AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON OCTOBER 10, 2000
REGISTRATION NO. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SCI SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 63-0583436
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2101 WEST CLINTON AVENUE
HUNTSVILLE, ALABAMA 35805
(256) 882-4800
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
MICHAEL M. SULLIVAN, ESQ.
SECRETARY AND CORPORATE COUNSEL
SCI SYSTEMS, INC.
2101 WEST CLINTON AVENUE
HUNTSVILLE, ALABAMA 35805
(256) 882-4800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------------------------------------------------------------
COPIES TO:
G. WILLIAM SPEER, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 PEACHTREE STREET, N.E., 16TH FLOOR
ATLANTA, GEORGIA 30303
TELEPHONE: (404) 572-6600
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<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |X|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
-----------------------------------------------------------------------------------------------------
PROPOSED PROPOSED AMOUNT OF
MAXIMUM MAXIMUM REGISTRATION
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE FEE (3)
SECURITIES TO BE BE PRICE PER OFFERING
REGISTERED REGISTERED UNIT (1) PRICE (1)(2)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(4)
-----------------------------------------------------------------------------------------------------
Preferred Stock, no par
value per share(5)
-----------------------------------------------------------------------------------------------------
Common Stock, $0.10 par
value per share (6)
-----------------------------------------------------------------------------------------------------
Depositary Shares(7)
-----------------------------------------------------------------------------------------------------
Warrants(8)
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total $1,000,000,000 (2) $1,000,000,000 $264,000
-----------------------------------------------------------------------------------------------------
</TABLE>
(1) In no event will the aggregate maximum initial offering price of all
securities issued pursuant to this Registration Statement exceed $_____________,
or the equivalent thereof in foreign currencies or currency units. Any
securities registered hereunder may be sold separately, together or as units
with other securities registered hereunder.
(2) The proposed maximum offering price per unit (a) has been omitted pursuant
to Instruction II.D of Form S-3 and (b) will be determined, from time to time,
by the Registrant in connection with the issuance by the Registrant of the
securities registered hereunder.
(3) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
(4) Subject to footnote 1, there is being registered hereunder an indeterminate
principal amount of Debt Securities as may be sold, from time to time, by the
Company. Such amount shall be increased, if any Debt Securities are issued at an
original issue discount, by an amount
<PAGE>
such that the net proceeds to be received by the Company shall be equal to the
above amount to be registered. Also, in addition to any Debt Securities that may
be issued directly under this Registration Statement, there is being registered
hereunder such indeterminate amount of Debt Securities as may be issued upon
conversion or exchange of other Debt Securities, Preferred Stock or Depositary
Shares of the Company, for which no consideration will be received by the
Company, or upon exercise of Warrants registered hereby.
(5) Subject to footnote 1, there is being registered hereunder an indeterminate
number of shares of Preferred Stock as may be sold, from time to time, by the
Company. There also is being registered hereunder an indeterminate number of
shares of Preferred Stock as shall be issuable upon exercise of Warrants
registered hereby. In addition, there is being registered hereunder such
indeterminate number of shares of Preferred Stock, for which no consideration
will be received by the Company, as may be issued upon conversion or exchange of
Debt Securities of the Company.
(6) Subject to footnote 1, there is being registered hereunder an indeterminate
number of shares of Common Stock as may be sold, from time to time, by the
Company. There also is being registered hereunder an indeterminate number of
shares of Common Stock as may be issuable upon conversion of the Debt Securities
or the Preferred Stock or upon exercise of Warrants registered hereby. The
aggregate amount of Common Stock registered hereunder is limited, solely for
purposes of any at the market offerings, to that which is permissible under Rule
415(a)(4) under the Securities Act of 1933, as amended.
(7) Such indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts, representing a fractional interest of a share of Preferred Stock.
(8) Subject to footnote 1, there is being registered hereunder an indeterminate
number of Warrants representing rights to purchase Debt Securities, shares of
Common Stock or Preferred Stock or Depositary Shares of the Company registered
hereby.
--------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED ______________, 2000
PROSPECTUS
$1,000,000,000
[LOGO OF SCI]
SCI SYSTEMS, INC.
Debt Securities, Preferred Stock, Common Stock
Depositary Shares and Warrants
--------------------------------------------------------------------------------
When we offer securities, we will provide you with a prospectus supplement
describing the terms of the specific issue of securities, including the offering
price of the securities. The prospectus supplements may also add, update or
change information contained in this prospectus. You should read this prospectus
and any supplements carefully before you invest.
Our common stock is traded on the New York Stock Exchange
under the symbol "SCI".
--------------------------------------------------------------------------------
INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 10 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this prospectus is ___________, 2000.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IN NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS..........................................................1
FORWARD-LOOKING STATEMENTS.....................................................1
SCI SYSTEMS, INC...............................................................9
RISK FACTORS..................................................................17
USE OF PROCEEDS...............................................................22
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES...............................22
THE SECURITIES................................................................22
LEGAL OWNERSHIP OF SECURITIES.................................................23
DESCRIPTION OF DEBT SECURITIES................................................27
DESCRIPTION OF CAPITAL STOCK..................................................46
DESCRIPTION OF DEPOSITARY SHARES..............................................48
DESCRIPTION OF WARRANTS.......................................................51
PLAN OF DISTRIBUTION..........................................................52
LEGAL MATTERS.................................................................54
EXPERTS.......................................................................54
WHERE YOU CAN FIND ADDITIONAL INFORMATION.....................................54
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................55
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf "
registration process. Under this shelf process, we may, from time to time, sell
any combination of securities described in this prospectus in one or more
offerings. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any applicable prospectus supplement together with additional information
described below under the heading "Where You Can Find More Information." When
used in this prospectus and any prospectus supplement, the terms "SCI", "we",
"our", "us" and the "Company" refer to SCI Systems, Inc. and its subsidiaries,
unless the context requires otherwise.
FORWARD-LOOKING STATEMENTS
We make "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, throughout this prospectus, supplements to this
prospectus and in the documents we incorporate by reference into this
prospectus. You can identify these statements by forward-looking words such as
"may," "will," "expect," "anticipate," "believe," "estimate," "plan" and
"continue" or similar words. We have based these statements on our current
expectations about future events. Although we believe that our expectations
reflected in or suggested by our forward-looking statements are reasonable, we
cannot assure you that these expectations will be achieved. Our actual results
may differ materially from what we currently expect. Important factors which
could cause our actual results to differ materially from the forward-looking
statements in this prospectus or in the documents that we incorporate by
reference into this prospectus are set forth in the "Risk Factors" section of
this prospectus, and elsewhere in this prospectus, in supplements to this
prospectus and in the documents that we incorporate by reference into this
prospectus.
You should read this prospectus, supplements to this prospectus and the
documents that we incorporate by reference into this prospectus completely and
with the understanding that our actual future results may be materially
different from what we expect. We may not update these forward-looking
statements, even in the event our situation changes in the future. All written
or oral forward-looking statements attributable to us are expressly qualified
by these cautionary statements.
SCI SYSTEMS, INC.
We are a diversified international electronics manufacturing services provider.
We design, manufacture, distribute, and service electronic products for
virtually every market segment. Markets served by us include the computer,
peripheral, datacom, telecom, medical, industrial, consumer, aerospace, defense,
and entertainment industries, as well as the U.S. Government.
Founded in 1961, we were initially engineering oriented--with the U.S.
Government's National Aeronautics and Space Administration (NASA) and its prime
contractors as our early customers. Building on a strong technical and
engineering base, which we still maintain today, we participated in a number of
significant Department of Defense programs and later expanded into a variety of
commercial activities.
1
<PAGE>
In the mid-1970s, we pioneered the electronic contract manufacturing services
industry, which encompasses a full range of outsourcing services to Original
Equipment Manufacturers (OEMs) for the production and assembly of electronic
products, including engineering, procurement and inventory management, testing,
distribution and depot repair services. We became the world's premier provider
of electronics manufacturing services, and we continue as a leader in surface
mount technology (SMT) production capacity.
Although we derive much of our revenue from hardware manufacturing and maintain
a broad technology base, we are primarily a vertically integrated engineering
and manufacturing services provider with dedication to close customer
interaction forming the cornerstone of our activities. The key elements of our
operating philosophy--quality products, competitive pricing, and customer
responsiveness--are a proven foundation for success. These fundamental tenets
will continue to guide us as we pursue opportunities for growth and expansion.
Our customers have included many of the foremost global OEMs that require
electronic manufacturing services and enclosures, such as Hewlett-Packard,
Compaq, Dell, Nortel, Nokia, Ericsson, Philips, Silicon Graphics, Cabletron,
General Electric, Cisco, Roche, NCD, ECI, Telrad, Johnson & Johnson, Boeing,
Echostar (Houston Tracker), Intel, AMD, LSI Logic, and McData. A majority of our
revenues are derived from direct sales to OEMs.
The Electronic Manufacturing Services (EMS) Industry continues to benefit from
the trend toward outsourcing on a global basis, and we believe SCI's
opportunities for growth and diversification have improved. The current business
environment fully supports continued improvement in our business mix, engagement
with a number of new customers, healthy organic growth from our existing
customer base, and strategic acquisitions that will strengthen both our service
offerings and customer base. Communications and other non desk top computer
business sectors we serve are experiencing greater expansion than the desk top
computer sector. This expansion benefitted our growth and margin improvement in
fiscal 2000. The Internet is expected to drive augmented growth in demand for a
wide range of Web-oriented products and systems and spur the development of a
multitude of technology innovations for some time to come. Today, EMS companies
have penetrated only about one quarter of the available market, estimated to be
about $600 billion. Further penetration, coupled with available market growth,
will provide a superior growth environment for years to come.
SCI has a diversified and high quality customer base. We have embarked on a
growth strategy that includes a priority focus on the addition of a number of
multinational world-class, high growth companies to our customer base and
continued emphasis on balanced industry segment participation. Our goal is to
achieve industry leading business, product and customer mixes to provide the
basis for sustained growth. We are also committed to maintaining a balance of
mature, high growth, and emerging growth markets.
During fiscal 2000, we made progress in achieving this diversification
objective. Several major new customers were acquired. Our involvement with
communication equipment grew substantially. SCI's personal computer business
grew but declined as a percent of total business.
2
<PAGE>
Encouraging progress was made in posturing SCI for continued growth in other
areas such as servers, peripheral products, set top boxes, "digital home
appliances," and medical products. We continue to look for opportunities to
enlarge our enclosure business through acquisitions and geographic expansions of
existing capabilities.
We enjoy a reputation for delivering on the cornerstones of SCI's long-standing
operating philosophy: cost competitiveness, high quality, and customer
responsiveness. As we enter the new millennium, we believe that there will be
numerous opportunities to enhance new business models and information
technologies are numerous and compelling. When properly implemented, we believe
these opportunities will allow us to not only confirm our existing philosophy,
but also to effectively compete by delivering lower cost solutions, the highest
quality products and services, and responsiveness in customer dealings, supply
chain management and adaptation to a full range of business dynamics.
SCI is beginning to employ the Internet and selected e-business tools to
automate our customer and supplier transactions, so as to change the way
business is conducted between SCI and our partners. We are committed to being
e-business driven and are making the necessary investments in our organization,
technology, people, and information systems to get us there. We therefore
believe it is appropriate that we identify ourselves as "SCI - The e-EMS Company
(TM)" and have registered that trademark so that we can be identified as what we
what we stand for in this new business age.
We believe we produce the broadest range of subassemblies and finished products
of any electronic manufacturing services company. These products and a full
range of engineering, distribution, logistic, and after sales services are
supplied to a large multinational customer base for a highly diversified mix of
commercial applications as well as for military and space programs. The
following is a partial listing of products that we build.
Telecommunications Products
o Cable modems for high-speed Internet access
o Terminals for tracking vehicles and cargo containers via satellite
o Broadband digital access products for fiber-to-the-curb
installations
o Transaction automation systems
o Printed circuit board (PCB) assemblies for use in:
o public switching equipment
o ground-based RF telephone systems
o high speed modems
o PCMCIA-format plug-in modems
o large cellular network base stations
o advanced multiplex equipment
o credit card processors
o token ring switches
o PCB assemblies and finished products for:
3
<PAGE>
o routers
o hubs
o switches
o multiplexers
o GSM radios
o battery chargers for cellular products
o power systems for base stations
Computers
o Personal Computer (PC), server, and workstation motherboards
o Home computers
o Office computers
o Microprocessor modules
o ATM motherboards
o Notebook computers
o Workstations
o Servers
o Ruggedized computers
Industrial Products
o Bar code readers
o Test and measurement systems
o Hand held tracking devices
o Battery chargers for electric vehicles
o Semiconductor processing equipment
o Hand held engine analyzers
o Sheet metal, plastic, and machined components
o Ruggedized high reliability assemblies for:
o railroad locomotives
o broadcast equipment
o studio and remote programming systems
o special effects units
o signal and transmission routing and processing systems
o automotive sensors
Military and Aerospace Products
o Aircraft voice and digital communications control systems
o GPS User Equipment for fixed-wing aircraft, helicopters, and ships
o Systems for the Apache Longbow helicopter: systems computers,
weapons computers, and communications processors
4
<PAGE>
o Tactical communications - ruggedized field telephones and shelter
communications systems
o Fiber Optic Guided Missile gunner consoles and fiber optic
dispensers system
o Data Bus products for aircraft
o Current mode couplers and Standard Interface Modules for aircraft
o Flight test instrumentation systems for joint service applications
on a wide range of aircraft
o Nonvolatile memories for aircraft and satellite applications
o Interference blanker systems for aircraft
o Data acquisition systems for the Titan IV Launch Vehicle
o Family of standard bus computer subsystems
o Satellite terminals - two-way terrestrial terminals for voice, data,
and telephony
o Sincgars radio card assemblies
Peripheral Products
o Color ink-jet printers
o High resolution color scanners and printers
o Point-of-sale data entry and management systems
o Video monitors
o Data terminals
o Network interface assembly
o Backplanes
o Notebook docking stations
o Asynchronous Transfer Mode control units
o Credit verification systems
o Memory modules
o assemblies for use in:
o disk drives
o disk array systems
o optical storage devices and systems
o tape drives
o large automated tape libraries
o graphic design systems
o graphics accelerators
o ink-jet, thermal, and dot-matrix printers
o color plotters
o copiers
5
<PAGE>
Consumer Products
o Video projectors
o Internet "TV set top" converters
o Family of digital TV receiver products for:
o direct broadcast satellites
o fixed cables
o ground based broadcast
o Miniature printed circuit board assemblies for:
o camera products
o cellular telephones
o Automotive control/dashboard products
Medical Products
o Vital signs monitoring equipment
o Blood glucose monitors
o Electronic controls for X-ray equipment
o Printed circuit board assemblies for:
o Computer Tomography (CT) scanners
o Magnetic Resonance Imaging (MRI) machines
o X-ray systems
o ultrasound systems
o infusion pumps
o sleep apnea pressure pumps
Engineering Services
Many of our existing and potential customers are in various stages of migrating
from vertical integration (where they perform all services to bring products to
market in house) to virtual integration (where separate service providers tied
together over the Internet, work together to bring products to market, resulting
in very active and timely data interchange) and will increasingly rely on the
electronic manufacturing services industry for new product development and
introduction support. We are benefiting from this trend, having begun as an
engineering oriented company and currently possessing the most extensive product
development and related support resources of any company in our industry. These
engineering resources, coupled with our global supply chain, manufacturing,
test, distribution, and after sale support capabilities, serve to promote
lasting strategic partnerships. Engineering support is a growing influence on
our customers' ability to realize their outsourcing objectives of lower total
cost, shorter time to market, reduced capital investment, enhanced risk
management, access to leading technologies, and flexible manufacturing and
distribution capacity.
The depth and breadth of our engineering resources and capabilities
differentiate SCI from our competitors with customers seeking to enhance the
product development process through a relationship with a provider of electronic
manufacturing services. SCI is an expert in the design of products and systems
with particular emphasis on computer, communications, and
6
<PAGE>
instrumentation technologies. Our product development engineers and technical
support personnel provide our customers with electronic, mechanical, software,
and system engineering services. We employ in excess of 2,000 engineering
personnel, including engineers specializing in the additional disciplines of
quality, reliability, component, manufacturing, test, industrial, and
environmental engineering.
Manufacturing Technology
We utilize leading edge manufacturing processes and equipment. We aggressively
invest in the very latest manufacturing and electronic interconnect technologies
and actively analyze and anticipate new manufacturing technologies. Our
equipment is continuously upgraded or replaced to provide increased production
throughput, higher productivity, and greater accuracy and reliability, and to
utilize the latest assembly technologies.
Company Organization
Our manufacturing and engineering facilities are located in the following
geographic locations:
--------------------------------------------------------------------------------
Americas
Huntsville, Alabama
Lacey's Spring, Alabama
Arab, Alabama
Graham, North Carolina
Rapid City, South Dakota
Colorado Springs, Colorado
Fountain, Colorado
San Jose, California
Augusta, Maine
Hooksett, New Hampshire
Hunt Valley, Maryland (Baltimore)
San Antonio, Texas
Pointe-Claire, Quebec, Canada
Brockville, Ontario, Canada
Guadalajara, Jalisco, Mexico
Mexico City, Distrito Federal, Mexico
Apodaca, Nuevo Leon, Mexico (Monterrey)
Hortolandia, Sao Paulo, Brazil (Campinas)
Europe
Irvine, Scotland, UK
Fermoy, County Cork, Ireland
Grenoble, France
Tatabanya, Hungary
Oulu, Finland
Motala, Sweden
Leganes, Spain
Heerenveen, Leek, The Netherlands
Asia
Republic of Singapore
Pathum Thani, Thailand (Bangkok)
Penang, Malaysia
Kunshan, China (Shanghai)
Middle East
Tel Aviv, Israel
--------------------------------------------------------------------------------
Principal Executive Offices And Website
Our principal executive offices are located at 2101 West Clinton Avenue,
Huntsville, Alabama, 35805, and our telephone number is (256) 882-4800. Our
website is located at www.sci.com. Information contained in our website is not a
part of this prospectus or the documents incorporated by reference in this
prospectus.
7
<PAGE>
RISK FACTORS
Before you invest in the securities that we are offering, you should be aware
that the occurrence of any of the events described in this risk factor section
and elsewhere in this prospectus or in a supplement to this prospectus could
have a material adverse effect on our business, financial condition and results
of operations. You should carefully consider these risk factors and the specific
risks set forth under the caption "Risk Factors" in any supplement to this
prospectus, together with all of the other information included in this
prospectus or in a supplement to this prospectus and in documents we incorporate
by reference before you decide to purchase our securities. You may obtain the
information incorporated by reference into this prospectus without charge by
following the instructions in the "Where You Can Find More Information" section
of this prospectus.
A MAJORITY OF OUR REVENUES COMES FROM A LIMITED NUMBER OF CUSTOMERS; REDUCTIONS
IN SALES TO THESE CUSTOMERS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS
A majority of our revenues are derived from direct sales to original equipment
manufacturers. Although we have several hundred customer accounts, in any
particular period a significant percentage of sales is derived from a limited
group of customers. In fiscal 2000, our ten largest customers contributed more
than 75% of revenues. Significant reductions in sales to any of these customers
could have a material adverse effect on our results of operations. Sales to
individual customer that exceeded 10% of annual consolidated sales in any of the
last three fiscal years were: Hewlett-Packard ($2,629 million in 2000, $2,465
million in 1999, and $2,692 million in 1998); Nortel ($931 million in 2000);
Dell ($681 million in 1999); and Compaq ($840 million in 1999).
Customer contracts can be canceled and volume levels changed or delayed at any
time without notice, subject to cancellation costs, if any. Timely replacement
of canceled, delayed, or reduced contracts with new business cannot be assured.
These risks are exacerbated as a majority of our sales are to customers in the
electronics industry, which is subject to rapid market and technological changes
and frequent product obsolescence. Factors affecting the electronics industry in
general or any of our major customers in particular could have a material
adverse effect upon our results of operations.
We Are Subject To Credit Risks With Customers
Our major contracts are with customers in the high technology industry. Credit
terms relating to both accounts receivable and contract inventories are extended
to customers after performing credit evaluations. When significant credit risks
exist, letters of credit or other appropriate security are generally requested.
However, credit losses on customer contracts have occurred in the past and no
assurances can be given that credit losses, which could be material, will not
reoccur.
8
<PAGE>
Our Rapid Growth May Be Difficult To Manage
We have experienced rapid growth over recent years. We have acquired and built
substantial facilities in several locations and continue to do so. There can be
no assurance that historical revenue growth will continue or that we will
successfully manage existing operations or future plants we may acquire or
build. As we manage our operations and expand geographically, we may experience,
as we have in the past, inefficiencies related to new operations and broadened
geographic diversification. We may be adversely affected by new and acquired
facilities that do not achieve growth sufficient to offset increased
expenditures associated with expansion. In addition, should we increase capacity
and expenditures in anticipation of future sales levels which do not
materialize, profitability could be adversely affected. Moreover, customers may
occasionally require rapid production increases which can stress our resources.
Risks Of Global Operations
We operate internationally with approximately even generation of revenue between
the United States and international operations. Additionally, much of our
manufacturing material is sourced from international suppliers. As a result of
our international sales and facilities, our operations are subject to a variety
of risks that are unique to our international operations, including the
following:
o adverse movement of international currencies against the U.S. dollar (our
reporting currency);
o import and export duties and value-added taxes that we may have to absorb;
o import and export regulation changes that could affect our profit margins
or restrict exports;
o potential restrictions on the transfer of funds; and
o the burden and cost of compliance with international laws.
We Operate In A Highly Competitive Industry
We operate primarily in the Electronics Manufacturing Services Industry. We
compete against numerous domestic and international companies which participate
in our industry. We also face competition from current and prospective customers
who evaluate our capabilities against the merits of internal manufacturing.
Competition varies depending upon the type of service offered and the geographic
area of competition. Competition is intense and is expected to continue to be so
as more companies enter our industry and existing competitors expand capacity.
We could be adversely affected if our competitors introduce superior or lower
priced services.
To remain competitive, we must continue to develop and provide technologically
advanced engineering services, information systems, and manufacturing processes.
We must also maintain high quality, offer flexible delivery schedules, deliver
products on a timely basis, and continue to price our products and services
competitively. Failure to satisfy any of the foregoing requirements could
adversely affect us.
9
<PAGE>
Shortages In The Availability And Increased Prices Of Electronic Components May
Affect Our Results Of Operations
Components are sourced globally. Component availability is periodically subject
to constraints, shortages, and abundances. Many components are available only
from a limited number of sources. Some components are subject to periodic
allocation by suppliers. Although no assurances can be given, we have generally
been able to obtain adequate supply to maintain production when shortages occur.
However, shipment delays have occurred and may reoccur. Significant component
constraints could adversely affect us. Our revenues are primarily generated from
turnkey manufacturing services. Accordingly, average selling prices for our
products fluctuate proportionally to component prices.
Our Results Of Operations May Be Affected By The Seasonality Of Our Business
We have not historically considered its business to be consistently seasonal,
although seasonal demands for our customers' products sold to consumers may
impact quarterly revenues. In recent periods the proportion of our customers'
products ultimately sold at retail has expanded, which has increased seasonality
in our sales. Operating margins have seen seasonal fluctuations in the past,
particularly in the first fiscal quarter due to slowing effects of the summer
season. We believe these seasonality effects may continue.
Our Operating Results May Fluctuate Due To A Number Of Factors
Our operating results are dependent upon our ability to identify and react in a
timely manner to changes in business conditions and customer requirements,
especially our actions in balancing inventory quantities, property, plant, and
equipment capacity, staffing levels, and liquidity amounts. Accordingly,
operating results could vary over time as such conditions change.
We Depend On Key Personnel
Our success depends largely upon the efforts and abilities of key managerial and
technical employees. The loss of services of certain key personnel could
adversely affect us. Our business depends upon our ability to recruit, train,
and retain senior managers, skilled professional and technical salaried
personnel, and skilled and semi-skilled hourly employees at competitive costs
for which there is intense competition. Failure to do so could adversely affect
us.
We Are Subject To Environmental Risks
We are subject to a variety of environmental regulations relating to the use,
storage, discharge, and disposal of hazardous materials used in our
manufacturing processes. Our failure to comply with present and future
regulations could subject us to future liabilities or the suspension of
production. In addition, such regulations could restrict our ability to expand
our facilities or could require us to acquire costly equipment or to incur other
significant expenses to comply with environmental regulations.
We Are A Party To Legal Proceedings
We are a party to several lawsuits incidental to our various activities and
incurred in the ordinary course of business. We believe that we have meritorious
claims and defenses in each case that either will absolve us of or limit our
liability. We also believe we have adequately provided for any likely material
adverse outcome of pending litigation. After consultation with counsel, it is
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the opinion of management that, although there can be no assurance given, none
of the associated claims when resolved will have a material adverse effect upon
our consolidated financial position. We, together with eighty-seven other
defendants including our major domestic competitors and customers, have been
sued by the Lemelson Medical Educational Research Foundation (Lemelson) alleging
infringement on fifteen patents relating to machine vision and use of bar coding
and bar code readers in manufacturing. Lemelson has been successful in settling
similar assertions against certain automobile and semiconductor manufacturers.
Lemelson is requesting damages equal to a certain percent of sales for a
ten-year period. We, together with other major defendants, intend to contest the
validity of the patents. In addition, possible recourse exists against the
manufacturers of the equipment which Lemelson is alleging violated its patents.
While no guarantee can be given, we believe that the outcome of this lawsuit
will not result in any material adverse effect to us. The maximum exposure for
this suit is currently estimated to be less than one percent of the our current
assets, and we have provided for what we believe will be the likely outcome of
the suit. Additionally, if Lemelson's patents are upheld, we believe we will be
able to obtain adequate licenses to use them.
We Are Sensitive To Interest Rate Fluctuations
Short-term interest rate changes can impact the Company's interest expense on
its variable interest rate debt, as well as the discount (reflected as interest
expense) on its accounts receivable sold under an asset securitization
agreement.
We Are Exposed To Fluctuations In The Exchange Rates Of Foreign Currencies
We predominantly conduct our international sales and purchase transactions in
U.S. dollars or under customer contract provisions that protect against most
major currency risks. Our largest currency risk is that associated with the
Brazilian operation. Unlike our other international operations, our Brazilian
plant is directly subjected to the effects of currency devaluation on certain
customers' contracts until forward pricing is adjusted accordingly (normally
monthly). Other currency exchange risks primarily relate to current assets and
liabilities denominated in other than the U.S. dollar. Although we endeavor to
balance such items against each other where possible at individual operations,
no assurance can be given that we will be successful in mitigating the effects
of changes in currency exchange rates upon such international dollar
transactions. Changes in some international currency exchange rates impact the
geographic areas where our revenue is derived. When international currencies are
devalued, manufacturing costs of plants in those countries may become more
competitive with other established plants.
Our Stock Price May Be Volatile
Our common stock is traded on the New York Stock Exchange. Our common stock
market price has fluctuated substantially in the past and could fluctuate
substantially in the future based on a variety of factors, including among
others:
o future announcements covering us or our key customers or competitors;
o demand for our services;
o changes in earnings estimates by analysts;
o fluctuations in quarterly operating results;
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o general conditions in the contract manufacturing, communications, computer
peripherals, personal computer, automotive or consumer products
industries;
o general economic, political and market conditions, such as recessions or
international currency fluctuations;
o litigation; and
o government regulations.
USE OF PROCEEDS
Unless otherwise indicated in the prospectus supplement, the net proceeds
from the sale of securities offered by this prospectus will be used for general
corporate purposes, including capital expenditures, the repayment or refinancing
of debt and to meet working capital needs. We expect from time to time to
evaluate the acquisition of businesses, products and technologies, for which a
portion of the net proceeds may be used. Pending such uses, we will invest the
net proceeds in interest-bearing securities.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The consolidated ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
-------------------------------------------------------------
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges 6.25x 7.20x 8.70x 10.02x 9.20x
</TABLE>
For these ratios, "earnings" represents income before taxes plus fixed charges.
Fixed charges consist of interest expense and amortization of debt expenses.
THE SECURITIES
SCI may from time to time offer under this prospectus, separately or together:
o unsecured senior or subordinated debt securities;
o shares of common stock;
o shares of preferred stock, which may be represented by depositary shares
as described below;
o warrants to purchase shares of common stock;
o warrants to purchase shares of preferred stock; and
o warrants to purchase debt securities.
The aggregate initial offering price of the offered securities will not exceed
$1,000,000,000.
LEGAL OWNERSHIP OF SECURITIES
Book-Entry Holders
SCI will issue debt securities in book-entry form only, unless it specifies
otherwise in a prospectus supplement. SCI may issue shares of common stock and
shares of preferred stock and warrants in book-entry form. If securities are
issued in book-entry form, this means the securities will be represented by one
or more global securities registered in the name of a financial institution that
holds them as depositary on behalf of other financial institutions that
participate
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in the depositary's book-entry system. These participating institutions, in
turn, hold beneficial interests in the securities on behalf of themselves or
their customers.
We will only recognize the person in whose name a security is registered as the
holder of that security. Consequently, for securities issued in global form, we
will recognize only the depositary as the holder of the securities and all
payments on the securities will be made to the depositary. The depositary passes
along the payments it receives to its participants, which in turn pass the
payments along to their customers who are the beneficial owners. The depositary
and its participants do so under agreements they have made with one another or
with their customers; they are not obligated to do so under the terms of the
securities.
As a result, investors will not own securities directly. Instead, they will own
beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depositary's book-entry system or
holds an interest through a participant. As long as the securities are issued in
global form, investors will be indirect holders, and not holders, of the
securities.
Street Name Holders
In the future we may terminate a global security or issue securities initially
in non-global form. In these cases, investors may choose to hold their
securities in their own names or in "street name." Securities held by an
investor in street name would be registered in the name of a bank, broker or
other financial institution that the investor chooses, and the investor would
hold only a beneficial interest in those securities through an account he or she
maintains at that institution.
For securities held in street name, we will recognize only the intermediary
banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities and all payments on those
securities will be made to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but only because they
agree to do so in their customer agreements or because they are legally required
to do so. Investors who hold securities in street name will be indirect holders,
not holders, of those securities.
Legal Holders
We, and any third parties employed by us or acting on our behalf, such as
trustees, depositories and transfer agents, are obligated only to the legal
holders of the securities. We do not have obligations to investors who hold
beneficial interests in global securities, in street name or by any other
indirect means. This will be the case whether an investor chooses to be an
indirect holder of a security or has no choice because we are issuing the
securities only in global form.
For example, once we make a payment or give a notice to the holder, we have no
further responsibility for the payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect holders but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose (for example, to
amend an indenture or to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of the indenture) we would seek
the approval
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only from the holders, and not the indirect holders, of the securities. Whether
and how the holders contact the indirect holders is up to the holders.
When we refer to you, we mean those who invest in the securities being offered
by this prospectus, whether they are the holders or only indirect holders of
those securities. When we refer to your securities, we mean the securities being
offered by this prospectus in which you hold a direct or indirect interest.
Special Considerations For Indirect Holders
If you hold securities through a bank, broker or other financial institution,
either in book-entry form or in street name, you should check with your own
institution to find out:
o how it handles securities payments and notices;
o whether it imposes fees or charges;
o how it would handle a request for the holders' consent, if ever
required;
o whether and how you can instruct it to send you securities
registered in your own name so you can be a holder, if that is
permitted in the future;
o how it would exercise rights under the securities if there were a
default or other event triggering the need for holders to act to
protect their interests; and
o if the securities are in book-entry form, how the depositary's rules
and procedures will affect these matters.
Global Securities
A global security represents one or any other number of individual securities.
Generally, all securities represented by the same global securities will have
the same terms. We may, however, issue a global security that represents
multiple securities that have different terms and are issued at different times.
We call this kind of global security a master global security.
Each security issued in book-entry form will be represented by a global security
that we deposit with and register in the name of a financial institution or its
nominee that we select. The financial institution that is selected for this
purpose is called the depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust & Clearing Corporation, New York,
New York, known as DTC, will be the depositary for all securities issued in
book-entry form.
A global security may not be transferred to or registered in the name of anyone
other than the depositary or its nominee, unless special termination situations
arise. We describe those situations below under "Special Situations When a
Global Security Will Be Terminated." As a result of these arrangements, the
depositary, or its nominee, will be the sole registered owner and holder of all
securities represented by a global security, and investors will be permitted to
own only beneficial interests in a global security. Beneficial interests must be
held by means of an account with a broker, bank or other financial institution
that in turn has an account with the depositary or with another institution that
does. Thus, an investor whose security is represented by a global security will
not be a holder of the security, but only an indirect holder of a beneficial
interest in the global security.
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Special Considerations For Global Securities
As an indirect holder, an investor's rights relating to a global security will
be governed by the account rules of the investor's financial institution and of
the depositary, as well as general laws relating to securities transfers. We do
not recognize this type of investor as a holder of securities and instead deal
only with the depositary that holds the global security.
If securities are issued only in the form of a global security, an investor
should be aware of the following:
o An investor cannot cause the securities to be registered in his or
her name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we
describe below.
o An investor will be an indirect holder and must look to his or her
own bank or broker for payments on the securities and protection of
his or her legal rights relating to the securities, as we describe
under "Legal Ownership of Securities" above.
o An investor may not be able to sell interests in the securities to
some insurance companies and to other institutions that are required
by law to own their securities in non- book-entry form.
o An investor may not be able to pledge his or her interest in a
global security in circumstances where certificates representing the
securities must be delivered to the lender or other beneficiary of
the pledge in order for the pledge to be effective.
o The depositary's policies, which may change from time to time, will
govern payments, transfers, exchanges and other matters relating to
an investor's interest in a global security. Neither we nor any
third parties employed by us or acting on our behalf, such as
trustees and transfer agents, have any responsibility for any aspect
of the depositary's actions or for its records of ownership
interests in a global security. We also do not supervise the
depositary in any way.
o DTC requires that those who purchase and sell interests in a global
security within its book-entry system use immediately available
funds and your broker or bank may require you to do so as well.
o Financial institutions that participate in the depositary's
book-entry system, and through which an investor holds its interest
in a global security, may also have their own policies affecting
payments, notices and other matters relating to the security. There
may be more than one financial intermediary in the chain of
ownership for an investor. We do not monitor and are not responsible
for the actions of any of those intermediaries.
Special Situations When A Global Security Will Be Terminated
In a few special situations described below, a global security will be
terminated and interests in it will be exchanged for certificates in non-global
form representing the securities it represented. After that exchange, the choice
of whether to hold the securities directly or in street name will be up to the
investor. Investors must consult their own banks or brokers to find out how to
have their interests in a global security transferred on termination to their
own names, so that they will be holders. We have described the rights of holders
and street name investors above.
The special situations for termination of a global security are as follows:
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o if the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary
within a specified time period;
o if we elect to terminate that global security; or
o if an event of default has occurred with regard to securities
represented by that global security and has not been cured or
waived.
The prospectus supplement may also list additional situations for terminating a
global security that would apply to a particular series of securities covered by
the prospectus supplement. If a global security is terminated, only the
depositary is responsible for deciding the names of the institutions in whose
names the securities represented by the global security will be registered and,
therefore, who will be the holders of those securities.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes the terms and provisions of the debt securities. When
we offer to sell a particular series of debt securities, we will describe the
specific terms of the securities in a prospectus supplement. The prospectus
supplement also will indicate whether the general terms and provisions described
in this prospectus apply to the particular series of debt securities.
The senior debt securities will be senior unsecured obligations of SCI issued in
one or more series under an indenture (the "senior indenture") to be entered
into between SCI and a U.S. banking institution, as trustee, whose name will be
set forth in the applicable supplement. The subordinated debt securities will be
subordinated unsecured obligations of SCI issued in one or more series under an
indenture (the "subordinated indenture") to be entered into between SCI and a
U.S. banking institution, as trustee, whose name will be set forth in the
applicable prospectus supplement. The forms of the indentures have been or will
be filed with the SEC as exhibits to the registration statement. The terms of
any series of debt securities will be those set forth in the applicable
indenture and such debt securities and those made part of the indenture by the
Trust Indenture Act.
Because the summary of the material provisions of the indentures and the debt
securities set forth below and the summary of the material terms of a particular
series of debt securities set forth in the applicable prospectus supplement are
not complete, you should refer to the forms of the applicable indenture and the
debt securities for complete information regarding the terms and provisions of
that indenture (including defined terms) and the debt securities. Wherever
particular articles, sections or defined terms of an indenture are referred to,
those articles, sections or defined terms are incorporated herein by reference,
and the statement in connection with which such reference is made is qualified
in its entirety by such reference.
General
The debt securities may be issued from time to time in one or more series. The
indentures do not limit the aggregate principal amount of debt securities which
SCI may issue thereunder and provide that SCI may issue debt securities of any
series thereunder up to an aggregate principal amount which SCI may authorize
from time to time.
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Unless otherwise provided in a prospectus supplement, the senior debt securities
will be unsecured obligations of SCI and will rank equally with all of its other
unsecured and unsubordinated indebtedness. The subordinated debt securities of
each series will be unsecured obligations of SCI, subordinated in right of
payment to the prior payment in full of all Senior Indebtedness (which term
includes senior debt securities) of SCI with respect to such series, as
described below under "Subordination of Subordinated Debt Securities" and in the
applicable prospectus supplement.
The prospectus supplement relating to the series of debt securities offered
thereby will describe the specific terms of the debt securities offered. These
terms will include some or all of the following:
o the title or designation of such debt securities and whether the
debt securities will be senior debt securities or subordinated debt
securities;
o any limit on the aggregate principal amount of such debt securities;
o the price or prices (expressed as a percentage of the principal
amount thereof) at which such debt securities will be issued;
o the date or dates on which the principal of and premium, if any, on
such debt securities will be payable, or the method or methods, if
any, by which such date or dates will be determined;
o the rate or rates at which such debt securities will bear interest,
if any, or the method or methods, if any, by which such rate or
rates are to be determined, the date or dates, if any, from which
such interest will accrue, or the method or methods, if any, by
which such date or dates are to be determined, and the basis upon
which interest will be calculated if other than that of a 360-day
year of twelve 30-day months;
o the dates on which such interest, if any, will be payable and the
record dates, if any, therefor;
o the place or places, if any, other than or in addition to New York
City, of payment, transfer, conversion and/or exchange of the debt
securities and where notices or demands to or upon SCI in respect of
the debt securities may be served;
o if applicable, the date or dates on which, the period or periods
within which, the price or prices at which and the other terms and
conditions upon which debt securities may be redeemed at the option
of SCI or are subject to repurchase at the option of the holders;
o the terms of any sinking fund or analogous provision;
o the authorized denominations in which such debt securities will be
issuable, if other than denominations of $1,000 and any integral
multiple thereof;
o whether the amount of payments of principal of, or premium, if any,
or interest on the debt securities will be determined with reference
to an index, formula or other method, which could be based on one or
more commodities, equity indices or other indices, and how these
amounts will be determined;
o whether any such debt securities are to be issuable in registered
form as registered securities or bearer form as bearer securities or
both and, if in bearer form, the terms and conditions relating
thereto and any limitations on issuance of such bearer securities
(including in exchange for registered securities of the same
series);
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o whether any such debt securities will be issued in temporary or
permanent global form and, if so, the identity of the depositary for
such global debt security;
o the person to whom any interest on any registered securities of the
series shall be payable, if other than the person in whose name the
registered security (or one or more predecessor securities (i.e.,
every previous debt security evidencing all or a portion of the same
indebtedness as that evidenced by such particular debt security)) is
registered at the close of business on the regular record date for
such interest, the manner in which, or the person to whom, any
interest on any bearer security of the series shall be payable, if
other than upon presentation and surrender of the coupons
appertaining thereto as they severally mature, and the extent to
which, or the manner in which, any interest payable on a temporary
global debt security will be paid if other than in the manner
provided in the indenture;
o the portion of the principal amount of such debt securities which
shall be payable upon acceleration thereof if other than the full
principal amount thereof;
o if the principal amount of the debt securities payable at maturity
is not determinable as of any date prior to such maturity, the
amount which will be deemed to be the outstanding principal amount
of such debt securities;
o if other than United States dollars, the currency of payment,
including composite currencies, of the principal of, any premium or
interest on or any Additional Amounts with respect to any of such
debt securities;
o whether the debt securities will be convertible into and/or
exchangeable for other securities, and, if so, the terms and
conditions upon which the debt securities will be so convertible or
exchangeable;
o any deletions from, modifications of or additions to the Events of
Default or covenants with respect to the debt securities;
o whether the provisions described below under "Defeasance and
Covenant Defeasance" will be applicable to such debt securities; and
o any other terms of such debt securities.
Debt securities may be issued as original issue discount securities (i.e., debt
securities which provide for declarations of amounts less than the principal
face amount thereof to be due and payable upon acceleration pursuant to the
indenture) to be sold at a substantial discount below their principal amount. In
the event of an acceleration of the maturity of any original issue discount
security, the amount payable to the holder thereof upon such acceleration will
be determined in the manner described in the applicable prospectus supplement.
Material federal income tax and other considerations applicable to original
issue discount securities will be described in the applicable prospectus
supplement.
Under the indentures, the terms of the debt securities of any series may differ,
and SCI, without the consent of the holders of the debt securities of any
series, may reopen a previous series of debt securities and issue additional
debt securities of such series or establish additional terms of such series.
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Unless otherwise described in a prospectus supplement relating to any debt
securities, neither indenture contains any provisions that would limit SCI's
ability to incur indebtedness or that would afford holders of debt securities
protection in the event of a sudden and significant decline in the credit
quality of SCI or a takeover, recapitalization or highly leveraged or similar
transaction involving SCI. Accordingly, SCI could in the future enter into
transactions that could increase the amount of indebtedness outstanding at that
time or otherwise affect SCI's capital structure or credit rating. You should
refer to the prospectus supplement relating to a particular series of debt
securities for information regarding any deletions from, modifications of or
additions to the Events of Default described below or covenants contained in the
applicable indenture, including any addition of a covenant or other provisions
providing event risk or similar protection.
Conversion And Exchange
The terms, if any, on which debt securities of any series are convertible into
or exchangeable for shares of common stock, shares of preferred stock or other
securities, whether or not issued by SCI, property or cash, or a combination of
any of the foregoing, will be set forth in the related prospectus supplement.
Such terms may include provisions for conversion or exchange, either mandatory,
at the option of the holder, or at the option of SCI, in which the securities,
property or cash to be received by the holders of the debt securities would be
calculated according to the factors and at such time as described in the related
prospectus supplement.
Subordination Of Subordinated Debt Securities
The subordinated debt securities of each series will, to the extent set forth in
the subordinated indenture, be subordinate in right of payment to the prior
payment in full of all Senior Indebtedness with respect to such series. In
addition, the debt securities are structurally subordinated to all indebtedness
and other liabilities of our subsidiaries. Upon any payment or distribution of
assets of SCI to creditors in connection with a liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors, or
marshalling of assets, or any bankruptcy, insolvency or similar proceedings of
SCI (except in connection with the consolidation or merger of SCI or its
liquidation or dissolution following the conveyance, transfer or lease of its
properties and assets substantially as an entirety, upon the terms and
conditions described under "--Consolidation, Merger and Sale of Assets"), no
payment on account of principal of, or premium, if any, or interest on or any
other amounts due on the subordinated debt securities, and no redemption,
purchase or other acquisition of the subordinated debt securities may be made
unless full payment of amounts then due on all Senior Indebtedness has been made
or duly provided for pursuant to the terms of the instruments governing the
Senior Indebtedness.
In the event that, notwithstanding the foregoing, the trustee under the
subordinated indenture or the holder of any subordinated debt security receives
any payment or distribution of assets of SCI of any kind or character (excluding
equity or subordinated securities of SCI provided for any plan of reorganization
or readjustment that, in the case of subordinated securities, are subordinated
in right of payment to all Senior Indebtedness to at least the same extent as
the subordinated debt
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securities are so subordinated), before all Senior Indebtedness is paid in full,
then such payment or distribution will be held in trust for the holders of
Senior Indebtedness and will be required to be paid over or delivered forthwith
to the trustee in bankruptcy or other person making payment or distribution of
assets of SCI for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay the Senior Indebtedness in
full.
By reason of such subordination, in the event of liquidation or insolvency of
SCI, holders of Senior Indebtedness with respect to the subordinated debt
securities of any series and holders of other obligations of SCI that are not
subordinated to such Senior Indebtedness may recover more, ratably, than the
holders of the subordinated debt securities of such series.
Subject to the payment in full of all Senior Indebtedness with respect to the
subordinated debt securities of any series, the rights of the holders of the
subordinated debt securities of such series will be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of SCI applicable to such Senior Indebtedness until
the principal of, any premium and interest on, and any additional amounts with
respect to, the subordinated debt securities of such series have been paid in
full.
No payment of principal (including redemption and sinking fund payments) of or
any premium or interest on the subordinated debt securities of any series may be
made:
(1) if any Senior Indebtedness with respect to such series is not paid
when due and any applicable grace period with respect to such default has ended
and such default has not been cured or waived or ceased to exist; or
(2) if the maturity of any Senior Indebtedness with respect to such series
has been accelerated because of a default.
In addition, if any default occurs with respect to Designated Senior
Indebtedness (as defined below), other than a payment default on such Designated
Senior Indebtedness, giving the holders of such Designated Senior Indebtedness
the right to accelerate the maturity thereof, and SCI and the trustee under the
subordinated indenture have received written notice thereof from an authorized
person on behalf of any holder of the Designated Senior Indebtedness, then SCI
may not make any payments on account of the subordinated debt securities or on
account of the purchase or redemption or other acquisition of the subordinated
debt securities for a payment blockage period commencing on the date SCI and the
trustee receive such written notice of default and ending on the earliest of:
o 180 days from such date;
o the date, if any, on which the Designated Senior Indebtedness to
which such default relates is discharged or such default is waived
or otherwise cured; and
o the date, if any, on which such blockage period has been terminated
by written notice to SCI or the trustee under the subordinated
indenture from the person who gave the written notice of default.
Unless the holders of the Designated Senior Indebtedness or an authorized
representative of such holders accelerates the maturity of such Designated
Senior Indebtedness, SCI may resume payments on the subordinated debt securities
after the end of the payment blockage period. Not
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more than one payment blockage notice may be given in any consecutive 365-day
period, irrespective of the number of defaults with respect to Senior
Indebtedness during such period.
The subordinated indenture does not limit or prohibit SCI from incurring
additional Senior Indebtedness, which may include Indebtedness that is senior to
the subordinated debt securities of any series, but subordinate to other
obligations of SCI. The senior debt securities will constitute Senior
Indebtedness with respect to the subordinated debt securities of each series
under the subordinated indenture.
The term "Senior Indebtedness" means, with respect to the subordinated debt
securities, the principal of, interest on and other amounts due on Indebtedness
of SCI, whether outstanding on the date of the subordinated indenture or
thereafter created, incurred, assumed or guaranteed by SCI; unless in the
instrument creating or evidencing or pursuant to which such Indebtedness is
outstanding, it is expressly provided that such Indebtedness is not senior in
right of payment to the subordinated debt securities. Senior Indebtedness
includes, with respect to the obligations described above, interest accruing,
pursuant to the terms of such Senior Indebtedness, on or after the filing of a
petition in bankruptcy or for reorganization relating to SCI, whether or not
post-filing interest is allowed in such proceeding, at the rate specified in
the instrument governing the relevant obligation. Senior Indebtedness will not,
however, include (1) Indebtedness of or amounts owed by SCI for compensation to
employees, or for goods, services or materials purchased in the ordinary course
of business; (2) with certain exceptions, Indebtedness of SCI to a Subsidiary;
or (3) any liability for federal, state, local or other taxes owed by SCI.
The term "Designated Senior Indebtedness" means any Senior Indebtedness which,
at the time of determination, has an aggregate principal amount outstanding of,
or commitments to lend up to, at least $50 million and is specifically
designated by SCI in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for the purposes of the
subordinated indenture.
The subordinated indenture provides that the foregoing subordination provisions,
insofar as they relate to any particular series of subordinated debt securities,
may be changed prior to such issuance. Any such change would be described in the
related prospectus supplement.
Registration And Transfer
Unless otherwise indicated in the applicable prospectus supplement, each series
of debt securities will be issued in registered form only, without coupons. The
indentures, however, provide that SCI may also issue debt securities in bearer
form only, or in both registered and bearer form. Bearer securities shall not be
offered, sold, resold or delivered in connection with their original issuance in
the United States or to any United States person (as defined below) other than
offices located outside the United States of certain United States financial
institutions. As used herein, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States, any estate the
income of which is subject to United States federal income taxation regardless
of its source, or any trust whose administration is subject to the primary
supervision of a United States court and which has one or more United States
fiduciaries who have the authority to control all
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substantial decisions of the trust, and "United States" means, except as may be
set forth in the prospectus supplement, the United States of America (including
the states thereof and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction. Purchasers of bearer
securities will be subject to certification procedures and may be affected by
certain limitations under United States tax laws. Such procedures and
limitations will be described in the prospectus supplement relating to the
offering of the bearer securities.
Unless otherwise indicated in the applicable prospectus supplement, registered
securities will be issued in denominations of $1,000 or any integral multiple
thereof.
Unless otherwise indicated in the applicable prospectus supplement, debt
securities may be surrendered for registration of transfer or exchange at an
office or agency to be maintained by SCI in the Borough of Manhattan, The City
of New York. No service charge shall be made for any registration of transfer or
exchange of debt securities, but SCI may require payment of a sum sufficient to
cover any tax or other governmental charge and any other expenses that may be
imposed in connection therewith.
Unless otherwise indicated in the applicable prospectus supplement, SCI will not
be required to do the following:
o issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series of like tenor
to be redeemed and ending at the close of business on the day of
giving notice of such redemption;
o register the transfer of or exchange any registered security, or
portion thereof, called for redemption, except the unredeemed
portion of any registered security being redeemed in part;
o exchange any bearer security called for redemption, except to
exchange such bearer security for a registered security of that
series and like tenor that is simultaneously surrendered for
redemption; or
o issue, register the transfer of or exchange any debt security that
has been surrendered for repayment at the option of the holder,
except the portion, if any, of such debt security not to be so
repaid.
Payment Mechanics
If interest is due on a debt security on an interest payment date, we will pay
the interest to the person or entity in whose name the debt security is
registered at the close of business on the regular record date (see below)
relating to the interest payment date. If interest is due at maturity but on a
day that is not an interest payment date, we will pay the interest to the person
or entity entitled to receive the principal of the debt security. If principal
or another amount besides interest is due on a debt security at maturity, we
will pay the amount to the holder of the debt security against surrender of the
debt security at a proper place of payment, or in the case of a global security,
in accordance with the applicable policies of the depositary.
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Payments On Global Securities. SCI will make payments on a global security in
accordance with the applicable policies of the depositary as in effect from time
to time. Under those policies, SCI will pay directly to the depositary, or its
nominee, and not to any indirect holders who own beneficial interests in the
global security. An indirect holder's right to those payments will be governed
by the rules and practices of the depositary and its participants, as described
under "Legal Ownership of Securities--Global Securities."
Payments On Non-Global Securities. We will pay interest that is due on an
interest payment date with respect to non-global securities by check mailed on
the interest payment date to the holder at his or her address shown on the
trustee's records as of the close of business on the regular record date. We
will make all other payments by check at the paying agent described below,
against surrender of the debt security. All payments by check will be made in
next-day funds, that is, funds that become available on the day after the check
is cashed.
Alternatively, if a non-global security has a face amount of at least $1
million, and the holder asks SCI to do so, SCI will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City, on the due date. To request wire payment,
the holder must give the paying agent appropriate transfer instructions at least
five business days before the requested wire payment is due. In the case of any
interest payment due on an interest payment date, the instructions must be given
by the person who is the holder on the relevant regular record date. In the case
of any other payment, payment will be made only after the debt security is
surrendered to the paying agent. Any wire instructions, once properly given,
will remain in effect unless and until new instructions are given in the manner
described below.
Regular Record Dates. SCI will pay interest to the holders listed on the
trustee's records as the owners of the debt securities at the close of business
on a particular day in advance of each interest payment date. Interest will be
paid to these holders if they are listed as the owner even if they no longer own
the debt security on the interest payment date. That particular day, usually
about two weeks in advance of the interest payment date, is called the regular
record date and will be identified in the applicable prospectus supplement.
Payment When Offices Are Closed. If any payment is due on a debt security on a
day that is not a business day, SCI will make the payment on the next day that
is a business day. Payments postponed to the next business day in this situation
will be treated under the indenture as if they were made on the original due
date. A postponement of this kind will not result in a default under any debt
security or the indenture, and no interest will accrue on the postponed amount
from the original due date to the next day that is a business day.
Paying Agents. SCI may appoint one or more financial institutions to act as its
paying agents, at whose designated offices debt securities in non-global form
may be surrendered for payment at their maturity. SCI calls each of these
offices a paying agent. SCI may add, replace or terminate paying agents from
time to time and may also choose to act as its own paying agent. Initially, SCI
will appoint the trustee for each series of debt securities, at its corporate
trust office in New York City, as the paying agent for such series.
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Bearer Securities. Unless otherwise indicated in the applicable prospectus
supplement, payment of principal of, premium, if any, and interest, if any, on
bearer securities will be made, subject to any applicable laws and regulations,
at such office or agency outside the United States as specified in the
prospectus supplement and as SCI may designate from time to time. Unless
otherwise indicated in the applicable prospectus supplement, payment of interest
due on bearer securities on any interest payment date will be made only against
surrender of the coupon relating to such interest payment date.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT WITH THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS ON THEIR DEBT SECURITIES.
Redemption And Repurchase
The debt securities of any series may be redeemable at the option of SCI, may be
subject to mandatory redemption pursuant to a sinking fund or otherwise, or may
be subject to repurchase by SCI at the option of the holders, in each case upon
the terms, at the times and at the prices set forth in the applicable prospectus
supplement.
Consolidation, Merger And Sale Of Assets
Each indenture restricts SCI's ability to, among other things:
o consolidate;
o merge; or
o transfer or lease substantially all of its assets.
SCI will not consolidate with or merge with or into any other person or,
directly or indirectly, sell, assign, transfer, lease or otherwise convey all or
substantially all its properties and assets substantially as an entirety,
unless:
(a) Either (1) SCI is the surviving corporation or (2) the Person, if other than
SCI, formed by such consolidation or into which SCI is merged or the Person that
acquires by sale, assignment, transfer, lease or other disposition the
properties and assets of SCI substantially as an entirety (A) is a corporation,
partnership or trust organized and validly existing under the laws of the United
States, any state thereof or the District of Columbia and (B) expressly assumes,
by a supplemental indenture in form satisfactory to the trustee under each
indenture, all of SCI's obligations under such indenture and the debt
securities;
(b) the sale, assignment, transfer, lease, conveyance or other disposition of
all or substantially all of our properties or assets shall be as an entirety or
virtually as an entirety to one corporation and the corporation assumes all
obligations, pursuant to a supplemental indenture in a form reasonably
satisfactory to the trustee, under the debt securities and the indenture;
(c) Immediately after giving effect to such transaction, no default or event of
default under the indenture has occurred and is continuing; and
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(d) SCI delivers, or causes to be delivered, to the trustee under each
indenture, in form and substance reasonably satisfactory to the trustee under
such indenture, an officers' certificate and an opinion of counsel, each stating
that such transaction complies with the requirements of the indenture.
Events Of Default
Unless otherwise specified in the applicable prospectus supplement, an Event of
Default with respect to the debt securities of any series is defined in the
applicable indenture as being:
1. default in the payment of any interest on any debt security of such series
when such interest becomes due and payable, and continuance of such default for
a period of 30 days;
2. default in payment of principal or any premium with respect to any debt
security of such series when due;
3. default in making any sinking fund payment or payment under any analogous
provision when due with respect to any debt security of such series;
4. default by SCI in the performance, or breach, of any other covenant or
warranty in the indenture (other than a covenant or warranty included therein
solely for the benefit of one or more series of debt securities other than that
series) of any debt security of such series which shall not have been remedied
for a period of 60 days after delivery of written notice to SCI by the trustee
or to SCI and the trustee by the holders of not less than 25% in aggregate
principal amount of the debt securities of such series then outstanding;
5. there occurs with respect to any issue or issues of Indebtedness of SCI
(including an Event of Default under any other series of debt securities) or any
Restricted Subsidiary having an outstanding principal amount of $50 million or
more in the aggregate for all such issues of all such Persons, whether such
Indebtedness exists on the date of the indenture or created after such date:
(a) an event of default that has resulted in such Indebtedness becoming due and
payable prior to its stated maturity and such Indebtedness shall not have been
discharged in full or such acceleration shall not have been rescinded or
annulled and/or
(b) the failure to pay when due principal of or interest on such Indebtedness
within the grace period provided for in such Indebtedness (which failure
continues beyond any applicable grace period);
6. SCI or any of its Restricted Subsidiaries shall fail within 60 days to pay,
bond or otherwise discharge judgements or court orders for the payment of money
the uninsured portion of which exceeds $50 million in the aggregate, which are
not stayed on appeal or are not otherwise being appropriately contested in good
faith;
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7. certain events of bankruptcy, insolvency, reorganization, winding up or
liquidation of SCI or any of its Restricted Subsidiaries; or
8. any other Event of Default established in or pursuant to the applicable
indenture for the debt securities of such series.
No Event of Default with respect to any particular series of debt
securities necessarily constitutes an Event of Default with respect to any other
series of debt securities. Each indenture provides that the trustee thereunder
may withhold notice to the holders of the debt securities of any series of the
occurrence of a default with respect to the debt securities of such series
(except a default in payment of principal, premium, if any, interest, if any, or
sinking fund payments, if any) if the trustee considers it in the interest of
the holders to do so.
Each indenture provides that if an Event of Default with respect to any
series of debt securities of the type described in clause (7) with respect to
SCI shall have occurred and be continuing, then the principal of, and accrued
and unpaid interest on, the debt securities of such series will become
immediately due and payable. Each indenture provides that if any other Event of
Default with respect to any series of debt securities issued thereunder shall
have occurred and be continuing, either the trustee or the holders of at least
25% in principal amount of the debt securities of such series then outstanding
may declare the principal amount (or if any debt securities of such series are
original issue discount securities, such lesser amount as may be specified in
the terms thereof) of all the debt securities of such series to be due and
payable immediately. Upon certain conditions such declaration and its
consequences may be rescinded and annulled by the holders of a majority in
principal amount of the debt securities of such series then outstanding except:
o in the case of a continuing default or Event of Default in the
payment of or interest on, or the principal of or premium on, the
debt securities of such series; or
o in respect of any covenant or provision of the applicable indenture
or debt securities which cannot be modified or amended without the
consent of the holder of each debt security affected.
Subject to the provisions of the Trust Indenture Act requiring the trustee,
during an Event of Default under the applicable indenture, to act with the
requisite standard of care, the trustee is under no obligation to exercise any
of its rights or powers under the applicable indenture at the request or
direction of any of the holders of debt securities of any series unless such
holders have offered the trustee reasonable indemnity. Subject to the foregoing,
holders of a majority in principal amount of the then outstanding debt
securities of any series issued under the applicable indenture shall 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 under the
indenture with respect to such series. Each indenture requires the annual filing
with the trustee of a certificate by SCI as to whether or not it is in default
under the terms of the indenture, and we are required, upon becoming aware of
any default or Event of Default, to deliver to the trustee for the applicable
series of securities a statement describing the default or Event of Default.
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Notwithstanding any other provision of the indentures, the holder of any debt
security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and interest, if any, on such
debt security on the respective due dates therefor (as the same may be extended
in accordance with the terms of such debt security) and to institute suit for
enforcement of any such payment, and such right shall not be impaired without
the consent of such holder.
Certain Definitions
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have means correlative to the
foregoing.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, partnership interests, participation rights in or other equivalents
(however designated) of such Person's equity (however designated).
"Consolidated Subsidiaries" means, at any date, any Subsidiary or other entity
whose accounts would be consolidated with those of SCI in its consolidated
financial statements if such statements were prepared as of such date.
"GAAP" means Generally Accepted Accounting Principles as in effect from time to
time, applied on a basis consistent (except for changes concurred in by SCI's
independent public accountants) with the most recent audited consolidated
financial statements of SCI and its Consolidated Subsidiaries.
"Hedging Obligations" means the obligations of any Person under interest rate
swap agreements, interest rate agreements, interest rate collar agreements or
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or the value of foreign currencies.
"Indebtedness" means (without duplication) (a) any liability of SCI or any
Subsidiary (1) for borrowed money, or under any reimbursement obligation
relating to a letter of credit, or (2) evidenced by a bond, note, debenture or
similar instrument, or (3) for payment obligations arising under any conditional
sale or other title retention arrangement (including a purchase money
obligation) given in connection with the acquisition of any businesses,
properties or assets of any kind, or (4) consisting of the discounted rental
stream properly classified in accordance with GAAP on the balance sheet of SCI
or any Subsidiary, as lessee, as a capitalized lease obligation, or (5) under
Hedging Obligations; (b) any liability of others of a type described in the
preceding clause (a) to the extent that SCI or any Subsidiary has guaranteed or
is otherwise legally obligated in respect thereof; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a) and (b) above. "Indebtedness"
shall not be construed to include (x) trade payables or credit on open account
to
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trade creditors incurred in the ordinary course of business or (y) obligations
or liabilities incurred in connection with the sale, transfer or other
disposition of property in connection with the securitization or other
asset-based financing thereof; provided however that any such sale, transfer or
other disposition shall be for valid consideration and shall not be to prefer
directly or indirectly any holder of any other obligation or Indebtedness of SCI
or any Subsidiary of SCI as to any such other obligation or Indebtedness that
was already outstanding and did not previously benefit from a Lien.
"Lien" means, with respect to any asset, any pledge, mortgage, charge,
encumbrance or security interest in respect of such asset; provided that any
transaction (including, without limitation, any sale of accounts receivable)
which is treated as a sale of assets under GAAP shall be so treated and any
asset which is so sold shall not be deemed subject to a Lien. Pursuant to the
indenture, a contractual grant of a right of set-off does not create a Lien in
the absence of an agreement to maintain a balance against which such right may
be exercised.
"Person" means any individual, corporation, partnership, joint venture,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Restricted Subsidiary" means, at any time, each and every Subsidiary which is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act of 1933 and the Securities Exchange Act of 1934 (as currently in
effect).
"Subsidiary" means any corporation, association or other business entity of
which at the time of determination SCI or one or more Subsidiaries owns or
controls more than 50% of the shares of Voting Stock.
"Voting Stock" means any class or classes of Capital Stock pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of any
Person (irrespective of whether or not, at the time, stock of any other class or
classes has, or might have, voting power by reason of the happening of any
contingency).
Defeasance And Covenant Defeasance
Unless otherwise indicated in the applicable prospectus supplement, SCI may, at
its option and at any time, terminate its obligations with respect to the debt
securities of a particular series and some of the covenants in each indenture
("defeasance"), subject to the exceptions set forth below. Such defeasance means
that SCI will be deemed to have paid and discharged the entire Indebtedness
represented by the then outstanding debt securities of the particular series,
except for:
o the rights of holders of then outstanding debt securities of the
series to receive payments in respect of the principal of, and
premium, if any, on, and interest on the debt securities when such
payments are due;
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o SCI's obligations to issue temporary debt securities, register the
transfer or exchange of any debt securities, replace mutilated,
destroyed, lost or stolen debt securities, maintain an office or
agency for payments in respect of the debt securities and segregate
and hold such payments in trust;
o the rights, powers, trusts, duties and immunities of the trustee
under the indenture; and
o the defeasance provisions of the applicable indenture.
In addition, unless otherwise indicated in the applicable prospectus supplement,
SCI may, at its option and at any time, elect to terminate its obligations with
respect to certain covenants set forth in each indenture and any omission to
comply with such obligations would not constitute a default or an event of
default with respect to the debt securities ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance,
o SCI must irrevocably deposit or cause to be deposited with the
applicable trustee, as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of
the debt securities of a particular series, money (in U.S. dollars
or in the Foreign Currency in which such debt securities are
payable) in an amount, or Government Obligations (as defined below)
that through the scheduled payment of principal and interest thereon
will provide money in an amount, or a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accounts, to pay and discharge the principal of,
and premium, if any, on, and interest on the then outstanding debt
securities of that series at maturity, or upon redemption, if
applicable, of such principal or installment of interest;
o no default or event of default has occurred and is continuing on the
date of such deposit or, insofar as an event of bankruptcy under
clause (7) of "Events of Default" above is concerned, at any time
during the period ending on the 91st day after the date of such
deposit;
o such defeasance or covenant defeasance must not result in a breach
or violation of, or constitute a default under, the indenture or any
material agreement or instrument to which SCI is a party or by which
it is bound or cause the applicable trustee or the trust so created
to be subject to the Investment Company Act of 1940, as amended;
o in the case of defeasance, SCI must deliver to the applicable
trustee an opinion of counsel stating that SCI has received from, or
there has been published by, the Internal Revenue Service a ruling,
or since the date hereof, there has been a change in applicable
federal income tax law, to the effect, and based thereon such
opinion must confirm that, the holders of the outstanding debt
securities will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance had not occurred;
o in the case of covenant defeasance, SCI must have delivered to the
applicable trustee an opinion of counsel to the effect that the
holders of the debt securities outstanding will not recognize
income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not
occurred; and
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o SCI must have delivered to the applicable trustee an officers'
certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to either the defeasance
or the covenant defeasance, as the case may be, have been complied
with.Foreign Currency" means any currency, currency unit or
composite currency, including, without limitation, the euro, issued
by the government of one or more countries other than the United
States of America or by any regional confederation or association of
such governments.
"Government Obligations" means debt securities which are (1) direct obligations
of the United States of America or the other government or governments in the
confederation which issued the Foreign Currency in which the principal of or any
premium or interest on such debt securities or any Additional Amounts in respect
thereof shall be payable, in each case where the payment or payments thereunder
are supported by the full faith and credit of such government or governments or
(2) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America or such other government or
governments, in each case where the timely payment or payments thereunder are
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments. In either case, such
obligations may not be callable or redeemable at the option of the issuer or
issuers thereof. Such obligations may also include a depository receipt issued
by a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or other amount
with respect to any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of or other amount with respect to the Government
Obligation evidenced by such depository receipt.
Satisfaction And Discharge
The indenture will cease to be of further effect, except as to surviving rights
of registration of transfer or exchange of the debt securities, as expressly
provided for in each indenture, and, upon the request of SCI, the trustee under
each indenture, at the expense of SCI, will execute proper instruments
acknowledging satisfaction and discharge of the indenture when:
(a) either:
(1) all the debt securities theretofore authenticated and delivered under
the indenture, other than destroyed, lost or stolen debt securities that have
been replaced or paid and debt securities that have been subject to defeasance
as described under "Defeasance and Covenant Defeasance" above have been
delivered to the trust under the indenture for cancellation; or
(2) all debt securities not theretofore delivered to the trust under the
indenture for cancellation:
(A) have become due and payable;
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(B) will become due and payable at their maturity within one
year; or
(C) are to be called for redemption within one year under
arrangements satisfactory to the trustee under the
indenture for the giving of notice of redemption by the
trustee under the indenture in the name, and at the
expense, of SCI;
and SCI has irrevocably deposited or caused to be deposited with the trustee
under the applicable indenture funds in trust for the purpose in an amount
sufficient to pay and discharge the entire Indebtedness on such debt securities
not theretofore delivered to the trust under the indenture for
cancellation, for principal, and premium, if any, on, and interest to the date
of such deposit, in the case of debt securities that have become due and
payable, or to the maturity or redemption date, as the case may be;
(b) SCI has paid or caused to be paid all sums payable under the indenture
by SCI; and
(c) SCI has delivered to the trustee under the indenture an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided in the indenture relating to the satisfaction and discharge
of the indenture have been complied with.
Certain additional provisions of the indenture will continue in effect
following any satisfaction and discharge pursuant to section (a)(2)(B) or (C)
above, including provisions regarding conversion rights, if any, under the debt
securities.
Amendments And Waivers
Modifications and amendments of each indenture may be made by SCI and the
applicable trustee with the consent of the holders of a majority in aggregate
outstanding principal amount of the debt securities of each series affected by
the modification; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding debt security affected
thereby:
(a) change the maturity of the principal of, or any installment of
interest on, any debt security, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption thereof, or
change the place of payment where or change the coin or currency in which, any
debt security or any premium or interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment after the maturity
thereof, or, in the case of redemption, on or after the redemption date;
(b) reduce the percentage in principal amount of outstanding debt
securities of any series, the consent of whose holders is required for any
amendment or for any waiver of compliance with certain provisions of, or certain
defaults and their consequences provided for under the indenture;
(c) modify any of the provisions of the applicable indenture relating to
the subordination of the debt securities in a manner materially adverse to the
holders; or
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(d) waive a default in the payment of principal of, or premium, if any, or
interest on the debt securities of any series or reduce the percentage or of the
aggregate principal amount of outstanding debt securities of any series the
consent of whose holders is necessary for waiver of compliance with certain
provisions of the indenture or for waiver of certain defaults.
The holders of a majority in aggregate principal amount of the debt
securities of any series outstanding may waive compliance with certain
restrictive covenants and provisions of the indenture with respect to that
series of debt securities.
Without the consent of any holders, SCI and the trustee under the
indenture, at any time and from time to time, may enter into one or more
indentures supplemental to the indenture governing the debt securities for any
of the following purposes:
(a) to evidence the succession of another person to SCI and the assumption
by any such successor of the covenants of SCI in the indenture and in the debt
securities;
(b) to add to the covenants of SCI for the benefit of the holders, or to
surrender any right or power conferred upon SCI under the indenture;
(c) to add additional Events of Default;
(d) to establish the form or terms of Securities of any series;
(e) to evidence and provide for the acceptance of appointment under the
indenture by a successor trustee under the indenture;
(f) to secure the debt securities;
(g) to cure any ambiguity, defect or inconsistency in a manner that does
not adversely affect the interests of the holders in any material respect;
(h) to comply with any requirements of the SEC in order to effect and
maintain the qualification of the indenture under the Trust Indenture Act; or
(i) to make any other change that does not adversely effect the rights of
any holder.
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any request, demand, authorization,
direction, notice, consent or waiver under the applicable indenture:
o the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding for such purposes
shall be that portion of the principal amount thereof that could be
declared to be due and payable upon a declaration of acceleration
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thereof pursuant to the terms of such original issue discount
security as of the date of such determination;
o the principal amount of any Indexed Security (i.e. a security the
terms of which provide that the principal amount payable at maturity
may be more or less than the principal face amount at original
issuance), that shall be deemed to be outstanding for such purpose
shall be the principal face amount of such Indexed Security
determined on the date of its original issuance; and
o any debt security owned by SCI or any obligor on such debt security
or any Affiliate of SCI or such other obligor shall be deemed not to
be outstanding.
Governing Law
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
Regarding The Trustees
The Trust Indenture Act contains limitations on the rights of a trustee, should
it become a creditor of SCI, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such claims, as
security or otherwise. Each trustee is permitted to engage in other transactions
with SCI and its subsidiaries from time to time, provided that if the trustee
acquires any conflicting interest it must eliminate such conflict upon the
occurrence of an Event of Default under the applicable indenture, or else
resign.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 200,500,000 shares. Those shares
consist of (1) 200,000,000 shares designated as common stock, $0.10 par value
per share, and (2) 500,000 shares designated as preferred stock, no par value
per share. The only equity securities currently outstanding are shares of common
stock. As of September 15, 2000, there were 145,818,057 shares of common stock
issued and outstanding.
Common Stock
Our common stock is listed on the New York Stock Exchange under the symbol
"SCI." Holders of common stock are entitled to receive dividends declared by the
Board of Directors, out of funds legally available for the payment of dividends,
subject to the rights of holders of preferred stock and subject to certain
financial covenants contained in our loan agreements. Currently, we are not
paying a dividend. Each holder of common stock is entitled to one vote per
share. Stockholders do not have cumulative voting rights which means that the
holders of a majority of the shares voting for the election of directors can
elect all the directors then standing for election. Upon any liquidation,
dissolution or winding up of our business, the holders of common stock are
entitled to share equally in all assets available for distribution after payment
of all liabilities and provision for liquidation preference of shares of
preferred stock then outstanding. The holders of common stock have no preemptive
rights and no rights to convert their common stock into any other securities.
There are also no redemption or sinking fund provisions applicable to the common
stock. All outstanding shares of common stock are fully paid and nonassessable.
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Preferred Stock
The following description of preferred stock and the description of the terms of
a particular series of preferred stock that will be set forth in the related
prospectus supplement are not complete. These descriptions are qualified in
their entirety by reference to the certificate of designation relating to that
series. The rights, preferences, privileges and restrictions of the preferred
stock of each series will be fixed by the certificate of designation relating to
that series. The prospectus supplement also will contain a description of
certain United States federal income tax consequences relating to the purchase
and ownership of the series of preferred stock that is described in the
prospectus supplement.
Each holder of preferred stock is entitled to one vote per share of preferred
stock. The Board of Directors has the authority, without further action by the
stockholders, to issue up to 500,000 shares of preferred stock in one or more
series and to fix the following terms of the preferred stock which will be
specified in the prospectus supplement relating to preferred stock. As of
September 29, 2000, there were no shares of preferred stock outstanding.
The prospectus supplement will specify as to each issuance of preferred stock:
o the maximum number of shares;
o the designation of the shares;
o the annual dividend rate, if any, whether the dividend rate is fixed
or variable, the date dividends will accrue, the dividend payment
dates and whether dividends will be cumulative;
o the price and the terms and conditions for redemption, if any,
including redemption at our option or at the option of the holders,
including the time period for redemption, and any accumulated
dividends or premiums;
o the liquidation preference, if any, and any accumulated dividends
upon the liquidation, dissolution or winding up of SCI's affairs;
o any sinking fund or similar provision, and, if so, the terms and
provisions relating to the purpose and operation of the fund;
o the terms and conditions, if any, for conversion or exchange of
shares into or for any other class or classes of our capital stock
or any series of any other class or classes, or into or for any
other series of the same class, or any other securities or assets,
including the price or the rate of conversion or exchange and the
method, if any, of adjustment; and
o any or all other preferences and relative, participating, optional
or other special rights, privileges or qualifications, limitations
or restrictions.
Preferred stock will be fully paid and nonassessable upon issuance. The
preferred stock or any series of preferred stock may be represented, in whole or
in part, by one or more global certificates, which will represent an aggregate
number of shares equal to that of the preferred stock represented by the global
certificate.
Each global certificate will:
o be registered in the name of a depositary or a nominee of the
depositary identified in the prospectus supplement;
o be deposited with such depositary or nominee or a custodian for the
depositary; and
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o bear a legend regarding any restrictions on exchanges and
registration of transfer and any other matters as may be provided
for under the certificate of designation.
DESCRIPTION OF DEPOSITARY SHARES
General
SCI may elect to offer depositary shares, each representing a fraction (to be
set forth in the prospectus supplement relating to a particular series of shares
of preferred stock) of a share of a particular series of shares of preferred
stock as described below. In the event SCI elects to do so, depositary receipts
evidencing depositary shares will be issued to the public.
The shares of any class or series of shares of preferred stock represented by
depositary shares will be deposited under a deposit agreement among SCI, a
depositary selected by SCI and the holders of the depositary receipts. The
depositary will be 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.
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 preferred share
represented by such depositary share, to all the rights and preferences of the
shares of preferred stock represented thereby (including dividend, voting,
redemption and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued pursuant
to the deposit agreement. Depositary receipts will be distributed to those
persons purchasing the fractional shares of the related class or series of
shares of preferred stock in accordance with the terms of the offering described
in the related prospectus supplement. Copies of the forms of deposit agreement
and depositary receipt will be filed as exhibits to or incorporated by reference
in the registration statement of which this prospectus forms a part, and the
following summary is qualified in its entirety by reference to such exhibits.
Pending the preparation of definitive depositary receipts, the depositary may,
upon the written order of SCI, issue temporary depositary receipts substantially
identical to (and entitling the holders thereof to all the rights pertaining to)
the definitive depositary receipts but not in definitive form. Definitive
depositary receipts will be prepared thereafter without unreasonable delay, and
temporary depositary receipts will be exchangeable for definitive depositary
receipts without charge to the holder thereof.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other distributions
received in respect of the related class or series of shares of preferred stock
to the record holders of depositary shares relating to such class or series of
shares of preferred stock in proportion to the number of such depositary shares
owned by such holders.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled thereto, unless the depositary determines that it is not feasible to
make such distribution, in which case the depositary may, with the approval of
SCI, sell such property and distribute the net proceeds from such sale to such
holders.
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Withdrawal of Shares
Upon surrender of the depositary receipts at the corporate trust office of the
depositary (unless the related depositary shares have previously been called for
redemption), the holder of the depositary shares evidenced thereby is entitled
to delivery of the number of whole shares of the related class or series of
shares of preferred stock and any money or other property represented by such
depositary shares. Holders of depositary shares will be entitled to receive
whole shares of the related class or series of shares of preferred stock on the
basis set forth in the prospectus supplement for such class or series of shares
of preferred stock, but holders of such whole shares of preferred stock will not
thereafter be entitled to exchange them for depositary shares. If the depositary
receipts delivered by the holder evidence a number of depositary shares in
excess of the number of depositary shares representing the number of whole
shares of preferred stock to be withdrawn, the depositary will deliver to such
holder at the same time a new depositary receipt evidencing such excess number
of depositary shares. In no event will fractional shares of preferred stock be
delivered upon surrender of depositary receipts to the depositary.
Redemption of Depositary Shares
Whenever SCI 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 the related class or series of shares of preferred
stock so redeemed. The redemption price per depositary share will be equal to
the applicable fraction of the redemption price per share payable with respect
to such class or series of shares of preferred stock. If less than all the
depositary shares are to be redeemed, the depositary shares to be redeemed will
be selected by lot or pro rata as may be determined by the depositary.
Voting the Shares of Preferred Stock
Upon receipt of notice of any meeting at which the holders of the shares of
preferred stock are entitled to vote, the depositary will mail the information
contained in such notice of meeting to the record holders of the depositary
shares relating to such shares of preferred stock. Each record holder of such
depositary shares on the record date (which will be the same date as the record
date for the shares of preferred stock) will be entitled to instruct the
depositary as to the exercise of the voting rights pertaining to the amount of
the class or series of shares of preferred stock represented by such holder's
depositary shares. The depositary will endeavor, insofar as practicable, to vote
the number of shares of preferred stock represented by such depositary shares in
accordance with such instructions, and SCI will agree to take all action which
the depositary deems necessary in order to enable the depositary to do so. The
depositary will abstain from voting shares of preferred stock to the extent it
does not receive specific instructions from the holders of depositary shares
representing such shares of preferred stock.
Amendment and Termination of the 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 SCI and the depositary. However, any amendment which materially and
adversely alters the rights of the holders of depositary receipts will not be
effective unless such amendment has been approved by the holders of depositary
receipts representing at least a majority (or, in the case of amendments
relating to or affecting rights to receive dividends or distributions or voting
or redemption rights, 66%, unless
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otherwise provided in the related prospectus supplement) of the depositary
shares then outstanding. The deposit agreement may be terminated by SCI or the
depositary only (1) if all outstanding depositary shares have been redeemed, (2)
if there has been a final distribution in respect of the related class or series
of shares of preferred stock in connection with any liquidation, dissolution or
winding up of SCI and such distribution has been distributed to the holders of
depositary receipts or (3) upon the consent of holders of depositary receipts
representing not less than 66% of the depositary shares outstanding.
Charges of Depositary
SCI will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. SCI will pay charges
of the depositary in connection with the initial deposit of the related class or
series of shares of preferred stock and any redemption of such shares of
preferred stock. Holders of depositary receipts will pay all other transfer and
other taxes and governmental charges and such other charges as are expressly
provided in the deposit agreement to be for their accounts.
The depositary may refuse to effect any transfer of a depositary receipt or any
withdrawal of shares of a class or series of preferred stock evidenced thereby
until all taxes and charges with respect to the depositary receipt or shares of
preferred stock are paid by the holders thereof.
Miscellaneous
The depositary will forward all reports and communications from SCI which are
delivered to the depositary and which SCI is required to furnish to the holders
of the shares of preferred stock.
Neither the depositary nor SCI 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 SCI and the depositary under the
deposit agreement will be limited to performance in good faith of their duties
thereunder, and neither SCI nor the depositary will be obligated to prosecute or
defend any legal proceeding in respect of any depositary shares or class or
series of shares of preferred stock unless satisfactory indemnity is furnished.
SCI and the depositary may rely on written advice of counsel or accountants, or
information provided by persons presenting shares of preferred stock for
deposit, holders of depositary shares or other persons believed to be competent
and on the documents believed to be genuine.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to SCI notice of its
election to do so, and SCI may at any time remove the depositary. Any such
resignation or removal of the depositary will take effect upon the appointment
of a successor depositary, which successor must be appointed within 60 days
after delivery of the notice of resignation or removal and must be 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.
DESCRIPTION OF WARRANTS
SCI has no warrants outstanding (other than options issued under its employee
stock option plans). SCI may issue warrants for the purchase of debt securities,
common stock or preferred
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stock. Warrants may be issued independently or together with any other
securities offered by any prospectus supplement and may be attached to or
separate from such securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between SCI and a warrant agent
specified in the applicable prospectus supplement. The warrant agent will act
solely as an agent of SCI in connection with the warrants of such series and
will not assume any obligation or relationship of agency or trust for or with
any holders of the warrants. Further terms of the warrants and the applicable
warrant agreements will be set forth in the applicable prospectus supplement.
Copies of the form of warrant agreement and warrant will be filed as exhibits to
or incorporated by reference in the registration statement of which this
prospectus forms a part, and the following summary is qualified in its entirety
by reference to such exhibits.
The applicable prospectus supplement will describe the terms of the warrants,
including, where applicable, the following:
o the title of the warrants;
o the aggregate number of warrants;
o the price or prices at which warrants will be issued;
o the designation, terms and number of securities purchasable upon
exercise of warrants; o the designation and terms of the securities,
if any, with which warrants are issued and the number of warrants
issued with each security;
o the date, if any, on and after which warrants and the related
securities will be separately transferable;
o the price at which each security purchasable upon exercise of
warrants may be purchased;
o the date on which the right to exercise the warrants shall commence
and the date on which that right shall expire;
o the minimum or maximum amount of warrants which may be exercised at
any one time;
o information with respect to book-entry procedures, if any; and
o any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
PLAN OF DISTRIBUTION
We may offer and sell the securities directly, to or through underwriting
syndicates represented by managing underwriters, to or through underwriters
without a syndicate or through dealers or agents. The prospectus supplement with
respect to the offered securities will set forth the terms of the offering,
including the following:
o the name or names of any underwriters, dealers or agents;
o the purchase price and the proceeds we will receive from the sale;
o any underwriting discounts, agency fees and other items constituting
underwriters' or agents' compensation; and
o the initial public offering price and any discounts or concessions
allowed, re-allowed or paid to dealers.
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If any underwriters are involved in the offer and sale, the securities will be
acquired by the underwriters and may be resold by them, either at a fixed public
offering price established at the time of offering or from time to time in one
or more negotiated transactions or otherwise, at prices related to prevailing
market prices determined at the time of sale. Unless otherwise set forth in the
applicable prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to conditions precedent and the
underwriters will be obligated to purchase all the securities described in the
prospectus supplement if any are purchased. Any initial public offering price
and any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time.
We may offer and sell the securities directly or through an agent or agents
designated by us from time to time. An agent may sell securities it has
purchased from us as principal to other dealers for resale to investors and
other purchasers, and may reallow all or any portion of the discount received in
connection with the purchase from us to the dealers. After the initial offering
of the securities, the offering price (in the case of securities to be resold at
a fixed offering price), the concession and the discount may be changed. Any
agent participating in the distribution of the securities may be deemed to be an
"underwriter," as that term is defined in the Securities Act of 1933, of the
securities so offered and sold.
If any underwriters are involved in the offer and sale, they will be permitted
to engage in transactions that maintain or otherwise affect the price of the
securities. These transactions may include over-allotment transactions,
purchases to cover short positions created by the underwriter in connection with
the offering and the imposition of penalty bids. If an underwriter creates a
short position in the securities in connection with the offering, i.e., if it
sells more securities than set forth on the cover page of the applicable
prospectus supplement, the underwriter may reduce that short position by
purchasing the securities in the open market. In general, purchases of a
security to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. As noted above,
underwriters may also choose to impose penalty bids on other underwriters and/or
selling group members. This means that if underwriters purchase securities on
the open market to reduce their short position or to stabilize the price of the
securities, they may reclaim the amount of the selling concession from those
underwriters and/or selling group members who sold such securities as part of
the offering.
Neither we nor any underwriter make any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the securities. In addition, neither we nor any underwriter
make any representation that such underwriter will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
Underwriters, dealers and agents may be entitled, under agreements entered into
with us, to indemnification by us against some liabilities, including
liabilities under the Securities Act of 1933. The place and time of delivery for
the securities in respect of which this prospectus is delivered will be set
forth in the applicable prospectus supplement if appropriate.
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Unless otherwise indicated in the prospectus supplement, each series of offered
securities will be a new issue of securities and, other than the common stock,
which is listed on the NYSE, for which there currently is no market. Any
underwriters to whom securities are sold for public offering and sale may make a
market in such series of securities as permitted by applicable laws and
regulations, but such underwriters will not be obligated to do so, and any such
market making may be discontinued at any time without notice. Accordingly, there
can be no assurance as to the development or liquidity of any market for the
securities. The securities may or may not be listed on a national securities
exchange or for quotation through the National Association of Securities Dealers
Automated Quotation System.
Underwriters, agents and dealers may engage in transactions with or perform
services, including various investment banking and other services, for us and/or
any of our affiliates in the ordinary course of business.
LEGAL MATTERS
Michael M. Sullivan, Esq., our Secretary and Corporate Counsel, will issue an
opinion for us with respect to the validity of the securities offered hereby.
Any underwriters, dealers or agents will be advised about issues relating to
this offering by their own legal counsel.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements and schedule included in our Annual report on form 10-K for the year
ended June 30, 2000, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Those reports, proxy statements and other information
may be obtained:
o At the Public Reference Room of the SEC, Room 1024-Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;
o At the public reference facilities at the SEC's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York
10048 or Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661;
o From the SEC, Public Reference Section, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549;
o At the offices of The New York Stock Exchange, 20 Broad Street, New
York, New York 10005; and
o From the Internet site maintained by the SEC at http://www.sec.gov,
which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC.
Some locations may charge prescribed or modest fees for copies.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities, or after the date of this initial
registration statement and before the effectiveness of the registration
statement.
o Annual Report on Form 10-K for the year ended June 30, 2000
(including information specifically incorporated by reference into
our Form 10-K from our definitive Proxy Statement for our 2000
Annual Meeting of Stockholders).
o The description of SCI's common stock contained in SCI's
registration statement on Form 8-A filed with the SEC on March 18,
1997.
On request we will provide at no cost to each person, including any beneficial
owner, who receives a copy of this prospectus, a copy of any or all of the
documents incorporated in this prospectus by reference. We will not provide
exhibits to any of such documents, however, unless such exhibits are
specifically incorporated by reference into those documents. Written or
telephone requests for such copies should be addressed to our Corporate
Controller, John M. Noll, c/o SCI Systems (Alabama) Inc., P. O. Box 1000,
Huntsville, Alabama 35807, telephone number (256) 882-4833.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate (other than the SEC Registration Fee) of the fees
and expenses all of which are payable by the Registrant, in connection with the
registration and sale of the securities being registered:
Commission Registration Fee............................. $ 264,000
Trustee's Fees and Expenses............................. *
Rating Agencies' Fees................................... *
Transfer Agent and Registrar Fees and Expenses.......... *
Legal Fees and expenses................................. *
Accounting Fees and Expenses............................ *
Printing, Engraving and Mailing Expenses................ *
Miscellaneous........................................... *
Total............................................. $ *
--------------------------------------------------------------------------------
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 145 of the General Corporation Law of the State of
Delaware ("DGCL"), each director and officer of the Registrant may be
indemnified by the Registrant against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of any threatened, pending or
completed legal proceedings in which he is involved by reason of the fact that
he is or was a director or officer of the Registrant if he acted in good faith
and in a manner that he reasonably believed to be in or not opposed to the best
interests of the Registrant and, with respect to any criminal action or
proceeding, if he had no reasonable cause to believe that his conduct was
unlawful. If the legal proceeding, however, is by or in the right of the
Registrant, the director or officer may not be indemnified in respect of any
claim, issue or matter as to which he shall have been adjudged to be liable to
the Registrant unless a court determines otherwise.
Article Tenth of the Registrant's Certificate of Incorporation provides for
mandatory indemnification of the Registrant's directors, officers and employees
and the Registrant's Bylaws provide for permissible indemnification of other
agents to the maximum extent permitted by the DGCL. The Registrant has entered
into Indemnification Agreements with its officers and directors with further
indemnification to the maximum extent permitted by the DGCL.
The general effect of the foregoing provisions may be to reduce the
circumstances in which an officer or director may be required to bear the
economic burden of the foregoing liabilities and expense.
The form(s) of proposed Underwriting Agreement(s) to be filed as (an) Exhibit(s)
hereto or incorporated by reference herein may include provisions regarding the
indemnification of our officers and directors by the several Underwriters.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
Exhibit
Number Description
-------- -----------
1.1 Form of Underwriting Agreement*
4.1 Form of Senior Indenture*
4.2 Form of Subordinated Indenture*
4.3 Form of Senior Debt Security**
4.4 Form of Subordinated Debt Security**
4.5 Form of Preferred Stock Certificate of Designation**
4.6 Form of Warrant**
4.7 Form of Warrant Agreement**
4.8 Form of Deposit Agreement**
5.1 Opinion of Michael M. Sullivan*
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Michael M. Sullivan (included in Exhibit 5.1)*
24.1 Power of Attorney of certain directors and officers of SCI (set
forth on the signature page of this registration statement)
25.1 Form T-1 Statement of Eligibility of Trustee for Senior Indenture
under the Trust Indenture Act of 1939*
25.2 Form T-1 Statement of Eligibility of Trustee for Subordinated
Indenture under the Trust Indenture Act of 1939*
--------------------------------------------------------------------------------
* To be filed with a Pre-Effective Amendment to Registration Statement.
** To be filed with a Current Report on Form 8-K or a Post-Effective
amendment to Registration Statement.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act,
(b) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high
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end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective Registration
Statement,
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement, provided, however, that clauses (a)
and (b) do not apply if the information required to be
included in a post-effective amendment by such clauses is
contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") that are incorporated by
reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
4. That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to its Certificate of Incorporation, Bylaws, by
agreement or otherwise, the Registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance on Rule 430A and contained
in a form of prospectus filed by the Registrant
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pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
2. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
Huntsville, Alabama on October 6, 2000.
SCI SYSTEMS, INC.
By: /s/ A. Eugene Sapp, Jr.
-----------------------
Name: A. Eugene Sapp, Jr.
Title: Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears below
constitutes and appoints James E. Moylan, Jr. and Michael M. Sullivan, and each
of them, as his true and lawful attorneys-in-fact and agents, each with the
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement filed herewith and any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act, and all post-effective amendments
thereto, and to file the same, with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the foregoing, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
45
<PAGE>
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 6, 2000.
Signature Title
--------- -----
/s/ A. Eugene Sapp, Jr. Chairman, President, Chief Executive Officer
------------------------ and Director
A. Eugene Sapp, Jr. (Principal Executive Officer)
/s/ James E. Moylan, Jr. Senior Vice President and Chief Financial
------------------------ Officer
James E. Moylan, Jr. (Principal Financial Officer)
/s/ John M. Noll Assistant Vice President and Corporate
------------------------ Controller
John M. Noll (Principal Accounting Officer)
/s/ Howard H. Callaway Director
------------------------
Howard H. Callaway
/s/ William E. Fruhan Director
------------------------
William E. Fruhan
/s/ Olin B. King Director
------------------------
Olin B. King
/s/ Wayne Shortridge Director
------------------------
Wayne Shortridge
/s/ G. Robert Tod Director
------------------------
G. Robert Tod
/s/ Jackie M. Ward Director
------------------------
Jackie M. Ward
46
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
-------- -----------
1.1 Form of Underwriting Agreement*
4.1 Form of Senior Indenture*
4.2 Form of Subordinated Indenture*
4.3 Form of Senior Debt Security**
4.4 Form of Subordinated Debt Security**
4.5 Form of Preferred Stock Certificate of Designation**
4.6 Form of Warrant**
4.7 Form of Warrant Agreement**
4.8 Form of Deposit Agreement**
5.1 Opinion of Michael M. Sullivan*
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Michael M. Sullivan (included in Exhibit 5.1)*
24.1 Power of Attorney of certain directors and officers of SCI (set
forth on the signature page of this registration statement)
25.1 Form T-1 Statement of Eligibility of Trustee for Senior Indenture
under the Trust Indenture Act of 1939*
25.2 Form T-1 Statement of Eligibility of Trustee for Subordinated
Indenture under the Trust Indenture Act of 1939*
--------------------------------------------------------------------------------
* To be filed with a Pre-Effective Amendment to Registration Statement.
** To be filed with a Current Report on Form 8-K or a Post-Effective amendment
to Registration Statement.
47
