<PAGE>
As filed with the Securities and Exchange Commission on June 1, 2000
Registration No. 333-96207
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
LONE STAR TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 75-2085454
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15660 North Dallas Parkway, Suite 500
Dallas, Texas 75248
P.O. Box 803546
Dallas, Texas 75380
(972) 770-6401
(Address, including zip code, and
telephone number, including area code,
of registrant's principal executive offices)
Rhys J. Best
Chairman of the Board,
Chief Executive Officer and President
Lone Star Technologies, Inc.
15660 North Dallas Parkway, Suite 500
Dallas, Texas 75248
P.O. Box 803546
Dallas, Texas 75380
(972) 770-6401
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
COPIES TO:
David E. Morrison
Jane E. Rast
Thompson & Knight L.L.P.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
(214) 969-1700 (phone)
(214) 969-1751 (fax)
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 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. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
===============================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 1, 2000
PROSPECTUS
760,237 SHARES
LONE STAR TECHNOLOGIES, INC.
COMMON STOCK
--------------------
This prospectus covers the offer and sale by the selling
stockholders of Lone Star Technologies, Inc. identified in this prospectus of
up to 760,237 shares of Lone Star common stock.
The selling stockholders obtained their shares of our common stock in a
private placement as part of the consideration for our purchase of substantially
all of the assets of Fintube Limited Partnership, effective as of January 1,
2000, as described under the heading "Selling Stockholders."
The selling stockholders may offer their Lone Star common stock through
public or private transactions, on or off the New York Stock Exchange ("NYSE"),
at prevailing market prices, or at privately negotiated prices. The selling
stockholders can use broker-dealers to facilitate these transactions. To the
extent required, the specific shares to be sold, the terms of the offering,
including price, the names of any agent, dealer or underwriter, and any
applicable commission, discount or other compensation with respect to a
particular sale will be set forth in an accompanying prospectus supplement.
Our common stock is listed on the NYSE under the symbol "LSS." On
June , 2000, the last reported sale price of our common stock on the NYSE
was $ per share.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF
THIS PROSPECTUS BEFORE PURCHASING ANY SHARES OF LONE STAR COMMON STOCK.
--------------------
The shares of Lone Star common stock offered or sold under this
prospectus have not been approved by the Securities and Exchange Commission or
any state securities commission, nor have these organizations determined that
this prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
--------------------
THE INFORMATION IN THIS PRELIMINARY 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 BECOMES EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES NOR A
SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus..............................................2
Where You Can Find More Information................................2
Risk Factors.......................................................4
Cautionary Statement Regarding Forward-Looking Statements.........10
The Company.......................................................11
Selling Stockholders..............................................12
Plan of Distribution..............................................15
Use of Proceeds...................................................16
Description of Capital Stock......................................16
Legal Matters.....................................................19
Experts...........................................................19
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC. This prospectus provides you with a general description of the
securities being offered. You should read this prospectus together with
additional information described below under the heading "Where You Can Find
More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at the SEC's headquarters at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's regional offices at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and at 7 World Trade Center, Suite 1300, New York,
New York 10048. Our SEC filings are also available to the public over the
Internet at the SEC's web site at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 until all of the securities are sold.
- Annual Report on Form 10-K for the year ended December 31, 1999, as
amended by Amendment No. 1 to Form 10-K filed June 1, 2000.
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000,
as amended by Amendment No. 1 to Form 10-Q filed June 1, 2000.
- Current Report on Form 8-K filed November 22, 1999 (date of event
November 16, 1999).
- Current Report on Form 8-K filed January 18, 2000 (date of event
January 3, 2000), Amendment No. 1 to the Form 8-K filed February 3,
2000, Amendment No. 2 to the Form 8-K filed March 17, 2000, and
Amendment No. 3 to the Form 8-K filed March 29, 2000 and Amendment
No. 4 to Form 8-K filed June 1, 2000. The Form 8-K, as amended,
includes audited financial
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statements of Fintube Limited Partnership and unaudited pro forma
financial statements of Lone Star reflecting the acquisition by
Lone Star of the Fintube assets.
- Current Report on Form 8-K filed April 17, 2000.
- Proxy Statement filed March 29, 2000.
- Registration Statement on Form 8-A filed April 9, 1997 containing a
description of the Lone Star common stock.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Lone Star Technologies, Inc.
15660 North Dallas Parkway, Suite 500
Dallas, Texas 75248
P.O. Box 803546
Dallas, Texas 75380
Dallas: (972) 770-6401
United States: (800) 527-4615
------------------------------
The terms "Lone Star," "we," "our" and "us" refer to Lone Star
Technologies, Inc. and its consolidated subsidiaries unless the context suggests
otherwise. The term "you" refers to a prospective investor.
------------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you
with different information. Our affairs may change after this prospectus. You
should read all information supplementing this prospectus.
3
<PAGE>
RISK FACTORS
YOUR INVESTMENT IN THE COMMON STOCK INVOLVES RISKS. IN ADDITION TO THE
OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE DECIDING WHETHER AN
INVESTMENT IN THE COMMON STOCK IS SUITABLE FOR YOU.
VOLATILITY OF THE OIL AND GAS MARKETS AFFECTS DEMAND FOR OUR PRINCIPAL
PRODUCTS, AND DOWNTURNS IN THESE MARKETS COULD CAUSE OUR REVENUES TO
DECREASE.
The largest source of net sales of our largest subsidiary, Lone Star Steel
Company, is the sale of casing and tubing and line pipe to the oil and gas
industry, which has historically been volatile. Downturns in the oil and gas
markets could cause demand for our principal products to decrease, which would
adversely affect our revenues and results of operations.
Demand for these principal products depends primarily upon the number
of oil and gas wells being drilled, completed and connected in the United
States and Canada, which are in turn primarily dependent on oil and gas price
expectations and realizations. Prices for oil and gas are subject to
significant fluctuations in response to relatively minor changes in supply,
market uncertainty and a variety of additional factors which are beyond our
control. These factors include:
- worldwide and domestic supplies of and demand for oil and natural
gas;
- instability and volatility of oil prices and domestic and foreign
oil production levels;
- political instability or armed conflict in oil-producing regions;
- the price and level of imports of oil and gas casing and tubing and
line pipe;
- the level of consumer and industrial demand;
- the price and availability of alternative fuels;
- the price and availability of imported steel pipe and tubing;
- the availability of pipeline capacity;
- weather conditions;
- domestic and foreign governmental regulations and taxes,
especially trade laws; and
- the overall economic environment.
We expect oil and gas prices to continue to be volatile in the future. We
cannot predict future oil and gas price movements, and we cannot give you any
assurances as to the level of future demand for our products.
MARKET VOLATILITY OF INDUSTRIES WHICH UTILIZE OUR FINTUBE PRODUCTS FOR
HEAT RECOVERY APPLICATIONS AFFECTS DEMAND FOR THOSE PRODUCTS, AND
DOWNTURNS IN THOSE INDUSTRIES COULD ADVERSELY AFFECT OUR REVENUES.
Our Fintube Technologies, Inc. subsidiary produces boiler tubes, finned
tubes and other products used in a variety of heat recovery applications,
including power generation, industrial plant processing and petrochemical
businesses. Demand for these products is subject to significant fluctuations
in response to a number of economic, market and other factors, and a decrease
in such demand could adversely affect our results of operations. The factors
which cause such fluctuations include:
- the level of consumer and industrial demand for power generation;
- instability and volatility of oil prices and domestic and
foreign oil production levels, which factors can affect
investment in petrochemical plants;
- the price and level of imports of foreign products;
- worldwide and domestic supplies of natural gas, since
construction of gas-fired, combined cycle electric power
generating plants and other new power generation plants
becomes a more cost-effective alternative when natural gas
prices are relatively low;
- the price and availability of alternative fuels;
- weather conditions;
- domestic and foreign governmental regulations and taxes; and
- the overall economic environment.
We cannot predict future economic and market movements, and we cannot give
you any assurances as to the level of future demand for our Fintube products.
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EXCESSIVE CAPACITY OF OUR OIL AND GAS CASING AND TUBING PRODUCTS AND LINE
PIPE COULD ADVERSELY AFFECT OUR SALES.
Industry-wide inventory levels of tubular goods for the oil and gas
industry can vary significantly from period to period and can have a direct
effect on the demand for new production of those products. As a result, our oil
and gas casing and tubing sales and results of operations may vary significantly
from period to period. We cannot assure you that oil and gas casing and tubing
inventories will not become excessive, which could have a material adverse
effect on price levels and the quantity of oil and gas casing and tubing and
line pipe products sold by us. Domestic and foreign manufacturers of tubular
goods for the oil and gas industry suffer from excess capacity, which has
resulted in intense competition and depressed prices for oil and gas casing and
tubing and line pipe. If domestic drilling activity were to increase, we cannot
assure you that excess domestic capacity would be substantially absorbed since
foreign producers of oil and gas casing and tubing and line pipe may increase
their exports to the United States market.
The level of imports of oil and gas casing and tubing and line pipe is
affected by:
- the relative value of the United States dollar;
- overall world demand for oil and gas casing and tubing and line
pipe;
- the competitiveness of domestic producers;
- the purchasing pattern of distributors and end-users; and
- domestic and foreign trade policy.
OUR OIL AND GAS CASING AND TUBING AND LINE PIPE, SPECIALTY TUBING AND
OTHER BUSINESSES ARE CYCLICAL AND SENSITIVE TO ECONOMIC DOWNTURNS, WHICH
COULD CAUSE OUR REVENUES TO DECREASE.
The demand for the oil and gas casing and tubing products of our Lone Star
Steel subsidiary is cyclical in nature and dependent on oil and gas drilling
activity, industry-wide inventory levels and general economic conditions, as
noted above. The demand for our specialty tubing products, flat rolled steel and
other products is also cyclical in nature and is sensitive to general economic
conditions. Future economic downturns may adversely affect us.
Through our Lone Star Steel specialty tubing business, we manufacture and
sell high quality steel tubing used by our customers in the manufacture of
products such as automotive stabilizer bars, hydraulic cylinders and cranes. The
demand for these products and, in turn, for our specialty tubing, is cyclical
and dependent on the general economy, the automotive and construction industries
and other factors affecting domestic goods activity. We cannot assure you that
our specialty tubing inventories will not become excessive, which could have a
material adverse effect on price levels and the quantity of specialty tubing
products sold by us.
Our Fintube subsidiary manufactures and sells steel tubing with fins or
studs used in a variety of heat transfer applications, including those in
municipal power plants. Our Fintube business is therefore dependent on, among
other factors, power plant construction, the cost of alternative fuels for power
generation and other factors. To a lesser extent, our Fintube business is also
dependent on industrial plant processing and petrochemical plant construction.
This construction activity and the corresponding demand for our Fintube products
are also related to oil and natural gas prices and are therefore subject to the
volatility of the oil and gas market.
WE FACE SIGNIFICANT FOREIGN AND DOMESTIC COMPETITION IN OUR OIL AND GAS
CASING AND TUBING AND FINTUBE BUSINESSES, AND THIS COMPETITION MAY CAUSE
US TO LOSE SALES.
Our Lone Star Steel and Fintube subsidiaries compete with foreign
and domestic producers, many of which have substantially greater assets and
larger sales organizations than us. Our oil and gas casing and tubing and
line pipe products are subject to competition from domestic and foreign
integrated and mini-mill producers. Our Fintube products face competition
from both domestic manufacturers and from Pacific Rim and other international
producers. The market for our products, particularly with respect to oil and
gas casing and tubing, line pipe and finned tubes, is highly competitive. We
believe that the principal competitive factors affecting these products are
availability, price, quality and service.
In the welded oil and gas casing and tubing and line pipe market, we
compete against manufacturers that may be able to purchase or produce
semi-finished steel, hot rolled coils or scrap at a lower cost than we can. Our
Lone Star Steel subsidiary satisfies its raw material requirements by purchasing
semi-finished steel and by using
5
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purchased and internally generated scrap to make hot rolled coils in its melt
shop and hot strip mill. Correspondingly, our Fintube subsidiary must also
compete with manufacturers that may be able to purchase or produce hot rolled
coils more cost-effectively than our subsidiary can purchase them. We cannot
assure you that we can satisfy our subsidiaries' raw material requirements as
cost-effectively as our competitors. Moreover, by steel industry standards,
the barriers to entry into either the welded tubular market or the finned
tube market with respect to capital investment are low.
SIGNIFICANT FOREIGN COMPETITION IN OUR INDUSTRY COULD HARM OUR BUSINESS,
PARTICULARLY IN THE CASE OF OIL AND GAS CASING AND TUBING AND LINE PIPE
IF THE U.S. GOVERNMENT EASES IMPORT TRADE RESTRICTIONS.
The domestic steel industry historically has faced significant competition
from foreign steel producers. Many foreign steel producers are owned, controlled
or subsidized by their governments and their decisions with respect to
production and sales may be influenced more by political and economic policy
considerations than by prevailing market conditions. Actions motivated by such
factors could increase competition and cause our sales to decrease.
The U.S. government is currently imposing duties on the imports of
various oil and gas casing and tubing products from some foreign countries in
response to antidumping and countervailing duty cases filed by several
domestic steel companies. These tariffs are limited to specific countries,
are largely under appeal and are subject to various reviews. Trade tariffs on
oil and gas casing and tubing from these countries became subject to sunset
review beginning in May 1999. Trade tariffs on oil and gas casing and tubing
from more significant importers will be subject to review in July 2000.
Under schedules proposed by the U.S. International Trade Commission,
decisions in cases should be made approximately one year after initiation.
In response to a petition filed by Lone Star Steel and other domestic
welded line pipe producers and their workers, in February 2000 the U.S.
government granted relief to the line pipe industry under Section 201 of the
Trade Act of 1974. The relief restricts welded line pipe imports not
exceeding 16 inches to 9,000 tons from any country other than Canada and
Mexico for three years. Imports in excess of that amount are subject to
additional tariffs. This ruling is also subject to appeal and review.
We cannot predict the U.S. government's future actions regarding import
duties or other trade restrictions on imports of oil and gas casing and
tubing products or line pipe, or the impact of these actions on our sales of
oil and gas casing and tubing products or line pipe.
OUR FUTURE OPERATING RESULTS MAY FLUCTUATE, WHICH COULD RESULT IN A LOWER
PRICE FOR OUR COMMON STOCK.
We cannot assure you that we will be profitable in the future. We had
an operating loss in 1999 due to the low level of oil and gas drilling
activity that resulted from low oil and gas prices in the first half of the
year. We also sustained operating losses from continuing operations in 1998
and in 1994, in each case principally as the result of a continued decline in
oil and gas drilling activity which reduced demand and prices for our oil and
gas casing and tubing products. We had operating earnings from continuing
operations in 1995, 1996 and 1997 when the levels of domestic drilling
activity were higher. Our recently acquired Fintube business has historically
had fluctuating operating results. Our future operating results may fluctuate
significantly depending upon a number of factors, including industry
conditions and level of oil and gas drilling activity, in the case of our
Lone Star Steel subsidiary, and continuing domestic and foreign demand for
power generation, in the case of our Fintube subsidiary.
WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS, AND WE MAY REQUIRE ADDITIONAL
CAPITAL IN THE FUTURE WHICH MIGHT NOT BE AVAILABLE TO US.
We operate in capital intensive businesses. Our Lone Star Steel
subsidiary has made, and we expect our Fintube subsidiary will be required to
make, significant capital expenditures each year both for the recurring
maintenance necessary to keep manufacturing facilities operational and to
comply with environmental and other legal requirements. Our borrowing
capacity and the borrowing capacities of our Lone Star Steel and Fintube
subsidiaries are interrelated and substantially utilized. If funding is
insufficient at any time in the future, we may be unable to develop or
enhance our products or services, take advantage of business opportunities or
respond to competitive pressures.
We believe our Lone Star Steel and Fintube subsidiaries will have adequate
borrowing capacity to satisfy working capital needs and planned expenditures for
the foreseeable future. However, if additional funds are required, our
subsidiaries might not be able to obtain additional financing on reasonable
terms or at all, since both of
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our operating subsidiaries are highly leveraged and all of their respective
assets are pledged to secure their separate credit facilities. The revolving
credit agreement of each of our two subsidiaries restricts its ability to
incur additional indebtedness and includes various restrictive covenants,
including requirements to maintain cash flow and minimum net worth levels and
other financial ratios.
THE INTENSE COMPETITION FOR RAW MATERIALS WE USE IN OUR BUSINESS AND THE
VOLATILITY OF OUR RAW MATERIAL COSTS COULD ADVERSELY AFFECT OUR
OPERATIONS.
The price and availability of the scrap steel, semi-finished steel, steel
coils and wire rod that we use in our manufacturing processes is highly
competitive and subject to price volatility influenced by various factors beyond
our control, such as:
- supply and demand factors;
- freight costs;
- speculation by scrap brokers;
- imports;
- trade duties;
- import taxes; and
- labor disputes.
During periods of declining steel prices, declines in steel prices may
not be as significant as declines in product prices and, likewise, a decline
in steel prices may cause a decline in selling prices for our products.
Although the availability of semi-finished steel and steel coils has not
constrained our Lone Star Steel operations historically, and to our knowledge
the availability of hot rolled coils and wire rod has not constrained the
operations of our recently acquired Fintube business, we cannot predict
whether it will do so in the future.
OUR ACQUISITION OF FINTUBE'S AND BELLVILLE'S BUSINESSES AND ANY OTHER
ACQUISITIONS MIGHT DISRUPT OUR BUSINESS IF OUR EXPECTATIONS ARE NOT MET
OR IF WE ARE UNABLE TO OPERATE THE ACQUIRED BUSINESS SUCCESSFULLY.
On January 3, 2000, we purchased our Fintube business through our
Fintube subsidiary's purchase of substantially all of the assets of Fintube
Limited Partnership and its subsidiaries. We have retained Fintube Limited
Partnership's personnel and to conduct its business in generally the same
manner as was conducted prior to the acquisition, but we cannot assure you
that we will be successful in maintaining this continuity or that our plans
regarding the operation of the acquired Fintube business or our existing
business will not change. Any disruptions in personnel or operations could be
compounded by our lack of familiarity with the finned tube business and could
result in quality problems, inefficiencies in production or dissatisfied or
lost customers. Similarly, we have retained Bellville Tube Corporation's
personnel following our April 1, 2000 acquisition of Bellville's assets. Any
loss of key Bellville personnel could be disruptive to our business.
In addition, Lone Star may consider strategic acquisitions from time to
time. We must necessarily base any assessment of potential acquisitions on
inexact and incomplete information and assumptions with respect to
operations, profitability and other matters that may prove to be incorrect.
Lone Star cannot assure you that management of Lone Star would recognize the
risks and uncertainties associated with an acquisition or that we recognized
all the risks and uncertainties in the Fintube and Bellville acquisitions. In
addition, any other acquisitions could involve risks similar to those
discussed in the preceding paragraph with respect to Fintube and Bellville.
WE HAVE UNDERFUNDED PENSION PLANS, WHICH COULD RESULT IN CLAIMS AGAINST
OUR ASSETS.
Our three defined benefit pension plans for our Lone Star Steel
bargaining unit employees were underfunded by an aggregate of approximately
$18.2 million as of November 30, 1999 (as reflected in our December 31, 1999
financial statements) using an investment return assumption of 9% per annum
and a discount rate of 7.5% per annum. If the plans were terminated under the
distress termination provisions of the Employee Retirement Income Security
Act of 1974, as amended, or "ERISA," using the actuarial assumptions
specified by the Pension Benefit Guaranty Corporation, or "PBGC," the PBGC
would have claims against our assets for the amount necessary to satisfy the
plans' unfunded benefit liabilities under the PBGC assumptions, which amount
would likely be between $30 million and $35 million.
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POTENTIAL CASUALTIES AND PRODUCT LIABILITY CLAIMS RELATING TO THE PRODUCTS
WE MANUFACTURE AND SELL TO THE OIL AND GAS INDUSTRY AND INDUSTRIES USING
HEAT RECOVERY APPLICATIONS COULD HARM OUR BUSINESS.
Our oil and gas casing and tubing products are sold primarily for use in
oil and gas drilling activities, which are subject to inherent risks, including
blowouts and fires, that could result in death, personal injury, property
damage, pollution or loss of production. Any of these hazards and risks can
result in the loss of hydrocarbons, environmental pollution, personal injury
claims and damage to property. Correspondingly, defects in products made by our
Fintube subsidiary could result in death, personal injury, property damage,
pollution, damage to equipment and facilities or inefficient heat recovery. If
an event occurs that is not covered, or not fully covered, by insurance, it
could harm our financial condition and results of operations. We warrant our oil
and gas casing and tubing products and our Fintube products to be free of
various defects. As protection against these risks, we maintain insurance
coverage against some, but not all, potential losses, and we believe this
insurance is adequate. We cannot assure you that our insurance will be adequate
or available to protect us in the event of a claim or that the coverage will not
be canceled or otherwise terminated.
POLITICAL AND ECONOMIC CONDITIONS IN FOREIGN COMPANIES IN WHICH WE OPERATE
COULD ADVERSELY AFFECT US.
Lone Star Steel's direct foreign revenues as a percentage of total
revenues constituted approximately 6% in 1999, 8% in 1998 and 9% in 1997. The
success of our sales to foreign markets depends on numerous factors, many of
which are beyond our control. Such factors include economic conditions in the
foreign countries in which we sell our products and services. Our international
sales may also expose us to risks inherent in doing business outside the United
States, including currency fluctuations, restrictions on the repatriation of
profits and assets, compliance with foreign laws and standards and political
risks.
Our entry into the finned tube business has increased our foreign
exposure, as our Fintube subsidiary maintains manufacturing facilities in
Quebec, Canada and Veracruz, Mexico. Before our Fintube acquisition, Fintube
Limited Partnership had direct and indirect sales relating to projects outside
the United States of approximately $5.1 million in 1999, $8.6 million in 1998
and $15.8 million in 1997.
VARIOUS GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL RISKS APPLICABLE TO OUR
BUSINESS MAY REQUIRE US TO TAKE ACTION WHICH WILL ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.
Our business is subject to United States and foreign federal, state,
provincial and local laws and regulations relating to manufacturing operations,
as well as safety matters. Although we believe we are in substantial compliance
with all applicable laws and regulations, legal requirements are frequently
changed and subject to interpretation, and we are unable to predict the ultimate
cost of compliance with these requirements or their effect on our operations. We
may be required to make significant expenditures to comply with governmental
laws and regulations.
Our operations are subject to extensive environmental regulations
imposed by United States and foreign federal, state, provincial and local
authorities with respect to air emissions, wastewater discharges, and the
generation, handling, storage, transportation, treatment, and disposal of
waste materials. The domestic steel industry, including Lone Star, has spent
substantial amounts to comply with these regulations. Although we believe
that we are generally in compliance with the various environmental
regulations applicable to our businesses, environmental laws and regulations
change frequently, and the implementation of new, or the modification of
existing, laws or regulations could harm us. We cannot be certain that
existing environmental laws or regulations, as currently interpreted or
reinterpreted in the future, or future laws or regulations will not harm our
results of operations and financial condition.
SINCE WE DO NOT INTEND TO DECLARE DIVIDENDS IN THE FORESEEABLE FUTURE, THE
RETURN ON YOUR INVESTMENT WILL DEPEND UPON APPRECIATION OF THE MARKET
PRICE OF YOUR SHARES.
We have not paid any dividends on our common stock since becoming a
publicly held corporation in 1985, and we do not anticipate paying dividends on
our common stock at any time in the foreseeable future. As a result, the return
on your investment in our common stock will depend upon any appreciation in the
market price of the common stock.
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VOLATILITY IN THE PRICE OF OUR COMMON STOCK COULD RESULT IN A LOWER
TRADING PRICE THAN YOU PAID.
The market price of our common stock may be adversely affected by factors
such as actual or anticipated fluctuations in Lone Star's operating results,
acquisition activity, the impact of international markets, changes in financial
estimates by securities analysts, general market conditions and other factors.
Broad market fluctuations may adversely affect the market price of our common
stock. Lone Star cannot assure you that the market price of the common stock
will not decline below the levels prevailing at the time of this offering.
OUR SIGNIFICANT STOCKHOLDERS CONTROL A SUBSTANTIAL PORTION OF THE
OUTSTANDING COMMON STOCK.
Significant stockholders of Lone Star report their ownership of Lone
Star common stock as a group pursuant to Sections 13 and 16 of the Securities
and Exchange Act of 1934. Based on the most recent amendment to their
Schedule 13D and subsequent Form 4 filings, as of April 30, 2000, they
collectively owned 11,344,772 shares of our common stock, which represents
approximately 48.3% of our outstanding common stock as of that date.
Accordingly, these stockholders, as a group, will be able to significantly
influence the outcome of stockholder votes, including votes concerning the
election of directors, the adoption or amendment of provisions in our
certificate of incorporation or bylaws, and the approval of mergers and other
significant corporate transactions. Historically, this significant
stockholder group has been a passive investor in Lone Star and has generally
not affirmatively acted to control or impact our management. However, we
cannot assure you that their passive ownership will continue to be passive in
the future. The existence of these levels of ownership concentrated in a few
persons makes it less likely that any other holder of common stock will be
able to affect our management or direction. These factors may also have the
effect of delaying or preventing a change in our management or voting control
or the acquisition of Lone Star by a third party. In addition, this group's
ownership of approximately 48% of our common stock reduces the trading volume
in such stock from that which might otherwise exist.
PROVISIONS IN OUR CHARTER AND BYLAWS MAY AFFECT YOUR RIGHTS AS A
STOCKHOLDER AND LIMIT THE PRICE SOME INVESTORS MIGHT BE WILLING TO PAY FOR
OUR COMMON STOCK.
Provisions of our certificate of incorporation and bylaws may make it more
difficult for a third party to acquire Lone Star, or may discourage acquisition
bids for Lone Star and could limit the price that investors might be willing to
pay in the future for shares of our common stock. For example, our Board of
Directors has the authority to issue up to 10,000,000 shares of preferred stock
and to fix the rights, preferences, privileges and restrictions of those shares
without any further vote or action by the stockholders. Our certificate of
incorporation also provides for a staggered board. We are also subject to
provisions of the Delaware General Corporation Law and provisions in our
certificate of incorporation that may make some business combinations more
difficult. See "Description of Capital Stock--Delaware Law and Charter and Bylaw
Provisions, Anti-Takeover Effects" on page ___ for more information about these
types of charter and bylaws provisions and applicable Delaware law.
THE NUMBER OF SHARES OF OUR STOCK ELIGIBLE FOR FUTURE SALE MAY ADVERSELY
AFFECT THE PRICE OF OUR COMMON STOCK.
As of May 15, 2000, Lone Star had a total of 23,501,485 shares of
common stock outstanding. Except for any portion of the 760,237 shares
covered by this prospectus that are not sold while the registration statement
of which this prospectus is a part remains effective, and except for shares
held by "affiliates" of Lone Star, as defined in Rule 144 under the
Securities Act of 1933, all of the shares of our common stock are freely
tradeable without restriction or registration under the Securities Act.
As of May 15, 2000, Lone Star had outstanding options entitling their
holders to acquire an aggregate of 1,817,000 shares of our common stock, of
which options covering 697,000 shares were currently exercisable. An
aggregate of 616,650 shares of our common stock are reserved for issuance
upon the exercise of options that may be granted in the future under our
stock option plan.
The market price of our common stock could drop due to sales of a large
number of shares of our common stock by the selling stockholders or otherwise or
the perception that these sales could occur. These factors could also make it
more difficult to raise funds through future offerings of common stock.
9
<PAGE>
OUR OPERATIONS ARE SUBJECT TO VARIOUS COLLECTIVE BARGAINING AGREEMENTS
AND WORK STOPPAGES AND OTHER LABOR PROBLEMS COULD ADVERSELY AFFECT US.
Lone Star Steel has the following collective bargaining agreements: (i) a
collective bargaining agreement expiring May 31, 2001 with the United
Steelworkers of America, Local 4134, covering substantially all of Lone Star
Steel's employees; (ii) a collective bargaining agreement expiring July 31, 2000
with the same union covering substantially all of the employees at T&N Lone
Star Warehouse Company, a subsidiary of Lone Star Steel; and (iii) a collective
bargaining agreement expiring September 30, 2000 with the United Plant Guard
Workers of America, Local 258, covering all or substantially all of our guards.
These agreements generally cover wages, health care benefits and retirement
plans, seniority, job classes and work rules. While we believe our present labor
relations to be good, there can be no assurance that these collective bargaining
agreements will be renewed upon expiration or that new collective bargaining
agreements on terms acceptable to us will be established.
Fintube's subsidiaries have (i) a collective bargaining agreement expiring
December 31, 2000 with Syndicat des Travailleurs de Biraghi (CSN) covering
substantially all of the employees in Quebec, Canada and (ii) a collective
bargaining agreement expiring December 31, 2000 with Sindicato de Trabajadores y
Operadores en Talleres y Fabricas de Maquinaria Industrial, Similares y Conexos
de la Region de Veracruz, Ver. (F.O.E.V.) covering substantially all of the
employees in Veracruz, Mexico.
POTENTIAL PROBLEMS RELATED TO THE YEAR 2000 MAY ADVERSELY AFFECT OUR
BUSINESS.
As of the date of this prospectus, we have not experienced any significant
year 2000 problems with our internal systems or equipment, nor have we detected
any significant year 2000 problems affecting our customers or suppliers. While
we believe that our systems are year 2000 compliant, our business could be
adversely affected if any of the systems on which we depend to conduct our
operations are not in fact Year 2000 compliant. In particular, in December 1999
our Fintube subsidiary completed installation of some replacement software
systems. While we believe these systems are year 2000 compliant, there has been
a relatively short period of time to use and test these systems for year 2000
compliance or any software conversion problems. We also cannot reasonably
estimate the potential impact on our financial condition and operations if key
third parties including, among others, suppliers, contractors, financial
institutions, customers and governments did not become Year 2000 compliant on a
timely basis. We cannot assure you that those with whom we conduct business were
successful in implementing timely solutions.
Any failure by us to address our Year 2000 compliance issues successfully,
or of our suppliers, customers and other third parties with which we conduct
business to address their Year 2000 issues successfully, could have a harmful
effect on our business, financial position and results of operations.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document and in the
documents referred to in this document which are subject to risks and
uncertainties. These forward-looking statements include statements regarding our
financial position, business strategy and other plans and objectives for future
operations and any other statements which are not historical facts. Although we
believe that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that the actual results or developments we
anticipate will be realized or, even if substantially realized, that they will
have the expected effects on our business or operations. Among the factors that
could cause actual results to differ materially from our expectations are the
following:
- industry conditions;
- competition;
- our ability to successfully manage Fintube's business;
- general economic conditions;
- government regulations; and
- other factors disclosed under "Risk Factors" and elsewhere in this
prospectus.
These factors expressly qualify all subsequent oral and written
forward-looking statements attributable to us or persons acting on our behalf.
Except for our ongoing obligations to disclose material information as required
by the federal securities laws, we do not have any intention or obligation to
update forward-looking statements after we distribute this document.
10
<PAGE>
THE COMPANY
Lone Star Technologies, Inc. is a management and holding company.
Through our Lone Star Steel subsidiary and our recently-acquired Bellville
subsidiary, we are a manufacturer and global marketer of tubular goods and
line pipe for the oil and gas industry and specialty tubing products for
other industrial applications. The oil and gas casing and tubing products
that we refer to in this prospectus are part of a group of products commonly
referred to in our industry as oil country tubular goods, or OCTG. Our Lone
Star Steel subsidiary also manufactures flat rolled steel, markets various
tubular products for third parties and offers other customer services.
Through our Fintube subsidiary, we design and produce finned and studded
tubes and other products which are used in a variety of heat recovery
applications.
Lone Star Technologies, Inc. was incorporated in Delaware in 1986 to
serve as the holding company of Lone Star Steel. Lone Star acquired its
Fintube business effective as of January 1, 2000, through the purchase by
Fintube Technologies, Inc. of substantially all of the assets of Fintube
Limited Partnership and its subsidiaries. Lone Star acquired its Bellville
subsidiary on April 1, 2000, through the purchase of substantially all of
the assets of Bellville Tube Corporation.
11
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders,
the aggregate number of shares owned by each selling stockholder as of May
15, 2000, the percentage of our outstanding common stock owned by each
selling stockholder as of that date, the aggregate number of shares to be
offered by each selling stockholder, the aggregate number of shares to be
owned by each selling stockholder after the sale of all shares in this
offering and the percentage of our outstanding common stock that will be
owned by each selling stockholder after this offering, in each case assuming
the offering and sale of all shares covered by this prospectus and no
additional issuances to or purchases by these selling stockholders of our
common stock or other issuances of our common stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IF ALL SHARES
SHARES BENEFICIALLY OWNED BEING REGISTERED
PRIOR TO OFFERING NUMBER OF ARE SOLD (2)
------------------------------ SHARES BEING ----------------------------
NUMBER OF PERCENT REGISTERED NUMBER OF
SELLING STOCKHOLDERS SHARES (1) FOR SALE SHARES PERCENT (1)
-------------------------------------- ---------------- --- ------------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
H. Michael Ashford 59 * 59 0 0%
Charles A. Ballard 297 * 297 0 0%
John P. Birkelund 1,978 * 1,978 0 0%
William S. Brenizer 197 * 197 0 0%
John Connor Briggs 3,385 * 3,385 0 0%
Raymond M. Briggs 95,644 * 95,644 0 0%
Travis J. Briggs 3,385 * 3,385 0 0%
William Clinton Briggs 3,385 * 3,385 0 0%
John G. Brim 989 * 989 0 0%
Brown University Third Century
Fund 9,896 * 9,896 0 0%
Larry J. Bump 95,644 * 95,644 0 0%
Tina L. Bump 3,385 * 3,385 0 0%
Thomas J. Butchko 2,711 * 2,711 0 0%
Patrick S. Ciampi 19 * 19 0 0%
Concord Partners, L.P. 39,586 * 39,586 0 0%
Concord Partners II, L.P. 27,710 * 27,710 0 0%
Concord Partners Japan Limited 1,979 * 1,979 0 0%
David Crowell 4,167 * 4,167 0 0%
Douglas A. Darby 15 * 15 0 0%
Sally A. Dean 59 * 59 0 0%
Marion Deaton 3,614 * 3,614 0 0%
Charles P. Durkin 494 * 494 0 0%
Tricia L. Eichler 3,385 * 3,385 0 0%
Peter M. Flanigan 890 * 890 0 0%
Terry L. Gilbert 3,385 * 3,385 0 0%
Gerald Greenwald 1,187 * 1,187 0 0%
Robert A. Hanson 1,563 * 1,563 0 0%
John H. F. Haskell, Jr. 1,978 * 1,978 0 0%
Franklin W. Hobbs 593 * 593 0 0%
Tracy Ryan Jerd "S" Trust 3,385 * 3,385 0 0%
Craig A.T. Jones 297 * 297 0 0%
Kurt Kalm 98 * 98 0 0%
W. Howard Keenan, Jr. 445 * 445 0 0%
Michel Labelle 2,683 * 2,083 600 *
Bryan H. Lawrence 1,583 * 1,583 0 0%
Lexington Partners III, L.P. 1,385 * 1,385 0 0%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IF ALL SHARES
SHARES BENEFICIALLY OWNED BEING REGISTERED
PRIOR TO OFFERING NUMBER OF ARE SOLD (2)
------------------------------ SHARES BEING ----------------------------
NUMBER OF PERCENT REGISTERED NUMBER OF
SELLING STOCKHOLDERS SHARES (1) FOR SALE SHARES PERCENT (1)
-------------------------------------- ---------------- --- ------------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Emmett D. Mantle 1,563 * 1,563 0 0%
Hartman Mitchell 2,083 * 2,083 0 0%
John H. Mullin, III 445 * 445 0 0%
John J. Murabito 119 * 119 0 0%
Jerry R. Nichols 95,644 * 95,644 0 0%
Kris Nichols Custodian for Justin
Nichols under the Oklahoma Uniform
Transfers to Minors Act 3,385 * 3,385 0 0%
Nancy Nichols 3,385 * 3,385 0 0%
David W. Niemiec 890 * 890 0 0%
Erin Nichols Peters 3,385 * 3,385 0 0%
Peggy Peters 4,167 * 4,167 0 0%
Robert A. Pilkington 593 * 593 0 0%
Thomas L. Piper, III 59 * 59 0 0%
Don R. Reid 780 * 780 0 0%
Bret E. Russell 297 * 297 0 0%
Andrew C. Ryan "S" Trust 3,385 * 3,385 0 0%
Jerry E. Ryan 95,644 * 95,644 0 0%
Sloane Renee Ryan "S" Trust 3,385 * 3,385 0 0%
Francois de Saints Phalle 1,978 * 1,978 0 0%
Larry Sims 12,499 * 12,499 0 0%
Stuart L. Sindell 88 * 88 0 0%
H. C. Bowen Smith 890 * 890 0 0%
Michael I. Somers 98 * 98 0 0%
Danforth W. Starr 297 * 297 0 0%
F. Davis Terry, Jr. 593 * 593 0 0%
Warburg Dillon Read LLC 317 * 317 0 0%
Lorenzo Weisman 494 * 494 0 0%
Chris Weierman 3,124 * 3,124 0 0%
Edward B. Whitney 989 * 989 0 0%
George A. Wiegers 1,484 * 1,484 0 0%
Gary Willis 1,807 * 1,807 0 0%
Richard C. Yancey 98 * 98 0 0%
Yorktown Energy Partners, L.P. 194,765 * 194,765 0 0%
Robert A. Young 593 * 593 0 0%
---------- ---------- --- ----
Total........................... 760,837 3.24% 760,237 600 *
-------------------
</TABLE>
* Less than 1%.
(1) Based on 23,501,485 shares of Lone Star common stock issued and
outstanding as of May 15, 2000.
(2) The shares may be offered from time to time by the selling stockholders.
The selling stockholders are not obligated to sell all or any portion of
their shares, nor are they obligated to sell any of their shares
immediately pursuant to this prospectus. The decision of any selling
stockholder to sell some or all of his or
13
<PAGE>
her shares of our common stock is dependent upon a variety of factors,
including the price of our common stock and his or her personal financial
circumstances. Because the selling stockholders may sell all or some of
their shares, no estimate can be given as to the amount of common stock
actually to be offered for sale by a selling stockholder or as to the
amount of common stock that will be held by a selling stockholder upon
the termination of this offering.
The selling stockholders obtained their shares of our common stock in a
private placement as part of the consideration for our purchase as of January 1,
2000 of substantially all of the assets of Fintube Limited Partnership pursuant
to an Asset Purchase Agreement dated November 16, 1999 among Lone Star, Fintube
Technologies, Inc. (our wholly-owned subsidiary) and Fintube Limited
Partnership. We are registering the resale of these shares pursuant to a stock
registration agreement entered into as of January 1, 2000.
As part of our Fintube acquisition, our Fintube subsidiary entered into
customary employment agreements with the following officers, among others: o
David Crowell (Managing Director of Coil Products), o Marion Deaton (Managing
Director of Engineered & Tubular Products), o Michel Labelle (Biraghi Division
General Manager), o Peggy Peters (Vice President and Managing Director of
Finning), o Larry Sims (President and Chief Executive Officer) and o Gary Willis
(Director of Fintool Technologies and Business Development). We also entered
into agreements implementing our Employment Retention Policy with respect to
each of these six persons, among others, and we granted stock options to several
employees, including these six persons and Thomas J. Butchko, Don R. Reid and
Jerry E. Ryan. Our Fintube subsidiary also executed a consulting employment
agreement with Mr. Ryan. Raymond M. Briggs, Larry J. Bump, Jerry R. Nichols,
Jerry E. Ryan, W. Howard Keenan, Jr., Bryan H. Lawrence and Peter A. Leidel
executed noncompetition agreements with our Fintube subsidiary. Messrs. Keenan,
Lawrence and Leidel are Managing Members of Yorktown Partners L.L.C., an
affiliate of Yorktown Energy Partners, L.P. Finally, we entered into an
arrangement under which we may utilize legal services provided by Nichols,
Wolfe, Stamper, Nally, Fallis & Robertson, Inc., a law firm of which Mr. Nichols
is a shareholder.
14
<PAGE>
PLAN OF DISTRIBUTION
The Lone Star common stock may be sold from time to time by the selling
stockholders, or by their donees or pledgees selling shares received after the
date of this prospectus, subject to restrictions, on any stock exchange or
automated interdealer quotation system on which the shares are listed, in
privately negotiated transactions or otherwise. The shares may be sold at market
prices prevailing at the time of sale, at prices related to prevailing market
prices, at fixed prices that may be changed or at prices otherwise negotiated.
The common stock may be sold by one or more of the following methods, without
limitation:
- block trades in which the broker or dealer so engaged 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 or dealer as principal and resale by the
broker or dealer for its own account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of any stock
exchange on which the shares are listed;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- privately negotiated transactions;
- short sales;
- through the writing of options on the shares, whether or not the
options are listed on an options exchange;
- through the distribution of the shares by any selling stockholder to
its partners, members or stockholders;
- one or more underwritten offerings on a firm commitment or best
efforts basis; and
- any combination of any of these methods of sale.
The selling stockholders may also transfer the shares by gift. We do not
know of any arrangements by the selling stockholders for the sale of any of the
shares.
The selling stockholders may effect these transactions by selling the
common stock directly to purchasers or through or to brokers or dealers, who may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders, and/or from the purchasers of the common stock for
whom they may act as agent or to whom they may sell as principal, or both,
(which compensation as to a particular broker or dealer might be in excess of
customary commissions). Any brokers and dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate in
effecting sales of the shares. These brokers or dealers may act as principals,
or as an agent of a selling stockholder. Broker-dealers may agree with a selling
stockholder to sell a specified number of the shares at a stipulated price per
share. If the broker-dealer is unable to sell shares acting as agent for a
selling stockholder, it may purchase as principal any unsold shares at the
stipulated price. Broker-dealers who acquire shares as principals may then
resell the shares from time to time in transactions on any stock exchange or
automated interdealer quotation system on which the shares are then listed, at
prices and on terms then prevailing at the time of sale, at prices related to
the then-current market price or in negotiated transactions. Broker-dealers may
use block transactions and sales to and through broker-dealers, including
transactions of the nature described above.
Upon our being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of any of
the common stock offered by this prospectus through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, to the extent required a prospectus supplement will be
filed that will set forth the specific shares to be sold and the terms of the
offering,
15
<PAGE>
including the name or names of any underwriters or dealer-agents, any
discounts, commissions and other items constituting compensation from the
selling stockholders and any discounts, commission or concessions allowed or
reallowed or paid to dealers. In addition, upon our being notified that a
donee or pledgee intends to sell more than 500 shares, if required a
supplement to this prospectus will be filed.
Any of the shares covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act of 1933 may be sold under that
rule rather than pursuant to this prospectus.
We cannot assure you that the selling stockholders will sell any or all of
the common stock offered by them under this prospectus.
A selling stockholder may enter into hedging transactions with
broker-dealers, and the broker-dealers may engage in short sales of the shares
in the course of hedging the positions they assume with that selling
stockholder, including, without limitation, in connection with distributions of
the shares by those broker-dealers. A selling stockholder may enter into option
or other transactions with broker-dealers that involve the delivery of the
shares offered by this prospectus to the broker-dealers, who may then resell or
otherwise transfer those shares pursuant to this prospectus, as supplemented or
amended to reflect the transaction. In addition, a selling stockholder may, from
time to time, sell the shares short, and, in those instances, this prospectus
may be delivered in connection with the short sales and the shares offered under
this prospectus may be used to cover short sales. A selling stockholder may also
pledge the shares offered by this prospectus to a broker-dealer or other
financial institution, and, upon a default, the broker-dealer or other financial
institution may effect sales of the pledged shares pursuant to this prospectus
(if required, as supplemented or amended to reflect the transaction.
We will pay all fees and expenses incident to the preparation and filing
of the registration statement and this prospectus, including legal and
accounting fees and expenses and any printing expenses, except for transfer
taxes payable on the sale of the common stock and the fees and expenses of
selling stockholders' counsel and accountants. All underwriting discounts and
any selling commissions payable with respect to sales of the common stock will
be paid by the selling stockholders. We will receive no part of the proceeds
from sales of the common stock. We intend to keep the registration statement
effective until the earlier of the date that is 240 days after the effective
date of the registration statement (subject to extension under some
circumstances) or the date on which the distribution of all the securities
covered by the registration statement is completed.
The selling stockholders and any broker-dealer acting in connection with
the sale of the common stock offered by this prospectus may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, in which event
any discounts, concessions or commissions received by them, which are not
expected to exceed those customary in the types of transactions involved, or any
profit on resales of the common stock by them, may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933. We have advised the
selling stockholders that the anti-manipulation rules of Regulation M
promulgated by the SEC may apply to their sales in the market and have informed
them that they will be subject to the prospectus delivery requirements of the
Securities Act of 1933 which may include delivery through the facilities of the
New York Stock Exchange pursuant to Rule 153 under the Securities Act of 1933.
The selling stockholders may agree to indemnify any agent, broker or dealer that
participates in transactions involving sales of our common stock against
liabilities, including liabilities under the Securities Act of 1933. We have
agreed to indemnify the selling stockholders against liabilities arising under
the Securities Act of 1933 from sales of our common stock.
USE OF PROCEEDS
All net proceeds from the sale of the shares of Lone Star common stock
will go to the selling stockholders. Accordingly, we will not receive any
proceeds from sales of the Lone Star shares.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 80 million shares of common
stock, $1.00 par value, and 10 million shares of preferred stock, $1.00 par
value.
16
<PAGE>
The following summary of the terms and provisions of our capital stock
does not purport to be complete, and we refer you to the certificate of
incorporation and bylaws, which we filed as exhibits to the registration
statement of which this prospectus is a part, and applicable law.
COMMON STOCK
Lone Star is authorized to issue up to 80 million shares of common stock,
par value $1.00 per share. The holders of our common stock are entitled to one
vote for each share held of record on all matters submitted to the stockholders.
The holders of our common stock are entitled to participate equally in
dividends, if any, declared by our Board of Directors out of legally available
funds, and in the distribution of assets in the event of liquidation. However,
the payment of any dividends and the distribution of assets to holders of our
common stock will be subject to any prior rights of outstanding shares of Lone
Star preferred stock. We have never paid cash dividends on our common stock. The
holders of our common stock have no preemptive or conversion rights, redemption
rights, or sinking fund provisions. Our common stock is not assessable.
PREFERRED STOCK
Lone Star is authorized to issue up to 10 million shares of preferred
stock. No shares of Lone Star preferred stock are issued or outstanding. Our
Board of Directors may establish, without stockholder approval, one or more
classes or series of Lone Star preferred stock having the number of shares,
designations, relative voting rights, dividend rates, liquidation and other
rights, preferences, and limitations that our Board of Directors may designate.
The issuance of Lone Star preferred stock could adversely affect the voting
power of holders of Lone Star common stock and restrict their rights to receive
payments upon our liquidation. It could also have the effect of delaying,
deferring or preventing a change in control of Lone Star. We have no present
intention to issue Lone Star preferred stock.
DELAWARE LAW AND CHARTER AND BYLAW PROVISIONS, ANTI-TAKEOVER EFFECTS
BOARD OF DIRECTORS
Our certificate of incorporation provides that our Board of Directors
will set the number of members of our board by resolution and that our Board of
Directors will be divided into three classes, each class to be as nearly equal
in number of directors as possible. In addition, under our certificate of
incorporation, directors may be removed only for cause by the affirmative vote
of 80% of the then-outstanding shares of capital stock of Lone Star entitled to
vote. Thus, the holder or holders of as little as one share more than 20% of the
voting power may veto the removal of any director. Our certificate of
incorporation also provides that vacancies on the Board will be filled by the
affirmative vote of a majority of the remaining directors, even if less than a
quorum, and that the newly elected director serves for the unexpired term of his
or her predecessor. The likely effect of the classified board and limitations on
the removal of directors and filling of vacancies is an increase in the time
required for the stockholders to change the composition of the Board of
Directors. These classification provisions are subject to the rights of holders
of preferred stock which may be established by the Board pursuant to our
certificate of incorporation in order to permit the holders of preferred stock
to elect directors under specified circumstances relating to the payment of
dividends by, and the liquidation of, Lone Star.
Our bylaws provide that nominations for the election of directors
may be made by the Board of Directors, by a proxy committee appointed by the
Board or by any stockholder entitled to vote in the election of directors.
Under the bylaws, stockholders intending to nominate director candidates for
election must give proper advance notice to the secretary of Lone Star. The
chairman of any stockholder meeting may refuse to acknowledge the nomination
of any person not nominated in compliance with the procedure established in
the bylaws. Although this does not give the Board of Directors any power to
approve or disapprove stockholder nominations for election of directors, it
may have the effect of precluding a contest for the election of directors if
these procedures are not followed.
17
<PAGE>
STOCKHOLDER MEETINGS
Our certificate of incorporation provides that any action required or
permitted to be taken by the stockholders of Lone Star at an annual meeting or
special meeting of stockholders may not be taken by written consent. Our
certificate of incorporation further provides that special meetings of the
stockholders may be called only by the Chairman of the Board of Directors or by
a majority of the Board of Directors. The foregoing provisions could have the
effect of delaying until the next stockholders' meeting stockholder actions that
are favored by the holders of a majority of the outstanding voting securities of
Lone Star.
SPECIAL VOTE REQUIRED FOR BUSINESS COMBINATIONS
Lone Star is subject to the provisions of Section 203 of the Delaware
General Corporation Law and provisions in our certificate of incorporation which
relate to transactions with interested stockholders. Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales having an aggregate market value
equal to 10% or more of either the aggregate market value of all the assets of
the corporation determined on a consolidated basis or the aggregate market value
of all the outstanding stock of the corporation and other transactions resulting
in a financial benefit to the interested stockholder. An "interested
stockholder" is generally a person who, together with affiliates and associates,
owns, or within the prior three years did own, 15% or more of the corporation's
outstanding voting stock.
Our certificate of incorporation contains additional provisions
relating to business combinations that supplement Section 203 and prohibit Lone
Star from engaging in a "business combination" with an "interested stockholder"
for a period of two years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. A "business combination" includes:
- mergers;
- assets sales and other transactions having an aggregate fair market
value of $100 million dollars or more;
- the adoption of any plan or proposal for the liquidation or
dissolution of Lone Star proposed by any "interested stockholder" or
an affiliate of any "interested stockholder"; and
- any reclassification of securities or other transaction that has the
effect of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of Lone Star
or any subsidiary which is directly or indirectly owned by any
"interested stockholder" or any affiliate of any "interested
stockholder".
An "interested stockholder" is a person who, together with affiliates and
associates, owns, or within the prior two years did own, 20% or more of the
corporation's outstanding voting stock or who is an assignee of any shares which
were at any time within the two-year period immediately prior to the date in
question beneficially owned by any "interested stockholder", if the assignment
did not involve a public offering within the meaning of the Securities Act of
1933.
AMENDING OUR CERTIFICATE OF INCORPORATION AND BYLAWS
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter
is required to amend a corporation's certificate of incorporation or bylaws
unless the certificate of incorporation or bylaws, as the case may be,
requires a greater percentage. The majority stockholder vote would be in
addition to any separate class vote that might be required by the terms of
any series of preferred stock that might be outstanding at the time any
amendments are submitted to stockholders. Many of the provisions in our
certificate of incorporation require the affirmative vote of 80% or more of
the then-outstanding shares of capital stock of Lone Star for their amendment.
18
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LEGAL MATTERS
The legality of the common stock offered by this prospectus will be passed
upon for us by Thompson & Knight L.L.P., Dallas, Texas.
EXPERTS
The audited consolidated financial statements and schedules of Lone Star
and Fintube incorporated by reference or included, respectively, in this
prospectus and elsewhere in the registration statement to the extent and for the
periods indicated in their reports have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included or incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said reports.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Except for the SEC registration fee, all expenses are estimated. All such
expenses will be paid by the Registrant.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee..................................................$ 5,563.48
New York Stock Exchange fee...........................................$ 2,661.00
Accounting fees and expenses..........................................$175,000.00
Legal fees and expenses...............................................$157,000.00
Printing and engraving expense........................................$ 1,000.00
Miscellaneous.........................................................$ 775.52
-----------
Total........................................................$342,000.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with Section 102(b)(7) of the Delaware General
Corporation Law ("DGCL"), Registrant's Certificate of Incorporation includes a
provision that, to the fullest extent permitted by law, limits the personal
liability of members of its Board of Directors to Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director to a total of
$25,000. Such provision does not eliminate or limit the liability of a director
for (1) any breach of a director's duty of loyalty to Registrant or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of a law, (3) paying an unlawful
dividend or approving an illegal stock repurchase (as provided in Section 174 of
the DGCL) or (4) any transaction from which the director derived an improper
personal benefit.
Under Section 145 of the DGCL, the Registrant has the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than
an action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, reasonably incurred in
connection with such action, suit or proceeding. The power to indemnify applies
only if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe the person's conduct was unlawful.
In the case of an action by or in the right of the Registrant, no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Registrant unless
and only to the extent that the court of chancery or the court in which such
action or suit was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 of the DGCL further
provides that to the extent a director or officer of the Registrant has been
successful in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue or matter therein, that person shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith.
The Registrant also has the power to purchase and maintain insurance on
behalf of any person covering any liability incurred in that person's capacity
as a director, officer, employee or agent of the corporation, or arising out of
that person's status as such, whether or not the corporation would have the
power to indemnify against the liability.
The Certificate of Incorporation and Bylaws provide that the
Registrant will indemnify its officers and directors and former officers and
directors against any expenses, liability or loss reasonably incurred or
suffered by such persons as a result of having acted as an officer or
director of the Registrant, or, at the request of the Registrant, as an
officer, director, agent or employee of another business entity. The
Certificate of Incorporation and Bylaws
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<PAGE>
further provide that the Registrant may, by action of its Board of Directors,
provide indemnification to employees and agents of the Registrant with the
same scope and effect as the indemnification of directors and officers.
ITEM 16. EXHIBITS.
The information required by this Item 16 is set forth in the Index to
Exhibits accompanying this Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
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 by
the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE.
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 securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(h) REQUEST FOR ACCELERATION OF EFFECTIVE DATE.
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 in Item 15 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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 2 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on June 1, 2000.
LONE STAR TECHNOLOGIES, INC.
(Registrant)
By: /s/ RHYS J. BEST
----------------------------
Rhys J. Best
Chairman of the Board,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RHYS J. BEST Chairman of the Board, Chief Executive June 1, 2000
--------------------------------------- Officer and President (principal executive
Rhys J. Best officer)
/s/ CHARLES J. KESZLER Vice President --Finance and Treasurer June 1, 2000
-------------------------------------- (principal financial and accounting officer)
Charles J. Keszler
/s/ CHARLES L. BLACKBURN* Director June 1, 2000
--------------------------------------
Charles L. Blackburn
/s/ FREDERICK B. HEGI, JR.* Director June 1, 2000
--------------------------------------
Frederick B. Hegi, Jr.
/s/ JAMES E. MCCORMICK* Director June 1, 2000
--------------------------------------
James E. McCormick
/s/ M. JOSEPH MCHUGH* Director June 1, 2000
--------------------------------------
M. Joseph McHugh
/s/ THOMAS M. MERCER* Director June 1, 2000
--------------------------------------
Thomas M. Mercer, Jr.
Director
--------------------------------------
Jerry E. Ryan
Director
--------------------------------------
Alfred M. Micallef
*By: /s/ Rhys J. Best
----------------------------------
Rhys J. Best
Attorney-in-fact
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
3.1 Certificate of Incorporation of Registrant (incorporated by
reference to Exhibit 3(a) to Form S-4 Registration Statement
of Lone Star as filed on April 4, 1986, File No. 33-4581).
3.2* Certificate of Amendment to Certificate of Incorporation dated
September 30, 1986.
3.3 Certificate of Amendment to Certificate of Incorporation dated
May 20, 1998 (incorporated by reference to same numbered
Exhibit to Form 10-Q for the quarter ended June 30, 1998).
3.4 Agreement and Plan of Merger dated March 6, 1986, among Lone
Stare Steel Company, a Texas corporation, Lone Star
Technologies, Inc., a Delaware corporation, and Lone Star
Steel Company Merging Corporation, a Delaware corporation
(incorporated by reference to Exhibit II to Form S-4
Registration Statement of Lone Star as filed on April 4, 1986,
File No. 33-4581).
3.5* By-Laws as adopted March 6, 1986, as amended by amendments
effective September 30, 1986 and March 15, 1990.
4.1* Stock Registration Agreement dated January 1, 2000 among Lone
Star Technologies, Inc., Fintube Limited Partnership, Yorktown
Energy Partners, Brown University Third Century Fund, Warburg,
Dillon, Reed, L.L.C. and Ticonderoga Partners and the
stockholders named therein.
5.1* Opinion of Thompson & Knight L.L.P.
23.1* Consent of counsel (included in the opinion of Thompson &
Knight L.L.P. filed herewith as Exhibit 5.1).
23.2** Consent of independent accountants.
23.3** Consent of independent accountants.
24* Power of Attorney.
--------------------
* Previously filed.
** Filed herewith.
II-5
