<PAGE> 1
FILED PURSUANT TO 424(b)(5)
REGISTRATION NO. 333-25233
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 2, 1997)
$325,000,000
Nabors Industries, Inc.
[NABORS INDUSTRIES, INC.LOGO]
6.80% NOTES DUE 2004
------------------------
Interest payable on April 15 and October 15
------------------------
NABORS INDUSTRIES, INC. MAY REDEEM THE NOTES, IN WHOLE OR IN PART, AT ANY TIME
PRIOR TO
MATURITY AT REDEMPTION PRICES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT.
------------------------
INVESTING IN THE NOTES INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE S-7
OF THE PROSPECTUS SUPPLEMENT AND PAGE 3 OF THE PROSPECTUS.
------------------------
PRICE 99.91% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------- ------------- -----------
<S> <C> <C> <C>
Per Note............... 99.91% .60% 99.31%
Total.................. $324,707,500 $1,950,000 $322,757,500
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this Prospectus
Supplement or the accompanying Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the Notes to purchasers on
March 9, 1999.
------------------------
The Joint Book Runners are:
MORGAN STANLEY DEAN WITTER
LEHMAN BROTHERS
PRUDENTIAL SECURITIES
------------------------
DONALDSON, LUFKIN & JENRETTE
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
Incorporated
SALOMON SMITH BARNEY
SCHRODER &
CO. INC.
March 4, 1999
<PAGE> 2
You should rely only on the information contained or incorporated by
reference into this Prospectus Supplement and the accompanying Prospectus. We
have not authorized anyone to provide you with information different from that
contained in this Prospectus Supplement and the accompanying Prospectus. We are
offering to sell the Notes, and seeking offers to buy the Notes, only in
jurisdictions where offers and sales are permitted. The information contained in
this Prospectus Supplement and the accompanying Prospectus is accurate only as
of the date of this Prospectus Supplement and the date of the accompanying
Prospectus, regardless of the time of delivery of this Prospectus Supplement or
any sales of the Notes. In this Prospectus Supplement and the accompanying
Prospectus, the "Company," "we," "us" and "our" refer to Nabors Industries, Inc.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Forward-Looking Statements.................................. S-3
The Company................................................. S-4
Recent Developments......................................... S-6
Risk Factors................................................ S-7
Use of Proceeds............................................. S-10
Capitalization.............................................. S-10
Selected Consolidated Financial Data........................ S-11
Description of Notes........................................ S-13
Underwriters................................................ S-20
Experts..................................................... S-21
Legal Matters............................................... S-21
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
Risk Factors................................................ 3
The Company................................................. 4
Use of Proceeds............................................. 5
Ratio of Earnings to Fixed Charges.......................... 5
Description of Debt Securities.............................. 6
Description of Capital Stock and Depositary Shares.......... 15
Description of Warrants..................................... 20
Selling Stockholders........................................ 22
Plan of Distribution........................................ 22
Validity of Securities...................................... 24
Experts..................................................... 24
</TABLE>
S-2
<PAGE> 3
FORWARD-LOOKING STATEMENTS
The statements in this document and the documents incorporated by reference
that relate to matters that are not historical facts are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. When used in this document
and the documents incorporated by reference, words such as "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "will," "could,"
"may," "predict," and similar expressions are intended to identify
forward-looking statements. Future events and actual results may differ
materially from the results set forth in or implied in the forward-looking
statements. Factors that might cause such a difference include:
- fluctuations in worldwide prices and demand for oil and gas;
- fluctuations in levels of oil and gas exploration and development
activities;
- fluctuations in the demand for contract drilling services;
- the existence of competitors, technological changes and developments in
the industry;
- the existence of operating risks inherent in the contract drilling
industry;
- the existence of regulatory uncertainties, the possibility of political
instability in any of the countries in which Nabors does business; and
- year 2000 issues and general economic conditions, in addition to the
other matters discussed under "Risk Factors."
S-3
<PAGE> 4
THE COMPANY
Nabors is the largest land drilling contractor in the world, with over 400
actively marketed land rigs as of December 31, 1998. Nabors conducts oil and gas
land drilling operations in the US Lower 48 states, Alaska and Canada, and
internationally, primarily in South and Central America and the Middle East.
Offshore, Nabors markets 25 platform, six jack-up and two barge drilling rigs in
the Gulf of Mexico and several international markets. To supplement our primary
businesses, we offer a number of ancillary well-site services, including oil
field management, engineering, transportation, construction, maintenance, well
logging and other support services, in selected domestic and international
markets. In addition, we manufacture and lease or sell top drives for a broad
range of drilling rig applications and we also manufacture and lease or sell rig
instrumentation equipment and software to monitor rig performance.
Our business philosophy is to grow and remain profitable in any market
environment, to build a diverse portfolio of market positions, to mitigate risk
and create potential for growth, to maintain a conservative and flexible
financial posture and to forge long-term relationships with customers. We have
implemented this philosophy by:
- maintaining a technologically and geographically diverse rig fleet,
enabling us to optimize returns through increased utilization and
increased day rates;
- increasing value-added revenues from ancillary well-site products and
services that complement our business in its existing field locations,
including top drives, mudlogging, instrumentation systems, pipe rental
and construction and transportation services;
- upgrading and enhancing the capabilities of our existing fleet and
building certain specialized rig equipment such as the MASE(TM), arctic
and other special purpose rigs;
- entering into partnering relationships or alliances with operators as a
preferred contractor in certain domestic and international locations; and
- making strategic acquisitions to augment the existing rig fleet or to
grow in other related areas and making divestitures to take advantage of
market conditions in non-strategic business or geographic markets.
Our rigs may perform drilling, well servicing (routine repair and
maintenance of mechanical problems) or workover services (major overhaul or
remediation of an existing wellbore and/or plugging and redrilling the well),
depending on the configuration of the individual rig.
We employ our drilling rigs under individual contracts which extend either
over a stated period of time required to drill a well or a number of wells to a
specified depth. On land in the US Lower 48 states and Canada, we typically
contract on a single well basis, with extensions subject to agreement on pricing
and other significant terms. Offshore, and on land in Alaska and international
markets, we generally contract for longer terms than in domestic markets,
typically from one to three years. We generally obtain our drilling contracts
through competitive bidding and, in some cases, by direct negotiation. These
contracts generally can be terminated by the customer on short notice, but can
be firm for a number of wells or a period of time. Contracts also may provide
for early termination payments in certain circumstances.
Nabors also provides onshore transportation and support services through
long-term contracts or on a short-term demand basis. From time to time, we
provide drilling, engineering and integrated project management services,
ranging from well design and engineering expertise to site preparation and road
construction.
Nabors currently markets approximately 300 land rigs in the US Lower 48
market:
- 136 of our land drilling rigs in the US Lower 48 states are diesel
electric rigs controlled by a computerized silicon-controlled rectifier
or SCR unit;
- 36 are equipped with top drives; and
- 222 are capable of drilling to 15,000 feet or deeper.
S-4
<PAGE> 5
We also have a fleet of 35 rigs in Canada. Fourteen rigs in the fleet are
diesel electric SCR rigs, 14 are equipped with top drives and 14 are capable of
drilling to 15,000 feet or deeper. All of the rigs in our Canadian fleet are
capable of performing exploratory and development drilling under arctic and
sub-arctic conditions.
Nabors is the leading drilling contractor in Alaska, where we own 12 arctic
land drilling and well service rigs on the North Slope and three land drilling
rigs in the Cook Inlet area of South Central Alaska. Eleven of these rigs are
SCR rigs and three are equipped with top drive units. Nine are capable of
drilling to depths of 18,000 feet or more. All of the North Slope rigs are
designed to operate in severe arctic conditions.
We conduct international operations primarily through Nabors Drilling
International Limited. Our International group actively markets 50 land rigs and
one jackup rig in South and Central America, the Middle East, the Commonwealth
of Independent States and Africa. Of these, 35 are SCR rigs, 15 are equipped
with top drives, two are slim hole rigs and 27 are capable of drilling to depths
of 15,000 feet or deeper.
With the acquisition of Sundowner Offshore Services, Inc. in October of
1994, we expanded our existing offshore business in the Gulf of Mexico by
entering into the offshore workover and well services business in the Gulf of
Mexico, the Commonwealth of Independent States, Europe and West Africa. Our
offshore group operates a fleet of 33 rigs including eight Sundowner(R) and
seven Super Sundowner(R) workover platform rigs, three MASE(TM) platform
drilling rigs, five API platform drilling rigs, two land rigs converted to
offshore platform drilling rigs, five jackup workover rigs and three inland
barge rigs that offer plugging and abandonment services. Nabors also provides
plug and abandonment services on the Gulf Coast. We developed a new generation
of innovative MASE(TM) platform drilling rigs that results in reduced drilling
and workover costs.
Through various subsidiaries and joint ventures, Nabors provides additional
well-site services. These services can be packaged with our contract drilling
services or provided on a stand alone basis to operators or other contractors.
They include top drive rentals and sales, mudlogging services, rig
instrumentation equipment rentals and sales, construction and maintenance
services and rig transportation services.
Our customers include major oil and gas companies, foreign national oil and
gas companies and independent oil and gas companies.
S-5
<PAGE> 6
RECENT DEVELOPMENTS
On October 19, 1998, Nabors agreed to acquire Bayard Drilling Technologies,
Inc., a leading provider of contract land drilling services to major and
independent oil and gas companies. As of December 31, 1998, Bayard's fleet
consisted of 87 rigs, of which 73 were being actively marketed and 14 were
available for refurbishment. Of Bayard's 87 rigs, 69 are capable of drilling to
depths of 15,000 feet or deeper and 43 are capable of drilling to depths of
20,000 feet or deeper. Bayard's rig fleet is currently concentrated in three
core operating regions in the US Lower 48 states -- the Mid-Continent region,
the Gulf Coast region and the South Texas region. The agreement provides for
Nabors to issue approximately 6,140,000 shares of common stock, and pay to
Bayard's stockholders approximately $5.5 million in cash in exchange for all of
the outstanding shares of Bayard. Bayard has approximately $120 million of debt
that will remain an obligation of Bayard after the acquisition. Our acquisition
of Bayard is subject to customary closing conditions, including the approval of
holders of at least a majority of Bayard's outstanding shares. The Bayard
stockholders' meeting to consider the transaction will be held on March 16,
1999. If Bayard's stockholders approve the acquisition, we expect to close the
transaction shortly thereafter. For further information regarding Bayard, see
Nabor's Current Report on Form 8-K, dated March 1, 1999, which is incorporated
by reference into this document.
On January 10, 1999, Nabors agreed to acquire Pool Energy Services Co., an
energy services company. Pool's principal business is providing well-servicing,
workover and drilling services and related transportation services on land and
offshore in the United States and selected international markets. Pool's rig
fleet includes approximately 750 US-based land well-servicing workover rigs, 32
internationally-based workover rigs, 29 internationally-based land drilling rigs
and 27 offshore rigs. Pool also owns and operates 23 offshore supply vessels,
more than 300 fluid hauling trucks and a large quality of fluid storage tanks.
The agreement provides for Nabors to issue approximately 19,750,000 shares of
common stock in exchange for all of the outstanding shares of Pool. As of
December 31, 1998, Pool had approximately $172.8 million of long-term debt that
will remain an obligation of Pool after the acquisition. Our acquisition of Pool
is subject to customary closing conditions, including regulatory approval and
the approval of holders of at least two-thirds of Pool's outstanding shares. For
further information, see Nabors' Current Report on Form 8-K dated January 10,
1999, which is incorporated by reference into this document.
On February 2, 1999, Nabors announced its operating results for the fourth
quarter and full year ended December 31, 1998. Net income for the fourth quarter
of 1998 was $21.0 million or $0.20 per share versus $41.3 million or $0.37 per
share in 1997. Operating income was $31.5 million versus $64.2 million in the
prior year period, with revenues at $208.2 million versus $302.8 million. For
the full year 1998, net and operating income were $125.0 million ($1.16 per
share) and $182.3 million, respectively, versus $136.0 million ($1.24 per share)
and $195.3 million. Revenues for the full year 1998 were $968.2 million versus
$1,115.0 million in 1997. For further information, see Nabor's Current Report on
Form 8-K, dated February 2, 1999, which is incorporated by reference into this
document.
On February 26, 1999, Bayard announced its operating results for the fourth
quarter and full year ended December 31, 1998. Net loss for the fourth quarter
of 1998 was $6.3 million or $0.35 per share versus net income of $1.3 million or
$0.08 per share in 1997. After extraordinary items, Bayard had a net loss for
the fourth quarter of $6.3 million versus a net loss of $2.8 million in the
fourth quarter of 1997. Bayard incurred an operating loss of $7.5 million in the
fourth quarter of 1998 versus operating income of $2.4 million in the prior year
period with revenues of $14.3 million versus $22.5 million. For the full year
1998, net loss was $5.2 million or $0.29 per share versus net income of $1.9
million or $0.17 per share before extraordinary items. After extraordinary
items, Bayard had a net loss of $5.6 million in 1998 versus a net loss of $2.1
million in 1997. Operating loss was $3.9 million in 1998 versus operating income
of $5.2 million in 1997 and revenues for the full year 1998 were $79.1 million
versus $55.7 million in 1997. For further information, see Nabors' Current
Report on Form 8-K dated March 1, 1999, which is incorporated by reference into
this document.
S-6
<PAGE> 7
RISK FACTORS
You should carefully consider the following risk factors and all of the
other information set forth or incorporated by reference in this Prospectus
Supplement and the Prospectus before you purchase the Notes. This Prospectus
Supplement, the Prospectus and the documents incorporated by reference contain
forward-looking statements which involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in the
following risk factors and elsewhere in this Prospectus Supplement, the
Prospectus and the documents incorporated by reference into this document. See
"Forward-Looking Statements."
RISKS RELATED TO NABORS' BUSINESS
Decreased oil and gas prices could adversely affect drilling activity and
Nabors' revenues, cash flows and profitability. Nabors' operations are
materially dependent upon the level of activity in oil and gas exploration and
production. Both short-term and long-term trends in oil and gas prices affect
the level of such activity. Oil and gas prices and, therefore, the level of
drilling, exploration and production activity, can be volatile. Worldwide
military, political and economic events, including initiatives by the
Organization of Petroleum Exporting Countries, affect both the demand for, and
the supply of, oil and gas. Fluctuations during the last year in the demand and
supply of oil and gas have contributed to, and are likely to continue to
contribute to, price volatility. Nabors believes that any prolonged reduction in
oil and gas prices would depress the level of exploration and production
activity. This would likely result in a corresponding decline in the demand for
Nabors' services and could have a material adverse effect on Nabors' revenues,
cash flows and profitability. There can be no assurances as to the future level
of demand for Nabors' services or future conditions in the drilling industry.
Beginning in early 1998, domestic land drillers, including Nabors, experienced a
significant downturn in demand for their drilling rigs. The downturn has since
impacted offshore and international drilling activity. Nabors believes the
downturn is attributable in large part to sharp drops in oil prices that began
in late 1997 and have continued through 1998 and into 1999. The decline in crude
oil prices negatively impacted the revenues of oil companies, who have responded
by reducing exploration and development activity. Decreased demand has adversely
affected Nabors by lowering utilization of Nabors' rigs and reducing the day
rates Nabors can charge for its rigs.
Nabors operates in a highly competitive industry with excess drilling
capacity, which may adversely affect Nabors' results of operations. The drilling
and workover industry in which Nabors operates is very competitive. Contract
drilling companies compete primarily on a regional basis, and competition may
vary significantly from region to region at any particular time. Many drilling
rigs can be readily moved from one region to another in response to changes in
levels of activity, which may result in an oversupply of rigs in such area. In
many markets in which Nabors operates, the number of rigs available for use
exceeds the demand for rigs, resulting in price competition. Most drilling and
workover contracts are awarded on the basis of competitive bids, which also
results in intense price competition. The land drilling market generally is more
competitive than the offshore drilling market because there are a larger number
of rigs and competitors.
In all of the markets in which Nabors operates, price and the availability
and condition of equipment are the most significant factors in determining which
drilling contractor is awarded a job. Other factors include the availability of
trained personnel possessing the required specialized skills, the overall
quality of service and safety record and the ability to offer ancillary
services. In international markets, experience in operating in certain
environments and customer alliances have also been factors in the selection of
Nabors.
Certain competitors are present in more than one of Nabors' regions,
although no one competitor operates in all of these areas. In the US Lower 48
states, the next largest competitors have over 100 rigs, based on industry
reports, and several hundred competitors have smaller national, regional or
local rig operations. In the Alaska market, Nabors has approximately five major
competitors. In Canada and offshore, Nabors competes with several companies of
varying size, many of which have more significant operations in those areas than
Nabors. Internationally, Nabors competes directly with various competitors at
each location where it operates. Nabors believes that the market for land
drilling contracts will continue to be competitive for the foreseeable future.
Although Nabors believes it has a strong competitive position in the domestic
land
S-7
<PAGE> 8
market, certain of its competitors internationally and offshore may be better
positioned in these markets and have newer and more desirable equipment,
allowing them to compete more effectively.
The nature of Nabors' operations present inherent risks of loss that, if
not insured or indemnified against, could adversely affect its results of
operations. Nabors' operations are subject to many hazards inherent in the
drilling, workover and well servicing industries, including blowouts, cratering,
explosions, fires, loss of well control, loss of hole, damaged or lost drilling
equipment and damage or loss from inclement weather, any of which could result
in personal injury or death, damage to or destruction of equipment and
facilities, suspension of operations, environmental damage and damage to the
property of others. Nabors' offshore operations are also subject to the hazards
of marine operations including capsizing, grounding, collision, damage from
heavy weather or sea conditions and unsound bottom conditions. In addition,
Nabors' international operations are subject to risks of war, civil disturbances
or other political events. Generally, drilling contracts provide for the
division of responsibilities between a drilling company and its customer, and
Nabors seeks to obtain indemnification from its customers by contract for
certain of these risks. To the extent that Nabors is unable to transfer such
risks to customers by contract or indemnification agreements, Nabors seeks
protection through insurance which its management considers to be adequate.
However, there is no assurance that such insurance or indemnification agreements
will adequately protect Nabors against liability from all of the consequences of
the hazards described above. The occurrence of an event not fully insured or
indemnified against, or the failure of a customer to meet its indemnification
obligations, could result in substantial losses to Nabors. In addition, there
can be no assurance that insurance will be available to cover any or all of
these risks, or, even if available, that it will be adequate or that insurance
premiums or other costs will not rise significantly in the future, so as to make
such insurance prohibitive.
The profitability of Nabors' international operations could be adversely
affected by war, civil disturbance or economic turmoil. Nabors' business is
subject to additional risks of loss associated with conducting business abroad.
Nabors derives a significant portion of its business from international markets,
including major operations in Canada, the Middle East, the Commonwealth of
Independent States and South and Central America. These operations are subject
to various risks, including the risk of war, civil disturbances and governmental
activities, that may limit or disrupt markets, restrict the movement of funds or
result in the deprivation of contract rights or the taking of property without
fair compensation. In certain countries, Nabors' operations may be subject to
the additional risk of fluctuating currency values and exchange controls. In the
international markets in which Nabors operates, it is subject to various laws
and regulations that govern the operation and taxation of its business and the
import and export of its equipment from country to country, the imposition,
application and interpretation of which can prove to be uncertain.
Exposure to environmental liabilities could adversely affect Nabors'
results of operations. The drilling of oil and gas wells is subject to various
federal, state, local and foreign laws, rules and regulations. The cost to
Nabors of compliance with these laws and regulations may be substantial. For
example, federal law imposes specific design and operational standards on rigs
and platforms. Failure to comply with these requirements could subject Nabors to
substantial civil and criminal penalties as well as potential court injunctions.
In addition, federal law imposes a variety of regulations on "responsible
parties" related to the prevention of oil spills and liability for damages from
such spills. Nabors, as an owner and operator of onshore and offshore rigs, may
be deemed to be a responsible party under federal law. Federal law assigns
liability to a responsible party of oil removal costs and subjects a responsible
party to a variety of public and private damages. In some circumstances, federal
law imposes liability without regard to negligence or fault, resulting in
substantial costs to the party upon whom such liability is imposed. Nabors
generally tries to require its customers to contractually assume responsibility
for compliance with environmental regulations. However, Nabors is not always
successful in shifting all of these risks.
Nabors could be adversely affected if it loses the services of Mr.
Isenberg, Mr. Petrello or Mr. Stratton. Nabors' business is dependent to a
significant extent upon the performance of certain key individuals, including
Eugene M. Isenberg, Anthony G. Petrello and Richard A. Stratton. Each of these
individuals has entered into an employment agreement with Nabors. The loss of
the services of Mr. Isenberg, Mr. Petrello and/or Mr. Stratton could have a
material adverse affect upon the Company.
S-8
<PAGE> 9
RISKS RELATED TO THE NOTES
Nabors, as a holding company, depends on its subsidiaries to meet its
financial obligations. We are a holding company with no significant assets other
than the stock of our subsidiaries. In order to meet our financial needs, we
will rely exclusively on repayments of interest and principal on intercompany
loans made by us to our operating subsidiaries and income from dividends and
other cash flow from such subsidiaries. We cannot assure you that our operating
subsidiaries will generate sufficient net income to pay upstream dividends or
cash flow to make payments of interest and principal to us in respect of our
intercompany loans.
If an active trading market does not develop for these Notes, it will be
difficult to sell these Notes or to receive an attractive price. The Notes have
no existing trading market. We do not intend to apply for listing or quotation
of the Notes on any exchange. Therefore, we do not know the extent to which
investor interest will lead to the development of a trading market or how liquid
that market might be. We also cannot provide assurance regarding your ability to
sell Notes or the price at which the Notes might be sold. Although the
underwriters of the Notes have informed us that they currently intend to make a
market in the Notes, they are not obligated to do so, and any such market-making
may be discontinued at any time without notice. As a result, the market price of
the Notes could be harmed.
S-9
<PAGE> 10
USE OF PROCEEDS
The net proceeds to Nabors from the sale of the Notes are estimated to be
approximately $322.4 million after deduction of the underwriting discount and
expenses of the public offering of the Notes. We estimate that we will use
approximately $253.6 million of such estimated net proceeds for general
corporate purposes, including, but not limited to, working capital, investment
in subsidiaries, retirement of indebtedness in addition to that discussed below
(if economically prudent), and possible future business acquisitions.
We anticipate that we will use the remaining approximately $68.8 million of
estimated net proceeds to repay existing indebtedness as follows:
- approximately $45.2 million to repay short-term borrowings from
commercial banks incurred for working capital purposes and currently
bearing interest at annual rates ranging from 5.19% to 5.94%;
- approximately $6.4 million to repay long-term borrowings from financial
institutions incurred for rig and rig equipment financing and currently
bearing interest at annual rates ranging from 6.06% to 8.00% and
- if the Bayard acquisition is completed, approximately $17.2 million to
repay Bayard long-term borrowings from financial institutions for rig and
rig equipment financing and currently bearing interest at annual rates
ranging from 9.50% to 9.91%.
CAPITALIZATION
The following table sets forth as of September 30, 1998: (a) the historical
capitalization of the Company, (b) the historical capitalization of the Company
as adjusted for the Bayard acquisition and (c) the historical capitalization of
the Company as adjusted for the Bayard acquisition and as further adjusted to
give effect to the Notes and the application of net proceeds to pay existing
indebtedness and items described in footnote (1) below. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998
----------------------------------------------
AS ADJUSTED AS ADJUSTED FOR THE
HISTORICAL FOR BAYARD NOTE OFFERING(1)
---------- ----------- -------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Cash and cash equivalents and short-term marketable
securities................................................ $ 12,799 $ 26,489 $ 266,697
========== ========== ==========
Short-term borrowings and current portion of long-term
obligations:
Short-term borrowings..................................... $ 61,931 $ 61,931 $ 1,000
Current portion of long-term obligations.................. 14,242 20,242 1,247
---------- ---------- ----------
Total short-term obligations....................... $ 76,173 $ 82,173 $ 2,247
========== ========== ==========
Long-term obligations:
5% Convertible Subordinated Notes......................... $ 172,498 $ 172,498 $ 172,498
9.18% Senior Secured Notes................................ 40,000 40,000 40,000
11% Senior Notes.......................................... -- 100,000 100,000
6.80% Notes............................................... -- -- 325,000
Other long-term obligations............................... 4,933 18,155 2,733
---------- ---------- ----------
Total long-term obligations, net of current
maturities....................................... 217,431 330,653 640,231
---------- ---------- ----------
Stockholders' equity:
Preferred stock, par value $.10 per share, 10,000 shares
authorized; none issued or outstanding.................. -- -- --
Capital stock, par value $.10 per share, 200,000 shares
authorized; issued and outstanding 101,360, 107,500 and
107,500................................................. 10,136 10,750 10,750
Capital in excess of par value............................ 397,271 471,607 471,607
Accumulated other comprehensive expense................... (9,098) (9,098) (9,098)
Retained earnings......................................... 457,543 457,543 457,543
Less treasury stock at cost, 589 common shares............ (4,817) (4,817) (4,817)
---------- ---------- ----------
Total stockholders' equity......................... 851,035 925,985 925,985
---------- ---------- ----------
Total capitalization............................... $1,068,466 $1,256,638 $1,566,216
========== ========== ==========
Total short-term and long-term obligations, net of
cash and cash equivalents and marketable
securities....................................... $ 280,805 $ 386,337 $ 375,781
---------- ---------- ----------
</TABLE>
- ---------------
(1) Reflects a $13.4 million reduction in cash and cash equivalents and
marketable securities, a $15.7 million reduction in short-term borrowings
and $10.8 million in scheduled principal payments on long-term obligations
subsequent to September 30, 1998.
S-10
<PAGE> 11
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected historical financial data of Nabors
and unaudited selected pro forma combined financial data after giving effect to
the acquisition of all of the outstanding capital stock of Bayard by Nabors
under the purchase method of accounting. Nabors changed its fiscal year end from
September 30 to December 31, effective for the fiscal year beginning January 1,
1998. A three month transition period from October 1, 1997 through December 31,
1997 preceded the start of Nabors' new fiscal year. Nabors has recast its
financial data to conform to the presentation of the twelve months ended
December 31, 1997 by adjusting its audited results for the year ended September
30, 1997 to exclude the unaudited results for the quarter ended December 31,
1996 and to include the unaudited results for the quarter ended December 31,
1997.
Results for the interim period are not necessarily indicative of results to
be expected for a full year and the unaudited selected pro forma combined
financial data does not indicate what the combined results of operations of
Nabors and Bayard would have been had the merger occurred as of the dates
indicated or the results of operations that the combined company may obtain in
the future. The unaudited selected pro forma combined financial data does not
reflect the anticipated cost savings resulting from integration of the
operations of Nabors and Bayard.
You should read the following in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
historical and pro forma combined financial statements and notes incorporated by
reference or included in this document.
S-11
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------------------------------
THREE TWELVE NINE MONTHS
MONTHS MONTHS ENDED
YEAR ENDED SEPTEMBER 30, ENDED ENDED SEPTEMBER 30,
-------------------------------- DECEMBER 31, DECEMBER 31, -----------------------
1995 1996 1997 1997 1997 1997 1998
-------- -------- ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues........................ $572,788 $719,743 $1,029,303 $ 302,806 $1,115,032 $ 812,226 $ 759,917
Operating expenses:
Direct costs.................. 434,097 539,665 737,780 199,714 774,856 575,142 487,801
General and administrative
expenses.................... 49,094 56,862 68,616 18,580 72,478 53,898 58,628
Depreciation and
amortization................ 31,042 46,117 66,391 20,313 72,350 52,037 62,617
Merger expenses............... -- -- 1,755 -- -- -- --
Operating expenses............ 514,233 642,644 874,542 238,607 919,684 681,077 609,046
Operating income................ 58,555 77,099 154,761 64,199 195,348 131,149 150,871
Other income (expense):
Interest expense.............. (7,611) (11,884) (16,520) (3,979) (16,323) (12,344) (11,839)
Interest income............... 1,694 2,695 3,422 93 1,936 1,843 1,205
Other income, net............. 5,990 13,690 40,747 2,303 28,502 26,199 24,782
Other income (expense),
net....................... 73 4,501 27,649 (1,583) 14,115 15,698 14,148
Income before income taxes...... 58,628 81,600 182,410 62,616 209,463 146,847 165,019
Income taxes.................... 7,524 11,100 67,602 21,289 73,443 52,154 61,057
Net income...................... $ 51,104 $ 70,500 $ 114,808 $ 41,327 $ 136,020 $ 94,693 $ 103,962
Earnings per share:
Basic......................... $ .61 $ .83 $ 1.20 $ .41 $ 1.39 $ .97 $ 1.03
Diluted....................... $ .57 $ .75 $ 1.08 $ .37 $ 1.24 $ .87 $ .96
OTHER FINANCIAL DATA:
EBITDA(2)....................... $ 89,597 $123,216 $ 221,152 $ 84,512 $ 267,698 $ 183,186 $ 213,488
Cash provided by operating
activities.................... 73,766 84,124 165,004 69,638 220,732 151,094 226,365
Cash used for investing
activities.................... (87,389) (160,395) (326,077) (83,585) (363,148) (279,563) (223,101)
Cash provided by (used for)
financing activities.......... 3,098 160,100 68,607 15,651 61,886 46,235 (5,150)
Capital expenditures and
acquisitions.................. 144,560 174,483 396,668 84,038 381,009 296,971 265,485
Ratio of earnings to fixed
charges:(3)
Historical.................... 7.67 7.09 10.97 15.15 12.43 11.56 12.78
Pro forma(4)..................
BALANCE SHEET DATA:
Cash and short-term marketable
securities.................... $ 15,334 $104,027 $ 11,044 $ 12,606 $ 12,606 $ 11,044 $ 12,799
Working capital................. 33,892 172,091 70,872 62,571 62,571 70,872 13,308
Property, plant and equipment,
net........................... 393,464 511,203 861,393 923,402 923,402 861,393 1,120,265
Long-term marketable
securities.................... 9,645 11,839 42,279 29,529 29,529 42,279 9,330
Total assets.................... 593,272 871,274 1,234,232 1,281,306 1,281,306 1,234,232 1,411,950
Long-term obligations........... 51,478 229,504 229,507 226,299 226,299 229,507 217,431
Stockholders' equity............ 368,750 457,822 727,843 767,340 767,340 727,843 851,035
<CAPTION>
UNAUDITED
----------------------------
PRO FORMA(1)
----------------------------
TWELVE NINE
MONTHS MONTHS
ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
OPERATING DATA:
Revenues........................ $1,196,405 $ 824,719
Operating expenses:
Direct costs.................. 834,560 536,248
General and administrative
expenses.................... 75,918 61,002
Depreciation and
amortization................ 79,324 68,439
Merger expenses............... -- --
Operating expenses............ 989,802 665,689
Operating income................ 206,603 159,030
Other income (expense):
Interest expense.............. (19,933) (14,732)
Interest income............... 2,969 2,422
Other income, net............. 29,016 25,129
Other income (expense),
net....................... 12,052 12,819
Income before income taxes...... 218,655 171,849
Income taxes.................... 76,936 63,652
Net income...................... $ 141,719 $ 108,197
Earnings per share:
Basic......................... $ 1.36 $ 1.01
Diluted....................... $ 1.23 $ .94
OTHER FINANCIAL DATA:
EBITDA(2)....................... $ 285,927 $ 227,469
Cash provided by operating
activities....................
Cash used for investing
activities....................
Cash provided by (used for)
financing activities..........
Capital expenditures and
acquisitions..................
Ratio of earnings to fixed
charges:(3)
Historical....................
Pro forma(4).................. 11.32 10.59
BALANCE SHEET DATA:
Cash and short-term marketable
securities.................... $ 26,489
Working capital................. 12,268
Property, plant and equipment,
net........................... 1,291,334
Long-term marketable
securities.................... 9,330
Total assets.................... 1,617,239
Long-term obligations........... 330,653
Stockholders' equity............ 925,985
</TABLE>
- ---------------
(1) Gives effect to the acquisition of all of the outstanding capital stock of
Bayard by Nabors under the purchase method of accounting. For further
information regarding Bayard, see Nabors' Current Report on Form 8-K, dated
March 1, 1999, which is incorporated by reference into this document.
(2) EBITDA (defined to mean operating income plus depreciation and amortization
for purposes of this table) is a supplemental financial measure used by the
Company in evaluating its business and should be read in conjunction with
all of the information in the Selected Consolidated Financial Data, as well
as the Consolidated Financial Statements (including the Notes thereto)
prepared in accordance with generally accepted accounting principles. EBITDA
should not be considered as an alternative to operating income or cash flow
from operations or as an indication of the Company's performance or as a
measure of liquidity.
(3) For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of pretax income from continuing operations plus fixed
charges (excluding capitalized interest). Fixed charges represent interest
incurred (whether expensed or capitalized), amortization of debt expense,
and that portion of rental expense on operating leases deemed to be the
equivalent of interest. No preferred stock was outstanding during any of the
periods presented.
(4) Pro forma for the acquisition of Bayard, this offering and for the
application of a portion of the net proceeds of this offering to repay $68.8
million of existing indebtedness. See "Use of Proceeds."
S-12
<PAGE> 13
DESCRIPTION OF NOTES
You should read this description carefully with the description of the
Senior Debt Securities contained in the Prospectus prior to making an investment
in the Notes.
GENERAL
The Notes are a series of Senior Debt Securities described in the
accompanying Prospectus that will be issued under an indenture, dated as of
March 1, 1999 (the "Senior Indenture"), between the Company and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"), as supplemented by
a Supplemental Indenture, dated as of March 1, 1999 (the "Supplemental
Indenture"), between the Company and the Trustee. The following description of
the particular terms of this offering supplements, and to the extent of any
inconsistency replaces, the description of the general terms and provisions of
the Senior Debt Securities set forth in the accompanying Prospectus. Capitalized
terms used but not defined herein or in the accompanying Prospectus have the
meanings given to them in the Senior Indenture. As used in this section, the
"Company" means Nabors Industries, Inc., but not any of its subsidiaries, unless
the context otherwise requires. Unless the context otherwise requires, all
references herein to the "Senior Indenture" shall mean the Senior Indenture, as
supplemented by the Supplemental Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited to $325 million aggregate principal amount, will
mature on April 15, 2004 and will bear interest at the rate of 6.80% per annum
from March 9, 1999, payable semiannually on April 15 and October 15 of each
year, commencing October 15, 1999, to the persons in whose name the Notes are
registered at the close of business on the April 1 or October 1 next preceding
such interest payment date. Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Principal and interest will be payable
at the offices of the Trustee, provided that, at the option of the Company,
payment of interest will be made by check mailed to the address of the person
entitled thereto as it appears in the register of the Notes maintained by the
Trustee. The Notes will be transferable and exchangeable at the office of the
Trustee and will be issued in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. The Company may
require payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection with certain transfers and exchanges.
The registered holder of a Note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
The Notes will be redeemable in whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (1) 100% of
their principal amount or (2) the sum of the present values of the remaining
scheduled payments of principal and interest on the Notes discounted to the date
of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 25 basis points, plus, in either
case, accrued and unpaid interest on the principal amount being redeemed to such
redemption date.
"Business Day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes.
"Comparable Treasury Price" means (1) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
S-13
<PAGE> 14
"Independent Investment Banker" means Morgan Stanley & Co. Incorporated or,
if such firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
Trustee.
"Reference Treasury Dealer" means (1) Morgan Stanley & Co. Incorporated,
Lehman Brothers Inc. and Prudential Securities Incorporated and their respective
successors, provided, however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer
and (2) any other Primary Treasury Dealer selected by the Independent Investment
Banker after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
"Treasury Rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15 (519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (2) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
Holders of Notes to be redeemed will receive notice of redemption by
first-class mail at least 30 and not more than 60 days prior to the date fixed
for redemption. If fewer than all of the Notes are to be redeemed, the Trustee
will select, not more than 45 days prior to the redemption date, the particular
Notes or portions thereof for redemption from the outstanding Notes not
previously called, by such method as the Trustee deems fair and appropriate.
Except as set forth above, the Notes will not be redeemable by the Company
prior to maturity and will not be entitled to the benefit of any sinking fund.
RANKING
The Notes will be senior unsecured obligations of the Company and will rank
pari passu with all other unsecured and unsubordinated indebtedness of the
Company.
The Senior Indenture does not limit the amount of debt securities,
debentures, notes or other evidences of indebtedness that may be issued by the
Company or any of its subsidiaries, nor does it restrict transactions between
the Company and its affiliates or dividends and other distributions by the
Company or its subsidiaries.
The Company currently conducts substantially all its operations through
subsidiaries, and substantially all of the Company's operating income and cash
flow are generated by its subsidiaries. As a result, funds necessary to meet the
Company's debt service obligations are provided principally by distributions or
advances from its subsidiaries. Under some circumstances, contractual or legal
restrictions, as well as the financial condition and operating requirements of
the Company's subsidiaries, could limit the Company's ability to obtain cash
from its subsidiaries for the purpose of meeting its debt service obligations,
including the payment
S-14
<PAGE> 15
of principal and interest on the Notes. The claims of creditors of the
subsidiaries will effectively have priority with respect to the assets and
earnings of the subsidiaries over the claims of creditors of the Company,
including the holders of the Notes.
As of September 30, 1998, as adjusted to give effect to the Bayard
acquisition, the reduction of borrowings subsequent to September 30, 1998, the
issuance of the Notes and the anticipated use of proceeds therefrom, the Company
would have had an aggregate of $882.1 million of consolidated indebtedness, of
which approximately $243.2 million would have been owed by subsidiaries or
secured and therefore effectively senior to the Notes.
COVENANTS AND DEFEASANCE
The provisions of the Senior Indenture which are described in the
accompanying Prospectus under "Description of Debt Securities -- Certain
Covenants," "Consolidation, Merger or Sale of Assets," "Defeasance or Covenant
Defeasance," "Modification and Waiver," "Governing Law" and "Global Securities"
will, as and to the extent modified as described in this Prospectus Supplement,
apply to the Notes.
The Senior Indenture does not contain any covenants or other provisions
that are intended to afford holders of the Notes special protection in the event
of a highly leveraged transaction by the Company.
CERTAIN ADDITIONAL COVENANTS
In addition to the covenants included in the Senior Indenture, certain
additional covenants that will apply to the Notes are included in the
Supplemental Indenture.
Limitations on Liens. So long as any Notes are outstanding, the Company
will not, nor will it permit any Subsidiary to, issue, assume, guarantee or
suffer to exist any debt for money borrowed ("Debt") if such Debt is secured by
a mortgage, pledge, security interest or lien (a "mortgage" or "mortgages") upon
any properties of the Company or any Subsidiary or upon any securities or
indebtedness of any Subsidiary (whether such properties, securities or
indebtedness is now owned or hereafter acquired) without in any such case
effectively providing that the Notes (and all other series of securities under
the Senior Indenture) shall be secured equally and ratably with (or prior to)
such Debt, except that the foregoing restrictions shall not apply to:
(a) mortgages on any property acquired, constructed or improved by the
Company or any Subsidiary (or mortgages on the securities of a special
purpose Subsidiary which holds no material assets other than the property
being acquired, constructed or improved) after the date of the Senior
Indenture which are created within 180 days after such acquisition (or in
the case of property constructed or improved, after the completion and
commencement of commercial operation of such property, whichever is later)
to secure or provide for the payment of the purchase price or cost thereof;
provided that in the case of such construction or improvement the mortgages
shall not apply to any property owned by the Company or any Subsidiary
before such construction or improvement other than (1) unimproved real
property on which the property so constructed, or the improvement, is
located or (2) personal property which is so improved;
(b) mortgages existing on the date of issuance of the Notes, existing
mortgages on property acquired (including mortgages on any property
acquired from a Person which is consolidated with or merged with or into
the Company or a Subsidiary) or mortgages outstanding at the time any
corporation, partnership or other entity becomes a Subsidiary; provided
that such mortgages shall only apply to property owned by such corporation,
partnership or other entity at the time it becomes a Subsidiary or that is
acquired thereafter other than from the Company or another Subsidiary;
(c) mortgages in favor of the Company or any Subsidiary;
(d) mortgages in favor of domestic or foreign governmental bodies to
secure advances or other payments pursuant to any contract or statute or to
secure indebtedness incurred to finance the purchase
S-15
<PAGE> 16
price or cost of constructing or improving the property subject to such
mortgages, including mortgages to secure Debt of the pollution control or
industrial revenue bond type; or
(e) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred to
in the foregoing clauses (a), (b), (c) or (d), inclusive; provided that the
principal amount of Debt secured thereby shall not exceed the principal
amount of Debt so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall be
limited to all or a part of the property which secured the mortgage so
extended, renewed or replaced (plus improvements in such property).
In addition to the foregoing, the Company and any Subsidiary may, without
securing the Notes, issue, assume or guarantee secured Debt that, with certain
other Debt described in the following sentence, does not exceed 15% of
Consolidated Net Worth, as shown on a consolidated balance sheet of the Company
as of a date not more than 90 days prior to the proposed transaction, prepared
by the Company in accordance with generally accepted accounting principles. The
other Debt to be aggregated for purpose of this exception is all Attributable
Debt in respect of Sale and Lease-Back Transactions (as defined below) of the
Company and its Subsidiaries under the exception in clause (e)(2) below existing
at such time.
Limitations on Sale and Lease-Back Transactions. So long as any Notes are
outstanding, the Company will not, nor will it permit any Subsidiary to, enter
into any Sale and Lease-Back Transaction, other than any Sale and Lease-Back
Transaction:
(a) entered into within 180 days of the later of the acquisition or
placing into service of the property subject thereto by the Company or
Subsidiary;
(b) involving a lease of less than five years;
(c) entered into in connection with an industrial revenue bond or
pollution control financing;
(d) between the Company and/or one or more Subsidiaries;
(e) as to which the Company or such Subsidiary would be entitled to
incur Debt secured by a mortgage on the property to be leased in an amount
equal to the Attributable Debt with respect to such Sale and Lease-Back
Transaction without equally and ratably securing the Notes (1) under
clauses (a) through (e) in "--Limitations on Liens" above or (2) under the
last paragraph of that section; or
(f) as to which the Company will apply an amount equal to the net
proceeds from the sale of the property so leased to (1) the retirement
(other than any mandatory retirement), within 180 days of the effective
date of any such Sale and Lease-Back Transaction, of Notes, of other debt
securities issued under the Senior Indenture or of Funded Debt of the
Company or a Subsidiary or (2) the purchase or construction of other
property, provided that such property is owned by the Company or a
Subsidiary free and clear of all mortgages.
"Attributable Debt" means, with respect to any Sale and Lease-Back
Transaction as of any particular time, the present value discounted at the rate
of interest implicit in the terms of the lease of the obligations of the lessee
under such lease for net rental payments during the remaining term of the lease.
"Consolidated Net Worth" means the amount of total stockholders' equity
shown in the most recent consolidated statement of financial position of the
Company.
"Funded Debt" means indebtedness for money borrowed which by its terms
matures at, or is extendible or renewable at the option of the obligor to, a
date more than twelve months after the date of the creation of such
indebtedness.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of any property,
whereby such property had been sold or transferred by the Company or any
Subsidiary to such Person.
S-16
<PAGE> 17
"Subsidiary" means a corporation, partnership or other entity more than 50%
of the outstanding voting securities of which is owned, directly or indirectly,
by the Company or one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For purposes of this definition, "voting securities"
means securities which ordinarily have voting power for the election of a
governing board, whether at all times or only so long as no senior class of
securities has such voting power by reason of any contingency.
EVENTS OF DEFAULT
All Events of Default described in the accompanying Prospectus in the first
paragraph under "Description of Debt Securities -- Events of Default and Notice
Thereof" shall apply to the Notes except for item (4) in the first paragraph of
that section. Therefore, the acceleration of other indebtedness will not create
an Event of Default with respect to the Notes.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Notes will be issued in fully registered
form, without coupons. The Notes will be deposited with, or on behalf of, The
Depository Trust Company, New York ("DTC"), and registered in the name of Cede &
Co., as DTC's nominee in the form of a global Note certificate (the "Global
Certificate") or will remain in the custody of the Trustee pursuant to a FAST
Balance Certificate Agreement between DTC and the Trustee.
GLOBAL CERTIFICATES
Upon the issuance of the Global Certificate, DTC or its custodian will
credit, on its internal system, the respective principal amount of Notes of the
individual beneficial interests represented by such Global Certificate to the
respective accounts of persons who have accounts with such depositary. Such
accounts initially will be designated by or on behalf of the Underwriters.
Ownership of beneficial interests in the Global Certificate will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Certificate will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants).
Conveyance of notices and other communications by DTC to Direct
Participants (as defined herein), by Direct Participants to Indirect
Participants (as defined herein), and by Direct Participants and Indirect
Participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note ("Beneficial Owner")
will in turn be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct and Indirect Participant through which the Beneficial
Owners entered the transaction. Transfers of ownership interests in the Notes
are to be accomplished by entries made on the books of participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Notes, except in the event that
use of the book-entry system for the Notes is discontinued.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Notes represented by such Global Certificate for
all purposes under the Senior Indenture and the Notes. No beneficial owner of an
interest in the Global Certificate will be able to transfer the interest except
in accordance with DTC's applicable procedures, in addition to those provided
for under the Senior Indenture.
S-17
<PAGE> 18
Payments of the principal of, and interest on, the Global Certificate will
be made to DTC or its nominee, as the case may be, as the registered owner
thereof. Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Certificate of or maintaining, supervising or reviewing any records relating to
such beneficial ownership interests, subject to any statutory or regulatory
requirements as may be in effect from time to time.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of the Global Certificate, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of such Global
Certificate as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in such
Global Certificate held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. If a holder requires physical delivery of a
certificated note for any reason, including to sell Notes to persons in
jurisdictions which require such delivery of such Notes or to pledge such Notes,
such holder must transfer its interest in the Global Certificate in accordance
with the normal procedures of DTC and the procedures set forth in the Senior
Indenture. Once an interest in the Global Certificate is delivered as a
certificated Note, such certificated Note may not be exchanged for an interest
in the Global Certificate.
The Company expects that DTC will take any action permitted to be taken by
a holder of Notes (including the presentation of Notes for exchange as described
below) only at the direction of one or more participants to whose account the
DTC interests in a Global Certificate is credited and only in respect of such
portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the Global Certificate
for certificated Notes, which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its direct participants and by the New York Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as banks, securities brokers and dealers
and trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect Participants").
Although the Company expects that DTC will agree to the foregoing
procedures in order to facilitate transfers of interests in the Global
Certificate among participants of DTC, DTC is under no obligation to perform or
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither the Company nor the Trustee will have any responsibility for
the performance by DTC or its Direct or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling or unable to continue as a depository for a
Global Certificate and a successor depositary is not appointed by the Company
within 90 days, the Company will issue certificated Notes in exchange for the
Global Certificate. The Company also may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities depository). In
that event, the Company will issue certificated Notes in exchange for the Global
Certificate.
S-18
<PAGE> 19
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for their accuracy.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Senior
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Senior Indenture. The Company is not required to exchange or
register the transfer of any Note selected for redemption. Also, the Company is
not required to exchange or register the transfer of any Note for a period of 15
days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
S-19
<PAGE> 20
UNDERWRITERS
Under the terms and conditions contained in the underwriting agreement
dated the date hereof (the "Underwriting Agreement"), the underwriters named
below (the "Underwriters") have severally agreed to purchase, and the Company
has agreed to sell to them, the respective amounts of the Notes set forth
opposite their names below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF NOTES
---- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated........................... $ 65,000,000
Lehman Brothers Inc......................................... 65,000,000
Prudential Securities Incorporated.......................... 65,000,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 32,500,000
Howard, Weil, Labouisse, Friedrichs Incorporated............ 32,500,000
Salomon Smith Barney Inc.................................... 32,500,000
Schroder & Co. Inc.......................................... 32,500,000
------------
Total............................................. $325,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to, among
other things, the approval of certain legal matters by their counsel and certain
other conditions. The Underwriters are obligated to take and pay for all the
Notes if any are taken.
The Underwriters propose initially to offer the Notes in part to the public
at the public offering price set forth on the cover page of this Prospectus
Supplement and in part to certain dealers at prices that represent a concession
not in excess of .35% of the principal amount of the Notes. Any Underwriter may
allow, and such dealers may reallow, a concession not in excess of .25% of the
principal amount of the Notes to certain other dealers. After the initial
offering of the Notes, the offering price and other selling terms may from time
to time be varied by the Underwriters.
The Company does not intend to apply for a listing of the Notes on a
national securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at the sole
discretion of the Underwriters. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Notes.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes. Specifically, the Underwriters may over-allot in connection with this
offering, creating short positions in the Notes for their own account. In
addition, to cover over-allotments or to stabilize the price of the Notes, the
Underwriters may bid for, and purchase, Notes in the open market. Finally, the
Underwriters may reclaim selling concessions allowed to an underwriter or dealer
for distributing Notes in this offering, if the Underwriters repurchase
previously distributed Notes in transactions that cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Notes above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Certain of the Underwriters and their affiliates have provided, and may in
the future continue to provide, investment banking and other financial services
to the Company for customary compensation. In addition, certain of the
Underwriters and their affiliates have provided and may provide investment
banking and other financial services to some acquisition candidates of the
Company. In particular, Morgan Stanley & Co. Incorporated advises Pool and
Donaldson, Lufkin & Jenrette Securities Corporation advises Bayard in their
proposed acquisitions by the Company.
S-20
<PAGE> 21
EXPERTS
The consolidated financial statements of Nabors as of September 30, 1997
and 1996 and for each of the three years in the period ended September 30, 1997,
incorporated by reference into this document have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in auditing and accounting.
The financial statements of Bayard as of December 31, 1996 and for each of
the two years in the period ended December 31, 1996 incorporated by reference
into this document have been audited by Grant Thornton LLP, independent public
accountants, as stated in their reports thereon and are so included in reliance
on such reports given upon the authority of that firm as experts in auditing and
accounting. The financial statements of Bayard as of December 31, 1997 and for
the fiscal year then ended, the financial statements of Trend Drilling Company
as of December 31, 1995 and 1996 and for the three fiscal years ended December
31, 1996, 1995 and 1994, and the financial statements of Ward Drilling Company,
as of December 31, 1996 and for the fiscal year then ended, have been
incorporated by reference into this document in reliance on the report of
PricewaterhouseCoopers LLP, independent public accountants, given upon the
authority of that firm as experts in auditing and accounting. The financial
statements of Bonray Drilling Corporation as of December 31, 1996 and June 30,
1996 and for the six-month period ended December 31, 1996 and years ended June
30, 1996 and 1995 incorporated by reference into this document have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
and are included in reliance on such report given upon the authority of such
firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the Notes will be passed upon for Nabors by Winston &
Strawn, New York, New York, and for the underwriters by Vinson & Elkins L.L.P.,
Houston, Texas. Vinson & Elkins L.L.P., from time to time, acts as legal counsel
to Nabors for various legal matters.
S-21
<PAGE> 22
PROSPECTUS
<TABLE>
<S> <C> <C>
$350,000,000
[NABORS
INDUSTRIES, NABORS INDUSTRIES, INC.
INC. LOGO] DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
DEPOSITARY SHARES AND WARRANTS
</TABLE>
Nabors Industries, Inc. (collectively with its subsidiaries (unless the
context otherwise requires), the "Company") may from time to time offer,
together or separately, in amounts, at prices and on terms to be determined at
the time of the offering, its (i) debt securities (the "Debt Securities"), which
may be either senior debt securities (the "Senior Debt Securities") or
subordinated debt securities (the "Subordinated Debt Securities"), (ii) shares
of its preferred stock, $.10 par value per share (the "Preferred Stock"), which
may be issued in the form of Depositary Shares (as defined herein) evidenced by
Depositary Receipts (as defined herein), (iii) shares of its common stock, $.10
par value per share (the "Common Stock"), and (iv) warrants to purchase Debt
Securities, Preferred Stock or Common Stock of the Company, as the Company shall
designate at the time of the offering (the "Warrants"). (The Debt Securities,
Preferred Stock, Depositary Shares, Common Stock and Warrants are collectively
called the "Securities.") Securities may be sold for U.S. dollars or one or more
foreign currencies, currency units or composite currencies -- in each case, as
the Company specifically designates.
In addition, shares of Common Stock may be offered from time to time by
stockholders of the Company who acquire their shares in connection with future
acquisitions by the Company ("Selling Stockholders"). Any Selling Stockholders
will be identified, and the number of shares to be offered by them will be
specified, in a Prospectus Supplement to this Prospectus. The Company will not
receive proceeds of any sale of shares by the Selling Stockholders.
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to $350,000,000 in aggregate
initial public offering price or the equivalent in one or more foreign
currencies, currency units or composite currencies. Certain specific terms of
the particular Securities in respect of which this Prospectus is being delivered
will be set forth in an accompanying Prospectus Supplement, including, where
applicable, (i) in the case of Debt Securities, the specific title, aggregate
principal amount, the denomination, whether such Debt Securities are secured or
unsecured obligations, maturity, premium, if any, the interest, if any (which
may be fixed, floating or adjustable rate), the time and method of calculating
payment of interest, if any, the place or places where principal of (and
premium, if any) and interest, if any, on such Debt Securities will be payable,
the currency, currency unit or composite currency in which principal of (and
premium, if any) and interest, if any, on such Debt Securities will be payable,
any terms of redemption at the option of the Company or the holder, any sinking
fund provisions, terms for any conversion or exchange into Securities or other
securities of the Company (however, any such other securities issuable upon
conversion or exchange of Debt Securities will be subject to registration under
the Securities Act (as defined herein) or an applicable exemption therefrom),
the initial public offering price, listing (if any) on a securities exchange and
other terms, (ii) in the case of Preferred Stock, the specific title, the
aggregate number of shares offered, any dividend (including the method of
calculating payment of dividends), liquidation, redemption, voting and other
rights, any terms for any conversion or exchange into Securities or other
securities of the Company (however, any such other securities issuable upon
conversion or exchange of Preferred Stock will be subject to registration under
the Securities Act or an applicable exemption therefrom), the initial public
offering price, listing (if any) on a securities exchange and other terms, (iii)
in the case of Warrants, the duration, purchase price, exercise price and
detachability of such Warrants, any listing of the Warrants or underlying
Securities on a securities exchange, a description of the securities for which
each Warrant is exercisable and other terms, and (iv) in the case of Depositary
Shares, the fractional share of Preferred Stock represented by each such
Depositary Share. If so specified in the applicable Prospectus Supplement, Debt
Securities of a series may be issued in whole or in part in the form of one or
more temporary or permanent global securities ("Global Securities").
The Common Stock is listed on the American Stock Exchange under the trading
symbol "NBR." Any Common Stock sold pursuant to a Prospectus Supplement will be
listed on that exchange, subject to official notice of issuance. On May 1, 1997,
the closing price of a share of Common Stock on that exchange was $18 5/8 per
share.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities, when issued, will be subordinated in right of payment to all Senior
Debt (as defined herein) of the Company.
The Prospectus Supplement may contain information concerning certain United
States federal income tax considerations applicable to the Securities offered.
This Prospectus may not be used to consummate sales of Securities, unless
accompanied by a Prospectus Supplement. Any statement contained in this
Prospectus will be deemed to be modified or superseded by any inconsistent
statement contained in an accompanying Prospectus Supplement.
SEE "RISK FACTORS" ON PAGE 3 HEREOF FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved in
the sale of the Securities in respect of which this Prospectus is being
delivered, the names of the agents, dealers or underwriters and any applicable
commissions or discounts will be set forth in or may be calculated from the
Prospectus Supplement with respect to such Securities. See "Plan of
Distribution" for possible indemnification arrangements with agents, dealers and
underwriters.
THE DATE OF THIS PROSPECTUS IS MAY 2, 1997.
<PAGE> 23
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Securities being
offered by this Prospectus. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits and
schedules to the Registration Statement as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits thereto, and the financial statements and
notes filed as a part thereof. Statements made in this Prospectus concerning the
contents of any contract, agreement or other document filed with the Commission
as an exhibit are not necessarily complete. With respect to each such contract,
agreement or other document filed with the Commission as an exhibit, reference
is made to the exhibit for a more complete description of the matter involved,
and each such statement shall be deemed qualified in its entirety by such
reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549, and at the Commission's Regional Offices at 7 World Trade
Center, 13th Floor, New York, New York 10048 and the Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
documents can also be obtained at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington
D.C. 20549. The Company is an electronic filer under the EDGAR (Electronic Data
Gathering, Analysis and Retrieval) system maintained by the Commission. The
Commission maintains a Web site (http://www.sec.gov) on the Internet that
contains reports, proxy and information statements and other information
regarding companies that file electronically with the Commission. In addition,
documents filed by the Company can be inspected at the offices of the American
Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which the Company has filed with the Commission,
are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 (the "1996 Form 10-K");
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1996;
(3) The Company's Current Report on Form 8-K filed with the Commission on
March 3, 1997; and
(4) The description of the Common Stock and the Preferred Stock contained
in Amendment No. 1 to the Registration Statement on Form 8-A (File No.
1-9245) filed with the Commission on May 20, 1992, and any subsequent
amendment thereto filed for the purposes of updating such description.
All documents and reports filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents or reports. Any statement contained in a
document which is, or is deemed to be, incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in any other subsequently filed
document which also is, or is deemed to be, incorporated by reference herein)
modifies or supersedes the previous statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request, a copy of any document incorporated by reference in this Prospectus,
other than exhibits to any such document not specifically described above.
Requests for such documents should be directed to Daniel McLachlin, Corporate
Secretary, Nabors Industries, Inc., 515 West Greens Road, Suite 1200, Houston,
Texas 77067; telephone number: (281) 874-0035.
-2-
<PAGE> 24
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus or any Prospectus Supplement, the following factors should be
considered carefully by prospective investors in evaluating the Company before
purchasing any of the securities offered hereby. The information contained or
incorporated by reference in this Prospectus or any Prospectus Supplement
includes forward-looking statements that involve risks and uncertainties, a
number of which are identified in this "Risk Factors" section. These risks and
uncertainties include, without limitation, industry conditions and the
variability of demand for contract drilling and related oilfield services,
intense competition, operating risks inherent in a hazardous industry, the
adequacy and availability of insurance, risks associated with international
operations, regulations pertaining to environmental matters and the other
matters detailed or referred to below and from time to time in the Company's
other reports filed with the Commission. The Company's actual results may differ
materially from the results set forth in or implied by any forward-looking
statements, due to such risks and uncertainties.
Business-Related Risks. The information set forth under the captions
"Industry Conditions, Competition and Seasonality," "Operating Risks and
Insurance," "International Operations" and "Governmental Matters" in Part I of
the Company's 1996 Form 10-K, in addition to the other information included in
the 1996 Form 10-K, is specifically incorporated by reference herein.
International Operations. A significant portion of the Company's business
is derived from international markets, including major operations in the Middle
East and South and Central America, as well as other operations in the
Commonwealth of Independent States, the Far East and Africa. Such operations may
be subject to various risks, including the risk of war and civil disturbances
and government activities, that may limit or disrupt markets, restrict the
movement of funds or result in the deprivation of contract rights or the taking
of property without fair compensation. In certain countries, such operations may
be subject to the additional risk of fluctuating currency values and exchange
controls. In the international markets in which the Company operates, it is
subject to various laws and regulations with respect to the operation and
taxation of its business and the import and export of its equipment from country
to country, the imposition, application and interpretation of which can prove to
be uncertain.
Dividend Policies; Restrictions on Payment of Dividends. The Company does
not anticipate that it will pay any dividends on the Common Stock in the
foreseeable future. Certain of the Company's debt instruments include covenants
restricting the Company's ability to pay dividends or to make certain other
distributions to stockholders. In connection with the offering of any
dividend-paying Preferred Stock hereby, the applicable Prospectus Supplement
will set forth the amount available for distribution as of the end of the most
recent fiscal period under the Company's debt instruments.
Holding Company Structure. The Company is a holding company, and it
conducts substantially all of its operations through subsidiaries. Consequently,
the Company will rely principally on dividends or advances from its subsidiaries
for the funds necessary to, among other things, pay principal of and any
interest or premium on the Debt Securities and the other indebtedness of the
Company. The ability of the Company's subsidiaries to pay dividends is subject
to applicable state law and certain other restrictions. Any right of the holders
of the Debt Securities to participate in the assets of any subsidiary upon the
subsidiary's liquidation or recapitalization will be effectively subordinated to
the claims of the subsidiary's creditors and preferred stockholders (if any),
except to the extent that the Company is itself recognized as a creditor of the
subsidiary.
Absence of Public Market for Certain of the Securities. All Debt
Securities, Preferred Stock, Depositary Shares and Warrants will be new issues
of securities with no established trading market. Any underwriters to whom Debt
Securities, Preferred Stock, Depositary Shares or Warrants are sold by the
Company for public offering and sale may make a market in such Securities, but
the underwriters will not be obligated to do so and may discontinue any
market-making at any time without notice. No assurance can be given as to the
liquidity of any secondary market for Debt Securities, Preferred Stock,
Depositary Shares or Warrants.
Market Risk with Respect to Common Stock; Certain Investment
Limitations. The Common Stock is listed for trading on the American Stock
Exchange. However, the prices at which shares of Common Stock trade may depend
on many factors, including prevailing interest rates, markets for similar
securities, industry
-3-
<PAGE> 25
conditions and the performance of, and investor expectations for, the Company.
No assurance can be given that a holder of shares of Common Stock will be able
to sell those shares at any particular price. Certain institutional investors
may invest only in dividend-paying equity securities or may operate under other
restrictions that may prohibit or limit their ability to invest in the Common
Stock.
Shares Available for Future Sale. As of March 31, 1997, there were
93,310,006 shares of Common Stock outstanding. As of such date, 19,729,808
shares of Common Stock were reserved for issuance pursuant to option and
employee benefit plans and 9,517,242 shares of Common Stock were reserved for
issuance upon the conversion of the 5% Notes (as defined herein). The exercise
price of many of these options is substantially lower than the trading prices of
Common Stock on that date. In addition, the exercise of certain of these options
may cause the Company to issue to the exercising holders additional options to
purchase shares of Common Stock at an exercise price equal to the fair market
value of Common Stock on the date of issuance, and the Company may issue
additional options in the future under stock option plans or otherwise. Certain
of the shares to be issued pursuant to the exercise of options may be
"restricted securities," as that term is defined in Rule 144 promulgated under
the Securities Act. The sale, or availability for sale, of substantial amounts
of Common Stock in the public market due to the exercise of options (and, where
applicable, sales pursuant to Rule 144) could adversely affect the prevailing
market price of the Common Stock and could impair the Company's ability to raise
additional capital through the sale of equity securities.
Reliance on Key Personnel. The Company's business is dependent to a
significant extent upon the performance of certain key individuals, including
Eugene M. Isenberg, Anthony G. Petrello and Richard A. Stratton. Each of these
individuals has entered into an employment agreement with the Company. The loss
of the services of Messrs. Isenberg, Petrello or Stratton could have a material
adverse effect on the Company.
Possible Deterrents to Changes of Control. The board of directors of the
Company is divided into three classes of directors, with each class serving a
staggered three-year term. See "Description of Capital Stock and Depositary
Shares -- Certain Certificate of Incorporation and By-Law Provisions." In
addition, the board of directors has the authority to issue up to 10,000,000
shares of Preferred Stock and to determine the price, rights (including voting
rights), conversion ratios, preferences and privileges of that stock without
further vote or action by the holders of the Common Stock. Although the Company
has no present plans to issue shares of Preferred Stock, the classified board
and the Board's ability to issue additional shares of Preferred Stock may
discourage, delay or prevent changes in control of the Company that are not
approved by the board of directors, thereby preventing certain stockholders of
the Company from realizing a possible premium on their shares.
THE COMPANY
The Company is the largest land drilling contractor in the world. The
Company was incorporated in Delaware in 1978 and has principally engaged in oil,
gas and geothermal land drilling operations in Alaska, the lower 48 states of
the United States and Canada, and internationally in the Middle East, the Far
East, the Commonwealth of Independent States, North and West Africa and South
and Central America. The Company, through its subsidiaries, also provides
offshore drilling, well servicing and workover services in the Gulf of Mexico,
Alaska's Cook Inlet and several international markets. A subsidiary of the
Company provides well servicing and workover services, primarily in the Rocky
Mountains and mid-continent region of the United States. The Company also
provides oilfield management, engineering, transportation, construction,
maintenance and other support services in selected domestic and international
markets. Another subsidiary of the Company, Canrig Drilling Technology Ltd.,
manufactures top drives for a broad range of drilling rig applications.
Since the current management group began directing the Company in 1987, the
Company's business philosophy has been to establish and maintain a conservative
and flexible financial posture, to build a diverse portfolio of market positions
to mitigate risk and provide potential for growth, to forge long-term
relationships with customers, to build a cadre of talented and experienced
employees, to grow and remain profitable in any market environment and to
position the business for the future by maintaining flexibility. This philosophy
has been implemented primarily through strategic acquisitions and internal
growth in existing and new markets.
-4-
<PAGE> 26
The Company also has advanced this philosophy by entering into strategic
alliances with customers and by providing integrated drilling, engineering and
other oilfield services responsive to customers' needs.
Acquisitions and Internal Growth. The Company's business philosophy has
been implemented through strategic acquisitions and internal growth in existing
and new markets. Since 1988, through acquisition of other drilling companies,
asset purchases and internal expansion, the Company has grown from a business
centered principally in Canada and Alaska to an international company operating
on land and offshore in many of the major oil, gas and geothermal markets in the
world. In 1988, the Company's rig fleet consisted of 44 land drilling rigs. As
of December 31, 1996, the active Company-owned rig fleet consisted of 362 land
drilling rigs, 34 offshore rigs and 78 land workover and well servicing rigs.
Strategic Alliances. The Company's business philosophy has also been
advanced by entering into strategic alliances with customers. An increasing
number of customers have been seeking to benefit from exploration and
development drilling programs by establishing continuing relationships, or
alliances, with a smaller number of preferred drilling contractors. These
alliances can result in long-term work and increased profitability for drilling
contractors that are selected as partners in the alliance. The Company has been
selected by operators as alliance partners in Alaska, the lower 48 states of the
United States and Canada.
Drilling and Engineering Services. The Company's business philosophy has
also been advanced by providing drilling-related services and management of
drill site activities to its customers. Many major oil and gas companies are
reducing the number of services they provide and the number of service
contractors at a drill site, and are requiring the contractors remaining provide
such drilling-related services and management. The Company also seeks to provide
innovative, quality engineering and technical support from its drilling and
oilfield support operations. The Company provides engineering services to all of
its subsidiaries and to its worldwide customers from its Houston-based
engineering groups.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of shares of Common
Stock by the Selling Shareholders. With respect to offerings of Securities by
the Company, except as otherwise set forth in a Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for future business
acquisitions and other general corporate purposes, including working capital,
investment in subsidiaries, the repayment of existing debt and/or the repurchase
of shares of Common Stock or other securities. The precise amounts and timing of
the application of the net proceeds for corporate purposes will depend upon a
variety of factors, including the Company's funding requirements and the
availability of alternative sources of funding. The Company routinely reviews
acquisition opportunities. Any proposal to use proceeds from any offering of
Securities in connection with an acquisition will be disclosed in the Prospectus
Supplement relating to such offering.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods set forth
below has been computed on a consolidated basis and should be read in
conjunction with the Company's consolidated financial statements (including the
notes thereto) set forth or incorporated by reference in the Company's 1996 Form
10-K for the fiscal year ended September 30, 1996 and the Company's quarterly
report on Form 10-Q for the fiscal quarter ended December 31, 1996.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30,
THREE MONTHS ENDED ------------------------------------
DECEMBER 31, 1996 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..... 9.12 7.09 7.67 1.65 5.35 6.50
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of pretax income from continuing operations plus fixed
charges (excluding capitalized interest). "Fixed charges" represent interest
incurred (whether expensed or capitalized), amortization of debt expense, and
that portion of rental
-5-
<PAGE> 27
expense on operating leases deemed to be the equivalent of interest. No
Preferred Stock was outstanding during any of the periods presented and, as a
result, the ratio of earnings to combined fixed charges and Preferred Stock
dividends was the same as the ratio of earnings to fixed charges.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Senior Debt Securities are to be issued under an indenture (the "Senior
Indenture"), to be entered into between the Company and a trustee named in the
applicable Prospectus Supplement. The Subordinated Debt Securities are to be
issued under a separate indenture (the "Subordinated Indenture"), to be entered
into between the Company and a trustee named in the applicable Prospectus
Supplement. (The Senior Indenture and the Subordinated Indenture are referred to
collectively herein as the "Indentures." The trustee under the Senior Indenture
and the trustee under the Subordinated Indenture are each referred to herein as
the "Trustee.") The following summaries of certain provisions of the Senior Debt
Securities, the Subordinated Debt Securities and the Indentures do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indentures applicable to a particular
series of Debt Securities, including the definitions therein of certain terms.
Copies of the forms of the Indentures are filed as exhibits to the Registration
Statement of which this Prospectus is a part, and the following summary is
qualified in its entirety by reference to such exhibits. See "Available
Information." Article and Section references used herein are references to the
applicable Indenture. Capitalized terms not otherwise defined in this
Description of Debt Securities will have the meaning given in the Indentures.
Wherever particular Sections, Articles or defined terms of the Indentures are
referred to, it is intended that those Sections, Articles or defined terms shall
be incorporated herein by reference.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series.
Unless otherwise specified in the applicable Prospectus Supplement, the Senior
Debt Securities, when issued, will be unsecured and unsubordinated obligations
of the Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities,
when issued, will be subordinated in right of payment to the prior payment in
full of all Senior Debt (as defined below) of the Company, as described under
"-- Subordination of Subordinated Debt Securities" and in the Prospectus
Supplement applicable to an offering of Subordinated Debt Securities. The Debt
Securities will be payable in currency of the United States or in such other
foreign currency, currency unit or composite currency as may be specified in the
applicable Prospectus Supplement.
The Prospectus Supplement relating to the offering of particular Debt
Securities (the "Offered Debt Securities") will set forth whether the Offered
Debt Securities will be Senior Debt Securities or Subordinated Debt Securities,
and will further set forth (to the extent applicable) the following terms of the
Offered Debt Securities: (1) the title of the Offered Debt Securities; (2) any
limit on the aggregate principal amount of the Offered Debt Securities; (3) the
Person to whom any interest on the Offered Debt Securities will be payable, if
other than the Person in whose name such Offered Debt Securities are registered
on any Regular Record Date; (4) the date or dates, or the method or methods (and
related procedures) by which such date or dates will be determined or extended,
on which the principal of the Offered Debt Securities will be payable; (5) the
rate or rates per annum (which may be fixed, floating or adjustable) at which
the Offered Debt Securities will bear interest, if any, or the formula pursuant
to which such rate or rates shall be determined, the date or dates from which
such interest will accrue and the dates on which such interest, if any, will be
payable and the Regular Record Dates for such interest payment dates; (6)
whether the Offered Debt Securities will be secured; (7) the place or places
where principal of (and premium, if any) and interest, if any, on the Offered
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Debt Securities will be payable; (8) if applicable, the price at which, the
periods within which and the terms and conditions upon which the Offered Debt
Securities may be redeemed in whole or in part at the option of the Company; (9)
if applicable, any obligation of the Company to redeem or purchase Offered Debt
Securities pursuant to any sinking fund or analogous provision or at the option
of a Holder thereof, and the period or periods within which, the price or prices
at which and the terms and conditions upon which the Offered Debt Securities
will be redeemed or purchased, in whole or in part; (10) if applicable, the
terms of any right to convert or exchange the Offered Debt Securities into
Securities or other securities of the Company (provided, however, that any such
other securities issuable upon conversion or exchange of Offered Debt Securities
will be subject to registration under the Securities Act or an applicable
exemption therefrom); (11) if other than denominations of $1,000 and any
integral multiple thereof (or the equivalent thereof in one or more foreign
currencies, currency units or composite currencies), the denominations in which
the Offered Debt Securities will be issuable; (12) if the amount of payments of
principal of (or premium, if any) or interest, if any, on the Offered Debt
Securities may be determined with reference to one or more indices, the manner
in which such amounts will be determined; (13) if other than currency of the
United States, one or more foreign currencies, currency units or composite
currencies in which the Offered Debt Securities are to be denominated; (14) if
other than the coin or currency in which the Offered Debt Securities are to be
denominated, the coin or currency in which payment of the principal of or
interest on the Offered Debt Securities shall be payable; (15) the price or
prices (expressed as a percentage of the principal amount thereof) at which such
Debt Securities will be issued and the portion of the principal amount of the
Offered Debt Securities, if other than the principal amount thereof, payable
upon acceleration of maturity thereof; (16) whether all or any part of the
Offered Debt Securities will be issued in the form of a Global Security or
Securities and, if so, the depositary for, and other terms relating to, such
Global Security or Securities; (17) whether any of the Offered Debt Securities
are Original Issue Discount Securities (as defined herein); (18) whether the
interest, if any, on the Offered Debt Securities is to be payable in securities
of the Company, and the terms and conditions applicable to any such payment;
(19) any event or events of default applicable with respect to the Offered Debt
Securities in addition to those provided in the Indentures; (20) any other
covenant or warranty included for the benefit of the Offered Debt Securities in
addition to (and not inconsistent with) those included in the Indentures for the
benefit of Debt Securities of all series, or any other covenant or warranty
included for the benefit of the Offered Debt Securities in lieu of any covenant
or warranty included in the Indentures for the benefit of Debt Securities of all
series, or any provision that any covenant or warranty included in the
Indentures for the benefit of Debt Securities of all series shall not be for the
benefit of the Offered Debt Securities, or any combination of such covenants,
warranties or provisions; (21) any restriction or condition on the
transferability of the Offered Debt Securities; (22) any authenticating or
paying agents, registrars, conversion agents or other agents with respect to the
Offered Debt Securities; and (23) any other terms of the Offered Debt
Securities. (Indentures, Section 301.) Debt Securities may also be issued under
the Indentures upon the exercise of Warrants. See "Description of Warrants."
Debt Securities may be issued at a discount from their stated principal
amount. Certain United States federal income tax considerations applicable to
any Debt Security issued with original issue discount (an "Original Issue
Discount Security") and any Debt Security on which the interest is to be payable
in securities of the Company may be described in an applicable Prospectus
Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency, currency unit or composite currency or if the principal of
(and premium, if any) and interest on any series of Debt Securities is payable
in one or more foreign currencies, currency units or composite currencies, the
restrictions, elections, general tax considerations, specific terms and other
information with respect to such Debt Securities and such foreign currencies,
currency units or composite currencies will be set forth in an applicable
Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued as registered securities without
coupons in denominations of $1,000 or any integral multiple of $1,000 (or the
equivalent thereof in one or more foreign currencies, currency units or
composite currencies). (Indentures, Section 302.) No service charge will be made
for any transfer or exchange of such Offered Debt
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<PAGE> 29
Securities, but the Company or the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Indentures, Section 305.)
Since the Company is a holding company, the rights of the Company, and
hence the rights of creditors of the Company (including the Holders of the Debt
Securities), to participate in any distribution of the assets of any subsidiary
upon its liquidation or reorganization or otherwise are necessarily subject to
the prior claims of creditors of the subsidiary, except to the extent that the
Company may be recognized as a creditor of the subsidiary. Generally, the Debt
Securities will be effectively subordinated to all existing and future
indebtedness of the Company's operating subsidiaries.
Unless otherwise specified in an applicable Prospectus Supplement, the
Indentures will not contain any provisions that limit the ability of the Company
or any subsidiary to incur indebtedness or that afford Holders of the Debt
Securities protection in the event of a highly leveraged or similar transaction
involving the Company or any subsidiary.
Other Indebtedness. Certain of the Company's existing debt instruments
impose, and future debt instruments may impose, certain restrictions on the
Company, including restrictions on the payment of dividends and certain business
combinations, and require the Company to maintain certain financial ratios. On
May 28, 1996, the Company issued $172.5 million of 5% Convertible Subordinated
Notes with a scheduled maturity on May 15, 2006 (the "5% Notes"). Interest on
the 5% Notes is payable semi-annually on May 15 and November 15 of each year
commencing November 15, 1996. The 5% Notes are convertible into common shares of
the Company at any time, at a conversion price of $18.125 per share, subject to
an adjustment in certain events. The 5% Notes are redeemable at the option of
the Company, in whole or in part, at any time on or after May 15, 1999,
initially at 103.5% and at decreasing prices thereafter to 100% at maturity, in
each case together with accrued and unpaid interest. The 5% Notes also may be
repaid at the option of the holder at 101%, together with accrued and unpaid
interest, any time prior to May 15, 2006 if there is a change in control, as
defined in the subordinated indenture. The proceeds from the 5% Notes were used
to repay several term loans and reduce outstanding borrowings on the Company's
credit facilities. The remaining proceeds are to be used for general corporate
purposes, including working capital.
The Company issued 9.18% Senior Secured Notes due July 31, 2006 in the
principal amount of $40.0 million (the "9.18% Notes") to the John Hancock Mutual
Life Insurance Company, pursuant to an Amended and Restated Note Purchase
Agreement dated October 1, 1992. The 9.18% Notes impose certain restrictions on
the Company, including restrictions on additional borrowings, liens,
transactions with affiliates, dividends and other payments in respect of capital
stock and certain business combinations. The Company may pay dividends to the
extent that the Company's cumulative dividends, plus certain other payments
since March 31, 1989, do not exceed 50% of the Company's cumulative net income
since March 31, 1989, plus the proceeds of any offering of equity securities of
the Company that are not redeemable at the option of the holder of the
securities. As of September 30, 1996, retained earnings available for dividends
totaled approximately $178 million. Also, proceeds from the sale of certain
assets must be used to prepay the 9.18% Notes to the extent that an amount equal
to those proceeds is not invested by the Company during a two-year period. The
9.18% Notes also require that certain financial tests be met by the Company on a
consolidated basis, the most restrictive of which requires working capital to be
in excess of $5.0 million. The 9.18% Notes are collateralized by the pledge of
all of the shares of one of the Company's subsidiaries operating in the Gulf of
Mexico and certain other subsidiary assets. Interest on the 9.18% Notes is
payable semi-annually on July 31 and January 31 of each year.
During 1995, a subsidiary of the Company entered into a revolving loan
agreement with a financial institution whereby it can borrow up to $20.0 million
for the construction of certain drilling equipment. Borrowings under the
agreement are guaranteed by the Company and bear interest at 90-day LIBOR plus
.50%. As of December 31, 1996, the amount of outstanding borrowings under this
agreement was approximately $13.0 million.
The Company has available lines of credit with a number of banks that
permit borrowings of up to $64.5 million at interest rates generally not to
exceed, at the option of the Company, each bank's prime rate or
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LIBOR plus .75%. Under these lines of credit, the Company had short-term
borrowings and letters of credit outstanding of approximately $20.2 million as
of December 31, 1996.
The information included in item 8 (entitled "Financial Statements and
Supplementary Data") in Part II of the Company's 1996 Form 10-K is specifically
incorporated by reference herein.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise specified in the applicable Prospectus Supplement, the
following events are defined in the Indentures as "Events of Default" with
respect to Debt Securities of any series: (1) failure to pay principal
(including any sinking fund payment) of, or premium (if any) on, any Debt
Security of that series when due (in the case of the Subordinated Indenture,
whether or not payment is prohibited by the subordination provisions) and such
failure continues for a period of 10 days; (2) failure to pay interest, if any,
on any Debt Security of that series when due and such failure continues for a
period of 30 days; (3) failure by the Company to perform any other covenant in
the Indentures (other than a covenant included in the Indentures solely for the
benefit of a series of Debt Securities other than that series) which continues
for a period of 90 days after written notice to the Company; (4) due
acceleration of any indebtedness for borrowed money in a principal amount in
excess of $25.0 million for which the Company or any Principal Subsidiary is
liable, including Debt Securities of another series, or a default by the Company
or any Principal Subsidiary in the payment at final maturity of outstanding
indebtedness for borrowed money in a principal amount in excess of $25.0
million, and such acceleration or default at maturity shall not be waived,
rescinded or annulled within 30 days after written notice to the Company
thereof, unless such acceleration or default at maturity shall be remedied or
cured by the Company or such Principal Subsidiary or rescinded, annulled or
waived by the holders of such indebtedness, in which case such acceleration or
default at maturity shall not constitute an Event of Default under this
provision; and (5) certain events of insolvency, reorganization, receivership or
liquidation of the Company. (Indentures, Section 501.)
No Event of Default with respect to Debt Securities of a particular series
will necessarily constitute an Event of Default with respect to Debt Securities
of any other series. If an Event of Default with respect to any outstanding
series of Debt Securities occurs and continues, then either the Trustee or the
Holders of at least 25% in principal amount of the outstanding Debt Securities
of that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Debt Securities, such portion of the principal
amount as may be specified in the terms of that series) of all Debt Securities
of that series to be due and payable immediately; however, under certain
circumstances, the Holders of a majority in aggregate principal amount of
outstanding Debt Securities of that series may rescind or annul such declaration
and its consequences. (Indentures, Section 502.)
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to the principal amount of such Original Issue
Discount Securities due on acceleration upon the occurrence of an Event of
Default and the continuation thereof.
The Trustee is not charged with knowledge of any Event of Default unless
written notice thereof has been given to the Trustee by the Company, the Paying
Agent or Holders of at least 25% in principal amount of the outstanding Debt
Securities of that series. (Indentures, Section 501.) Each Indenture provides
that the Trustee may withhold notice to the Holders of the Debt Securities of
any default (except in payment of principal (or premium, if any) or interest, if
any) if it considers it in the interest of the Holders of the Debt Securities to
do so. (Indentures, Section 602.) The Company must furnish annually to the
Trustee a statement by one of certain specified officers of the Company as to
the compliance with all conditions and covenants of the Indentures. (Indentures,
Section 1004.)
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series will have the right, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of that series, and to waive certain
defaults. (Indentures, Sections 512 and 513.)
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The Indentures provide that, if an Event of Default occurs and continues,
then the Trustee must exercise such of its rights and powers under the
Indentures, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. (Indentures, Section 601.) Subject to these provisions,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indentures at the request of any of the Holders of Debt Securities
unless they have offered to the Trustee security or indemnity in form and
substance reasonably satisfactory to the Trustee against the costs, expenses and
liabilities that it might incur in compliance with the Holders' request.
(Indentures, Section 603.)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indentures or for any remedy thereunder,
unless (1) that Holder has previously given to the Trustee written notice of a
continuing Event of Default, (2) the Holders of at least 25% in principal amount
of the outstanding Debt Securities of the same series have made a written
request, and offered indemnity to the Trustee in form and substance reasonably
satisfactory to the Trustee, to institute the proceeding as Trustee, (3) the
Trustee has not received from the Holders of a majority in principal amount of
the outstanding Debt Securities of the same series a direction inconsistent with
the request, and (4) the Trustee has failed to institute such proceeding within
60 days of the written request therefor. (Indentures, Section 507.) However,
these limitations do not apply to a suit instituted by a Holder of a Debt
Security for enforcement of payment of the principal of (or premium, if any) or
interest, if any, on that Holder's Debt Security on or after the respective due
dates expressed in that Debt Security, or of the right to convert that Holder's
Debt Security in accordance with the Indentures (if applicable). (Indentures,
Section 508.)
MODIFICATION AND WAIVER
Each Indenture allows the Company and the Trustee, from time to time,
without the consent of the Holders of any series of Debt Securities, to amend
the Indenture or the applicable series of Debt Securities for certain specified
purposes, including curing ambiguities or inconsistencies and making any change
that does not adversely affect the rights of any Holder of that series of Debt
Securities. (Indentures, Section 901.) Modifications and amendments of the
Indentures may also be made by the Company and the Trustee, with the consent of
the Holders of not less than a majority of principal amount of each series of
the outstanding Debt Securities issued under the Indentures which is affected by
the modification or amendment; however, no such modification or amendment may,
without the consent of each Holder of a Debt Security affected thereby: (1)
change the Stated Maturity of the principal of or any installment of principal
or interest, if any, on any such Debt Security, except that, with the consent of
the Holders of not less than 75% of the outstanding Debt Securities of any
series, the Company may postpone any interest payment in respect of that series
for a period not to exceed three years; (2) reduce the principal amount of (or
premium, if any) or the interest rate, if any, on any such Debt Security or the
principal amount due upon acceleration of any Original Issue Discount Security;
(3) change the place or currency of payment of principal of (or premium, if any)
or the interest, if any, on any such Debt Security; (4) impair the right to
institute suit for the enforcement of any such payment on or with respect to any
such Debt Security; (5) reduce the percentage of the principal amount of Debt
Securities necessary to modify or amend the Indentures; (6) in the case of the
Subordinated Indenture, modify the subordination provisions in a manner adverse
to the holders of the Subordinated Debt Securities; or (7) modify the foregoing
requirements or reduce the percentage of outstanding Debt Securities necessary
to waive compliance with certain provisions of the Indentures or to waive
certain defaults. (Indentures, Section 902.)
The holders of at least a majority of the aggregate principal amount of the
outstanding Debt Securities of any series may, on behalf of all Holders of that
series, waive compliance by the Company with any of the provisions of the
Indentures and waive any past default under the applicable Indenture, except a
default in the payment of principal (and premium, if any), or interest (if any)
or in the performance of certain covenants. (Indentures, Sections 908 and 513.)
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DEFEASANCE AND COVENANT DEFEASANCE
The Indentures allow the Company to elect either (1) to defease and be
discharged from all of its obligations with respect to any series of Debt
Securities (including, in the case of Subordinated Debt Securities, the
provisions described under "-- Subordination of Subordinated Debt Securities"
and except for the obligations to exchange or register the transfer of such Debt
Securities, to replace temporary, mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of such Debt Securities,
and to hold monies for payments in trust) ("defeasance"), or (2) to be released
from its obligations with respect to any series of Debt Securities concerning
the restrictions described under "-- Consolidation, Merger or Sale of Assets"
and any other covenants applicable to such Debt Securities (including, in the
case of Subordinated Debt Securities, the provisions described under
"--Subordination of Subordinated Debt Securities") which are subject to covenant
defeasance ("covenant defeasance"), and the occurrence of an event described and
notice thereof in clauses (3) and (4) under "-- Events of Default and Notice
Thereof" (with respect to covenants subject to covenant defeasance) shall no
longer be an Event of Default, in each case, upon the irrevocable deposit with
the Trustee (or other qualifying trustee), in trust for such purpose, of money
and U.S. Government Obligations that, through the payment of principal and
interest in accordance with their terms, will provide money in an amount
sufficient to pay the principal of (and premium, if any) and interest, if any,
on such Debt Securities on the scheduled due dates therefor. Such a trust may
only be established if, among other things, (a) the Company has delivered to the
Trustee (i) in the case of defeasance, an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (B) since the date of the Indenture, there has been
a change in the applicable United States federal income tax law, in the case of
either (A) or (B) to the effect that the holders of such Securities will not
recognize gain or loss for United States federal income tax purposes as a result
of the deposit, defeasance and discharge to be effected with respect to such
Securities and will be subject to United States federal income tax on the same
amount, in the same manner and at the same times as would be the case if such
deposit, defeasance and discharge were not to occur or (ii) in the case of
covenant defeasance, an Opinion of Counsel to the effect that the Holders of
such Debt Securities will not recognize gain or loss for United States federal
income tax purposes as a result of such deposit and covenant defeasance and will
be subject to United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit and
covenant defeasance had not occurred, (b) no Event of Default or event which
with the giving of notice or lapse of time, or both, would become an Event of
Default under the applicable Indenture shall have occurred and be continuing on
the date of such deposit and (c) in the case of Subordinated Debt Securities,
(i) no default in the payment of principal of (or premium, if any) or interest,
if any, on any Senior Debt beyond any applicable grace period shall have
occurred and be continuing, or (ii) no other default with respect to any Senior
Debt shall have occurred and be continuing and shall have resulted in the
acceleration of such Senior Debt. The Company may exercise its defeasance option
with respect to such Debt Securities notwithstanding its prior exercise of its
covenant defeasance option. If the Company exercises its defeasance option,
payment of such Debt Securities may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, payment of
such Debt Securities may not be accelerated by reference to the covenants noted
under clause (2) above. If the Company omits to comply with its remaining
obligations with respect to such Debt Securities under the applicable Indenture
after exercising its covenant defeasance option, and if such Debt Securities are
declared due and payable because of the occurrence of any Event of Default, then
the amount of money and U.S. Government Obligations on deposit with the Trustee
may, in certain circumstances, be insufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from the Event of Default;
however, the Company will remain liable for making such payments. (Indentures,
Article Thirteen.)
CERTAIN COVENANTS
Maintenance of Office or Agency. The Company must maintain an office or
agency in each Place of Payment for each series of Debt Securities, both for
notice and demand purposes and for the purposes of presenting or surrendering
Debt Securities for payment or registration of transfer or exchange.
(Indentures, Section 1002.)
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<PAGE> 33
Paying Agents, Etc. If the Company acts as its own Paying Agent with
respect to any series of Debt Securities, then, on or before each due date of
the principal of or interest on any Debt Securities of that series, it must
segregate and hold in trust for the benefit of the persons entitled thereto a
sum that is sufficient to pay the amount due and must notify the Trustee
promptly of its action or failure so to act. If the Company has one or more
Paying Agents for any series of Debt Securities, then, prior to each due date of
the principal of or interest on any Debt Securities of that series, it must
deposit with a Paying Agent a sum sufficient to pay such amount, and must
promptly notify the Trustee of its action or failure to so act (unless the
Paying Agent is the Trustee). All amounts that are paid by the Company to a
Paying Agent for the payment of principal of and interest on any Debt Securities
and that remain unclaimed for two years after such principal and interest has
become due and payable may be repaid to the Company, and thereafter the holder
of those Debt Securities may look only to the Company for payment thereof.
(Indentures, Section 1003.)
Restrictive Covenants. Any restrictive covenants applicable to any series
of Debt Securities will be described in an applicable Prospectus Supplement.
CONSOLIDATION, MERGER OR SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or sell
its property and assets as, or substantially as, an entirety to any Person and
may not permit any Person to merge into or consolidate with the Company unless
(i) either the Company will be the resulting or surviving entity or any
successor or purchaser is a corporation, partnership or trust organized under
the law of the United States of America, any State or the District of Columbia,
and any such successor or purchaser expressly assumes the Company's obligations
under the Debt Securities in a supplemental indenture, (ii) immediately after
giving effect to the transaction, no Event of Default shall have occurred and be
continuing, and (iii) certain other conditions are met. (Indentures, Section
801.)
CONVERSION RIGHTS
The terms on which Debt Securities of any series may be convertible or
exchangeable into Securities or other securities of the Company will be set
forth in the Prospectus Supplement relating to that series of Debt Securities
(however, any such other securities issuable upon conversion or exchange of Debt
Securities will be subject to registration under the Securities Act or an
applicable exemption therefrom). The terms will include provisions as to whether
conversion or exchange is mandatory, at the option of the holder or at the
option of the Company, and may include provisions requiring the number of
securities to be received by the holders of Debt Securities to be calculated
according to the market price of the securities to be received, as of a time
stated in the Prospectus Supplement. (Indentures, Section 301 and Article
Twelve.)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities.
To the extent set forth in the Subordinated Indenture, the Subordinated
Debt Securities will be subordinated in right of payment to the prior payment in
full of all Senior Debt, including any Senior Debt Securities. (Subordinated
Indenture, Section 1501.) Upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of assets
or any bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of the Company, the
holders of Senior Debt will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on the Senior Debt
before the holders of Subordinated Debt Securities will be entitled to receive
or retain any payment in respect of the principal of (and premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Subordinated Indenture,
Section 1502.)
Because of the subordination of the Subordinated Debt Securities, if the
Company is liquidated or insolvent, then Holders of Subordinated Debt Securities
may recover less, ratably, than holders of Senior Debt or other creditors of the
Company who are not subordinated to holders of Senior Debt.
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If the maturity of any Subordinated Debt Securities is accelerated, then
the holders of all Senior Debt outstanding at that time will first be entitled
to receive payment in full of all amounts due with respect to their Senior Debt
(including any amounts due upon acceleration) before the Holders of the
Subordinated Debt Securities will be entitled to receive any payment upon the
principal of (or premium, if any) or interest, if any, on the Subordinated Debt
Securities. (Subordinated Indenture, Section 1503.)
The Company is prohibited from making payments of principal (or premium, if
any) or interest, if any, in respect of the Subordinated Debt Securities if a
default in any payment with respect to Senior Debt, or an event of default with
respect to any Senior Debt resulting in the acceleration of the maturity
thereof, has occurred and continues, or if any judicial proceeding is then
pending with respect to any such default. (Subordinated Indenture, Section
1504.) For purposes of the subordination provisions, the payment, issuance and
delivery of cash, property or securities (other than stock and certain
subordinated securities of the Company) upon conversion of a Subordinated Debt
Security will be deemed to constitute payment on account of the principal of
such Subordinated Debt Security. (Subordinated Indenture, Section 1516.)
Therefore, these conversion payments, issuances or deliveries will be
subordinated to the same extent as payments of principal of the Subordinated
Debt Securities.
"Debt" means (without duplication and without regard to any portion of
principal amount that has not accrued and to any interest component thereof
(whether accrued or imputed) that is not due and payable), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (1) every obligation of such Person for money
borrowed; (2) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (3) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (4)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (5) every capital lease
obligation of such Person; (6) the maximum fixed redemption or repurchase price
of redeemable stock of such Person at the time of determination; and (7) every
obligation of the type referred to in clauses (1) through (6) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company to the extent that such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Subordinated Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debt
Securities or to other Debt which is pari passu with, or subordinated to, the
Subordinated Debt Securities; however, Senior Debt will not be deemed to include
(1) the Subordinated Debt Securities, (2) the Debt referred to in clause (6) of
the definition of Debt or (3) the 5% Notes.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The indebtedness represented by the Notes, and all borrowings under revolving
credit and other credit facilities maintained by the Company or its
subsidiaries, will also constitute Senior Debt. At December 31, 1996, Senior
Debt outstanding aggregated approximately $86.0 million. See
"-- General -- Other Indebtedness."
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of Subordinated Debt Securities of a particular
series.
GLOBAL SECURITIES
Debt Securities of a series may be issued in the form of one or more Global
Securities that will be deposited with a depositary or its nominee. In such a
case, one or more Global Securities will be issued in a
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denomination or aggregate denominations equal to the portion of the aggregate
principal amount of Outstanding Debt Securities of the series to be represented
by such Global Security or Securities. Unless and until it is exchanged in whole
or in part for Debt Securities in definitive registered form, a Global Security
may not be registered for transfer or exchange except as a whole by the
depositary for such Global Security to the depositary's nominee and except in
the circumstances described in the applicable Prospectus Supplement.
(Indentures, Sections 204 and 305.)
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in an applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in an applicable Prospectus Supplement, if Debt
Securities are to be represented by a Global Security deposited with or on
behalf of a depositary, then the Global Security will be registered in the name
of the depositary or its nominee. Upon the issuance of the Global Security, and
the deposit of the Global Security with or on behalf of the depositary, the
depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by the Global
Security to the accounts of institutions that have accounts with the depositary
or its nominee ("Participants"). The accounts to be credited will be designated
by the underwriters or agents of the applicable Debt Securities or by the
Company, if the Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in the Global Securities will be limited to
Participants or Persons who hold interests through Participants. Ownership of
beneficial interests by Participants in the Global Security will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by the depositary or its nominee for the Global Security.
Ownership of beneficial interests in the Global Security by Persons who hold
through Participants will be shown on, and the transfer of that ownership
interest will be effected only through, records maintained by such Participants.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the depositary for a Global Security, or its nominee, is the
registered owner of the Global Security, the depositary or the nominee, as the
case may be, will be considered the sole owner or Holder of the Debt Securities
represented by the Global Security for all purposes under the applicable
Indenture. Unless otherwise specified in an applicable Prospectus Supplement,
owners of beneficial interests in Global Securities will not be entitled to have
Debt Securities of the series represented by that Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of that series in certificated form, and will not be considered
the owners or Holders of those Debt Securities for any purpose under the
applicable Indenture. Accordingly, each Person owning a beneficial interest in a
Global Security must rely on the procedures of the depositary and, if that
Person is not a Participant, on the procedures of the Participant through which
the Person owns its interest, to exercise any rights of a Holder under the
applicable Indenture. The Company understands that, under existing industry
practices, if the Company requests any action of Holders or an owner of a
beneficial interest in a Global Security desires to give any notice or take any
action that a Holder is entitled to give or take under the applicable Indenture,
then the depositary would authorize the Participants to give the notice or take
the action, and Participants would authorize beneficial owners owning through
the Participants to give the notice or take the action or would otherwise act
upon the instructions of beneficial owners owning through them.
Principal of, and any premium and interest on, a Global Security will be
payable in the manner described in an applicable Prospectus Supplement. Payment
of principal of, and any premium or interest on, Debt Securities registered in
the name of or held by a depositary or its nominee will be made to the
depositary or its nominee, as the case may be, as the registered owner or the
holder of the Global Security representing those Debt Securities. None of the
Company, the Trustee, any Paying Agent, or the Registrar for those Debt
Securities will be responsible or liable for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in a Global
Security for Debt Securities or for maintaining, supervising, or reviewing any
records relating to those beneficial ownership interests.
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THE TRUSTEE
Each Indenture contains certain limitations on the Trustee's right, if it
becomes a creditor of the Company within three months of, or subsequent to, a
default by the Company, to make payment in full of principal of, or interest on,
any series of Debt Securities when and as the principal and interest become due
and payable, to obtain payment of claims, or to realize for the Trustee's own
account on property received in respect of any claim as security or otherwise,
unless and until the default is cured. (Indentures, Section 613.)
The Trustee or its affiliates may act as depositary for funds of, make
loans to, perform other services for, or be a customer of, the Company in the
ordinary course of business.
GOVERNING LAW
The Indentures are governed by and will be construed in accordance with the
laws (except for principles of conflicts of laws) of the State of New York.
(Indentures, Section 112.)
DESCRIPTION OF CAPITAL STOCK AND DEPOSITARY SHARES
AUTHORIZED CAPITAL STOCK
Pursuant to the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the authorized capital stock of the Company
consists of 200,000,000 shares of Common Stock, par value $.10 per share (the
"Common Stock"), 8,000,000 shares of Class B Stock, par value $.10 per share
(the "Class B Stock"), none of which are outstanding, and 10,000,000 shares of
Preferred Stock, par value $.10 per share (the "Preferred Stock"), none of which
are outstanding.
As of March 31, 1997, there were 96,310,006 shares of Common Stock
outstanding, 19,729,808 shares of Common Stock reserved for issuance pursuant to
option and employee benefit plans and 9,517,242 shares of Common Stock reserved
for issuance upon the conversion of the 5% Notes.
PREFERRED STOCK
The following description sets forth certain general terms and provisions
of the Preferred Stock to which any Prospectus Supplement may relate. Certain
other terms, and the particular terms of a specific series of Preferred Stock,
will be described in the Prospectus Supplement relating to that series. If so
indicated in the applicable Prospectus Supplement, the terms of any specific
series may differ from the terms set forth below. The summary of certain
provisions of the Preferred Stock set forth below and in any Prospectus
Supplement does not purport to be complete and is subject to and qualified in
their entirety by reference to the Certificate of Incorporation (as it may be
amended from time to time) and the certificate of designations relating to that
series of Preferred Stock (the "Certificate of Designations"), which will be
filed as an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus forms a part at or prior to the time of
issuance of that series of the Preferred Stock.
General. Under the Certificate of Incorporation, the Board of Directors of
the Company is authorized, without further stockholder action, to issue from
time to time up to 10,000,000 shares of Preferred Stock and to fix and determine
the voting powers, designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
of any series of Preferred Stock, including, without limitation, any voting
rights, any dividends payable and any right of the shares of that series to
convert into or be exchanged for other securities of the Company (provided,
however, that any securities issuable upon conversion or exchange of Preferred
Stock will be subject to registration under the Securities Act or an applicable
exemption therefrom). Thus, the Board of Directors of the Company, without
stockholder approval, could authorize the issuance of Preferred Stock with
voting, conversion and other rights that could adversely affect the voting power
(if any) and other rights of other series of the Preferred Stock or of the
Common Stock. As of the date of this Prospectus, the Company has no Preferred
Stock outstanding.
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The Preferred Stock will have the dividend, liquidation, redemption and
voting rights set forth below, unless otherwise provided in the Prospectus
Supplement relating to a particular series of Preferred Stock. The applicable
Prospectus Supplement will describe: (1) the designation and the number of
shares offered; (2) the amount of liquidation preference per share; (3) the
price at which that Preferred Stock will be issued; (4) the dividend rate (or
method of calculation), if any, the dates on which dividends will be payable,
whether dividends will be cumulative or noncumulative and, if cumulative, the
dates from which dividends will begin to cumulate; (5) any redemption or sinking
fund provisions; (6) the terms of any rights to convert or exchange the
Preferred Stock into other securities of the Company; (7) whether the Company
has elected to offer Depositary Shares (as defined below); and (8) any
additional voting, dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions.
As indicated elsewhere herein (see "Description of Debt
Securities -- General"), because the Company is a holding company, its rights
and the rights of holders of its securities, including the holders of Preferred
Stock, to participate in the distribution of assets of any subsidiary of the
Company upon the subsidiary's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors and preferred stockholders,
except to the extent that the Company may itself be a creditor with recognized
claims against the subsidiary or a holder of preferred stock of the subsidiary.
The Preferred Stock will rank prior to the Common Stock and the Class B Stock
with respect to dividend rights and rights upon winding up and dissolution of
the Company.
The Preferred Stock will be issued in one or more series. The holders of
Preferred Stock will have no preemptive rights. Preferred Stock will be fully
paid and nonassessable when issued upon full payment of the purchase price
therefor. Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Preferred Stock, each series of Preferred Stock offered
hereby will rank on a parity as to dividends and liquidation rights in all
respects with each other series of Preferred Stock. The Prospectus Supplement
will contain, if applicable, a description of material United States federal
income tax consequences relating to the purchase and ownership of shares of the
series of Preferred Stock offered by the Prospectus Supplement.
Dividend Rights. Unless otherwise set forth in the applicable Prospectus
Supplement, holders of shares of each series of the Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company out of funds legally available therefor, cash dividends at such rates
and on such dates as are set forth in the Prospectus Supplement relating to such
series of Preferred Stock. Different series of Preferred Stock may be entitled
to dividends at different rates or based upon different methods of
determination. The dividend rate may be fixed or variable or both. Each dividend
will be payable to the holders of record as they appear on the stock books of
the Company, on the record dates fixed by the Board of Directors of the Company
or a duly authorized committee thereof. Dividends on any series of the Preferred
Stock may be cumulative or noncumulative, as provided in the Prospectus
Supplement relating thereto.
Rights Upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of shares of
each series of Preferred Stock will be entitled to receive liquidating
distributions in the amount set forth in the Prospectus Supplement relating to
that series of Preferred Stock, out of assets of the Company available for
distribution to stockholders, before any distribution of assets is made to
holders of Common Stock or the Class B Stock or any other class of stock ranking
junior to that series of Preferred Stock upon liquidation.
Redemption. One or more series of the Preferred Stock may be redeemable, in
whole or in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the applicable Prospectus
Supplement.
Conversion and Exchange. The terms, if any, on which shares of any series
of Preferred Stock will be convertible into or exchangeable for other securities
of the Company will be set forth in the applicable Prospectus Supplement
(however, any securities issuable upon conversion or exchange of Preferred Stock
will be subject to registration under the Securities Act or an applicable
exemption therefrom). The conversion or exchange terms may include provisions
for conversion or exchange, either mandatory, at the option of the holder, or at
the option of the Company, in which case the number of other securities of the
Company to be
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received by the holders of that series of Preferred Stock would be calculated as
of a time and in the manner stated in the Prospectus Supplement.
Transfer Agent and Registrar. The transfer agent, registrar and dividend
disbursement agent for the Preferred Stock will be designated in the applicable
Prospectus Supplement. The registrar for shares of Preferred Stock will send to
stockholders notices of any meetings at which holders of the applicable series
of Preferred Stock will have the right to elect directors of the Company or to
vote on any other matter.
Voting Rights. The holders of Preferred Stock of a series offered hereby
will not have any voting rights, except as indicated in the applicable
Prospectus Supplement or as required by applicable law.
DEPOSITARY SHARES
General. The Company may, at its option, offer receipts for fractional
interests ("Depositary Shares") in Preferred Stock, rather than full shares of
Preferred Stock. In that event, receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fraction (which will be set forth in the
Prospectus Supplement relating to the applicable series of Preferred Stock) of a
share of a particular series of Preferred Stock, will be issued as described
below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a depositary to be named by the Company in the
applicable Prospectus Supplement (the "Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by that Depositary Share, to all of the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, subscription
and liquidation rights). The following summary of certain provisions of the
Deposit Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the Deposit
Agreement, including the definitions therein of certain terms. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to those exhibits.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the applicable
series of Preferred Stock to the record holders of Depositary Shares relating to
that series in proportion to the amount of those Depositary Shares owned by the
holders.
In the event of a distribution other than in cash, then the Depositary will
distribute property received by it to the record holders of Depositary Shares in
an equitable manner, unless the Company, after consulting with the Depositary,
determines that it is not feasible to make the distribution, in which case the
Depositary may sell the distributed property and distribute the net proceeds
from the sale to the holders.
Redemption of Depositary Shares. If a series of Preferred Stock represented
by Depositary Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from any
redemption of any shares of that series of Preferred Stock held by the
Depositary. The redemption price per Depositary Share will equal the applicable
fraction of the redemption price per share payable with respect to that series
of Preferred Stock. Whenever the Company redeems shares of Preferred Stock held
by the Depositary, the Depositary will redeem, as of the same redemption date,
the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If fewer than all of the Depositary Shares are to be redeemed, then
the Depositary Shares to be redeemed will be selected by lot, pro rata or by
another equitable method.
Withdrawal of Preferred Stock. Any holder of Depositary Shares may receive,
upon surrender of the corresponding Depositary Receipts to the Depositary, the
number of whole shares of the related series of Preferred Stock and any money or
other property represented by the surrendered Depositary Receipts. Holders of
Depositary Shares that surrender their Depositary Receipts will be entitled to
receive whole shares of Preferred Stock on the basis set forth in the related
Prospectus Supplement for the applicable series of Preferred Stock, but holders
of whole shares of that series of Preferred Stock will not be entitled to
subsequently deposit those shares of Preferred Stock under the Deposit Agreement
or to receive Depositary
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Receipts therefor. If the Depositary Shares surrendered by a holder in
connection with a withdrawal exceed the number of Depositary Shares that
represent the number of whole shares of Preferred Stock to be withdrawn, then
the Depositary will deliver to that holder at the same time a new Depositary
Receipt evidencing the excess number of Depositary Shares.
Voting the Preferred Stock. Upon receipt of a notice of any meeting at
which the holders of a series of Preferred Stock are entitled to vote, the
Depositary will mail the information contained in the notice to the record
holders of the Depositary Shares relating to that series of Preferred Stock.
Each record holder of the Depositary Shares on the record date (which will be
the same date as the record date for the Preferred Stock) will be entitled to
instruct the Depositary to exercise the voting rights pertaining to the shares
of Preferred Stock represented by that holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the amount of the
Preferred Stock represented by those Depositary Shares in accordance with the
holder's instructions, and the Company will take all reasonable action that the
Depositary may deem necessary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Preferred Stock to the extent
that it does not receive specific instructions from the holder of Depositary
Shares representing those shares of Preferred Stock.
Amendment and Termination of Deposit Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Depositary. However, any amendment that imposes any fees, taxes or other charges
payable by holders of Depositary Receipts (other than taxes and other
governmental charges, fees and other expenses payable by such holders as stated
under "-- Depositary Shares -- Charges of Depositary"), or that otherwise
prejudices any substantial existing right of holders of Depositary Receipts,
will not affect outstanding Depositary Receipts until 90 days after notice of
the amendment has been mailed to the record holders of outstanding Depositary
Receipts. Every holder of Depositary Receipts at the time the amendment becomes
effective will be deemed to consent and agree to the amendment and to be bound
by the Deposit Agreement, as so amended. No amendment may impair the right of
any owner of Depositary Shares to receive shares of the Preferred Stock and any
money or other property represented thereby, subject to the conditions specified
in the Deposit Agreement, upon surrender of the Depositary Receipts evidencing
such Depositary Shares, except in order to comply with mandatory provisions of
applicable law.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement by mailing notice of termination to the record holders of all
Depositary Receipts then outstanding at least 30 days before the termination
date stated in the notice. The Depositary may also terminate the Deposit
Agreement if 45 days have expired after the Depositary delivered to the Company
a written notice of its election to resign and a successor depositary has not
been appointed and accepted its appointment. If any Depositary Receipts remain
outstanding after the date of termination, the Depositary will discontinue the
transfer of Depositary Receipts, will suspend the distribution of dividends to
the holders of Depositary Receipts, and will not give any further notices (other
than notice of termination) or perform any further acts under the Deposit
Agreement, except that the Depositary will continue (1) to collect dividends and
any other distributions on the Preferred Stock and (2) to deliver the Preferred
Stock, together with the corresponding dividends and distributions and the net
proceeds of any sales of rights, preferences, privileges or other property,
without liability for interest thereon, in exchange for Depositary Receipts
surrendered. At any time after two years from the date of termination, the
Depositary may sell the Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper, and may
hold the net proceeds of any sale, together with any money and other property
then held by it, without liability for interest thereon, for the pro rata
benefit of the holders of Depositary Receipts which have not been surrendered.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering notice of its election to do so to the Company, and the
Company may at any time remove the Depositary. Any resignation or removal will
take effect upon the appointment of a successor Depositary and its acceptance of
such appointment. The successor Depositary must be appointed within 45 days
after delivery of the notice of resignation or removal and must be a bank or
trust company, or an affiliate of a bank or trust company, having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
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Charges of Depositary. The Company will pay charges of the Depositary in
connection with the initial deposit of the Preferred Stock and issuance of
Depositary Receipts, all withdrawals of shares of Preferred Stock by owners of
Depositary Shares, any redemption of the deposited Preferred Stock and the
distribution of information to holders of the Depositary Receipts. Holders of
Depositary Receipts will pay other transfer and other taxes and governmental
charges and any other charges that are expressly provided in the Deposit
Agreement to be at their expense.
Miscellaneous. The Depositary will forward to the holders of Depositary
Receipts all reports and communications from the Company that are delivered to
the Depositary and that the Company is required or otherwise determines to
furnish to the holders of the corresponding series of Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Depositary under
the Deposit Agreement are limited to performing its duties thereunder without
negligence or bad faith. The obligations of the Company under the Deposit
Agreement are limited to performing its duties thereunder in good faith. Neither
the Company nor the Depositary will be required to prosecute or defend any legal
proceeding regarding any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Depositary may rely
upon the advice of counsel or accountants, or upon information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Receipts
or other persons believed to be competent and on documents believed to be
genuine.
COMMON STOCK; CLASS B STOCK
General. Holders of shares of Common Stock are entitled to one vote per
share, and holders of shares of Class B Stock have no voting rights except as
required by applicable law. Holders of shares of Common Stock do not have the
right to cumulate votes in the election of directors. A special meeting of
stockholders may be called by the Board of Directors of the Company and must be
called upon the written request of the holders of not less than 50% of the
Company's stock then outstanding and entitled to vote. Any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without prior notice by written consent only if the consent is signed by
each stockholder entitled to vote on the matter.
Holders of Class B Stock may convert their shares into shares of Common
Stock at any time, unless the conversion would cause a holder, together with the
holder's affiliates, to own, control or vote more shares of the Company's stock
than permitted by applicable law. Stockholders of the Company do not have
preemptive rights to subscribe for shares of any class of the Company's capital
stock.
Dividends. Holders of shares of Common Stock and Class B Stock are entitled
to participate equally on a per-share basis in any dividends that the Board of
Directors of the Company may declare from time to time out of funds of the
Company legally available for the payment of dividends. However, the Company has
neither declared nor paid any cash dividends on its Common Stock or Class B
Stock since 1982. Certain of the Company's debt instruments (see "Description of
Debt Securities -- General -- Other Indebtedness") restrict, and the terms of
any series of Debt Securities or Preferred Stock issued pursuant to this
Prospectus may restrict, the Company's ability to pay dividends. Under the terms
of existing instruments, the Company may pay dividends to the extent that
cumulative dividends plus certain other payments since March 31, 1989, do not
exceed 50% of the Company's cumulative net income since March 31, 1989, plus the
proceeds of any offering of equity securities of the Company that are not
redeemable at the option of the holder of the securities. As of September 30,
1996, retained earnings available for dividends totaled approximately $178.0
million. The Company does not intend to pay any cash dividends on its Common
Stock or Class B Stock for the foreseeable future.
Transfer Agent and Registrar. The transfer agent and registrar for the
Common Stock is First Chicago Trust Company of New York.
The foregoing descriptions of the Preferred Stock and Common Stock are
summaries, and reference is herein made to the detailed provisions of the
Certificate of Incorporation (including, without limitation, the Certificate of
Designations relating to any series of Preferred Stock, filed hereafter and
incorporated by
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reference herein) and the Company's Amended and Restated By-Laws (the
"By-Laws"), copies of which are filed as exhibits to the Registration Statement.
CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS
Under Delaware law, a corporation may include provisions in its certificate
of incorporation which relieve its directors of monetary liability for breach of
their fiduciary duty, except under certain circumstances which include a breach
of a director's duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct and a knowing violation of law, or any
transaction from which the director derived an improper personal benefit. The
Certificate of Incorporation provides that the Company's directors are not
liable to the Company or its stockholders for monetary damages for breach of
their fiduciary duties, subject to the exceptions specified by Delaware law.
Delaware law also provides that, when an officer, director, employee or
agent of a corporation is a party to, or its threatened to be made a party to,
any action, the corporation may indemnify such persons against expenses
(including attorneys' fees) and judgments, fines and amounts paid in settlement,
if that person acted in good faith and reasonably believed his or her actions
were in, or not opposed to, the best interests of the corporation, and were not
unlawful. Delaware law also provides that a person to be indemnified has the
right to be advanced any expenses incurred in his defense against any action
prior to the final disposition thereof and upon such terms as the board of
directors may determine. The Certificate of Incorporation provides these rights
to the Company's officers, directors, employees and agents. Certain directors
and officers of the Company are also parties to employment agreements which
provide for these and other indemnification rights in accordance with Delaware
law.
Under Delaware law, the power to adopt, amend and repeal by-laws is
conferred solely on the stockholders unless the corporation's certificate of
incorporation also confers this power upon its board of directors. Under the
Certificate of Incorporation the Board of Directors of the Company has been
granted this power. The Certificate of Incorporation and By-laws also provide
that the number of directors shall be fixed by resolution of the Board of
Directors of the Company from time to time, but shall not be less than five nor
more than eleven. As of the date of this Prospectus, the number of directors is
fixed at eight. These provisions, in addition to the staggered Board of
Directors discussed below and the existence of authorized but unissued capital
stock, may have the effect, either alone or in combination with each other, of
discouraging or making more difficult an acquisition of the Company deemed
undesirable by the Board of Directors of the Company.
The Certificate of Incorporation provides that the board of directors of
the Company is divided into three classes of directors. Each class of directors
serves a staggered three-year term. The classified board may make it more
difficult for any stockholder who is attempting to acquire the Company,
including a stockholder holding a majority of shares, to succeed. Such a
stockholder will be unable to force immediate changes in the composition of a
majority of the Board of Directors of the Company, since the terms of
approximately one-third of the incumbent directors would expire each year, and
at least two annual meetings would be required for stockholders to change a
majority of the Board of Directors.
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase Debt Securities, Common Stock or
Preferred Stock (which may be represented by Depositary Shares). Warrants may be
issued independently or together with any other Securities and may be attached
to or separate from other Securities. Warrants will be issued under warrant
agreements (each, a "Warrant Agreement") to be entered into between the Company
and a warrant agent (the "Warrant Agent") specified in the applicable Prospectus
Supplement.
The following sets forth certain general terms and provisions of the
Warrants offered hereby. Copies of the forms of Warrant Agreements are filed as
exhibits to the Registration Statement of which this Prospectus is a part, and
the following summary is qualified in its entirety by reference to those
exhibits. Further terms of the Warrants and the applicable Warrant Agreement
will be set forth in the applicable Prospectus Supplement. If so indicated in
the applicable Prospectus Supplement, the terms of any Warrants may differ
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from the terms set forth below. The Warrants will be denominated in U.S. dollars
or in such foreign currency, currency unit or composite currency as may be
specified in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of any series
of Warrants in respect of which this Prospectus is being delivered, including,
where applicable, the following: (1) the title of the Warrants; (2) the
aggregate number of the Warrants; (3) the price or prices for which the Warrants
will be issued; (4) the currency, currency unit or composite currency in which
the price for the Warrants will be payable; (5) the designation, number and
terms of the Debt Securities, Common Stock or Preferred Stock purchasable upon
exercise of the Warrants, and procedures pursuant to which such numbers may be
adjusted; (6) the designation and terms of the Debt Securities, Common Stock or
Preferred Stock, if any, with which the Warrants are issued and the number of
Warrants issued with each such Security; (7) the date, if any, on and after
which the Warrants and the related underlying Security will be separately
transferable; (8) the exercise price or prices at which the Debt Securities,
Common Stock or Preferred Stock purchasable upon exercise of the Warrants may be
purchased, or provisions for determining the exercise price or prices,
procedures pursuant to which the exercise price or prices may be adjusted, and
(if not U.S. dollars) the foreign currency, currency unit or composite currency
in which the exercise price or prices are denominated; (9) the date on which the
right to exercise the Warrants will commence and the date on which that right
will expire; (10) whether the Warrants will be issued in bearer form; (11) the
minimum or maximum amount of Warrants that may be exercised at any one time;
(12) information with respect to book-entry procedures, if any; (13) a
discussion of certain United States federal income tax considerations; and (14)
any other terms of the Warrants, including terms, procedures and limitations
relating to the transferability, exchange and exercise of the Warrants.
Prior to the exercise of their Warrants, holders of Warrants will not have
any of the rights of holders of the Securities purchasable upon exercise, and
will not be entitled to (1) receive payments of principal of (or premium, if
any) or interest, if any, on any Debt Securities purchasable upon exercise, (2)
receive dividend payments, if any, with respect to any underlying Securities or
(3) exercise the voting rights of any Common Stock or Preferred Stock
purchasable upon exercise.
EXERCISE OF WARRANTS
Unless otherwise indicated in the applicable Prospectus Supplement relating
thereto, the Warrants will be issued in registered form. Each Warrant will
entitle its holder to purchase for cash the principal amount or number of
securities of the Company at the exercise price set forth in, or determinable
from, the applicable Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Warrants offered thereby at any time up to the close
of business on the expiration date set forth in the Prospectus Supplement. After
the close of business on the expiration date (or any later expiration date, as
extended by the Company), unexercised Warrants will become void.
Upon receipt of payment and of the certificate evidencing a Warrant (the
"Warrant Certificate"), properly completed and duly executed, at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Company will, as soon as practicable,
forward the Securities purchasable upon such exercise. If less than all of the
Warrants represented by a surrendered Warrant Certificate are exercised, a new
Warrant Certificate will be issued for the remaining Warrants.
MODIFICATIONS
The Warrant Agreements and the terms of the Warrants may be amended by the
Company and the Warrant Agent, without the consent of the holders of Warrants,
for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision contained therein, or in
any other manner which the Company may deem necessary or desirable and which
will not materially and adversely affect the interests of holders of outstanding
Warrants.
The Company and the Warrant Agent also may modify or amend certain other
terms of the Warrant Agreements and the Warrants with the consent of the holders
of not less than a majority in number of the
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then-outstanding unexercised Warrants affected. However, no such modification or
amendment may be made without the consent of the affected holders if the
amendment would (1) shorten the period of time during which the Warrants may be
exercised; (2) otherwise materially and adversely affect the exercise rights of
the holders of the Warrants; or (3) reduce the number of outstanding Warrants.
MERGER, CONSOLIDATION OR SALE OF ASSETS
If at any time there occurs a merger of, consolidation of, or sale of
substantially all of the assets of, the Company, as a result of which securities
underlying Warrants are converted into the right to receive stock, securities or
other property, then each outstanding Warrant will thereafter only be
exercisable for the kind and amount of stock, securities or other property
receivable upon the consummation of that transaction by a holder of the number
of securities underlying the Warrant.
ENFORCEABILITY OF RIGHTS BY HOLDERS
The Warrant Agent will act solely as an agent of the Company in connection
with the issuance and exercise of any Warrants. The Warrant Agent will have no
duty or responsibility in case of any default by the Company in the performance
of its obligations under the Warrant Agreements or the Warrant Certificates.
Each holder of Warrants may, without the consent of the Warrant Agent, enforce
by appropriate legal action, on its own behalf, its right to exercise its
Warrants.
SELLING STOCKHOLDERS
In addition to covering the offering of Securities by the Company, this
Prospectus covers the offering for resale of an unspecified number of shares of
Common Stock, not to exceed $350,000,000 in aggregate maximum offering price, by
Selling Stockholders who acquire their shares in connection with future
acquisitions by the Company. The applicable Prospectus Supplement will set
forth, with respect to each Selling Stockholder, (1) the name of the Selling
Stockholder, (2) the nature of any position, office or other materials
relationship which the Selling Stockholder will have had within the prior three
years with the Company or any of its predecessors or affiliates, (3) the number
of shares of Common Stock owned by the Selling Stockholder prior to the
offering, (4) the amount of Common Stock to be offered for the Selling
Stockholder's account and (5) the amount and (if one percent or more) the
percentage of the Common Stock to be owned by the Selling Stockholder after
completion of the offering.
PLAN OF DISTRIBUTION
DISTRIBUTION BY THE COMPANY
The Company may sell Securities to one or more underwriters for public
offering and sale by them, and also may sell Securities directly to investors or
to other purchasers or through dealers or agents. Any such underwriter, dealer
or agent involved in the offer and sale of the Securities will be named in the
applicable Prospectus Supplement.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Sales of Common Stock offered
hereby may be effected from time to time in one or more transactions on the
American Stock Exchange or in negotiated transactions or a combination of such
methods of sale.
In connection with distributions of Common Stock or otherwise, the Company
may enter into hedging transactions with broker-dealers in connection with which
such broker-dealers may sell Common Stock registered hereunder in the course of
hedging through short sales the positions they assume with the Company.
In connection with the sale of Securities, underwriters, dealers or agents
may receive compensation from the Company or from purchasers of Securities for
whom they may act as agents in the form of discounts,
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concessions or commissions. Underwriters may sell Securities to or through
dealers, and the dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers and agents
that participate in the distribution of Securities may be deemed to be
underwriters, and any discounts or commissions received by them from the Company
(along with any profit on the resale of Securities by them) may be deemed to be
underwriting discounts and commissions under the Securities Act. Any such
underwriter, dealer or agent will be identified, and any such compensation
received from the Company will be described, in the applicable Prospectus
Supplement. Unless otherwise indicated in the applicable Prospectus Supplement,
any agent will be acting on a best efforts basis and any dealer will purchase
Securities as a principal, and may then resell such Securities at varying prices
to be determined by the dealer.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against (and contribution toward)
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by the Company for certain expenses.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents and underwriters or dealers to solicit offers by certain
purchasers to purchase offered Securities from the Company, at the public
offering price set forth in the Prospectus Supplement, pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. These contracts will be subject only to those conditions set forth in
the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of the offers.
Certain underwriters, dealers or agents and their associates may engage in
transactions with and perform services for the Company in the ordinary course of
business.
The Securities may or may not be listed on a national securities exchange
or a foreign securities exchange (other than the Common Stock, which is listed
on the American Stock Exchange). Any Common Stock sold pursuant to a Prospectus
Supplement will be listed on the American Stock Exchange, subject to official
notice of issuance. Any underwriters to whom Securities are sold by the Company
for public offering and sale may make a market in those Securities, but the
underwriters will not be obligated to do so and may discontinue any market
making activities at any time without notice. No assurances can be given that
there will be an active trading market for the Securities.
DISTRIBUTION BY SELLING STOCKHOLDERS
Distribution of any shares to be offered by one or more of the Selling
Stockholders may be effected from time to time in one or more transactions
(which may involve block transactions) (1) on the American Stock Exchange, (2)
in the over-the-counter market, (3) in transactions otherwise than on the
American Stock Exchange or in the over-the-counter market or (4) in a
combination of any of these transactions. The transactions may be effected by
the Selling Stockholders at market prices prevailing at the time of sale, at
prices related to the prevailing market prices, at negotiated prices or at fixed
prices. The Selling Stockholders may from time to time offer their shares
through underwriters, brokers, dealers or agents, who may receive compensation
in the form of underwriting discounts, commissions or concessions from the
Selling Stockholders and/or the purchasers of the shares for whom they act as
agent. From time to time the Selling Stockholders may engage in short sales,
short sales against the box, puts and calls and other transactions in securities
of the Company, or derivatives thereof, and may sell and deliver their shares in
connection therewith. In addition, the Selling Stockholders may from time to
time sell their shares in transactions permitted by Rule 144 under the
Securities Act.
As of the date of this Prospectus, no underwriter, broker, dealer or agent
has been engaged by the Company in connection with the distribution of shares
pursuant to this Prospectus by the Selling Stockholders. To the extent required,
the number of shares to be sold, the purchase price, the name of any applicable
agent, broker, dealer or underwriter and any applicable commissions with respect
to a particular offer will be set forth in the applicable Prospectus Supplement.
The aggregate net proceeds to the Selling Stockholders
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from the sale of their shares offered hereby will be the sale price of those
shares, less any commissions, if any, and other expenses of issuance and
distribution not borne by the Company.
The Selling Stockholders and any brokers, dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of shares may
be deemed to be "underwriters" within the meaning of the Securities Act, in
which event any discounts, concessions and commissions received by such brokers,
dealers, agents or underwriters and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts and commissions
under the Securities Act.
The applicable Prospectus Supplement will set forth the extent to which the
Company will have agreed to bear fees and expenses of the Selling Stockholders
in connection with the registration of the shares being offered hereby by them.
The Company may, if so indicated in the applicable Prospectus Supplement, agree
to indemnify Selling Stockholders against certain civil liabilities, including
liabilities under the Securities Act.
VALIDITY OF SECURITIES
The legal validity of the Securities offered pursuant to this Prospectus
will be passed upon for the Company by Baker & McKenzie, New York, New York, and
for any underwriters or agents by counsel to be named in the appropriate
Prospectus Supplement. Anthony G. Petrello, the President, Chief Operating
Officer and a director of the Company, was a partner of and is currently of
counsel to Baker & McKenzie.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the 1996 Form 10-K have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
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