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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2000
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SMITH INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 95-3822631
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
16740 HARDY STREET
HOUSTON, TEXAS 77032
(281) 443-3370
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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NEAL S. SUTTON
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SMITH INTERNATIONAL, INC.
16740 HARDY STREET
HOUSTON, TEXAS 77032
(281) 233-5060
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
ERIC A. BLUMROSEN
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
1000 LOUISIANA, SUITE 3400
HOUSTON, TEXAS 77002
(713) 276-5533
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement until such time
that all of the securities registered hereunder have been sold.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED PRICE PER SECURITY(1) OFFERING PRICE(2) REGISTRATION FEE(3)
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Debt Securities(4).................. -- -- -- --
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Common Stock, par value $1 per
share(5).......................... -- -- -- --
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Total...................... $250,000,000 -- $250,000,000 $66,000
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(1) The proposed maximum initial offering price per security will be determined
from time to time by the registrant.
(2) Estimated solely for the purpose of calculating the registration fee. In no
event will the aggregate initial offering price of all securities issued
from time to time pursuant to this registration statement exceed
$250,000,000 or the equivalent thereof in foreign currencies. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(3) The registration fee has been calculated in accordance with Rule 457(o).
(4) Subject to Footnote (2), there is being registered hereunder an
indeterminate principal amount of debt securities that may be issued from
time to time by the registrant. If any such debt securities are issued at an
original issue discount, then the offering price shall be in such greater
amount as shall result in proceeds of $250,000,000.
(5) Subject to Footnote (2), there is being registered hereunder an
indeterminate number of shares of common stock that may be issued from time
to time by the registrant.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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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 THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 30, 2000
PROSPECTUS
SMITH INTERNATIONAL, INC.
$250,000,000
By this prospectus, we may offer:
COMMON STOCK
DEBT SECURITIES
UNITS CONSISTING OF ANY COMBINATION OF THESE SECURITIES
These securities will have an aggregate initial offering price of up to
$250,000,000 or an equivalent amount in U.S. dollars if any securities are
denominated in a currency other than U.S. dollars. We may offer these securities
separately or together in units and as separate series.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS
PROSPECTUS.
Our common stock is listed on the New York Stock Exchange and the Pacific
Stock Exchange under the trading symbol "SII."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2000
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR THE
PROSPECTUS SUPPLEMENT THAT WE HAVE REFERRED YOU TO. WE HAVE AUTHORIZED NO ONE TO
PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE
SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IS ACCURATE
AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
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TABLE OF CONTENTS
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ABOUT THE PROSPECTUS........................................ 2
WHERE YOU CAN FIND MORE INFORMATION......................... 2
FORWARD-LOOKING STATEMENTS.................................. 3
THE COMPANY................................................. 3
RISK FACTORS................................................ 4
USE OF PROCEEDS............................................. 5
RATIO OF EARNINGS TO FIXED CHARGES.......................... 5
PROSPECTUS SUPPLEMENT....................................... 5
DESCRIPTION OF CAPITAL STOCK................................ 6
DESCRIPTION OF DEBT SECURITIES.............................. 10
DESCRIPTION OF UNITS........................................ 18
PLAN OF DISTRIBUTION........................................ 18
LEGAL MATTERS............................................... 19
EXPERTS..................................................... 19
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ABOUT THE PROSPECTUS
This prospectus is part of a "shelf" registration statement that we have
filed with the Securities and Exchange Commission. Using the shelf process, we
may offer: common stock; debt securities; and units consisting of any
combination of these securities. We may offer these securities in one or more
offerings with a total initial offering price of up to $250,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we use this prospectus to offer securities, we will provide a
prospectus supplement and, if applicable, a pricing supplement that will
describe the specific terms of that offering. The prospectus supplement and any
pricing supplement may also add, update or change the information in this
prospectus. Please carefully read this prospectus, the prospectus supplement and
any pricing supplement, in addition to the information contained in the
documents we refer to under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You can read and copy any materials we file with the
SEC at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can obtain information about the operation of the SEC's public
reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
Web site that contains information we file electronically with the SEC, which
you can access over the Internet at http://www.sec.gov. You can obtain
information about us at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005 and the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California 94104 or 233 South Beaudry Avenue, Los
Angeles, California 90012.
This prospectus is part of a registration statement we have filed with the
SEC relating to the securities we may offer. As permitted by SEC rules, this
prospectus does not contain all of the information we have included in the
registration statement and the accompanying exhibits and schedules we file with
the SEC. You may refer to the registration statement, the exhibits and schedules
for more information about our securities and us. The registration statement,
exhibits and schedules are available at the SEC's public reference room or
through its Web site.
The SEC allows us to "incorporate by reference" the information that 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
considered to be part of this prospectus and any supplements to this prospectus.
The information filed by us with the SEC in the future will update and supersede
all or some of the information that we have included in this prospectus. We
incorporate by reference the documents listed below and any future filings made
by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until our offering is completed. This prospectus is part of
a registration statement filed with the SEC.
- Annual Report on Form 10-K for the year ended December 31, 1999.
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.
- Current Reports on Form 8-K filed with the SEC on March 22, 2000, April
26, 2000 and June 15, 2000.
- The description of our common stock contained in our Registration
Statement on Form 8-A, as filed with the SEC on May 20, 1959, including
any amendment to that form that we may have filed in the past, or may
file in the future, for the purpose of updating the description of our
common stock.
- The description of our preferred share purchase rights contained in our
Registration Statement on Form 8-A, as filed with the SEC on June 15,
2000.
We will provide you with a copy of these filings, other than exhibits to
those documents, at no cost. You may request them by writing or telephoning us
at Smith International, Inc., 16740 Hardy Street, Houston, Texas 77032, (281)
443-3370, Attention: Investor Relations.
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FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference forward-looking
statements within the meaning of the Securities Act and the Securities Exchange
Act. These statements relate to analyses and other information which are based
on forecasts of future results and estimates of amounts not yet determinable.
These statements also relate to our future prospects, developments and business
strategies.
These forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "could," "estimate," "expect,"
"intend," "may," "plan," "project," "will" and similar terms and phrases,
including references to assumptions. These statements are contained in this
prospectus and in the documents incorporated by reference in this prospectus.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. Our future results and stockholder
value may differ significantly from those expressed in or implied by the
forward-looking statements contained in this prospectus and in the information
incorporated in this prospectus. Many of the factors that will determine these
results and values are beyond our ability to control or predict. We caution you
that a number of important factors could cause actual results to be different
from our expectations expressed in or implied by any forward-looking statement.
These factors include, but are not limited to, those discussed in "Risk Factors"
beginning on page 4.
Our management believes these forward-looking statements are reasonable.
However, you should not place undue reliance on these forward-looking
statements, which are based only on our current expectations. Forward-looking
statements speak only as of the date they are made, and we undertake no
obligation to publicly update any of them in light of new information or future
events.
THE COMPANY
We are a leading worldwide supplier of premium products and services to the
oil and gas exploration and production industry, the petrochemical industry and
other industrial markets. Our comprehensive line of technologically-advanced
products and engineering services include drilling and completion fluid systems,
solids-control equipment, waste-management services, three-cone and diamond
drill bits, fishing services, drilling tools, underreamers, casing exit and
multilateral systems, packers and liner hangers. We also offer supply-chain
management solutions through an extensive branch network providing pipe, valves,
fittings, mill, safety and other maintenance products.
We aggregate our operations into two reportable segments. Our Oilfield
Products and Services segment includes the following operations which provide
products and services throughout the world:
- M-I, which provides drilling and completion fluid systems and services,
solids-control equipment and waste management services;
- Smith Bits, which manufactures and sells three-cone and diamond drill
bits; and
- Smith Services, which manufactures and markets products and services used
in drilling, workover, well completion and well re-entry operations.
Our Distribution segment operates predominately in North America offering
supply-chain management solutions through an extensive branch network, providing
pipe, valves, fittings, mill, safety and other maintenance products.
We were incorporated in the State of California in January 1937 and
reincorporated under Delaware law in May 1983. Our executive offices are
headquartered at 16740 Hardy Street, Houston, Texas 77032 and our telephone
number is (281) 443-3370.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER, IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN, OR INCORPORATED BY REFERENCE INTO, THIS PROSPECTUS AND ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT, THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION.
WE ARE DEPENDENT UPON THE LEVEL OF OIL AND NATURAL GAS EXPLORATION AND
DEVELOPMENT ACTIVITIES, AND A DECREASE IN THE LEVEL OF SUCH ACTIVITIES COULD
ADVERSELY IMPACT OUR FINANCIAL CONDITION OR RESULTS OF OPERATIONS.
Demand for our products and services is dependent upon the level of oil and
natural gas exploration and development activities. The level of worldwide oil
and natural gas development activities is primarily influenced by the price of
oil and natural gas and price expectations. In addition to oil and natural gas
prices, the following factors impact exploration and development activity and
may lead to significant changes in worldwide activity levels:
- Overall level of global economic growth and activity;
- Actual and perceived changes in the supply and demand for oil and natural
gas;
- Political stability of oil-producing countries;
- Finding and development costs of operators; and
- Decline and depletion rates for oil and natural gas wells.
As a result, changes in any of these factors could adversely impact our
financial condition or results of operations.
WE HAVE SIGNIFICANT EXPOSURE TO MARKETS OUTSIDE OF NORTH AMERICA. LONG-TERM
DISRUPTIONS IN CERTAIN MARKETS COULD ADVERSELY IMPACT OUR FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
We are a multinational oilfield service company and have operations in
certain countries that are inherently subject to risks of war, local economic
conditions, political disruption, civil disturbance and policies that may:
- Disrupt oil and gas exploration and development activities and our
operations;
- Restrict the movement of funds and other assets;
- Lead to U.S. government or international sanctions; and
- Limit access to markets.
The occurrence of any of these events could adversely impact our financial
condition or results of operations.
CHANGING ECONOMIC BUSINESS CONDITIONS COULD ADVERSELY IMPACT OUR FINANCIAL
CONDITION OR RESULTS OF OPERATIONS.
Recent consolidations within the energy sector have resulted in an
operating environment with a fewer number of exploration and production
companies which influence a larger proportion of total worldwide spending
levels. Moreover, certain operators are focusing on the adoption of procurement
initiatives, including electronic commerce and global purchasing programs, in an
effort to lower their overall costs. These factors could create competitive
pricing pressures in certain markets in which we participate and adversely
impact our financial condition or results of operations.
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USE OF PROCEEDS
Unless we specify otherwise in the applicable prospectus supplement, we
will use the net proceeds from the sale of the offered securities for general
corporate purposes, including working capital, the repayment or refinancing of
our indebtedness, future acquisitions and capital expenditures. A description of
any indebtedness to be refinanced with the proceeds from the sale of the
securities will be set forth in the applicable prospectus supplement. Until we
apply the net proceeds for specific purposes, we may invest the net proceeds in
short-term or marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
Our unaudited ratio of earnings to fixed charges for the periods indicated
are set forth below.
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THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
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2000 1999 1999 1998 1997 1996 1995
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Ratio of earnings to fixed charges(1)....... 3.67 1.82 3.50 2.68 7.52 6.49 5.35
</TABLE>
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(1) For purposes of computing the ratio of earnings to fixed charges: "earnings"
consist of "income before income taxes and minority interests," which
includes earnings allocable to the minority interest ownership partners,
plus fixed charges. "Fixed charges" consist of interest expensed and
capitalized, amortized discounts and capitalized expenses related to
indebtedness and the portion of rental expense estimated to represent a
reasonable approximation of the interest component.
PROSPECTUS SUPPLEMENT
This prospectus provides you with a general description of the common
stock, debt securities and units consisting of common stock and debt securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add to, update or change
information contained in this prospectus and, accordingly, to the extent
inconsistent, such information will be superseded by the information in the
prospectus supplement. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information."
The prospectus supplement to be attached to the front of this prospectus
will describe:
- the terms of any debt securities that we offer, including their title,
ranking, aggregate principal amount, maturity, rate of any interest (or
manner of calculation) and time of payment of principal and/or interest,
any redemption or repayment terms, the currency or currencies in which
such debt securities will be denominated or payable, any index, formula,
or other method pursuant to which principal, premium, or interest may be
determined, any terms of conversion or exchange and the form of such debt
securities (registered, bearer, global and/or certificate);
- the terms of any common shares that we offer; and
- any initial public offering price, the purchase price and net proceeds to
our company and the other specific terms related to our offering of such
securities.
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DESCRIPTION OF CAPITAL STOCK
The following is a summary of certain matters with respect to our capital
stock. Because it is only a summary, it does not contain all of the information
that may be important to you. Therefore, you should read the more detailed
provisions of our restated certificate of incorporation, our bylaws, as amended,
and our stockholder rights plan (described below) carefully.
GENERAL
We may offer from time-to-time shares of common stock. As of the date of
this prospectus, we have authorized 60,000,000 shares of common stock, $1.00 par
value, and 5,000,000 shares of preferred stock, $1.00 par value. The following
description of our capital stock is subject to the applicable provisions of our
restated certificate of incorporation and our bylaws, which are incorporated by
reference in this prospectus.
COMMON STOCK
We are authorized by our restated certificate of incorporation to issue
60,000,000 shares of common stock, of which approximately 50,400,561 shares were
issued and outstanding as of June 28, 2000.
The holders of shares of common stock are entitled to one vote for each
share held on all matters submitted to a vote of holders of common stock. Our
common stock does not have cumulative voting rights, which means that the
holders of a majority of the shares of our common stock outstanding can elect
all our directors if they choose to do so. In such event, the holders of the
remaining shares will not be able to elect any directors.
Each share of our common stock is entitled to participate equally in
dividends, as and when declared by our board of directors, and in the
distribution of assets in the event of liquidation, subject in all cases to any
prior rights of outstanding shares of preferred stock. The shares of our common
stock have no preemptive or conversion rights, redemption provisions or sinking
fund provisions. All outstanding shares of our common stock are duly and validly
issued, fully paid and nonassessable.
Our shares of common stock are listed on the New York Stock Exchange and
the Pacific Stock Exchange under the symbol "SII." Any additional shares of
common stock will also be listed on the New York Stock Exchange and the Pacific
Stock Exchange.
PREFERRED STOCK
We are authorized by our restated certificate of incorporation to issue
5,000,000 shares of preferred stock, of which no shares were issued and
outstanding as of June 28, 2000. Our board of directors has the authority to
issue, without any further action by the stockholders, except as may be required
by applicable law or stock exchange regulations, the preferred stock in one or
more series, to establish from time-to-time the number of shares to be included
in each series, and to fix the designations, powers, preferences and rights of
the shares of each series and the qualifications, limitations and restrictions
of each series.
In connection with the stockholder rights plan, our board of directors has
authorized the issuance of up to 650,000 shares of junior participating
preferred stock. Upon issuance, each share of junior participating preferred
stock shall be entitled to receive, when, as and if declared by our board of
directors, quarterly cash dividends equal to the greater of $1 or 100 times the
aggregate value of all dividends or other distributions declared on a share of
common stock, other than distributions of common stock, since the last quarterly
dividend payment date. The multiple of 100 is subject to antidilution
adjustments for stock dividends and stock splits.
Each share of junior participating preferred stock is entitled to 100
votes, subject to antidilution adjustments, on all matters submitted to a vote
of our stockholders, voting together as one class with the common stock.
Except as required by applicable law, holders of our junior participating
preferred stock have no other special voting rights. Whenever dividends or
distributions on the junior participating preferred stock are in
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arrears, the stockholder rights plan prohibits us from declaring or paying
dividends or distributions on, and prohibits us and any subsidiary from
redeeming or acquiring for value, any stock ranking junior as to dividends or
upon liquidation except in exchange for shares ranking junior to the junior
participating preferred stock. During any arrearage, we may declare or pay
dividends on stock ranking on a parity with the junior participating preferred
stock as to dividends or upon liquidation only if we declare or pay dividends
ratably with the junior participating preferred stock. During any arrearage, the
stockholder rights plan prohibits us and any subsidiary from redeeming or
acquiring for value any parity stock or any junior participating preferred
stock, except pursuant to an offer to purchase the junior participating
preferred stock and parity stock on terms our board of directors determines to
be fair and equitable. The junior participating preferred stock shall not be
redeemable.
The junior participating preferred stock ranks junior to all other series
of our preferred stock and senior to the common stock as to the payment of
dividends and the distribution of assets, unless the terms of any series
provides otherwise.
Upon our liquidation, dissolution or winding up, the junior participating
preferred stock is entitled to a liquidation preference of $100 per share plus
any accrued but unpaid dividends, subject to the prior rights of any series of
preferred stock ranking in liquidation senior to the junior participating
preferred stock. In the event of any shortfall in the assets available for
distribution, we shall make any liquidating distribution ratably to the junior
participating preferred stock and any other series of preferred stock ranking on
a parity in proportion to their relative liquidation preferences. Following any
payment, we may not make additional liquidating distributions on the junior
participating preferred stock until each share of common stock shall have
received a distribution equal to the junior participating preferred stock
liquidation preference divided by 100, subject to antidilution adjustments.
Thereafter, we shall distribute any remaining assets to each share of junior
participating preferred stock and each share of common stock in the ratio of 100
to 1, subject to antidilution adjustments.
STOCKHOLDER RIGHTS PLAN; CERTAIN OTHER ANTI-TAKEOVER PROVISIONS
On June 8, 2000, our board of directors adopted a stockholder rights plan.
The rights plan provides for a dividend distribution of one preferred stock
purchase right for each outstanding share of common stock to stockholders of
record on June 20, 2000. Each right entitles the holder to purchase from us at
any time on or after the distribution date (as described below) and prior to the
occurrence of a triggering event (as described below) one-hundredth of a share
of the junior participating preferred stock at an exercise price of $350,
subject to adjustment. The rights are exercisable beginning on the distribution
date, which is the earlier of ten business days after the date on which:
- there is a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of our
common stock; or
- a person commences a tender offer or exchange offer that would result in
a person or group beneficially owning 20% or more of the outstanding
shares of our common stock.
If any person or group becomes an acquiring person, except pursuant to a
qualifying offer, including a tender offer or an exchange offer for all
outstanding shares of common stock at a price and on terms determined by at
least a majority of our independent directors to be at a price that is fair to
the stockholders and otherwise in our best interests and the best interests of
our stockholders, then each right will thereafter entitle the holder to receive,
upon exercise, a number of shares of common stock, or cash, property or other
securities of ours, having a value equal to two times the exercise price of the
right, except that any rights beneficially owned by the acquiring person shall
be null and void. Additionally, at any time after the date a person becomes an
acquiring person, or a triggering event occurs, including an event under which
we are acquired in a merger or other business combination transaction, other
than a qualifying offer, in which we are not the surviving corporation, or we
sell or transfer 50% or more of our assets or earning power, each right, other
than rights previously voided, will entitle its holder to purchase,
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at the right's then current exercise price, shares of common stock of the
acquiring person having a value of twice the right's exercise price.
Until the distribution date, the rights will be evidenced by the common
stock certificates, and the surrender or transfer of any certificates for common
stock will also constitute the surrender or transfer of the rights associated
with that common stock. The rights are not exercisable until the distribution
date and will expire on June 8, 2010, unless we redeem them earlier. The
exercise price and the number of shares of junior participating preferred stock
or other securities issuable upon exercise of the rights are subject to
adjustment from time to time to prevent dilution. We will generally be entitled
to redeem the rights at $.01 per right at any time until the tenth business day,
subject to extension, after a person becomes an acquiring person.
Additionally, we are subject to Section 203 of the Delaware General
Corporation Law. Section 203 of the Delaware General Corporation Law prohibits
corporations from engaging in a "business combination" (as described below) with
an "interested stockholder." An "interested stockholder" is defined generally to
mean a person who, together with his affiliates, owns, or if the person is an
affiliate of the corporation, did own within the last three years, 15% or more
of the outstanding voting stock of the corporation, for a period of three years
after the time of the transaction in which the person became an interested
stockholder, unless:
- prior to the time of the business combination, the board of directors
approved the business combination or the transaction in which the
stockholder became an interested stockholder;
- as a result of the business combination, the interested stockholders
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced; or
- on or subsequent to the date of the business combination, the board of
directors and the holders of at least 66 2/3% of the outstanding voting
stock not owned by the interested stockholder approved the business
combination.
The Delaware General Corporation Law defines a "business combination"
generally as:
- a merger or consolidation with the interested stockholder or with any
other corporation if the merger or consolidation is caused by the
interested stockholder;
- a sale or other disposition to or with an interested stockholder of
assets with an aggregate market value greater than or equal to 10% or
more of either the aggregate market value of all assets of the
corporation or the aggregate market value of all of the outstanding stock
of the corporation;
- with certain exceptions, any transaction resulting in the issuance or
transfer by the corporation or any majority-owned subsidiary of any stock
of the corporation or the subsidiary to the interested stockholder;
- any transaction involving the corporation or a majority-owned subsidiary
that has the effect of increasing the proportionate share of the stock of
the corporation or the subsidiary owned by the interested stockholder; or
- any receipt by the interested stockholder of the benefit of any loans or
other financial benefits provided by the corporation or any
majority-owned subsidiary.
Section 203 of the Delaware General Corporation Law applies only to
Delaware corporations that have securities traded on a national securities
exchange, authorized for quotation on the National Market System of the Nasdaq
Stock Market, Inc. or held of record by more than 2,000 stockholders.
Our restated certificate of incorporation contains a provision similar to
Section 203 of the Delaware General Corporation Law, except that it requires a
higher percentage of all stockholders voting as a class to approve a business
combination, it prohibits business combinations with interested stockholders for
only two years and it contains what is generally referred to as a "fair price
provision." Our restated certificate of
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incorporation requires the affirmative vote of the holders of at least 75% of
the outstanding shares of capital stock entitled to vote on matters submitted to
stockholders generally, voting together as a single class, to approve a business
combination involving us or a subsidiary and any interested stockholder or
affiliate of an interested stockholder, unless either:
- the business combination does not involve the payment of consideration to
the holders of our capital stock and is approved by a majority of
disinterested directors; or
- the business combination is approved by a majority of disinterested
directors, the stockholders receive a "fair price" for their securities
and certain other procedural requirements are met.
Our restated certificate of incorporation provides that this provision may
not be repealed or amended in any respect except by the affirmative vote of the
holders of not less than 75% of the outstanding shares of capital stock entitled
to vote generally in the election of our directors. A "business combination" is
defined generally in our restated certificate of incorporation as:
- our merger or consolidation with any interested stockholder or any
company affiliated with an interested stockholder;
- any sale or other disposition or any loan, advance or guarantee,
agreement to purchase, agreement to pay, extension of credit or other
arrangement for the benefit of an interested stockholder involving any of
our assets, securities or commitments having an aggregate fair market
value of $2,500,000 or more or constituting 5% of the book value of the
total assets or 5% of the stockholders' equity;
- the adoption of any plan or proposal for our liquidation or dissolution
or for any amendment to our bylaws; or
- any reclassification or recapitalization that has the effect of
increasing the proportionate share of any class or series of capital
stock, or any security convertible into capital stock, that is
beneficially owned by an interested stockholder.
An "interested stockholder" is defined in our restated certificate of
incorporation generally as any person, other than us or any subsidiary of ours,
who has announced or publicly disclosed a plan or intention to become the
beneficial owner of 20% or more of our outstanding voting stock or is an
affiliate of ours and at any time within the two years prior to the date in
question was the beneficial owner of 20% or more of our outstanding voting
stock.
Our restated certificate of incorporation contains certain other provisions
that may delay, defer or prevent a tender offer or takeover attempt. Our
restated certificate of incorporation provides that our board of directors is
divided into three classes that are elected for staggered three-year terms and
that our stockholders may only remove a director for cause. Our restated
certificate of incorporation further provides that our stockholders may not take
any action by written consent.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is First Chicago
Trust Company of New York.
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DESCRIPTION OF DEBT SECURITIES
We may offer debt securities that will be issued pursuant to an indenture,
dated as of September 8, 1997, between us and The Bank of New York, as trustee.
We may supplement the indenture by supplemental indentures in order to issue new
debt securities, change the provisions of the indenture or alter previously
issued debt securities. The following is a summary of certain provisions of the
indenture and does not contain all of the information that may be important to
you. You should read all provisions of the indenture carefully, including the
definitions of terms, before you decide to invest in the debt securities. If we
refer to particular sections or defined terms of the indenture, we mean to
incorporate by reference those sections or defined terms of the indenture. We
filed a copy of the indenture as Exhibit 4.1 to our Registration Statement on
Form S-3 dated August 22, 1997 (Registration No. 333-34249). See "Where You Can
Find More Information."
GENERAL
The debt securities will rank equally with all of our other existing and
future unsecured and unsubordinated indebtedness. We issued $150,000,000 in
aggregate principal amount of 7% senior notes due 2007 on September 16, 1997
under the indenture.
The indenture does not limit the amount of debt securities that we may
issue. We may issue the debt securities in one or more series with the same or
various maturities, at par, at a premium, or with an original issue discount.
The prospectus supplement will set forth the initial offering price, the
aggregate principal amount and the following terms of the debt securities:
- the title;
- any limit on the aggregate principal amount of a particular series;
- the date or dates that principal is payable;
- the rate or rates of interest and, if applicable, the method used to
determine the rate or rates of interest, if any, the date or dates from
which interest will accrue, the dates that interest will be payable and
the record date for the payment of interest;
- the place or places where principal and interest will be payable;
- the period or periods within which, the price or prices at which and the
terms and conditions upon which the debt securities may be redeemed, in
whole or in part, at our option;
- our obligation, if any, to redeem, repurchase or repay the debt
securities pursuant to any sinking fund or similar provisions or at the
option of a holder thereof and the period, price and terms and conditions
for redemption, repurchase or repayment;
- the provisions, if any, for the defeasance of the debt securities;
- the denominations, if other than denominations of $1,000 and any integral
multiple thereof;
- the amount of principal that will be payable upon acceleration, if other
than the entire principal amount;
- the currency of denomination;
- the designation of the currency or currencies in which payment of
principal and interest will be made;
- if payments of principal or interest are to be made in a currency other
than the denominated currency, how the exchange rate will be determined;
- how the payments of principal or interest will be determined if by
reference to an index based on a currency or currencies other than
originally denominated or by reference to a commodity, commodity index,
stock exchange index or financial index;
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- any addition to or change in the events of default or covenants with
respect to the debt securities; and
- any other terms that will not be inconsistent with the provisions of the
indenture.
FORM, EXCHANGE, REGISTRATION AND TRANSFER; PAYMENT; BOOK-ENTRY
We will issue the debt securities in registered form. We will not charge a
service charge for any registration of transfer or exchange of the debt
securities. We may, however, require the payment of any tax or other
governmental charge payable for that registration.
Debt securities of any series will be exchangeable for other debt
securities of the same series with the same total principal amount and the same
terms but in different authorized denominations in accordance with the
applicable indenture. Holders may present debt securities for registration of
transfer at the office of the registrar. The registrar will effect the transfer
or exchange when it is satisfied with the documents of title and identity of the
person making the request.
We will appoint the trustee under the indenture as registrar for our debt
securities issued under that indenture. We are required to maintain an office or
agency for transfers and exchanges in each place of payment. We may at any time
designate additional registrars for any series of debt securities.
Unless we inform you otherwise in a prospectus supplement, payments on the
debt securities will be made in U.S. dollars at the office of the trustee or any
paying agent we designate. At our option, we may make payments by check mailed
to the holder's registered address or by wire transfer for global debt
securities. Unless we inform you otherwise in a prospectus supplement, we will
make interest payments to the person in whose name the debt security is
registered at the close of business on the record date for the interest payment.
Unless we inform you otherwise in a prospectus supplement, the trustee
under the indenture will be designated as our paying agent for payments on debt
securities issued under the indenture. We may at any time designate additional
paying agents or rescind the designation of any paying agent or approve a change
in the office through which any paying agent acts.
In most cases, the trustee and paying agent will repay to us upon written
request any funds held by them for payments on the debt securities that remain
unclaimed for two years after the date upon which that payment has become due.
After payment to us, holders entitled to the money must look to us for payment.
We may issue debt securities of a series in the form of one or more global
debt securities that would be deposited with a depositary or its nominee
identified in the prospectus supplement. We may issue global debt securities in
either temporary or permanent form. We will describe in the prospectus
supplement the terms of any depositary arrangement and the rights and
limitations of owners of beneficial interests in any global debt security.
NO PROTECTION IN THE EVENT OF A CHANGE OF CONTROL
Unless otherwise set forth in the prospectus supplement, the debt
securities will not contain any provisions that protect the holders of the debt
securities in the event of a change of control of us or in the event of a highly
leveraged transaction, whether or not such transaction results in a change of
control of us.
CERTAIN COVENANTS
The indenture does not contain any restrictions on our payment of dividends
or any financial covenants. The indenture does not contain provisions that would
afford holders of the debt securities protection in the event of a transfer of
assets to a Subsidiary and incurrence of unsecured debt by that Subsidiary, or
in the event of a decline in our credit quality resulting from highly leveraged
or other similar transactions involving us.
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Limitation on Indebtedness Secured by a Lien. The indenture provides that
neither we nor any Subsidiary will create, assume, guarantee or suffer to exist
any Indebtedness secured by any lien, pledge, mortgage, security interest,
conditional sale or other title retention agreement or other similar encumbrance
("Lien") on any Principal Property unless we secure or cause our Subsidiary to
secure the debt securities equally and ratably with, or prior to, the secured
Indebtedness. This restriction will not apply to Indebtedness secured by:
- Liens on any Principal Property of any Person that exists prior to the
time (A) that Person becomes a Subsidiary, (B) that Person merges into or
consolidates with a Subsidiary or (C) a Subsidiary merges into or
consolidates with that Person in a transaction in which that Person
becomes a Subsidiary, provided that the Liens were not created in
anticipation of or in connection with any transaction described in
clauses (A), (B) or (C);
- Liens in favor of us or a Subsidiary;
- Liens on any Principal Property in favor of the United States of America
or any state or political subdivision of the United States, or in favor
of any other country or any political subdivision of any other country,
to secure payment under any contract or statute or to secure any
Indebtedness incurred for the purpose of financing all or part of the
purchase price or the cost of construction or improvement of the
Principal Property subject to those Liens;
- Liens on any Principal Property subsequently acquired by us or any
Subsidiary, contemporaneously with the acquisition of the Principal
Property or within 180 days after that acquisition, to secure or provide
for the payment of any part of the purchase price, construction or
improvement of the Principal Property, or Liens assumed by us or any
Subsidiary upon any Principal Property subsequently acquired by us or any
Subsidiary that existed at the time of the acquisition of the Principal
Property, provided that the amount of any Indebtedness secured by any
Lien created or assumed does not exceed the cost to us or our Subsidiary,
as the case may be, of the Principal Property covered by that Lien;
- Liens existing on the date of issuance of the debt securities;
- Liens representing the extension, renewal or refunding of any Lien
referred to in the preceding clauses and the Indebtedness secured by
those Liens;
- Liens for taxes and governmental charges not yet due or that are being
contested in good faith;
- pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-
insurance arrangements; and
- any other Lien, so long as the aggregate of all Indebtedness secured by
such Liens and the aggregate Value of the Sale and Lease-Back
Transactions in existence at that time, not including those in connection
with which we have voluntarily retired funded Indebtedness as provided in
the indenture, does not exceed 10% of the Consolidated Net Tangible
Assets of us and our Subsidiaries. (Indenture Section 10.7).
Limitation on Sale and Lease-Back Transactions. The indenture provides that
neither we nor any Subsidiary will enter into any Sale and Lease-Back
Transaction with respect to any Principal Property unless either:
- we or any Subsidiary would be entitled, under our covenant relating to
"Limitation on Indebtedness Secured by a Lien," to create, assume,
guarantee or suffer Indebtedness secured by a Lien under any provision of
the first five clauses in the preceding paragraph or to incur
Indebtedness in a principal amount equal to or exceeding the Value of the
Sale and Lease-Back Transaction secured by a Lien on the property to be
leased without equally and ratably securing the securities; or
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- we or any Subsidiary, within 120 days after the effective date of the
transaction, apply an amount equal to the greater of (x) the net proceeds
of the sale of the property subject to the Sale and Lease-Back
Transaction and (y) the Value of the Sale and Lease-Back Transaction, to
the voluntary retirement of our Indebtedness, which may include the debt
securities. (Indenture Section 10.8).
CERTAIN DEFINITIONS
"Capital Stock" is defined in the indenture to mean any and all shares,
interests, participations or other equivalents in the equity interest in any
Person and any rights (other than debt securities convertible into an equity
interest), warrants or options to subscribe for or to acquire an equity interest
in such Person.
"Consolidated Net Tangible Assets" is defined in the indenture to mean
total consolidated assets of us and our Subsidiaries, less (i) current
liabilities of us and our Subsidiaries, and (ii) the net book amount of all
intangible assets of us and our Subsidiaries.
"Consolidated Subsidiary" is defined in the indenture to mean at any date
any Subsidiary the accounts of which are consolidated with ours for financial
reporting purposes.
"Indebtedness" is defined in the indenture to mean (i) long-term
liabilities representing borrowed money or purchase money obligations as shown
on the liability side of a balance sheet, other than liabilities evidenced by
obligations under leases, (ii) indebtedness secured by any Lien existing on
property owned subject to that Lien, whether or not the secured indebtedness has
been assumed and (iii) contingent obligations in respect of, or to purchase or
otherwise acquire, any indebtedness of others described in the foregoing clauses
(i) or (ii) above, including guarantees and endorsements, other than for
purposes of collection in the ordinary course of business of any indebtedness.
"Person" is defined in the indenture to mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust, limited
liability company, unincorporated organization or any other entity.
"Principal Property" is defined in the indenture to mean any manufacturing
plant, processing plant or any mining facility or property owned or leased by us
or any Subsidiary, any Capital Stock or Indebtedness of a Subsidiary or any
other property or right owned by or granted to us or any Subsidiary and used or
held for use in any of the principal businesses conducted by us or any
Subsidiary, except for any such property or right which, in the opinion of our
board of directors as set forth in a board resolution adopted in good faith, is
not material to the total business conducted by us and our Subsidiaries
considered as one enterprise.
"Sale and Lease-Back Transaction" is defined in the indenture to mean the
leasing by us or a Subsidiary for a period of more than three years of any
Principal Property that has been sold or is to be sold or transferred by us or
any Subsidiary to any party, other than us or a Subsidiary.
"Significant Subsidiary" is defined in the indenture to mean any Subsidiary
(i) which, as of the close of our fiscal year immediately preceding the date of
determination, contributed more than 10% of the consolidated net operating
revenues of us and our consolidated Subsidiaries for such year or (ii) the total
net tangible assets of which as of the close of such immediately preceding
fiscal year exceeded 10% of the Consolidated Net Tangible Assets.
"Subsidiary" of a Person is defined in the indenture to mean (i) a
corporation, a majority of whose Voting Stock is at the time, directly or
indirectly, owned by that Person, by one or more subsidiaries of that Person or
by that Person and one or more subsidiaries of that Person, (ii) a partnership
in which that Person or a subsidiary of that Person is, at the date of
determination, a general or limited partner of that partnership, but only if
that Person or its subsidiary is entitled to receive more than 50% of the assets
of that partnership upon its dissolution, or (iii) any other Person, other than
a corporation or partnership, in which that Person, directly or indirectly, at
the date of determination, has (a) at least a majority
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ownership interest or (b) the power to elect or direct the election of a
majority of the directors or other governing body of that Person.
"Value" is defined in the indenture to mean, with respect to any Sale and
Lease-Back Transaction, as of any particular time, the amount equal to the
greater of (i) the net proceeds of the sale or transfer of the property leased
pursuant to the Sale and Lease-Back Transaction and (ii) the fair value in the
opinion of the board of directors of the property at the time of entering into
the Sale and Lease-Back Transaction, subject to adjustment at any particular
time for the length of the remaining initial lease term.
"Voting Stock" is defined in the indenture to mean all classes of Capital
Stock of a Person then outstanding normally entitled to vote in elections of
directors or Persons performing similar functions, whether at all times or only
so long as no senior class of stock has voting power by reason of any
contingency.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indenture provides that we may not consolidate with or merge into any
other corporation, or convey, transfer or lease our properties and assets
substantially as an entirety to any other party, unless, among other things:
- the corporation formed by consolidation or into which we merge or the
party that acquires by conveyance or transfer, or that leases our
properties and assets substantially as an entirety, is organized and
existing under the laws of the United States, any state of the United
States or the District of Columbia and expressly assumes our obligations
on the debt securities and under the indenture by means of an indenture
supplemental to the indenture; and
- immediately after giving effect to the transaction, no event of default,
and no event which, after notice or lapse of time, or both, would become
an event of default, shall have occurred and be continuing. (Indenture
Section 8.1).
EVENTS OF DEFAULT
The following are events of default under the indenture with respect to
debt securities of any series:
- default for 30 days in the payment of any interest on the debt securities
of such series;
- default in the payment of the principal of or premium, if any, on the
debt securities of such series when due either at maturity or upon
acceleration, redemption or otherwise;
- default in the deposit of any sinking fund payment, when and as due by
the terms of a debt security of such series;
- default in the performance of any other of the covenants or warranties in
the indenture applicable to us that shall not have been remedied for a
period of 60 days after notice of default; and
- the bankruptcy, insolvency or reorganization of us or any Significant
Subsidiary. (Indenture Section 5.1).
Within 90 days after the occurrence of any default under the indenture, the
trustee is required to notify the holders of the debt securities of the default
unless, in the case of any default other than a default in the payment of
principal of or premium, if any, or interest on any series of debt securities, a
trust committee of the board of directors or responsible officers of the trustee
in good faith considers it in the interest of the holders of the debt securities
not to do so.
The indenture provides that if an event of default, other than an event of
bankruptcy, insolvency or reorganization of us or any Significant Subsidiary,
shall have occurred and be continuing, either the trustee or the holders of at
least 25% in aggregate principal amount of the debt securities of any series
then outstanding may declare the entire principal and accrued interest of the
debt securities of such series to be due and payable immediately. If an event of
bankruptcy, insolvency or reorganization of us or any
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Significant Subsidiary occurs, the principal amount shall automatically, and
without any declaration or other action on the part of the trustee or any
holder, become immediately due and payable. Any time after acceleration of the
debt securities of any series has been made, but before a judgment or decree for
the payment of money based on such acceleration has been obtained by the
trustee, the holders of a majority in principal amount of the outstanding debt
securities of such series, may, under certain circumstances, rescind and annul
the acceleration. The holders of a majority in principal amount of the
outstanding debt securities of any series may waive any past defaults under the
indenture with respect to such series of debt securities, except defaults in
payment of principal of or premium, if any, other than by a declaration of
acceleration, or interest on the debt securities of such series or provisions
that may not be modified or amended without the consent of the holders of all
outstanding debt securities of such series.
We are required to furnish to the trustee annually a statement as to our
performance of our covenants and agreements under the indenture.
Subject to certain conditions set forth in the indenture, the holders of a
majority in principal amount of the then outstanding debt securities of any
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust
or power conferred on the trustee under the indenture in respect of the debt
securities of such series. No holder of any debt securities of any series shall
have any right to cause the trustee to institute any proceedings, judicial or
otherwise, with respect to the indenture or any remedy thereunder unless, among
other things, the holder or holders of debt securities of such series shall have
offered to the trustee reasonable indemnity against costs, expenses and
liabilities relating to such proceedings.
The indenture provides that, in determining whether the holders of the
requisite aggregate principal amount of the outstanding debt securities of any
series have given, made or taken any request, demand, authorization, direction,
notice, consent, waiver or other action thereunder as of any date, debt
securities of such series owned by us or any affiliate of ours shall be
disregarded and deemed not to be outstanding. In determining whether the trustee
shall be protected in relying upon any request, demand, authorization,
direction, notice, consent, waiver or other action, only debt securities that a
responsible officer of the trustee actually knows to be so owned shall be so
disregarded. Debt securities that have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
trustee the pledgee's right so to act with respect to those debt securities and
that the pledgee is not us or any affiliate of ours.
MODIFICATION OF THE INDENTURE
The indenture provides that we, along with the trustee, may, without the
consent of the holders, modify or amend the indenture in order to:
- evidence the succession of another corporation to us and the assumption
by any successor corporation of our covenants in the indenture and in the
debt securities;
- add to our covenants, agreements and obligations for the benefit of the
holders of the debt securities;
- add any additional events of default to the indenture;
- add to or change any of the provisions of the indenture necessary to
permit the issuance of the debt securities in bearer form, registrable as
to principal, and with or without interest coupons;
- evidence and provide for the acceptance of appointment under the
indenture by a successor trustee; or
- cure any ambiguity, or correct or supplement any provision of the
indenture that may be inconsistent with any other provision of the
indenture, provided the action does not adversely affect the interest of
the holders of the debt securities. (Indenture Section 9.1).
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We, along with the trustee, may modify or amend the indenture with the
consent of the holders of a majority in aggregate principal amount of each
series of the debt securities, except that no modification or amendment may,
without the consent of the holders of all then outstanding series of debt
securities:
- change the due date of the principal of, or any installment of principal
of or interest on, any debt securities of any series;
- reduce the principal amount of, or any installment of principal or
interest or rate of interest on, or any premiums payable on redemption
of, any debt securities of any series;
- reduce the principal amount of any debt securities of any series payable
upon acceleration of the maturity of any debt securities;
- change the place or the currency of payment of principal of, or any
premium or interest on, any debt securities of any series;
- impair the right to institute suit for the enforcement of any payment on
or with respect to any debt securities of any series on or after the due
date thereof;
- reduce the percentage in principal amount of debt securities of any
series then outstanding, the consent of whose holders is required for
modification or amendment of the indenture or for waiver of compliance
with certain provisions of the indenture or for waiver of certain
defaults; or
- modify certain provisions of the indenture regarding the amendment or
modification of, or waiver with respect to, any provision of the
indenture or the debt securities of any series. (Indenture Section 9.2).
DISCHARGE OF THE INDENTURE
The indenture shall, upon our written request or order, cease to be of
further effect, except as to any surviving rights of registration of transfer or
exchange of debt securities expressly provided for in the debt securities, when:
- either (A) all debt securities authenticated and delivered, other than
(1) debt securities that have been destroyed, lost or stolen and that
have been replaced or paid and (2) debt securities for whose payment
money has been deposited in trust or segregated and held in trust by us
and then repaid or discharged from the trust, have been delivered to the
trustee for cancellation or (B) all the debt securities not delivered to
the trustee for cancellation (1) have become due and payable, (2) will
become due and payable at their stated maturity within one year or (3)
are to be called for redemption within one year under arrangements
satisfactory to the trustee, and we, in the case of (B)(1), (2) or (3),
have deposited or caused to be deposited with the trustee, an amount in
dollars sufficient to pay and discharge the entire indebtedness on the
debt securities not delivered to the trustee for cancellation, for
principal and premium, if any, and interest to the date of the deposit,
in the case of debt securities that have become due and payable, or to
the stated maturity or redemption date, as the case may be;
- we have paid or caused to be paid all other sums payable by us under the
indenture; and
- we have delivered to the trustee an officers' certificate and an opinion
of counsel, each stating that all conditions precedent provided for in
the indenture relating to the satisfaction and discharge of the indenture
have been complied with. (Indenture Section 4.1).
DEFEASANCE AND COVENANT DEFEASANCE
Defeasance and Discharge. The indenture provides that we will be discharged
from all our obligations with respect to the debt securities of any series,
except for certain obligations to exchange or register the transfer of the debt
securities of such series, to replace stolen, lost or mutilated debt securities,
to maintain paying agencies and to hold moneys for payment in trust, upon the
deposit in trust for the benefit of the holders of the debt securities of such
series of money or U.S. government obligations, or both, which,
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through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay any
installment of principal of and any premium and interest on the debt securities
of such series on the stated maturities in accordance with the terms of the
indenture and the debt securities. This defeasance or discharge may occur only
if, among other things, we have delivered to the trustee an opinion of counsel
to the effect that the holders of the debt securities of such series will not
recognize gain or loss for federal income tax purposes as a result of the
deposit, defeasance and discharge, and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if the deposit, defeasance and discharge had not occurred, accompanied by a
ruling to that effect received from or published by the Internal Revenue
Service. (Indenture Section 13.2).
Defeasance of Certain Covenants. The indenture provides that we may omit to
comply with some of the restrictive covenants described under the captions
"Certain Covenants -- Limitation on Indebtedness Secured by a Lien" and "Certain
Covenants -- Limitation on Sale and Lease-Back Transactions" above, and that the
omission will be deemed not to be or result in an event of default in each case
with respect to each series of debt securities. In order to do so, we will have
to deposit, in trust for the benefit of the holders of the debt securities,
money or U.S. government obligations, or both, which through the payment of
principal and interest in accordance with their terms, will provide money in an
amount sufficient to pay any installment of the principal of and any premium and
interest on the debt securities on the stated maturities in accordance with the
terms of the indenture and the debt securities. We will also have to, among
other things, deliver to the trustee an opinion of counsel to the effect that
holders of the debt securities will not recognize gain or loss for federal
income tax purposes as a result of the deposit and defeasance of the obligations
and will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if the deposit and defeasance
had not occurred. In the event we exercise this option with respect to the debt
securities and the debt securities are declared due and payable because of the
occurrence of any event of default, the amount of money and U.S. government
obligations deposited in trust will be sufficient to pay amounts due on the debt
securities at the time of their stated maturity but may not be sufficient to pay
amounts due on the debt securities upon any acceleration resulting from the
event of default. In that case, we will remain liable for the payments.
THE TRUSTEE
The Bank of New York is the trustee under the indenture. Its address is 101
Barclay Street 12W, New York, New York 10286. We have also appointed the trustee
as the initial registrar and as the initial paying agent under the indenture.
The indenture contains limitations on the right of the trustee, should it
become a creditor of ours, to obtain payment of claims in some cases, or to
realize on property received in respect of any claim as security or otherwise.
In the event the trustee acquires any conflicting interest, as defined in the
Trust Indenture Act of 1939, however, it must eliminate the conflict or resign.
We maintain a banking relationship in the ordinary course of business with
an affiliate of the trustee.
GOVERNING LAW
The indenture is, and the debt securities will be, governed by, and
construed in accordance with, the internal laws of the State of New York, except
as may otherwise be required by mandatory provisions of law, without regard to
conflicts of laws principles thereof.
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<PAGE> 20
DESCRIPTION OF UNITS
We may offer units consisting of common stock and debt securities. We may
issue the units as, and for the period of time specified in the units, the units
may be transferable as, a single security only, as distinguished from the
separate constituent securities comprising the units. Any units will be offered
pursuant to a prospectus supplement that will:
- identify and designate the title of any series of units;
- identify and describe the separate constituent securities comprising the
units;
- set forth the price or prices at which the units will be issued;
- describe, if applicable, the date on and after which the constituent
securities comprising the units will become separately transferable;
- provide information with respect to book-entry procedures, if any;
- discuss applicable United States federal income tax considerations
relating to the units; and
- set forth any other terms of the units and their constituent securities.
PLAN OF DISTRIBUTION
We may sell the securities:
- through underwriters or dealers;
- directly to one or more purchasers; or
- through agents.
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the 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. Underwriters
may offer securities to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The obligations of the underwriters to purchase
securities will be subject to various conditions. The underwriters will be
obligated to purchase all the securities of the series offered by a prospectus
supplement, if any of the securities are purchased. The underwriters may change
from time-to-time any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include over allotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that selling concessions
allowed to syndicate members or other broker-dealers for the offered securities
sold for their account may be reclaimed by the syndicate if the offered
securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the offered securities, which may be higher than the price that
might otherwise prevail in the open market. If commenced, the underwriters may
discontinue these activities at any time.
We may also sell securities directly or through agents designated by us.
Unless indicated in the prospectus supplement, any agent is acting on a
reasonable efforts basis for the period of its appointment.
In connection with distributions of common stock or otherwise, we may enter
into hedging transactions with broker-dealers in connection with which the
broker-dealers may sell common stock registered under the registration statement
of which this prospectus is a part in the course of hedging through short sales
the positions they assume with us.
18
<PAGE> 21
We may authorize agents, underwriters or dealers to solicit offers by
certain institutional investors to purchase securities providing for payment and
delivery on a future date specified in the prospectus supplement. Jurisdictional
investors to which such offers may be made, when authorized, include commercial
and savings banks, insurance companies, pension funds, investment companies,
education and charitable institutions and other institutions as may be approved
by us. The obligations of any purchasers under delayed delivery and payment
arrangements will not be subject to any conditions except that the purchase by
an institution of the securities shall not at delivery be prohibited under the
laws of any jurisdiction in the United States to which the institution is
subject. Underwriters will not have any responsibility for the validity of these
arrangements or the performance by us or the institutional investors.
Underwriters, dealers and agents that participate in the distribution of
the securities may be deemed to be underwriters, and any discounts or
commissions received by them from us and any profit on the resale of the
securities by them may be treated as underwriting discounts and commissions,
under the Securities Act. Under agreements that we may enter into, underwriters,
dealers and agents who participate in the distribution of the securities may be
entitled to indemnification by us against civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, us or our subsidiaries in the ordinary course of their businesses.
The securities we offer under this prospectus and applicable prospectus
supplements may or may not be listed on a national securities exchange or a
foreign securities exchange (other than our common stock, which is listed on the
New York Stock Exchange and the Pacific Stock Exchange). Any common stock sold
under a prospectus supplement will be listed on the New York Stock Exchange and
the Pacific Stock Exchange, subject to official notice of issuance. Any
underwriters to whom we sell securities for public offering and sale may make a
market in those securities, but the underwriters will not be obligated to do so
and may discontinue any market making activities at any time without notice. No
assurances can be given that there will be an active trading market for the
securities.
LEGAL MATTERS
Unless otherwise specified in a prospectus supplement relating to a
specific series of securities, Gardere Wynne Sewell & Riggs, L.L.P., 1000
Louisiana, Suite 3400, Houston, Texas 77002, will pass upon the validity of the
securities offered under this prospectus. Any underwriter will be advised
concerning other issues relating to any offering by their own counsel.
EXPERTS
The consolidated financial statements and schedule as of December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999
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
said reports.
19
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses payable by the registrant in connection with the offering of
the securities being registered are as follows (all amounts are estimates except
the registration fee):
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee...... $ 66,000
Rating agency fees....................................... 269,250
Trustee and/or transfer agency fees and expenses......... 15,000
Blue sky fees and expenses (including counsel fees)...... 10,000
Accounting fees and expenses............................. 15,000
Legal fees and expenses.................................. 20,000
Printing, EDGAR formatting and engraving fees and mailing
expenses............................................... 50,000
Miscellaneous............................................ 29,750
--------
Total.......................................... $475,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation has the power, under specified circumstances, to
indemnify a director, officer, employee or agent of the corporation and certain
other persons serving at the request of the corporation in related capacities
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
an action or proceeding to which he or she is threatened to be made a party by
reason of such position, if such person shall have acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal action, that
they had no reasonable cause to believe their conduct was unlawful. With respect
to suits by or in the right of the corporation, however, indemnification is
generally limited to attorneys' fees and other expenses and is not available if
such person is adjudged to be liable to the corporation unless the court
determines that indemnification is appropriate. Additionally, a corporation is
required to indemnify its directors and officers against expenses to the extent
that such directors or officers have been successful on the merits or otherwise
in any action, suit or proceeding or in defense of any claim, issue or matter
therein. Indemnification can be made by the corporation only upon a
determination that indemnification is proper in the circumstances because the
party seeking indemnification has met the applicable standard of conduct as set
forth in the General Corporation Law of the State of Delaware. A corporation
also has the power to purchase and maintain insurance on behalf of any person
who is or was a director or officer of the corporation against any liability
asserted against such person or incurred by such person in any capacity or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
provisions of the law.
The restated certificate of incorporation of Smith and the restated bylaws
of Smith extend indemnification rights to its directors, officers, employees and
agents to the fullest extent authorized by the General Corporation Law of the
State of Delaware. The restated certificate of incorporation of Smith and the
restated bylaws of Smith also permit Smith to maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of Smith against
any liability asserted against such person and incurred by such person in such
capacity, whether or not Smith would have the power or the obligation to
indemnify such person against such liability. Reference is made to the restated
certificate of incorporation and the restated bylaws of Smith.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a
II-1
<PAGE> 23
director of the corporation or its stockholders for monetary damages for a
breach of fiduciary duty as a director, provided that such provisions may not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock) of
the General Corporation Law of the State of Delaware or (iv) for any transaction
from which the director derived an improper personal benefit. Smith's restated
certificate of incorporation contains such a provision, and further provides
that if the General Corporation Law of the State of Delaware is amended to
further eliminate or limit the personal liability of directors, then the
liability of the directors of Smith shall be eliminated or limited to the
fullest extent permitted by the General Corporation Law of the State of
Delaware.
The above discussion of Smith's restated certificate of incorporation and
restated bylaws and of Sections 102(b)(7) and 145 of the General Corporation Law
of the State of Delaware is not intended to be exhaustive and is qualified in
its entirety by such restated certificate of incorporation, restated bylaws and
statutes.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1+ -- Form of Underwriting Agreement for Common Stock.
1.2+ -- Form of Underwriting Agreement for Debt Securities.
4.1 -- Indenture between Smith International, Inc. and The Bank
of New York, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-3 of
Smith International, Inc. (Registration No. 333-34249)
dated August 22, 1997).
4.2 -- Rights Agreement, dated as of June 8, 2000, between Smith
International, Inc. and First Chicago Trust Company of
New York, as Rights Agent (incorporated by reference to
the Registration Statement on Form 8-A of Smith
International, Inc., dated June 15, 2000).
4.3 -- Form of Common Stock Certificate (incorporated by
reference to the Registration Statement on Form 8 of
Smith International, Inc., dated August 23, 1991).
4.4+ -- Form of Debt Securities.
5.1* -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P. as to
legality of the securities registered hereby.
12.1* -- Computation of Ratio of Earnings to Fixed Charges of the
registrant.
23.1* -- Consent of Arthur Andersen LLP.
23.2* -- Consent of Gardere Wynne Sewell & Riggs, L.L.P. (set
forth in the opinion filed as Exhibit 5.1).
24.1* -- Powers of attorney (set forth on the signature page
hereof).
25.1* -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee on Form T-1.
</TABLE>
---------------
+ To be filed by a post-effective amendment or as an exhibit to a Current Report
on Form 8-K.
* Filed herewith.
II-2
<PAGE> 24
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(d) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A
II-3
<PAGE> 25
and contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(e) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 30th day of June,
2000.
SMITH INTERNATIONAL, INC.
By: /s/ DOUGLAS L. ROCK
----------------------------------
Douglas L. Rock,
Chief Executive Officer, President
and
Chief Operating Officer
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints Neal S. Sutton and
Margaret K. Dorman, and each of them, either one of whom may act without joinder
of the other, his true and lawful attorneys-in-fact, with full power to execute
in his name, place and stead, in any and all capacities this Registration
Statement, together with any and all amendments (including any and all pre- and
post-effective amendments thereto) to such Registration Statement and to file
the same, with all exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
each and every act and thing requested to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact, and each of them, or the substitute or substitutes
of either of them, shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS L. ROCK Chief Executive Officer, June 30, 2000
----------------------------------------------------- President and Chief Operating
Douglas L. Rock Officer (Principal Executive
Officer)
/s/ LOREN K. CARROLL Executive Vice President and June 30, 2000
----------------------------------------------------- Director
Loren K. Carroll
/s/ MARGARET K. DORMAN Senior Vice President and Chief June 30, 2000
----------------------------------------------------- Financial Officer (Principal
Margaret K. Dorman Financial and Accounting
Officer)
/s/ BENJAMIN F. BAILAR Director June 30, 2000
-----------------------------------------------------
Benjamin F. Bailar
/s/ G. CLYDE BUCK Director June 30, 2000
-----------------------------------------------------
G. Clyde Buck
/s/ JAMES R. GIBBS Director June 30, 2000
-----------------------------------------------------
James R. Gibbs
</TABLE>
II-5
<PAGE> 27
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JERRY W. NEELY Director June 30, 2000
-----------------------------------------------------
Jerry W. Neely
/s/ WALLACE S. WILSON Director June 30, 2000
-----------------------------------------------------
Wallace S. Wilson
</TABLE>
II-6
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1+ -- Form of Underwriting Agreement for Common Stock.
1.2+ -- Form of Underwriting Agreement for Debt Securities.
4.1 -- Indenture between Smith International, Inc. and The Bank
of New York, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-3 of
Smith International, Inc. (Registration No. 333-34249)
dated August 22, 1997).
4.2 -- Rights Agreement, dated as of June 8, 2000, between Smith
International, Inc. and First Chicago Trust Company of
New York, as Rights Agent (incorporated by reference to
the Registration Statement on Form 8-A of Smith
International, Inc., dated June 15, 2000).
4.3 -- Form of Common Stock Certificate (incorporated by
reference to the Registration Statement on Form 8 of
Smith International, Inc., dated August 23, 1991).
4.4+ -- Form of Debt Securities.
5.1* -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P. as to
legality of the securities registered hereby.
12.1* -- Computation of Ratio of Earnings to Fixed Charges of the
registrant.
23.1* -- Consent of Arthur Andersen LLP.
23.2* -- Consent of Gardere Wynne Sewell & Riggs, L.L.P. (set
forth in the opinion filed as Exhibit 5.1).
24.1* -- Powers of attorney (set forth on the signature page
hereof).
25.1* -- Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee on Form T-1.
</TABLE>
---------------
+ To be filed by a post-effective amendment or as an exhibit to a Current Report
on Form 8-K.
* Filed herewith.
