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As filed Securities and Exchange Commission on August 28, 2000.
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
________________
PACIFIC AEROSPACE & ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
________________
WASHINGTON 91-1744587
(State or other jurisdiction (I.R.S.Employer
of incorporation or organization) Identification No.)
430 Olds Station Road, Third Floor
Wenatchee, WA 98801
(509) 667-9600 (telephone)
(509) 667-9696 (facsimile)
(Address, including zip code, and telephone and facsimile numbers,
including area code, of registrant's principal executive offices)
_________________
Donald A. Wright
430 Olds Station Road, Third Floor
Wenatchee, WA 98801
(509) 667-9600 (telephone)
(509) 667-9696 (facsimile)
(Name, address, including zip code, and
telephone and facsimile numbers, including area code, of agent for service)
Copy to:
Ronald J. Lone
Stoel Rives LLP
One Union Square, 36th Floor
600 University Street
Seattle, WA 98101-3197
(206) 624-0900 (telephone)
(206) 386-7500 (facsimile)
Approximate date of commencement of proposed sale to the public:
From time to time after the effectiveness of this registration statement.
If the only securities being registered on this Form are to be 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 a dividend or
interest reinvestment plan, 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 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>
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Title of each class Proposed maximum Proposed maximum Amount of
of securities to be Amount to be offering price per aggregate offering Registration
registered Registered/(1)/ share/(2)/ price/(2)/ Fee/(2)/
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<S> <C> <C> <C> <C>
Common Stock 5,279,150 shares $1.47 $7,760,351 $2,049
============================================================================================================
</TABLE>
/(1)/ Including:
(a) 1,142,860 shares of common stock issued on July 27, 2000;
(b) 857,140 shares of common stock issuable upon effectiveness of
this registration statement on or before September 25, 2000;
(c) up to 385,000 shares of common stock issuable upon exercise of
warrants (the "Closing Warrants") held by certain of the Selling
Shareholders;
(d) up to 2,815,000 shares of common stock issuable upon exercise of
warrants (the "Adjustable Warrants" and the "Vesting Warrants") held
by certain of the Selling Shareholders; and
(e) up to 79,150 shares of common stock issuable upon exercise of
warrants (the "Placement Agent Warrants") held by one of the Selling
Shareholders
/(2)/ Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on an estimated value of $1.47 per share. This
value equals the average of the high and low prices of the Common Stock on the
Nasdaq National Market System on August 21, 2000.
_______________________________________________________________________________
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until either (1) the registrant
files an amendment specifically stating that this Registration Statement shall
become effective under Section 8(a) of the Securities Act of 1933, as amended;
or (2) until the date that the Securities and Exchange Commission declares this
Registration Statement to be effective.
_______________________________________________________________________________
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
RESALE PROSPECTUS
Subject to Completion, dated August 28, 2000
[LOGO OF PACIFIC AEROSPACE & ELECTRONICS, INC. APPEARS HERE]
5,279,150 SHARES OF COMMON STOCK
PACIFIC AEROSPACE & ELECTRONICS, INC. Pacific Aerospace is an international
430 Olds Station Road, third floor engineering and manufacturing company
Wenatchee, Washington 98801 specializing in technically demanding
(509) 667-9600 components, designs and assemblies
for global leaders in the aerospace,
defense, electronics,
telecommunications, medical, and
transportation industries in the
United States and Europe.
SELLING SHAREHOLDERS: These shares of common stock are
See Page 13 for the Names of being offered and sold from time to
the Selling Shareholders. time by certain of our current
shareholders or warrant holders. The
Selling Shareholders together are
offering 2,000,000 shares of common
stock that they purchased from us in
a private placement, and up to
3,279,150 shares of common stock that
they may receive upon exercise of
warrants that they hold. We will not
receive any of the proceeds from sale
of these shares.
CLOSING SALE PRICE OF COMMON STOCK: The Selling Shareholders may offer
$1.50 per Share on August 21, 2000 the shares to the public forprices
computed as follows:
. Fixed prices,
. Prevailing market prices,
TRADING MARKET AND SYMBOL: NASDAQ . Formula prices relating to
National Market System -- PCTH. prevailing market prices, or
. Negotiated prices.
Potential investors should consider the Risk Factors starting on page 3 before
purchasing the shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares, or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
_________ __, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Section Page
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<S> <C>
Risk Factors............................................................... 3
Information Incorporated by Reference...................................... 12
Available Information...................................................... 12
Selling Shareholders....................................................... 13
Plan of Distribution....................................................... 15
Experts.................................................................... 16
Legal Matters.............................................................. 16
</TABLE>
______________________
Prospective investors may rely only on information contained in this prospectus.
Neither Pacific Aerospace & Electronics, Inc. (also referred to in this
prospectus as "we," "Pacific Aerospace" or the "Company") nor the Selling
Shareholders have authorized any person to provide prospective investors with
any information other than that contained in this prospectus. This prospectus
is not an offering in any jurisdiction where such offering is not permitted.
The information contained in this prospectus is correct only as of the date of
the prospectus, regardless of the time of the delivery of this prospectus or any
sale of the shares.
______________________
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RISK FACTORS
______________________________________________________________________________
An investment in shares of our common stock involves certain risks. You should
carefully consider all of the information set forth in this prospectus. In
particular, you should evaluate the following risk factors before making an
investment in the shares of our common stock. If any of the following
circumstances actually occur, our business, financial condition and results of
operations could be materially and adversely affected. If that occurs, the
trading price of our common stock could decline, and you could lose all or part
of your investment.
Some of these risk factors contain "forward-looking statements." These forward-
looking statements are not guarantees of our future performance. They are
subject to risks and uncertainties related to business operations, some of which
are beyond our control. Any of these risks or uncertainties may cause actual
results or future circumstances to differ materially from the forward-looking
statements set forth in this section.
______________________________________________________________________________
We need to manage our rapid growth to be successful.
We have experienced rapid growth from both operations and acquisitions. This
growth has placed and will continue to place significant demands on our
managerial, administrative, financial and operational resources. For example,
both our total number of employees and the number of our operating sites nearly
doubled as a result of acquiring our European Aerospace Group, which was formed
when we acquired Aeromet International PLC in July 1998. Our operating
divisions have had different accounting systems, which we have integrated or are
in the process of integrating. As we grow and our business operations become
more complex, we will need to be increasingly diligent in our business decisions
to comply with regulatory and accounting requirements. To manage our growth
effectively, we must continue to improve our operational, accounting, financial
and other management processes and systems. We must also continue to attract
and retain highly skilled management and technical personnel.
We have reported net losses for recent periods, and we may continue to incur net
losses.
We reported a net loss of $13,049,000 for our fiscal year ended May 31, 2000 and
a net loss of $12,869,000 for our fiscal year ended May 31, 1999. We can offer
no assurance that profitable operations will be achieved in the near future or
that any profitable operations will be sustained. Our ability to achieve a
profitable level of operations in the future will depend on many factors,
including our ability to reduce the level of our debt, to assimilate our recent
and potential future acquisitions and to finance production, our ability to
develop new products, the degree of market acceptance of existing and new
products, and the level of competition in those markets in which we operate.
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We have significant debt that could have disadvantages for us.
We incurred substantial debt and payment obligations to finance the Aeromet
acquisition and ongoing operations. This debt could have important
consequences, such as:
. making us unable to obtain additional financing in the future,
. diverting a significant portion of our cash flow to principal and
interest payments and away from operations and capital expenditures,
. increasing our interest expense, and decreasing our net income,
. putting us at a competitive disadvantage in relation to competitors
with less debt, or
. limiting our flexibility in adjusting to downturns in our business or
market conditions.
If we do not perform well in the future, we might not be able to pay our debt.
Our future financial and operating performance will determine our ability to pay
our debt. Many factors affect our performance. Because some of these factors
are beyond our control, we might not have sufficient cash flow to make our debt
payments when scheduled, or at all. If we do not maintain sufficient cash flow
to make our debt payments, we could be forced to:
. reduce or delay capital expenditures,
. dispose of material assets or operations, potentially at a loss,
. restructure or refinance our debt at potentially higher rates of
interest, or
. seek additional equity capital, which would probably dilute the value
of the shares held by our existing shareholders.
We may not be able to do any of these things, or we may not be able to do them
on satisfactory terms. In addition, if we could not repay our secured debt,
secured lenders could proceed against any collateral securing that debt.
Our debt limits our flexibility.
We must comply with a number of significant covenants imposed by the agreements
that govern our debt. Those covenants restrict a number of our activities,
including our ability to:
. dispose of or create liens on assets,
. incur additional indebtedness,
. prepay or amend certain debt,
. pay dividends or repurchase stock,
. enter into sale and leaseback transactions,
. make investments, loans or advances,
. engage in acquisitions, mergers or consolidations,
. make capital expenditures,
. change the business we conduct, or
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. engage in certain transactions with related parties.
If we breach any of these covenants, the lenders may be able to declare all
amounts we owe to be immediately due and payable. As a result, our lenders
might terminate their commitments to extend further credit to us. In addition,
if there is a change of control of our company, we may be required to repay our
debt. Any of these events could harm our business and financial performance.
We may need to raise additional cash.
We believe that our existing cash and credit facilities may be sufficient to
meet our obligations as they become due during fiscal 2001. However, we may
determine that we need to obtain additional cash during fiscal 2001. Our actual
cash needs will depend on many unpredictable factors, including:
. cash generated from or used by operations,
. interest due on our variable rate debt,
. early repayment of debt or other unexpected cash expenditures,
. capital expenditures required to remain competitive, and
. cash required for acquired companies, future acquisitions, if any, and
financing transaction costs.
As a result of these factors, we cannot predict accurately the amount or timing
of our future cash needs. If we cannot obtain additional cash if and when
needed, we may be unable to fund all our obligations as they become due or at
all. Should we need to dispose of assets to generate cash, we can offer no
assurance that the carrying values will be realizable upon liquidation outside
of the ordinary course of business. We also can offer no assurance that
existing credit facilities will be renewed and remain available on acceptable
terms or at all. Our inability to obtain additional cash if and when needed
could have a material adverse effect on our financial position and results of
operations, and could severely impact our ability to continue as a going
concern. Our consolidated financial statements have been prepared assuming that
the Company will continue as a going concern and do not include any adjustments
that might result from the outcome of that uncertainty.
We need to manage the risks posed by our acquisitions and our acquisition
strategy.
We have historically pursued an aggressive growth strategy. Although we are
currently focusing substantially all of our attention on existing operations and
on internal growth, we expect to continue to evaluate and pursue potential
strategic acquisitions. The success of our strategy depends on our ability to
manage the risks associated with acquisitions. These risks include:
. our ability to assess the value, strengths and weaknesses of
acquisition candidates accurately,
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. our effectiveness in implementing necessary changes at newly acquired
subsidiaries,
. possible diversion of management attention from our operations, and
. possible increased borrowings, disruption of product development
cycles and dilution of earnings per share.
We have incurred substantial losses as a result of some of our acquisitions and
investments. Furthermore, the size of our European Aerospace Group has caused
and will continue to cause it to have a significant impact on our future
financial results. If we do not manage these or other acquisition risks, our
acquisition strategy may not succeed.
Maintaining our European Aerospace Group subjects us to additional risks because
we have foreign operations.
These risks include:
. our ability to manage operations in the United Kingdom effectively
from our Wenatchee, Washington headquarters,
. unfavorable changes in foreign government policies, regulations,
tariffs, taxes and other trade barriers,
. exchange controls and limitations on dividends or other payments, and
. devaluations and fluctuations in currency exchange rates.
Our foreign operations also subject us to foreign currency risks.
Because of our European Aerospace Group, we may decide to engage in hedging
transactions to protect against losses if the exchange rate between the U.S.
dollar and the British pound sterling changes. However, hedging transactions
may not completely offset such losses. Our European Aerospace Group has a few
contracts that are in European currencies other than British pounds sterling, or
in U.S. dollars. We believe that the conversion of European currencies to the
Euro will not have a material adverse effect on the European Aerospace Group's
business or financial condition.
We depend on some significant customers who may be able to influence our
business.
Our top ten customers in terms of revenues during fiscal 2000 together accounted
for approximately 46% of our revenues for that year, and no other customer
accounted for more than 2% of our revenues. Only the top four customers
individually accounted for 5% or more of our revenues, with The Boeing Company
at approximately 10%, Rolls-Royce plc at approximately 7%, PACCAR, Inc. at
approximately 6%, and Aeronautical Macchi Manufacturing Corporation (Aermacchi)
at approximately 5%. Because of the relatively small number of customers for
most of our products, our largest customers can influence product pricing and
other terms of trade. If we were to lose any of our largest customers, or if
they reduced or canceled orders, our business and financial performance could be
harmed.
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We operate in industries that are subject to cyclical downturns.
We operate in historically cyclical industries. The aerospace, defense and
transportation industries are sensitive to general economic conditions, and past
recessions have adversely affected these industries. In past years, a number of
factors have adversely affected the aerospace industry, including increased fuel
and labor costs, and intense price competition. Recently, the commercial
aircraft industry has experienced a downturn in the rate of its growth due to
changing economic conditions and as a result of the ongoing financial crisis in
Asia, which has caused reduction in production rates for some commercial airline
programs. Additional cancellations or delays in aircraft orders from customers
of Boeing or Airbus could reduce demand for our products and could have a
material adverse effect on our business and financial performance. These
cyclical factors and general economic conditions may lead to a downturn in
demand for our core products.
The loss of any of our key management or technical personnel could negatively
affect our ability to manage our business.
We believe that our ability to successfully implement our business strategy and
to operate profitably depends significantly on the continued employment of our
senior management team, led by our president, Donald A. Wright, and our
significant technical personnel. We have key man life insurance policies on the
life of Mr. Wright totaling $8 million. Our business and financial results
could be materially adversely affected if Mr. Wright, other members of the
senior management team, or significant technical personnel become unable or
unwilling to continue in their present employment. In addition, our growth and
future success will depend in large part on our ability to retain and attract
additional board members, senior managers and highly skilled technical
personnel. Competition for such individuals is intense, and we may not be
successful in attracting and retaining them, which could interfere with our
ability to manage our business.
We may not be able to convert all of our backlog into revenue.
We sell the majority of our products through individual purchase orders. Many
of our customers would have the right to terminate orders by paying the cost of
work in process plus a related profit factor. Historically, we have not
experienced a large number of significant order cancellations. However, from
time to time, customers cancel orders as a result of a program being cancelled
or for other reasons. As of May 31, 2000, we had purchase orders and
contractual arrangements evidencing anticipated future deliveries, which we
treat as backlog, through fiscal year 2002 of approximately $80 million. We
expect to deliver approximately $70 million of this backlog in fiscal year 2001.
We may not be able to complete all of that backlog and book it as net sales, if
we experience cancellations of pending contracts or terminations or reductions
of contracts in progress.
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We need to adapt to technological change and develop new products.
The market for our products is characterized by evolving technology and industry
standards, changes in customer needs, adaptation of products to customer needs,
and new product introductions. Our competitors from time to time may announce
new products, enhancements, or technologies that have the potential to replace
or render our existing products obsolete. Our success will depend on our
ability to:
. enhance our current products and develop new products to meet changing
customer needs, and achieve market acceptance of those products, and
. anticipate or respond to evolving industry standards and other
technological changes on a timely and cost-effective basis.
We have substantial competition in many of the markets that we serve.
Many of our competitors have greater financial resources, broader experience,
better name recognition and more substantial marketing operations than we have,
and they represent substantial long-term competition for us. Components and
products similar to those we make can be made by competitors using a number of
different manufacturing processes. We believe that our manufacturing processes,
proprietary technologies and experience provide significant advantages to our
customers. These advantages include high quality, more complete solutions,
competitive prices, and physical properties that meet stringent demands.
However, competitors can use alternative forms of manufacturing to produce many
of the components and products that we make. We expect our competitors to
continue making new developments, and they could develop products that customers
view as more effective or more economical than our products. In addition, our
competitors may introduce automation processes and robotics systems that could
lower their costs of production substantially. If we are not able to compete
successfully against current and future competitors, and respond appropriately
to changes in industry standards, our business could be seriously harmed.
If we cannot obtain raw materials when needed and at a reasonable cost, we could
have difficulty producing cost-effective products and delivering them on time.
Our European Aerospace Group obtains approximately 70% of its titanium from one
supplier and is subject to a lead time of approximately 65 weeks in ordering and
obtaining titanium. While the European Aerospace Group generally has managed
the ordering process to obtain titanium when needed, a labor strike at the
supplier negatively affected the group's ability to obtain timely deliveries of
titanium during fiscal 1999 and into the 2000 fiscal year. Although the
shortage of titanium did not have a material adverse effect on our European
Aerospace Group's business or on our overall financial condition, we lost some
business due to customers' dual sourcing contracts, and some customer orders
that were expected to be delivered in fiscal 1999 were delayed into fiscal 2000
and 2001. The effect of the strike emphasizes the fact that a failure to obtain
titanium or other raw materials when we need them, or significant cost increases
imposed by suppliers of raw materials such as titanium or
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aluminum, could damage our business and financial performance. We generally have
readily available sources of all raw materials and supplies we need to
manufacture our products and, where possible, we maintain alternate sources of
supply. However, we do not have fixed price contracts or arrangements for all of
the raw materials and other supplies we purchase. We have experienced in the
past shortages of, or price increases for, certain raw materials and supplies,
and shortages or price increases may occur again in the future. Future shortages
or price fluctuations could have a material adverse effect on our ability to
manufacture and sell our products in a timely and cost-effective manner.
We need to protect our intellectual property and proprietary rights, and
protection may be costly and not always available.
Significant aspects of our business depend on proprietary processes, know-how
and other technology that are not subject to patent protection. We rely on a
combination of trade secret, copyright and trademark laws, confidentiality
procedures, and other intellectual property protection to protect our
proprietary technology. However, our competitors may still develop or utilize
technology that is the same as or similar to our proprietary technology.
We have a number of U.S. and European patents, as well as a number of patent
applications that are pending in the United States, Canada, and in Europe under
the Patent Cooperation Treaty. We can provide no assurance that any of the
patent applications will result in issued patents, that existing patents or any
future patents will give us any competitive advantages for our products or
technology, or that, if challenged, these patents will be held valid and
enforceable. Most of our issued patents expire at various times over the next
15 years, with 16 patents expiring over the next four years. Although we
believe that the manufacturing processes of much of our patented technology are
sufficiently complex that competing products made with the same technology are
unlikely, our competitors may be able to design competing products using the
same or similar technology after these patents have expired.
Despite the precautions we have taken, unauthorized parties may attempt to copy
aspects of our products or obtain and use information that we regard as
proprietary. Existing intellectual property laws give only limited protection
with respect to such actions, and policing violations of these laws is
difficult. The laws of certain countries in which our products are or may be
distributed do not protect products and intellectual property rights to the same
extent as do the laws of the United States. We could be required to enter into
costly litigation to enforce our intellectual property rights or to defend
infringement claims by others. Infringement claims could require us to license
the intellectual property rights of third parties, but licenses may not be
available on reasonable terms, or at all.
We could be subject to product liability claims and lawsuits for harm caused by
our products.
We maintain product liability insurance with a maximum coverage of $2 million.
However, this insurance may not be sufficient to cover any claims that may
arise. A successful product
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liability claim in excess of our insurance coverage could have a material
adverse effect on our business and financial performance.
We must comply with environmental laws, and any failure to do so could subject
us to claims or regulatory action.
Our facilities are subject to regulations concerning solid waste disposal,
hazardous materials generation, storage, use and disposal, air emissions, waste
water discharge, employee health and other environmental matters. Proper waste
disposal and environmental regulation are major considerations for us because a
number of the metals, chemicals and other materials used in and resulting from
our manufacturing processes are classified as hazardous substances and hazardous
wastes. If we do not meet permitting and other requirements of applicable
environmental laws, we could be liable for damages and for the costs of remedial
actions. We could also be subject to fines or other penalties, including
revocation of permits needed to conduct our business. Any permit revocation
could require us to cease or limit production at one or more of our facilities,
which could damage our business and financial performance. We have an ongoing
program of monitoring and addressing environmental matters, and from time to
time in the ordinary course of business we are required to address minor issues
of noncompliance at our operating sites. From time to time, we identify certain
operations or processes that lack required permits or otherwise are not in full
compliance with applicable environmental laws. Although we believe these items
have not been material to date, we maintain an environmental compliance team,
and our policy is to take steps promptly to remedy any noncompliance.
Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with any
violations. As a generator of hazardous materials, we are subject to financial
exposure with regard to our properties even if we fully comply with these laws.
In addition, certain of our facilities are located in industrial areas and have
lengthy operating histories. As a consequence, it is possible that historical
or neighboring activities have affected properties we currently own, and that,
as a result, additional environmental issues may arise in the future, the
precise nature of which we cannot now predict. Any present or future
noncompliance with environmental laws or future discovery of contamination could
have a material adverse effect on our results of operations or financial
condition.
We are subject to costs and risks from our U.S. government contracts and federal
laws.
Certain of our products are manufactured and sold under United States government
contracts or subcontracts. As with all companies that provide products or
services to the United States government, we are directly and indirectly subject
to various federal rules, regulations and orders applicable to government
contractors. Some of these regulations relate specifically to the seller-
purchaser relationship with the government, such as the bidding and pricing
rules. Under regulations of this type, we must observe certain pricing
restrictions, produce and maintain detailed accounting data, and meet various
other requirements. We are also subject to
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many regulations affecting the conduct of our business generally. For example,
in the United States we must adhere to federal acquisition requirements and
standards established by the Occupational Safety and Health Act relating to
labor practices and occupational safety standards. We are currently updating and
implementing written policies and training programs relating to employee health
and safety matters at several of our facilities. Violation of applicable
government rules and regulations could result in civil liability, in
cancellation or suspension of existing contracts, or in ineligibility for future
contracts or subcontracts funded in whole or in part with federal funds. In
addition, some of our customers are in the defense industry, and loss of
governmental certification by these customers could cause them to reduce or
curtail their purchases from us, which could harm our business.
Future issuances or resales of a significant number of shares of our common
stock could negatively affect the market price of our stock.
Sales of a significant number of shares of common stock in the public market or
the prospect of such sales could adversely affect the market price of our common
stock. This offering covers the resale by the Selling Shareholders of up to
5,279,150 shares of common stock. The actual number of shares issuable upon
exercise of the warrants described in this prospectus cannot be determined at
this time and could be more or less than the 3,279,150 shares being registered
with respect to the warrants. As of August 18, 2000, we have also reserved
2,295,000 common shares for issuance under our publicly traded warrants,
3,353,948 common shares for issuance under options outstanding under our two
stock incentive plans, 86,637 common shares for issuance under options
outstanding under our independent director stock plan, and 838,609 common shares
for issuance under other warrants and options. We also have an employee stock
purchase plan permitting employees to purchase shares of common stock using
payroll deductions, subject to certain limits. Shares issued upon exercise of
our outstanding warrants or options or pursuant to the employee stock purchase
plan would be available for resale in the public markets, subject in some cases
to volume and other limitations.
Any future issuance of a significant number of common shares, or any future
resales by the holders of a significant number of common shares, or the prospect
of such issuances or resales, could negatively affect the market price of our
common stock.
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INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" certain of our publicly-filed
documents into this prospectus, which means that information included in those
documents is considered part of this prospectus. Information that we file with
the SEC after the date of this prospectus will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until the Selling Shareholders
have sold all the shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our annual report on Form 10-K for the year ended May 31, 2000; and
2. The description of our common stock set forth in our registration
statement on Form 8-B as filed with the SEC on February 6, 1997.
You may request free copies of these filings by writing or telephoning us at the
following address: Pacific Aerospace & Electronics, Inc., 430 Olds Station Road,
Third Floor, Wenatchee, Washington 98801, Attention: Mr. Tom Barrows, Investor
Relations, (509) 667-9600.
The information relating to Pacific Aerospace contained in this prospectus is
not comprehensive, and you should read it together with the information
contained in the incorporated documents.
AVAILABLE INFORMATION
This prospectus is part of a registration statement that we filed with the SEC.
Certain information in the registration statement has been omitted from this
prospectus in accordance with SEC rules.
We file annual, quarterly and special reports and other information with the
SEC. You may read and copy the registration statement and any other document
that we file at the SEC's public reference rooms located at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549; 7 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings are
also available to you free of charge at the SEC's web site at
http://www.sec.gov.
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
you should refer to the copy of the contract or other document filed as an
exhibit to the registration statement.
12
<PAGE>
SELLING SHAREHOLDERS
The Selling Shareholders are offering up to 5,279,150 shares of common stock
(the "Shares") pursuant to this prospectus. The Shares being offered are
related to a private placement that closed on July 27, 2000 and are composed of:
. 1,142,860 shares of common stock sold to Strong River Investments, Inc. and
sold to Bay Harbor Investments, Inc. ("the Investors") on July 27, 2000;
. 857,140 shares of common stock issuable to the Investors upon effectiveness
of the registration statement of which this prospectus is a part by
September 25, 2000;
. up to 385,000 shares of common stock issuable to the Investors upon
exercise of warrants issued to them on July 27, 2000;
. up to 2,815,000 shares of common stock issuable to the Investors if certain
events occur, pursuant to additional warrants issued to them on July 27,
2000; and
. up to 79,150 shares of common stock issuable upon exercise of warrants
issued on July 27, 2000 to the placement agent that acted on behalf of the
Company in the private placement.
The private placement was made pursuant to the exemption from registration
contained in Rule 506 of Regulation D under the Securities Act. In the private
placement, the Company agreed with the Investors to file the registration
statement of which this prospectus is a part to register the Shares for resale
in the U.S.
This prospectus and the related registration statement that the Company has
filed with the SEC will allow the Selling Shareholders to resell the Shares to
third parties according to the plan of distribution described in this
prospectus. See "Plan of Distribution."
No Selling Shareholder has held any position or office or has had any other
material relationship with the Company or any of its affiliates within the past
three years, except that Rochon Capital Group, Ltd. has been engaged through
November 16, 2000 to act as placement agent on behalf of the Company.
13
<PAGE>
The following table sets forth certain information as of August 18, 2000, to the
best of the Company's knowledge, regarding the ownership of common stock by the
Selling Shareholders and as adjusted to give effect to the sale of the Shares
offered by this prospectus.
<TABLE>
<CAPTION>
Ownership After Offering
Shares if All Shares Offered by
Beneficially this Prospectus are Sold
------------------------
Owned Prior Shares Being
Selling Shareholder to Offering/(1)/ Offered Shares Percent
------------------- ----------- ------- ------ -------
<S> <C> <C> <C> <C>
Strong River Investments, Inc. 2,600,000/(2)/ 2,600,000/(2)/ 0 --
Bay Harbor Investments, Inc. 2,600,000/(3)/ 2,600,000/(3)/ 0 --
Rochon Capital Group, Ltd. 79,150/(4)/ 79,150/(4)/ 0 --
</TABLE>
___________________
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
subject to warrants that are currently exercisable or convertible or may be
exercised or converted within sixty days are deemed to be outstanding and
to be beneficially owned by the person holding the warrants for the purpose
of computing the number of shares beneficially owned.
(2) Includes: 571,430 shares of common stock issued to Strong River
Investments, Inc. on July 27, 2000; 428,570 shares of common stock to be
issued to Strong River Investments, Inc. upon effectiveness of the
registration statement of which this prospectus is a part prior to
September 25, 2000; and up to 1,600,000 shares of common stock issuable to
Strong River Investments, Inc. upon exercise of warrants issued on July 27,
2000.
(3) Includes: 571,430 shares of common stock issued to Bay Harbor Investments,
Inc. on July 27, 2000; 428,570 shares of common stock to be issued to Bay
Harbor Investments, Inc. upon effectiveness of the registration statement
of which this prospectus is a part prior to September 25, 2000; and up to
1,600,000 shares of common stock issuable to Bay Harbor Investments, Inc.
upon exercise of warrants issued on July 27, 2000.
(4) Represents shares of common stock issuable upon exercise of warrants issued
to Rochon Capital Group, Ltd. on July 27, 2000.
14
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders and any of their pledgees, assignees and successors-in-
interest may, from time to time, sell any or all of their shares of common stock
on any stock exchange, market or trading facility on which the shares are traded
or in private transactions. These sales may be at fixed or negotiated prices.
The Selling Shareholders may use any one or more of the following methods when
selling shares:
. ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
. block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
. purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
. an exchange distribution in accordance with the rules of the applicable
exchange;
. privately negotiated transactions;
. broker-dealers may agree with the Selling Shareholders to sell a specified
number of such shares at a stipulated price per share;
. a combination of any such methods of sale; and
. any other method permitted pursuant to applicable law.
The Selling Shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Shareholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
Pacific Aerospace is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Shareholders. Pacific Aerospace has agreed to indemnify the Selling
Shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
15
<PAGE>
EXPERTS
The financial statements and schedules of Pacific Aerospace & Electronics, Inc.
as of May 31, 2000 and May 31, 1999 and for each of the fiscal years in the
three-year period ended May 31, 2000 have been incorporated by reference in this
prospectus and in the registration statement of which this prospectus is a part
in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein and therein, and upon the
authority of that firm as experts in accounting and auditing. The report of
KPMG LLP contained in our annual report on Form 10-K for the year ended May 31,
2000, contains an explanatory paragraph that states that the Company's recurring
losses from operations raise substantial doubt about our ability to continue as
a going concern. Our consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.
LEGAL MATTERS
The validity of the issuance of the Shares offered by this prospectus has been
passed upon for the Company by Stoel Rives LLP of Seattle, Washington.
16
<PAGE>
No person is authorized to give any information or to make any representation
regarding this offering other than those contained in this prospectus. Any
further information or representation has not been authorized by Pacific
Aerospace. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the shares:
. in any jurisdiction in which such offer to sell or solicitation is not
unauthorized;
. in any jurisdiction in which the person making such offer or solicitation
is not qualified to do so; or
. to any person to whom it is unlawful to make such offer or solicitation.
The delivery of this prospectus and any sale under this prospectus shall not
create any implication that the affairs of Pacific Aerospace are unchanged, or
that the information contained in this prospectus is correct, at any time after
the date of this prospectus.
PACIFIC AEROSPACE & ELECTRONICS, INC.
5,279,150 Shares
of
Common Stock
__________________
PROSPECTUS
__________________
________ __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Distribution.
------------------------------
The following table sets forth the expenses incurred in connection with the sale
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimated except the
SEC registration fee and the Nasdaq listing fee.
<TABLE>
<S> <C>
SEC registration fee................................... $ 2,049
Nasdaq National Market listing fee..................... 17,500
Legal fees and expenses................................ 10,000
Accounting fees and expenses........................... 7,000
Miscellaneous.......................................... 451
Total.................................................. $37,000
</TABLE>
Item 15. Indemnification of Officers and Directors.
-----------------------------------------
Article 8 of the Company's Articles of Incorporation authorizes the Company to
indemnify its directors to the fullest extent permitted by the Washington
Business Corporation Act through the adoption of bylaws, approval of agreements,
or by any other manner approved by the Board of Directors.
In accordance with such authorization, Section 10 of the Company's Bylaws (the
"Bylaws") requires indemnification, to the fullest extent permitted by
applicable law, of any person who is or has served as a director or officer of
the Company, as well as any person who, while serving as a director or officer
of the Company, served at the request of the Company as a director, officer,
employee or agent of another entity, against expenses reasonably incurred
because such person was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether formal or
informal, civil, criminal, administrative or investigative.
Notwithstanding these indemnification obligations, Section 10 of the Bylaws
states that no indemnification will be provided (a) to the extent that such
indemnification would be prohibited by the Washington Business Corporation Act
or other applicable law as then in effect, or (b) except with respect to
proceedings seeking to enforce rights to indemnification, to any director or
officer seeking indemnification in connection with a proceeding initiated by
such person unless such proceeding was authorized by the Board of Directors.
Section 10 of the Bylaws also provides that expenses incurred in defending any
proceeding in advance of its final disposition shall be advanced by the Company
to the director or officer upon receipt of an undertaking by or on behalf of
such person to repay such amount if it is ultimately determined that such person
is not entitled to be indemnified by the Company,
II-1
<PAGE>
except where the Board of Directors adopts a resolution expressly disapproving
such advancement. Section 10 of the Bylaws also authorizes the Board to
indemnify and advance expenses to employees and agents of the Company on the
same terms and with the same scope and effect as the provisions thereof with
respect to the indemnification and advancement of expenses to directors and
officers.
Item 16. Exhibits.
--------
Exhibit
Number Description
2.1 Securities Purchase Agreement among Pacific Aerospace &
Electronics, Inc., Strong River Investments, Inc., and Bay Harbor
Investments, Inc., dated as of July 27, 2000./(2)/
4.l Articles of Incorporation of Pacific Aerospace & Electronics,
Inc./(1)/
4.3 Bylaws of Pacific Aerospace & Electronics, Inc./(1)/
4.4 Form of specimen certificate for Common Stock./(1)/
4.5 Registration Rights Agreement between Pacific Aerospace &
Electronics, Inc., Strong River Investments, Inc., and Bay Harbor
Investments, Inc., dated as of July 27, 2000./(2)/
4.6 Warrant between Pacific Aerospace & Electronics, Inc. and
Strong River Investments, Inc., dated as of July 27, 2000. /(2)/
4.7 Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000. /(2)/
4.8 Warrant between Pacific Aerospace & Electronics, Inc. and
Strong River Investments, Inc., dated as of July 27, 2000. /(2)/
4.9 Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.10 Vesting Warrant between Pacific Aerospace & Electronics, Inc.
and Strong River Investments, Inc., dated as of July 27, 2000.
/(2)/
4.11 Vesting Warrant between Pacific Aerospace & Electronics, Inc.
and Bay Harbor Investments, Inc., dated as of July 27, 2000.
/(2)/
4.12 Placement Agent Warrant between Pacific Aerospace & Electronics,
Inc. and Rochon Capital Group, Ltd., dated as of July 27, 2000.
/(3)/
5.1 Opinion of Stoel Rives LLP./(4)/
23.1 Consent of KPMG LLP./(4)/
23.2 Consent of Stoel Rives LLP (included in Exhibit 5.1).
24.1 Power of Attorney for officers and directors./(4)/
________________________________________________________________________________
/(1)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on December 12, 1996.
/(2)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on August 8, 2000.
/(3)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ending May 31, 2000.
/(4)/ Filed with this Registration Statement.
II-2
<PAGE>
Item 17. Undertakings.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) that, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
II-3
<PAGE>
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under "Plan of Distribution" and Item 15, 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 Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, PACIFIC
AEROSPACE & ELECTRONICS, INC. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in Wenatchee, Washington, on
August 28, 2000.
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: /s/ Donald A. Wright
---------------------------
Donald A. Wright, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities indicated on August 28, 2000.
Signature Title
/s/ Donald A. Wright President, Chief Executive Officer and
------------------------------- Director (Principal Executive Officer)
Donald A. Wright
/s/ Nick A. Gerde* Chief Financial Officer, Vice President
------------------------------- Finance and Treasurer (Principal Financial
Nick A. Gerde and Accounting Officer)
/s/ Allen W. Dahl, M.D.* Director
-------------------------------
Allen W. Dahl, M.D.
/s/ Werner Hafelfinger* Director
-------------------------------
Werner Hafelfinger
/s/ Dale L. Rasmussen* Director
-------------------------------
Dale L. Rasmussen
/s/ William A. Wheeler* Director
-------------------------------
William A. Wheeler
/s/ Robert M. Stemmler * Director
-------------------------------
Robert M. Stemmler
*By /s/ Donald A. Wright
-------------------------------
Donald A. Wright
(Attorney in Fact)
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.1 Securities Purchase Agreement among Pacific Aerospace &
Electronics, Inc., Strong River Investments, Inc., and Bay
Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.l Articles of Incorporation of Pacific Aerospace &
Electronics, Inc./(1)/
4.3 Bylaws of Pacific Aerospace & Electronics, Inc./(1)/
4.4 Form of specimen certificate for Common Stock./(1)/
4.5 Registration Rights Agreement between Pacific Aerospace &
Electronics, Inc., Strong River Investments, Inc., and Bay
Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.6 Warrant between Pacific Aerospace & Electronics, Inc. and
Strong River Investments, Inc., dated as of July 27, 2000.
/(2)/
4.7 Warrant between Pacific Aerospace & Electronics, Inc. and
Bay Harbor Investments, Inc., dated as of July 27, 2000.
/(2)/
4.8 Warrant between Pacific Aerospace & Electronics, Inc. and
Strong River Investments, Inc., dated as of July 27, 2000.
/(2)/
4.9 Warrant between Pacific Aerospace & Electronics, Inc. and
Bay Harbor Investments, Inc., dated as of July 27, 2000.
/(2)/
4.10 Vesting Warrant between Pacific Aerospace & Electronics,
Inc. and Strong River Investments, Inc., dated as of July
27, 2000./(2)/
4.11 Vesting Warrant between Pacific Aerospace & Electronics,
Inc. and Bay Harbor Investments, Inc., dated as of July
27, 2000./(2)/
4.12 Placement Agent Warrant between Pacific Aerospace &
Electronics, Inc. and Rochon Capital Group, Ltd., dated as
of July 27, 2000./(3)/
5.1 Opinion of Stoel Rives LLP./(4)/
23.1 Consent of KPMG LLP./(4)/
23.2 Consent of Stoel Rives LLP (included in Exhibit 5.1).
24.1 Power of Attorney for officers and directors./(4)/
________________________________________________________________________________
/(1)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on December 12, 1996.
/(2)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on August 8, 2000.
/(3)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ending May 31, 2000.
/(4)/ Filed with this Registration Statement.
