As filed with the Securities and Exchange Commission on August 18, 1998.
REGISTRATION NO. 333-23553
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
Post-Effective
AMENDMENT No. 1
to
FORM S-1
on
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CIRRUS LOGIC, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 3674 77-0024818
(State or other jurisdiction (Primary Standard Industial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
3100 West Warren Avenue
Fremont, California 94538
(510) 623-8300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------
Robert F. Donohue
Vice President, Chief Legal Officer
General Counsel and Secretary
CIRRUS LOGIC, INC.
3100 West Warren Avenue
Fremont, California 94538
(510) 623-8300
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
----------------
Copies to:
Michael Danaher, Esq.
Deborah M. Chang, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
(415) 493-9300
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
----------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, 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
<TABLE>
<CAPTION>
========================================================================================
Proposed Proposed
maximum maximum
offering aggregate Amount of
Title of each class of Amount to be price per offering registration
securities to be registered registered unit price (1) fee
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6% Convertible Subordinated $ 280,725,000 100% $ 280,725,00 $ 85,068.1(3)
Notes due December 15, 2003 . .
- ----------------------------------------------------------------------------------------
Common Stock, no par 11,591,219
value . . . . . . . . . . . . . shares (2) - - 5,512,255 (3)
========================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) of the Securities Act of 1933, as amended.
(2) Such number represents the number of shares of Common Stock as are
initially issuable upon conversion of the 6% Convertible Subordinated
Notes due December 15, 2003 registered hereby and, pursuant to Rule
416 under the Securities Act of 1933, as amended, such indeterminate
number of shares of Common Stock as shall be required for issuance upon
conversion of the Notes being registered hereunder. Pursuant to
Rule 457(i), no registration fee is required.
(3) Registration fees were paid with the original filing on Form S-1,
Registration No. 333-23553.
--------------
EXPLANATORY NOTE
This Post-Effective Amendment No. 1 to Form S-1 Registration Statement on Form
S-3 amends the Prospectus dated January 28, 1998 filed pursuant to Rule 424(b)
under the Securities Act of 1933. The Prospectus contained herein is to be used
by holders of Registrable Notes in connection with offers and sales of the
Company's Registrable Notes in the over-the-counter market at negotiated prices
related to the prevailing market prices at the time of sale.
===========================================================================
<PAGE>
PROSPECTUS
Cirrus Logic, Inc.
U.S. $280,725,000
6% Convertible Subordinated Notes due December 15, 2003
and
Shares of Common Stock
Issuable Upon Conversion Thereof
------------------------------------
This Prospectus relates to $280,725,000 aggregate principal amount of 6%
Convertible Subordinated Notes due December 15, 2003 (the "Notes") of Cirrus
Logic, Inc. (the "Company") sold otherwise than in reliance on Regulation S (the
"Registrable Notes") under the Securities Act of 1933, as amended (the
"Securities Act"), and the shares of Common Stock, no par value of the Company,
("Common Stock") issuable upon the conversion of the Registrable Notes (the
"Conversion Shares"). The Registrable Notes registered hereby were issued and
sold on December 12, 1996 (the "Original Offering") in transactions exempt from
the registration requirements of the Securities Act, to persons reasonably
believed by Goldman, Sachs & Co., Salomon Brothers Inc, J.P. Morgan Securities
Inc., and Robertson, Stevens & Company LLC, as the initial purchasers (the
"Initial Purchasers") of the Registrable Notes, to be "qualified institutional
buyers" (as defined by Rule 144A under the Securities Act) or other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) under Regulation D of the Securities Act). An additional $19,275,000
aggregate amount of Notes were issued by the Company in the Original Offering
and sold by the Initial Purchasers in compliance with the provisions of
Regulation S under the Securities Act. The Registrable Notes and the Common
Stock issuable upon conversion thereof may be offered and sold from time to
time by the holders named herein or by their transferees, pledgees, donees or
their successors (collectively, the "Selling Securityholders") pursuant to this
Prospectus. The Registration Statement of which this Prospectus is a part has
been filed with the Securities and Exchange Commission pursuant to a
registration rights agreement dated as of December 12, 1996 (the "Registration
Agreement") between the Company and the Initial Purchasers, entered into in
connection with the Original Offering.
The Registrable Notes are convertible at the option of the holder into shares
of Common Stock of the Company (at any time on or after March 18, 1997 and prior
to redemption or maturity, at a conversion rate of 41.2903 shares per $1,000
principal amount of Registrable Notes), subject to adjustment under certain
circumstances. Interest on the Registrable Notes is payable semi-annually in
arrears on June 15 and December 15 of each year, commencing on June 15, 1997.
On August 17, 1998, the closing price of the Common Stock, which is quoted on
the Nasdaq National Market under the symbol "CRUS," was $9.094 per share.
---------------------------
THE NOTES AND THE COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF
RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4
----------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ____________, 1998
The Registrable Notes are unsecured general obligations of the Company and are
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined in the Indenture). See "Description of the Notes-Subordination."
The Registrable Notes will mature on December 15, 2003, and may be redeemed, at
the option of the Company, in whole or in part, at any time on or after December
16, 1999 at the redemption prices set forth herein plus accrued interest. Each
holder of Registrable Notes will have the right to cause the Company to
repurchase all of such holder's Registrable Notes, payable in cash or, at the
Company's option, in Common Stock, in the event the Common Stock is no longer
publicly traded or in certain circumstances involving a Change of Control (as
defined in the indenture). The Company's ability to repurchase the Registrable
Notes upon the occurrence of a Change in Control is subject to limitations.
Any failure by the company to repurchase the Notes when required following a
Change in Control would result in an Event of default under the Indenture. Any
such default may, in turn, cause a default under Senior Indebtedness of the
Company. Moreover, the occurrence of a Change in Control would result in an
event of default under terms of other Senior Indebtedness of the Company. As
a result, in each case, any repurchase of the Notes would, absent a waiver,
be prohibited under the subordination provisions of the Indenture until the
Senior Indebtedness of the Company is paid in full. In addition, the Company's
repurchase of Notes as a result of the occurrence of a Change of Control may
be prohibited or limited by, or create an event of default under the cross-
default provisions and/or other terms of agreements related to borrowings which
the Company may enter into from time to time, including agreements relating to
Senior Indebtedness.
The Registrable Notes and the Conversion Shares may be offered by the Selling
Securityholders from time to time in transactions (which may include block
transactions in the case of the Conversion Shares) on any exchange or market on
which such securities are listed or quoted, as applicable, in negotiated
transactions, through a combination of such methods of sale, or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices.
The Selling Securityholders may effect such transactions by selling the
Registrable Notes or Conversion Shares directly or to or through broker-dealers,
who may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of the
Registrable Notes or Conversion Shares for whom such broker-dealers may act as
agents or to whom they may sell as principals, or both (which compensation as
to a particular broker-dealer might be in excess of customary commissions).
The Company will not receive any of the proceeds from the sale of the
Registrable Notes or Conversion Shares by the Selling Securityholders. The
Company has agreed to pay all expenses incident to the offer and sale of the
Registrable Notes and Conversion Shares offered by the Selling Securityholders
hereby, except that the Selling Securityholders will pay all underwriting
discounts and selling commissions, if any. See "Plan of Distribution."
The Registrable Notes have been designated for trading on the PORTAL Market.
Registrable Notes sold pursuant to this Prospectus are not eligible for trading
on the PORTAL Market. The Registrable Notes will not be listed for trading on
the Nasdaq National Market or Nasdaq SmallCap Market or on any exchange. The
Registrable Notes are expected to be traded over-the-counter.
The Selling Securityholders will receive all of the net proceeds from the sale
of the Registrable Notes and the Common Stock issuable upon conversion of the
Registrable Notes and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Registrable Notes and the
Common Stock issuable upon conversion of the Registrable Notes. The Company
is responsible for payment of all other expenses incident to the offer and sale
of the Registrable Notes and the Common Stock issuable upon conversion of the
Registrable Notes.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-3 under the Securities Act
with respect to the Registrable Notes. This Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company
and such Registrable Notes, reference is made to the Registration Statement
and the exhibits and schedules filed as part thereof. For further information
with respect to the Company and the Registrable Notes being offered, reference
is hereby made to such Registration Statement of Form S-1 and the exhibits and
schedules thereto, which may be obtained from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C.
20549, upon payment of prescribed fees.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at its principal office referred to above and at the Commission's
regional offices at 13th Floor, Seven World Trade Center, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison, Suite 1400, Chicago,
Illinois 60601-2511. Copies of such material can be obtained from the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549,
at prescribed rates.
The Company intends to furnish to the holders of the Registrable Notes annual
reports containing audited consolidated financial statements examined by its
independent auditors and quarterly reports containing unaudited condensed
consolidated financial statements for the first three quarters of each fiscal
year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") pursuant to the Exchange Act are
incorporated herein by reference: (1) Company's Annual Report on Form 10-K for
year ended March 28, 1998 (including those portions of the Company's Annual
Report to Stockholders and definitive proxy statement for the Annual Meeting
of Stockholders held on July 21, 1998), (2) the description of the Company's
Common Stock contained in the Company's registration statement on Form 8-A
filed under the Exchange Act with the Commission on June 16, 1997, and (3)
Company's Quarterly Report on Form 10-Q for period ended June 27, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such reports and documents. The Company will provide without
charge to each person to whom this Prospectus is delivered, a copy of any and
all of such documents (exclusive of exhibits unless such exhibits are
specifically incorporated by reference herein), upon written or oral request
to Vice President, Finance, Cirrus Logic, Inc., 3100 W. Warren Avenue, Fremont,
CA 94538 (telephone number (510) 623-8300).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
SUMMARY
The following summary information is qualified in its entirety
by the detailed information and financial information incorporated by
reference herein appearing elsewhere in this Prospectus. This
Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. When used in this Prospectus, the words "believes,"
"intends," "anticipates" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those projected. Such risks and uncertainties
include the timing and acceptance of new product introductions, the
actions of the Company's competitors and business partners, and those
discussed under the caption "Risk Factors."
THE COMPANY
Cirrus Logic, Inc., ("Cirrus Logic" or the "Company") is a
premier supplier of system-level integrated circuits that demand high-
performance mixed-signal processing and algorithmic expertise. The
Company's products, sold under its own name and the Crystal product
brand, enable high-volume applications in mass storage, communications,
consumer electronics and industrial markets. Cirrus Logic was
incorporated under the laws of California on February 3, 1984, as the
successor to a research corporation which had been incorporated in Utah
in 1981. The Company's principal executive offices are located at 3100
West Warren Avenue, Fremont, California 94538 and its telephone number
is (510) 623-8300.
THE OFFERING
Securities Offered . . . . . $280,725,000 aggregate principal amount
of 6% Convertible Subordinated Notes
due December 15, 2003, issued under an
indenture (the "Indenture") between the
Company and State Street Bank and Trust
Company as Trustee ("Trustee") and
Common Stock issuable upon conversion
thereof.
Issuer . . . . . . . . . . . Cirrus Logic, Inc., a California
corporation.
Interest Payment Date. . . . Interest on the Registrable Notes is
payable semiannually on June 15 and
December 15 of each year, commencing
June 15, 1997.
Conversion Rate. . . . . . . 41.2903 shares per U.S. $1,000
principal amount of Registrable Notes
(equivalent to a conversion price of
approximately U.S. $24.219 per share),
subject to adjustment.
Conversion Rights. . . . . . The Registrable Notes are convertible
at any time on or after March 18, 1997
and prior to the close of business on
the maturity date, unless previously
redeemed or repurchased, at the
conversion rate set forth above.
Holders of Registrable Notes called for
redemption or repurchase will be
entitled to convert the Registrable
Notes up to, but not including or
after, the date fixed for redemption or
repurchase, as the case may be. See
"Description of Registrable Notes -
Conversion Rights."
Subordination. . . . . . . . The Registrable Notes are subordinated
in right of payment to all existing and
future Senior Indebtedness (as defined)
of the Company and effectively
subordinated to all liabilities of the
Company's subsidiaries. The Indenture does
not restrict the incurrence of additional
Senior Indebtedness or other indebtedness
by the Company or any subsidiary. The
Company anticipates incurring
significant additional obligations,
which may include Senior Indebtedness,
for its manufacturing program. See
"Risk Factors - Leverage and
Subordination."
Optional Redemption. . . . . The Registrable Notes are redeemable at
the option of the Company, in whole or
in part, at any time on or after
December 16, 1999 at the redemption
prices set forth herein plus accrued
interest to the redemption date. See
"Description of Registrable Notes -
Redemption."
Repurchase at Option . . . . Upon a Change in Control (as defined),
of Holders Upon a holders of the Registrable Notes will
Change in Control have the right, subject to certain
conditions and restrictions, to require
the Company to purchase all or part of
their Registrable Notes at 100% of the
principal amount thereof, plus accrued
interest to the repurchase date. The
repurchase price is payable in cash or,
at the option of the Company but
subject to the satisfaction of certain
conditions on the part of the Company,
in shares of Common Stock (valued at
95% of the average closing bid prices
of the Common Stock for the five
trading days preceding the second
trading day prior to the repurchase
date). The Company's ability to
repurchase the Registrable Notes upon the
occurance of a Change in Control is subject
to limitations. Any failure by the Company
to repurchase the Notes when required
following a Change in Control would result
in an Event of Default under the
Indenture. Any such default may, in turn,
cause a default under Senior Indebtedness
of the Company. Moreover, the occurrence
of a Change in Control would result in an
event of default under terms of other
Senior Indebtedness of the Company. As a
result, in each case, any repurchase of
the Notes would, absent a waiver, be
prohibited under the subordination
provisions of the Indenture until the
Senior Indebtedness is paid in full. In
addition, the Company's repurchase of
Notes as a result of the occurence of a
Change of Control may be prohibited or
limited by, or create an event of default
under the cross-default provisions and/or
other terms of agreements related to
borrowings which the Company may enter
into from time to time, including
agreements relating to Senior Indebteness.
See "Description of Registrable
Notes - Repurchase at Option of
Holders Upon a Change in Control", and
"Risk Factors - Limitations on Repurchase
of Registrable Notes."
Use of Proceeds. . . . . . . The Company will not receive any
proceeds from the sale of the
Registrable Notes or the Common Stock
issuable upon conversion thereof by
the Selling Shareholders, although the
Company did receive proceeds from the
inital sales of the Notes by the Company.
The Company has used some of these
proceeds to repay outstanding borrowings,
and has invested the remaining proceeds
in investment grade, interest-bearing
instruments. See "Use of Proceeds."
Events of Default. . . . . . Events of default include: (a) failure
to pay principal of or premium, if any,
on any Note when due, whether or not
such payment is prohibited by the
subordination provisions of the Notes
and the Indenture; (b) failure to pay
any interest on any Note when due,
continuing for 30 days, whether or not
such payment is prohibited by the
subordination provisions of the Notes
and the Indenture; (c) default in the
Company's obligation to provide notice
of a Change in Control (as defined);
(d) failure to perform any other
covenant of the Company in the
Indenture, continuing for 60 days after
written notice as provided in the
Indenture (except that if such failure
is capable of being cured and the
Company commences efforts to cure such
failure within such 60 day period, such
failure shall not be considered an
event of default for an additional 60
days so long as the Company is
diligently pursuing the cure); (e) any
indebtedness for money borrowed by the
Company in an outstanding principal
amount in excess of $20,000,000 is not
paid at final maturity or upon
acceleration thereof and such default
in payment or acceleration is not cured
or rescinded within 30 days after
written notice as provided in the
Indenture; and (f) certain events of
bankruptcy, insolvency or
reorganization. See "Description of
Registrable Notes - Events of Default."
Registration Rights. . . . . Upon any failure by the Company to
comply with certain of its obligations
under the Registration Agreement,
additional interest will be payable on
the Registrable Notes.
RISK FACTORS
In addition to the other information included in this
Prospectus, the following risk factors should be carefully considered
in evaluating an investment in the Registrable Notes offered hereby and
the shares of Common Stock issuable upon conversion thereof. This
Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act, which involve risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in
the forward-looking statements as a result of various risks and
uncertainties, including those summarized below.
The Company's Annual Report on Form 10-K filed with the
Commission for the fiscal year ended March 28, 1998 includes certain
risk factors and is incorporated herein by reference. These risk
factors include "Quarterly Fluctuations", "Issues Relating to
Manufacturing and Manufacturing Investment", "Dependence on PC Market",
"Issues Relating to Mass Storage Market", "Issues Relating to Graphics
Products", "Issues Relating to Consumer Electronics Products", "Issues
Relating to Communications Products", "Issues Relating to Industrial
Products", "Intellectual Property Matters", "Foreign Operations and
Markets", "Competition", and "Impact of Year 2000".
That report sets forth an additional risk factor in
"Management's Discussion and Analysis of Financial Conditions and
Results of Operations--Liquidity and Capital Resources", which relates
to the capital intensive nature of the semiconductor industry and the
availability of financing under satisfactory terms, which is also
incorporated herein by reference.
Limitations on Repurchase of Registrable Notes
The Company's ability to repurchase Registrable Notes upon the
occurrence of a Change in Control is subject to limitations. There can
be no assurance that the Company would have the financial resources, or
would be able to arrange financing, to pay the repurchase price for all
the Registrable Notes that might be delivered by Holders of Registrable
Notes seeking to exercise the repurchase right. Moreover, although
under the Indenture the Company may elect, subject to satisfaction of
certain conditions, to pay the repurchase price for the Registrable
Notes using shares of Common Stock, the Company's ability to purchase
Registrable Notes may be limited or prohibited by the terms of any
future borrowing arrangements, including Senior Indebtedness existing
at the time of a Change in Control. The Company's ability to repurchase
Notes with cash may also be limited by the terms of its subsidiaries,
borrowing arrangements due to dividend restrictions. Any failure by
the Company to repurchase the Registrable Notes when required following
a Change in Control would result in an Event of Default under the
Indenture whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in
turn, cause a default under Senior Indebtedness of the Company.
Moreover, the occurrence of a Change in Control would result in an
Event of Default under the Company's existing revolving credit facility
and may cause an event of default under the terms of other Senior
Indebtedness of the Company. As a result, in each case, any repurchase
of the Registrable Notes would, absent a waiver, be prohibited under
the subordination provisions of the Indenture until the Senior
Indebtedness is paid in full. In addition, the Company's repurchase of
Registrable Notes as a result of the occurrence of a Change in Control
may be prohibited or limited by, or create an event of default under,
the terms of agreements related to borrowings which the Company may
enter into from time to time, including agreements relating to Senior
Indebtedness. See "Description of Registrable Notes-Repurchase at
Option of Holders Upon a Change in Control."
Absence of Public Market for the Registrable Notes
The Registrable Notes were issued in December 1996 to a small
number of institutional buyers. The Registrable Notes issued in
reliance on Rule 144A have been designated for trading on the PORTAL
Market. Registrable Notes sold pursuant to the Registration Statement
of which this Prospectus forms a part are no longer eligible for
trading on the PORTAL Market. The Registration Statement of which this
Prospectus forms a part is filed pursuant to the Registration
Agreement, which does not obligate the Company to keep the Registration
Statement effective after the third anniversary of the date when the
Registration Statement is declared effective or, if earlier, the date
when all the Registrable Notes and the Common Stock issuable on
conversion thereof covered by the Registration Statement have been sold
pursuant to the Registration Statement or may be resold without
registration by persons that are not affiliates of the Company pursuant
to Rule 144(k) under the Securities Act. The Company does not intend
to apply for listing of the Registrable Notes on any securities
exchange or to seek approval for quotation through any automated
quotation system. The Initial Purchasers have advised the Company that
they intend to make a market in the Registrable Notes. The Initial
Purchasers are not obligated, however, to make a market in the
Registrable Notes and any such market making may be discontinued at any
time in the sole discretion of the Initial Purchasers without notice.
Accordingly, there can be no assurance as to the development or
liquidity of any market for the Registrable Notes.
Possible Volatility of Registrable Notes and Stock Price
The Company anticipates that its quarterly revenues and
operating results will fluctuate substantially from quarter to quarter
as a result of a wide variety of factors, many of which are outside of
the Company's control, including, but not limited to, economic
conditions and overall market demand in the United States and
worldwide, the Company's ability to introduce new products and
technologies on a timely basis, the ability of the Company to utilize
fully the capacity of its manufacturing joint ventures and the ability
of such joint ventures to produce wafers on a timely and competitive
basis, changes in product mix, pricing decisions, fluctuations in
manufacturing costs which affect the Company's gross margins, declines
in market demand for the Company's and its customers' products, sales
timing, the level of orders which are received and can be shipped in a
quarter, the cyclical nature of both the semiconductor industry and the
markets addressed by the Company's products, product obsolescence,
price erosion, and competitive factors, which may have a significant
impact on the market price of Registrable Notes and the Common Stock
into which they are convertible. The trading price of the Common Stock
has been, and the trading price of the Registrable Notes and the Common
Stock into which they are convertible may continue to be, subject to
wide fluctuations in response to quarter-to-quarter variations in
operating results, changes in earnings estimates by analysts,
announcements concerning new products, strategic relationships or
technological innovations by the Company or its competitors, general
conditions in the computer industry and other events or facts. In
recent years the stock market in general, and the shares of technology
companies in particular, have experienced extreme price fluctuations.
This volatility has had a substantial effect on the market prices of
securities issued by many companies for reasons unrelated to their
operating performance. These broad market fluctuations may adversely
affect the market price of the Registrable Notes and Common Stock.
Leverage and Subordination
The Company is highly leveraged. In connection with the
Original Offering, the Company incurred $300 million of indebtedness,
increasing the Company's total debt to approximately $358 million and
resulting in a ratio of total debt to equity (expressed as a
percentage) of approximately 88% percent, as of June 27, 1998. In
addition, as of June 27, 1998, the Company has guaranteed or is
directly liable for payments under operating leases payable over lease
terms ranging from five to seven years and aggregating approximately
$509 million. Moreover, the Company expects to incur substantial
additional direct or guaranteed lease obligations in connection with
its manufacturing joint ventures.
The Company's Second Amended and Restated Multicurrency Credit
Agreement dated as of June 30, 1997 among the Company, certain of its
subsidiaries and Bank of America National Trust and Savings
Association, the Indenture governing the Registrable Notes, and certain
leveraged leases to which the Company is a part, including the
leveraged leases pursuant to (A)(i) the Participation Agreement dated
as of October 31, 1996 among Cirent Semiconductor, G.P., as Lessee,
Ciror, Inc., as General Partner of the Lessee, the Company, as
Co-Lessee and Guarantor, Ameritech Credit Corporation, as Owner
Participant, First Security Bank, National Association, as Owner
Trustee, the institutions listed therein, as Lenders, and Wilmington
Trust Company, as Indenture Trustee, and (ii) the Lease Agreement dated
as of October 31, 1996 among First Security Bank, National Association,
as Owner Trustee for The Orlando Semiconductor Equipment Owner Trust,
Cirent Semiconductor, G.P., as Lessee, and the Company, as Co-Lessee,
and the (B)(i) the Participation Agreement dated as of November 15,
1996 among Cirent Semiconductor, G.P., as Lessee, Ciror, Inc., as
General Partner of the Lessee, the Company, as Co-Lessee and Guarantor,
AT&T Commercial Finance Corporation, as Owner Participant, First
Security Bank, National Association, as Owner Trustee, the institutions
listed therein, as Lenders, and Wilmington Trust Company, as Indenture
Trustee, and (ii) the Lease Agreement dated as of November 15, 1996
among First Security Bank, National Association, as Owner Trustee for
The Orlando Semiconductor Equipment Owner Trust II, Cirent
Semiconductor, G.P., as Lessee, and the Company, as Co-Lessee, contain
cross-default provisions which permit the holders of such indebtedness
or lease obligations under certain circumstances to accelerate the
Company's obligations in the event there is a default under the
provisions of the foregoing agreements, as well as other indebtedness
or lease obligations of the Company may incur from time to time.
For fiscal 1996 and fiscal 1997 the Company's earnings were
insufficient to cover fixed charges by approximately $41.7 million and
$51.6 million, respectively. Fixed charges exclude the interest factor
associated with operating leases of the Company's MiCRUS and Cirent
Semiconductor joint ventures and the interest associated with
capitalized leases of the Company's MiCRUS and Cirent joint ventures.
Had the amount of such interest factors been included in such fixed charges,
the Company's earnings would have been insufficient to cover fixed
charges for fiscal 1996, fiscal 1997, and for the first quarter of
fiscal 1999 by approximately $50.6 million, $67.1 million and $7.0 million,
respectively. Whereas for fiscal 1998 and for the first quarter of fiscal
1999, the Company's earnings were sufficient to cover fixed charges
(assuming the Cirent Semiconductor leases were entered into at the
beginning of each such period).
The degree to which the Company is leveraged could (i)
adversely affect its ability to obtain additional financing for itself
or its joint ventures, (ii) make it more vulnerable to general economic
and market conditions, industry downturns and competitive pressures,
(iii) impair its ability to respond to technological changes, and (iv)
result in the dedication of a significant amount of any cash generated
from operating activities to the payment of debt service and other
financing obligations, thereby reducing funds available for operations,
and its existing manufacturing joint ventures and future business
opportunities. The Company's ability to meet its debt service and
other obligations will be dependent on the Company's future performance
which will be subject to financial, business and other factors
affecting operations of the Company, many of which are beyond its
control.
The Registrable Notes are obligations exclusively of the
Company. Since the operations of the Company are partially conducted
through subsidiaries, the cash flow and the consequent ability to
service debt, including the Registrable Notes, of the Company, are
partially dependent upon the earnings of its subsidiaries and the
distribution of those earnings to, or upon loans or other payments of
funds by those subsidiaries to, the Company. The payment of dividends
and the making of loans and advances to the Company by its subsidiaries
may be subject to statutory or contractual restrictions, are dependent
upon the earnings of those subsidiaries and are subject to various
business considerations. Any right of the Company to receive assets of
any of its subsidiaries upon their liquidation or reorganization (and
the consequent right of the holders of the Registrable Notes to
participate in those assets) will be effectively subordinated to the
claims of that subsidiary's creditors (including trade creditors),
except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company
would still be subordinate to any security interests in the assets of
such subsidiary and any indebtedness of such subsidiary senior to that
held by the Company.
The Registrable Notes are unsecured and subordinated in right
of payment in full to all existing and future Senior Indebtedness of
the Company and are effectively subordinated to all liabilities of the
Company's subsidiaries. As a result of such subordination, in the
event of the Company's liquidation or insolvency, payment default with
respect to Senior Indebtedness, a covenant default with respect to
Designated Senior Indebtedness (as defined), or upon acceleration of
the Registrable Notes due to an event of default, the assets of the
Company will be available to pay obligations on the Notes only after
all Senior Indebtedness has been paid in full, and there may not be
sufficient assets remaining to pay amounts due on any or all of the
Registrable Notes then outstanding.
The Indenture does not prohibit or limit the incurrence of
Senior Indebtedness or the incurrence of other indebtedness and other
liabilities by the Company or its subsidiaries. The incurrence of
additional indebtedness and other liabilities by the Company or its
subsidiaries could adversely affect the Company's ability to pay its
obligations on the Notes. The Company expects from time to time to
incur additional indebtedness and other liabilities, including Senior
Indebtedness, and also expects that its subsidiaries will from time to
time incur additional indebtedness and other liabilities. In
particular, the Company anticipates incurring significant obligations,
which may include additional Senior Indebtedness, in connection with
its manufacturing program.
Fraudulent Conveyance
Under applicable provisions of the United States Bankruptcy
Code or comparable provisions of state fraudulent transfer or
conveyance law, if the Company, at the time it issued the Registrable
Notes, (a) incurred such indebtedness with the intent to hinder, delay
or defraud creditors, or (b) (i) received less than reasonably
equivalent value or fair consideration for the issuance of the
Registrable Notes and (ii) (A) was insolvent at the time of the
incurrence, (B) was rendered insolvent by reason of such incurrence,
(C) was engaged or was about to engage in a business or transaction for
which the assets remaining with the Company constituted unreasonably
small capital to carry on its business, or (D) intended to incur, or
believed that it would incur, debts beyond its ability to pay such
debts as they mature, then, in each such case, a court of competent
jurisdiction could avoid, in whole or in part, the Registrable Notes
or, in the alternate, subordinate the Registrable Notes to existing and
future indebtedness of the Company. The measure of insolvency for
purposes of the foregoing would vary depending upon the law applied in
such case. Generally, however, the Company would be considered
insolvent if the sum of its debts, including contingent liabilities,
was greater than all of its assets at fair valuation or if the present
fair saleable value of its assets was less than the amount that would
be required to pay the probable liability on its existing debts,
including contingent liabilities, as they become absolute and matured.
The Company believes that, for purposes of the United States
Bankruptcy Code and state fraudulent transfer or conveyance laws, the
Registrable Notes were issued without the intent to hinder, delay or
defraud creditors and for proper purposes and in good faith, that the
Company received fair consideration in exchange for the Registrable
Notes, and that the Company, after the issuance of the Registrable
Notes and the application of proceeds therefrom, was and remains
solvent, has sufficient capital for carrying on its business and is
able to pay its debts as they mature. Accordingly, the Company believes
that these provisions of the Bankruptcy Code and the state fraudulent
transfer or conveyance laws were not triggered by the issuance of the
Registrable Notes.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Registrable Notes or the Common Stock issuable upon conversion thereof
by the Selling Shareholders. In the third quarter of fiscal 1997, the
Company received approximately $290.6 million in net proceeds from the
initial sale of the Notes. Approximately $25.0 million of these
proceeds was used to repay all outstanding borrowings under the Amended
and Restated Multicurrency Credit Agreement, dated as of October 31,
1996, among the Company, certain of its subsidiaries, Bank of America
National Trust and Savings Association, as Agent, Morgan Guaranty Trust
Company of New York and The Bank of Nova Scotia, as Co-Agents, and
certain other financial institutions. The Company has invested the
remaining proceeds in investment grade, interest-bearing instruments.
Proceeds from this offering will be invested with the Bank of America
in amounts sufficient to cover the outstanding letters of credit and
will serve as collateral for these letters of credit. The remaining
funds are available for general working capital purposes and for
expenditures associated with the Company's investments in
manufacturing.
RATIO OF EARNINGS TO FIXED CHARGES
Quarter ending
At Fiscal Year End(1)(2) June 27,
1994 1995 1996 1997 1998 1998
------ ------ ------ ------ ------ ------
Ratio of earnings to
fixed charges (1) 14.7x 17.3x N/A N/A 2.9x 1.1x
- --------------------
(1) For the purposes of calculating the ratio of earnings to fixed
charges, (i) earnings consist of consolidated income (loss) from
operations before provision for income taxes and cumulative effect
of accounting change plus fixed charges and (ii) fixed charges
consist of interest expense incurred, including capital leases,
amortization of interest costs and the portion of rental expense
under leases deemed by the Company to be representative of the
interest factor. Earnings were not sufficient to cover fixed
charges for fiscal 1996 and fiscal 1997 by approximately $41.7
million and $51.6 million, respectively. Fixed charges exclude
interest on capitalized leases and the interest factor associated
with operating leases of the company's MiCRUS and Cirent joint ventures,
estimated at $1.8 million, $8.9 million, $15.4 million, $26.9
million, and $7.5 million for fiscal 1995, 1996, 1997, 1998, and
for the first quarter of fiscal 1999, respectively, which are
guaranteed by the Company or as to which the Company is otherwise
liable. Had such charges been included, the ratio of earnings to
fixed charges for fiscal 1995 and 1998 would have been 13.1x and
1.5x, respectively. In addition, the deficiency of earnings to
cover fixed charges for fiscal 1996 and 1997 and for the first
quarter ended June 27, 1998 would have been $50.6 million, $67.1
million and $7.0 million.
(2) Additional information may be obtained by reference to the
Company's Annual Report on Form 10-K for fiscal year ended March
28, 1998.
DESCRIPTION OF THE REGISTRABLE NOTES
The Registrable Notes have been issued under an indenture,
dated as of December 15, 1996, between the Company and State Street
Bank and Trust Company, as Trustee (the "Indenture"). The following
summaries of certain provisions of the Registrable Notes and the
Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Registrable Notes and the Indenture, including the definitions therein
of certain terms that are not otherwise defined in this Prospectus.
Wherever particular provisions or defined terms of the Indenture (or of
the form of Registrable Note that is a part thereof) are referred to,
such provisions or defined terms are incorporated herein by reference.
General
The Registrable Notes are unsecured general obligations of the
Company subordinate in right of payment to certain other obligations of
the Company as described under "-Subordination," and convertible into
Common Stock as described under "-Conversion Rights." The Registrable
Notes will mature on December 15, 2003, unless earlier redeemed at the
option of the Company or repurchased by the Company at the option of
the holder upon the occurrence of a Change in Control (as defined).
The Registrable Notes bear interest from the most recent date
that interest has been paid, or if no interest has been paid, from
December 18, 1996, at 6% per annum. Interest is payable semi-annually
on June 15 and December 15, commencing on June 15, 1997, to holders of
record at the close of business on the preceding June 1 and December 1,
respectively. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Principal will be payable, and the Registrable Notes may be
presented for conversion, registration of transfer and exchange,
without service charge, at the office of the Company maintained by the
Company for such purposes in New York, New York, which shall initially
be the office or agency of the Trustee in New York, New York.
The Indenture does not contain any financial covenants or any
restrictions on the payment of dividends, the repurchase of securities
of the Company or the incurrence of Senior Indebtedness or other
indebtedness. The Indenture contains no covenants or other provisions
to afford protection to holders of Notes in the event of a highly
leveraged transaction or a change in control of the Company except to
the extent described under "-Repurchase at Option of Holders Upon a
Change in Control" below.
Conversion Rights
The Holder of any Registrable Note will have the right at the
Holders option, to convert any portion of the principal amount of any
Registrable Note that is an integral multiple of $1,000 into shares of
Common Stock at any time on or after March 18, 1997 and prior to the
close of business on the maturity date, unless previously redeemed or
repurchased, at a conversion rate of 41.2903 shares of Common Stock per
$1,000 principal amount of Notes (the "Conversion Rate") (equivalent to
a conversion price of approximately $24.219 per share of Common Stock),
subject to adjustment as described below. The right to convert a
Registrable Note called for redemption or submitted for repurchase will
terminate at the close of business on the last Business Day prior to
the Redemption Date or Repurchase Date for such Registrable Note, as
the case may be. (Section 12.1)
The right of conversion attaching to any Registrable Note may
be exercised by the Holder by delivering the Registrable Note at the
office or agency of the Trustee in the Borough of Manhattan, The City
of New York, accompanied by a duly signed and completed notice of
conversion. Such notice of conversion can be obtained from the
Trustee. Beneficial owners of interests in a Registered Global Note
may exercise their right of conversion by delivering to The Depository
Trust Company ("DTC") the appropriate instruction form for conversion
pursuant to DTC's conversion program. Such notice of conversion can be
obtained at the office of any Conversion Agent. The conversion date
will be the date on which the Registrable Note and the duly signed and
completed notice of conversion are so delivered. As promptly as
practicable on or after the conversion date, the Company will issue and
deliver to the Trustee a certificate or certificates for the number of
full shares of Common Stock issuable upon conversion, together with
payment in lieu of any fraction of a share; such certificate will be
sent by the Trustee to the Conversion Agent for delivery to the Holder.
Such shares of Common Stock issuable upon conversion of the Registrable
Notes, in accordance with the provisions of the Indenture, will be
fully paid and nonassessable and will rank pari passu with the other
shares of Common Stock of the Company outstanding from time to time.
Any Registrable Note surrendered for conversion during the period from
the close of business on any Regular Record Date to the opening of
business on the next succeeding Interest Payment Date (except
Registrable Notes (or portions thereof) called for redemption on a
Redemption Date or repurchaseable on a Repurchase Date occurring, in
either case, within such period (including any Registrable Notes (or
portions thereof) called for redemption on a Redemption Date or
submitted for repurchase on a Repurchase Date that is a Regular Record
Date or Interest Payment Date, as the case may be)) must be accompanied
by payment of an amount equal to the interest payable on such Interest
Payment Date on the principal amount of Registrable Notes being
surrendered for conversion. The interest payable on such Interest
Payment Date with respect to any Registrable Note (or portion thereof,
if applicable) which has been called for redemption on a Redemption
Date, or is repurchaseable on a Repurchase Date, occurring, in either
case, during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (including any Notes (or
portions thereof) called for redemption on a Redemption Date or
submitted for repurchase on a Repurchase Date that is a Regular Record
Date or Interest Payment Date, as the case may be), which Note (or
portion thereof, if applicable) is surrendered for conversion during
such period (or on the last Business Day prior to the Regular Record
Date or Interest Payment Date in the case of a Registrable Note (or
portions thereof) called for redemption or submitted for repurchase on
a Regular Record Date or Interest Payment Date, as the case may be),
shall be paid to the Holder of such Registrable Note being converted in
an amount equal to the interest that would have been payable on such
Registrable Note if such Registrable Note had been converted as of the
close of business on such Interest Payment Date. The interest payable
on such Interest Payment Date in respect of any Registrable Note (or
portion thereof, as the case may be) which has not been called for
redemption on a Redemption Date, or is not eligible for repurchase on a
Repurchase Date, occurring, in either case, during the period from the
close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest
Payment Date, which Registrable Note (or portion thereof, as the case
may be) is surrendered for conversion during such period, shall be paid
to the Holder of such Registrable Note as of such Regular Record Date.
Interest payable in respect of any Registrable Note surrendered for
conversion on or after an Interest Payment Date shall be paid to the
Holder of such Registrable Note as of the next preceding Regular Record
Date, notwithstanding the exercise of the right of conversion. As a
result of the foregoing provisions, Holders that surrender Registrable
Notes for conversion on a date that is not an Interest Payment Date
will not receive any interest for the period from the Interest Payment
Date next preceding the date of conversion to the date of conversion or
for any later period, even if the Registrable Notes are surrendered
after a notice of redemption (except for the payment of interest on
Registrable Notes called for redemption on a Redemption Date or
submitted for repurchase on a Repurchase Date between a Regular Record
Date and the Interest Payment Date to which it relates (including any
Registrable Notes (or portions thereof) called for redemption on a
Redemption Date or submitted for repurchase on a Repurchase Date that
is a Regular Record Date or Interest Payment Date, as the case may be),
as provided above). No other payment or adjustment for interest, or for
any dividends in respect of Common Stock, will be made upon conversion.
Holders of Common Stock issued upon conversion will not be entitled to
receive any dividends payable to holders of Common Stock as of any
record time or date before the close of business on the conversion
date. No fractional shares will be issued upon conversion but, in lieu
thereof, an appropriate amount will be paid in cash by the Company
based on the market bid price of Common Stock at the close of business
on the day of conversion. (Sections 2.2, 3.7, 12.2 and 12.3)
A Holder delivering a Registrable Note for conversion will not
be required to pay any taxes or duties in respect of the issue or
delivery of Common Stock on conversion but will be required to pay any
tax or duty which may be payable in respect of any transfer involved in
the issue or delivery of the Common Stock in a name other than that of
the Holder of the Registrable Note. Certificates representing shares
of Common Stock will not be issued or delivered unless all taxes and
duties, if any, payable by the Holder have been paid.
The Conversion Rate is subject to adjustment in certain events,
including, without duplication: (a) dividends (and other distributions)
payable in Common Stock on shares of Common Stock of the Company, (b)
the issuance to all holders of Common Stock of rights, options or
warrants entitling them to subscribe for or purchase Common Stock at
less than the then Current Market Price of such Common Stock
(determined as provided in the Indenture) as of the record date for
shareholders entitled to receive such rights, options or warrants
(provided that the Conversion Rate will be readjusted to the extent any
such rights, options or warrants are not exercised prior to the
expiration thereof), (c) subdivisions, combinations and
reclassifications of Common Stock, (d) distributions to all holders of
Common Stock of evidences of indebtedness of the Company, shares of
capital stock, cash or assets (including securities, but excluding
those dividends, rights, options, warrants and distributions referred
to above or dividends and distributions paid exclusively in cash), (e)
distributions consisting exclusively of cash (excluding any cash
portion of distributions referred to in (d) above) to all holders of
Common Stock in an aggregate amount that, combined together with (i)
other such all-cash distributions made within the preceding 12 months
in respect of which no adjustment has been made and (ii) any cash and
the fair market value of other consideration payable in respect of any
tender offer by the Company or any of its subsidiaries for Common Stock
concluded within the preceding 12 months in respect of which no
adjustment has been made exceeds 12.5% of the Company's market
capitalization (for this purpose being the product of the Current
Market Price per share of the Common Stock on the record date for such
distribution times the number of shares of Common Stock outstanding) on
such date, and (f) the successful completion of a tender offer made by
the Company or any of its subsidiaries for Common Stock which involves
an aggregate consideration that, together with (i) any cash and other
consideration payable in a tender offer by the Company or any of its
subsidiaries for Common Stock expiring within the 12 months preceding
the expiration of such tender offer in respect of which no adjustment
has been made and (ii) the aggregate amount of any such all-cash
distributions referred to in (e) above to all holders of Common Stock
within the 12 months preceding the expiration of such tender offer in
respect of which no adjustments have been made, exceeds 12.5% of the
Company's market capitalization on the expiration of such tender offer.
The Company reserves the right to make such reductions in the
Conversion Rate in addition to those required in the foregoing
provisions as it considers to be advisable in order that any event
treated for United States federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the recipients. No
adjustment of the Conversion Rate will be required to be made until the
cumulative adjustments amount to 1.0% or more of the Conversion Rate.
(Section 12.4) The Company will compute any adjustments to the
Conversion Rate pursuant to this paragraph and will give notice by mail
to Holders of the Registrable Notes of any adjustments. (Section 12.5)
In case of any consolidation or merger of the Company with or
into another Person or any merger of another Person into the Company
(other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of the Common Stock), or in case
of any sale, transfer or lease of all or substantially all of the
assets of the Company, each Registrable Note then outstanding will,
without the consent of the Holder of any Registrable Note, become
convertible only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale, transfer or
lease by a holder of the number of shares of Common Stock into which
such Registrable Note was convertible immediately prior thereto
(assuming such holder of Common Stock failed to exercise any rights of
election and that such Note was then convertible). (Section 12.11)
The Company from time to time may increase the Conversion Rate
by any amount for any period of at least 20 days, in which case the
Company shall give at least 15 days' notice of such increase, if the
Board of Directors has made a determination that such increase would be
in the best interests of the Company, which determination shall be
conclusive. No such increase shall be taken into account for purposes
of determining whether the closing price of the Common Stock exceeds
the Conversion Price by 105% in connection with an event which
otherwise would be a Change in Control. (Section 12.4)
If at any time the Company makes a distribution of property to
its stockholders which would be taxable to such stockholders as a
dividend for United States federal income tax purposes (e.g.,
distributions of evidences of indebtedness or assets of the Company,
but generally not stock dividends on common stock or rights to
subscribe for common stock) and, pursuant to the anti-dilution
provisions of the Indenture, the number of shares into which
Registrable Notes are convertible is increased, such increase may be
deemed for federal income tax purposes to be the payment of a taxable
dividend to Holders of Registrable Notes. See "United States Taxation-
United States Holders-Dividends."
Subordination
The payment of the principal of, premium, if any, and interest
on the Registrable Notes (including any Liquidated Damages (as
defined)) and any amounts payable upon the redemption or the repurchase
of the Registrable Notes will be subordinated in right of payment to
the extent set forth in the Indenture to the prior payment in full of
the principal of, premium, if any, interest and other amounts in
respect of all Senior Indebtedness of the Company.
"Senior Indebtedness" is defined in the Indenture to mean: the
principal of (and premium, if any) and interest (including all interest
accruing subsequent to the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is
allowable as a claim in any such proceeding) on, and all fees and other
amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on
the date of the Indenture or thereafter created, incurred or assumed:
(a) indebtedness of the Company evidenced by credit or loan agreements,
notes, bonds, debentures, or other written obligations, (b) all
obligations of the Company for money borrowed, (c) all obligations of
the Company evidenced by a note or similar instrument given in
connection with the acquisition of any businesses, properties or assets
of any kind, (d) obligations of the Company as lessee (i) under leases
required to be capitalized on the balance sheet of the lessee under
generally accepted accounting principles and (ii) under other leases
for facilities, equipment or related assets, whether or not
capitalized, entered into or leased after the date of the Indenture for
financing purposes (as determined by the Company), (e) obligations of
the Company under interest rate and currency swaps, caps, floors,
collars, hedge agreements, forward contracts, or similar agreements or
arrangements, (f) all obligations of the Company with respect to
letters of credit, bankers' acceptances or similar facilities, (g) all
obligations of the Company issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable
arising in the ordinary course of business), (h) all obligations of the
type referred to in clauses (a) through (g) above of another Person and
all dividends of another Person, the payment of which, in either case,
the Company has assumed or guaranteed, or for which the Company is
responsible or liable, directly or indirectly, jointly or severally, as
obligor, guarantor or otherwise, or which is secured by a lien on
property of the Company, and (i) renewals, extensions, modifications,
replacements, restatements and refundings of, or any indebtedness or
obligation issued in exchange for, any such indebtedness or obligation
described in clauses (a) through (h) of this paragraph; provided,
however, that Senior Indebtedness shall not include the Registrable
Notes or any such indebtedness or obligation if the terms of such
indebtedness or obligation (or the terms of the instrument under which,
or pursuant to which it is issued) expressly provided that such
indebtedness or obligation is not superior in right of payment to the
Registrable Notes.
No payment on account of principal of, premium, if any, or
interest on (including any Liquidated Damages), or the redemption or
the repurchase of, the Registrable Notes may be made by the Company if
(i) a default in the payment of principal, premium, if any, or interest
(including a default under any repurchase or redemption obligation) or
other amounts with respect to any Senior Indebtedness occurs and is
continuing beyond the applicable grace period or (ii) any other event
of default occurs and is continuing with respect to Designated Senior
Indebtedness (as defined below) that permits the holders thereof to
accelerate the maturity thereof, and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company, a holder
of such Designated Senior Indebtedness or other person permitted to
give such notice under the Indenture. Payments on the Registrable
Notes may and shall be resumed (a) in the case of a payment default,
upon the date on which such default is cured or waived and (b) in the
case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received. No new
period of payment blockage may be commenced unless and until (i) 365
days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice and (ii) all scheduled payments of principal,
premium, if any, and interest on the Registrable Notes that have come
due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice. "Designated Senior Indebtedness" means the
Company's obligations under the Credit Agreement (as defined) and any
particular Senior Indebtedness in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly
provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of the Indenture (provided that such
instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the
rights of Designated Senior Indebtedness). (Sections 1.1 and 13.2) In
addition, upon any acceleration of the principal due on the Registrable
Notes as a result of an Event of Default or payment or distribution of
assets of the Company to creditors upon any dissolution, winding up,
liquidation or reorganization, whether voluntary or involuntary,
marshaling of assets, assignment for the benefit of creditors, or in
bankruptcy, insolvency, receivership or other similar proceedings of
the Company, all principal, premium, if any, and interest or other
amounts due on all Senior Indebtedness must be paid in full before the
Holders of the Registrable Notes are entitled to receive any payment.
(Sections 13.2 and 13.3) By reason of such subordination, in the event
of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Holders of the
Registrable Notes, and such subordination may result in a reduction or
elimination of payments to the Holders of the Registrable Notes.
In addition, the Registrable Notes will be structurally
subordinated to all indebtedness and other liabilities (including trade
payables and lease obligations) of the Company's subsidiaries, as any
right of the Company to receive any assets of its subsidiaries upon
their liquidation or reorganization (and the consequent right of the
Holders of the Registrable Notes to participate in those assets) will
be effectively subordinated to the claims of that subsidiary's
creditors (including trade creditors and lessors), except to the extent
that the Company itself is recognized as a creditor of such subsidiary,
in which case the claims of the Company would still be subordinate to
any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company.
The Indenture does not limit the Company's or its subsidiaries'
ability to incur Senior Indebtedness or any other indebtedness or
liabilities. The Company expects from time to time to incur additional
indebtedness and other liabilities, including Senior Indebtedness, and
also expects that its subsidiaries will from time to time incur
additional indebtedness and other liabilities. In particular, the
Company anticipates incurring significant obligations, which may
include additional Senior Indebtedness, in connection with its
manufacturing program. See "Risk Factors-Leverage and Subordination."
Redemption
The Registrable Notes may not be redeemed at the option of the
Company prior to December 16, 1999. On and after December 16, 1999,
the Registrable Notes may be redeemed, in whole or in part, at the
option of the Company, at the redemption prices specified below, upon
not less than 20 nor more than 60 days' prior notice as provided under
"-Notices" below.
The redemption price (expressed as a percentage of principal
amount) is as follows for the 12-month periods beginning on December 15
of the following years (or December 16, in the case of 1999):
Year Redemption Price
------- -----------------
1999 . . . . . . . . . . . . . . . 103.429%
2000 . . . . . . . . . . . . . . . 102.571
2001 . . . . . . . . . . . . . . . 101.714
2002 . . . . . . . . . . . . . . . 100.857
No sinking fund is provided for the Registrable Notes.
Payment and Conversion
The principal of Registrable Notes will be payable in U.S.
dollars, against surrender thereof at the office or agency of the
Trustee in the Borough of Manhattan, The City of New York, by dollar
check drawn on, or by transfer to a dollar account (such transfer to be
made only to Holders of an aggregate principal amount of Registrable
Notes in excess of U.S. $2,000,000). Payment of any installment of
interest on Registrable Notes will be made to the Person in whose name
such Registrable Notes (or any predecessor Registrable Note) is
registered at the close of business on the June 1 or the December 1
(whether or not a Business Day) immediately preceding the relevant
Interest Payment Date (a "Regular Record Date"). Payments of such
interest will be made by a dollar check mailed to the Holder at such
Holder's registered address or, upon application by the Holder thereof
to the Trustee not later than the applicable Regular Record Date, by
transfer to a dollar account (such transfer to be made only to Holders
of an aggregate principal amount of Notes in excess of U.S.
$2,000,000). No transfer to a dollar account will be made unless the
Trustee has received written wire instructions not less than 15 days
prior to the relevant payment date. (Section 2.2)
Any payment on the Registrable Notes due on any day which is
not a Business Day need not be made on such day, but may be made on the
next succeeding Business Day with the same force and effect as if made
on such due date, and no interest shall accrue on such payment for the
period from and after such date. "Business Day", when used with
respect to any place of payment, place of conversion or any other
place, as the case may be, means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in
such place of payment, place of conversion or other place, as the case
may be, are generally authorized or obligated by law or executive order
to close; provided, however, that a day on which banking institutions
in San Jose, California, Boston, Massachusetts, New York, New York or
London, England are generally authorized or obligated by law or
executive order to close shall not be a Business Day for certain
purposes. (Sections 1.1 and 2.2)
Registrable Notes may be surrendered for conversion at the
office or agency of the Trustee in the Borough of Manhattan, The City
of New York. Registrable Notes surrendered for conversion must be
accompanied by appropriate notices and any payments in respect of
interest or taxes, as applicable, as described above under "-Conversion
Rights". (Sections 2.2 and 12.2)
The Company has initially appointed the Trustee as Paying Agent
and Conversion Agent. The Company may at any time terminate the
appointment of any Paying Agent or Conversion Agent and appoint
additional or other Paying Agents and Conversion Agents, provided that
until the Registrable Notes have been delivered to the Trustee for
cancellation, or moneys sufficient to pay the principal of, premium, if
any, and interest on the Registrable Notes have been made available for
payment and either paid or returned to the Company as provided in the
Indenture, it will maintain an office or agency in the Borough of
Manhattan, The City of New York for surrender of Registrable Notes for
conversion, which shall initially be an office or agency of the Trustee
as provided in the Indenture. Notice of any such termination or
appointment and of any change in the office through which any Paying
Agent or Conversion Agent will act will be given in accordance with "-
Notices" below. (Section 10.2)
All moneys deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of principal of,
premium, if any, or interest on any Registrable Notes which remain
unclaimed at the end of two years after such payment has become due and
payable will be repaid to the Company, and the Holder of such
Registrable Note will thereafter look only to the Company for payment
thereof. (Section 10.3).
Repurchase at Option of Holders Upon a Change in Control
If a Change in Control (as defined) occurs, each Holder of
Registrable Notes shall have the right, at the Holder's option, to
require the Company to repurchase all of such Holder's Registrable
Notes not theretofore called for redemption, or any portion of the
principal amount thereof that is $1,000 or an integral multiple of
$1,000 in excess thereof, on the date (the "Repurchase Date") that is
45 days after the date of the Company Notice (as defined), at a price
equal to 100% of the principal amount of the Registrable Notes to be
repurchased, together with interest accrued to the Repurchase Date (the
"Repurchase Price"). (Section 14.1)
The Company may, at its option, in lieu of paying the
Repurchase Price in cash, pay the Repurchase Price in Common Stock
valued at 95% of the average of the closing bid prices of the Common
Stock for the five trading days immediately preceding the second
trading day prior to the Repurchase Date; provided that payment may not
be made in Common Stock unless the Company satisfies certain conditions
with respect to such payment prior to the Repurchase Date as provided
in the Indenture. (Sections 14.1 and 14.2)
Within 30 days after the occurrence of a Change in Control, the
Company is obligated to give to all Holders of the Registrable Notes
notice, as provided in the Indenture (the "Company Notice"), of the
occurrence of such Change in Control and of the repurchase right
arising as a result thereof, or, at the request of the Company on or
before the 15th day after the occurrence, the Trustee shall give the
Company Notice. The Company must also deliver a copy of the Company
Notice to the Trustee. To exercise the repurchase right, a Holder of
Registrable Notes must deliver on or before the 30th day after the date
of the Company Notice irrevocable written notice to the Trustee of the
Holder's exercise of such right, together with the Registrable Notes
with respect to which the right is being exercised. (Section 14.3)
A "Change in Control" shall be deemed to have occurred at such
time after the original issuance of the Registrable Notes as there
shall occur:
(i) the acquisition by any Person (including any
syndicate or group deemed to be a "person" under Section 13(d)(3) of
the Exchange Act) of beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or series
of transactions, of shares of capital stock of the Company entitling
such Person to exercise 50% or more of the total voting power of all
shares of capital stock of the Company entitled to vote generally in
elections of directors, other than any such acquisition by the Company,
any subsidiary of the Company or any employee benefit plan of the
Company; or
(ii) any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another Person
into the Company, or any sale or transfer of all or substantially all
of the assets (other than to a wholly-owned Subsidiary of the Company)
of the Company to any other Person (other than (a) any such transaction
pursuant to which the holders of 50% or more of the total voting power
of all shares of capital stock of the Company entitled to vote
generally in elections of directors immediately prior to such
transaction have, directly or indirectly, at least 50% or more of the
total voting power of all shares of capital stock of the continuing or
surviving corporation entitled to vote generally in elections of
directors of the continuing or surviving corporation immediately after
such transaction and (b) a merger (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock of the Company or (y) which is effected solely
to change the jurisdiction of incorporation of the Company and results
in a reclassification, conversion or exchange of outstanding shares of
Common Stock into solely shares of common stock); provided, however,
that a Change in Control shall not be deemed to have occurred if either
(a) the closing price per share of the Common Stock for any five
trading days within the period of 10 consecutive trading days ending
immediately after the later of the Change in Control or the public
announcement of the Change in Control (in the case of a Change in
Control under clause (i) above) or the period of 10 consecutive trading
days ending immediately before the Change in Control (in the case of a
Change in Control under clause (ii) above) shall equal or exceed 105%
of the Conversion Price of the Registrable Notes in effect on each such
trading day, or (b) all of the consideration (excluding cash payments
for fractional shares and cash payments made pursuant to dissenters'
appraisal rights) in a merger or consolidation constituting the Change
in Control described in clause (i) and/or clause (ii) above consists of
shares of common stock traded on a national securities exchange or
quoted on the Nasdaq National Market (or will be so traded or quoted
immediately following the Change in Control) and as a result of such
transaction or transactions the Notes become convertible solely into
such common stock. The "Conversion Price" is equal to $1,000 divided by
the Conversion Rate. "Beneficial Owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Commission under the
Exchange Act, as in effect on the date of execution of the Indenture.
"Person" includes any syndicate or group which would be deemed to be a
"person" under section 13(d)(3) of the Exchange Act. (Section 14.4)
Rule 13e-4 under the Exchange Act requires the dissemination of
certain information to Securityholders in the event of an issuer tender
offer and may apply in the event that the repurchase option becomes
available to Holders of the Registrable Notes. The Company will comply
with this rule to the extent applicable at that time.
The Company may, to the extent permitted by applicable law, at
any time purchase Registrable Notes in the open market or by tender at
any price or by private agreement. Any Registrable Note so purchased
by the Company may, to the extent permitted by applicable law and
subject to restrictions contained in the Purchase Agreement, be
reissued or resold or may, at the Company's option, be surrendered to
the Trustee for cancellation. Any Registrable Notes surrendered as
aforesaid may not be reissued or resold and will be canceled promptly.
The foregoing provisions would not necessarily afford Holders
of the Registrable Notes protection in the event of highly leveraged or
other transactions involving the Company that may adversely affect
Holders.
The Company's ability to repurchase Notes upon the occurrence
of a Change in Control is subject to limitations. There can be no
assurance that the Company would have the financial resources, or would
be able to arrange financing, to pay the Repurchase Price for all the
Notes that might be delivered by Holders of Notes seeking to exercise
the repurchase right. Moreover, although under the Indenture the
Company may elect, subject to satisfaction of certain conditions, to
pay the repurchase price for the Notes using shares of Common Stock,
and the Company's ability to repurchase Notes may be limited or
prohibited by the terms of any future borrowing arrangements, including
Senior Indebtedness existing at the time of a Change in Control. The
Company's ability to repurchase Notes with cash may also be limited by
the terms of its subsidiaries' borrowing arrangements due to dividend
restrictions. Any failure by the Company to repurchase the Notes when
required following a Change in Control would result in an Event of
Default under the Indenture whether or not such repurchase is permitted
by the subordination provisions of the Indenture. (Section 5.1) Any
such default may, in turn, cause a default under Senior Indebtedness of
the Company. Moreover, the occurrence of a Change in Control would
result in an event of default under the Company's Credit Agreement and
may cause an event of default under terms of other Senior Indebtedness
of the Company. As a result, in each case, any repurchase of the Notes
would, absent a waiver, be prohibited under the subordination
provisions of the Indenture until the Senior Indebtedness is paid in
full. In addition, the Company's repurchase of Notes as a result of the
occurrence of a Change in Control may be prohibited or limited by, or
create an event of default under, the cross-default provisions and
other terms of agreements related to borrowings which the Company may
enter into from time to time, including agreements relating to Senior
Indebtedness. See "-Subordination", "Risk Factors-Leverage and
Subordination," and "Risk Factors-Limitations on Repurchase of
Registrable Notes."
Mergers and Sales of Assets by the Company
The Company may not consolidate with or merge into any other
Person (in a transaction in which the Company is not the surviving
corporation) or convey, transfer, sell or lease its properties and
assets substantially as an entirety to any Person, unless (a) the
Person formed by such consolidation or into or with which the Company
is merged or the Person to which the properties and assets of the
Company are so conveyed, transferred, sold or leased shall be a
corporation, limited liability company, partnership or trust organized
and existing under the laws of the United States, any State thereof or
the District of Columbia and, if other than the Company, shall
expressly assume the payment of the principal of, premium, if any, and
interest on the Notes and the performance of the other covenants of the
Company under the Indenture, and (b) immediately after giving effect to
such transaction, no Event of Default, and no event that after notice
or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing. (Section 7.1)
Events of Default
The following will be Events of Default under the Indenture:
(a) failure to pay principal of or premium, if any, on any Note when
due, whether or not such payment is prohibited by the subordination
provisions of the Notes and the Indenture; (b) failure to pay any
interest (including any Liquidated Damages) on any Note when due,
continuing for 30 days, whether or not such payment is prohibited by
the subordination provisions of the Notes and the Indenture; (c)
failure to provide a Company Notice in the event of a Change in
Control, whether or not the payment of the Repurchase Price is
prohibited by the subordination provisions of the Notes and the
Indenture; (d) failure to perform any other covenant of the Company in
the Indenture, continuing for 60 days (plus an additional 60 days in
the case of defaults subject to cure, provided the Company commences
such cure within the initial 60 days and is diligently pursuing such
cure) after written notice as provided in the Indenture; (e) any
indebtedness for money borrowed by the Company in an outstanding
principal amount in excess of $20,000,000 is not paid at final maturity
or upon acceleration thereof and such default in payment or
acceleration is not cured or rescinded within 30 days after written
notice as provided in the Indenture; and (f) certain events of
bankruptcy, insolvency or reorganization. (Section 5.1) Subject to the
provisions of the Indenture relating to the duties of the Trustee in
case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Trustee reasonable
indemnity. (Section 6.3) Subject to compliance with all rules or laws
and the Indenture, the Holders of a majority in aggregate principal
amount of the Outstanding Notes will 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. (Section 5.12)
If an Event of Default (other than as specified in clause (f)
above) shall occur and be continuing, either the Trustee or the Holders
of at least 25% in principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after
such acceleration but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount
of Outstanding Notes may, under certain circumstances, rescind and
annul such acceleration if all Events of Default, other than the
nonpayment of principal of the Notes which have become due solely by
such declaration of acceleration, have been cured or waived as provided
in the Indenture. If an Event of Default as specified in clause (f)
above occurs and is continuing, then the principal of, and accrued
interest on, all the Notes shall ipso facto become immediately due and
payable without any declaration or other act on the part of the Holders
of the Notes or the Trustee. (Section 5.2) For information as to
waiver of defaults, see "-Meetings, Modification and Waiver."
No Holder of any Registrable Note will have any right to
institute any proceeding with respect to the Indenture or for any
remedy thereunder, unless such Holder shall have previously given to
the Trustee written notice of a continuing Event of Default and the
Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Outstanding Notes a
direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. (Section 5.7) However, such
limitations do not apply to a suit instituted by a Holder of a
Registrable Note for the enforcement of payment of the principal of,
premium, if any, or interest on such Registrable Note (including
Liquidated Damages, if any) on or after the respective due dates
expressed in such Registrable Note or of the right to convert such
Registrable Note in accordance with the Indenture. (Section 5.8)
The Company will be required to furnish to the Trustee annually
a statement as to the performance by the Company of certain of its
obligations under the Indenture and as to any default in such
performance. (Section 10.9)
Meetings, Modification and Waiver
The Indenture contains provision for convening meetings of the
Holders of Notes to consider matters affecting their interests.
(Article IX)
Certain limited modifications of the Indenture may be made
without the necessity of obtaining the consent of the Holders of the
Notes. Other modifications and amendments of the Indenture may be
made, and certain past defaults by the Company may be waived, either
(i) with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes at the time Outstanding or
(ii) by the adoption of a resolution, at a meeting of Holders of the
Notes at which a quorum is present, by the Holders of the lesser of (a)
not less than a majority in aggregate principal amount of the Notes at
the time Outstanding and (b) at least 66 2/3% in aggregate principal
amount of the Notes represented at such meeting. However, no such
modification or amendment may, without the consent of the Holder of
each Outstanding Note affected thereby, (a) change the Stated Maturity
of the principal of, or any installment of interest on, any Note, (b)
reduce the principal amount of, or the premium, if any, or interest on,
any Note, (c) reduce the amount payable upon a redemption or mandatory
repurchase, (d) modify the provisions with respect to the repurchase
right of the Holders in a manner adverse to the Holders, (e) change the
place or currency of payment of principal of, premium, if any, or
interest on, any Note (including any payment of Liquidated Damages or
the Redemption Price or the Repurchase Price in respect of such Note),
(f) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (g) modify the obligation of
the Company to maintain an office or agency in New York City, (h)
except as otherwise permitted or contemplated by provisions concerning
consolidation, merger, conveyance, transfer, sale or lease of all or
substantially all of the property and assets of the Company, adversely
affect the right of Holders to convert any of the Notes other than as
provided in the Indenture, (i) modify the subordination provisions in a
manner adverse to the Holders of the Notes, (j) reduce the above-stated
percentage of Outstanding Notes necessary to modify or amend the
Indenture, (k) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, (l)
reduce the percentage in aggregate principal amount of Outstanding
Notes required for the adoption of a resolution or the quorum required
at any meeting of Holders of Notes at which a resolution is adopted,
(m) modify the obligation of the Company to deliver information
required under Rule 144A to permit resales of Notes and Common Stock
issuable upon conversion thereof in the event the Company ceases to be
subject to certain reporting requirements under the United States
securities laws or (n) modify the obligations of the Company not to
resell the Notes and to use its reasonable efforts to prevent its
affiliates from reselling the Notes. (Sections 8.2 and 5.13). The
quorum at any meeting called to adopt a resolution will be Persons
holding or representing a majority in aggregate principal amount of the
Notes at the time Outstanding and, at any reconvened meeting adjourned
for lack of a quorum, 25% of such aggregate principal amount. (Section
9.4)
The Holders of a majority in aggregate principal amount of the
Outstanding Notes may waive compliance by the Company with certain
restrictive provisions of the Indenture by written consent or by the
adoption of a resolution at a meeting. (Section 10.13) The Holders of
a majority in aggregate principal amount of the Outstanding Notes also
may waive any past default under the Indenture, except a default in the
payment of principal, premium, if any, or interest, by written consent.
(Section 5.13)
Registration Rights
In connection with the Original Offering, the Company entered
into a registration rights agreement with the Initial Purchasers (the
"Registration Agreement") pursuant to which the Company agreed to, at
the Company's expense for the benefit of the Holders of the Registrable
Notes and the shares of Common Stock issuable upon conversion thereof
(together, the "Registrable Securities"), (i) file with the Commission
within 90 days after the date of original issuance of the Registrable
Notes, a registration statement (the "Shelf Registration Statement")
covering resales of the Registrable Securities, (ii) use reasonable
efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act within 180 days after the date of
original issuance of the Registrable Notes and (iii) use reasonable
efforts to keep effective the Shelf Registration Statement until three
years after the date of the original issuance of the Registrable Notes
or such earlier date as all Registrable Securities shall have been
disposed of or on which all Registrable Securities held by persons that
are not affiliates of the Company may be resold without registration
pursuant to Rule 144(k) under the Securities Act (the "Effectiveness
Period"). The Company will be permitted to suspend the use of this
Prospectus which is part of this Shelf Registration Statement in
connection with the sales of the Registrable Securities during certain
periods of time under certain circumstances relating to pending
corporate developments, public filing with the Commission and other
events. The Company will provide to each holder of Registrable
Securities copies of this Prospectus that is a part of this Shelf
Registration Statement, notify each holder when this Shelf Registration
Statement has become effective and take certain other actions as are
required to permit public resales of the Registrable Securities. A
holder of Registrable Securities that sells such Registrable Securities
pursuant to this Shelf Registration Statement will be required to be
named as a selling security holder in the related prospectus and to
deliver a prospectus to purchasers, will be subject to certain of the
civil liability provisions under the Securities Act in connection with
such sales and will be bound by the provisions of the Registration
Agreement, including certain indemnification obligations.
In the event that this Shelf Registration Statement ceases to
be effective for more than 90 days or the Company suspends the use of
this Prospectus which is a part hereof for more than 90 days, whether
or not consecutive, during any 12-month period then the interest rate
borne by Registrable Notes will increase by an additional one-half of
one percent (0.50%) per annum from the 91st day of the applicable
12-month period this Shelf Registration Statement ceases to be
effective or the Company suspends the use of this Prospectus which is a
part thereof, as the case may be, until the earlier of such time as (i)
this Shelf Registration Statement or another Shelf Registration
Statement again becomes effective, (ii) the use of the related
Prospectus ceases to be suspended or (iii) the Effectiveness Period
expires. Registrable Securities that have been sold pursuant to this
Shelf Registration Statement or Rule 144 prior to the occurrence of a
Registration Default will not be entitled to Liquidated Damages.
Book-Entry; Delivery and Form; Global Certificates
The Registrable Notes may be represented by one or more fully
registered global notes (the "Global Note") as well as Registrable
Notes in definitive form registered in the name of individual
purchasers or their nominees. Each such Global Note will be deposited
upon issuance with, or on behalf of, DTC and registered in the name of
DTC or its nominee (the "Global Note Registered Owner") or will remain
in the custody of the Trustee pursuant to a FAST Balance Certificate
Agreement between DTC and the Trustee. Except as set forth below, the
Global Note may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee.
DTC is a limited purpose trust company organized under the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities
for its participant organizations (collectively, the "Participants")
and to facilitate the clearance and settlement of transactions in those
securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and
certain other organizations. Access to DTC's system is also available
to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or
the Indirect Participants. The ownership interest and transfer of
ownership interest of each actual purchaser of each security held by or
on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
Pursuant to procedures established by DTC, (i) upon deposit of
the Global Note, DTC will credit the accounts of Participants with
portions of the principal amount of the Global Note and (ii) ownership
of such interests in the Global Note will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained
by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial
interests in the Global Note). The laws of some states require that
certain persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer Registrable Notes
will be limited to that extent.
Except as described below, owners of interests in the Global
Note will not have Registrable Notes registered in their names, will
not receive physical delivery of Registrable Notes in definitive form
and will not be considered the registered owners thereof under the
Indenture for any purpose.
None of the Company, the Trustee, nor any agent of the Company
or the Trustee will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's records relating to or
payments made on account of beneficial ownership interests in the
Global Note, or for maintaining, supervising or reviewing any of DTC's
records or any Participant's records relating to the beneficial
ownership interests in the Global Note or (ii) any other matter
relating to the actions and practices of DTC's or any of its
Participants.
Payments in respect of the principal of, premium, if any, and
interest on any Registrable Notes registered in the name of the Global
Note Registered Owner on any relevant record date will be payable by
the Trustee to the Global Note Registered Owner in its capacity as the
registered holder under the Indenture. Under the terms of the
Indenture, the Company and the Trustee will treat the person in whose
names the Registrable Notes, including the Global Note, are registered
as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the
Company, the Trustee, nor any agent of the Company or the Trustee has
nor will have any responsibility or liability for the payment of such
amounts to beneficial owners of the Registrable Notes or for any other
matter relating to actions or practices of DTC or any of its
Participants. The Company understands that DTC's current practice,
upon receipt of any payment in respect of securities such as the
Registrable Notes (including principal and interest), is to credit the
accounts of the relevant Participants with the payment on the payment
date, in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the relevant security as
shown on the records of DTC (unless DTC has reason to believe it will
not receive payment on such payment date). Payments by the
Participants and the Indirect Participants to the beneficial owners of
Registrable Notes will be governed by standing instructions and
customary practices and will be the responsibility of Participants or
the Indirect Participant, and the beneficial owners and not the
responsibility of the DTC, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by DTC or any of
its Participants in identifying the beneficial owners of the
Registrable Notes, and the Company and the Trustee may conclusively
rely on and will be protected in relying on instructions from the
Global Note Registered Owner for all purposes.
So long as DTC, or its nominee, is the registered owner or
holder of a Global Note, DTC or such nominee, as the case may be, will
be considered the sole owner or holder of the Registrable Notes
represented by such Global Note for all purposes under the Indenture
and the Registrable Notes. No beneficial owner of an interest in a
Global Note will be able to transfer the interest except in accordance
with DTC's applicable procedures, in addition to those provided for
under the Indenture. Transfers between Participants in DTC will be
effected in the ordinary way in accordance with DTC rules.
The Company expects that DTC will take any action permitted to
be taken by a holder of Registrable Notes (including the presentation
of Registrable Notes for exchange as described below) only at the
direction of one or more Participants to whose account the DTC
interests in a Global Note is credited and only in respect of such
portion of the aggregate principal amount of the Registrable Notes as
to which such Participant or Participants has or have given such
direction.
Although the Company expects that DTC will agree to the
foregoing procedures in order to facilitate transfers of interests in a
Global Note among Participants of DTC, it is under no obligation to
perform or continue to perform such procedures, and such procedures may
be discontinued at any time. Neither the Company nor the Trustee will
have any responsibility for the performance by DTC or its Participants
or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a
depositary for a Global Note and a successor depositary is not
obtained, the Company will issue definitive certificated Registrable
Notes in exchange for a Global Note. Such definitive certificated
Registrable Notes shall be registered in names of the owners of the
beneficial interests in the Global Note as provided by the
Participants. Notes issued in definitive certificated form will be
fully registered, without coupons, in minimum denominations of $1,000
and integral multiples of $1,000 above that amount. Upon issuance of
Registrable Notes in definitive certificated form, the Trustee is
required to register the Registrable Notes in the name of, and cause
the Registrable Notes to be delivered to, the person or persons (or the
nominee thereof) identified as the beneficial owner as DTC shall
direct.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for
the accuracy thereof.
Transfer and Exchange
A holder may transfer or exchange Registrable Notes in
accordance with the Indenture. The Registrar and the Trustee may
require a holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a
holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any
Registrable Note selected for redemption. Also, the Company is not
required to transfer or exchange any Registrable Note for a period of
15 days before a selection of Registrable Notes to be redeemed.
The registered holder of a Registrable Note will be treated as
the owner of it for all purposes.
Title
The Company, the Trustee, any Paying Agent and any Conversion
Agent may treat the registered owner (as reflected in the Security
Register) of any Registrable Note as the absolute owner thereof
(whether or not such Note shall be overdue) for the purpose of making
payment and for all other purposes. (Section 2.2)
Notices
Notice to Holders of the Registrable Notes will be given by
mail to the addresses of such Holders as they appear in the Security
Register. Such notices will be deemed to have been given on the date
of such mailing. (Sections 1.1 and 1.6)
Notice of a redemption of Registrable Notes will be given at
least once not less than 20 nor more than 60 days prior to the
redemption date (which notice shall be irrevocable) and will specify
the redemption date.
Replacement of Notes
Registrable Notes that become mutilated, destroyed, stolen or
lost will be replaced by the Company at the expense of the Holder upon
delivery to the Trustee of the Registrable mutilated Notes or evidence
of the loss, theft or destruction thereof satisfactory to the Company
and the Trustee. In the case of a lost, stolen or destroyed Registrable
Note, indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Registrable Note before a
replacement Note will be issued. (Section 3.6)
Governing Law
The Indenture and the Notes will be governed by and construed
in accordance with the laws of the State of New York, United States of
America. (Section 1.11)
The Trustee
In case an Event of Default shall occur (and shall not be
cured), the Trustee will be required to use the degree of care of a
prudent person in the conduct of his own affairs in the exercise of its
powers. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture
at the request of any of the Holders of Registrable Notes, unless they
shall have offered to the Trustee reasonable security or indemnity.
(Sections 6.1 and 6.3)
Notes Issued in Reliance upon Regulation S
The Notes issued in the Original Offering in reliance upon
Regulation S (the "Regulation S Notes") are not being registered
pursuant to the Registration Statement of which this Prospectus forms a
part. The Regulation S Notes issued under the Indenture are governed
by substantially similar terms as the Registrable Notes, except with
respect to certain mechanical provisions relating to form and
denomination, payment and conversion, redemption for taxation reasons
and payments of additional amounts. For a complete description of the
terms and conditions of the Regulation S Notes, see the detailed
provisions of the Indenture.
UNITED STATES TAXATION
The following is a summary of certain material United States
federal income and estate tax considerations relating to the purchase,
ownership and disposition of the Notes and of Common Stock into which
Notes may be converted, but does not purport to be a complete analysis
of all the potential tax considerations relating thereto. This summary
is based on the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the applicable Treasury Regulations promulgated
or proposed thereunder ("Treasury Regulations"), judicial authority and
current administrative rulings and practice, all of which are subject
to change, possibly on a retroactive basis. This summary deals only
with holders that will hold Registrable Notes and Common Stock into
which Registrable Notes may be converted as "capital assets" (within
the meaning of Section 1221) and does not address tax considerations
applicable to investors that may be subject to special tax rules, such
as banks, tax-exempt organizations, insurance companies, dealers in
securities or currencies, persons that will hold Registrable Notes as a
position in a hedging transaction, "straddle" or "conversion
transaction" for tax purposes, or persons that have a "functional
currency" other than the U.S. dollar. This summary discusses the tax
considerations applicable to the initial purchasers of the Registrable
Notes who purchase the Registrable Notes at their "issue price" as
defined in Section 1273 of the Code and does not discuss the tax
considerations applicable to subsequent purchasers of the Registrable
Notes. The Company has not sought any ruling from the Internal Revenue
Service ("IRS") with respect to the statements made and the conclusions
reached in the following summary, and there can be no assurance that
the IRS will agree with such statements and conclusions. INVESTORS
CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME AND
ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
United States Holders
As used herein, the term "United States Holder" means the
beneficial owner of a Note or Common Stock that for United States
federal income tax purposes is (i) a citizen or resident of the United
States, (ii) treated as a domestic corporation or domestic partnership,
or (iii) an estate or trust that is subject to United States federal
income taxation on a net income basis in respect of the Registrable
Notes or Common Stock.
Payment of Interest
Interest on a Note generally will be includable in the income
of a United States Holder as ordinary income at the time such interest
is received or accrued, in accordance with such Holder's method of
accounting for United States federal income tax purposes. The
Registrable Notes will not have original issue discount.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange or redemption of a Registrable Note, a
United States Holder generally will recognize capital gain or loss
equal to the difference between (i) the amount of cash proceeds and the
fair market value of any property received on the sale, exchange or
redemption (except to the extent such amount is attributable to accrued
interest income, which is taxable as ordinary income) and (ii) such
Holder's adjusted tax basis in the Registrable Note. A United States
Holder's adjusted tax basis in a Registrable Note generally will equal
the cost of the Registrable Note to such Holder, less any principal
payments received by such Holder. Such capital gain or loss will be
long-term capital gain or loss if the United States Holder's holding
period in the Registrable Note is more than one year at the time of
sale, exchange or redemption.
Conversion of the Notes
A United States Holder generally will not recognize any income,
gain or loss upon conversion of a Registrable Note into Common Stock,
except with respect to cash received in lieu of a fractional share of
Common Stock. Such Holder's tax basis in the Common Stock received on
conversion of a Registrable Note will be the same as such Holder's
adjusted tax basis in the Registrable Note at the time of conversion
(reduced by any basis allocable to a fractional share interest), and
the holding period for the Common Stock received on conversion will
generally include the holding period of the Registrable Note converted.
Cash received in lieu of a fractional share of Common Stock
upon conversion will be treated as a payment in exchange for the
fractional share of Common Stock. Accordingly, the receipt of cash in
lieu of a fractional share of Common Stock generally will result in
capital gain or loss (measured by the difference between the cash
received for the fractional share and the United States Holder's
adjusted tax basis in the fractional share).
Dividends
The amount of any distribution by the Company in respect of the
Common Stock will be equal to the amount of cash and the fair market
value, on the date of distribution, of any property distributed.
Generally, distributions will be treated as a dividend, subject to tax
as ordinary income, to the extent of the Company's current or
accumulated earnings and profits, then as a tax-free return of capital
to the extent of the Holder's tax basis in the Common Stock and
thereafter as gain from the sale of exchange of such stock.
In general, a dividend distribution to a corporate United
States Holder will qualify for the 70% dividends received deduction if
the Holder owns less than 20% of the voting power and value of the
Company's stock (other than any non-voting, non-convertible,
non-participating preferred stock). A corporate United States Holder
that owns 20% or more of the voting power and value of the Company's
stock (other than any non-voting, non-convertible, non-participating
preferred stock) generally will qualify for an 80% dividends received
deduction. The dividends received deduction is subject, however, to
certain holding period, taxable income and other limitations.
If at any time (i) the Company makes a distribution of cash or
property to its stockholders or purchases Common Stock and such
distribution or purchase would be taxable to such stockholders as a
dividend for United States federal income tax purposes (e.g.,
distributions of evidences of indebtedness or assets of the Company,
but generally not stock dividends or rights to subscribe for Common
Stock) and, pursuant to the anti-dilution provisions of the Indenture,
the Conversion Rate of the Registrable Notes is increased, or (ii) the
Conversion Rate of the Registrable Notes is increased at the discretion
of the Company, such increase in Conversion Rate may be deemed to be
the payment of a taxable dividend to United States Holders of
Registrable Notes (pursuant to Section 305 of the Code). Such Holders
of Registrable Notes could therefore have taxable income as a result of
an event pursuant to which they received no cash or property.
Sale of Common Stock
Upon the sale or exchange of Common Stock, a United States
Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash and the fair market value of
any property received upon the sale or exchange and (ii) such Holder's
adjusted tax basis in the Common Stock. Such capital gain or loss will
be long-term if the United States Holder's holding period in the Common
Stock is more than one year at the time of the sale or exchange. A
United States Holder's basis and holding period in Common Stock
received upon conversion of a Registrable Note are determined as
discussed above under "-Conversion Rights".
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to
payments of principal, premium, if any, and interest on a Registrable
Note, payments of dividends on Common Stock, payments of the proceeds
of the sale of a Registrable Note and payments of the proceeds of the
sale of Common Stock to certain noncorporate United States Holders.
The payor will be required to withhold backup withholding tax at the
rate of 31% if (a) the payee fails to furnish a taxpayer identification
number ("TIN") to the payor or establish an exemption from backup
withholding, (b) the IRS notifies the payor that the TIN furnished by
the payee is incorrect, (c) there has been a notified payee
underreporting with respect to interest, dividends or original issue
discount described in Section 3406(c) of the Code or (d) there has been
a failure of the payee to certify under the penalty of perjury that the
payee is not subject to backup withholding under the Code. Any amounts
withheld under the backup withholding rules from a payment to a United
States Holder will be allowed as a credit against such Holder's United
States federal income tax and may entitle the Holder to a refund,
provided that the required information is furnished to the IRS.
SELLING SECURITYHOLDERS
The Registrable Notes offered hereby were originally issued by
the Company and sold by the Initial Purchasers, in a transaction
exempt from the registration requirements of the Securities Act, to
persons reasonably believed by such initial purchaser to be "qualified
institutional buyers" (as defined in Rule 144A under the Securities
Act), or other institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act. An
additional $19,275,000 aggregate principal amount of Notes were issued
in the Original Offering by the Company and sold by the Initial
Purchasers in compliance with the provisions of Regulation S under the
Securities Act. The Selling Securityholders (which term includes their
transferees, pledgees, donees or their successors) may from time to
time offer and sell pursuant to this Prospectus any or all of the
Registrable Notes and Common Stock issued upon conversion of the
Registrable Notes.
The following table sets forth, as of the dates indicated,
information with respect to the Selling Securityholders and the
respective principal amounts of Registrable Notes beneficially owned by
each Selling Securityholder that may be offered pursuant to this
Prospectus. Such information has been obtained from the Selling
Securityholders. None of the Selling Securityholders has, or within
the past three years has had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates,
except as noted below. Because the Selling Securityholders may offer
all or some portion of the Registrable Notes or the Common Stock
issuable upon conversion thereof pursuant to this Prospectus, no
estimate can be given as to the amount of the Registrable Notes or the
Common Stock issuable upon conversion thereof that will be held by the
Selling Holders upon termination of any such sales. In addition, the
Selling Securityholders identified below may have sold, transferred or
otherwise disposed of all or a portion of their Registrable Notes since
the date on which they provided the information regarding their
Registrable Notes in transactions exempt from the registration
requirements of the Securities Act. A subsequent listing of a Selling
Securityholder in the table after its initial listing indicates that as
of the date of the subsequent listing said Selling Securityholder owned
additional Notes which they desired to offer pursuant to this
Prospectus but is not necessarily indicative of the aggregate principal
amount of Notes held as of that date.
From time to time, Goldman, Sachs & Co. or its affiliate
provided, and they continue to provide, investment banking services to
the Company, for which they received or will receive customary fees.
None of the other Selling Securityholders has had any position, office
or other materials relationship with the Company or its affiliates
within the last three years.
Principal Amount Number of Shares of Common Stock
of Registrable -----------------------------------
Notes
Beneficially Offered Selling
Owned and Beneficially Holder Hereby
Name Offered Hereby Owned (1)(2) (2)(3)(4)
- ---------------- ---------------- ------------ ---------------
February 6, 1998
Entity
affiliated with
Merrill Lynch (5) $133,500,000 5,512,255 5,512,255
First Boston
Corporation 11,790,000 486,813 486,813
Northwestern
Mutual Life
Insurance Co 11,000,000 454,193 454,193
FMR Corp (6) 13,000,000 536,774 536,774
Bankers Trust
International PLC 10,350,000 427,350 427,350
Kellner Dileo
and Company 6,100,000 255,997 255,997
Sheperd
Investments
International,
Ltd. 5,525,000 228,126 228,126
Stark
International 5,525,000 228,126 228,126
Highbridge
Capital
Corporation 2,750,000 113,548 113,548
Lutheran
Brotherhood
Research
Corporation 2,350,000 97,032 97,032
Prudential
Equity
Management
Association 2,000,000 82,581 82,581
Smith
Barney, Inc. 1,800,000 74,323 74,323
Lutheran
Brotherhood
Research
Corporation 1,650,000 68,129 68,129
Gen Hedge/G.
Jacobs Conv
Trading 1,550,000 64,000 64,000
Putnam
Convertible
Fund, Inc. 1,500,000 61,935 61,935
Forest Fulcrum
Fund Limited
Partnership 1,300,000 53,677 53,677
High Inc
Convertible 1,000,000 41,290 41,290
Convertible Bond
Trading and
Arbitrage 750,000 30,968 30,968
McMahan Securities 750,000 30,968 30,968
TQA Vantage 750,000 30,968 30,968
Lehman Brothers
Inc. 630,000 26,013 26,013
Minnesota Power
& Light Company 600,000 24,774 24,774
South Dakota
Retirement
System
Convertible Fund 500,000 20,645 20,645
Commonwealth
Life Insurance
Company 500,000 20,645 20,645
State of
Connecticut 500,000 20,645 20,645
TQA Leverage 500,000 20,645 20,645
TQA Vantage Plus 500,000 20,645 20,645
Spear, Leeds
& Kellogg 500,000 20,644 20,644
Gyroscope + Co. 460,000 18,994 18,994
Standard
Mortgage Holding
Corporation 400,000 16,516 16,516
Donaldson, Lufkin
& Jenrette SEC,
Inc. 305,000 12,594 12,594
Robertson,
Stephens &
Co., LLP 105,000 4,335 4,335
Mary S Spencer
Revocable Living
Trust, date of the
trust 7/27/90
Trustee:
Mary S. Peterson 100,000 4,129 4,129
Meditation
Groups, Inc. 100,000 4,129 4,129
Sally H. Whiting 50,000 2,065 2,065
Paul Heichman
Living Trust 39,000 1,610 1,610
Shepherd
Management
Services 30,000 1,239 1,239
Steven J Liodas
& Jeane Liodas
Trustees in
trust fbo the
Liodas Family
Trust 30,000 1,239 1,239
Bergo Trust 30,000 1,239 1,239
Paul S Heichman 21,000 867 867
John J Hart Jr 20,000 826 826
James L Kloss
Trustee James L
Kloss dds Profit
Pension Plan
under agreement
dated 12/21/70 20,000 826 826
John R Durio 10,000 413 413
March 9, 1998
KA Management Ltd. 3,779,989 156,075 156,075
KA Trading LP 2,220,011 91,664 91,664
April 2, 1998
Fidelity Equity-
Income Fund: Fidelity
Devonshire Trust (6) 11,090,000 457,905 457,905
Forest Alternative
Strategies FD II
LP Series 2-5 8,125,000 335,480 335,480
Forest Global
Convertible
Fund Series A-5 6,300,000 260,126 260,126
Fidelity Management
Trust Company on
behalf of accounts
managed by it (7) 1,763,000 72,794 72,794
Forest Alternative
Strategies FD II
LP Series 2A5I 550,000 22,709 22,709
LLT Limited 550,000 22,709 22,709
McMahan Securities
Company, L.P. 500,000 20,645 20,645
State of Delaware
PERS 475,000 19,613 19,613
Fox Portfolio
Partnership c/o
Forest Management
Corp. 400,000 16,516 16,516
Forest Alternative
Strategies FD II
LP Series 2A5M 300,000 12,387 12,387
Forest Global
Convertible Fund
Series B-1 200,000 8,258 8,258
Forest Greyhound
c/o Forest
Management Corp. 200,000 8,258 8,258
Fox Family FDN
D/T/D 10/10/87
c/o Forest
Management 200,000 8,258 8,258
IC American
Holdings Trust 200,000 8,258 8,258
Zeneca Holdings
Trust 200,000 8,258 8,258
Forest Alternative
Strategies FD II
LP Series 2B3F 192,000 7,928 7,928
Forest Global
Convertible
Fund Series B-5 175,000 7,226 7,226
Forest Global
Convertible Fund
Series B-2 125,000 5,161 5,161
Forest Global
Convertible
Fund Series B-3 100,000 4,129 4,129
Nalco Chemical
Company 100,000 4,129 4,129
Forest Performance
Fund 83,000 3,427 3,427
Forest Global
Convertible
Fund Series A-1 50,000 2,064 2,064
June 18, 1998
Rhode Island 4,600,000 189,934 189,934
Retirement (8)
General Motors
Pension Fund High
Yield (8) 3,575,000 147,611 147,611
BCBS Michigan (8) 3,450,000 142,450 142,450
New York City
Employees (8) 3,055,000 126,141 126,141
The New England
Corp. Bond (8) 2,900,000 119,741 119,741
Detroit Edison
Employees (8) 2,200,000 90,838 90,838
Central Pension
Fund (8) 2,100,000 86,709 86,709
Baltimore Gas
& Electric (8) 2,000,000 82,250 82,250
Gencorp (8) 2,000,000 82,250 82,250
Bell Atlantic
Master Trust (8) 1,925,000 79,483 79,483
Raytheon Master
Trust (8) 1,750,000 72,257 72,257
United Mine
Workers (8) 1,750,000 72,257 72,257
Minneapolis
Teachers (8) 1,650,000 68,128 68,128
Houston
Municipal (8) 1,600,000 66,064 66,064
Loomis Sayles
Bond Fund (8) 1,600,000 66,064 66,064
GM / Met Life
High Yield (8) 1,550,000 63,999 63,999
State of
Connecticut Fund
"F"(8) 1,500,000 61,935 61,935
Pension Reserves
Investment Trust (8) 1,350,000 55,741 55,741
IBM Pension Plan (8) 1,300,000 53,677 53,677
ABMAMRO
Incorporated (8) 1,275,000 52,645 52,645
Teamsters
Affiliates
Pension Plan (8) 1,175,000 48,516 48,516
World Bank "B"(8) 1,100,000 45,419 45,419
Arkansas Public
Emp. Retirement
System (8) 1,050,000 43,354 43,354
American
Stores (8) 1,025,000 42,322 42,322
Ensign Peak
Advisors (8) 1,000,000 41,290 41,290
Milwaukee
County "B" (8) 1,000,000 41,290 41,290
Orange County
Retirement
System (8) 1,000,000 41,290 41,290
The Rockefeller
Foundation (8) 1,000,000 41,290 41,290
Goldman, Sachs
& Co. 960,000 39,638 39,638
Loomis Sayles
High Yield Fixed
Income F (8) 825,000 34,064 34,064
Metropolitan Life
Variable Annuity
Fund (8) 800,000 33,032 33,032
Credit Suisse
First Boston
Corporation 750,000 30,967 30,967
World Bank
"RSBP"(8) 750,000 30,967 30,967
UFCW (8) 700,000 28,903 28,903
United
Technologies (8) 700,000 28,903 28,903
Winchester
Convertible Plus,
Ltd.c/o Oaktree
Capital Management,
L. P. 695,000 28,696 28,696
Maxim Corporate
Bond Fund (8) 650,000 26,838 26,838
Mid Ocean High
Yield (8) 625,000 25,806 25,806
Foundations Account
No. 1c/o Oaktree
Capital Management,
L. P. 585,000 24,155 24,155
New York City
Police (8) 575,000 23,742 23,742
Robertson,
Stephens & Co. LLP 520,000 21,471 21,471
Entergy (8) 500,000 20,645 20,645
Halliburton
High Yield (8) 500,000 20,645 20,645
Houston Fire
"B" (8) 500,000 20,645 20,645
Siemens Master
Trust (8) 500,000 20,645 20,645
PHS Pension (8) 450,000 18,580 18,580
Standard Mortgage
Holding Corp. 400,000 16,516 16,516
Nike (8) 350,000 14,451 14,451
Metropolitan Life
Q1 Acct. 235 (8) 325,000 13,419 13,419
New England
Strategic Income
Fund (8) 325,000 13,419 13,419
New York City
Fire (8) 325,000 13,419 13,419
Donaldson, Lufkin
& Jenrette Sec.
Inc.(8) 305,000 12,593 12,593
Partners
Healthcare (8) 300,000 12,387 12,387
City of Richmond (8) 275,000 11,355 11,355
Dow Corning (8) 275,000 11,355 11,355
LLC Account No.
1c/o Oaktree Capital
Management, L. P. 270,000 11,148 11,148
Boston Edison
Retirement Trust (8) 250,000 10,322 10,322
Georgia
Pacific (8) 250,000 10,322 10,322
Norfolk County (8) 250,000 10,322 10,322
Nuclear Electric
Ins. Ltd.(8) 250,000 10,322 10,322
Philip Morris (8) 250,000 10,322 10,322
Rohm & Haas
Company (8) 205,000 8,464 8,464
Loomis Sayles Fixed
Income Fund (8) 200,000 8,258 8,258
Partner Reinsurance 200,000 8,258 8,258
Co. (8)
City of Worcester (8) 150,000 6,193 6,193
Loomis Sayles
High Yield Fund (8) 150,000 6,193 6,193
International Union
Operating Engineers (8) 150,000 6,193 6,193
Christiana Care
Health Svcs.
Account (8) 125,000 5,161 5,161
Curtiss-Wright (8) 125,000 5,161 5,161
Detriot Medical
Pension (8) 125,000 5,161 5,161
New York City
Education (8) 125,000 5,161 5,161
Boston Medical
Center (8) 100,000 4,129 4,129
Christiana Care
Health Services
Account (8) 100,000 4,129 4,129
Data General (8) 100,000 4,129 4,129
Metropolitan Life
NQ Acct. 242 (8) 100,000 4,129 4,129
Teamsters Retirement
Pension Plan (8) 100,000 4,129 4,129
Tredegar (8) 100,000 4,129 4,129
Detroit Medical 75,000 3,097 3,097
Endowment (8)
Health Sciences
Foundation (8) 75,000 3,097 3,097
F.R. Bigelow
Foundation (8) 56,000 2,312 2,312
Diocese of
Springfield (8) 50,000 2,064 2,064
Community
Investment Group (8) 39,000 1,610 1,610
LS International
Fund (8) 20,000 826 826
July 7, 1998
General Motors
Employees Domestic
Group Trust c/o
Mellon Bank Center 8,380,000 346,009 346,009
Delaware State
Employees' Retirement
Fund c/o Mercantile
Safe Deposit & Trust 2,625,000 108,386 108,386
Thermo Electron
Balanced Investment
Fund c/o Mellon Bank 1,050,000 43,354 43,354
Declaration of Trust
for the Defined
Benefit Plans of
ICI American Holdings
c/o State Street
Bank & Trust Co. 670,000 27,664 27,664
Forum Capital
Markets LLC 500,000 20,645 20,645
Declaration of
Trust for the
Defined Benefit
Plans of ZENECA
Holdings Inc.c/o
State Street Bank
& Trust Co. 430,000 17,755 17,755
First Church of
Christ, Scientist
- - endowment c/o
State Street Bank
& Trust 430,000 17,755 17,755
Christian Science
Trustees for Gifts
and Endowments c/o
Investors Bank &
Trust 430,000 17,755 17,755
Hillside Capital
Incorporated,
Corporate Account
c/o FMB Trust 235,000 9,703 9,703
Summer Hill
Global Partners
L.P. c/o PNC Bank,
Delaware 100,000 4,129 4,129
August 18, 1998
General Motors
Employees Domestic
Group Trust c/o
Mellon Bank Center 8,380,000 346,009 346,006
D.E. Shaw
Securities, L.P. 4,109,000 169,660 169,660
Paine Webber
Incorporated 3,870,000 159,791 159,791
Helix Convertible
Opportunities L.P.
c/o Helix Investment
Partners L.P. 3,110,000 128,412 128,412
Delaware State
Employees' Retirement
Fund c/o Mercantile
Safe Deposit & Trust 2,625,000 108,385 108,385
Kennilworth Partners
L.P. II 2,500,000 103,225 103,225
D.E. Shaw
Investments, L.P. 1,236,000 51,034 51,034
Helix Convertible
Opportunities Fund
LTD c/o Helix
Investment partners
L.P. 1,220,000 50,373 50,373
ABN-AMRO Incorporated 1,000,000 41,289 41,289
Thermo Electron
Balanced Investment
Fund c/o Mellon Bank 1,050,000 43,354 43,354
Goldman, Sachs Co. 772,000 31,875 31,875
Declaration of Trust
for the Defined
Benefit Plans of
Zeneca Holdings
Inc. c/o State
Street Bank & Trust Co. 670,000 27,664 27,664
Simpson Group
Retirement Fund
c/o Helix
Investment Partners
L.P. 520,000 21,470 21,470
Forum Capital Markets
L.L.C. 500,000 20,644 20,644
World Wide
Transactions LTD
c/o Helix Investment
Partners L.P. 465,000 19,199 19,199
The Common Fund
FAO Absolute Return Funds
c/o Helix Investment 460,000 18,993 18,993
Partners L.P.
UBS A.G.-London Branch
c/o UBS Center 450,000 18,580 18,580
Christian Science
Trustees for Gifts
& Endowments c/o
Investors Bank & Trust 430,000 17,754 17,754
Declaration of
Trust for the
Defined Benefit
Plans of Zeneca
Holdings Inc.
c/o State Street
Bank & Trust Co. 430,000 17,754 17,754
First Church
of Christ,
Scientist-Endowment
c/o State Street
Bank & Trust Co. 430,000 17,754 17,754
WR Investment
Partners L.P.
c/o Helix
Investment
Partners L.P. 275,000 11,354 11,354
Hillside Capital
Incorporated
Corporate Account
c/o FMB Trust 235,000 9,703 9,703
Shepherd Management
Services
c/o Helix Investment
Partners L.P. 180,000 7,432 7,432
Warbug Dillon Read
c/o UBS Center 150,000 6,193 6,193
Summer Hill Global
Partners L.P.
C/O PNC Bank
Delaware 100,000 4,128 4,128
(1) Represents shares of Common Stock issuable upon conversion of the
Registrable Notes.
(2) Assumes a conversion price of $24.219 per share and a cash payment
in lieu of any fractional share interest; such conversion price is
subject to adjustment as described under "Description of the
Notes-Conversion." Accordingly the number of shares of Common
Stock issuable upon conversion of the Registrable Notes may
increase or decrease from time to time. Under the terms of
Indenture, fractional shares will not be issued upon conversion of
the Registrable Notes; cash will be paid in lieu of fractional
shares, if any.
(3) Information concerning other Registrable Note Selling Security
holders will be set forth in Prospectus Supplements to be filed
quarterly in order to specify the names of the individual holders
of the Registrable Notes as they become known to the Company.
(4) Assumes that any other holders of Registrable Notes or any future
transferee from any such holder does not beneficially own any
Common Stock other than the Common Stock issuable upon conversion
of the Notes at the initial conversion rate.
(5) Merrill Lynch Growth Fund for Investment and Retirement ("Fund")
is the beneficial owner of the securities as set forth above.
Merrill Lynch Asset Management, L.P. (d/b/a Merrill Lynch Asset
Management ("MLAM")), an investment advisor registered under the
Investment Advisors Act of 1940, is a registered investment
company which advises the beneficial owner. MLAM may be deemed to
be the beneficial owner of certain of the securities set forth
above of the Company by virtue of its acting as investment advisor
to the Fund. The general partner of MLAM is Princeton Services,
Inc. ("PSI"). PSI is a wholly owned subsidiary of Merrill Lynch
Group, Inc. ("ML Group"). PSI may be deemed to be the beneficial
owner of certain of the securities set forth above of the Company
by virtue of its being the general partner of MLAM. ML Group is a
wholly owned subsidiary of Merrill Lynch and Co. ("ML & Co."). ML
Group may be deemed to be the beneficial owner of certain of the
securities set forth above of the company by virtue of its control
of PSI. Merrill Lynch, Pierce, Fenner & Smith, Incorporated
("MLPF & S"), a broker-dealer, registered under the Securities
Exchange Act of 1934 is a wholly-owned subsidiary of ML & Co.
MLPF & S hold certain of the securities set forth above of the
Company in proprietary trading accounts and may be deemed to be
the beneficial owner of securities of the Company held in customer
accounts over which MLPF & S has discretionary power. ML & Co.
may be deemed to be the beneficial owner of certain of the
securities set forth above the Company by virtue of its
wholly-owned subsidiaries, ML Group and MLPF & S. ML & Co., ML
Group, MLPF & S, PSI and MLAM all disclaim beneficial ownership of
the securities of the Company set forth above.
(6) The entity is either an investment company or a portfolio of an
investment company registered under Section 8 of the Investment
Company Act of 1940, as amended, or a private investment account
advised by Fidelity Management & Research Company ("FMR Co.").
FMR Co. is a Massachusetts corporation and an investment advisor
registered under Section 203 of the Investment Advisers Act of
1940, as amended, and provides investment advisory services to
each of such Fidelity entities identified above, and to other
registered investment companies and to certain other funds which
are generally offered to a limited group of investors. FMR Co. is
a wholly-owned subsidiary of FMR Corp. ("FMR"), a Massachusetts
corporation. The holdings are as of March 27, 1998.
(7) Shares indicated as owned by such entity are owned directly by
various private investment accounts, primarily employee benefit
plans for which Fidelity Management Trust Company ("FMTC") serves
as trustee or managing agent. FMTC is a wholly-owned subsidiary of
FMR and a bank as defined in Section 3(a)(6) of the Securities
Exchange Act of 1934, as amended. These holdings are as of March
27, 1998. None of the Selling Securityholders (Fidelity
Equity-Income Fund: Fidelity Devonshire Trust and Fidelity
Management Trust Company on behalf of accounts managed by it)
listed above has, or within the past three years has had, any
position, office or other material relationship with the Company
or any of its predecessors or affiliates. Because the Selling
Holders may offer all or some portion of the above referenced
securities pursuant to this Prospectus or otherwise, no estimate
can be given as to the amount or percentage of such securities
that will be held by the Selling Holders upon termination of any
such sale. In addition, the Selling Holders identified above may
have sold, transferred or otherwise disposed of all or a portion
of such securities since March 27, 1998 in transactions exempt
from the registration requirements of the Securities Act of 1933.
The Selling Holders may sell all, part or none of the securities
listed above.
(8) c/o Loomis, Sayles & Company, L.P.
The preceding table has been prepared based upon the
information furnished to the Company by Automatic Data Processing and
responses to questionnaires by the beneficial owners.
The Selling Securityholders identified above may have sold,
transferred or otherwise disposed of, in transactions exempt from the
registration requirements of the Securities Act, all or a portion of
their Notes since the date on which the information in the preceding
table is presented. Information concerning the Selling Securityholders
may change from time to time and any such changed information will be
set forth in supplements to this Prospectus if and when necessary.
Because the Selling Securityholders may offer all or some of the Notes
that they hold and/or Conversion Shares pursuant to the offering
contemplated by this Prospectus, no estimate can be given as to the
amount of the Notes or Conversion Shares that will be held by the
Selling Securityholders upon the termination of this offering. See
"Plan of Distribution."
Information concerning the Selling Securityholders may change
from time to time and any such changed information will be set forth
in supplements to this Prospectus if and when necessary. In addition,
the per share conversion price, and therefore the number of shares
issuable upon conversion of the Registrable Notes, is subject to
adjustment under certain circumstances. Accordingly, the aggregate
principal amount of Registrable Notes and the number of shares of
Common Stock issuable upon conversion thereof offered hereby may
increase or decrease.
PLAN OF DISTRIBUTION
The Registrable Notes and Common Stock offered hereby may be
sold from time to time to purchasers directly by the Selling
Securityholders. Alternatively, the Selling Securityholders may from
time to time offer the Registrable Notes and Common Stock to or
through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Securityholders or the purchasers of
Registrable Notes and Common Stock for whom they may act as agents.
The Selling Securityholders and any underwriters, broker/dealers or
agents that participate in the distribution of Registrable Notes and
Common Stock may be deemed to be "underwriters" within the meaning of
the Securities Act and any profit on the sale of Registrable Notes and
Common Stock by them and any discounts, commissions, concessions or
other compensation received by any such underwriter, broker/dealer or
agent may be deemed to be underwriting discounts and commissions under
the Securities Act.
The Registrable Notes and Common Stock offered hereby may be
sold from time to time in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, any varying prices
determined at the time of sale or at negotiated prices. The sale of
the Registrable Notes and the Common Stock issuable upon conversion
thereof may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or
quotation service on which the Registrable Notes or the Common Stock
may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such
exchanges or in the over-the-counter market or (iv) through the writing
of options. At the time a particular offering of the Registrable Notes
and the Common Stock is made, a Prospectus Supplement, if required,
will be distributed which will set forth the aggregate amount and type
of Registrable Notes and Common Stock being offered and the terms of
the offering, including the name or names of any underwriters,
broker/dealers or agents, any discounts, commissions and other terms
constituting compensation from the Selling Securityholders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Registrable Notes and Common Stock will be offered or
sold in such jurisdictions only through registered or licensed brokers
or dealers. In addition, in certain jurisdictions the Registrable Notes
and Common Stock may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or any exemption
from registration or qualification is available and is complied with.
The Selling Securityholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of purchases and
sales of any of the Registrable Notes and Common Stock by the Selling
Securityholders. The foregoing may affect the marketability of the
Registrable Notes and the Common Stock.
Pursuant to the Registration Agreement, all expenses of the
registration of the Registrable Notes and Common Stock will be paid by
the Company, including, without limitation, Commission filing fees and
expenses of compliance with state securities or "blue sky" laws;
provided, however, that the Selling Securityholders will pay all
underwriting discounts and selling commissions, if any. The Selling
Securityholders will be indemnified by the Company against certain
civil liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith.
LEGAL MATTERS
The validity of the Registrable Notes and the Common Stock
being offered hereby has been passed upon for the Company by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The consolidated financial statements of Cirrus Logic, Inc.
appearing in Cirrus Logic, Inc.'s Annual Report (Form 10-K) for the
year ended March 28, 1998 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein,
and are incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
============================================ ==============================
No dealer,sales representative, or any
other person has been authorized to give any
information or to make any representations
in connection with this offering other
than those contained in this Prospectus,
and, if given or made, such information or
representations must not be relied upon as U.S. $280,725,000
having been authorized by the Company or
any of the Underwriters. This Prospectus
does not constitute an offer to sell
or a solicitation of an offer to buy CIRRUS LOGIC, INC.
any securities other than the shares of
Common Stock to which it relates or an
offer to, or asolicitation of, any person
in any jurisdiction where such an offer or
solicitation would be unlawful. Neither
the delivery of this Prospectus nor any 6% Convertible Subordinated
sale made hereunder shall, under any Notes Due December 15, 2003
circumstances, create an implication
that there has been no change in the
affairs of the Company or that information
contained herein is correct as of PROSPECTUS
any date subsequent to the date hereof.
--------------------
TABLE OF CONTENTS
--------------------
Page
-----
Additional Information 1
Incorporated of Certain
Documents by Reference 1
Summary 1
The Company 2
The Offering 2
Risk Factors 4 ____________, 1998
Use of Proceeds 7
Ratio of Earnings to Fixed Charges 8
Description of Registrable Notes 8
United States Taxation 21
Selling Securityholders 24
Plan of Distribution 32
Legal Matters 33
Experts 33
============================================ ==============================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable
by the Registrant in connection with the sale and distribution of the
securities being registered hereby. Normal commission expenses and
brokerage fees are payable individually by the Selling Stockholders.
All amounts are estimated except the Securities and Exchange Commission
registration fee.
<TABLE>
<CAPTION>
Amount
-----------
<S> <C>
SEC registration fee . . . . . . . . . . . . $ 85,068
Accounting fees and expenses . . . . . . . . 180,000
Legal fees and expenses . . . . . . . . . . 90,000
Printing expenses . . . . . . . . . . . . . 10,000
Trustee's Fees and Expenses . . . . . . . . . 10,000
Miscellaneous fees and expenses . . . . . . 19,932
-----------
Total . . . . . . . . . . . . . . . $ 395,000
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California General Corporation Law
authorizes a court to award, or a corporation's Board of Directors to
grant, indemnity to directors and officers who are parties or are
threatened to be made parties to any proceeding (with certain
exceptions) by reason of the fact that the person is or was an agent of
the corporation, against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with the
proceeding if that person acted in good faith and in a manner the
person reasonably believed to be in the best interests of the
corporation. This limitation on liability has no effect on a
director's liability (i) for acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) for acts or
omissions that a director believes to be contrary to the best interests
of the corporation or its shareholders or that involve the absence of
good faith on the part of the director, (iii) relating to any
transaction from which a director derived an improper personal benefit,
(iv) for acts or omissions that show a reckless disregard for the
director's duty to the corporation or its shareholders in circumstances
in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of a
serious injury to the corporation or its shareholders, (v) for acts or
omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the corporation or
its shareholders, (vi) under Section 310 of the California General
Corporation Law (concerning contracts or transactions between the
corporation and a director) or (vii) under Section 316 of the
California General Corporation Law (directors' liability for improper
dividends, loans and guarantees). The provision does not extend to
acts or omissions of a director in his capacity as an officer. Further,
the provision has no effect on claims arising under federal or state
securities laws and does not affect the availability of injunctions and
other equitable remedies available to the Company's shareholders for
any violation of a director's fiduciary duty to the Company or its
shareholders. Although the validity and scope of the legislation
underlying the provision have not yet been interpreted to any
significant extent by the California courts, the provision may relieve
directors of monetary liability to the Company for grossly negligent
conduct, including conduct in situations involving attempted takeovers
of the Company.
In accordance with Section 317, the Restated Articles of
Incorporation, as amended (the "Articles"), of the Company limits the
liability of a director to the Company or its shareholders for monetary
damages to the fullest extent permissible under California law, and
authorizes the Company to provide indemnification to its agents
(including officers and directors), subject to the limitations set
forth above. The Company's By-Laws further provide for indemnification
of corporate agents to the maximum extent permitted by the California
General Corporation Law.
Pursuant to the authority provided in the Articles, the
Company has entered into indemnification agreements with each of its
officers and directors, indemnifying them against certain potential
liabilities that may arise as a result of their service to the Company,
and providing for certain other protection.
The Company also maintains insurance policies which insure
its officers and directors against certain liabilities.
The foregoing summaries are necessarily subject to the
complete text of the statute, the Articles, the By-Laws and the
agreements referred to above and are qualified in their entirety by
reference thereto.
Reference is made to the Underwriting Agreements included
herein as exhibits to the Registration Statement for provisions
regarding indemnification of the Company's officers, directors and
controlling persons against liabilities, including liabilities under
the Securities Act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Number Description of Document
- ------ --------------------------------------------------------------
<S> <C>
The following exhibits are filed as part of or incorporated
by reference into this Post-effective Amendment on Form S-3:
4.1(1) Indenture dated as of December 15, 1996
6% Convertible subordinated Notes.
4.2(2) Registration Rights Agreement, dated as
of December 15, 1996, among the registrant,
Goldman Sachs & Co., Salomon Brothers Inc., J.P.
Morgan & Co., and Robertson, Stephens & Co.
5.1(2) Opinion of Wilson Sonsini Goodrich &
Rosati, Professional Corporation.
12.1 Statement Regarding Computation of Ratios of
Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 (2) Consent of Wilson Sonsini Goodrich & Rosati,
Professional. Corporation (included in Exhibit
5.1).
25.1 (2) Statement of Eligibility and Qualification Under
the Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee on Form T-1.
_______
(1) Incorporated by reference to Registrant's Report on Form 10-K for
the fiscal year ended March 29, 1997.
(2) Previously filed.
</TABLE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 14 above,
or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(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 the Registration
Statement 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.
(2) That, for the purpose of determining any
liability under the Act, each such 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.
(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) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in Act and will be governed by
the final adjudication of such issue.
CIRRUS LOGIC, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CIRRUS LOGIC, INC.
(Registrant)
/s/ Robert F. Donohue
Robert F. Donohue
Vice President, Chief Legal Officer
General Counsel and Secretary
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.
SIGNATURE TITLE DATE
- --------- ----- ----
* MICHAEL L. HACKWORTH Chairman of the Board, Chief August 18, 1998
Michael L. Hackworth Executive Officer, and Director
/s/ DAVID D. FRENCH President, Chief Operating Officer August 18, 1998
David D. French
/s/ RONALD K. SHELTON VP Finance, Chief Financial Officer, August 18, 1998
Ronald K. Shelton Treasurer, Principal Accounting
Officer
* SUHAS S. PATIL Chairman Emeritus, and August 18, 1998
Suhas S. Patil Director
* C. GORDON BELL Director August 18, 1998
C. Gordon Bell
* D. JAMES GUZY Director August 18, 1998
D. James Guzy
* WALDEN C. RHINES Director August 18, 1998
Walden C. Rhines
* ROBERT H. SMITH Director August 18, 1998
Robert H. Smith
/s/ ALFRED S. TEO Director August 18, 1998
Alfred S. Teo
* By /s/ Robert F. Donohue
Robert F. Donohue
Attorney-In-Fact
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------ --------------------------------------------------------------
<S> <C>
The following exhibits are filed as part of or incorporated
by reference into this Post-effective Amendment on Form S-3:
4.1(1) Indenture dated as of December 15, 1996 6% Convertible
subordinated Notes.
4.2(2) Registration Rights Agreement, dated as of December 15, 1996,
among the registrant, Goldman Sachs & Co., Salomon Brothers Inc.,
J.P. Morgan & Co., and Robertson, Stephens & Co.
5.1(2) Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed
Charges.
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 (2) Consent of Wilson Sonsini Goodrich & Rosati, Professional.
Corporation (included in Exhibit 5.1).
25.1 (2) Statement of Eligibility and Qualification Under the Trust
Indenture Act of 1939 of a Corporation Designated to Act as
Trustee on Form T-1.
_______
(1) Incorporated by reference to Registrant's Report on Form 10-K for
the fiscal year ended March 29, 1997.
(2) Previously filed.
</TABLE>
[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>
Exhibit 12.1
STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except for ratios)
<CAPTION>
--------------
Fiscal Year Quarter ending
------------ ------------ ------------ ------------ ------------ June. 27
1994 1995 1996 1997 1998 1998
------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes $55,964 $89,638 ($41,723) ($51,619) $58,278 $506
Fixed charges (1) 4,075 5,514 8,504 23,528 30,692 6,865
------------ ------------ ------------ ------------ ------------ --------------
Total earnings and fixed charges 60,039 95,152 (33,219) (28,091) 88,970 7,371
Fixed charges (1) 4,075 5,514 8,504 23,528 30,692 6,865
Ratio of earnings to fixed charges (2) 14.7x 17.3x N/A N/A 2.9x 1.1x
============ ============ ============ ============ ============ ==============
ADJUSTED FOR MiCRUS AND CIRENT FIXED CHARGES:
Fixed charges (3) 7,284 17,401 38,961 57,546 14,399
Ratio of earnings to fixed charges (4) 13.1x N/A N/A 1.5x N/A
============ ============ ============ ============ ==============
</TABLE>
____________________
(1) Fixed charges consist of interest expense incurred, including
capital leases, amortization of interest costs and the portion of
rental expense under operating leases deemed by the company to be
representative of the interest factor.
(2) Earnings were inadequate to cover fixed charges for fiscal 1996 and
1997 by approximately $41.7 millions and $51.6 million,
respectively.
(3) Fixed charges consist of interest expense incurred, including
capital leases, amortization of interest costs and the portion of
rental expense under operating leases deemed by the company to be
representative of the interest factor and interest on capitalized
leases and the interest factor associated with operating leases of
the Company's MiCRUS and Cirent joint ventures.
(4) Earnings would have been inadequate to cover fixed charges for
fiscal 1996, 1997 and for the first quarter ended June 27, 1998 by
approximately $50.6 million, $67.1 million, and $7.0 million,
respectively.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG, LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Post-Effective Amendment No. 1 on Form S-3 to the Registration Statement
(Form S-1 No. 333-23553) and related Prospectus of Cirrus Logic, Inc.
for the registration of $280,725,000 principal amount of its 6%
Convertible Subordinated Notes due December 15, 2003 and 11,591,219
shares of its common stock and to the incorporation by reference
therein of our report dated April 22, 1998 (except for Note 18, as to
which the date is June 4, 1998), with respect to the consolidated
financial statements and schedule of Cirrus Logic, Inc. included in its Annual
Report (Form 10-K) for the year ended March 28, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
August 17, 1998
