurrection, and (e)
other risks arising out of foreign governmental sovereignty over the areas in
which our operations are conducted.
Consequently, our non-U.S. activities may be substantially affected by
factors beyond our control, any of which could materially adversely affect our
financial position or results of operations. Furthermore, in the event of a
dispute arising from non-U.S. operations, we may be subject to the exclusive
jurisdiction of courts outside the United States or may not be successful in
subjecting non-U.S. persons to the jurisdiction of the courts in the United
States, which could adversely affect the outcome of the dispute.
OUR INDUSTRIES ARE EXTREMELY COMPETITIVE.
The energy and chemical industries are extremely competitive. This is
especially true with regard to exploration for, and exploitation and development
of, new sources of crude oil and natural gas. As an independent oil and natural
gas company, we frequently compete against other companies that are larger and
financially stronger in acquiring properties suitable for exploration, in
contracting for drilling equipment and other services and in securing trained
personnel.
WE DO NOT INSURE AGAINST ALL POTENTIAL LOSSES AND COULD BE SERIOUSLY HARMED BY
UNEXPECTED LIABILITIES.
Our businesses, including the exploration for and production of oil and
natural gas and the manufacturing of chemicals, can be hazardous, involving
natural disasters and other unforeseen occurrences such as blowouts, cratering,
fires, loss of well control, explosions, and other occurrences, which can damage
or destroy assets, injure or kill people, and damage property and the
environment. Offshore operations are subject to usual marine perils, such as
adverse weather conditions and governmental regulations as well as interruption
or termination by governmental authorities based on environmental and other
considerations. We maintain insurance against many, but not all, potential
losses or liabilities arising from our operations in accordance with customary
industry practices and in amounts that we believe to be prudent. Losses and
liabilities arising from such events could reduce our revenues and increase our
costs to the extent not covered by insurance.
The occurrence of any of the aforementioned events and any payments made as
a result of such events and the liabilities related thereto, would reduce the
funds available for our business activities and could have a material adverse
effect on our financial position or results of operations.
WE INCUR CERTAIN COSTS TO COMPLY WITH GOVERNMENT REGULATIONS AND COULD INCUR
EVEN GREATER COSTS IN THE FUTURE.
Our business operations are regulated extensively at the federal, state and
local levels, as well as by other countries in which we do business. We have
made and will continue to make expenditures in our efforts to comply with the
requirements of all such regulations. Further, the regulatory environment
applicable to our business and the requirements, costs, or methods of regulatory
compliance could change in ways that might substantially increase these costs.
S-5
<PAGE> 6
THE OIL AND NATURAL GAS RESERVE DATA AND FUTURE NET REVENUE ESTIMATES WE REPORT
ARE UNCERTAIN.
Estimates of reserves are projections based on engineering data, the
projection of future rates of production and the timing of future expenditures.
Estimates of our proved oil and natural gas reserves and projected future net
revenues are based on reserve reports which we prepare and a portion of which
are reviewed by independent petroleum engineers. The process of estimating oil
and natural gas reserves requires substantial judgment on the part of the
petroleum engineers, resulting in imprecise determinations, particularly with
respect to new discoveries. Different reserve engineers may make different
estimates of reserve quantities and revenues attributable thereto based on the
same data. Future performance that deviates significantly from the reserve
reports could have a material adverse effect on us. The accuracy of any reserve
estimate depends on the quality of the available data as well as engineering and
geological interpretation and judgment. Results of drilling, testing and
production and changes in the assumptions regarding decline and production
rates, the ability to market oil and natural gas that is produced, oil and
natural gas prices, revenues, taxes, capital expenditures, operating expenses,
geologic success and quantities of recoverable oil and natural gas may vary
substantially from those assumed in the estimates, may result in revisions to
such estimates and could materially affect the estimated quantities and related
value of reserves. The estimates of future net revenues reflect oil and natural
gas prices as of year-end, without escalation or reduction. Fluctuations in the
price of oil and natural gas have the effect of significantly altering reserve
estimates as the economic projections inherent in the estimates may reduce or
increase the quantities of recoverable reserves. There can be no assurance,
however, that such prices will be realized or that the estimated production
volumes will be produced during the periods indicated. Actual future production,
oil and natural gas prices, revenues, taxes, development expenditures, operating
expenses and quantities of recoverable oil and natural gas reserves most likely
will vary from our estimates.
IF WE FAIL TO ACQUIRE OR FIND ADDITIONAL RESERVES, OUR RESERVES AND PRODUCTION
WILL DECLINE MATERIALLY FROM THEIR CURRENT LEVELS.
The rate of production from oil and natural gas properties generally
declines as reserves are depleted. Except to the extent that we acquire
additional properties containing proved reserves or conduct successful
exploration and development activities, our proved reserves will decline
materially as reserves are produced. Future oil and natural gas production is,
therefore, highly dependent upon our level of success in acquiring or finding
additional reserves.
OUR ABILITY TO SELL OUR OIL AND NATURAL GAS PRODUCTION COULD BE MATERIALLY
HARMED IF WE FAIL TO OBTAIN ADEQUATE SERVICES SUCH AS TRANSPORTATION AND
PROCESSING.
The sale of our oil and natural gas production depends on a number of
factors beyond our control, including the availability and capacity of
transportation and processing facilities. Our failure to obtain such services on
acceptable terms could materially harm our business.
WHEN WE ACQUIRE OIL AND NATURAL GAS PROPERTIES AND ACQUIRE OR MERGE WITH OTHER
COMPANIES, OUR FAILURE TO FULLY IDENTIFY POTENTIAL PROBLEMS, TO PROPERLY
ESTIMATE RESERVES OR PRODUCTION RATES OR COSTS, OR TO EFFECTIVELY INTEGRATE THE
ACQUIRED OPERATIONS COULD SERIOUSLY HARM US.
Although we perform reviews of acquired assets, properties and businesses
that we believe are consistent with industry practices, we do not review in
depth every individual property involved in each acquisition. However, even a
detailed review of records and properties may not necessarily reveal existing or
potential problems, nor will it permit a buyer to become sufficiently familiar
with the properties to assess fully their deficiencies and potential.
Even when problems are identified, we often assume environmental and other
risks and liabilities in connection with acquired properties. There are numerous
uncertainties inherent in estimating quantities of proved oil and natural gas
reserves and actual future production rates and associated costs with respect to
acquired properties. Actual results may vary substantially from those assumed in
the estimates. In addition, acquisitions may have adverse effects on our
operating results, particularly during the periods in which the operations of
acquired businesses are being integrated into our ongoing operations.
S-6
<PAGE> 7
PRICE RANGE OF COMMON STOCK
Our common stock is listed on the NYSE under the symbol "KMG." The
following table sets forth the quarterly high and low sales prices for our
common stock as reported by the NYSE for the periods indicated. We paid a
dividend of $.45 per share for each of the periods through December 31, 1999,
and our board has declared a dividend of $.45 per share for the quarter ending
March 31, 2000 that will be payable April 3, 2000 to stockholders of record as
of March 3, 2000. We have paid dividends continuously since 1948. Any future
dividends are subject to the approval of our board of directors.
<TABLE>
<CAPTION>
MARKET PRICES
IN DOLLARS
---------------------
HIGH LOW
---- ---
<S> <C> <C>
1998:
Quarter Ended March 31, 1998.............................. 73 3/16 55 7/8
Quarter Ended June 30, 1998............................... 70 1/4 56 5/8
Quarter Ended September 30, 1998.......................... 60 1/2 38
Quarter Ended December 31, 1998........................... 47 9/16 36 3/16
1999:
Quarter Ended March 31, 1999.............................. 41 7/16 28 1/2
Quarter Ended June 30, 1999............................... 52 1/8 32 1/2
Quarter Ended September 30, 1999.......................... 60 1/16 49 5/16
Quarter Ended December 31, 1999........................... 62 52
2000:
Quarter Ending March 31, 2000 (through January 21,
2000).................................................. 67 15/16 56 3/16
</TABLE>
USE OF PROCEEDS
We estimate that we will receive net proceeds from the common stock
offering of $ . We are also offering $300,000,000 of
our % convertible subordinated debentures due 2010 in a separate offering
and we estimate that we will receive net proceeds of approximately $ from
that offering. The net proceeds of both offerings are expected to be used:
- to redeem on May 1, 2000 our $150,000,000 floating rate notes due
November 1, 2001. These notes currently have an interest rate of 6.7%.
The proceeds of these notes were used for general corporate purposes,
- to redeem on May 1, 2000 our $400,000,000 floating rate notes due August
1, 2001. These notes currently have an interest rate of 6.4%. The
proceeds of these notes were used in the Repsol North Sea acquisition,
- to repay $25,000,000 of debt borrowed under a credit line with a maturity
of February 14, 2000 and an interest rate of 6.3%,
- repay up to $425,000,000 of commercial paper with maturities ranging from
February 10, 2000 to May 3, 2000 and interest rates currently ranging
from 6.0% to 6.8%, and
- for general corporate purposes, which may include the acquisition of
complementary businesses.
Net proceeds will be invested in short-term eurodollar time deposits until
they are used.
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth our unaudited capitalization, which includes
our consolidated subsidiaries, as of September 30, 1999 and as adjusted to give
effect to the sale of the common stock, the sale of the convertible subordinated
debentures and the application of the estimated net proceeds from these sales as
described in "Use of Proceeds."
<TABLE>
<CAPTION>
ACTUAL ADJUSTED
-------- ----------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Short-term borrowings....................................... $ 7 $
====== ========
Long-term debt
Debentures --
7.5% Convertible subordinated debentures due 2000
through 2014.......................................... $ 180 $
% Convertible subordinated debentures due 2010....... --
7.125% Debentures due 2027............................. 150
7% Debentures due 2011, net of unamortized debt
discount of $103...................................... 147
5 1/2% Exchangeable notes due 2004..................... 350
Notes payable --
10% Notes due 2001..................................... 150
6.625% Notes due 2007.................................. 150
8.375% Notes due 2004.................................. 150
8.125% Notes due 2005.................................. 150
8% Notes due 2003...................................... 100
Variable interest rate revolving credit agreements with
banks due 2000 through 2003(1)........................ 128
Medium-term notes due 2002............................. 13
Commercial paper.......................................... 773
Guaranteed debt of employee stock ownership plan 9.61%
notes due in installments through 2005................. 33
Other..................................................... 2
------ --------
Total............................................. 2,476
Long-term debt due within one year........................ 120
------ --------
Total long-term debt.............................. $2,596 $
====== ========
Minority interest in subsidiary companies................... $ 20 $
====== ========
Stockholders' equity
Common stock -- 300,000,000 shares
authorized -- 93,474,191 shares issued and outstanding,
shares issued and outstanding as adjusted......... $ 93 $
Capital in excess of par value............................ 1,284
Preferred stock rights.................................... 1
Accumulated other comprehensive income.................... 72
Retained earnings......................................... 506
Common stock in treasury, at cost 7,010,790 shares........ (388)
Deferred compensation..................................... (124)
------ --------
Total stockholders' equity........................ $1,444 $
====== ========
Total capitalization.............................. $4,067 $
====== ========
</TABLE>
- ---------------
(1) On January 18, 2000, we borrowed $478 million in connection with the
acquisition of Repsol's North Sea operations.
S-8
<PAGE> 9
SELECTED FINANCIAL AND OPERATING DATA OF KERR-MCGEE
The following table sets forth certain information regarding our
consolidated results of operations, financial position and operating data as of
and for the periods indicated. You should read the data presented below in
conjunction with our consolidated financial statements and the notes thereto,
which are incorporated by reference into the attached prospectus. The following
financial information is not necessarily indicative of our future results.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ ---------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales
Exploration and production............................ $1,720 $1,708 $2,048 $1,845 $1,267 $ 970 $1,216
Chemicals............................................. 639 707 692 760 933 694 680
Other................................................. -- 4 -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total........................................... $2,359 $2,419 $2,740 $2,605 $2,200 $1,664 $1,896
====== ====== ====== ====== ====== ====== ======
Operating profit (loss)
Exploration and production(1)......................... $ 173 $ 109 $ 667 $ 595 $ (361) $ 53 $ 331
Chemicals(2).......................................... 92 122 85 81 56 86 92
------ ------ ------ ------ ------ ------ ------
Total........................................... 265 231 752 676 (305) 139 423
Net interest expense(3)................................. (189) (170) (134) (127) (119) (88) (132)
Net other income (expense)(4)........................... (98) 7 (35) (14) (96) (61) (203)
Taxes on income......................................... (9) 42 (225) (184) 175 (10) (52)
------ ------ ------ ------ ------ ------ ------
Income (loss) from continuing operations(5)............. (31) 110 358 351 (345) (20) 36
Income from discontinued operations, net of income
taxes................................................. 55 27 56 33 277 277 --
Extraordinary charge, net of income taxes............... (12) (23) -- (2) -- -- --
Cumulative effect of change in accounting principle, net
of income taxes....................................... (948) -- -- -- -- -- (4)
------ ------ ------ ------ ------ ------ ------
Net income (loss)(5)............................ $ (936) $ 114 $ 414 $ 382 $ (68) $ 257 $ 32
====== ====== ====== ====== ====== ====== ======
Income (loss) from continuing operations, per share
(diluted)............................................. $(0.36) $ 1.23 $ 4.05 $ 4.02 $(3.98) $ (.23) $ .42
Cash dividends declared per share....................... $ 1.52 $ 1.55 $ 1.64 $ 1.80 $ 1.80 $ 1.35 $ 1.35
Balance sheet data
Working capital....................................... $ (254) $ (106) $ 161 $ -- $ (173) $ (50) $ 270
Property, plant and equipment, net.................... 4,497 3,807 3,693 3,919 4,153 4,636 4,062
Total assets.......................................... 5,918 5,006 5,194 5,339 5,451 6,065 5,874
Total debt............................................ 2,704 1,938 1,849 1,766 2,250 2,277 2,603
Stockholders' equity.................................. 1,112 1,124 1,279 1,558 1,346 1,745 1,444
Cash flow information
Net cash provided by operating activities............. 678 728 1,169 1,097 385 353 333
Cash capital expenditures
Exploration and production.......................... 505 632 722 708 871 787 321
Chemicals........................................... 52 69 118 91 92 67 62
Other and discontinued operations................... 54 44 35 37 18 17 5
------ ------ ------ ------ ------ ------ ------
Total........................................... $ 611 $ 745 $ 875 $ 836 $ 981 $ 871 $ 388
====== ====== ====== ====== ====== ====== ======
Other financial data
Current ratio......................................... .8 .9 1.2 1.0 .8 1.0 1.3
Total debt to capitalization.......................... 71% 63% 59% 53% 62% 56% 64%
Total debt net of cash to capitalization.............. 70% 62% 57% 50% 61% 53% 62%
</TABLE>
S-9
<PAGE> 10
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ ---------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating data
Crude oil and condensate production (thousands of
barrels/day)
Domestic.............................................. 73.4 74.8 73.8 70.6 66.2 66.6 77.0
North Sea............................................. 88.7 91.9 86.5 83.3 87.4 86.7 104.4
Other international................................... 26.4 17.4 16.8 18.1 18.4 19.1 15.5
------ ------ ------ ------ ------ ------ ------
Total............................................. 188.5 184.1 177.1 172.0 172.0 172.4 196.9
====== ====== ====== ====== ====== ====== ======
Average price of crude oil sold (per barrel)
Domestic............................................ $14.25 $15.73 $19.45 $18.34 $12.73 $12.62 $14.67
North Sea........................................... 15.33 16.56 19.60 18.93 12.93 12.89 15.92
Other International................................. 14.58 14.70 15.85 15.36 9.90 10.24 12.55
Average............................................... $14.80 $16.05 $19.18 $18.32 $12.52 $12.91 $15.28
Total natural gas sold (MMCF/day)..................... 872 809 781 685 584 590 573
Average price of natural gas sold (per MCF)........... $ 1.82 $ 1.63 $ 2.10 $ 2.43 $ 2.12 $ 2.13 $ 2.28
Industrial and specialty chemical sales (thousands of
metric tons)........................................ 346 404 405 443 481 346 372
</TABLE>
- ---------------
Includes special items as follows:
(1) Charges totaling $423 million in 1998 for FAS 121 asset impairments and
restructuring programs; charges totaling $2 million in 1997 primarily for a
restructuring program; charges totaling $32 million in 1996 for FAS 121
asset impairments and a restructuring program; charges totaling $235 million
in 1995 for FAS 121 asset impairments and a restructuring program; charges
totaling $92 million in 1994 for a restructuring program.
(2) Charges totaling $59 million in 1998 for FAS 121 asset impairments and
severance expenses; charges totaling $3 million in 1997 primarily for the
write-off of obsolete equipment; charges totaling $5 million in 1996 for FAS
121 asset impairments.
(3) Income totaling $13 million for the first nine months of 1998 and $19
million in 1998 for interest on settlement of prior years' income taxes.
(4) Charges totaling $168 million for the first nine months of 1999 primarily
for merger related costs; charges totaling $22 million for the first nine
months of 1998 primarily for a then-equity affiliate's full cost write-down
partially offset by insurance settlements; charges totaling $60 million in
1998 primarily for environmental provisions and a then-equity affiliate's
full-cost write-down partially offset by insurance settlements; income
totaling $17 million in 1997 primarily for gains on sales of securities and
insurance settlements partially offset by environmental provisions; income
totaling $20 million in 1996 primarily for insurance settlements and gains
on sales of securities partially offset by environmental provisions and
pending litigation; charges totaling $28 million in 1995 primarily for
environmental provisions.
(5) After-tax charges of $129 million for the first nine months of 1999;
after-tax charges of $17 million for the first nine months of 1998;
after-tax charges of $321 million in 1998; after-tax income of $8 million in
1997; after-tax charges of $11 million in 1996; after-tax charges of $163
million in 1995; after-tax charges of $60 million in 1994 as a result of the
items described in preceding footnotes 1 through 4.
S-10
<PAGE> 11
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the purchase, ownership and disposition of
common stock by a Non-U.S. Holder. As used herein the term "Non-U.S. Holder"
means any person or entity that is not a U.S. Holder. A U.S. Holder is any
beneficial owner of common stock that is:
- a citizen or resident of the United States,
- a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision thereof,
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source,
- a trust, that (1) is subject to the supervision of a court within the
United States and the control of one or more United States persons as
described in section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended (the "Code") or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a United States
person.
If a partnership holds common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships that hold common stock should consult
their tax advisors as to the particular tax consequences to them.
This discussion does not address all aspects of United States federal
income and estate taxes and does not deal with foreign, state and local
consequences that may be relevant to such Non-U.S. Holders in light of their
personal circumstances. Furthermore, this discussion is based on provisions of
the Code, existing and proposed regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change. EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS
ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX
CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF COMMON STOCK AS WELL AS ANY
TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY U.S. STATE, MUNICIPALITY
OR OTHER TAXING JURISDICTION.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding of United States federal income tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. However,
dividends that are effectively connected with the conduct of a trade or business
by the Non-U.S. Holder within the United States and, where a tax treaty applies,
are attributable to a United States permanent establishment of the Non-U.S.
Holder, are not subject to the withholding tax, but instead are subject to
United States federal income tax on a net income basis at applicable graduated
individual or corporate rates. Certain certification and disclosure requirements
must be complied with in order for effectively connected income to be exempt
from withholding. Any such effectively connected dividends received by a foreign
corporation may be subject to an additional "branch profits tax" at a 30% rate
or such lower rate as may be specified by an applicable income tax treaty.
After December 31, 2000, dividends paid to an address outside the United
States are presumed to be paid to a resident of such country (unless the payer
has knowledge to the contrary) for purposes of the withholding tax discussed
above and, under the current interpretation of United States Treasury
regulations, for purposes of determining the applicability of a tax treaty rate.
However, United States Treasury regulations (the "Final Regulations") provide
that a Non-U.S. Holder of common stock who wishes to claim the benefit of an
applicable treaty rate (and avoid back-up withholding as discussed below) for
dividends paid after December 31, 2000, will be required to satisfy applicable
certification and other requirements.
S-11
<PAGE> 12
A Non-U.S. Holder of common stock eligible for a reduced rate of United
States withholding tax pursuant to an income tax treaty may obtain a refund of
any excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service (the "IRS").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of
common stock unless (1) the gain is effectively connected with a trade or
business of the Non-U.S. Holder in the United States, and, where a tax treaty
applies, is attributable to a United States permanent establishment of the
Non-U.S. Holder, (2) in the case of a Non-U.S. Holder who is an individual and
holds the common stock as a capital asset, such holder is present in the United
States for 183 or more days in the taxable year of the sale or other disposition
and certain other conditions are met, or (3) we are or have been a "U.S. real
property holding corporation" for United States federal income tax purposes.
An individual Non-U.S. Holder described in clause (1) above will be subject
to tax on the net gain derived from the sale under regular graduated United
States federal income tax rates. An individual Non-U.S. Holder described in
clause (2) above will be subject to a flat 30% tax on the gain derived from the
sale, which may be offset by United States source capital losses (even though
the individual is not considered a resident of the United States). If a Non-U.S.
Holder that is a foreign corporation falls under clause (1) above, it will be
subject to tax on its gain under regular graduated United States federal income
tax rates and, in addition, may be subject to a branch profits tax equal to 30%
of its effectively connected earnings and profits (within the meaning of the
Code) for the taxable year, as adjusted for certain items, unless it qualifies
for a lower rate or exemption under an applicable income tax treaty.
We have not determined whether we are a "U.S. real property holding
corporation" for U.S. federal income tax purposes. If we are or become a "U.S.
real property holding corporation," so long as our common stock is and continues
to be regularly traded on an established securities market, only a Non-U.S.
Holder who holds or held (at any time during the shorter of the five year period
preceding the date of disposition or the holder's holding period) more than five
percent of our common stock will be subject to U.S. federal income tax on the
disposition of our common stock.
U.S. FEDERAL ESTATE TAX
Common stock held by an individual Non-U.S. Holder at the time of death
will be included in such holder's gross estate for United States federal estate
tax purposes, unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We must report annually to the IRS and to each Non-U.S. Holder the amount
of dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
Under current law, backup withholding at the rate of 31% (as opposed to the
general withholding tax rate of 30% described above) generally will not apply to
dividends paid to a Non-U.S. Holder at an address outside the United States
(unless the payer has knowledge that the payee is a U.S. person). Under the
Final Regulations, however, a Non-U.S. Holder will be subject to backup
withholding unless applicable certification requirements are met.
Payment of the proceeds of a sale of common stock within the United States
or conducted through certain U.S. related financial intermediaries is subject to
both backup withholding and information reporting unless the beneficial owner
certifies under penalties of perjury that it is a Non-U.S. Holder (and
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<PAGE> 13
the payer does not have actual knowledge that the beneficial owner is a United
States person) or the holder otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
Special rules may apply to certain Non-U.S. Holders, such as foreign
insurance companies, "controlled foreign corporations," "passive foreign
investment companies," "foreign personal holding companies," and companies that
accumulate earnings for the purpose of avoiding tax, that are subject to special
treatment under the Code. Such entities should consult their own tax advisors to
determine the United States federal, state, local and other tax consequences
that may be relevant to them.
S-13
<PAGE> 14
UNDERWRITING
Under an underwriting agreement, Lehman Brothers Inc. and Goldman, Sachs &
Co. are acting as representatives of the underwriters named below. Under the
underwriting agreement each of the underwriters has agreed to purchase from us
the respective number of shares of common stock shown opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES OF COMMON STOCK
- ------------ ----------------------
<S> <C>
Lehman Brothers Inc.........................................
Goldman, Sachs & Co.........................................
ABN AMRO Incorporated.......................................
Credit Suisse First Boston Corporation......................
Deutsche Bank Securities Inc................................
J.P. Morgan Securities Inc..................................
Banc of America Securities LLC..............................
Salomon Smith Barney Inc....................................
----------
Total............................................. 9,000,000
==========
</TABLE>
The underwriting agreement provides that the underwriters' obligations to
purchase shares of the common stock depend on the satisfaction of the conditions
contained in the underwriting agreement, and that if any of the shares of common
stock are purchased by the underwriters under the underwriting agreement, all of
the shares of common stock which the underwriters have agreed to purchase under
the underwriting agreement, must be purchased. The conditions contained in the
underwriting agreement include the condition that all the representations and
warranties made by us to the underwriters are true, that there has been no
material adverse change in our condition or in the financial markets and that we
deliver to the underwriters customary closing documents.
The following table shows the underwriting fees to be paid to the
underwriters by us in connection with this offering. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares of common stock. This underwriting fee is the
difference between the initial price to public and the amount the underwriters
pay to us to purchase the shares from us. On a per share basis, the underwriting
fee is % of the initial price to public.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share................................................... $ $
Total....................................................... $ $
</TABLE>
We have been advised by the representatives that the underwriters propose
to offer the common stock directly to the public at the initial price to public
set forth on the cover page of this prospectus supplement and to dealers (who
may include the underwriters) at this initial price to public less a concession
not in excess of $ per share. The underwriters may allow, and the dealers
may reallow, a concession not in excess of $ per share to certain brokers
and dealers. After the offering, the underwriters may change the offering price
and other selling terms.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that may be required to be made in respect thereof.
We have granted to the underwriters an option to purchase up to an
aggregate of 1,350,000 additional shares of common stock at the initial price to
public less the underwriting discounts and commissions set forth on the cover of
this prospectus supplement exercisable solely to cover over-allotments. Such
option may be exercised at any time until 30 days after the date of the
underwriting agreement. If this option is exercised, each underwriter will be
committed, subject to satisfaction of the conditions specified in the
underwriting agreement, to purchase a number of additional shares of common
stock proportionate to such
S-14
<PAGE> 15
underwriter's initial commitment as indicated in the preceding table, and we
will be obligated, pursuant to such option, to sell such shares of common stock
to the underwriters.
We and our executive officers and directors have agreed, for a period of 90
days from the date of this prospectus supplement, not to, directly or
indirectly, offer, sell or otherwise dispose of any shares of common stock or
any securities convertible into or exchangeable or exercisable for any such
shares of common stock or enter into any derivative transaction with similar
effect as a sale of common stock, without the prior written consent of the
representatives. The restrictions described in this paragraph do not apply to
(a) the sale of common stock to the underwriters, (b) the concurrent sale of our
convertible subordinated debentures or the issuance of common stock upon their
conversion or (c) shares of common stock issued by us under employee incentive
plans or upon the exercise of options issued under employee incentive plans.
In connection with this offering, the representatives may purchase and sell
our common stock in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the representatives of a greater amount
of common stock than they are required to purchase from us, and in such case the
representatives may purchase common stock in the open market following
completion of the offering to cover all or a portion of their short position.
The representatives may also cover all or a portion of such short position in
the common stock by exercising the underwriters' over-allotment option referred
to above. Stabilizing transactions consist of certain bids or purchases made for
the purpose of preventing or retarding a decline in the market price of our
common stock while this offering is in progress. In addition, the
representatives may impose penalty bids. This occurs when a particular
underwriter repays to the representatives a portion of the underwriting discount
received by it because the representatives have repurchased common stock sold by
or for the account of that underwriter in stabilizing or short-covering
transactions. Any of the activities by the representatives described in this
paragraph may stabilize, maintain or otherwise affect the market price of our
common stock. As a result, the price of our common stock may be higher than the
price that otherwise might exist in the open market. The representatives may
effect these transactions on the NYSE, in the over-the-counter market or
otherwise. If these activities are commenced, they may be discontinued by the
representatives at any time without notice.
Some of the underwriters or their affiliates have from time to time
provided investment banking and financial advisory services to us and our
affiliates in the ordinary course of business, for which they have received
customary fees, and they may continue to do so. Each of Lehman Brothers Inc. and
Goldman, Sachs & Co. are also underwriters for our convertible subordinated
debenture offering for which they will receive customary underwriting fees. In
addition, some of the underwriters or their affiliates will also be receiving
proceeds from this offering due to their participation in certain of our credit
facilities or the ownership of certain of our notes.
This prospectus supplement and the accompanying prospectus are not, and
under no circumstances are to be construed as, an advertisement or a public
offering of the shares in Canada or any province or territory thereof. Any offer
or sale of shares in Canada will be made only under an exemption from the
requirements to file a prospectus and an exemption from the dealer registration
requirement in the relevant province or territory of Canada in which such offer
or sale is made.
LEGAL MATTERS
Certain legal matters with respect to the common stock will be passed upon
for us by Gregory F. Pilcher, Esq., Vice President, General Counsel and
Secretary of Kerr-McGee and Simpson Thacher & Bartlett, New York, New York and
for the underwriters by Vinson & Elkins L.L.P., Houston, Texas.
EXPERTS
The financial statements and schedules as of December 31, 1998 and 1997 and
for each of the three years in the period ended December 31, 1998, incorporated
by reference in the attached prospectus, have
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<PAGE> 16
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto. In those reports, the firm
states that with respect to Oryx Energy Company, which was merged into
Kerr-McGee Corporation during 1999 in a transaction accounted for as a pooling
of interests, its opinion is based on the reports of other independent public
accountants, namely PricewaterhouseCoopers LLP. The financial statements and
supporting schedules referred to above have been included herein in reliance
upon the authority of those firms as experts in giving said reports.
FORWARD-LOOKING STATEMENTS
Statements in this prospectus supplement and the attached prospectus
regarding our or management's intentions, beliefs or expectations for the future
are "forward-looking statements" within the meaning of the Securities Litigation
Reform Act. Such statements may be affected by various factors and are subject
to numerous risks such as the accuracy of the assumptions that underlie the
statements, the success of the oil and natural gas exploration and production
program, drilling risks, the price of our products, uncertainties in
interpreting engineering data, demand for consumer products for which our
business supplies raw materials, general economic conditions and other factors
and risks discussed in our SEC filings. Actual results and developments may
differ materially from those expressed or implied in this prospectus supplement
and in the attached prospectus.
S-16
<PAGE> 17
PROSPECTUS
[KERR-McGEE LOGO]
$1,500,000,000
KERR-MCGEE CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK, WARRANTS
---------------------
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell theses securities and is not soliciting an offer to buy these securities
in any state where the offer and sale is not permitted.
By this prospectus, we may offer up to $1,500,000,000 of debt securities,
preferred stock, common stock and warrants on terms to be determined at the time
of sale. We will provide more specific information regarding these securities in
supplements to this prospectus. You should read this prospectus, particularly
the Risk Factors beginning on page 4, and any supplement carefully before
investing.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR BY ANY STATE SECURITIES COMMISSION, NOR HAVE THOSE ORGANIZATIONS
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
JANUARY 13, 2000
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About This Prospectus....................................... 3
Where You Can Find Information.............................. 3
Risk Factors................................................ 4
The Company................................................. 5
Use Of Proceeds............................................. 6
Ratio Of Earnings To Fixed Charges And Ratio Of Earnings To
Combined Fixed Charges And Preferred Stock Dividend
Requirements.............................................. 6
Description Of Debt Securities.............................. 6
Description Of Preferred Stock.............................. 12
Description Of Common Stock................................. 14
Description Of Warrants..................................... 15
Plan of Distribution........................................ 15
Legal Matters............................................... 16
Experts..................................................... 16
</TABLE>
2
<PAGE> 19
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement that we filed with the
SEC utilizing a shelf registration process. Under this shelf process, we may
sell the unsecured Debt Securities, Preferred Stock, Common Stock and Warrants
(which we refer to as the Offered Securities) described in this prospectus in
one or more offerings up to a total dollar amount of $1,500,000,000. This
prospectus provides you with a general description of the Offered Securities we
may offer. Each time we sell Offered Securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described below under
"Where You Can Find Information".
WHERE YOU CAN FIND INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any materials on file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. Our filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Room.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities:
- Our Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999;
June 30, 1999 and September 30, 1999;
- Our Current Reports on Form 8-K filed January 19, 1999; February 26,
1999; March 11, 1999; April 30, 1999; May 12, 1999; June 4, 1999; July
29, 1999; and October 15, 1999; and
- Our Current Reports on Form 8-K/A filed January 26, 1999; July 16, 1999
and July 26, 1999.
You can get a free copy of any of the documents incorporated by reference by
making an oral or written request directed to:
Investor Relations
Kerr-McGee Corporation
P. O. Box 25861
Oklahoma City, Oklahoma 73125
Telephone (405) 270-3125
You should rely only on the information contained or incorporated in this
prospectus or any supplement. We have not authorized anyone else to provide you
with different information. You should not rely on any other representations.
Our affairs may change after this prospectus or any supplement is distributed.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
You should read all information supplementing this prospectus.
3
<PAGE> 20
RISK FACTORS
Prospective purchasers of the offered securities should carefully review
the information contained elsewhere in this prospectus and should particularly
consider the following matters.
EFFECTS OF VOLATILE PRODUCT PRICES AND MARKETS
Our results of operations are highly dependent upon the prices of and
demand for oil & gas, and our commodity chemical products. Historically, the
markets for oil and gas have been volatile and are likely to continue to be
volatile in the future. Accordingly, the prices received by the company for its
oil and gas production are dependent upon numerous factors which will be beyond
its control. These factors include, but are not limited to, the level of
ultimate consumer product demand, governmental regulations and taxes, the price
and availability of alternative fuels, the level of imports and exports of oil
and gas, and the overall economic environment. Any significant decline in prices
for oil and gas could have a material adverse effect on our financial condition,
results of operations and quantities of reserves recoverable on an economic
basis. Demands for TiO2 is dependent on the ultimate products utilizing TiO2
pigment. This demand is generally reflected by the status of the economy,
profitability of our products which is dependent on the price realized, the
efficiency of the manufacturing costs, and the ability to acquire feed stock at
a competitive price. Should the industry experience significant price declines
or other adverse market conditions, we may not be able to generate sufficient
cash flow from operations to meet our obligations and make planned capital
expenditures. In order to manage our exposure to price risks in the sale of our
oil and gas, we may from time to time enter into commodities futures or option
contracts to hedge a portion of our crude oil and natural gas sales volume,
although we do not currently do so. Any such hedging activities may prevent us
from realizing the benefits of price increases above the levels reflected in
such hedges.
FAILURE TO FUND CONTINUED CAPITAL EXPENDITURES COULD ADVERSELY AFFECT PROPERTIES
If our revenues substantially decrease as a result of lower oil and gas
prices or otherwise, we may have limited ability to spend the capital necessary
to replace our reserves or to maintain production at current levels, resulting
in a decrease in production over time.
We expect that we will continue to make capital expenditures for the
acquisition, exploration and development of oil and gas reserves. Historically,
we have financed these expenditures primarily with cash flow from operations and
proceeds from debt and equity financings, asset sales and sales of partial
interests in foreign concessions. We believe that we will have sufficient cash
flow from operations, available drawings under our credit facilities and other
debt financings to fund capital expenditures. However, if our cash flow from
operations is not sufficient to satisfy our capital expenditure requirements,
there can be no assurance that additional debt or equity financing or other
sources of capital will be available to meet these requirements. If we are not
able to fund our capital expenditures, our interests in some of our properties
may be reduced or forfeited.
COSTS OF ENVIRONMENTAL LIABILITIES AND REGULATIONS COULD EXCEED ESTIMATES
Our current and former operations involve management of regulated materials
and are subject to various environmental laws and regulations. These laws and
regulations obligate us to clean up various sites at which petroleum, chemicals,
low-level radioactive substances or other regulated materials have been disposed
of or released. Some of these sites have been designated Superfund sites by the
U.S. Environmental Protection Agency pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980. We are also a party to legal
proceedings involving environmental matters pending in various courts or
agencies.
4
<PAGE> 21
It is not possible for us to reliably estimate the amount and timing of all
future expenditures related to environmental matters because of:
- The difficulty of estimating clean up costs;
- The uncertainty in quantifying liability under environmental laws that
impose joint and several liability on all potentially responsible
parties; and
- The continually changing nature of environmental laws and regulations.
Although we believe that we have established appropriate reserves for
cleanup costs, due to the above-noted uncertainties, we could be required to
record additional reserves in the future.
THE COMPANY
Kerr-McGee Corporation, an energy and chemical company, had its beginning
in 1929 with the formation of Anderson & Kerr Drilling Company. With oil and gas
exploration, development and production as our base, we have expanded into
titanium dioxide pigment manufacturing and marketing and into the mining and
marketing of minerals. We own a large inventory of natural resources that
includes oil and gas reserves and chemical and mineral deposits. Our executive
offices are located at Kerr-McGee Center, Oklahoma City, Oklahoma 73125.
On February 26, 1999, we completed a merger with Oryx Energy Company which
created the fifth largest independent, nonintegrated oil and gas exploration,
development and production company based in the United States in terms of proved
oil and gas reserves at December 31, 1998. After the merger, combined proved
reserves as of December 31, 1998 totaled 959 million barrels of oil equivalent
with 80% of these located in our core operating areas of the United States and
the North Sea. We conduct offshore oil and gas exploration and/or production
activities in the Gulf of Mexico, U. K., China, Thailand, Gabon, Algeria,
Australia, Indonesia and Brazil. We conduct onshore exploration and/or
production operations in the United States, Ecuador, Indonesia, the United
Kingdom, Kazakhstan, Thailand and Yemen.
Our primary chemical product is titanium dioxide pigment, which is produced
at four titanium dioxide plants located in the United States, Australia, Germany
and Belgium. In addition, our chemical operations produce and market inorganic
industrial and specialty chemicals, heavy minerals and forest products. We
produce and market other industrial chemicals including synthetic rutile,
manganese products and sodium chlorate and specialty chemicals including boron
trichloride and elemental boron. We produce the heavy minerals ilmenite,
synthetic and natural rutile, zircon and leucoxene. Our forest products
operations treat railroad crossties and other hardwood products and provide wood
treating services.
5
<PAGE> 22
USE OF PROCEEDS
We will use the proceeds we receive from selling these Offered Securities
for acquisitions or for other general corporate purposes. General corporate
purposes may include capital expenditures, payment of debt, or any other
purposes that may be stated in the supplements. The proceeds may be invested
temporarily until they are used for their stated purpose.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,(1)
- -------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
- ---- ---- ---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(2) 1.2 4.1 3.9 (2) (2) 1.5
</TABLE>
- ---------------
(1) As of September 30, 1999, we had no outstanding preferred stock. Therefore,
unless otherwise indicated, ratio of earnings to combined fixed charges and
preferred dividend requirements will be the same.
(2) Earnings were inadequate to cover fixed charges by $33 million for nine
months ended September 30, 1998, by $548 million for the year ended December
31, 1998, and $41 million for the year ended December 31, 1994.
For purposes of computing the ratios, the earnings calculation is: income
from continuing operations + income taxes + fixed charges - capitalized
interest. Fixed charges calculation is: all interest + interest factor of rental
expense.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities summarizes
certain general terms that will apply to the Debt Securities. The description is
not complete, and we refer you to the Indenture, a copy of which is an exhibit
to the Registration Statement of which this prospectus is a part. For your
reference, in several cases below we have noted the section in the Indenture
that the paragraph summarizes. Capitalized items have the meanings assigned to
them in the Indenture. The referenced sections of the Indenture and the
definitions of capitalized terms are incorporated by reference in the following
summary.
The Debt Securities will be issued under an Indenture dated as of August 1,
1982 and supplemented by the First Supplemental Indenture dated May 7, 1996
between Kerr-McGee and Citibank, N.A., as Trustee, relating to the Company's
6.625% notes due October 15, 2007, and the Company's 7.125% Debentures Due
October 15, 2027, filed as Exhibit 4.1 to the Form 8-K filed on July 29, 1999;
the Second Supplemental Indenture dated August 2, 1999, between the Company and
Citibank, N.A., as Trustee, relating to the Company's 5 1/2% Exchangeable Notes
due August 2, 2004; and the Third Supplemental Indenture dated November 1, 1999,
between the Company and Citibank, N.A., as Trustee, relating to the Company's
variable interest rate notes due November 1, 2001. The Indenture is incorporated
by reference as an exhibit to the Registration Statement filed with the SEC.
This summary of the Indenture is qualified by reference to the Indenture. You
should refer to the Indenture in addition to reading this summary. The summary
is not complete and is subject to the specific terms of the Indenture.
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<PAGE> 23
GENERAL
Under the Indenture, we can issue an unlimited amount of Debt Securities.
The following amounts of Debt Securities are currently outstanding under the
Indenture:
<TABLE>
<C> <C> <S>
$150,000,000 -- 6.625% Notes Due October 15, 2027
150,000,000 -- 7.125% Debentures Due October 15, 2027
330,348,375 -- 5.50% Notes Due August 2, 2004
150,000,000 -- Floating Rate Notes Due October 30, 2001
</TABLE>
Each time that we issue a new series of Debt Securities, the supplement
relating to that new series will specify the terms of those Debt Securities,
including:
- Designation, amount and denominations;
- Percentage of principal amount at which Debt Securities will be issued;
- Maturity date;
- Annual interest rate and payment dates;
- Terms and conditions of exchanging or converting Debt Securities for
other securities;
- Redemption terms; and
- Whether the Debt Securities will be senior, senior subordinated or
subordinated.
Payments relating to the Debt Securities generally will be paid at
Citibank's corporate trust office. However, we may elect to pay interest by
mailing checks directly to the registered holders of the Debt Securities. You
can transfer your Debt Securities at Citibank's corporate trust office.
RANKING
Unless otherwise described in the prospectus supplement for any series, the
Debt Securities will be unsecured and will rank on a parity with all of our
other unsecured and unsubordinated indebtedness.
We will issue the Debt Securities in registered form without coupons. You
can transfer or exchange your Debt Securities without a service charge, but we
may require advance payment of any tax or other governmental transfer or
exchange charge.
DEFINITIONS
The covenants in the Indenture, which we summarize below, use the following
terms:
- Subsidiary: A corporation or limited liability company of which we own a
majority of the voting stock either directly or indirectly. (Section 101)
- Restricted Subsidiary: Any subsidiary which we designate as a Restricted
Subsidiary or which owns or leases any Principal Property (see the next
definition). The term does not include a subsidiary if its principal
business is leasing assets, financing the sale of products or holding the
securities of other subsidiaries. (Section 101)
- Principal Property: Any company-owned U.S. mineral property capable of
producing in paying quantities and any manufacturing plant owned by us in
the U.S. (including the land and fixtures), unless our Board of Directors
feels that the property or plant is not material to our total business.
The term does not include any facility acquired to control or abate air,
water, noise, odor, or other pollution, or facilities financed through
industrial revenue bonds or similar financing. (Section 101)
- Consolidated Net Tangible Assets: The total amount of assets on our
consolidated balance sheet and the balance sheets of our Restricted
Subsidiaries, less any reserves and after deducting: (1) current
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<PAGE> 24
liabilities and (2) goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other intangibles. (Section
101)
- Funded Debt: Money borrowed or debt evidenced by bonds or debentures, or
agreements having a maturity of more than one year (or less than one year
but which is renewable after that year at the borrower's option).
(Section 101)
- Debt: Notes, bonds, debentures or other similar documents indicating
indebtedness. (Section 1008)
- Mortgage: A pledge, mortgage or other lien securing a debt. (Section
1008)
CERTAIN COVENANTS
The Indenture includes the following covenants. These covenants use certain
terms that are defined above. The covenants for a series of Debt Securities may
differ from those described below. If they do, this will be described in the
supplement to this prospectus relating to that series.
RESTRICTIONS ON SECURED DEBT
After the date of the Indenture, if we incur or guarantee a debt secured by
either a mortgage on any of our Principal Property or on a Restricted
Subsidiary's stock or debt, we will secure the Debt Securities on the same
basis, unless the amount of the new debt plus the value of all sale and
leaseback transactions involving Principal Properties would not exceed 5% of
Consolidated Net Tangible Assets. The restrictions do not apply to debt secured
by the following:
- Mortgages on our property or the property of a Restricted Subsidiary,
which existed on the date of the Indenture.
- Mortgages on the property, stock or debt of a corporation that existed
when the corporation became a Restricted Subsidiary.
- Mortgages on the property of a Restricted Subsidiary, which only secures
indebtedness owed by the Subsidiary to another Restricted Subsidiary or
us.
- Mortgages in favor of governmental bodies to secure progress, advance or
other payments.
- Mortgages on acquired property, stock or debt which existed at the time
of the acquisition (including acquisition through merger or
consolidation) and certain purchase money and construction mortgages.
- Mortgages on our property or the property of a Restricted Subsidiary to
secure payment of the costs of operations, increase the production and
disposition of minerals from the property or indebtedness incurred to
provide funds for such purposes.
- Any extension, renewal or refunding of the foregoing.
The listed debt will be excluded when computing our secured debt.
The restrictions will not apply to sale and leaseback transactions if the
proceeds are applied to the retirement of Funded Debt. Secured debt will not be
deemed to be created by the transfer of an interest in property in the form
commonly referred to as a "production payment". (Sections 1008 and 1009)
RESTRICTIONS ON SALES AND LEASEBACKS
We may not enter into any sale and leaseback transaction involving any
Principal Property after the date of the Indenture unless:
- The sale or transfer occurs within 120 days after construction is
complete and the Principal Property is fully operational.
- We could mortgage the property under Section 1008 of the Indenture for an
amount equal to the proceeds of the sale and leaseback transaction
without securing the Debt Securities on the same basis.
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<PAGE> 25
- We use an amount equal to the market value of the Principal Property
being leased to retire Funded Debt within 120 days. This restriction will
not apply to any sale and leaseback transaction between us (or a
Restricted Subsidiary) and a Restricted Subsidiary, or involving the
taking back of a lease for a period of less than three years. (Section
1009)
MERGER AND CONSOLIDATION
The Indenture generally permits a consolidation or merger between
Kerr-McGee and another corporation. It also permits the sale by Kerr-McGee of
all or substantially all of our property and assets. If this happens, the
resulting or acquiring corporation will assume all of our responsibilities and
liabilities under the Indenture. If the resulting or acquiring corporation has
outstanding Debt secured by a Mortgage on any Principal Property, or shares of
stock of a Restricted Subsidiary, the Debt Securities will be equally and
ratably secured with (or prior to) the Debt secured by such Mortgage. This
restriction will not apply if the Mortgage could be created pursuant to Section
1008 of the Indenture (see "Restrictions on Secured Debt" above) without equally
and ratable securing the Debt Securities. (Section 803)
MODIFICATION
Generally, our rights and obligations and the holders' rights may be
modified if the holders of 66 2/3% of the outstanding Debt Securities consent.
However, no modification or amendment may occur without the consent of the
affected holder of the Debt Security if that modification or amendment would do
any of the following:
- Change the stated maturity date of the principal of, or any installment
of interest on, any of the holder's Debt Security.
- Reduce the principal amount of, or the interest (or premium, if any) on,
the Debt Security (including in the case of a discounted Debt Security,
the amount payable upon acceleration of maturity or provable in
bankruptcy).
- Change the currency of payment of the Debt Security.
- Impair the right to institute suit for the enforcement of any payment on
the Debt Security or adversely affect the right of repayment, if any, at
the option of the holder.
- Reduce the percentage of holders of Debt Securities necessary to modify
or amend the Indenture.
A modification which changes a covenant or provision expressly included
solely for the benefit of holders of one or more particular series will not
affect the rights of holders of Debt Securities of any other series. (Section
902)
Kerr-McGee or Citibank may make modifications without the consent of the
Debt Securities holders in order to do the following: (Section 901)
- Evidence that another corporation has succeeded to Kerr-McGee and assumed
our obligations.
- Convey security for the Debt Securities to Citibank.
- Add covenants, restrictions or conditions for the protection of the Debt
Security holders.
- Provide for the issuance of Debt Securities in coupon form.
- Establish the form or terms of Debt Securities of any series.
- Cure any ambiguity or correct any defect in the Indenture which does not
adversely affect the interests of a holder.
- Evidence the appointment of a successor trustee or more than one trustee.
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EVENTS OF DEFAULT
In the Indenture, an Event of Default means any one of the following:
- Failure to pay interest on a Debt Security for 30 days;
- Failure to pay principal and premium, if any, when due;
- Failure to pay sinking fund installment when due;
- Failure to perform any other covenant in the Indenture that continues for
60 days after receipt of notice; or
- Certain events in bankruptcy, insolvency or reorganization.
An Event of Default relating to one series of Debt Securities does not
necessarily constitute an Event of Default with respect to any other series
issued under the Indenture. If an Event of Default exists with respect to a
series of Debt Securities, Citibank or the holders of at least 25% of the
outstanding Debt Securities of that series (or of all the outstanding Debt
Securities in the case of defaults due to failure to perform a covenant in the
Indenture or certain events in bankruptcy, insolvency, or reorganization) may
declare the principal of that series (or of all outstanding Debt Securities, as
the case may be) due and payable.
Any Event of Default with respect to a particular series of Debt Securities
may be waived by the holders of a majority of the outstanding Debt Securities of
that series (or of all the outstanding Debt Securities as the case may be),
except for a failure to pay principal, premium or interest on the Debt Security.
(Sections 501, 502 and 508)
Citibank may withhold notice to the holders of the Debt Securities of any
default (except in payment of principal, premium, interest or sinking fund
payment) if Citibank thinks it is in the interest of the holders. (Section 602)
Subject to the specific duties that arise under the Indenture if an Event
of Default exists, Citibank is not obligated to exercise any of its rights or
powers under the Indenture at the request of the holders of the Debt Securities,
unless they provide reasonable indemnity. (Sections 601 and 603). Generally, the
holders of a majority of the outstanding Debt Securities can direct the
proceeding for a remedy available to Citibank or for exercising any power
conferred on Citibank as the trustee. (Section 508)
TRUSTEE'S RELATIONSHIP
Citibank has loaned us substantial amounts of money in the past and may
continue to do so. Citibank serves as a depository for us and performs other
services for us in the normal course of business. The Indenture provides that we
will indemnify Citibank against any loss, liability or expense incurred that
arises from the trust created by the Indenture unless the loss, liability or
expense results from Citibank's negligence or bad faith. (Section 607)
GLOBAL SECURITIES
We may issue some of the Debt Securities as Global Securities that will be
deposited with a depository identified in a prospectus supplement. Global
Securities may be issued in either registered or bearer form and may be either
temporary or permanent. A prospectus supplement will contain additional
information about depository arrangements.
Registered Global Securities will be registered in the depositary's name or
in the name of its nominee. When we issue a Global Security, the depositary will
credit that amount of Debt Securities to the investors that have accounts with
the depository or its nominee. The underwriters or the Debt Security holders'
agent will designate the accounts to be credited, unless the Debt Securities are
offered and sold directly by Kerr-McGee, in which case, we will designate the
appropriate account to be credited.
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<PAGE> 27
Investors who have accounts with a depository, and people who have an
interest in those institutions, are the beneficial owners of Global Securities
held by that particular depository.
Kerr-McGee will not maintain records regarding ownership or the transfer of
Global Securities held by a depository or to nominee. If you are the beneficial
owner of Global Securities held by a depository, you must get information
directly from the depository.
As long as a depositary is the registered owner of a Global Security, that
depository will be considered the sole owner of the Debt Securities represented
by that Global Security. Except as set forth below, beneficial owners of Global
Securities held by a depository will not be entitled to:
- Register the represented Debt Securities in their names;
- Receive physical delivery of the Debt Securities; or
- Be considered the owners or holders of the Global Security under the
Indenture.
Payments on Debt Securities registered in the name of a depositary or its
nominee will be made to the depositary or its nominee. (Section 203)
When a depositary receives a payment, it must immediately credit the
accounts in amounts proportionate to the account holders' interests in the
Global Security. The beneficial owners of a Global Security should, and are
expected to, establish standing instructions and customary practices with their
investor that has an account with the depository, so that payments can be made
with regard to securities beneficially held for them, much like securities held
for the accounts of customers in bearer form or registered in "street name."
A Global Security can only be transferred in whole by the depository to a
nominee of such depository, or to another nominee of a depository. If a
depositary is unwilling or unable to continue as a depository and we do not
appoint a successor depository within ninety (90) days, we will issue Debt
Securities in exchange for all of the Global Securities held by that depository.
In addition, we may eliminate all Global Securities at any time and issue Debt
Securities in exchange for them. Further, we may allow a depository to surrender
a Global Security in exchange for Debt Securities on any terms that are
acceptable to us and the depositary. (Section 307)
If any of these events occur, we will execute and Citibank will
authenticate and deliver to the beneficial owners of the Global Security in
question a new registered security in an amount equal to and in exchange for
that person's beneficial interest in the exchanged Global Security. The
depository will receive a new Global Security in an amount equal to the
difference, if any, between the amount of the surrendered Global Security and
the amount of Debt Securities delivered to the beneficial owners. Debt
Securities issued in exchange for Global Securities will be registered in the
same names and in the same denominations as indicated by the depository's
records and in accordance with the instructions from its direct and indirect
participants. (Section 307)
The laws of certain jurisdictions require some people who purchase
securities to actually take physical possession of those securities. The
limitations imposed by these laws may impair your ability to transfer your
beneficial interests in a Global Security.
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<PAGE> 28
DESCRIPTION OF PREFERRED STOCK
GENERAL
Our Certificate of Incorporation authorizes our Board of Directors or a
committee of our Board of Directors to cause Preferred Stock to be issued in one
or more series, without stockholder action. The Board of Directors is authorized
to issue up to 40,000,000 shares of Preferred Stock, $1 par value per share, and
can determine the number of shares of each series, and the rights, preference
and limitations of each series. We may amend the Charter to increase the number
of authorized shares of preferred stock in a manner permitted by the Charter and
the Delaware General Corporation Law.
The particular terms of any series of preferred stock being offered by us
under this shelf registration will be described in the prospectus supplement
relating to that series of Preferred Stock. Those terms may include:
- The number of shares of the series of Preferred Stock being offered;
- The title and liquidation preference per share of that series of the
Preferred Stock;
- The purchase price of the Preferred Stock;
- The dividend rate (or method for determining such rates);
- The dates on which dividends will be paid;
- Whether dividends on that series of Preferred Stock will be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall
commence to accumulate;
- Any redemption or sinking fund provisions applicable to that series of
preferred stock;
- Any conversion provisions applicable to that series of preferred stock;
- Whether we have elected to offer Depositary Shares with respect to that
series of preferred stock; and
- Any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of preferred stock.
If the terms of any series of Preferred Stock being offered differ from the
terms set forth herein, those terms will also be disclosed in the prospectus
supplement relating to that series of Preferred Stock. The following summary is
not complete. You should refer to the Certificate of Designations relating to
the series of the Preferred Stock for the complete terms of that Preferred
Stock. That Certificate of Designations will be filed with the SEC promptly
after the offering of the Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the prospectus supplement, in the event we
liquidate, dissolve or wind-up our business, each series of Preferred Stock will
have the same rank as to dividends and distributions as each other series of the
Preferred Stock we may issue in the future. The Preferred Stock will have no
preemptive rights.
DIVIDEND RIGHTS
Holders of Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, cash dividends at the rates
and on the dates set forth in the prospectus supplement. Dividend rates may be
fixed or variable or both. Different series of Preferred Stock may be entitled
to dividends at different dividend rates or based upon different methods of
determination. Each dividend will be payable to the holders of record as they
appear on our stock books on record dates determined by the Board of Directors.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as specified in the prospectus supplement. If the Board of
Directors fails to declare a dividend on any series of Preferred Stock for which
dividends are noncumulative, then the right to receive that dividend will be
lost, and we will have no obligation to pay the dividend for that dividend
period, whether or not dividends are declared for any future dividend period.
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No full dividends will be declared or paid on any series of Preferred
Stock, unless full dividends for the dividend period commencing after the
immediately preceding dividend payment date (and cumulative dividends still
owing, if any) have been or contemporaneously are declared and paid on all other
series of Preferred Stock that have the same rank as, or rank senior to, that
Preferred Stock. When those dividends are not paid in full, dividends will be
declared pro rata, so that the amount of dividends declared per share on that
series of Preferred Stock and on each other series of preferred stock having the
same rank as, or ranking senior to, that series of Preferred Stock will in all
cases bear to each other the same ratio that accrued dividends per share on that
series of Preferred Stock and the other preferred stock bear to each other. In
addition, generally, unless full dividends, including cumulative dividends still
owing, if any, on all outstanding shares of any series of Preferred Stock have
been paid, no dividends will be declared or paid on the Common Stock and
generally we may not redeem or purchase any Common Stock. No interest, or sum of
money in lieu of interest, will be paid in connection with any dividend payment
or payments which may be in arrears.
Unless otherwise described in the prospectus supplement, the amount of
dividends payable for each dividend period will be computed by annualizing the
applicable dividend rate and dividing by the number of dividend periods in a
year, except that the amount of dividends payable for the initial dividend
period or any period shorter than a full dividend period shall be computed on
the basis of a 360-day year consisting of twelve 30-day months and, for any
period less than a full month, the actual number of days elapsed in the period.
RIGHTS UPON LIQUIDATION
In the event we liquidate, dissolve or wind-up our affairs, either
voluntarily or involuntarily, the holders of each series of Preferred Stock will
be entitled to receive liquidating distributions in the amount set forth in the
prospectus supplement relating to each series of Preferred Stock, plus an amount
equal to accrued and unpaid dividends, if any, before any distribution of assets
is made to the holders of Common Stock. If the amounts payable with respect to
Preferred Stock of any series and any stock having the same rank as that series
of Preferred Stock are not paid in full, the holders of Preferred Stock and of
such other stock will share ratably in any such distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled. After the holders of each series of Preferred Stock and any stock
having the same rank as the Preferred Stock are paid in full, they will have no
right or claim to any of our remaining assets. Neither the sale of all or
substantially all our property or business nor a merger or consolidation by us
with any other corporation will be considered a dissolution, liquidation or
winding up by us of our business or affairs.
REDEMPTION
Any series of Preferred Stock may be redeemable, in whole or in part, at
our option. In addition, any series of Preferred Stock may be subject to
mandatory redemption pursuant to a sinking fund. The redemption provisions that
may apply to a series of Preferred Stock, including the redemption dates and the
redemption prices for that series, will be set forth in the prospectus
supplement.
If a series of Preferred Stock is subject to mandatory redemption, the
prospectus supplement will specify the year we can begin to redeem shares of the
Preferred Stock, the number of shares of the Preferred Stock we can redeem each
year, and the redemption price per share. We may pay the redemption price in
cash, stock or in cash that we have received specifically from the sale of our
capital stock, as specified in the prospectus supplement. If the redemption
price is to be paid only from the proceeds of the sale of our capital stock, the
terms of the series of Preferred Stock may also provide that, if no such capital
stock is sold or if the amount of cash received is insufficient to pay in full
the redemption price then due, the series of Preferred Stock will automatically
be converted into shares of the applicable capital stock pursuant to conversion
provisions specified in the prospectus supplement.
If fewer than all the outstanding shares of any series of Preferred Stock
are to be redeemed, whether by mandatory or optional redemption, the Board of
Directors will determine the method for selecting the shares to be redeemed,
which may be by lot or pro rata or by any other method determined to be
equitable. From and after the redemption date, dividends will cease to accrue on
the shares of Preferred Stock called for
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<PAGE> 30
redemption and all rights of the holders of those shares (except the right to
receive the redemption price) will cease.
In the event that full dividends, including accrued but unpaid dividends,
if any, have not been paid on any series of Preferred Stock, we may not redeem
that series in part and we may not purchase or acquire any shares of that series
of Preferred Stock, except by any offer made on the same terms to all holders of
that series of Preferred Stock.
VOTING RIGHTS
Except as indicated in the prospectus supplement, or except as expressly
required by applicable law, the holders of Preferred Stock will not be entitled
to vote.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
300,000,000 shares of Common Stock. As of December 30, 1999, we had 86,477,596
shares of Common Stock issued and outstanding.
The following summary is not complete. You should refer to the applicable
provisions of the Charter, including the Certificates of Designations pursuant
to which any outstanding series of Preferred Stock may be issued, and the
Delaware General Corporation Law for a complete statement of the terms and
rights of the Common Stock.
Dividends. Holders of Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors, out of funds legally available for
their payment (subject to the rights of holders of the preferred stock, if any).
Voting Rights. Each holder of Common Stock is entitled to one vote per
share. Subject to the rights, if any, of the holder of any series of preferred
stock pursuant to applicable law or the provision of the Certificate of
Designations creating that series, all voting rights are vested in the holders
of shares of Common Stock.
Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of Common Stock will be
entitled to share equally in any of our assets available for distribution after
the payment in full of all debts and distributions and after the holders of all
series of outstanding preferred stock, if any, have received their liquidation
preferences in full.
Rights Agreement. We have adopted a Rights Agreement, which provides for
the issuance of a right (which we refer to as a Kerr-McGee Right), to the holder
of each of our shares of Common Stock. If anyone acquires 15% or more of our
outstanding Common Stock (which we refer to as an Acquiring Person), each holder
of the Kerr-McGee Right (other than the Acquiring Person) will be entitled to
purchase additional shares of Common Stock (or, in certain cases, other of our
securities, or cash or other property) having a current market value of two
times the exercise price of $215. Otherwise, prior to an Acquiring Person
acquiring 50% or more of the outstanding Common Stock, we may elect to issue a
share of Common Stock in exchange for each Kerr-McGee Right (other than
Kerr-McGee Rights held by the Acquiring Person). In addition, if we are acquired
in a merger or other business combination or 50% or more of our assets or
earning power are sold, each holder of a Kerr-McGee Right will be entitled to
buy, at the exercise price, common stock of the acquirer having a current market
value of two times the exercise price. At any time before there is an Acquiring
Person, we can redeem the Kerr-McGee Rights in whole, but not in part, for $0.01
per each Kerr-McGee Right, or may amend the Rights Agreement in any way without
the consent of the holders of the Kerr-McGee Rights. We amended the Rights
Agreement so it was not triggered by the merger between us and Oryx.
Miscellaneous. The issued and outstanding shares of Common Stock are fully
paid and nonassessable. Holders of shares of Common Stock are not entitled to
preemptive rights. Shares of Common Stock are not convertible into shares of any
other class of capital stock.
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<PAGE> 31
DESCRIPTION OF WARRANTS
We may issue Warrants for the purchase of Debt Securities, Preferred Stock
or Common Stock. We may issue Warrants independently or together with other
securities. Each series of Warrants will be issued under a separate Warrant
Agreement to be entered into between us and a bank or trust company, as warrant
agent. You should refer to the Warrant Agreement relating to the specific
Warrants being offered for the complete terms of the Warrant Agreement and the
Warrants.
Each Warrant will entitle the holder to purchase the principal amount of
Debt Securities, or the number of shares of Preferred Stock, or Common Stock at
the exercise price set forth in, or calculable as set forth in, the prospectus
supplement. The exercise price may be subject to adjustment upon the occurrence
of certain events, as set forth in the prospectus supplement. After the close of
business on the expiration date of the Warrant, unexercised Warrants will become
void. The place or places where, and the manner in which, Warrants may be
exercised shall be specified in the prospectus supplement.
PLAN OF DISTRIBUTION
We may sell the Offered Securities through underwriters, dealers or agents,
or we may sell directly to one or more purchasers. The prospectus supplement
names any underwriters, states the purchase price and the proceeds received by
us, any underwriting discounts and other items constituting underwriters'
compensation, the initial public offering price, any discounts or concessions to
dealers, and any securities exchanges on which the Offered Securities may be
listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account. The underwriters may resell
the Offered Securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Offered Securities may be offered through an
underwriting syndicate represented by many underwriters. The obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions. The underwriters will be obligated to purchase all the Offered
Securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
These Offered Securities may be sold directly by us or through agents. Any
agent will be named, and any commissions payable to that agent will be set forth
in the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a best efforts basis.
We may authorize agents, underwriters or dealers to solicit offers by
specified institutions to purchase Offered Securities pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. These contracts will be subject only to those conditions set forth in
the prospectus supplement. The prospectus supplement will set forth the
commission payable for soliciting such contracts.
We may agree to indemnify underwriters, dealers or agents against certain
civil liabilities, including liabilities under the Securities Act of 1933, and
may also agree to contribute to payments which the underwriters, dealers or
agents may be required to make.
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LEGAL MATTERS
Gregory F. Pilcher, our Vice President, General Counsel and Secretary, or
another of our lawyers, will issue an opinion about the legality of the
securities for us. Any underwriters will be advised about issues relating to
this offering by their own legal counsel.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving the said reports.
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9,000,000 Shares
KERR-MCGEE CORPORATION
Common Stock
---------------------------------------
PROSPECTUS SUPPLEMENT
, 2000
---------------------------------------
KERR-MCGEE LOGO
Joint Book-Running Managers
LEHMAN BROTHERS
GOLDMAN, SACHS & CO.
------------------------
ABN AMRO ROTHSCHILD
A DIVISION OF ABN AMRO INCORPORATED
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
J.P. MORGAN & CO.
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY
LOGO
