AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1998
REGISTRATION NO. 333-46381
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
SPX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3429 38-1016240
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (IRS EMPLOYER
OF INCORPORATION OR INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
ORGANIZATION) CODE NUMBER)
- --------------------------------------------------------------------------------
700 TERRACE POINT DRIVE
MUSKEGON, MI 49443
(616) 724-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
CHRISTOPHER J. KEARNEY, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
SPX CORPORATION
700 TERRACE POINT DRIVE
MUSKEGON, MI 49443
(616) 724-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
AVIVA DIAMANT, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
(212) 859-8000
------------------------------
Approximate date of commencement of proposed sale to public: As soon
as practicable after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. |_|
------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2) FEE(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $10.00, of SPX 29,744,303(1) N/A $1,593,112,524(2) $469,968.19(2)
- -------------------------------------------------------------------------------------------------------------------
Common Stock, par value $10.00, of SPX 38,277(3) N/A $ 1,526,295 $ 450.26
- -------------------------------------------------------------------------------------------------------------------
Rights to Purchase Preferred Stock(5) 29,782,580 N/A N/A N/A
===================================================================================================================
<FN>
(1) Represents 63,169,129 shares of common stock, par value $1.00 per
share (the "Shares"), of Echlin Inc. (the "Company"), outstanding on
December 31, 1997, as set forth in the Company's Form 10-Q dated
November 30, 1997, less 1,150,150 Shares owned by SPX Corporation
("SPX"), multiplied by the exchange ratio of 0.4796.
(2) Pursuant to Rules 457(f)(1) and (3) and 457(c) of the Securities Act
of 1933, as amended (the "Securities Act"), and solely for purposes of
calculating the registration fee, the registration fee was computed on
the basis of the average of the high and low prices of a Share as
reported on the New York Stock Exchange, Inc. Composite Tape (the
"NYSE Composite Tape") on February 9, 1998 less the amount of cash to
be paid by SPX in connection with the exchange.
(3) Represents 79,810 shares (reflecting the increase in number of
outstanding shares from December 31, 1997 to February 17, 1998)
multiplied by the exchange ratio of 0.4796.
(4) Pursuant to Rules 457(F)(1) and (3) and 457(c) of the Securities Act,
and solely for purposes of calculating the registration Fee, the
registration Fee was computed on the basis of the average of the high
and low prices of a Share as reported on the NYSE Composite Tape on
March 31, 1998 less the amount of cash to be paid by SPX in connection
with the exchange.
(5) Associated with the Common Stock of SPX are rights to purchase Series
A Junior Participating Preferred Stock that will not be exercisable or
evidenced separately from the Common Stock of SPX prior to the
occurrence of certain events.
</FN>
</TABLE>
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===========================================================================
[RED HERRING]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 2, 1998
PROSPECTUS
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
ECHLIN INC.
FOR
$12.00 NET PER SHARE IN CASH
AND
0.4796 SHARE OF COMMON STOCK
OF
SPX CORPORATION
- ---------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY
TIME ON 1998 UNLESS EXTENDED. SHARES WHICH ARE TENDERED PURSUANT TO
THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE
OFFER.
- ---------------------------------------------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 25 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF SHARES IN CONNECTION WITH
THE OFFER.
THIS PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A
SOLICITATION OF ANY PROXIES. ANY SUCH SOLICITATION WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
-------------------------
THE DEALER MANAGER FOR THE OFFER IS
CIBC OPPENHEIMER CORP.
The date of this Prospectus is , 1998
-------------------------
SPX Corporation, a Delaware corporation ("SPX"), hereby offers, upon
the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (collectively, the "Offer"), to exchange the amount
of $12.00 net in cash and 0.4796 share of common stock, par value $10.00
per share ("SPX Common Stock"), of SPX (the "Consideration"), for each
outstanding share of common stock, par value $1.00 per share (each, a
"Share" and, collectively, the "Shares"), of Echlin Inc., a Connecticut
corporation (the "Company") (including the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of June 21, 1989, as amended (the "Rights Agreement"), between the
Company and The Connecticut Bank and Trust Company, N.A., as Rights Agent),
validly tendered on or prior to the Expiration Date (as hereinafter
defined) and not properly withdrawn. The 0.4796 figure is sometimes
referred to herein as the "Exchange Ratio." Unless the context otherwise
requires, all references to Shares shall include the associated Rights, and
all. All references to Rights shall include all benefits that may inure to
holders of the Rights pursuant to the Rights Agreement. Unless the context
otherwise reaquires, all references to shares of SPX Common Stock shall
include the associated preferred stock purchase rights (the "SPX Rights")
issued pursuant to the Rights Agreement dated June 25, 1996, as amended
(the "SPX Rights Agreement"), between SPX and The Bank of New York as
Rights Agent, and all references to SPX Rights shall include all benefits
which may inure to holders of the SPX Rights pursuant to the SPX Rights
Agreement.
On February 13, 1998, the last trading date preceding the date of the
public announcement of SPX's proposal for a strategic business combination
of the Company with SPX (the "Proposed Business Combination") the closing
price of a Share on the New York Stock Exchange, Inc. (the "NYSE")
Composite Tape was $38-7/8. Based on the closing price of a share of SPX
Common Stock on the NYSE Composite Tape on the same date ($75-1/16), the
value of the SPX Common Stock offered pursuant to the Offer was $36.00 per
Share and the Consideration had a total value of $48.00. On April [ ],
1998, the last trading day preceding the date of this Prospectus, the value
of the SPX Common Stock offered pursuant to the Offer was $[ ] per Share
and the Consideration had a total value of $[ ], based upon the closing
price of a share of SPX Common Stock on the NYSE Composite Tape on that
date ($[ ]). At the time the Offer is consummated, the Consideration may
have a market value that is greater or lesser than either of those two
amounts depending upon the market price of a share of SPX Common Stock at
such time.
SPX intends, as promptly as practicable following consummation of the
Offer, to cause a wholly-owned subsidiary of SPX to be merged into the
Company (the "Merger"), in which each Share then outstanding will be
converted into the right to receive the Consideration. Immediately
following consummation of the Merger and after giving effect to the
issuance of the SPX Common Stock in the transaction, the shareholders of
the Company (other than SPX) would own approximately 70% of the then
outstanding shares of SPX Common Stock.
SPX'S OBLIGATION TO EXCHANGE SHARES OF SPX COMMON STOCK FOR SHARES
PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE
BEING VALIDLY TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT
WITHDRAWN A NUMBER OF SHARES WHICH WILL CONSTITUTE AT LEAST 66-2/3% OF THE
TOTAL OUTSTANDING SHARES ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES
ARE ACCEPTED FOR EXCHANGE BY SPX (THE "MINIMUM TENDER CONDITION"); (B)
APPROVAL BY THE STOCKHOLDERS OF SPX OF THE ISSUANCE OF SHARES OF COMMON
STOCK OF SPX PURSUANT TO THE OFFER AND THE MERGER (THE "SPX STOCKHOLDER
APPROVAL CONDITION"); (C) THE REDEMPTION OF THE RIGHTS BY THE BOARD OF
DIRECTORS OF THE COMPANY OR SPX BEING OTHERWISE SATISFIED THAT THE RIGHTS
WILL NOT BE APPLICABLE TO THE ACQUISITION OF THE SHARES PURSUANT TO THE
OFFER OR THE MERGER (THE "RIGHTS PLAN CONDITION"); (D) SPX BEING SATISFIED
THAT SECTIONS 841 AND 844 OF THE CONNECTICUT BUSINESS CORPORATION ACT (THE
"CONNECTICUT BUSINESS ACT") WILL NOT BE APPLICABLE TO THE OFFER AND THE
MERGER (THE "BUSINESS COMBINATION STATUTES CONDITION"); AND (E) SPX HAVING
OBTAINED SUFFICIENT FINANCING FOR THE CONSUMMATION OF THE OFFER AND THE
MERGER (THE "FINANCING CONDITION"). THE MINIMUM TENDER CONDITION, THE SPX
STOCKHOLDER APPROVAL CONDITION, THE RIGHTS PLAN CONDITION, THE BUSINESS
COMBINATION STATUTES CONDITION, THE FINANCING CONDITION AND THE OTHER
CONDITIONS SET FORTH UNDER THE CAPTION "THE OFFER--CONDITIONS OF THE
OFFER--CERTAIN OTHER CONDITIONS OF THE OFFER" ARE REFERRED TO COLLECTIVELY
AS THE "OFFER CONDITIONS."
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRELIMINARY
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
IMPORTANT
SHAREHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE
TENDERED IN ORDER TO EFFECT A VALID TENDER OF SHARES, UNLESS THE RIGHTS
PLAN CONDITION HAS BEEN SATISFIED OR WAIVED. UNLESS THE DISTRIBUTION DATE
(AS HEREINAFTER DEFINED) OCCURS, A TENDER OF SHARES WILL CONSTITUTE A
TENDER OF THE ASSOCIATED RIGHTS.
ANY SHAREHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF HIS OR HER
SHARES AND THE ASSOCIATED RIGHTS SHOULD EITHER (i) COMPLETE AND SIGN THE
LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF IN ACCORDANCE WITH THE
INSTRUCTIONS IN THE LETTER OF TRANSMITTAL, MAIL OR DELIVER THE LETTER OF
TRANSMITTAL OR SUCH FACSIMILE AND ANY OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT (AS HEREINAFTER DEFINED), AND EITHER DELIVER THE
CERTIFICATES FOR SUCH SHARES AND, IF SEPARATE, CERTIFICATES FOR THE RIGHTS
TO THE EXCHANGE AGENT ALONG WITH THE LETTER OF TRANSMITTAL, DELIVER SUCH
SHARES AND RIGHTS PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET
FORTH HEREIN (IN THE CASE OF RIGHTS, ONLY IF SUCH PROCEDURES ARE AVAILABLE)
OR COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES SET FORTH HEREIN OR (ii)
REQUEST HIS OR HER BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO EFFECT THE TRANSACTION FOR HIM OR HER. A SHAREHOLDER HAVING
SHARES AND RIGHTS REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF HE OR SHE DESIRES TO
TENDER SUCH SHARES AND RIGHTS.
ANY SHAREHOLDER THAT DESIRES TO TENDER HIS OR HER SHARES AND WHOSE
CERTIFICATES FOR SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT
COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, OR
WHO CANNOT DELIVER ALL REQUIRED DOCUMENTS TO THE EXCHANGE AGENT PRIOR TO
THE EXPIRATION DATE, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURE FOR
GUARANTEED DELIVERY.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE
INFORMATION AGENT (AS HEREINAFTER DEFINED) OR TO THE DEALER MANAGER AT
THEIR RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK
COVER OF THIS PROSPECTUS. REQUESTS FOR ADDITIONAL COPIES OF THIS PROSPECTUS
AND THE LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE INFORMATION AGENT OR
TO BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST COMPANIES.
AVAILABLE INFORMATION.....................................................1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.........................2
COMPANY INFORMATION.......................................................3
FORWARD-LOOKING STATEMENTS................................................4
PROSPECTUS SUMMARY........................................................5
SPX...................................................................5
The Company...........................................................5
Reasons for the Offer.................................................5
Background of the Offer...............................................6
Risk Factors..........................................................7
The Offer.............................................................7
Certain Federal Income Tax Consequences...............................9
Effect of Offer on Market for Shares.................................10
Dissenters' Rights...................................................10
Comparison of the Rights of Holders of Shares and SPX
Common Stock.......................................................10
Description of SPX Capital Stock.....................................10
The Exchange Agent...................................................11
Requests for Assistance and Additional Copies........................11
Market Prices and Dividends..........................................11
Comparative Per Share Data...........................................13
Selected Historical Financial Data of SPX............................15
Selected Historical Financial Data of The Company....................19
Selected Pro Forma Condensed Combined Financial Data of SPX
and the Company....................................................22
RISK FACTORS.............................................................25
REASONS FOR THE OFFER....................................................27
BACKGROUND OF THE OFFER..................................................27
THE SPECIAL MEETING......................................................29
THE OFFER................................................................30
General..............................................................30
The Rights...........................................................30
Timing of the Offer..................................................31
Extension, Termination and Amendment.................................31
Exchange of Shares; Delivery of SPX Common Stock and Cash
Consideration......................................................32
Cash in Lieu of Fractional Shares of SPX Common Stock................33
Withdrawal Rights....................................................33
Federal Income Tax Withholding and Backup Withholding................34
Certain Federal Income Tax Consequences..............................37
Effect of Offer on Market for Shares; Registration under
the Exchange Act...................................................39
Purpose of the Offer; the Merger.....................................40
Conditions of the Offer..............................................40
Source and Amount of Funds...........................................46
Debt Instruments of the Company......................................46
Relationships with the Company.......................................46
Fees and Expenses....................................................46
Accounting Treatment.................................................48
Stock Exchange Listing...............................................48
THE MERGER...............................................................49
General..............................................................49
Dissenters' Rights...................................................49
BUSINESSES OF SPX AND THE COMPANY........................................49
SPX..................................................................49
The Company..........................................................50
DESCRIPTION OF SPX CAPITAL STOCK.........................................50
COMPARISON OF RIGHTS OF HOLDERS OF SHARES AND SPX COMMON STOCK...........51
MARKET PRICES AND DIVIDENDS..............................................62
COMPARATIVE PER SHARE DATA...............................................63
SELECTED HISTORICAL FINANCIAL DATA OF SPX................................65
SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY........................69
PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF SPX AND
THE COMPANY..........................................................72
PRO FORMA ADJUSTED HISTORICAL FINANCIAL DATA OF SPX......................80
VALIDITY OF SPX COMMON STOCK.............................................82
EXPERTS..................................................................82
AVAILABLE INFORMATION
SPX and the Company are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
in accordance therewith, file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
The reports, proxy statements and other information filed by SPX or the
Company with the Commission may be inspected and copied at the Commission's
public reference room located at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the public reference facilities
in the Commission's regional offices located at: 7 World Trade Center, 13th
Floor, New York, New York 10048, and 500 West Madison Street, Suite 400,
Chicago, Illinois 60661. Copies of such material may be obtained at
prescribed rates by writing to the Commission, Public Reference Section,
450 Fifth Street, N.W., Washington, D.C. 20549. SPX and the Company are
electronic filers with the Commission, which maintains a website containing
reports, proxy and other information statements at the following location:
http://www.sec.gov. The Shares are listed on the NYSE, the Pacific
Exchange, Inc. (the "PE") and the International Stock Exchange in London
under the symbol "ECH". The shares of SPX Common Stock are listed on the
NYSE and the PE under the symbol "SPW". The periodic reports, proxy
statements and other information filed by SPX and the Company with the
Commission may be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005, and at the offices of the PE at 301 Pine Street,
San Francisco, California 94104.
This Prospectus does not contain all of the information set forth in
the Registration Statement on Form S-4 (the "Registration Statement")
covering the SPX Common Stock offered hereby which has been filed with the
Commission. Reference is hereby made to the Registration Statement for
further information with respect to SPX, the Company and the securities
offered hereby. Statements contained herein concerning certain documents
are not necessarily complete and, in each instance, reference is made to
the copies of such documents filed as exhibits to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
Not later than the date of commencement of the Offer, SPX will file
with the Commission a statement on Schedule 14D-1 pursuant to Rule 14d-3
under the Exchange Act furnishing certain information with respect to the
Offer. Such schedule and any amendments thereto should be available for
inspection and copying as set forth above (except that such schedule and
any amendments thereto will not be available at the regional offices of the
Commission).
Pursuant to Rule 409 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 12b-21 promulgated under the
Exchange Act, SPX will request that the Company and its independent public
accountants, Price Waterhouse LLP, provide to SPX the information required
for complete disclosure concerning the business, operations, financial
condition and management of the Company. SPX will provide any and all
information which it receives from the Company prior to the expiration of
the Offer and which SPX deems material, reliable and appropriate in a
subsequently prepared amendment or supplement thereto.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE TO SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO:
CORPORATE SECRETARY, SPX CORPORATION, 700 TERRACE POINT DRIVE, MUSKEGON, MI
49443. REQUESTS MAY BE DIRECTED TO SPX'S SECRETARY AT (616) 724-5000. IN
ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST FOR
DOCUMENTS SHOULD BE SUBMITTED NO LATER THAN FIVE BUSINESS DAYS PRIOR TO THE
EXPIRATION DATE OF THE OFFER.
The following documents filed with the Commission by SPX (File No.
1-6948) are incorporated herein by reference:
(i) SPX's Annual Report on Form 10-K for the year ended December 31,
1997 ("SPX's 1997 Form 10-K");
(ii) SPX's Quarterly Report on Form 10-Q for the period ended
September 30, 1997 ("SPX's 1997 Third Quarter Form 10-Q");
(iii) SPX's Current Report on Form 8-K, dated February 21, 1997;
(iv) SPX's Preliminary Solicitation Statement on Schedule 14A, dated
March 6, 1998, to the shareholders Echlin and all subsequent filings of
solicitation materials in connection with the solicitation of written
demands to call a special meeting of the shareholders of the Company; and
(v) SPX's Preliminary Proxy Statement for its Annual Meeting of
Stockholders to be held on May 20, 1998 ("SPX's 1998 Annual Meeting Proxy
Statement").
The following documents filed with the Commission by the Company (File
No. 1-4651) are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997 (the "Company's 1997 Form 10-K") (except for the report of
the Company's independent accountants contained therein which is not
incorporated herein by reference because the consent of the Company's
independent accountants has not yet been obtained);
(ii) the Company's Proxy Statement for the Annual Meeting of
Shareholders held on December 17, 1997 (the "Company's 1997 Annual Meeting
Proxy Statement");
(iii) the Company's Quarterly Report on Form 10-Q for the period ended
November 30, 1997 (the "Company's 1998 First Quarter Form 10-Q"); and
(iv) the Company's Revocation Solicitation Statement on Schedule 14A,
dated March 13, 1998, and all subsequent filings of solicitation materials
in connection with the solicitation of revocations of written demands to
call a special meeting of the shareholders of the Company.
All documents filed by either SPX or the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to or
contemporaneous with the date hereof and prior to the date the Shares are
accepted for exchange or the Offer is terminated shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of
such filing. See "Available Information." Any statement contained herein or
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein or in any other subsequently filed
document which also is, or is deemed to be, incorporated herein by
reference modifies or supersedes such statement. Any such statement so
modified shall not be deemed to constitute a part hereof, except as so
modified, and any statement so superseded shall not be deemed to constitute
a part hereof.
COMPANY INFORMATION
While SPX has included information concerning the Company insofar as
it is known or reasonably available to SPX, the Company is not affiliated
with SPX and the Company has not to date permitted access by SPX to the
Company's books and records for the purpose of preparing this Prospectus.
Therefore, information concerning the Company which has not been made
public was not available to SPX for the purpose of preparing this
Prospectus. Although SPX has no knowledge that would indicate that
statements relating to the Company contained or incorporated by reference
in this Prospectus in reliance upon publicly available information are
inaccurate or incomplete, SPX was not involved in the preparation of such
information and statements and, for the foregoing reasons, is not in a
position to verify any such information or statements.
-------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY SPX OR BY THE DEALER MANAGER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE OFFER IS NOT BEING MADE
TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF SHARES IN
ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, SPX MAY, IN ITS
SOLE DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE
OFFER IN ANY SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY EXCHANGE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SPX OR THE COMPANY SINCE
THE DATE AS OF WHICH INFORMATION IS FURNISHED OR THE DATE HEREOF.
IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS
REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER
SHALL BE DEEMED TO BE MADE ON BEHALF OF SPX BY CIBC OPPENHEIMER CORP.
("CIBC OPPENHEIMER"), AS DEALER MANAGER, OR ONE OR MORE OTHER REGISTERED
BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS UNDER "REASONS FOR THE
OFFER," AND "BACKGROUND OF THE OFFER," IN ADDITION TO CERTAIN STATEMENTS
CONTAINED ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE
THAT ARE NOT STATEMENTS OF HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS
AND ARE THUS PROSPECTIVE. SUCH FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT
LIMITATION, STATEMENTS REGARDING SPX'S OR THE COMPANY'S FUTURE FINANCIAL
POSITION, RESULTS OF OPERATIONS, BUSINESS STRATEGY (INCLUDING FUTURE
DISPOSITIONS OF ASSETS AND RESTRUCTURING OF OPERATIONS), BUDGETS, EXPECTED
COST SAVINGS, PLANS AS TO DIVIDENDS, AND PLANS AND OBJECTIVES OF MANAGEMENT
FOR FUTURE OPERATIONS. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THE INFORMATION SET FORTH IN ANY
FORWARD-LOOKING STATEMENTS ARE DISCLOSED UNDER "RISK FACTORS" ("CAUTIONARY
STATEMENTS"). ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO SPX OR TO PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. SPX WAS NOT
INVOLVED IN THE PREPARATION OF ANY FORWARD-LOOKING STATEMENTS RELATING TO
THE COMPANY INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND IS NOT IN A
POSITION TO VERIFY SUCH STATEMENTS AND TAKES NO RESPONSIBILITY THEREFOR.
IN THE FEBRUARY 18, 1998 PRESS RELEASE ANNOUNCING THE PROPOSED
BUSINESS COMBINATION AND IN CERTAIN SLIDES UTILIZED BY SPX REGARDING THE
PROPOSED BUSINESS COMBINATION, CERTAIN CAUTIONS WERE GIVEN REGARDING THE
FORWARD-LOOKING STATEMENTS CONTAINED THEREIN. TO THE EXTENT THESE MATERIALS
WERE DEEMED ISSUED IN CONNECTION WITH THE OFFER, IT SHOULD BE NOTED THAT
THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 DO NOT APPLY TO TENDER OR EXCHANGE OFFERS.
PROSPECTUS SUMMARY
The information below is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere in this
Prospectus, including the documents incorporated in this Prospectus by
reference. Shareholders are urged to read this Prospectus and the
attachments hereto, and the documents incorporated herein by reference, in
their entirety. As used in this Prospectus, the terms "SPX" and the
"Company" refer to SPX Corporation and Echlin Inc., respectively, and,
unless the context otherwise requires, their subsidiaries.
SPX
General. SPX is a global provider of Vehicle Service Solutions to
franchised dealers of motor vehicle manufacturers and independent service
locations, Service Support to vehicle manufacturers, and Vehicle Components
to the worldwide motor vehicle industry.
SPX is comprised of two business segments. The Service Solutions
segment includes operations that primarily design, manufacture and market a
wide range of specialty service tools, equipment and services to the global
motor vehicle industry. Major customers are franchised dealers of motor
vehicle manufacturers, aftermarket vehicle service facilities and
independent distributors. Vehicle Components includes operations that
primarily design, manufacture and market transmission and steering
components for light and heavy duty vehicle markets, principally in North
America and Europe. Major customers of this segment include vehicle
manufacturers, other component manufacturers and the aftermarket.
SPX was organized in 1911 under the laws of Michigan and
reincorporated in Delaware in 1968. SPX was known as The Piston Ring
Company until 1931, when it changed its name to Sealed Power Corporation.
In 1988, it changed its name again to SPX Corporation. Today SPX is a
multinational corporation with operations in 14 countries. SPX's corporate
headquarters is located at 700 Terrace Point Drive, Muskegon, MI
49443-3301, telephone number (616) 724-5000.
THE COMPANY
The following information concerning the Company is excerpted from the
Company's 1997 Form 10-K. See "Company Information."
The Company was incorporated in the state of Connecticut in 1959 and
is engaged in only one business segment, as a worldwide supplier of
products to maintain or improve the efficiency and safety of motor
vehicles. The Company's principal products can be classified into the
following categories: brake system, engine system, other vehicle parts and
non-vehicular products.
The Company's products are sold primarily as replacement products for
use by professional technicians and by car and truck owners. Sales are made
to automotive warehouse distributors, heavy-duty distributors, retailers,
other parts manufacturers and parts remanufacturers. The Company also sells
its products to original equipment manufacturers in both the automotive and
heavy-duty markets.
The Company's corporate headquarters are located at 100 Double Beach
Road, Branford, CT 06405, telephone number (203) 481-5751.
On March 26, 1998, the Company issued a press release on its 1998
second quarter results. According to the Company, net sales for the quarter
ended February 28, 1998 were $835.7 million compared to net sales of $842.2
million for the second quarter of 1997. Net income for the quarter ended
February 28, 1998 was $26.9 million or $0.42 per share (basic), versus
$23.6 million, or $0.38 per share (basic), for the second quarter of 1997.
REASONS FOR THE OFFER
On February 17, 1998, SPX delivered a letter to the Board of Directors
of the Company proposing to enter into the Proposed Business Combination
pursuant to which shareholders of the Company would receive for each Share
the Consideration in the amount of $12.00 net in cash and 0.4796 share of
SPX Common Stock. The Consideration had a total value of $48.00, based on
the $75-1/16 closing price of a share of SPX Common Stock on the NYSE
Composite Tape on February 13, 1998, the last trading date preceding the
date of the first public announcement of the Proposed Business Combination,
and a total value of $[ ], based on the $[ ] closing price on the NYSE
Composite Tape of a share of SPX Common Stock on April [ ], 1998, the last
trading date preceding the date of this Prospectus. At the time the Offer
is consummated, the Consideration may have a market value that is greater
or less than either of those two amounts depending upon the market price of
a share of SPX Common Stock at such time. At a total value of $[ ], the
Consideration represents a [ ]% premium over the $38-7/8 price at which a
Share closed on the NYSE on February 13, 1998 and a [ ]% premium over the
average trading price at which a Share closed on the NYSE during the 30
trading days preceding February 17, 1998. Immediately following
consummation of the Proposed Business Combination and after giving effect
to the issuance of the SPX Common Stock in the transaction, the
shareholders of the Company (other than SPX) would own approximately 70% of
the then outstanding shares of SPX Common Stock.
With its letter to the Board of Directors of the Company, SPX
delivered a proposed merger agreement to the Company in contemplation of
arriving at a negotiated transaction. That agreement provides for a
single-step "cash election" merger of the Company into a subsidiary of SPX
in which each outstanding Share would be converted into the right to
receive the Consideration (with shareholders able to elect to receive
instead all cash, in the amount of $48.00 per Share, or all stock, in the
amount of 0.6395 share of SPX Common Stock per Share, subject to proration)
in a partially tax-free reorganization. However, because of the Company's
negative responses to SPX's approaches over the several months prior to
February 17, 1998 (see "Background"), SPX also filed a Registration
Statement, of which this Prospectus is part, with the Commission, so that
the Proposed Business Combination may be effected by means of the Offer, to
be followed by the Merger in which each Share not purchased in the Offer
would be converted into the right to receive the Consideration. The
exchange of Shares for the Consideration in the Offer and the Merger will
be a taxable transaction. See "The Offer--Certain Federal Income Tax
Consequences."
If the Merger is consummated, the Company will become a wholly owned
subsidiary of SPX. If the Minimum Tender Condition is satisfied and the
other Offer Conditions are satisfied or waived and the Offer is
consummated, SPX will own at least 66-2/3% of the outstanding Shares, and
will have sufficient voting power in the Company to approve the Merger
independently of the votes of any other shareholders of the Company.
SPX believes that the Offer is in the best interests of the Company's
shareholders because, among other things, the Consideration will allow
shareholders of the Company to realize a substantial premium for their
Shares in cash immediately, while continuing, through their ownership of
SPX Common Stock, to participate in the future growth of the combined
companies. See "Reasons for the Offer."
BACKGROUND OF THE OFFER
In February 1997, John B. Blystone, Chairman and Chief Executive
Officer of SPX, met with Trevor O. Jones, then Chairman and interim
President and Chief Executive Officer of the Company, to propose that the
two companies explore a business combination. Mr. Jones did not follow up
on this meeting. In November 1997, Mr. Blystone met for several hours with
Larry McCurdy, who had succeeded Mr. Jones as President and Chief Executive
Officer, to discuss a strategic merger between the two companies, and on
November 24, 1997, Patrick J. O'Leary, SPX's Vice President - Finance and
Chief Financial Officer, met with Robert Tobe, the Company's Vice President
- - Corporate Development. These discussions were not fruitful, and SPX was
informed that the Company had no interest in a business combination with
SPX.
On December 12, 1997, Mr. Blystone wrote a letter to Mr. McCurdy
setting out the strategic rationale of a business combination of the two
companies and the benefits to the Company's shareholders of the
transaction. Although the letter stated that SPX anticipated a price in the
$40's range, Mr. Blystone advised Mr. McCurdy that SPX would be willing to
revise its thinking if the Company could identify greater value in the
transaction. Mr. Blystone, in his letter, further suggested that the letter
be shared with the Company's Board of Directors and offered to meet with
and make a presentation to the Board about any and all aspects of the
proposed transaction.
On December 17, 1997, Mr. Blystone received a letter from Mr. McCurdy
stating that Mr. McCurdy had shared Mr. Blystone's views with the Company's
Board of Directors, and that the Company's and the Board's position
remained that the Company had no interest in further discussions with SPX.
On December 18, 1997, Mr. Blystone sent a letter to each member of the
Company's Board enclosing a copy of his December 12 letter and reiterating
the merits of a strategic combination. Mr. Blystone once again offered to
meet personally with and make a presentation to the Company's Board of
Directors.
On December 23, 1997, Mr. Blystone received a letter from Mr. McCurdy
advising that the Company's Board of Directors was of the unanimous view
that the Company did not have an interest in pursuing discussions with SPX.
On January 6, 1998, SPX notified the Company that it was that day
filing a Premerger Notification and Report Form under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act") seeking to acquire up to
100% of the voting securities of the Company (the "HSR Filing").
On January 8, 1998, Mr. McCurdy wrote to Mr. Blystone acknowledging
receipt of the HSR Filing and advising SPX that the Company and its
advisors stood ready to aggressively defend its shareholders' interests.
On February 17, 1998, SPX sent the Board of Directors of the Company a
letter setting forth the Proposed Business Combination and its merits and
reaffirming its desire to enter into a negotiated transaction.
On the same day, SPX filed a Registration Statement, of which this
Prospectus is part. Concurrently, SPX filed preliminary solicitation
materials with the Commission for use in soliciting written demands
("Demands") from the shareholders of the Company that a special meeting of
shareholders (the "Special Meeting") be called and held for the purpose of
removing the current Board of Directors of the Company and replacing them
with SPX's nominees. Under the Connecticut Business Act, holders of
outstanding Shares representing in the aggregate at least 35% of all the
votes entitled to be cast on any issue proposed to be considered at the
Special Meeting have the right to demand that the Special Meeting be called
and held. On February 17, 1998, SPX also delivered to the Company its
Demand that the Special Meeting be called and held.
On March 6, 1998, SPX filed definitive solicitation materials with the
Commission and commenced its solicitation of Demands to call the Special
Meeting, and, on March 25, 1998, SPX delivered to the Company written
Demands by holders of an aggregate of 28,253,762 Shares, representing
(together with the Shares owned by SPX with respect to which a Demand had
previously been delivered) approximately 45.8% of the outstanding Shares,
which action SPX believes satisfies those provisions of the Connecticut
Business Act and the Company's By-Laws setting forth the requirements for
shareholders to call the Special Meeting. Under the Connecticut Business
Act and the Company's By-Laws, the Special Meeting must be called by April
24, 1998 and must be held by June 23, 1998.
On March 24, 1998, SPX delivered a binding agreement to the Members of
the Connecticut General Assembly that, for a term of at least three years
following completion of the acquisition by SPX of all the outstanding stock
of the Company, SPX would maintain at least the same aggregate number of
employees as were employed on March 24, 1998 at the Company's Branford,
Connecticut manufacturing facility (the "Branford Facility"), if the
acquisition of the Company is completed in accordance with the terms of the
Proposed Business Combination and within the timeframe contemplated under
current Connecticut law, and if the State of Connecticut did not enact
legislation impeding SPX's ability to acquire the Company.
On March 25, 1998, SPX signed an agreement with the United Auto
Workers ("UAW") in which SPX agreed with the UAW, among other things, that,
if SPX is successful in completing a transaction to acquire the Company,
and, thereafter, the UAW seeks to unionize the Branford Facility, neither
party would, among other things, (a) attack the other party by impugning
the other party's motives, integrity or character, (b) engage in threats,
misrepresentations or delaying tactics to frustrate the desires of Company
employees, or (c) commit an unfair labor practice.
On March 27, 1998, SPX announced that its Annual Meeting of
Shareholders would be held on May 20, 1998, and that, at that meeting,
SPX's Shareholders would vote on approving the issuance of Shares of SPX
Common Stock in connection with the Proposed Business Combination which
approval would cause the SPX Stockholder Approval Condition to be
satisfied.
RISK FACTORS
See "Risk Factors" beginning on page [25] for a discussion of certain
factors that should be considered by shareholders in deciding whether to
tender their Shares to SPX pursuant to the Offer.
THE OFFER
General. SPX hereby offers, upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange the Consideration for each outstanding Share validly tendered on
or prior to the Expiration Date and not withdrawn. The Consideration
consists of $12.00 in cash and 0.4796 share of SPX Common Stock. The term
"Expiration Date" shall mean 12:00 midnight, New York City time, on ,
1998, unless and until SPX extends the period of time for which the Offer
is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Offer, as so extended by SPX, shall expire. See
"The Offer--General."
Rights. Shareholders will be required to tender one Right for each
Share tendered in order to effect a valid tender of Shares, unless the
Rights Plan Condition has been satisfied or waived. Unless the Distribution
Date (as defined below) occurs, a tender of Shares will constitute a tender
of the associated Rights.
Conditions of the Offer. SPX's obligation to exchange cash and shares
of SPX Common Stock for Shares pursuant to the Offer is conditioned upon,
among other things, the satisfaction or, where permissible, waiver of each
of the Offer Conditions. See "The Offer--Conditions of the Offer."
Subject to the applicable rules and regulations of the Commission, SPX
expressly reserves the right, in its sole discretion, at any time or from
time to time, to delay acceptance for exchange of, or, regardless of
whether such Shares were theretofore accepted for exchange, exchange any
Shares pursuant to the Offer or to amend or terminate the Offer and not to
accept for exchange or exchange any Shares not theretofore accepted for
exchange or exchanged upon the failure of any of the Offer Conditions to be
satisfied. SPX reserves the absolute right to waive any defect or
irregularity in the tender of any securities and to waive any of the Offer
Conditions (other than the SPX Stockholder Approval Condition and the
condition related to the effectiveness of the Registration Statement).
Although SPX reserves the right to do so, SPX does not currently intend to
waive the Minimum Tender Condition, the Rights Plan Condition or the
Business Combination Statutes Condition. See "The Offer--Conditions of the
Offer. " Waiver or amendment of certain conditions of the Offer may require
an extension of the Offer.
Regulatory Approvals. The acquisition of Shares by SPX pursuant to the
Offer is subject to the HSR Act and the rules that have been promulgated
thereunder. On January 6, 1998, SPX made the HSR Filing with the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the
Federal Trade Commission (the "FTC"). At 11:59 p.m. on February 5, 1998,
the waiting period expired with respect to the HSR Filing.
Timing of the Offer. The Offer is currently scheduled to expire at
12:00 midnight New York City time on [ ], 1998; however, it is SPX's
current intention to extend the Offer from time to time as necessary until
all conditions to the Offer have been satisfied or waived. See "The
Offer--Extension, Termination and Amendment" and "--Conditions of the
Offer." SPX has received a "highly confident" letter from Canadian Imperial
Bank of Commerce ("CIBC") and its affiliate, CIBC Oppenheimer, dated
February 13, 1998, in which the two entities state that they are highly
confident of their ability to raise financing in the credit markets in an
amount sufficient to consummate the acquisition of the Company, including
the refinancing of existing debt of SPX and the Company, the payment of
related fees and expenses, and the provision of working capital for SPX and
its subsidiaries (the "Financing"). SPX believes that it is highly unlikely
that it will not have obtained the Financing prior to five business days
before the Expiration Date; however, in this unlikely event, SPX currently
intends to extend the Offer to ensure that five business days remain for
shareholders to tender their Shares in the Offer subsequent to SPX's
obtaining the Financing. See "The Offer--Source and Amount of Funds."
In connection with the Offer, SPX solicited Demands, and on March 25,
1998, delivered to the Company the requisite number of Demands, from the
shareholders of the Company that a Special Meeting be called and held for
the purpose of, among other things, removing the current Board of Directors
of the Company and electing five nominees of SPX (the "SPX Nominees") in
their place. Under the Connecticut Business Act and the Company's By-Laws,
the Special Meeting must be called by April 24, 1998 and held by June 23,
1998. SPX expects that if the SPX Nominees are elected, they will take all
action, subject to their fiduciary and statutory duties as Directors of the
Company, to cause the Rights Plan Condition and the Business Combination
Statutes Condition to be satisfied. At SPX's 1998 Annual Meeting of
Shareholders to be held on May 20, 1998, SPX's shareholders will vote on
approving the issuance of shares of SPX Common Stock in connection with the
Proposed Business Combination, which approval would satisfy the SPX
Stockholder Approval Condition.
Extension, Termination and Amendment. SPX expressly reserves the right
(but will not be obligated), in its sole discretion, at any time or from
time to time, and regardless of whether any of the events set forth in "The
Offer--Conditions of the Offer" shall have occurred or shall have been
determined by SPX to have occurred, (a) to extend the period of time during
which the Offer is to remain open by giving oral or written notice of such
extension to the Exchange Agent, which extension will be announced no later
than 9:00 a.m., Eastern Time, on the next business day after the previously
scheduled Expiration Date, and (b) to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of Shares and/or by
increasing or decreasing the number of Shares being sought in the Offer) by
giving oral or written notice of such amendment to the Exchange Agent. The
rights reserved by SPX in this paragraph are in addition to SPX's right to
terminate the Offer as described in "The Offer--Extension, Termination and
Amendment." There can be no assurance that SPX will exercise its right to
extend the Offer. However, it is SPX's current intention to extend the
Offer until all Offer Conditions have been satisfied or waived. See "The
Offer--Extension, Termination and Amendment." During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering shareholder to withdraw his or
her Shares. See "The Offer--Withdrawal Rights."
Exchange of Shares; Delivery of SPX Common Stock and Cash
Consideration. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), SPX will accept for exchange, and will
exchange, Shares validly tendered and not properly withdrawn as promptly as
practicable following the Expiration Date. See "The Offer--Exchange of
Shares; Delivery of SPX Common Stock and Cash Consideration."
Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date, and, unless theretofore
accepted for exchange and exchanged by SPX for the Consideration pursuant
to the Offer, may also be withdrawn at any time after [ ]. See "The
Offer--Withdrawal Rights."
Procedure for Tendering Shares. For a Shareholder validly to tender
Shares pursuant to the Offer, (i) a properly completed and duly executed
Letter of Transmittal (or manually executed facsimile thereof), together
with any required signature guarantees, or an Agent's Message (as defined
herein) in connection with a book-entry transfer, and any other required
documents, must be transmitted to and received by the Exchange Agent at one
of its addresses set forth on the back cover of this Prospectus, and either
certificates for tendered Shares must be received by the Exchange Agent at
such address or such Shares must be tendered pursuant to the procedures for
book-entry transfer set forth under "The Offer--Procedure for Tendering"
(and a confirmation of receipt of such tender received), in each case,
prior to the Expiration Date, or (ii) such shareholder must comply with the
guaranteed delivery procedure set forth under "The Offer--Procedure for
Tendering."
Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless the Rights
Plan Condition has been satisfied or waived. Unless the Distribution Date
occurs, a tender of Shares will constitute a tender of the associated
Rights.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES (AND RIGHTS CERTIFICATES,
IF APPLICABLE) AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH
ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The exchange of Shares for SPX Common Stock and cash pursuant to the
Offer and the Merger will be a taxable transaction for U.S. federal income
tax purposes and may also be taxable under applicable state, local and
foreign tax laws. If the Board of Directors of the Company agrees to
discuss a business combination with SPX, the Offer and the Merger may be
restructured to be a partially tax-free merger for U.S. federal income tax
purposes.
All Company shareholders should carefully read the summary of the
federal income tax consequences of the Offer and the Merger under "The
Offer--Certain Federal Income Tax Consequences" and are urged to consult
with their own tax advisors as to the federal, state, local and foreign tax
consequences in their particular circumstances.
EFFECT OF OFFER ON MARKET FOR SHARES
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade
publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
The Shares are listed on the NYSE, the PE and the International Stock
Exchange in London. Depending on the number of Shares acquired pursuant to
the Offer, following consummation of the Offer, the Shares may no longer
meet the requirements of the American exchanges for continued listing, and
the Shares may no longer constitute "margin securities" for purposes of the
Federal Reserve Board's margin regulations, in which event the Shares could
no longer be used as collateral for margin loans made by brokers. See "The
Offer--Effect of Offer on Market for Shares; Registration under the
Exchange Act."
DISSENTERS' RIGHTS
Holders of Shares do not have dissenters' rights as a result of the
Offer. In the event the Merger is consummated, holders of Shares will have
dissenters' rights with respect to their Shares under Section 33-856 of the
Connecticut Business Act assuming they comply with the procedural
requirements of the Connecticut Business Act. See "The Merger--Dissenters'
Rights."
COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND SPX COMMON STOCK
As a consequence of the exchange of Shares for shares of SPX Common
Stock in the Offer and the Merger, shareholders of the Company, a
corporation incorporated under the laws of Connecticut, would become
shareholders of SPX, a Delaware corporation. Such holders would have
certain rights as shareholders of SPX that are different from the rights
they currently have in the Company, both because of the differences between
SPX's Restated Certificate of Incorporation, as amended ("SPX's Certificate
of Incorporation"), and By-Laws, on the one hand, and the Company's
Certificate of Incorporation, as amended (the "Company's Certificate of
Incorporation"), and By-Laws, on the other hand, and because of differences
between Connecticut and Delaware corporation law. For a comparison of the
Certificate of Incorporation and By-Law provisions of SPX and the Company
and of Connecticut and Delaware law, see "Comparison of the Rights of
Holders of Shares and SPX Common Stock."
DESCRIPTION OF SPX CAPITAL STOCK
The authorized capital of SPX consists of (i) 3,000,000 shares of
preferred stock, without par value, issuable in series, of which, as of
February 6, 1998, 500,000 shares have been designated as Series A Junior
Participating Preferred Stock ("SPX Series A Preferred Stock") but no
shares were issued and outstanding, and (ii) 50,000,000 shares of SPX
Common Stock, of which, as of March 31, 1998, 12,684,602 shares were issued
and outstanding.
Each outstanding share of SPX Common Stock carries with it a right to
purchase, upon the occurrence of certain specified events, one
one-thousandth of a share of SPX Series A Preferred Stock. See "Comparison
of Rights of Holders of SPX Common Stock and Holders of Shares--SPX's
Rights Plan."
For information relating to ownership of Common Stock by certain
beneficial owners and directors and executive officers of SPX as a group,
see SPX's 1997 Annual Meeting Proxy Statement. As of March 14, 1997, SPX's
directors and executive officers as a group beneficially owned 583,954
shares, or approximately 4.6% of the then outstanding shares, of SPX Common
Stock. Immediately following consummation of the Proposed Business
Combination and after giving effect to the issuance of the SPX Common Stock
in the transaction, shareholders of the Company (other than SPX) would own
approximately 70% of the outstanding shares of SPX Common Stock, and SPX's
present directors, executive officers and their affiliates as a group would
own approximately 1.4% of the then outstanding shares of SPX Common Stock.
For additional information concerning the capital stock of SPX, see
"Description of SPX Capital Stock."
THE EXCHANGE AGENT
[ ] has been appointed exchange agent (the "Exchange Agent") in
connection with the Offer. The Letter of Transmittal (or facsimile copies
thereof) and certificates for Shares should be sent by each tendering
shareholder of Shares or his or her broker, dealer, bank or other nominee
to the Exchange Agent at one of the addresses set forth on the back cover
of this Prospectus.
REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES
Requests for information or assistance concerning the Offer may be
directed to the Dealer Manager or the Information Agent at their respective
addresses set forth on the back cover of this Prospectus. Requests for
additional copies of this Prospectus and the Letter of Transmittal should
be directed to the Information Agent.
MARKET PRICES AND DIVIDENDS
SPX Common Stock is listed and principally traded on the NYSE (under
the symbol "SPW") and is also listed on the PE. The Shares are listed and
principally traded on the NYSE (under the symbol "ECH"), the PE and the
International Stock Exchange in London. The following table sets forth, for
the periods indicated, the high and low sale prices per share of SPX Common
Stock and per Share as reported on the NYSE Composite Tape.
<TABLE>
<CAPTION>
SPX COMMON STOCK COMPANY SHARES
----------------------------------- ----------------------------------------
High Low Dividends High Low Dividends
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1995
First Quarter.................. $17-3/8 $14-1/4 $.10 $38-1/2 $29-7/8 $0.190
Second Quarter................. 15-1/8 10-3/4 .10 38-3/4 34 0.205
Third Quarter.................. 16 11-1/8 .10 39-5/8 33-7/8 0.205
Fourth Quarter................. 17 14-1/8 .10 39-1/2 33-7/8 0.205
1996
First Quarter.................. 18-1/8 13-5/8 .10 38-3/4 32-5/8 0.205
Second Quarter................. 27-1/8 18 .10 37-7/8 33-3/8 0.220
Third Quarter.................. 31-5/8 21-5/8 .10 37-5/8 29-3/4 0.220
Fourth Quarter................. 40-1/2 26-7/8 .10 34-1/4 30-1/4 0.220
1997
First Quarter.................. 49-3/4 37-3/8 .10 35-1/4 29-1/2 0.220
Second Quarter................. 70-5/8 41-7/8 - 36-1/2 31-1/8 0.225
Third Quarter.................. 65-3/4 49 - 38-9/16 33-5/8 0.225
Fourth Quarter................. 70-3/8 58-7/16 - 36-5/8 29-13/16 0.225
1998
First Quarter.................. 79-1/4 65-3/16 - 52-3/4 34-1/2 0.225
Second Quarter
(through April [ ], 1998).. [ ] [ ] - [ ] [ ] 0.225
</TABLE>
On February 13, 1998, the last full trading day prior to the first
public announcement by SPX of the Proposed Business Combination, the
reported high and low sale prices per share and closing price per share of
SPX Common Stock and per Share on the NYSE Composite Tape and per Share on
an equivalent share basis based on the Consideration of $12.00 in cash and
0.4796 share of SPX Common Stock were as follows:
<TABLE>
<CAPTION>
Per share Per equivalent share
------------------------------------ ----------------------------------------
High Low Close High Low Close
---- --- ------- ---- --- -----
<S> <C> <C> <C> <C> <C> <C>
SPX.................................. 75-5/8 74-3/4 75-1/16 - - -
The Company.......................... 39-1/4 38-1/2 38-7/8 48-1/4 47-13/16 48
</TABLE>
On April [ ], 1998, the last full trading day prior to the date of
this Prospectus, the reported high and low sale prices and closing price
per share of SPX Common Stock and per Share on the NYSE Composite Tape and
per Share on an equilvalent Share basis based on the Consideration of
$12.00 in cash and 0.4796 share of SPX Common Stock were as follows:
<TABLE>
<CAPTION>
Per share Per equivalent share
------------------------------------ ----------------------------------------
High Low Close High Low Close
---- --- ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C>
SPX.................................. [ ] [ ] [ ] [ - ] [ - ] [ - ]
The Company.......................... [ ] [ ] [ ] [ ] [ ] [ ]
</TABLE>
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR SHARES
OF SPX COMMON STOCK AND FOR THE SHARES.
COMPARATIVE PER SHARE DATA
(unaudited)
The following table presents historical and pro forma per share data
of SPX, historical per share data of the Company and pro forma combined per
share data as if the Proposed Business Combination had occurred as of
September 1, 1996, assuming an Exchange Ratio of 0.4796. The table also
presents the Company's pro forma equivalent per share data. See "Selected
Historical Financial Data of SPX," "Selected Historical Financial Data of
the Company," and "Selected Pro Forma Condensed Combined Financial Data of
SPX and the Company" included elsewhere herein for additional information
regarding this pro forma information. The pro forma combined per share data
is intended for information purposes, and does not purport to represent
what the combined entity's results of continuing operations would actually
have been had the transaction in fact occurred at an earlier date, or
project the results for any future date or period. Upon consummation of the
Proposed Business Combination, the actual financial position and results of
operations of the combined company will differ, perhaps significantly, from
the pro forma amounts reflected herein due to a variety of factors,
including changes in operating results between the date of the pro forma
financial information and the date on which the Proposed Business
Combination is consummated and thereafter, as well as the factors discussed
under "Risk Factors."
The pro forma condensed combined financial data does not give effect
to any integration or restructuring costs that could result from the
combination of the companies. Any integration and rationalization of the
operations of the Company may include certain costs that in turn would
result in a charge to earnings of the combined company. Such a charge,
which cannot now be quantified fully, may be material and would be
recognized in the period in which such a restructuring occurs. These costs
may include severance and related employee benefit costs, costs to
consolidate manufacturing and distribution facilities, facility
rearrangement costs, relocation and moving costs, training costs, debt
extinguishment costs, and costs associated with change of control
agreements, among others. To date, SPX's access to information related to
the Company has been limited to publicly available information. In
addition, publicly available information does not contain sufficient
details related to the Company's severance plans, employee benefit
agreements, change of control costs or debt extinguishment provisions to
enable SPX to quantify the costs associated with business integration and
rationalization actions that may be considered by SPX. Nonetheless, based
on assumptions related to headcount reductions and average annual salaries
used to compute the annualized expense savings and assuming a severance
policy that would result in an average severance term of six months, the
estimated pre-tax costs of the severance (excluding any change in control
costs) would be approximately $60.0 million.
The pro forma condensed combined financial data also does not give
effect to any costs savings that could result from the combination of the
companies. SPX management estimates that the combined company can achieve
approximately $125.0 million of annualized cost savings in the first full
year following the acquisition, and $175.0 million of annualized cost
savings in the second full year following the acquisition. These costs
savings include three categories of estimated annual savings in the second
full year: savings associated with headcount reductions of $120.0 million;
reduction in duplicative corporate costs of $20.0 million; and
manufacturing, distribution and sourcing rationization of $35.0 million.
These savings estimates are based upon assumptions made by SPX management
using available public information of the Company, certain comparative peer
group information of the Company, and SPX's own internal information.
<TABLE>
<CAPTION>
The Company
The Company Pro Forma Pro Forma
SPX (a) Historical Combined (b) Equivalent (c)
---------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Income (loss) per common share
from continuing operations
(primary) (d)(e):
Three months ended
November 30, 1997 $(5.02) $0.52 $(1.11) $(0.53)
Year ended August 31, 1997 $(3.22) (0.75) (3.81) (1.83)
Dividends per common share (f):
Three months ended
November 30, 1997 -- 0.225 -- --
Year ended August 31, 1997 0.20 0.89 0.20 0.10
Book value per common share:
November 30, 1997 (3.63) 14.84 27.40 13.14
August 31, 1997 1.09 14.60 25.96 12.45
<FN>
(a) The three-month and twelve-month information for SPX represents SPX's
historical information as of and for the three months ended September
30, 1997 and SPX's pro forma adjusted historical information as of and
for the twelve months ended December 31, 1997, respectively, but is
presented as of November 30, 1997 and August 31, 1997, respectively,
to conform to the Company's reporting. See "Selected Pro Forma
Adjusted Historical Financial Data of SPX."
(b) See "Selected Pro Forma Condensed Combined Financial Data of SPX and
the Company."
(c) The Company's pro forma equivalent per share information represents
the pro forma combined per share information multiplied by an Exchange
Ratio of 0.4796.
(d) The pro forma condensed combined financial data do not give effect to
any integration or restructuring costs, nor to any cost savings, that
could result from the combination of the companies.
The comparative per share data has been affected by various special
charges and gains recorded by SPX and the Company during the periods
presented.
The pro forma condensed combined financial data of SPX and the Company
for the three months ended November 30, 1997 include special charges
of $110.0 million recorded by SPX primarily to combine two divisions
and to recognize the reduced carrying value of certain assets
resulting from the decision to combine the divisions and exit certain
product lines. See "Selected Historical Financial Data of SPX."
The pro forma condensed combined financial data of SPX and the Company
for the year ended August 31, 1997 include special charges and gains
of $304.0 million. The special charges and gains included a $4.2
million special charge recorded by SPX related to the combination of
five divisions into two divisions, a $6.5 million special charge
recorded by SPX of anticipated future legal costs associated with the
ongoing litigation with Snap-on Incorporated, a $67.8 million
write-off of goodwill recorded by SPX related to the acquisitions of
Bear Automotive and Allen Testproducts, $254.1 million of
repositioning and other special charges recorded by the Company
related to facility realignments and rationalizations and other
actions, and $28.6 million of gains from the sale of two divisions by
the Company. See "Selected Historical Financial Data of SPX" and
"Selected Historical Financial Data of the Company."
(e) FAS 128, "Earnings per Share," is a new pronouncement which was issued
in February 1997, but not effective until after December 15, 1997. The
new pronouncement established revised standards for calculating and
reporting earnings per share. On a pro forma basis, if this standard
was adopted for all of the periods presented, both basic and diluted
income (loss) per share would have been equal to the primary income
(loss) per share, except that diluted income per share for the Company
for the three months ended November 30, 1997 would have been $0.51.
(f) In April 1997, SPX eliminated its quarterly cash dividend and stated
that future distributions to shareholders would be in the form of open
market purchases of SPX Common Stock when deemed appropriate by
management.
</FN>
</TABLE>
SELECTED HISTORICAL FINANCIAL DATA OF SPX
(in millions, except per share data)
The following table presents the selected historical statement of
income and other financial data of SPX. The financial data as of and for
the fiscal years ended December 31 have been derived from the audited
financial statements of SPX. SPX's selected historical financial data
should be read in conjunction with, and are qualified in their entirety by
reference to, the historical financial statements (and related notes) of
SPX which are incorporated by reference herein. See "Available Information"
and "Incorporation of Documents by Reference."
<TABLE>
<CAPTION>
As of and for the year ended December 31,
1997(a) 1996(b) 1995 1994(c) 1993(d,e)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Statement of
income data:
- --------------
Revenues $ 922.3 $ 1,109.4 $ 1,098.1 $1,079.9 $ 747.2
Cost of
products sold 669.0 850.1 853.5 821.5 508.0
Selling,
general and
administrative 175.3 186.5 194.5 198.0 204.1
Other
operating
expenses,
net (f) 3.9 1.9 8.3 2.9 53.4(c)
Special
charges (g) 116.5(h) 87.9(i) 10.7(i) --- 27.5(j)
------------ ------------ ------------ ------------ ------------
Operating
income (loss) (42.4) (17.0) 31.1 57.5 (45.8)
Other expense
(income), net (74.2)(a) (0.7) (3.0) 0.1 (102.9)(e)
Interest
expense, net 13.9 31.8 35.7 35.2 15.9
------------ ------------ ------------ ------------ ------------
Income (loss)
before income
taxes 17.9 (48.1) (1.6) 22.2 41.2
Income taxes 21.3 7.6 (0.2) 9.1 28.1
------------ ------------ ------------ ------------ ------------
Income (loss)
from
continuing
operations (3.4) (55.7) (1.4) 13.1 13.1
Discontinued
operation (k) --- --- (2.8) 1.0 2.1
Cumulative
effect of
accounting
changes (l) --- --- --- --- (31.8)
Extraordinary
items (m) (10.3) (6.6) (1.1) --- (24.0)
------------ ------------ ------------ ------------ ------------
Net income
(loss) $ (13.7) $ (62.3) $ (5.3) $ 14.1 $ (40.6)
============ ============ ============ ============ ============
Income (loss)
per share from
continuing
operations
Basic $ (0.27) $ (4.04) $ (0.10) $ 1.02 $ 1.04
Diluted (0.27) (4.04) (0.10) 1.02 1.04
Weighted average
number of
common shares
outstanding
Basic 12.754(n) 13.785 13.173 12.805 12.604
Diluted 12.754(n) 13.785 13.173 12.805 12.604
Dividends per
share $ 0.10(n) $ 0.40 $ 0.40 $ 0.40 $ 0.40
Other financial
data:
- ---------------
Total assets $ 583.8 $ 616.0 $ 831.4 $ 929.0 $1,024.4
Total debt 205.3 229.3 319.8 415.2 430.2
Shareholders'
equity (deficit) (43.4) 105.9 162.2 158.7 145.4
Capital
expenditures 22.6 20.2 31.0 48.5 15.1
Depreciation
and amortization 25.0 40.8 43.5 38.5 24.4
Note: The accompanying notes are an integral part of the selected historical
financial data.
NOTES TO SELECTED HISTORICAL FINANCIAL DATA OF SPX
(in millions, except per share data)
<FN>
(a) During 1997, SPX sold its Sealed Power division for $223.0 in gross cash
proceeds. SPX recorded a pretax gain of $71.9, or $31.2 after-tax.
Annual 1996 revenues of this division were approximately $230.0. See
"Pro Forma Adjusted Historical Financial Date of SPX."
(b) During 1996, SPX sold its Hy-Lift division for approximately $15.0.
Annual 1995 revenues of this division were approximately $45.0. See "Pro
Forma Adjusted Historical Financial Data of SPX."
(c) Effective December 31, 1993, SPX acquired the balance of Sealed Power
Technologies ("SPT") for $39.0. SPX previously owned 49% of SPT and
accounted for its investment using the equity method. SPT's 1993
revenues were $392.0. As a result of this acquisition, SPX was required
to recognize its share of SPT's losses, $26.9, in 1993. Also, in 1993,
SPX initiated consolidation of Sealed Power Europe Limited Partnership
which required recognition of cumulative losses of the partnership
since its inception, resulting in a charge of $21.5. These charges
have been included in other operating expenses, net.
(d) During 1993, SPX acquired Allen Testproducts and its related leasing
company for $102.0. Annual 1992 revenues of this acquisition were
approximately $83.0.
(e) During 1993, SPX divested its Sealed Power Replacement and Truth
divisions for a gain of $105.4 ($64.2 after-tax). Annual 1992 revenues
of these divisions were approximately $247.0.
(f) Other operating expenses, net, include goodwill/intangible
amortization, minority interest, and earnings from equity interests.
(g) Special charges include certain legal costs, restructuring charges,
and write-off of goodwill.
(h) These charges included a $99.0 restructuring charge, a $4.1 charge for
five corporate executive staff reductions, and $13.4 of costs
associated with various legal matters, including $6.5 of anticipated
future legal costs associated with the ongoing litigation with Snap-on
Incorporated, legal costs associated with a settled case in
California, and certain other matters.
SPX recorded the $99.0 restructuring charge to combine two divisions
within the Service Solution segment and to recognize reduced carrying
value of certain assets resulting from the decision to combine the
divisions and exit certain manufactured diagnostic equipment product
lines. The restructuring of the two Service Solutions businesses was
in response to changing market dynamics and changing needs of
customers. SPX decided to combine its OE Tool and Equipment business
with its Aftermarket Tool and Equipment business to provide a single
business focused on the combined market and customer needs.
Additionally, SPX decided to exit certain products to focus upon new
generation products that will better meet customer needs. The decision
results in a reduction of workforce and closing of certain facilities.
The components of the charge have been computed based on management's
estimate of the realizable value of the affected tangible and
intangible assets and estimated exit costs including severance and
other employee benefits based on existing severance policies and local
laws.
The $99.0 charge included $63.7 of restructuring costs, $25.8 of
reduced inventory value and $9.5 of reduced value of other tangible
and intangible assets related to exiting certain product lines. These
restructuring costs included $13.7 of severance related costs for
approximately 800 people, $20.3 for incremental repossession and
distribution exit costs (including the termination of lease financing
and distributor agreements), $21.2 for incremental service and
software update obligations resulting from the decision to exit these
product lines, and $8.5 of costs associated with idled facilities. The
implementation of this restructuring is expected to be substantially
complete by the end of 1998.
Of the total special charges of $116.5 million, the components of the
charge that will require the future payment of cash are $80.9 million.
Cash payments in 1997 related to the special charges were $1.5
million. The expected future cash payments include an estimated $49.0
million in 1998 with the remainder over the following two years. As
there is some uncertainty associated with the timing of the cash
payments, the remaining accrual at December 31, 1997 of $79.4 million
has been classified in other current accrued liabilities. Management
estimates that savings from the restructuring will increase operating
income by $3.0 million in 1998 and $10.0 million in 1999.
(i) During the fourth quarter of 1995, management authorized and committed
SPX to undertake two significant restructuring plans. The first plan
consolidated five Service Solutions divisions into two divisions. The
second plan closed Sealed Power division's German foundry operation
and transferred certain piston ring operations to other facilities. In
1996, three additional restructuring actions were initiated including
an early retirement program at the Service Solutions divisions, a cost
reduction initiative at several Service Solutions international
locations, and an early retirement program at the Sealed Power
division. A summary of these restructurings follows:
1996 1995
--------- ---------
Service Solutions - Five divisions
consolidated into two divisions $11.2 $ 7.0
Service Solutions - Early retirement 1.1 -
Service Solutions - International 3.5 -
SPD - Closing foundry at SP Europe - 3.7
SPD early retirement 4.2 -
------ -----
Total $20.0 $ 10.7
===== =======
Service Solutions Restructuring - In order to improve customer
service, reduce costs and improve productivity and asset utilization, SPX
decided to consolidate five existing Service Solutions divisions into two.
This restructuring plan involved closing two SPX owned manufacturing
facilities, an SPX owned distribution facility, several leased service
centers and a leased sales facility in France. The plan also included
combining sales, engineering and administrative functions, and was
completed at the end of 1996. The plan included the termination of
approximately 570 employees resulting in a net reduction of approximately
310 employee positions after considering staffing requirements at remaining
facilities.
SPX recorded a $7.0 charge in 1995 and an $11.2 charge in 1996 to
complete this restructuring. These charges recognized severance and
benefits for employees to be terminated, holding costs of vacated
facilities, the adjustment to fair market value of one manufacturing
facility to be closed, and other costs to complete the consolidation of the
divisions. The distribution facility was sold during the fourth quarter of
1996 and the manufacturing facilities were sold during 1997.
Service Solutions - Early Retirement - Closely associated with the
consolidation of five divisions into two, an early retirement program was
accepted by approximately 60 people and SPX recorded a $1.1 charge in the
first quarter of 1996.
Service Solutions - International - During the second quarter of 1996,
SPX recorded a $3.5 restructuring charge principally to recognize severance
associated with the termination of 113 international employees and related
operating downsizing costs.
SPD - Closing Foundry at SP Europe - SPX closed its unprofitable
foundry operations at SP Europe and transferred certain piston ring
operations to other facilities. This closing resulted in the elimination of
approximately 200 positions and was completed at the end of the third
quarter of 1996. In 1995, SPX recorded a $3.7 restructuring charge to
accrue severance that was paid to these employees.
Sealed Power Division Early Retirement - During the second quarter of
1996, SPX recorded a $4.2 restructuring charge for the early retirement of
94 employees at the Sealed Power division.
The actual savings associated with the 1995 and 1996 restructuring
actions relate primarily to the Service Solutions restructuring actions.
The actual savings achieved in 1996 and 1997 have been consistent with the
estimated full year savings of $23.0 million by the year 1998. The actions
increased operating income by an estimated $7.0 million in 1996 and an
estimated $12.0 million in 1997.
These charges were recorded in the appropriate periods in accordance
with the requirements of Emerging Issues Task Force Pronouncement 94-3.
Certain costs incurred in connection with management's planned actions not
qualifying for accrual in 1995 were recorded in 1996, based on employee
acceptance of voluntary termination benefits and the satisfaction of other
requirements to recognize these costs. At December 31, 1997, the
restructuring actions initiated in 1995 and 1996 were complete and the
actual costs to implement the actions did not differ materially from the
estimates used to record these accruals.
Also during 1996, SPX recognized a $67.8 goodwill write-off, with no
related tax benefit. The goodwill was related to the 1988 and 1993
acquisitions of Bear Automotive Company and of Allen Testproducts,
respectively.
(j) During 1993, SPX recognized a $27.5 ($18.5 after-tax) special charge
to combine its Bear Automotive operation with Allen Testproducts.
(k) During 1995, SPX sold SPX Credit Corporation and recorded a pretax
loss of $4.8 ($3.0 after-tax). The financial results of this operation
are included as a discontinued operation through the date of
divestiture.
(l) During 1993, SPX adopted a new accounting methodology for its ESOP and
reflected its 49% share of SPT's adoption of SFAS No. 106 regarding
accounting for postretirement benefits other than pensions.
(m) During 1997, SPX tendered for substantially all ($126.7) of its
outstanding 11-3/4% senior subordinated notes. SPX recorded an
extraordinary item, net of taxes, of $10.3 for the costs to purchase
the notes. During 1996, SPX purchased $99.9 of these notes and
recorded an extraordinary item, net of taxes, of $6.6 for the costs to
purchase the notes. During 1995, SPX purchased $31.7 of these notes
and recorded an extraordinary item, net of taxes, of $1.1 for the
costs to purchase the notes. During 1993, SPX recorded the costs
associated with prepayment of certain SPX and SPT indebtedness
totaling $24.0, net of taxes, as an extraordinary item.
(n) During 1997, SPX purchased 2.147 shares of SPX Common Stock through a
Dutch Auction self-tender offer for $56.00 per share. As of December
31, 1997, SPX had purchased an additional 0.390 shares through open
market purchases. Also, concurrent with the Dutch Auction, SPX
announced the elimination of quarterly cash dividends and stated that
future distributions to shareholders would be in the form of open
market purchases of SPX Common Stock, when deemed appropriate by
management.
</FN>
</TABLE>
SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY
(in millions, except per share data)
The following table presents selected historical statement of income
and other financial data of the Company. The financial data as of and for
the three months ended November 30, 1997 and November 30, 1996 have been
derived from the unaudited financial statements of the Company contained in
the Company's 1998 First Quarter Form 10-Q. The financial data as of and
for the fiscal years ended August 31, have been derived from the audited
financial statements of the Company and selected financial data contained
in the Company's 1997 Form 10-K. The operating results for the three months
ending November 30, 1997 are not necessarily indicative of the results that
may be expected for the year ending August 31, 1998. The Company's selected
historical financial data should be read in conjunction with, and are
qualified in their entirety by reference to, the historical financial
statements (and related notes) of the Company which are incorporated by
reference herein (except for the report of the Company's independent
accountants contained in the Company's 1997 Form 10-K which is not
incorporated herein by reference because the consent of the Company's
independent accountants has not yet been obtained). See "Available
Information" and "Incorporation of Documents by Reference."
<TABLE>
<CAPTION>
As of and
for three
months ended
November 30, As of and for the fiscal year ended August 31,
----------------------- ---------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
Statement of income data:
- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 889.5 $ 850.9 $ 3,568.6 $ 3,128.7 $ 2,717.9 $ 2,229.5 $ 1,944.5
Cost of goods sold 671.1 635.0 2,707.1 2,309.0 1,932.5 1,571.3 1,378.0
Selling and administrative expenses 159.2 149.2 640.1 574.6 531.3 468.5 420.4
Repositioning and other special charges (a) - - 254.1 - - - -
Gain on sales of businesses (b) - - (28.6) - - - -
-------- -------- --------- --------- --------- --------- ---------
Income (loss) from operations 59.2 66.7 (4.1) 245.1 254.1 189.7 146.1
Interest expense, net 9.8 8.0 40.6 32.9 23.6 11.7 8.5
-------- -------- --------- --------- --------- --------- ---------
Income (loss) before taxes 49.4 58.7 (44.7) 212.2 230.5 178.0 137.6
Provision for taxes 16.8 20.6 2.2 70.0 76.1 56.9 44.0
-------- -------- --------- --------- --------- --------- ---------
Income (loss) before cumulative
effect of accounting change 32.6 38.1 (46.9) 142.2 154.4 121.1 93.6
Cumulative effect of accounting change (c) - - - - - 2.6 -
-------- -------- --------- --------- --------- --------- ---------
Net income (loss) $ 32.6 $ 38.1 $ (46.9) $ 142.2 $ 154.4 $ 123.7 $ 93.6
======== ======== ========== ========= ======== ======== =========
Average shares outstanding 63.132 62.347 62.601 61.919 59.476 58.996 58.560
Primary net income (loss) per share (d) $ 0.52 $ 0.61 $ (0.75) $ 2.30 $ 2.60 $ 2.10 $ 1.60
Dividends per share $ 0.225 $ 0.22 $ 0.89 $ 0.85 $ 0.79 $ 0.73 $ 0.70
Other financial data:
- --------------------
Total assets $2,365.5 $2,453.8 $ 2,374.2 $ 2,130.8 $1,961.0 $1,577.4 $ 1,263.3
Total debt 761.4 769.9 757.9 495.9 507.1 308.3 164.2
Shareholders' equity 937.0 1,039.5 913.7 1,008.9 909.3 799.0 713.8
Capital expenditures 31.5 28.1 149.2 104.4 103.9 73.8 41.5
Depreciation and amortization 29.7 27.2 113.9 90.9 76.6 64.2 59.7
Note: The accompanying notes are an integral part of the
selected historical financial data.
NOTES TO SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY
(in millions, except per share data)
<FN>
(a) During fiscal 1997, the Company recorded repositioning and other
special charges of $254.1, pretax. The repositioning charge included
expenses related to facility realignments and rationalizations, and
the write-down to net realizable value of businesses to be disposed.
In addition, goodwill associated with brand names no longer in use was
written off, inventory related to discontinued and rationalized
product lines was written down, property, plant and equipment idled by
facility closures and product line rationalizations were reduced, and
other investments and deferred customer acquisition costs were written
off.
(b) During fiscal 1997, the Company sold two divisions for gross proceeds
of $75.9. The Company reported a pretax gain of $28.6.
(c) During fiscal 1994, the Company adopted a new accounting methodology
for income taxes.
(d) The Company indicates that pro forma diluted loss per share under FAS
128 would have been less than the reported loss per share for the year
ended August 31, 1997 and pro forma diluted earnings per share would
have been $0.51 for the quarter ended November 30, 1997.
</FN>
</TABLE>
SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF SPX AND THE COMPANY
(unaudited)
(in millions, except per share data)
The following table presents selected pro forma condensed combined
statement of income and other financial data of SPX and the Company. The
information is presented as if the Offer and the Merger of SPX and the
Company occurred on September 1, 1996 for statement of income and related
data and on November 30, 1997 for balance sheet data. This pro forma data
assumes that the Offer and the Merger are effected by the exchange of
shares of SPX Common Stock and cash for Shares. The pro forma data assumes
SPX will exchange 0.4796 share of SPX Common Stock and $12.00 cash for each
Share, whereby 30.532 million shares of SPX Common Stock and $763.9 of cash
are issued in exchange for all outstanding Shares and equivalent Shares,
other than those owned by SPX. The Offer and the Merger will be accounted
for as a reverse acquisition, as the shareholders of the Company will own a
majority of the outstanding shares of SPX Common Stock upon completion of
the transaction. Accordingly, for accounting purposes, SPX is treated as
the acquired company and the Company is considered to be the acquiring
company. The purchase price will be allocated to the assets and liabilities
assumed of SPX based on their estimated fair market values at the
acquisition date. Under reverse acquisition accounting, the purchase price
of SPX is based on the fair market value of SPX Common Stock at the date of
acquisition. The cash portion of the Consideration will be accounted for as
a dividend by the combined company. SPX's financial position and results of
operations will not be included in the Company's consolidated financial
statements prior to the date the Merger is consummated. See "Pro Forma
Condensed Combined Financial Data of SPX and the Company" included
elsewhere herein for additional information regarding this pro forma
information.
Under reverse acquisition accounting, the purchase price of SPX is
based on the fair market value of SPX Common Stock. For purposes of this
pro forma information, the fair market value of SPX Common Stock is assumed
to be $76-5/16 per share, which reflects the closing price of SPX Common
Stock on March 31, 1998. The Consideration includes 0.4796 share of SPX
Common Stock. This is a fixed exchange ratio and will not be adjusted in
the event of any increase or decrease in the market price of SPX Common
Stock. Consequently, changes in the market price of SPX Common Stock will
not impact these pro forma financial statements other than to increase or
decrease the purchase price of SPX and the related amount of goodwill and
amortization thereof.
The selected pro forma condensed combined financial data is intended
for information purposes, and do not purport to represent what the combined
entity's results of continuing operations or financial position would
actually have been had the transaction in fact occurred at an earlier date,
or project the results for any future date or period.
Upon consummation of the Offer, the actual financial position and
results of operations of the combined company will differ, perhaps
significantly, from the pro forma amounts reflected herein due to a variety
of factors, including changes in operating results between the date of the
pro forma condensed combined financial data and the date on which the Offer
is consummated and thereafter, as well as the factors discussed under "Risk
Factors."
The pro forma condensed combined financial data does not give effect
to any integration or restructuring costs that could result from the
combination of the companies. Any integration and rationalization of the
operations of the Company may include certain costs that in turn would
result in a charge to earnings of the combined company. Such a charge,
which cannot now be quantified fully, may be material and would be
recognized in the period in which such a restructuring occurs. These costs
may include severance and related employee benefit costs, costs to
consolidate manufacturing and distribution facilities, facility
rearrangement costs, relocation and moving costs, training costs, debt
extinguishment costs, and costs associated with change of control
agreements, among others. To date, the SPX's access to information related
to the Company has been limited to publicly available information. In
addition, publicly available information does not contain sufficient
details related to the Company's severance plans, employee benefit
agreements, change of control costs or debt extinguishment provisions to
enable SPX to quantify the costs associated with business integration and
rationalization actions that may be considered by SPX. Nonetheless, based
on assumptions related to headcount reductions and average annual salaries
used to compute the annualized expense savings and assuming a severance
policy that would result in an average severance term of six months, the
estimated pre-tax costs of the severance (excluding any change in control
costs) would be approximately $60.0 million.
The pro forma condensed combined financial data also does not give
effect to any costs savings that could result from the combination of the
companies. SPX management estimates that the combined company can achieve
approximately $125.0 million of annualized cost savings in the first full
year following the acquisition, and $175.0 million of annualized cost
savings in the second full year following the acquisition. These costs
savings include three categories of estimated annual savings in the second
full year; savings associated with headcount reductions of $120.0 million,
reduction in duplicative corporate costs of $20.0 million, and
manufacturing, distribution and sourcing rationization of $35.0 million.
These savings estimates are based upon assumptions made by SPX management
using available public information of the Company, certain comparative peer
group information of the Company, and SPX's own internal information.
As of and for the As of and for the
three months ended year ended
November 30, 1997 (a) August 31, 1997 (b)
--------------------- -------------------
Statement of income data:
- -------------------------
Revenues $ 1,131.2 $ 4,416.8
Cost of products sold 848.4 3,323.3
Selling, general and
administrative expense 205.6 813.0
Other operating expenses, net 6.6 25.9
Special charges and gains (c) 110.0 304.0
------- -------
Operating income (loss) (39.4) (49.4)
Other expense (income), net (1.1) (2.4)
Interest expense, net 33.8 133.4
------------------- --------------------
Income (loss) before income taxes 72.1 (180.4)
Provision (benefit) for
income taxes (25.3) (15.8)
------------------- --------------------
Income (loss) before
extraordinary item $ (46.8) $ (164.6)
=================== ====================
Primary income (loss) per
share (e) $ (1.11) $ (3.81)
Weighted average number of
common shares outstanding 42.022 43.184
Dividends per share (d) $ - $ 0.20
Other financial data:
- ---------------------
Total assets $ 4,058.6 $ 3,981.3
Total debt 1,783.2 1,770.4
Shareholders' equity 1,151.2 1,142.8
Capital expenditures 38.5 169.2
Depreciation and amortization 42.3 165.3
Note: The accompanying notes are an integral part of the selected pro
forma combined financial data.
NOTES TO SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
OF SPX AND THE COMPANY
(unaudited)
(in millions, except per share data)
(a) Pro forma information as of and for the three months ended November
30, 1997 includes the actual historical results of SPX as of and for
the three months ended December 31, 1997 (the most current fiscal
quarter end of SPX within 93 days of November 30, 1997) and the actual
historical results of the Company as of and for the three months ended
November 30, 1997.
(b) Pro forma information for the year ended August 31, 1997 includes the
pro forma adjusted historical results of SPX for the twelve months
ended September 30, 1997 (the most current fiscal twelve month period
of SPX within 93 days of August 31, 1997) and the actual historical
results of the Company for the year ended August 31, 1997. The pro
forma adjusted historical results of SPX for the twelve months ended
September 30, 1997 reflect SPX's February 1997 disposition of the
Sealed Power division and its November 1996 disposition of the Hy-Lift
division, as if such dispositions occurred on October 1, 1996. See
"Pro Forma Adjusted Historical Financial Data of SPX," presented
elsewhere herein.
(c) The pro forma condensed combined financial data do not give effect to
any integration or restructuring costs, nor to any cost savings, that
could result from the combination of the companies.
The pro forma condensed combined financial data of SPX and the Company
for the three months ended November 30, 1997 include special charges
of $110.0 recorded by SPX primarily to combine two divisions and to
recognize reduced carrying value of certain assets resulting from the
decision to combine the divisions and exit certain product lines. See
"Selected Historical Financial Data of SPX."
The pro forma condensed combined financial data of SPX and the Company
for the year ended August 31, 1997 include special charges and gains
of $304.0. The special charges and gains included a $4.2 special
charge recorded by SPX related to the combination of five divisions
into two divisions, a $6.5 special charge recorded by SPX of
anticipated future legal costs associated with the ongoing litigation
with Snap-on Incorporated, a $67.8 write-off of goodwill recorded by
SPX related to the acquisitions of Bear Automotive and Allen
Testproducts, $254.1 of repositioning and other special charges
recorded by the Company related to facility realignments and
rationalizations and other actions, and $28.6 of gains from the sale
of two divisions by the Company. See "Selected Historical Financial
Data of SPX" and "Selected Historical Financial Data of the Company."
(d) Represents the historical quarterly cash dividend per share of SPX for
the periods presented. In April of 1997, SPX eliminated its quarterly
cash dividend and stated that future distributions to shareholders
would be in the form of open market purchases of SPX Common Stock when
deemed appropriate by management.
(e) FAS 128, "Earnings per Share," is a new pronouncement which was issued
in February 1997, but not effective until after December 15, 1997. The
new pronouncement established revised standards for calculating and
reporting earnings per share. On a pro forma basis, if this standard
was adopted for the periods presented, both basic and diluted income
(loss) per share income (loss) would have been equal to primary income
(loss) per share.
RISK FACTORS
In addition to the other information in this Prospectus, the following
are certain factors that should be considered by holders of Shares in
evaluating the Offer and an investment in SPX Common Stock.
FIXED EXCHANGE RATIO DESPITE CHANGE IN RELATIVE STOCK PRICES
The Consideration includes 0.4796 share of SPX Common Stock. This is a
fixed exchange ratio and will not be adjusted in the event of any increase
or decrease in the market price of either SPX Common Stock or the Shares
between the date hereof and the Expiration Date. The price of SPX Common
Stock on the Expiration Date may be higher or lower than its price on the
date of this Prospectus. Such variations may be the result of changes in
the business, operations or prospects of SPX or the Company, market
assessments of the likelihood that the Offer will be consummated and the
timing thereof, general market and economic conditions or other factors.
The Expiration Date will occur as soon as practicable following the
satisfaction or waiver (where permissible) of the conditions to the Offer.
Tendering shareholders of the Company are urged to obtain current market
quotations for SPX Common Stock and the Shares. See "The Offer--Conditions
of the Offer" and "Market Prices and Dividends."
LEVERAGE
After consummation of the Offer and the Merger, SPX will be more
highly leveraged than are either SPX or the Company, or both of the
companies combined, at present, with substantial debt service obligations,
including principal and interest obligations, with respect to indebtedness
of as much as $2.4 billion. As such, SPX may be particularly susceptible to
adverse changes in its industry, the economy and the financial markets
generally. Moreover, SPX's conduct of its business may be more
circumscribed, and its ability to incur additional debt may be more
limited, than at present by restrictive covenants which will be contained
in agreements evidencing the Financing. In particular, any debt incurrence
restrictions may limit SPX's ability to service its existing debt
obligations through additional debt financing if cash flow from operations
is insufficient to service such obligations. The Financing will bear
interest at floating rates, and an increase in interest rates could
adversely affect SPX's ability to service its debt obligations.
UNCERTAINTIES IN INTEGRATING BUSINESS OPERATIONS AND ACHIEVING COST SAVINGS
The success of the Proposed Business Combination will in large part be
dependent on the ability, following the Offer and the Merger, to realize
cost savings and, to a lesser extent, to consolidate operations and
integrate processes. The businesses are strategically complementary but
largely operate in diverse markets with different distribution systems.
While SPX believes that it can obtain cost savings of at least $125.0
million in the first year, the realization of savings is dependent to a
large extent on the planned reduction of headcount at the Company. There
can be no assurance that the timing and magnitude of headcount reductions
will occur as planned. The integration of businesses, moreover, involves a
number of risks, including the diversion of management's attention to the
assimilation of the operations from other business concerns, delays or
difficulties in the actual integration of operations or systems, and
challenges in retaining customers and key personnel of the acquired
company. There can be no assurance that future consolidated results will
improve as a result of the Proposed Business Combination, or that the
timing or extent to which cost savings and efficiencies anticipated by SPX
will be achieved. The pro forma financial statements contained in this
Prospectus do not include the impact, positive or negative, of any cost
savings or efficiencies related to anticipated future actions. The
anticipated cost savings have been developed solely by the management of
SPX and are based on SPX's best judgments and knowledge of the Company's
operations derived from publicly available information, and in reliance on
that information being accurate and complete, together with SPX's knowledge
and experience in the vehicle components industry.
DEPENDENCE ON KEY PERSONNEL
SPX is dependent on the continued services of its management team,
including John B. Blystone, Chairman of the Board, President and Chief
Executive Officer. Although SPX believes it could replace key employees in
an orderly fashion should the need arise, the loss of such personnel could
have a material adverse effect on SPX.
DIVIDENDS
The Company recently paid its 155th consecutive dividend. In April
1997, SPX eliminated its quarterly cash dividend and stated that future
distributions to shareholders would be in the form of open market purchases
of SPX Common Stock when deemed appropriate by management and SPX does not
anticipate that this policy will change. There can be no assurance that
distributions to shareholders will be permitted under SPX's new credit and
other debt agreements.
RELIANCE ON MAJOR CUSTOMERS OF SPX
Sales to GM, Ford and Chrysler accounted for approximately 25%, 15%,
and 3% respectively of SPX's revenues for the year ended December 31, 1997.
The loss of GM, Ford or Chrysler or of any of SPX's other significant
customers could have a material adverse effect on SPX. There is substantial
and continuing pressure from the major OEMs to reduce costs, including the
cost of products and services purchased from outside suppliers such as SPX.
If in the future SPX were unable to generate sufficient cost savings to
offset price reductions, SPX's gross margins could be adversely affected.
LOSS OF THE COMPANY'S CUSTOMERS
The success of the combined company will depend in part on its ability
to retain the Company's customers. Although SPX can see no reason as to why
SPX would lose any of the Company's customers as a result of the Proposed
Business Combination, there can be no assurance that all of the Company's
customers would continue to do business with SPX following the acquisition.
According to the Company's 1997 Form 10-K, the Company does not have any
one customer which represents 10% or more of the Company's consolidated net
sales.
YEAR 2000 ISSUE
SPX utilizes software and related computer technologies essential to
its operations and to certain products that use two digits rather than four
to specify the year, which could result in a date recognition problem with
the transition to the year 2000. SPX has established a plan, utilizing both
internal and external resources, to assess the potential impact of the year
2000 problem on SPX's systems and operations and to implement solutions to
address this issue. SPX is presently in the assessment phase of its year
2000 plan which includes conducting an inventory of potentially
date-sensitive systems and is also surveying its suppliers and service
providers for year 2000 compliance. SPX's goal for correction of critical
systems is December 31, 1998 and its plan is to conduct testing of
corrected systems in 1999. Third party compliance and other factors could
adversely affect these goals. SPX does not believe that the costs to
remediate software and computer technologies for the year 2000 problem will
exceed $5 million over the next two years, which does not include the costs
to replace certain existing systems. SPX is in the process of implementing
a new enterprise resource planning system across its Service Solutions
business. Management estimates that it will spend approximately $10 million
to acquire and install this new system over the next two years.
As SPX is presently in the assessment phase of its year 2000 plan,
there can be no assurances that the costs of remediation will not be
material. Moreover, there can be no assurances that SPX will not experience
material unanticipated costs and/or business interruption due to year 2000
problems in its internal systems, its supply chain or from customer product
migration issues.
The Company has not disclosed in its public documents whether year
2000 compliance will be an issue for the Company.
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW AND STATUTORY PROVISIONS
Certain provisions of SPX's Certificate of Incorporation and By-Laws
may inhibit changes in control of SPX not approved by the SPX's Board of
Directors. These provisions include: (i) a staggered Board of Directors;
(ii) a prohibition on stockholder action through written consents; (iii) a
requirement that special meetings of stockholders be called only by SPX's
Board of Directors; (iv) advance notice requirements for stockholder
proposals and nominations; (v) limitations on the ability of stockholders
to amend, alter or repeal the By-Laws; and (vi) the authority of SPX's
Board of Directors to issue, without shareholder approval, preferred stock
with such terms as SPX's Board of Directors may determine. SPX will also be
afforded the protections of Section 203 of the Delaware General Corporation
Law, which could have similar effects. See "Comparison of Rights of Holders
of Shares and SPX Common Stock."
REASONS FOR THE OFFER
On February 17, 1998, SPX delivered a letter to the Board of Directors
of the Company proposing to enter into the Proposed Business Combination
pursuant to which shareholders of the Company would receive for each Share
the Consideration in the amount of $12.00 net in cash and 0.4796 share of
SPX Common Stock. The Consideration had a total value of $48.00, based on
the $75-1/16 closing price of a share of SPX Common Stock on the NYSE
Composite Tape on February 13, 1998, the last trading date preceding the
date of the first public announcement of the Proposed Business Combination,
and a total value of $[ ], based on the $[ ] closing price of a share of
SPX Common Stock on the NYSE Composite Tape on April [ ], 1998, the last
trading date preceding the date of this Prospectus. At the time the Offer
is consummated, the Consideration may have a market value that is greater
or less than either of those two amounts depending upon the market price of
a share of SPX Common Stock. At a total value of $[ ], the Consideration
represents a [ ]% premium over the $38-7/8 price at which a Share closed on
the NYSE on February 13, 1998 and a [ ]% premium over the average trading
price at which a Share closed on the NYSE during the 30 trading days
preceding February 17, 1998, the date of the public announcement of the
Proposed Business Combination. Immediately following consummation of the
Proposed Business Combination and after giving effect to the issuance of
the SPX Common Stock in the transaction, the shareholders of the Company
(other than SPX) would own approximately 70% of the then outstanding shares
of SPX Common Stock.
With its letter to the Board of Directors of the Company, SPX
delivered a proposed merger agreement to the Company in contemplation of
arriving at a negotiated transaction. That agreement provides for a
single-step "cash election" merger of the Company into a subsidiary of SPX
in which each outstanding Share would be converted into the right to
receive the Consideration (with shareholders able to elect to receive
instead all cash, in the amount of $48.00 per Share, or all stock, in the
amount of 0.6395 share of SPX Common Stock per Share, subject to proration)
in a partially tax-free reorganization. However, because of the Company's
negative responses to SPX's approaches over the several months prior to
February 17, 1998 (see "Background"), SPX also filed a Registration
Statement, of which this Prospectus is part, with the Commission, so that
the Proposed Business Combination may be effected by means of the Offer, to
be followed by the Merger in which each Share not purchased in the Offer
would be converted into the right to receive the Consideration. The
exchange of Shares for the Consideration in the Offer and the Merger will
be a taxable transaction. See "The Offer--Certain Federal Income Tax
Consequences."
If the Merger is consummated, the Company will become a wholly owned
subsidiary of SPX. If the Minimum Tender Condition is satisfied and the
other Offer Conditions are satisfied or waived and the Offer is
consummated, SPX will own at least 66-2/3% of the outstanding Shares, and
SPX will have sufficient voting power in the Company to approve the Merger
independent of the votes of any other shareholders of the Company.
SPX believes that the Offer is in the best interests of the Company's
shareholders because, among other things, the Consideration will allow
shareholders of the Company to realize a substantial premium for their
Shares in cash immediately, while continuing, through their ownership of
SPX Common Stock, to participate in the future growth of the combined
companies.
BACKGROUND OF THE OFFER
In February 1997, John B. Blystone, Chairman and Chief Executive
Officer of SPX, met with Trevor O. Jones, then Chairman and interim
President and Chief Executive Officer of the Company, to propose that the
two companies explore a business combination. Mr. Jones did not follow up
on this meeting. In November 1997, Mr. Blystone met for several hours with
Larry W. McCurdy, who had succeeded Mr. Jones as President and Chief
Executive Officer, to discuss a strategic merger between the two companies,
and on November 24, 1997, Patrick J. O'Leary, SPX's Vice President -
Finance and Chief Financial Officer, met with Robert Tobe, the Company's
Vice President - Corporate Development. These discussions were not
fruitful, and SPX was informed that the Company had no interest in a
business combination with SPX.
On December 12, 1997, Mr. Blystone wrote a letter to Mr. McCurdy
setting out the strategic rationale of a business combination of the two
companies and the benefits to the Company's shareholders of the
transaction. Although the letter stated that SPX anticipated a price in the
$40's range, Mr. Blystone advised Mr. McCurdy that SPX would be willing to
revise its thinking if the Company could identify greater value in the
transaction. Mr. Blystone, in his letter, further suggested that the letter
be shared with the Company's Board of Directors and offered to meet with
and make a presentation to the Board about any and all aspects of the
proposed transaction.
On December 17, 1997, Mr. Blystone received a letter from Mr. McCurdy
stating that Mr. McCurdy had shared Mr. Blystone's views with the Company's
Board of Directors, and that the Company's and the Board's position
remained that the Company had no interest in further discussions with SPX.
On December 18, 1997, Mr. Blystone sent a letter to each member of the
Company's Board enclosing a copy of his December 12 letter and reiterating
the merits of a strategic combination. Mr. Blystone once again offered to
meet personally with and make a presentation to the Company's Board of
Directors.
On December 23, 1997, Mr. Blystone received a letter from Mr. McCurdy
advising that the Company's Board of Directors was of the unanimous view
that the Company did not have an interest in pursuing discussions with SPX.
On January 6, 1998, SPX notified the Company that it was that day
making an HSR Filing under the HSR Act seeking to acquire up to 100% of the
voting securities of the Company.
On January 8, 1998, Mr. McCurdy wrote to Mr. Blystone acknowledging
receipt of notice of the HSR Filing and advising SPX that the Company and
its advisors stood ready to aggressively defend its shareholders'
interests.
On February 17, 1998, SPX sent the Board of Directors of the Company a
letter setting forth the Proposed Business Combination and its merits and
reaffirming its desire to enter into a negotiated transaction.
On the same day, SPX filed a Registration Statement, of which this
Prospectus is part, with the Commission. Concurrently, SPX filed
preliminary solicitation materials with the Commission for use in
soliciting Demands from the shareholders of the Company that a Special
Meeting be called and held for the purpose of removing the Board of
Directors of the Company and replacing them with the SPX Nominees. Under
the Connecticut Business Act, holders of outstanding Shares representing in
the aggregate at least 35% of all the votes entitled to be cast on any
issue proposed to be considered at the Special Meeting have the right to
demand that the Special Meeting be called and held. On February 17, 1998,
SPX also delivered to the Company its Demand that the Special Meeting be
called and held.
On March 6, 1998, SPX filed definitive solicitation materials with the
Commission and commenced its solicitation of Demands to call the Special
Meeting, and, on March 25, 1998, SPX delivered to the Company written
Demands by holders of an aggregate of 28,253,762 Shares, representing
(together with the Shares owned by SPX with respect to which a Demand had
previously been delivered) approximately 45.8% of the outstanding Shares,
which action SPX believes satisfies those provisions of the Connecticut
Business Act and the Company's By-Laws setting forth the requirements for
shareholders to call the Special Meeting. Under the Connecticut Business
Act and the Company's By-Laws, the Special Meeting must be called by April
24, 1998 and must be held by June 23, 1998.
On March 24, 1998, SPX delivered a binding agreement to the Members of
the Connecticut General Assembly that, for a term of at least three years
following completion of the acquisition by SPX of all the outstanding stock
of the Company, SPX would maintain at least the same aggregate number of
employees as were employed on March 24, 1998 at the Branford Facility, if
the acquisition of the Company is completed in accordance with the terms of
the Proposed Business Combination and within the timeframe contemplated
under current Connecticut law, and if the State of Connecticut did not
enact legislation impeding SPX's ability to acquire the Company.
On March 25, 1998, SPX signed an agreement with the UAW in which SPX
agreed with the UAW, among other things, that, if SPX is successful in
completing a transaction to acquire the Company, and, thereafter, the UAW
seeks to unionize the Branford Facility, neither party would, among other
things, (a) attack the other party by impugning the other party's motives,
integrity or character, (b) engage in threats, misrepresentations or
delaying tactics to frustrate the desires of Company employees, or (c)
commit an unfair labor practice.
On March 27, 1998, SPX announced that its Annual Meeting of
Shareholders would be held on May 20, 1998, and that, at that meeting,
SPX's shareholders would vote on approving the issuance of shares of SPX
Common Stock in connection with the Proposed Business Combination, which
approval would cause the SPX Stockholder Approval Condition to be
satisfied.
THE SPECIAL MEETING
On February 17, 1998, SPX filed preliminary solicitation materials
with the Commission to solicit Demands for the Company to call and hold a
Special Meeting, and delivered its Demand to the Company. Along with its
Demand, SPX presented four proposals for consideration at the Special
Meeting: (i) to repeal any provision of the Company's By-Laws or amendment
to the Company's By-Laws adopted by the Board of Directors of the Company
or any Committee thereof at any time after April 3, 1997 (the date of the
last set of By-Laws publicly filed by the Company) and before the
effectiveness of the last of the proposals to be voted on at the Special
Meeting; (ii) to vote upon a proposal to remove all of the members of the
Board of Directors of the Company; (iii) to vote upon a proposal to amend
the By-Laws of the Company to fix the number of directors of the Company at
five; and (iv) to elect the five Nominees to the Board of Directors of the
Company.
SPX has been attempting to negotiate a transaction with the Company
for close to a year. The Company, however, in past meetings and
correspondence with SPX has consistently informed SPX that the Company and
its Board of Directors have no interest in pursuing discussions with SPX.
Moreover, the Rights Agreement effectively prevents SPX from
consummating the Offer and the Merger without the approval of the Company's
Board of Directors. Likewise, the Connecticut Business Act presents certain
obstacles to the consummation of the Offer and the Merger absent Board
approval. See "The Offer--The Rights" and "--Conditions to the Offer" and
"Comparison of Rights of Holders of Shares and SPX Common Stock."
SPX expects that if the SPX Nominees are elected, they will act to
facilitate the consummation of the Proposed Business Combination, subject
to their fiduciary and statutory duties as Directors of the Company. More
specifically, SPX expects that the SPX Nominees will, subject to their
fiduciary and statutory duties as Directors of the Company, amend the
Rights Agreement so that the Rights Agreement will not be applicable to the
Offer or, if the Rights Agreement can no longer be amended, cause the
redemption of the Rights, thereby causing the Rights Plan Condition to be
satisfied. Likewise, SPX expects that the SPX Nominees will, subject to
their fiduciary and statutory duties as Directors of the Company, approve
the Offer and the Merger or take such other actions so that the
restrictions contained in the Business Combination Statutes will not be
applicable thereto, thereby causing the Business Combination Statutes
Condition to be satisfied.
Under the Connecticut Business Act and the Company's By-Laws, a
special meeting of the Company's shareholders may be called by one or more
holders of Shares representing in the aggregate at least 35% of all the
votes entitled to be cast on any issue proposed to be considered at the
Special Meeting. On March 6, 1998, SPX filed definitive solicitation
materials with the Commission and commenced its solicitation of Demands to
call the Special Meeting, and, on March 25, 1998, SPX delivered to the
Company written Demands by holders of an aggregate of 28,253,762 Shares,
representing (together with the Shares owned by SPX with respect to which a
Demand had previously been delivered) approximately 45.8% of the
outstanding Shares, which action SPX believes satisfies those provisions of
the Connecticut Business Act and the Company's By-Laws setting forth the
requirements for shareholders to call the Special Meeting. Under the
Connecticut Business Act and the Company's By-Laws, the Special Meeting
must be called by April 24, 1998 and must be held by June 23, 1998.
THE OFFER
GENERAL
SPX hereby offers, upon the terms and subject to the conditions set
forth herein and in the related Letter of Transmittal, to exchange the
Consideration, in the amount of $12.00 in cash and 0.4796 of a share of SPX
Common Stock, for each outstanding Share validly tendered on or prior to
the Expiration Date and not withdrawn.
Tendering shareholders will not be obligated to pay any charges or
expenses of the Exchange Agent or any brokerage commissions. Except as set
forth in the Instructions to the Letter of Transmittal, transfer taxes on
the exchange of Shares pursuant to the Offer will be paid by or on behalf
of SPX.
The purpose of the Offer is to enable SPX to obtain control of, and
ultimately the entire equity interest in, the Company. SPX presently
intends, as soon as practicable after consummation of the Offer, to seek to
have the Company effect the Merger. In the Merger, each outstanding Share
(other than Shares owned by SPX or any of its affiliates, Shares held in
the Company's treasury or by any subsidiary of the Company and Shares owned
by the Company's shareholders who perfect dissenters' rights under
Connecticut law) would be converted into the right to receive the
Consideration. See "The Merger."
SPX's obligation to exchange the Consideration for Shares pursuant to
the Offer is conditioned on the satisfaction of the Minimum Tender
Condition, the SPX Stockholder Approval Condition, the Rights Plan
Condition, the Business Combination Statutes Condition, the Financing
Condition and the other conditions as set forth under "Certain Conditions
of the Offer."
According to a shareholder list provided to SPX by the Company, as of
February 17, 1998, there were 63,248,939 Shares outstanding. SPX owns
1,150,150 Shares. In the event that SPX acquires all of the Shares pursuant
to the Offer and the Merger, then immediately following consummation of the
Merger, and after giving effect to the issuance of SPX Common Stock in the
Offer and the Merger, shareholders of the Company (other than SPX) would
own approximately 70% of the then outstanding shares of SPX Common Stock.
If 66-2/3% of the Shares are purchased in the Offer, such ownership
percentage would be approximately 61% immediately following consummation
of the Offer and after giving effect to the issuance of SPX Common Stock in
the Offer.
SPX has requested use of the Company's shareholder list and security
position listings for the purpose of communications with shareholders and
disseminating the Offer to holders of Shares. This Prospectus and the
related Letter of Transmittal and other relevant materials may be mailed to
record holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the shareholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of Shares.
THE RIGHTS
No separate payment will be made by SPX for the Rights pursuant to the
Offer. Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares. The Rights are
currently evidenced by the certificates for the Shares and the tender by a
shareholder of his or her Shares prior to the Distribution Date (as defined
below) will also constitute a tender of the associated Rights. The
"Distribution Date" is defined as the earlier of the following dates: (i)
the close of business on the tenth day following a public announcement that
a person has acquired beneficial ownership of 20% or more of the
outstanding Shares (an "Acquiring Person") or (ii) the close of business on
the tenth business day (or such later date as the Board may determine prior
to such time as any person becomes an Acquiring Person) following the
commencement of a tender offer or exchange offer which would result in the
person making the offer becoming an Acquiring Person. As soon as
practicable after the Company has notified the Rights Agent of the
occurrence of the Distribution Date, the Rights Agent will mail separate
certificates evidencing the Rights to holders of record of the Shares as of
the close of business on the Distribution Date and such separate Rights
certificates alone will evidence the Rights. The Distribution Date will
occur on [ ,] 1998 (i.e., the tenth business day following the commencement
by SPX of the Offer) unless prior to such date the Board of Directors of
the Company determines to extend the Distribution Date to a later date.
If the Distribution Date occurs and separate certificates representing
the Rights are distributed by the Company or the Rights Agent to holders of
Shares prior to the time that a holder's Shares are tendered pursuant to
the Offer, certificates representing a number of Rights equal to the number
of Shares tendered must be delivered to the Exchange Agent, or, if
available, a Book-Entry Confirmation (as defined in "--Procedure for
Tendering" below) must be received by the Exchange Agent with respect
thereto, in order for such Shares to be validly tendered. If a Distribution
Date occurs and separate certificates representing the Rights are not
distributed prior to the time Shares are tendered pursuant to the Offer,
Rights may be tendered prior to the shareholder receiving the certificates
for Rights by use of the guaranteed delivery procedure described under
"--Procedure for Tendering" below.
TIMING OF THE OFFER
The Offer is currently scheduled to expire at 12:00 midnight New York
City time on [ ], 1998; however, it is SPX's current intention to extend
the Offer from time to time as necessary until all conditions to the Offer
have been satisfied or waived. See "-- Extension, Termination and
Amendment." SPX has received a highly confident letter from CIBC and its
affiliate, CIBC Oppenheimer, in which they stated that they are highly
confident of their ability to raise the Financing. SPX believes it is
highly unlikely that it will not have obtained the Financing prior to five
business days before the Expiration Date; however, in this unlikely event,
SPX currently intends to extend the Offer in the manner set forth under
"--Extension, Termination and Amendment" to ensure that five business days
remain for shareholders to tender their Shares in the Offer subsequent to
obtaining financing.
In connection with the Offer, SPX solicited Demands, and on March 25,
1998, delivered to the Company the requisite number of Demands, from the
shareholders of the Company that a Special Meeting be called and held for
the purpose of, among other things, removing the Board of Directors of the
Company and electing the SPX Nominees in their place. Under the Connecticut
Business Act and the Company's By-Laws, the Special Meeting must be called
by April 24, 1998 and held by June 23, 1998. SPX expects that if the SPX
Nominees are elected, they will take all action, subject to their fiduciary
and statutory duties as Directors of the Company, to cause the Rights Plan
Condition and the Business Combination Statutes Condition to be satisfied.
At SPX's 1998 Annual Meeting of Shareholders to be held on May 20, 1998,
SPX's shareholders will vote on approving the issuance of shares of SPX
Common Stock in connection with the Proposed Business Combination, which
approval would satisfy the SPX Stockholder Approval Condition.
EXTENSION, TERMINATION AND AMENDMENT
SPX expressly reserves the right (but will not be obligated), in its
sole discretion, at any time or from time to time, and regardless of
whether any of the events set forth in "-- Conditions of the Offer" shall
have occurred or shall have been determined by SPX to have occurred, to
extend the period of time during which the Offer is to remain open by
giving oral or written notice of such extension to the Exchange Agent,
which extension will be announced no later than 9:00 a.m., Eastern Time, on
the next business day after the previously scheduled Expiration Date. There
can be no assurance that SPX will exercise its right to extend the Offer.
However, it is SPX's current intention to extend the Offer until all
conditions to the Offer have been satisfied or waived. During any such
extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering shareholder to
withdraw his or her Shares. See "-- Withdrawal Rights."
Subject to the applicable rules and regulations of the Commission, SPX
also reserves the right, in its sole discretion, at any time or from time
to time, (i) to delay acceptance for exchange of, or, regardless of whether
such Shares were theretofore accepted for exchange, exchange of any Shares
pursuant to the Offer, or to terminate the Offer and not accept for
exchange or exchange any Shares not theretofore accepted for exchange, or
exchanged, upon the failure of any of the conditions of the Offer to be
satisfied, and (ii) to waive any condition (other than the SPX Stockholder
Approval Condition and the condition relating to the effectiveness of the
Registration Statement) or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination or amendment to
the Exchange Agent and by making a public announcement thereof. Any such
extension, termination, amendment or delay will be followed as promptly as
practicable by public announcement thereof, such announcement in the case
of an extension to be issued no later than 9:00 a.m., Eastern time, on the
next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange
Act, which require that any material change in the information published,
sent or given to shareholders in connection with the Offer be promptly
disseminated to shareholders in a manner reasonably designed to inform
shareholders of such change) and without limiting the manner in which SPX
may choose to make any public announcement, SPX shall have no obligation to
publish, advertise or otherwise communicate any such public announcement
other than by making a release to the Dow Jones News Service.
SPX confirms that if it makes a material change in the terms of the
Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, SPX will extend the Offer to the extent required
under the Exchange Act. If, prior to the Expiration Date, SPX shall
increase or decrease the percentage of Shares being sought or the
consideration offered to holders of Shares, such increase or decrease shall
be applicable to all holders whose Shares are accepted for exchange
pursuant to the Offer, and, if at the time notice of any such increase or
decrease is first published, sent or given to holders of Shares, the Offer
is scheduled to expire at any time earlier than the tenth business day from
and including the date that such notice is first so published, sent or
given, the Offer will be extended until the expiration of such ten business
day period. For purposes of the Offer, "business day" means any day other
than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, Eastern time.
EXCHANGE OF SHARES; DELIVERY OF SPX COMMON STOCK AND CASH CONSIDERATION
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), SPX will accept for exchange, and will exchange,
Shares validly tendered and not properly withdrawn as promptly as
practicable following the Expiration Date. In addition, subject to
applicable rules of the Commission, SPX expressly reserves the right to
delay acceptance for exchange or the exchange of Shares in order to comply
with any applicable law. In all cases, exchange of Shares tendered and
accepted for exchange pursuant to the Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Shares (or a
confirmation of a book-entry transfer of such Shares in the Exchange
Agent's account at The Depository Trust Company or The Philadelphia
Depository Trust Company (each a "Book-Entry Transfer Facility" and
collectively the "Book-Entry Transfer Facilities")), a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and any
other required documents.
For purposes of the Offer, SPX will be deemed to have accepted for
exchange Shares validly tendered and not withdrawn as, if and when SPX
gives oral or written notice to the Exchange Agent of its acceptance of the
tenders of such Shares pursuant to the Offer. Delivery of the Consideration
in exchange for Shares pursuant to the Offer, and cash in lieu of
fractional shares of SPX Common Stock, will be made by the Exchange Agent
as soon as practicable after receipt of such notice. The Exchange Agent
will act as agent for tendering shareholders for the purpose of receiving
the Consideration and cash to be paid in lieu of fractional shares of SPX
Common Stock from SPX and transmitting the Consideration and cash to
tendering shareholders. Under no circumstances will interest with respect
to fractional shares be paid by SPX by reason of any delay in making such
exchange.
If any tendered Shares are not accepted for exchange pursuant to the
terms and conditions of the Offer for any reason, or if certificates are
submitted for more Shares than are tendered or are exchanged, certificates
for such unexchanged Shares will be returned without expense to the
tendering shareholder or, in the case of Shares tendered by book-entry
transfer of such Shares into the Exchange Agent's account at a Book-Entry
Transfer Facility pursuant to the procedures set forth below under "--
Procedure for Tendering," such Shares will be credited to an account
maintained within such Book-Entry Transfer Facility as soon as practicable
following expiration or termination of the Offer.
CASH IN LIEU OF FRACTIONAL SHARES OF SPX COMMON STOCK
No certificates representing fractional shares of SPX Common Stock
will be issued pursuant to the Offer. In lieu thereof, each tendering
shareholder who would otherwise be entitled to a fractional share of SPX
Common Stock will receive cash in an amount equal to such fraction
(expressed as a decimal and rounded to the nearest 0.01 of a share) times
the closing price for shares of SPX Common Stock on the NYSE Composite Tape
on the date such shareholder's Shares are accepted for exchange by SPX.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date, and,
unless theretofore accepted for exchange and exchanged by SPX for the
Consideration pursuant to the Offer, may also be withdrawn at any time
after [ ], 1998.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth on the back cover of this
Prospectus, and must specify the name of the person having tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder, if different from that of the person who tendered
such Shares.
The signature(s) on the notice of withdrawal must be guaranteed by a
financial institution (including most banks, savings and loan associations
and brokerage houses) which is a participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (an "Eligible Institution")
unless such Shares have been tendered for the account of any Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry tender as set forth below under "--Procedure for Tendering," any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
must otherwise comply with such Book-Entry Transfer Facility's procedures.
If certificates have been delivered or otherwise identified to the Exchange
Agent, the name of the registered holder and the serial numbers of the
particular certificates evidencing the Shares withdrawn must also be
furnished to the Exchange Agent as aforesaid prior to the physical release
of such certificates.
All questions as to the form and validity (including time of receipt)
of any notice of withdrawal will be determined by SPX, in its sole
discretion, which determination shall be final and binding. Neither SPX,
the Exchange Agent, the Information Agent, the Dealer Manager nor any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification. Any Shares properly withdrawn will
be deemed not to have been validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by following one of the
procedures described under "-- Procedure for Tendering" at any time prior
to the Expiration Date.
A withdrawal of Shares shall also constitute a withdrawal of the
associated Rights. Rights may not be withdrawn unless the associated Shares
are also withdrawn.
PROCEDURE FOR TENDERING
For a shareholder validly to tender Shares pursuant to the Offer, (i)
a properly completed and duly exercised Letter of Transmittal (or manually
executed facsimile thereof), together with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a
book-entry transfer, and any other required documents, must be transmitted
to and received by the Exchange Agent at one of its addresses set forth on
the back cover of this Prospectus and either certificates for tendered
Shares must be received by the Exchange Agent at such address or such
Shares must be tendered pursuant to the procedures for book-entry transfer
set forth below (and a confirmation of receipt of such tender received
(such confirmation, a "Book-Entry Confirmation")), in each case prior to
the Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedure set forth below.
The term "Agent's Message" means a message, transmitted by a
Book-Entry Transfer Facility to, and received by, the Exchange Agent, and
forming a part of a Book-Entry Confirmation, which states that such
Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering the Shares
which are the subject of such Book-Entry Confirmation, that such
participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that SPX may enforce such agreement against such
participant.
Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless the Rights
Plan Condition has been satisfied or waived. Unless the Distribution Date
occurs, a tender of Shares will constitute a tender of the associated
Rights. If the Distribution Date occurs and separate certificates
representing the Rights are distributed by the Company or the Rights Agent
to holders of Shares prior to the time a holder's Shares are tendered
pursuant to the Offer, certificates representing a number of Rights equal
to the number of Shares tendered must be delivered to the Exchange Agent,
or, if available, a Book-Entry Confirmation received by the Exchange Agent
with respect thereto, in order for such Shares to be validly tendered. If
the Distribution Date occurs and separate certificates representing the
Rights are not distributed prior to the time Shares are tendered pursuant
to the Offer, Rights may be tendered prior to a shareholder receiving the
certificates for Rights by use of the guaranteed delivery procedure
described below. If Rights certificates are distributed but are not
available to a shareholder prior to the time Shares are tendered pursuant
to the Offer, a tender of Shares constitutes an agreement by the tendering
shareholder to deliver to the Exchange Agent pursuant to the guaranteed
delivery procedure described below, prior to the expiration of the period
to be specified in the Notice of Guaranteed Delivery and the related Letter
of Transmittal for delivery of Rights certificates or a Book-Entry
Confirmation for Rights (the "Rights Delivery Period"), Rights certificates
representing a number of Rights equal to the number of Shares tendered. If
Rights certificates are distributed, SPX will distribute a separate letter
of transmittal for such Rights certificates. If Rights certificates are
tendered separately from Shares, then a properly completed letter of
transmittal for Rights certificates (or manually executed facsimile
thereof) must be submitted with respect to such Rights. SPX reserves the
right to require that it receive such Rights certificates (or a Book-Entry
Confirmation with respect to such Rights) prior to accepting Shares for
exchange.
Nevertheless, SPX will be entitled to accept for exchange Shares
tendered by a shareholder prior to receipt of the Rights certificates
required to be tendered with such Shares or a Book-Entry Confirmation for
such Rights and either (i) subject to complying with applicable rules and
regulations of the Commission, withhold payment for such Shares pending
receipt of the Rights certificates or a Book-Entry Confirmation for such
Rights or (ii) exchange Shares accepted for exchange pending receipt of the
Rights certificates or a Book-Entry Confirmation for such Rights in
reliance upon the guaranteed delivery procedure described below. In
addition, after expiration of the Rights Delivery Period, SPX may instead
elect to reject as invalid a tender of Shares with respect to which Rights
certificates or a Book-Entry Confirmation for an equal number of Rights
have not been received by the Exchange Agent. Any determination by SPX to
make payment for Shares in reliance upon such guaranteed delivery procedure
or, after expiration of the Rights Delivery Period, to reject a tender as
invalid, shall be made, subject to applicable law, in the sole and absolute
discretion of SPX.
The Exchange Agent will establish accounts with respect to the Shares
at the Book-Entry Transfer Facilities for purposes of the Offer within two
business days after the date of the mailing of this Prospectus, and any
financial institution that is a participant in any of the Book-Entry
Transfer Facilities' systems may make book-entry delivery of the Shares by
causing such Book-Entry Transfer Facility to transfer such Shares into the
Exchange Agent's account in accordance with such Book-Entry Transfer
Facility's procedure for such transfer. However, although delivery of
Shares may be effected through book-entry at the Book-Entry Transfer
Facilities, the Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents, must, in any case,
be transmitted to and received by the Exchange Agent at one or more of its
addresses set forth on the back cover of this Prospectus prior to the
Expiration Date, or the guaranteed delivery procedure described below must
be complied with. No assurance can be given, however, that book-entry
delivery of Rights will be available. If book-entry delivery is not
available, a tendering shareholder will be required to tender Rights by
means of delivery of Rights certificates or pursuant to the guaranteed
delivery procedure set forth below.
Signatures on all Letters of Transmittal must be guaranteed by an
Eligible Institution, except in cases in which Shares are tendered (i) by a
registered holder of Shares (including any participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position
listing as the owner of Shares) who has not completed either the box
entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account
of an Eligible Institution.
If the certificates for Shares or Rights (if any) are registered in
the name of a person other than the signer of the Letter of Transmittal, or
if certificates for unexchanged Shares or Rights (if any) are to be issued
to a person other than the registered holder(s), the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on
the certificates, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS
AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL
BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
If a shareholder desires to tender Shares pursuant to the Offer and
such shareholder's certificates are not immediately available or such
shareholder cannot deliver the certificates and all other required
documents to the Exchange Agent prior to the Expiration Date or such
shareholder cannot complete the procedure for book-entry transfer on a
timely basis, such Shares may nevertheless be tendered, provided that all
of the following conditions are satisfied:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by SPX, is
received by the Exchange Agent as provided below on or prior to
the Expiration Date; and
(c) the certificates for all tendered Shares (or a confirmation of a
book-entry transfer of such securities into the Exchange Agent's
account at a Book-Entry Transfer Facility as described above), in
proper form for transfer, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and all other documents
required by the Letter of Transmittal are received by the
Exchange Agent within three NYSE trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or mail to the
Exchange Agent and must include a guarantee by an Eligible Institution in
the form set forth in such Notice.
In all cases, exchanges of Shares tendered and accepted for exchange
pursuant to the Offer will be made only after timely receipt by the
Exchange Agent of certificates for Shares (or timely confirmation of a
book-entry transfer of such securities into the Exchange Agent's account at
a Book-Entry Transfer Facility as described above), properly completed and
duly executed Letter(s) of Transmittal (or facsimile(s) thereof), or an
Agent's Message in connection with a book-entry transfer, and any other
required documents. Accordingly, tendering shareholders may be paid at
different times depending upon when certificates for Shares or
confirmations of book-entry transfers of such Shares are actually received
by the Exchange Agent.
By executing a Letter of Transmittal as set forth above, the tendering
shareholder irrevocably appoints designees of SPX as such shareholder's
attorneys-in-fact and proxies, each with full power of substitution, to the
full extent of such shareholder's rights with respect to the Shares
tendered by such shareholder and accepted for exchange by SPX and with
respect to any and all other Shares and other securities issued or issuable
in respect of the Shares on or after [ ], 1998. Such appointment is
effective, and voting rights will be effected, when and only to the extent
that SPX deposits the Consideration for Shares tendered by such shareholder
with the Exchange Agent. All such proxies shall be considered coupled with
an interest in the tendered Shares and therefore shall not be revocable.
Upon the effectiveness of such appointment, all prior proxies given by such
shareholder will be revoked, and no subsequent proxies may be given (and,
if given, will not be deemed effective). SPX's designees will, with respect
to the Shares for which the appointment is effective, be empowered, among
other things, to exercise all voting and other rights of such shareholder
as they, in their sole discretion, deem proper at any annual, special or
adjourned meeting of Company shareholders, by written consent in lieu of
any such meeting or otherwise. SPX reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon SPX's
exchange of such Shares, SPX must be able to exercise full voting rights
with respect to such Shares.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Shares will be
determined by SPX, in its sole discretion, which determination shall be
final and binding. SPX reserves the absolute right to reject any and all
tenders of Shares determined by it not to be in proper form or the
acceptance of or exchange for which may, in the opinion of SPX's counsel,
be unlawful. SPX also reserves the absolute right to waive any of the
conditions of the Offer (other than the SPX Stockholder Approval Condition
and the condition relating to the effectiveness of the Registration
Statement), or any defect or irregularity in the tender of any Shares. No
tender of Shares will be deemed to have been validly made until all defects
and irregularities in such tender have been cured or waived. Neither SPX,
the Exchange Agent, the Information Agent, the Dealer Manager nor any other
person will be under any duty to give notification of any defects or
irregularities in the tender of any Shares or will incur any liability for
failure to give any such notification. SPX's interpretation of the terms
and conditions of the Offer (including the Letter of Transmittal and
instructions thereto) will be final and binding.
The tender of Shares pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Company
shareholder and SPX upon the terms and subject to the conditions of the
Offer.
FEDERAL INCOME TAX WITHHOLDING AND BACKUP WITHHOLDING
To prevent backup U.S. federal income tax withholding equal to 31% of
the gross proceeds (i.e., SPX Common Stock and cash) payable pursuant to
the Offer, each shareholder who does not otherwise establish an exemption
from backup withholding must notify the Exchange Agent of such
shareholder's correct taxpayer identification number (or certify that such
taxpayer is awaiting a taxpayer identification number) and provide certain
other information by completing, under penalties of perjury, a Substitute
Form W-9 included in the Letter of Transmittal. Noncorporate foreign
shareholders should generally complete and sign a form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Exchange Agent, in
order to avoid backup withholding. As more fully described below, in the
case of a foreign shareholder, even if such shareholder has provided the
required certification to avoid backup withholding, the Exchange Agent will
withhold 30% of certain cash payments made pursuant to the Offer unless a
reduced rate of withholding or an exemption from withholding is applicable.
The Exchange Agent will withhold United States federal income taxes
equal to 30% of the gross cash payments supplied by SPX (i.e. cash paid
pursuant to the Offer other than cash held by the Company prior to the
Merger plus the increase in liabilities of the Company arising by virtue of
the Merger) payable to foreign shareholders in the Offer unless SPX and the
Exchange Agent determine that (i) a reduced rate of withholding is
available pursuant to a tax treaty or (ii) an exemption from withholding is
applicable because such gross cash proceeds are effectively connected with
the conduct of a trade or business within the United States. For these
purposes, a foreign shareholder is any shareholder other than (a) a citizen
or resident of the United States, (b) a corporation, partnership, or other
entity created or organized in or under the laws of the United States, any
State or any political subdivision thereof, (c) an estate the income of
which is subject to United States federal income taxation regardless of its
source or (d) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one
or more United States persons have the authority to control all substantial
decisions of the trust. In order to obtain a reduced rate of withholding
pursuant to a tax treaty, a foreign shareholder must deliver to the
Exchange Agent before any payment a properly completed and executed IRS
Form 1001. In order to obtain an exemption from withholding on the grounds
that the gross cash proceeds received from SPX pursuant to the Offer and
the Merger are effectively connected with the conduct of a trade or
business within the United States, a foreign shareholder must deliver to
the Exchange Agent before any payment a properly completed and executed IRS
form 4224, SPX and the Exchange Agent will determine a shareholder's status
as a foreign shareholder and eligibility for a reduced rate of, or
exemption from, withholding by reference to any outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or Form 4224) unless facts and
circumstances indicate that such reliance thereon is not warranted. A
foreign shareholder may be eligible to obtain a refund of all or a portion
of any tax withheld if such shareholder meets the "substantially
disproportionate" or "meaningful reduction" tests of Section 302 of the
Code, as modified and applied under Code Section 304 (see "Certain Federal
Income Tax Consequences - Shareholders Owning Both Shares and SPX Common
Stock"), or such shareholder is otherwise able to establish that no tax or
a reduced amount of tax is due. Backup withholding generally will not apply
to amounts subject to the 30% or a treaty-reduced rate of withholding. [The
foregoing discussion assumes that the Offer and the Merger will be
effectuated prior to January 1, 1999. If the transactions were not
effectuated by this date, different withholding rules may apply to foreign
shareholders.]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material anticipated federal
income tax consequences of the Offer and the Merger. This discussion does
not address all aspects of U.S. federal income taxation that may be
relevant to a particular investor in light of the investor's particular
circumstances, and may not apply to Company shareholders in special tax
situations (such as insurance companies, regulated investment companies,
financial institutions, dealers in securities, tax exempt organizations,
persons who hold Shares as part of a "straddle", "hedging" or "conversion"
transaction or persons whose functional currency (as defined in Section 985
of the Code is not the United States dollar) or to shareholders who
acquired their Shares pursuant to the exercise of employee stock options or
warrants, or otherwise as compensation. The summary also does not discuss
the tax consequences to holders of Company warrants or stock options, nor
to persons who exercise dissenters' rights in the Merger. The discussion
below applies only to shareholders who hold their Shares as capital assets,
within the meaning of Section 1221 of the Code. This discussion is based
upon laws, regulations, rulings, administrative pronouncements and
decisions, all as in effect as of the date hereof and all of which are
subject to change (possibly with retroactive effect), and no ruling has
been or will be requested from the Internal Revenue Service on the tax
consequences of the Offer and the Merger.
The discussion below applies only to a United States Person. As used
herein, the term United States Person means (a) a citizen or resident of
the United States, (b) a corporation, partnership, or other entity created
or organized in or under the laws of the United States, any State or any
political subdivision thereof, (c) an estate the income of which is subject
to U.S. federal income taxation regardless of its source or (d) a trust, if
a court within the United States is able to exercise primary supervision
over the administration of the trust and one or more United States Persons
have the authority to control all substantial decisions of the trust.
Tax Treatment of the Offer and the Merger. The exchange of Shares for
cash and SPX Common Stock pursuant to the Offer or the Merger (or both)
will be a taxable transaction for U.S. federal income tax purposes, and may
also be taxable under applicable state, local and foreign tax laws.
Although, as described below, the exchange of Shares in the Offer and the
Merger is likely to be governed in part by Section 304 of the Code, in
general (subject to the discussion below with respect to shareholders
owning, directly or constructively, stock in both the Company and SPX other
than the SPX Common Stock received in the Offer or the Merger (see
"--Shareholders Owning Both Shares and SPX Common Stock," below)), for U.S.
federal income tax purposes, each shareholder will recognize capital gain
or loss equal to the difference between (x) the amount of cash and the fair
market value of the shares of SPX Common Stock received and (y) the
shareholder's adjusted tax basis in the Shares exchanged therefor.
Calculation of gain or loss must be made separately for each block of
Shares exchanged by a shareholder. Any gain recognized will (in the case of
individual shareholders) be subject to reduced rates of taxation if the
shareholder's holding period for the Shares exceeds 12 months, subject to
further reduction in the case of Shares held for more than 18 months. The
shareholder will have a tax basis in the SPX Common Stock received equal to
the fair market value thereof, and the shareholder's holding period for the
SPX Common Stock will begin on the day following the date of the exchange.
Shareholders Owning Both Shares and SPX Common Stock. If, as is
believed likely, the Offer and the Merger are treated as a single
integrated transaction for U.S. federal income tax purposes, the portion of
a shareholder's Shares exchanged for cash attributable to SPX (the "SPX
Cash") should be treated as a deemed distribution in redemption of SPX
Common Stock it owns or is considered to own pursuant to Section 304 of the
Code. SPX Cash is equal to the cash exchanged in the Offer and the Merger,
minus the sum of any such cash attributable to cash held by the Company
immediately prior to the Merger plus any increase in indebedness of the
Company arising by virtue of the Merger. As a result, a shareholder who
immediately prior to exchanging Shares in the Offer or Merger owns SPX
Common Stock (either directly or pursuant to certain constructive ownership
rules which are described below and not including SPX Common Stock received
in the Offer or the Merger) may have different tax treatment than that
discussed above under the heading "Tax Treatment of the Offer and the
Merger." Such shareholders will recognize capital gain or loss on the
portion of their Shares exchanged for SPX Common Stock and cash that is not
SPX Cash ("Company Cash"), in an amount equal to the difference between (x)
the sum of the Company Cash and the fair market value of the SPX Common
Stock received and (y) the shareholder's tax basis in the Shares deemed
exchanged therefor. Any such gain will be taxed as described above under
the heading "Tax Treatment of the Offer and the Merger." However, such
shareholders will recognize capital gain or loss with respect to the
portion of their Shares exchanged for SPX Cash only if, after giving effect
to the constructive ownership rules of Section 318 of the Code (as modified
for purposes of Section 304), the receipt of such cash either is (a)
"substantially disproportionate" with respect to that shareholder or (b) is
"not essentially equivalent to a dividend" with respect to that shareholder
within the meaning of Section 302 of the Code (collectively, the "Section
302 Tests"). Both of these tests, and Section 318, are described below.
If either of the Section 302 Tests is satisfied with respect to a
shareholder, that shareholder will recognize capital gain or loss equal to
the difference between the amount of SPX Cash received pursuant to the
Offer or Merger (or both) and that shareholder's basis for the Shares
exchanged therefor. Any such gain will be taxed as described above under
the heading "Tax Treatment of the Offer and the Merger."
If neither of the Section 302 Tests is satisfied with respect to a
shareholder, that shareholder will be treated as having received a dividend
(taxable as ordinary income) in an amount equal to the SPX Cash (or, if
less, equal to that shareholder's allocable portion of the Company's and
SPX's current and accumulated earnings and profits ("E&P")). Any SPX Cash
received in excess of such allocable portion of E&P will be treated, first,
as a non-taxable return of capital to the extent of the shareholder's basis
in the SPX Common Stock treated as redeemed, and thereafter as capital gain
to the extent it exceeds such basis. Proper adjustment will be made to such
shareholder's basis for his SPX Shares, if any, to reflect any unutilized
basis for the stock treated as redeemed. Corporate holders of Shares who
are deemed to receive a dividend pursuant to the Offer or the Merger will
be subject to special rules described under "Treatment of Dividends to
Corporate Shareholders" below.
A deemed redemption of SPX Common Stock from a shareholder will be
"substantially disproportionate" with respect to that shareholder if (a)
the percentage of the outstanding Shares constructively owned by the
shareholder immediately following the Merger is less than (b) 80% of the
percentage of the outstanding Shares actually and constructively owned by
that shareholder immediately before the purchase of Shares pursuant to the
Offer and the Merger.
A shareholder who fails to satisfy the "substantially
disproportionate" test may nevertheless satisfy the "not essentially
equivalent to a dividend" test if such shareholder's disposition of Shares
pursuant to the Offer or the Merger results in a "meaningful reduction" in
his proportionate interest in the Company. Whether the receipt of cash by a
shareholder will be "not essentially equivalent to a dividend" depends on
the particular shareholder's facts and circumstances. The IRS has indicated
in published rulings that even a small reduction in the proportionate
interest of a small minority shareholder in a publicly held corporation who
exercises no control over corporate affairs may constitute such a
"meaningful reduction".
In determining whether either of the Section 302 Tests is satisfied, a
shareholder must take into account not only stock of the Company which he
actually owns, but also stock of the Company which he constructively owns
pursuant to Section 318 of the Code as modified for purpose of Section 304
of the Code. Under Section 318 of the Code as modified, (i) a stockholder
of SPX (no matter how small its ownership interest in SPX) will be treated
as constructively owning a proportionate part of the stock of the Company
owned by SPX after consummation of the Offer and Merger, and (ii) certain
modified rules will apply in determining the extent to which a corporation
will be treated as owning stock actually or constructively owned by its
stockholders. In addition, a stockholder may constructively own stock of
the Company and of SPX (a) actually owned, and in some cases constructively
owned, by certain related individuals and entities, and (b) which the
stockholder has the right to acquire by exercise of an option or a
conversion privilege (including, perhaps, the Rights).
Treatment of Dividends to Corporate Shareholders. To the extent that
SPX Cash received in exchange for Shares is treated as a dividend to a
corporate shareholder, such holder will be (i) eligible for a dividends
received deduction (subject to applicable limitations) and (ii) subject to
the "extraordinary dividend" provisions of the Code. Under recently enacted
legislation, any SPX Cash which is treated as a dividend to a corporate
shareholder will constitute an extraordinary dividend, except as otherwise
provided in Treasury regulations which have yet to be promulgated.
Consequently, the nontaxed portion of the dividend would reduce a corporate
holder's adjusted tax basis in the Shares exchanged for SPX Cash, but not
below zero, and would thereafter be taxable as a capital gain from the sale
or exchange of the Shares exchanged for SPX Cash.
Tax Treatment if Offer and Merger are Not Integrated. In the unlikely
event that the Offer and the Merger were not treated as a single integrated
transaction for U.S. federal income tax purposes, both the Offer and the
Merger would be taxable transactions. The cash received in the Offer would
be subject to Section 304 of the Code, and the tax consequences to an
individual shareholder would depend on the application of the Section 302
Tests (as described above) to such shareholder based on such shareholder's
particular facts and circumstances. The cash received in the Merger might
also in part be subject to Section 304 of the Code. However, any
shareholder who tenders all of its Shares in the Offer and does not,
actually or by attribution, own any shares of SPX Common Stock immediately
prior to the effectuation of the Offer, should recognize capital gain or
loss.
RIGHTS
Because there is no specific binding authority dealing with securities
such as the Rights, it is unclear what the U.S. federal income tax
consequences are of the Rights becoming separately transferable apart from
the Shares, the redemption of the Rights, or the acquisition by SPX of the
Rights. Company shareholders should consult their own tax advisors as to
the tax consequences of transactions with respect to the Rights.
THE FOREGOING DISCUSSION RELATES TO THE MATERIAL ANTICIPATED U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER. THE ANALYSIS
CONTAINED HEREIN DOES NOT ADDRESS STATE, LOCAL, OR FOREIGN TAX CONSEQUENCES
OF THE OFFER AND THE MERGER, OR ANY OTHER UNITED STATES TAX CONSEQUENCE
OTHER THAN INCOME TAX CONSEQUENCES (E.G., ESTATE OR GIFT TAX CONSEQUENCES),
AND DOES NOT CONSTITUTE TAX ADVICE TO ANY PARTICULAR COMPANY SHAREHOLDER.
COMPANY SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC
TAX CONSEQUENCES OF THE OFFER AND THE MERGER.
See "Federal Income Tax Withholding and Backup Withholding" for
information regarding the application of U.S. federal income tax
withholding and backup withholding.
EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade
publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public.
The Shares are listed and principally traded on the NYSE and are also
listed on the PE and the International Stock Exchange in London. Depending
upon the number of Shares acquired pursuant to the Offer, following
consummation of the Offer the Shares may no longer meet the requirements of
such securities exchanges for continued listing. For example, published
guidelines of the NYSE indicate that the NYSE would consider delisting the
outstanding Shares if, among other things, (i) the number of publicly held
Shares (exclusive of holdings of officers, directors and members of their
immediate families and other concentrated holdings of 10% or more) should
fall below 600,000, (ii) the number of record holders of 100 or more Shares
should fall below 1,200 or (iii) the aggregate market value of publicly
held Shares should fall below $5 million.
According to a shareholder list provided to SPX by the Company, there
were outstanding, as of February 17, 1998, 63,248,939 Shares, and according
to the Company's 1997 Form 10-K, as of December 31, 1997, there were
options to acquire 2,044,284 Shares, and, as of November 5, 1997, 3,295
record holders of Shares.
If the NYSE were to delist the Shares, the market therefor could be
adversely affected. It is possible that the Shares would be traded on other
securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, through NASDAQ or by other
sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares
under the Exchange Act, as described below, and other factors.
The Shares are presently "margin securities" under the regulations of
the Federal Reserve Board, which has the effect, among other things, of
allowing brokers to extend credit on the collateral of such Shares.
Depending on factors similar to those described above with respect to
listing and market quotations, following consummation of the Offer the
Shares may no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations, in which event the Shares would
be ineligible as collateral for margin loans made by brokers. The Shares
are currently registered under the Exchange Act. Such registration may be
terminated by the Company upon application to the Commission if the
outstanding Shares are not listed on a national securities exchange and if
there are fewer than 300 holders of record of Shares. Termination of
registration of the Shares under the Exchange Act would reduce the
information required to be furnished by the Company to its shareholders and
to the Commission and would make certain provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b) and the
requirement of furnishing a proxy statement in connection with
shareholders' meetings pursuant to Section 14(a) and the related
requirement of furnishing an annual report to shareholders, no longer
applicable with respect to the Shares. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of
the Company to dispose of such securities pursuant to Rule 144 under the
Securities Act may be impaired or eliminated. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be
eligible for Nasdaq reporting or for continued inclusion on the Federal
Reserve Board's list of "margin securities."
The Rights are registered under the Exchange Act and are listed on the
NYSE, but currently are attached to the outstanding Shares and are not
separately transferable. The Rights may become transferable apart from the
Shares, unless previously redeemed or unless the Rights Agreement is
amended so as to make the Offer not applicable to the Rights. If the Rights
are not redeemed and the Rights Agreement is not so amended so as to make
the Offer inapplicable to the Rights and SPX waives the Rights Plan
Condition, then the foregoing discussion with respect to the effect of the
Offer on the Shares would be similarly applicable to the Rights (although
the continued listing criteria are different).
PURPOSE OF THE OFFER; THE MERGER
The purpose of the Offer is to enable SPX to obtain control of, and
ultimately the entire equity interest in, the Company.
The Offer, as the first step in the acquisition by SPX, is intended to
facilitate the acquisition of all of the Shares. SPX presently intends,
following consummation of the Offer, to propose and seek to have the
Company effect the Merger. In the Merger, each outstanding share (other
than Shares owned by SPX or any of its affiliates, Shares held in the
treasury of the Company or by any subsidiary of the Company and Shares
owned by the Company's shareholders who perfect dissenters' rights under
Connecticut law) would be converted into the right to receive the
Consideration. Assuming the Minimum Tender Condition and the other Offer
Conditions are satisfied (or waived, as applicable) and SPX consummates the
Offer, SPX would be able to consummate the Merger without any additional
vote of the holders of SPX Common Stock or the vote of any other
shareholders of the Company.
It is SPX's current intention to consummate the Offer as soon as the
conditions to the Offer are satisfied and to consummate the Merger as soon
as possible after successful completion of the Offer.
SPX reserves the right to change the structure of the Merger to
provide for the merger of a subsidiary of SPX into the Company or for a
merger of the Company into SPX in the context of a negotiated transaction
with the Company.
CONDITIONS OF THE OFFER
Minimum Tender Condition. The Offer is conditioned upon, among other
things, there being validly tendered and not withdrawn prior to the
Expiration Date a number of Shares which, together with Shares owned by SPX
and its affiliates, will constitute at least 66-2/3% of the total number of
outstanding Shares on a fully diluted basis (as though all options or other
securities convertible into or exercisable or exchangeable for Shares,
other than the Rights, had been so converted, exercised or exchanged) as of
the date the Shares are accepted for exchange by SPX pursuant to the Offer.
According to a shareholder list provided to SPX by the Company, as of
February 17, 1998, there were 63,248,939 Shares outstanding and according
to the Company's 1997 Form 10-K, as of December 31, 1997, options covering
an aggregate of 2,044,284 Shares had been granted. As of the date of this
Prospectus, SPX owned 1,150,150 Shares, or approximately 1.82% of the
outstanding Shares. Based on the foregoing, and assuming no additional
Shares have been or will be issued after February 17, 1998 (other than
Shares issued pursuant to the exercise of the stock options referred to
above), and no options, warrants or rights exercisable for, or securities
convertible into, Shares have been or will be issued after December 31,
1997, the Minimum Tender Condition would be satisfied if at least
42,378,666 Shares were validly tendered into and not withdrawn from the
Exchange Offer. SPX reserves the right (but shall not be obligated),
subject to the rules and regulations of the Commission, to waive or amend
the Minimum Tender Condition and to exchange fewer than such number of
Shares as would satisfy the Minimum Tender Condition pursuant to the Offer;
provided, however, that, in the event of such waiver or amendment, the
Offer will expire no sooner than ten business days from the date of such
waiver or amendment.
SPX Stockholder Approval Condition. The Offer is conditioned upon,
among other things, the satisfaction of the SPX Stockholder Approval
Condition. Pursuant to the rules of the NYSE (on which the SPX Common Stock
is listed), because the number of shares of SPX Common Stock to be issued
in the Offer and the Merger will exceed 20% of the shares outstanding prior
to such issuance, the issuance must be approved by the holders of a
majority of the shares of SPX Common Stock, voted at a meeting of such
holders at which the total number of votes cast represents over 50% in
interest of all shares of SPX Common Stock outstanding on the applicable
record date. Under the Delaware General Corporation Law and the NYSE rules,
approval by a majority of the votes entitled to be cast by the holders of
SPX Common Stock that are present or represented by proxy is required to
effect the amendment. SPX will seek such approval at the SPX Annual Meeting
of Shareholders to be held on May 20, 1998.
Rights Plan Condition. The Offer is conditioned upon, among other
things, the satisfaction of the Rights Plan Condition. The Rights Plan
Condition may be satisfied in several ways, including by the Company's
Board of Directors (a) amending the Rights Agreement so that the Rights
would not be triggered by the Offer and the Merger or (b) redeeming the
Rights. As noted above, if the SPX Nominees are elected to the Board of
Directors of the Company, it is expected that they will take all action
required to cause the Rights Plan Condition to be satisfied, subject to
their fiduciary and statutory duties as Directors of the Company.
For additional information concerning the Rights Agreement, see "The
Offer--The Rights" and "Comparison of Rights of Holders of Shares and SPX
Common Stock."
Business Combination Statutes Condition. The Offer is conditioned
upon, among other things, SPX being satisfied, in its sole judgment, that
the provisions of Sections 841 and 844 of the Connecticut Business
Combination Statutes are inapplicable to SPX, the Offer and the Merger and
that (i) the only approval necessary by the shareholders of the Company to
approve the Merger is the affirmative vote of 66-2/3% of the outstanding
Shares (and, in such vote, that the Shares held by SPX or any affiliate of
SPX will have full voting rights) and (ii) the Connecticut Business
Combination Statutes will not prohibit for any period of time the
consummation of the Merger or any other "business combination" (as defined
in such statutes) involving SPX or any affiliate or associate of SPX.
Section 844 of the Business Combination Statutes provides that a
corporation may not engage in any business combination with an "Interested
Shareholder" (defined as the beneficial owner of 10% or more of the voting
power of a company) for five years following the date on which the
Interested Shareholder became such unless the acquisition which resulted in
the Interested Shareholder becoming such (the "10% Acquisition"), or the
business combination, is approved by the board of directors and by a
majority of the non-employee directors, of which there shall be at least
two, before the date of the 10% Acquisition.
Sections 841 and 842 of the Business Combination Statutes provide that
any business combination with an Interested Shareholder that was not
approved by the board of directors prior to the 10% Acquisition must be
approved by the board of directors, 80% of the voting power of the
outstanding shares of the voting stock of the corporation and two-thirds of
the voting power not controlled by the Interested Shareholder or meet
certain conditions regarding minimum price and type of consideration.
As noted above, if the SPX Nominees are elected to the Board of
Directors of the Company, it is expected that they will take all action
required to cause the Business Combination Statutes Condition to be
satisfied, subject to their fiduciary duties as directors of the Company
and the general statutory standards applicable to any person serving as a
director of a Connecticut corporation as required in Section 756 of the
Connecticut Business Act.
For additional information concerning the Business Combination
Statutes, see "Comparison of Rights of Holders of Shares and SPX Common
Stock."
Financing Condition. The Offer is conditioned upon, among other
things, SPX obtaining, prior to the expiration of the Offer, on terms and
conditions satisfactory to SPX in its sole discretion, sufficient Financing
to enable consummation of the Offer and the Merger (the "Financing
Condition"). SPX estimates that the total amount of financing that will be
required to pay the cash component of the Consideration in the Proposed
Business Combination, to refinance outstanding debt of SPX and of the
Company, to pay fees and expenses related to the Proposed Business
Combination and to provide working capital will be approximately $2.4
billion. SPX has received a highly confident letter from CIBC and its
affiliate, CIBC Oppenheimer, dated February 13, 1998, in which the two
entities have stated that they are highly confident of their ability to
raise the Financing, subject to certain conditions set forth therein,
including without limitation (i) acceptance by the Company of SPX's
proposal and execution of the definitive documentation; (ii) satisfactory
completion of financial, business and legal due diligence by CIBC and CIBC
Oppenheimer regarding the Company; (iii) agreement among SPX, CIBC and CIBC
Oppenheimer upon a mutually acceptable set of terms and conditions upon
which a lending commitment could be issued; (iv) the absence of any
material adverse change in the business, condition (financial or
otherwise), results of operations, assets, liabilities or prospects of SPX
or the Company; (v) no material disruption or adverse change in CIBC or
CIBC Oppenheimer's opinion in the financial, banking or capital markets;
and (vi) the receipt of all necessary governmental, regulatory and
third-party approvals and consents in connection with the transaction.
Regulatory Approval Condition. The Offer is conditioned upon, among
other things, any regulatory approvals required to consummate the Offer
(the "Requisite Regulatory Approvals") having been obtained and remaining
in full force and effect, all statutory waiting periods in respect thereof
having expired and no such approval containing any conditions or
restrictions which the Board of Directors of SPX determines will or
reasonably could be expected to materially impair the strategic and
financial benefits expected to result from the Offer (the "Regulatory
Approval Condition"). Based on the Company's public filings, these
approvals may include the approval of certain foreign governmental
agencies. SPX will use its reasonable best efforts to obtain the Requisite
Regulatory Approvals. The Offer cannot proceed in the absence of any
Requisite Regulatory Approvals. Although no assurances can be given, SPX
anticipates that it will receive any Requisite Regulatory Approvals on a
timely basis.
Under the HSR Act and the rules and regulations that have been
promulgated thereunder, certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division and the FTC and certain waiting period requirements have been
satisfied. On January 6, 1998, SPX filed with the Antitrust Division and
the FTC its HSR Filing seeking to acquire up to 100% of the outstanding
Shares. At 11:59 p.m. on February 5, 1998 the waiting period expired with
respect to SPX's HSR Filing. Accordingly, satisfaction of the premerger
notification and waiting period requirements of the HSR Act is not a
condition of the Offer.
Certain stockholders of the Company may be required to make separate
filings with the Antitrust Division and the FTC under the HSR Act and the
rules and regulations that have been promulgated thereunder in conjunction
with the receipt of shares of SPX Common Stock. Such shareholders will then
be required to observe applicable waiting periods under the HSR Act and the
rules and regulations promulgated thereunder before receiving shares of SPX
Common Stock. If any shareholder is obligated to make such a filing, SPX
will deposit the shares of SPX Common Stock to be exchanged, pursuant to
the rules and regulations promulgated under the HSR Act, pending expiration
or early termination of the waiting period.
Except as set forth above, based upon an examination of publicly
available information filed by the Company with the Commission and other
publicly available information with respect to the Company, SPX is not
aware of (a) any license or regulatory permit which appears to be material
to the business of the Company and its subsidiaries taken as a whole, and
which is likely to be adversely affected by SPX's acquisition of Shares
pursuant to the Offer or (b) any approval or other action by any state,
federal or foreign governmental, administrative or regulatory agency or
authority (each, a "Governmental Entity") that would be required prior to
the acquisition of Shares pursuant to the Offer. SPX presently intends to
take such actions with respect to any approvals as will enable it to
consummate the Offer. In this regard, SPX expressly reserves the right to
challenge the validity and applicability of any state, foreign or other
statutes or regulations purporting to require approval of the consummation
of the Offer.
There can be no assurance that any license, permit, approval or other
action, if needed, would be obtained, or would be obtained without
substantial conditions, or, if so obtained, when it would be obtained, or
that adverse consequences might not result to the Company, SPX or their
respective businesses in the event of adverse regulatory action or
inaction.
Certain Other Conditions of the Offer. Notwithstanding any other
provision of the Offer and subject to any applicable rules and regulations
of the Commission, including Rule 14e-1(c) under the Exchange Act (relating
to SPX's obligation to exchange or return tendered Shares promptly after
the termination or withdrawal of the Offer), SPX shall not be required to
accept for exchange or exchange any Shares, may postpone the acceptance for
exchange or exchange for tendered Shares and may, in its sole discretion,
terminate or amend the Offer as to any Shares not then exchanged if, at the
Expiration Date, the Minimum Tender Condition, the SPX Stockholder Approval
Condition, the Rights Plan Condition, the Business Combination Statutes
Condition, the Financing Condition, and the Regulatory Approval Condition
shall not have been satisfied or, if legally permissible, waived, or if on
or after the date of this Prospectus and on or prior to the Expiration
Date:
(x) either of the following events shall not have occurred:
(a) The shares of SPX Common Stock (and the accompanying SPX Rights)
which shall be issued to the shareholders of the Company in the
Offer and the Merger shall have been authorized for listing on
the NYSE, subject to official notice of issuance; or
(b) The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or
threatened by the Commission; or
(y) any of the following conditions shall exist:
(a) there shall have been threatened or be pending any action or
proceeding before any court or Governmental Entity, (i)
challenging or seeking to restrain or prohibit, or seeking to
impose voting, procedural, price or other requirements, in
addition to those required by federal securities laws and the
Connecticut Business Act (each as in effect on the date of this
Offer), in connection with, the making of the Offer, the
acceptance for exchange of, or exchange for, any Shares by SPX or
any affiliate of SPX or the consummation by SPX or any affiliate
of SPX of the Merger or other business combination with the
Company, or seeking to obtain material damages in connection
therewith; (ii) seeking to prohibit or limit materially the
ownership or operation by the Company, SPX or any of their
subsidiaries of any material portion of the business or assets of
the Company, SPX or any of their subsidiaries, or to compel the
Company, SPX or any of their subsidiaries to dispose of or hold
separate any material portion of the business or assets of the
Company, SPX or any of their subsidiaries; (iii) seeking to
impose limitations on the ability of SPX or any affiliate of SPX
to exercise effectively full rights of ownership of any Shares
(including the Rights associated with Shares), including, without
limitation, the right to vote any Shares acquired by SPX pursuant
to the Offer or otherwise on all matters previously presented to
the Company's shareholders; (iv) seeking to require divestiture
by SPX or any of SPX's affiliates of any Shares; (v) seeking any
material diminution in the benefits expected to be derived by SPX
or any affiliates of SPX as a result of the transactions
contemplated by the Offer or the Merger or any other similar
business combination with the Company; (vi) otherwise directly or
indirectly relating to the Offer or which otherwise, in the
reasonable judgment of SPX, might materially adversely affect the
Company or any of its subsidiaries or SPX or any affiliate of SPX
or the value of the Shares; or (vii) which otherwise, in the
reasonable judgment of SPX, is reasonably likely to have a
material adverse effect on the business, operations (including,
without limitation, result of operations), condition (financial
or otherwise), assets, liabilities or prospects of the Company
and its subsidiaries taken as a whole (a "Material Adverse
Effect") or on SPX;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or
injunction enacted, entered, enforced, or deemed applicable to
(i) SPX, the Company or any affiliate of SPX or the Company or
(ii) the Offer or the Merger or other business combination by SPX
or any affiliate of SPX with the Company, by any legislative
body, court, or Governmental Entity, which, in the reasonable
judgment of SPX, is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i)
through (vii) of paragraph (y)(a) above;
(c) there shall have occurred any change, condition, event or
development which, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect or SPX
shall have become aware of any fact of which SPX had no actual or
constructive knowledge as of the date of this Offer which,
individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the
United States, (ii) any significant adverse change in interest
rates, the financial markets or major stock exchange indices in
the United States or abroad or in the market price of Shares,
including without limitation any decline, measured from the close
of business on [ ], 1998, in the Standard & Poor's
500 Index by an amount in excess of 10%, (iii) any change in the
general political, market, economic, regulatory or financial
condition in the United States or abroad that could, in the
reasonable business judgment of SPX, have a Material Adverse
Effect, (iv) any material adverse change in United States
currency exchange rates or a suspension of, or limitation on,
currency exchange markets, (v) a declaration of a banking
moratorium or any suspension of payments in respect of banks in
the United States, (vi) any limitation (whether or not mandatory)
by any government or Governmental Entity on, or other event that,
in the reasonable judgment of SPX, might affect the extension of
credit by banks or other lending institutions, (vii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the
United States or (viii) in the case of any of the foregoing
existing on [ ], 1998, a material acceleration or
worsening thereof;
(e) The Company or any of its affiliates shall have, directly or
indirectly, (i) split, combined or otherwise changed, or
authorized or proposed a split, combination or other change of,
the Shares or its capitalization (other than by redemption of the
Rights in accordance with their terms as such terms have been
publicly disclosed prior to the date of this Offer), (ii)
acquired or otherwise caused a reduction in the number of, or
authorized or proposed the acquisition or other reduction in the
number of, outstanding Shares or other securities (other than as
aforesaid), (iii) issued or sold, or authorized or proposed the
issuance, distribution or sale of, additional Shares (other than
the issuance of Shares under options granted prior to the date of
this Offer, in accordance with the terms of such options as such
terms have been publicly disclosed prior to the date of this
Offer), shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire, any of
the foregoing, (iv) declared or paid, or proposed to declare or
pay, any dividend or other distribution, whether payable in cash,
securities or other property, on or with respect to any shares of
capital stock of the Company (other than (A) a regular cash
quarterly dividend not in excess of $0.225 per Share, having
customary and usual record and payment dates and (B) in the event
the Rights are redeemed, the price of redemption thereof), (v)
altered or proposed to alter any material term of any outstanding
security (including the Rights) other than to amend the Rights
Agreement to make the Rights inapplicable to the Offer and the
Merger, (vi) incurred any debt other than in the ordinary course
of business or any debt containing burdensome covenants, (vii)
authorized, recommended, proposed or entered into an agreement,
arrangement or understanding with respect to any merger,
consolidation, liquidation, dissolution, business combination,
acquisition of assets, disposition of assets, release or
relinquishment of any material contractual or other right of the
Company or any of its subsidiaries or any comparable event not in
the ordinary course of business, (viii) authorized, recommended,
proposed or entered into, or announced its intention to
authorize, recommend, propose or enter into, any agreement,
arrangement or understanding with any person or group that in the
reasonable judgment of SPX could adversely affect either the
value of the Company or any of its subsidiaries or other
affiliates or the value of the Shares to SPX or any affiliate of
SPX, (ix) entered into or amended any employment, change in
control, severance, executive compensation or similar agreement,
arrangement or plan with or for the benefit of any of its
employees, consultants or directors, or made grants or awards
thereunder, other than in the ordinary course of business or
entered into or amended any agreements, arrangements or plans so
as to provide for increased or accelerated benefits to any such
person, (x) except as may be required by law, taken any action to
terminate or amend any employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended) of the Company or any of its subsidiaries, (xi)
amended or authorized or proposed any amendment to the Company's
Certificate of Incorporation or By-Laws, or (xii) SPX shall have
become aware that the Company or any of its subsidiaries shall
have taken any of the foregoing actions that was not disclosed in
publicly available filings prior to the date of this Offer;
(f) SPX shall have reached an agreement or understanding with the
Company providing for termination of the Offer, or SPX or any
affiliate of SPX shall have entered into a definitive agreement
or announced an agreement in principle with the Company providing
for a merger or other business combination with the Company or
the purchase of stock or assets of the Company;
which, in the reasonable judgment of SPX in any such case, and regardless
of the circumstances (including any action or inaction by SPX or any of its
affiliates) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment.
The foregoing conditions are for the sole benefit of SPX and may be
asserted by SPX regardless of the circumstances giving rise to any such
condition or may be waived by SPX in whole or in part at any time and from
time to time. The determination as to whether any condition has been
satisfied shall be in the reasonable judgment of SPX and will be final and
binding on all parties. The failure by SPX at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that
may be asserted at any time and from time to time. Notwithstanding the fact
that SPX reserves the right to assert the failure of a condition following
acceptance for exchange but prior to exchange in order to delay exchange or
cancel its obligation to exchange properly tendered Shares, SPX will either
promptly exchange such Shares or promptly return such Shares.
SOURCE AND AMOUNT OF FUNDS
SPX estimates that the total amount of funds that will be required to
pay the cash component of the Consideration in the Proposed Business
Combination, to refinance outstanding debt of SPX and of the Company, to
pay fees and expenses related to the Proposed Business Combination and to
provide working capital will be approximately $2.4 billion. See "The
Offer-Fees and Expenses." SPX plans to obtain the necessary Financing
pursuant to credit facilities to be arranged by CIBC and CIBC Oppenheimer.
SPX has received a letter from those two entities, dated February 13, 1998,
in which CIBC and CIBC Oppenheimer have stated that they are highly
confident of their ability to raise the Financing. See "--Conditions of the
Offer-Financing Condition."
DEBT INSTRUMENTS OF THE COMPANY
SPX has not had access to, and therefore has not been able to review,
any of the documents governing any indebtedness of the Company. Some or all
of these documents may contain provisions for acceleration of the Company's
indebtedness upon a change in control of the Company. In arranging for
receipt of the "highly confident" letter with respect to the financing
necessary to effect the transaction, SPX has assumed that all of the
indebtedness of the Company would need to be refinanced.
RELATIONSHIPS WITH THE COMPANY
Except as set forth herein under the captions "Prospectus
Summary--Background of the Offer" and "Background of the Offer," neither
SPX nor, to the best of its knowledge, any of its directors or executive
officers nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any equity
securities of the Company. Except as set forth below, neither SPX nor to
the best of its knowledge, any of the persons or entities referred to
above, nor any director, executive officer or subsidiary of any of the
foregoing, has effected any transaction in equity securities of the Company
during the last 60 days.
Number of Weighted Daily Average
Shareholder Transaction Date Shares Acquired Price per Share
----------- ---------------- --------------- ---------------
SPX 02/06/98 76,200 37.1443
SPX 02/09/98 160,700 37.8080
SPX 02/10/98 7,400 38.9730
SPX 02/11/98 146,500 38.4826
SPX 02/12/98 87,250 38.8041
SPX 02/13/98 202,300 38.9359
Except as described in this Prospectus, neither SPX nor, to the best
of its knowledge, any of its directors or executive officers has (i) any
contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties against
loss or the giving or withholding of proxies; (ii) had any contacts or
negotiations with the Company or its affiliates concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a
material amount of assets; or (iii) has had any transaction with the
Company or any of its executive officers, directors or affiliates that
would require disclosure under the rules and regulations of the Commission
applicable to the Offer.
Pursuant to the Company's Change in Control Severance Policy, if an
event constituting a "Change in Control" (as defined below) of the Company
occurs and the Board of Directors of the Company declares that such event
qualifies or will qualify as a Change in Control, employees of the Company
will have contractual rights against the Company or its successor to
receive certain severance benefits upon a "Qualifying Termination" (as
defined below) of their employment following such Change in Control.
Benefits under the Change in Control Severance Policy include the
following: (i) a lump sum equal to one week of annual base salary and one
week of annual executive bonus for each year of service, but not less than
between 7.5 and 36 months of pay (depending upon the level of
responsibility of the employee); (ii) continued insurance coverage; and
(iii) in lieu of outplacement services, between 5% and 15% (depending upon
the level of responsibility of the employee) of annual base salary. The
Change in Control Severance Policy contains a "gross-up" provision to
reimburse an employee in the event that a payment triggers an excise tax
pursuant to Section 4999 of the Code (or similar tax). The Company has also
agreed to pay all reasonable legal fees and disbursements of an employee in
enforcing his or her rights under the Change in Control Severance Policy.
The consummation of the transactions contemplated by the Offer, the Merger
and SPX's Demand Solicitation will each constitute a Change in Control if
the Company's Board of Directors declares it to be so. A "Qualifying
Termination" of an employee is defined as either of the following during
the two years following the Change in Control: (i) layoff or involuntary
termination by the Company or its successor other than for cause or by
reason of death or disability, or (ii) termination by the employee for
"Good Reason." "Good Reason" is defined as including, for employees who are
corporate officers or assistant corporate officers of the Company on the
date of the Change in Control, termination by the employee for any reason
during the thirty-day period commencing one year after the date of the
Change in Control. The Company has reported in the Company's 1997 Annual
Meeting Proxy Statement that approximately 350 of its employees participate
in the Change in Control Severance Policy, including all salaried employees
on the corporate staff of the Company.
A Change in Control of the Company would also affect certain other of
the publicly available employee benefit and compensation plans of the
Company, as follows: Under the Company's 1992 Stock Option Plan, options
granted under the plan (and certain incentive stock options granted prior
to the plan's effective date) would be deemed to have associated stock
appreciation rights. Upon exercise, these rights would be paid in cash,
with the number of rights exercised serving to reduce the number of shares
underlying the options. Under the Company's Performance Unit Plan,
outstanding performance units would immediately vest at a value equal to
100% of the value of the performance units multiplied by a fraction
representing the elapsed portion of the performance period. The performance
units would be required to be paid in cash within ninety days following the
Change in Control. Under the Company's Supplemental Senior Executive
Retirement Plan and Supplemental Executive Retirement Plan, the Company
would be required to fully fund trusts established for the payment of plan
benefits, and, in addition, upon termination of a participant's employment
within the two years following the Change in Control (i) by the Company
other than for cause or by reason of death or disability or (ii) by the
participant with "Good Reason," the participant would become vested in his
or her plan benefit. ("Good Reason" for purposes of these plans does not
include the right of a participant to terminate his or her employment for
any reason during the thirty-day period commencing one year after the date
of the Change in Control.) Under the Company's 1996 Non-Employee Director
Stock Option Plan, all outstanding options would immediately vest and
remain exercisable through their expiration dates (but not more than ten
years from date of grant). Under all these plans, the consummation of the
transactions contemplated by the Offer, the Merger and SPX's Demand
Solicitation will each constitute a Change in Control if the Company's
Board of Directors declares it to be so.
In the Company's 1997 Annual Meeting Proxy Statement, the Company also
reports that, with respect to its defined benefit pension plan, a Change in
Control would result in (i) the immediate vesting of accrued but unvested
benefits and (ii) the grant of service credit on the same basis as the
grant of benefits under the Change in Control Severance Policy (i.e., one
week of service credit for each year of service, but not less than 7.5
months of service credit and not more than 36 months of service credit
(depending on the level of responsibility of the employee)).
FEES AND EXPENSES
SPX has retained D.F. King & Co., Inc. to act as Information Agent in
connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interviews and may
request brokers, dealers and other nominee shareholders to forward the
Offer materials to beneficial owners of Shares. The Information Agent will
be paid reasonable and customary compensation for such services, plus
reimbursement of out-of-pocket expenses, and SPX will indemnify the
Information Agent against certain liabilities and expenses in connection
with the Offer, including liabilities under federal securities laws.
CIBC Oppenheimer is acting as financial advisor to SPX in connection
with the Proposed Business Combination, and as Dealer Manager of the Offer,
for which services SPX has paid a fee of $500,000 and has agreed to pay
additional fees, up to a maximum of $8.5 million in the aggregate (in
addition to any fees which may be paid to CIBC Oppenheimer in connection
with arranging or participating in the financing of the transaction), a
substantial portion of which is contingent upon the consummation of the
Proposed Business Combination. SPX has also agreed to reimburse CIBC
Oppenheimer for its reasonable out-of-pocket expenses, including reasonable
attorneys' fees up to a specified maximum, and has agreed to indemnify CIBC
Oppenheimer and certain related persons and entities against certain
liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. In connection with
CIBC Oppenheimer's engagement as financial advisor, officers and employees
of CIBC Oppenheimer may communicate in person, by telephone or otherwise
with a limited number of institutions, brokers or other persons who are
shareholders of the Company. CIBC Oppenheimer will not receive any fee for
or in connection with such solicitation activities by its officers and
employees apart from the fees it is otherwise entitled to receive as
described above. CIBC Oppenheimer or (its predecessor) has in the past
rendered financial advisory services to SPX for which it received customary
compensation, and may in the future render services to SPX for which it
will receive fees.
SPX will pay the Exchange Agent reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for
out-of-pocket expenses, and will indemnify the Exchange Agent against
certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws.
SPX will not pay any fees or commissions to any broker or dealer or
other person for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by SPX for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
ACCOUNTING TREATMENT
The Offer and the Merger will be accounted for as a reverse
acquisition as the shareholders of the Company will own a majority of the
shares of SPX upon completion of the Merger. Accordingly, for accounting
purposes, SPX is treated as the acquired company and the Company is
considered to be the acquiring company. The purchase price will be
allocated to the assets and liabilities assumed of SPX based on their
estimated fair market values at the acquisition date. Under reverse
acquisition accounting, the purchase price is based on the market value of
the SPX Common Stock at the date of acquisition. The cash portion of the
Offer will be accounted for as a dividend by the combined company. SPX's
financial position and results of operations will not be included in the
Company's consolidated accounts prior to the date the Merger is
consummated.
STOCK EXCHANGE LISTING
The SPX Common Stock is listed on the NYSE and the PE. Application
will be made to list the SPX Common Stock to be issued pursuant to the
Offer and the Merger on the NYSE. As described above under "The
Offer--Conditions of the Offer--SPX Stockholder Approval Condition,"
pursuant to the rules of the NYSE, assuming there is a quorum present at
the shareholders meeting at which the matter is being considered
(consisting of over 50% of the stock issued and outstanding and entitled to
be voted at the shareholders meeting), the issuance of the additional
shares must be approved by a majority of the votes entitled to be cast by
the holders of SPX Common Stock that are present or represented by proxy at
the stockholders meeting. SPX will seek such approval at the SPX Annual
Meeting of Shareholders to be held on May 20, 1998.
THE MERGER
GENERAL
With its letter to the Board of Directors of the Company, SPX
delivered a proposed merger agreement to the Company in contemplation of
arriving at a negotiated transaction. That agreement provides for a
single-step "cash election" merger of the Company into a subsidiary of SPX
in which each outstanding Share would be converted into the right to
receive the Consideration (with shareholders able to elect to receive
instead all cash, in the amount of $48.00 per Share, or all stock, in the
amount of 0.6395 share of SPX Common Stock per Share, subject to proration)
in a partially tax-free reorganization.
DISSENTERS' RIGHTS
The following discussion is not a complete statement of the law
pertaining to dissenters' rights under the Connecticut Business Act and is
qualified in its entirety by the full text of Part XIII (Sections 33-855
through 33-872) of that Act.
Holders of Shares do not have dissenters' rights as a result of the
Offer. However, in connection with the Merger, holders of Shares, by
complying with the provisions of Part XIII of the Connecticut Business Act,
have certain rights to dissent and to require the surviving company in the
Merger to purchase their Shares for fair value. In general, a holder of
Shares will be entitled to exercise "dissenters' rights" under the
Connecticut Business Act only if such holder of Shares (i) delivers to the
Company prior to the time the vote is taken with respect to the Merger,
written notice of his or her intent to demand payment for his or her Shares
if the Merger is effectuated and (ii) does not vote his or her Shares in
favor of the Merger. If the statutory procedures relating to dissenters'
rights are complied with, such rights could result in a judicial
determination of the fair value of the Shares. The "fair value" would be
determined based on the value of the Shares immediately before the Merger,
excluding any appreciation or depreciation in anticipation of the Merger.
The value so determined could be more or less than the Consideration.
BUSINESSES OF SPX AND THE COMPANY
SPX
General. SPX is a global provider of Vehicle Service Solutions to
franchised dealers of motor vehicle manufacturers and independent service
locations, Service Support to vehicle manufacturers and Vehicle Components
to the worldwide motor vehicle industry.
SPX is comprised of two business segments. The Service Solutions
segment includes operations that design, manufacture and market a wide
range of specialty service tools, equipment and services to the global
motor vehicle industry. Major customers are franchised dealers of motor
vehicle manufacturers, aftermarket vehicle service facilities and
independent distributors. Vehicle Components includes operations that
primarily design, manufacture and market transmission and steering
components for light and heavy duty vehicle markets principally in North
America and Europe. Major customers of this segment include vehicle
manufacturers, other component manufacturers and the aftermarket.
SPX was organized in 1911 under the laws of Michigan and
reincorporated in Delaware in 1968. SPX was known as the Piston Ring
Company until 1931, when it changed its name to Sealed Power Corporation.
In 1988, it changed its name again to SPX Corporation. Today SPX is a
multinational corporation with operations in 14 countries. SPX's corporate
headquarters is located at 700 Terrace Point Drive, Muskegon, MI
49443-3301, telephone number (616) 724-5000.
THE COMPANY
The following information concerning the Company is excerpted from the
Echlin 1997 Form 10-K and other publicly available information. See
"Company Information."
The Company was incorporated in the State of Connecticut in 1959 and
is engaged in only one business segment as a worldwide supplier of products
to maintain or improve the efficiency and safety of motor vehicles. During
the past fiscal year, the Company continued to conduct its business in a
manner consistent with prior years.
The Company's principal products can be classified into the following
categories: brake system parts, engine system parts, other vehicle parts
and non-vehicular products. Brake system parts include hydraulic brake
master cylinders, brake shoes, drums, brake cables, hardware and wheel
cylinders for drum brake systems, disc pads, rotors and calipers for disc
brake systems, hoses and electric brake controllers and antilock brake
systems. In addition, wheel oil seals, compressors, air dryers, valves,
power boosters, pressure converters, airbrake actuating products, spring
brakes, brake block, remanufactured brake shoes, hose assemblies, pneumatic
and electrical connectors, slack adjusters, gladhands, hubs and trailer
draw bars are manufactured for the heavy-duty brake market. Engine system
parts include condensers, contacts, complete distributors, distributor
caps, ignition coils, rotors, control modules, sensors, actuators, electron
voltage regulators, wire and cable products, carburetor and emission
control parts, fuel pumps, lines and rails, water pumps, oil pumps,
filters, gaskets, heating and air-conditioning coupled hose assemblies, oil
coolers, electronic fuel injection systems, oxygen sensors, EGR and PCV
valves. Other vehicle parts include power steering pumps, power steering
coupled hose assemblies, new and remanufactured clutches, slave cylinders,
bell housings, transmission oil cooler, timing gears and chains, universal
joints, drive shafts, engine mounts, airhorns, air suspension system
components, heavy duty windshield wiper systems, shifters and linkage,
shock absorbers, ball pins, track rod ends, king pins, tie-rods, rubber
bushings and mounts, louvers, lug nuts, wheel and chrome accessories, HVAC
controls, window lift systems, mirrors, lights, trailer hitches, electrical
connectors, body paints and finishes and cleaners for the high performance
market. Non-vehicular products include marine and power equipment parts.
The Company's products are sold primarily as replacement products for
use by professional technicians and by car and truck owners. Sales are made
to automotive warehouse distributors, heavy-duty distributors, retailers,
other parts manufacturers and parts remanufacturers. The Company also sells
its products to original equipment manufacturers in both the automotive and
heavy-duty markets.
On March 26, 1998, the Company issued a press release on its 1998
second quarter results. According to the Company, net sales for the quarter
ended February 28, 1998 were $835.7 million compared to net sales of $842.2
for the second quarter of 1997. Net income for the quarter ended February
28, 1998 was $26.9 million, or $0.42 per share (basic), versus $23.6
million, or $0.38 per share (basic), for the second quarter of 1997.
DESCRIPTION OF SPX CAPITAL STOCK
The authorized capital of SPX consists of 3,000,000 shares of SPX
Preferred Stock, without par value, issuable in series, of which, as of
February 6, 1998, 500,000 shares have been designated as SPX Series A
Preferred Stock and none is issued or outstanding, and 50,000,000 shares of
SPX Common Stock, par value $10 per share, of which, as of March 31, 1998,
12,634,602 shares were issued and outstanding. All of the outstanding
shares of capital stock of SPX are fully paid and nonassessable. Holders of
SPX's capital stock have no preemptive rights.
The holders of SPX Common Stock are entitled to have dividends
declared in cash, property, or other securities of SPX out of any net
profits or net assets of SPX legally available therefor as and when
declared by SPX's Board of Directors. In the event of the liquidation or
dissolution of SPX's business, the holders of SPX Common Stock will be
entitled to receive ratably the balance of SPX's net assets available for
distribution after payment of any liquidation or distribution preference
payable with respect to any then outstanding shares of SPX Preferred Stock.
Each share of SPX Common Stock is entitled to one vote with respect to
matters brought before the stockholders, except for the election of any
Directors who may be elected by vote of any outstanding shares of SPX
Preferred Stock voting as a class.
The rights and privileges of SPX Common Stock are subordinate to the
rights and preferences of any SPX Preferred Stock. The Board of Directors
is authorized to fix by resolution the designation of each series of SPX
Preferred Stock, and, with respect to each series, the stated value of the
shares, the dividend rate and the dates and other provisions respecting the
payment of dividends, the provisions, if any, for a sinking fund, the
preferences of the shares in the event of the liquidation or dissolution of
SPX, the provisions, if any, respecting the redemption of the shares,
subject to applicable law, the voting rights (except that such shares shall
not have more than one vote per share), the terms, if any, upon which the
shares would be convertible into or exchangeable for any other shares of
SPX, and any other relative, participating, optional or other special
rights, qualifications, limitations or restrictions. All shares of any
series of SPX Preferred Stock, as between themselves, rank equally and are
identical; and all series of SPX Preferred Stock, as between themselves,
rank equally and are identical except as set forth in resolutions of the
Board of Directors authorizing the issuance of a particular series.
SPX has designated a series of SPX Preferred Stock, SPX Series A
Preferred Stock, which is issuable in certain circumstances, and issued the
SPX Rights to purchase the SPX's Series A Preferred Stock to holders of
shares of SPX Common Stock. The SPX Rights are exercisable only in the
event of certain events described more fully below under the caption
"Comparison of Rights of Holders of SPX Common Stock and the Company's
Common Stock--SPX's Rights Plan."
SPX's Certificate of Incorporation requires the approval by the
holders of 80% of the voting power of SPX's shares as a condition for
certain Business Combinations of SPX with any holder of more than 10% of
such voting power unless certain minimum price and procedural requirements
or certain other conditions are met. The term "Business Combination" is
defined to include certain mergers, dispositions of assets, issuances of
securities and similar transactions. See "Comparison of Rights of Holders
of Shares and SPX Common Stock--Business Combinations with Substantial
Stockholders."
COMPARISON OF RIGHTS OF HOLDERS
OF SHARES AND SPX COMMON STOCK
Pursuant to the Offer, shareholders of the Company whose Shares are
purchased in the Offer will receive SPX Common Stock in exchange for their
Shares and will become stockholders of SPX. Differences between the laws of
Delaware, the state of incorporation of SPX, and those of Connecticut, the
state of incorporation of the Company, and between SPX's Certificate of
Incorporation and By-Laws, on the one hand, and the Company's Certificate
of Incorporation and By-Laws, on the other hand, will result in several
changes in the rights of shareholders of the Company who elect to exchange
their shares for those of SPX. A summary of the more significant changes is
set forth below.
The following summary does not purport to be a complete statement of
the rights of stockholders under SPX's Certificate of Incorporation,
By-Laws and other governing instruments and applicable law, as compared
with the rights of the Company's shareholders under the Company's
Certificate of Incorporation, By-Laws and other governing instruments and
applicable law, or a complete description of the specific provisions
referred to herein. The summary is qualified in its entirety by reference
to the governing corporate instruments of SPX and the Company and to the
laws of Delaware and Connecticut, respectively, to which shareholders are
referred. For information as to how these corporate instruments may be
obtained, see "Available Information."
SPECIAL MEETINGS OF STOCKHOLDERS. Under Delaware law, special meetings
of the stockholders may be called by the board of directors or such other
persons as may be authorized by the certificate of incorporation or
by-laws. Under SPX's Certificate of Incorporation and By-Laws, special
meetings of the stockholders may be called only by the Chairman, the
President or the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors.
Under Connecticut law, special meetings of the shareholders may be
called by the board of directors or such other persons as may be authorized
by the certificate of incorporation or by-laws. Under Connecticut law, a
corporation that has a class of voting stock registered pursuant to Section
12 of the Exchange Act is required to call a special meeting of
shareholders upon the written request of the holders of not less than 35
percent of the voting power of all shares entitled to vote on the matter at
the meeting. If notice of the special meeting is not given within 30 days
after the date the demand is delivered to the corporation's secretary or if
the special meeting is not held in accordance with the notice, the superior
court for the judicial district where the corporation's principal office is
located may summarily order a meeting to be held. The Company's By-Laws
provide that the Chairman of the Board, the President, or the Board of
Directors may, and, upon the written request of at least 35 percent of the
voting power of all shares entitled to vote at the meeting, the President
shall, call a special meeting of shareholders for such purposes as may be
designated in the notice thereof.
NUMBER OF DIRECTORS. Under Delaware law, a board of directors shall
consist of one or more directors, with the number fixed by or in the manner
provided in the by-laws, unless the certificate of incorporation fixes the
number of directors, in which case a change in the number of directors
shall be made only by amendment to the certificate of incorporation. SPX's
Certificate of Incorporation provides that the number of Directors shall be
fixed from time to time by or pursuant to the By-Laws. SPX's By-Laws
provide that except as otherwise fixed pursuant to the provisions of SPX's
Certificate of Incorporation relating to the rights of the holders of any
preferred stock, the number of Directors shall be fixed from time to time
by the Board of Directors but shall not be less than three. At present, the
Board of Directors of SPX has nine members.
Under Connecticut law, a board of directors shall consist of one or
more individuals, with the number specified in or fixed in accordance with
the certificate of incorporation or by-laws. The Company's By-Laws provide
that the Board shall consist of not less than three nor more than twelve
members, the number to be as the Directors shall from time to time direct,
provided, however, that if the Directors fail to fix the number of
Directors, the number to be elected will be the same aggregate number as
elected at the preceding annual meeting of shareholders at which Directors
were elected and at any intervening meeting for the election of Directors.
Based on currently available information, the Board of Directors of the
Company presently has nine members.
CLASSIFICATION OF DIRECTORS. Under Delaware law, the directors of a
corporation may, by the certificate of incorporation or by an initial
bylaw, or by a bylaw adopted by a vote of the stockholders, be divided into
one, two or three classes. SPX's Certificate of Incorporation provides that
the Directors, other than those who may be elected by the holders of
Preferred Stock, will be classified into three classes, as nearly equal in
number as possible.
Under Connecticut law, the certificate of incorporation may provide
for staggering the terms of Directors by dividing the total number of
Directors into up to five groups, with each group containing approximately
the same percentage of the total. The Company's Certificate of
Incorporation does not provide for a staggered Board.
REMOVAL OF DIRECTORS. Under Delaware law, generally any director or
the entire board of directors may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors. However, in the case of a corporation with a classified board,
stockholders may effect such removal only for cause, unless the certificate
of incorporation otherwise provides. SPX's Certificate of Incorporation and
By-Laws provide that, subject to certain rights of holders of SPX Preferred
Stock, any Director may be removed from office only for cause, and only by
the affirmative vote of the holders of 80% of the combined voting power of
the outstanding shares of stock entitled to vote in the election of
Directors, voting together as a single class.
Under Connecticut law, unless the certificate of incorporation
provides that directors may be removed only for cause, the shareholders may
remove one or more directors with or without cause only at a meeting called
for that purpose. Under Connecticut law, assuming a quorum is present, a
director can be removed if the number of votes in favor of removal is
greater than the number of votes against removal. In addition, the superior
court for the judicial district where a corporation's principal office is
located may, in certain circumstances, remove a director in a proceeding
commenced either by the corporation or by its shareholders holding at least
ten percent of the outstanding shares. The Company's Certificate of
Incorporation is silent on the issue of removal of Directors.
FILLING VACANCIES ON THE BOARD OF DIRECTORS. Under Delaware law, the
procedure for filling vacancies may be determined by a provision in the
certificate of incorporation. If, at any time, a corporation should have no
directors, Delaware law provides certain mechanisms to call a special
meeting to elect directors. The SPX's Certificate of Incorporation and
By-Laws provide that any vacancies on the Board, including those resulting
from any increase in the number of Directors, shall be filled by the
majority of the remaining Directors then in office, even though less than a
quorum.
Under Connecticut law, unless the certificate of incorporation
provides otherwise, vacancies may be filled by the shareholders or the
board of directors, even though less than a quorum. The Company's By-Laws
provide that the shareholders may at any time elect Directors to fill any
vacancy not filled by the Directors, and may elect additional Directors at
a meeting at which an amendment of the By-Laws is approved authorizing an
increase in the number of Directors.
PREEMPTIVE RIGHTS. Under Delaware law, preemptive rights are not
available to stockholders unless specifically authorized by the certificate
of incorporation. SPX's Certificate of Incorporation provides that holders
of its shares shall not have any preemptive rights.
Under Connecticut law, the holders of common stock of a corporation
which was incorporated under the laws of Connecticut prior to January 1,
1997 have preemptive rights unless the certificate of incorporation
expressly provides otherwise. The Company's Certificate of Incorporation
provides that holders of its shares shall not have any preemptive rights.
CORPORATE ACTION WITHOUT A SHAREHOLDERS' MEETING. Under Delaware law,
unless prohibited by the certificate of incorporation, corporate actions
may be authorized without a meeting by written consent of holders of voting
shares sufficient to approve the action at a meeting where all holders of
voting shares were present and voted. However, under SPX's Certificate of
Incorporation, corporate actions may not be effected by any consent in
writing by stockholders.
Under Connecticut law, actions which would otherwise require
shareholder approval at a meeting of shareholders may be taken without a
shareholder meeting (1) by written consent of all persons entitled to vote
on the action, or (2) if the certificate of incorporation so provides, and
the action to be taken is not an election of directors, by the written
consent of persons holding shares sufficient under the certificate of
incorporation to approve the action (but in no case less than a majority of
all shares entitled to vote). The Company's Certificate of Incorporation
does not provide for action by written consent. The Company's By-Laws
provide that any action which may be taken at a meeting of shareholders may
be taken without a meeting by consent in writing, setting forth the action
so taken or to be taken, signed by all the persons who would be entitled to
vote upon such action at a meeting.
DIVIDENDS. Under Delaware law, a corporation may, unless otherwise
restricted by its certificate of incorporation, declare and pay dividends
out of surplus, or, if no surplus exists, out of net profits for the
current or preceding fiscal year, provided that the amount of the capital
following the declaration and payment of the dividend is not less than the
aggregate amount of capital represented by the issued and outstanding stock
of all classes having a preference upon the distribution of the assets of
the corporation.
Under Connecticut law, a corporation may make distributions subject to
restriction by the certificate of incorporation. Further, under Connecticut
law, no distribution may be made if, after giving effect thereto, the
corporation would not be able to pay its debts as they become due in the
usual course of business, or the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed,
if the corporation were to be dissolved at the time of the distribution, to
satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the distribution.
AMENDMENT OF CERTIFICATE OF INCORPORATION. Under Delaware law, a
corporation may amend its certificate of incorporation if, among other
things, such amendment is approved by a majority of the outstanding stock
entitled to vote; however, whenever the certificate of incorporation shall
require for action by the board of directors or by the stockholders an
affirmative vote greater than that normally provided for by Delaware law,
such provision of the certificate of incorporation may not be amended or
repealed without such greater vote. SPX's Certificate of Incorporation
provides that Articles Eighth (number, classification and power of
Directors), Ninth (stockholder meetings), and Fifteenth (business
combinations) of the Certificate of Incorporation may only be altered or
amended by the affirmative vote of the holders of at least 80% of the
voting power of all shares of SPX; however, Article Fifteenth may be
amended or altered by a majority of the outstanding stock entitled to vote,
if such amendment or alteration has been approved by at least two-thirds of
the Continuing Directors (see "--Business Combinations with Substantial
Stockholders" below).
Under Connecticut law, with limited exceptions, for an amendment to
the certificate of incorporation to be adopted, the board must recommend
the amendment to the shareholders, and the shareholders must approve the
amendment by a majority of the votes entitled to be cast on the amendment.
AMENDMENT OF BY-LAWS. Under Delaware law, the power to adopt, amend or
repeal by-laws is vested in the stockholders unless the certificate of
incorporation confers the power to adopt, amend or repeal by-laws upon the
directors as well. SPX's Certificate of Incorporation provides that, with
limited exceptions, the Board is expressly authorized to adopt, amend and
repeal the SPX's By-Laws. SPX's By-Laws provide that, subject to the
provisions of the Certificate of Incorporation, the By-Laws may be altered
by a majority vote of the shares represented and entitled to vote at a
meeting, or by the Board of Directors through a majority vote of those
Directors present at any meeting at which a quorum is present.
Under Connecticut law, a board of directors may generally amend or
repeal the corporation's by-laws and a corporation's shareholders may amend
or repeal the corporation's by-laws even though the by-laws may also be
amended or repealed by its board of directors. The Company's By-Laws
provide that the By-Laws may be adopted, amended or repealed by the
shareholders or Directors.
STOCKHOLDER PROPOSAL PROCEDURES. Under SPX's By-Laws, for a matter to
be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the
Secretary of SPX not less than 120 days nor more than 150 days prior to the
anniversary date of the immediately preceding annual meeting. A
stockholder's notice must state as to each matter the stockholder proposes
to bring before the annual meeting: (1) a brief description of the matter
desired to be brought, (2) the name and address of the stockholder
proposing such action, (3) the class and number of shares of the
corporation which are beneficially owned by the stockholder, and (4) any
material interest of the stockholder in such matter.
Under the Company's By-Laws, for a matter to be properly brought
before an annual meeting by a shareholder, the shareholder must be a
shareholder of record on the date of the giving of the notice described
below and on the record date for the determination of shareholders entitled
to vote at such annual meeting. The shareholder must give timely notice
thereof in writing to the Secretary of the Company not less than 120 days
prior to the anniversary date of the immediately preceding annual meeting.
However, if the annual meeting is called for a date that is not within 30
days before or after such anniversary date, notice must be received not
later than the tenth day following the day on which such notice of the date
of the annual meeting is mailed or publicized, whichever first occurs. A
shareholder's notice must state as to each matter the shareholder proposes
to bring before the annual meeting: (1) a brief description of the matter
desired to be brought and the reasons for conducting such business at the
annual meeting, (2) the name and record address of the shareholder, (3) the
class and number of shares of the corporation which are owned beneficially
or of record by the shareholder, (4) any material interest of the
shareholder in such business and a description of all arrangements or
understandings between such shareholder and any other person in connection
with the proposal or in connection with the acquisition, holding, voting or
disposing of the Company's shares, and (5) a representation that the
shareholder intends to appear in person or by proxy at the annual meeting
to bring such business before the meeting.
ADVANCE NOTICE OF STOCKHOLDER NOMINATIONS OF DIRECTORS. Under SPX's
By-Laws, nominations for the election of Directors may be made by the Board
of Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the elections of Directors, generally.
However, any stockholder entitled to vote in the election of Directors may
nominate one or more persons for election as Directors at a meeting only if
written notice of such stockholder's intent to make such nomination has
been given to the Secretary of SPX not later than (a) with respect to an
election to be held at an annual meeting of stockholders, 120 days prior to
the anniversary date of the immediately preceding annual meeting, and (b)
with respect to an election to be held at a special meeting of
stockholders, the close of business on the tenth day following the date on
which notice of such meeting is first given to stockholders. Each such
notice must set forth: (a) the name and address of the stockholder who
intends to make the nomination and of the person to be nominated, (b) a
representation that the stockholder is a holder of record of stock entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice, (c) a
description of all arrangements or understandings between the stockholder
and each nominee and any other person pursuant to which the nomination is
to be made by the stockholder, (d) such other information regarding each
nominee as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Commission, and (e) the consent of each
nominee to serve as a Director if elected.
Under the Company's By-Laws, nominations of persons for election to
the Board of Directors may be made at any annual meeting by or at the
direction of the Board of Directors (or any duly authorized committee
thereof) or by any shareholder who is a shareholder of record on the date
of the giving of the notice described below and on the record date for the
determination of shareholders entitled to vote at such annual meeting.
Shareholders may nominate one or more persons for election as Directors at
a meeting only if written notice of such shareholder's intent to make such
nomination has been given to the Secretary of the Company not later than
120 days prior to the anniversary date of the immediately preceding annual
meeting. However, if the annual meeting is called for a date that is not
within 30 days before or after such anniversary date, notice must be
received not later than the tenth day following the day on which such
notice of the date of the annual meeting was mailed or publicized,
whichever first occurs. Each such notice must set forth: (a) the name, age,
and business and residence addresses of the person to be nominated, and the
name and address of the shareholder making the nomination, (b) the shares
of stock of the Company which are owned beneficially or of record by the
nominee and the shareholder making the nomination, (c) the principal
occupation or employment of the nominee, (d) a representation that the
shareholder intends to appear in person or by proxy at the meeting to
nominate the person, (e) a description of all arrangements or
understandings between the shareholder and each nominee and any other
person pursuant to which the nomination is to be made by the shareholder,
(f) such other information regarding each nominee or shareholder making the
nomination as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Commission, and (g) the consent of each
nominee to serve as a Director if elected.
INDEMNIFICATION. Under Delaware law, a corporation has the power to
indemnify director, officers, employees and agents for actions taken in
good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person's
conduct was unlawful. Delaware law provides that a corporation may advance
expenses of defense (upon receipt of a written undertaking from the person
seeking the advance to reimburse the corporation if indemnification is not
appropriate) and must reimburse a successful defendant for expenses,
including attorneys' fees, actually and reasonably incurred, and permits a
corporation to purchase and maintain liability insurance for its directors
and officers. Under Delaware law, no indemnification may be made for any
claim, issue or matter as to which a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be
liable to the corporation, unless and only to the extent that a court
determines that the person is entitled to indemnity for such expenses as
the court deems proper.
SPX's Certificate of Incorporation provides that Directors and
officers of SPX and those serving at the request of SPX as a Director,
officer, employee or agent of another corporation or entity will be
indemnified by SPX to the fullest extent authorized by Delaware law. The
indemnification right includes the right to be paid by SPX the expenses
incurred in defending any proceeding in advance of its final disposition.
SPX Certificate of Incorporation provides that the indemnification rights
conferred by SPX's Certificate of Incorporation are not exclusive of any
other right to which persons seeking indemnification may be entitled under
any law, bylaw, agreement, vote of stockholders or disinterested Directors
or otherwise. SPX is authorized by SPX's Certificate of Incorporation to
purchase and maintain insurance on behalf of its Directors and officers.
Under Connecticut law, unless the Certificate of Incorporation
provides otherwise, a corporation formed prior to January 1, 1997 shall
indemnify its directors, officers, employees and agents for actions taken
in good faith and, in the case of conduct in his or her official capacity,
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Connecticut law also provides that a corporation may advance reasonable
expenses of defense (upon receipt of a written undertaking from the person
seeking the advance to reimburse the corporation if indemnification is not
appropriate and a written affirmation of his good faith belief that he or
she has met the relevant standard of conduct or where liability for such
conduct has been eliminated in the Certificate of Incorporation) and must,
unless limited by the certificate of incorporation, reimburse a successful
defendant for expenses, including attorneys' fees, actually and reasonably
incurred, and permits a corporation to purchase and maintain liability
insurance for its directors, officers, employees and agents. Unless the
certificate of incorporation provides otherwise, a corporation must also
provide indemnification and the advancement of expenses if a court, upon
application, determines, among other things, that it is fair and reasonable
to indemnify and make such advances to such person.
The Company's Certificate of Incorporation is silent on these issues.
The Company's By-Laws state that the Company will provide for the
indemnification and advancement of expenses of directors and others to the
extent properly permitted by law.
LIMITATION OF LIABILITY. In recent years both Delaware and Connecticut
adopted similar though not identical statutes permitting a corporation to
limit the personal liability of its directors by including appropriate
language in the corporation's certificate of incorporation.
Delaware law allows a corporation to include in its certificate of
incorporation a provision limiting personal liability for a director to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that such provision does not
eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) under Section 174 of the Delaware law
concerning unlawful dividends and stock repurchases and redemptions, or (d)
for any transaction from which the director derived an improper personal
benefit. Such provision does not eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such
provision becomes effective.
SPX's Certification of Incorporation has such a provision. SPX's
Certificate of Incorporation also provides that any repeal or modification
of this provision by the stockholders of SPX will not adversely affect any
right or protection of a Director of SPX existing at the time of such
repeal or modification.
Under Connecticut law, a corporation can include in its certificate of
incorporation a provision limiting personal liability for a director to the
corporation or its shareholders for monetary damages for breach of duty as
a director to an amount that is not less than the compensation received by
the director for serving the corporation during the year of the violation
if such breach did not (a) involve a knowing and culpable violation of law
by the director, (b) enable the director or an associate to receive an
improper personal economic gain, (c) show a lack of good faith and a
conscious disregard for the duty of the director to the corporation under
circumstances in which the director was aware that his conduct or omission
created an unjustifiable risk of serious injury to the corporation, (d)
constitute a sustained and unexcused pattern of inattention that amounted
to an abdication of the director's duty to the corporation, or (e) create
liability under Section 33-757 of the Connecticut Business Act concerning
improper distributions and other improper actions. Such provision does not
limit or preclude the liability of a director for any act or omission
occurring prior to the effective date of such provision.
The Company's Certificate of Incorporation contains such a provision.
BUSINESS COMBINATIONS WITH SUBSTANTIAL STOCKHOLDERS. SPX's Certificate
of Incorporation requires the approval of a supermajority of SPX's
stockholders for certain business combinations with Substantial
Stockholders (defined below).
Notwithstanding any lesser percentage permitted by law, except as
provided below, 80% of the voting power of SPX's stockholders, voting
together as a single class, must approve any of the following Business
Combinations:
(a) Any merger of SPX or any of its subsidiaries with (i) any
Substantial Stockholder or (ii) any other corporation which is, or
after such merger or consolidation would be, an Affiliate or Associate
of a Substantial Stockholder; or
(b) Any sale, lease, exchange, mortgage, pledge, transfer or
other disposition to or with any Substantial Stockholder, its
Affiliate or Associate of (i) any assets of SPX or (ii) any of its
subsidiaries, in each case having an aggregate Fair Market Value of
$10,000,000 or more; or
(c) The issuance or transfer by SPX or any of its subsidiaries of
any securities of SPX or any of its subsidiaries to any Substantial
Stockholder or its Affiliate or Associate in exchange for cash,
securities or other consideration having an aggregate Fair Market
Value of $10,000,000 or more; or
(d) The adoption of any plan or proposal for the liquidation or
dissolution of SPX proposed by or on behalf of any Substantial
Stockholder or its Affiliate or Associate; or
(e) Any reclassification of securities (including any reverse
stock split), or recapitalization of SPX, or any merger or
consolidation of SPX with any of its subsidiaries, or any other
transaction (whether or not with or into or otherwise involving a
Substantial Stockholder) which has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding shares of any
class of equity or convertible securities of SPX or any of its
subsidiaries which is directly or indirectly owned by any Substantial
Stockholder or its Affiliate or Associate.
The 80% requirement does not apply (i) to Business Combinations where
SPX's stockholders do not receive any cash or other consideration, solely
in their capacities as stockholders, and the Business Combination has been
approved by two-thirds of the Continuing Directors then in office, or (ii)
to all other Business Combinations which have been approved by two-thirds
of the Continuing Directors then in office and which satisfy all of the
following conditions:
(a) The aggregate amount of cash and the Fair Market Value as of
the date of the consummation of the Business Combination (the
"Consummation Date") of the consideration other than cash to be
received per share by holders of SPX Common Stock in such Business
Combination is at least equal to the highest of the following:
(A) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid in
order to acquire any shares of SPX Common Stock beneficially
owned by the Substantial Stockholder which were acquired (1)
within the two-year period immediately prior to the first public
announcement of the proposal of the Business Combination (the
"Announcement Date") or (2) in the transaction in which it became
a Substantial Stockholder, whichever is higher, plus interest
compounded annually from the date on which the Substantial
Stockholder became a Substantial Stockholder through the
Consummation Date at the prime rate of interest of Harris Trust
and Savings Bank from time to time in effect in Chicago, less the
aggregate amount of any cash dividends paid, and the Fair Market
Value of any non-cash dividends paid, per share of SPX Common
Stock from the date on which the Substantial Stockholder became a
Substantial Stockholder through the Consummation Date in an
amount up to but not exceeding the amount of such interest; or
(B) the Fair Market Value per share of SPX Common Stock on
the Announcement Date or on the date on which the Substantial
Stockholder became a Substantial Stockholder, whichever is
higher; or
(C) the higher of the two numbers referred to in clause (B)
above, multiplied by a fraction, the numerator of which is the
highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid in order to
acquire any shares of SPX Common Stock beneficially owned by the
Substantial Stockholder which were acquired within the two-year
period immediately prior to the Announcement Date, and the
denominator of which is the Fair Market Value per share of SPX
Common Stock on the first day in such two-year period on which
the Substantial Stockholder beneficially owned any shares of SPX
Common Stock.
(b) The consideration to be received by Stockholders is to be in
cash or in the same form as the Substantial Stockholder has previously
paid for shares of the same stock. If multiple forms of consideration
have been used by the Substantial Stockholder, then the form of
consideration for the Business Combination will be cash or the form
used to acquire the largest number of shares previously acquired by
the Substantial Stockholder.
(c) Except as approved by at least two-thirds of the Continuing
Directors then in office, between the time that a Substantial
Stockholder becomes such and the Business Combination is consummated,
there shall have been (i) no failure to declare and pay periodic
dividends with respect to any shares of preferred stock outstanding
and (ii) no reduction in the annual rate of dividends paid on SPX
Common Stock (with certain exceptions).
(d) After becoming such, the Substantial Stockholder shall not
have received any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages from
SPX or any of its subsidiaries whether in anticipation of or in
connection with such Business Combination or otherwise.
(e) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Exchange Act shall have been mailed to public shareholders of the
Company at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is
required to be mailed pursuant to the Exchange Act).
"Continuing Director" is defined in SPX's Certificate of Incorporation
as any member of the SPX's Board of Directors who is unaffiliated with and
not a representative of the Substantial Stockholder and was a member of the
Board prior to the time that the Substantial Stockholder became a
Substantial Stockholder, and any successor of a Continuing Director who is
unaffiliated with and not a representative of the Substantial Stockholder
and is recommended to succeed a Continuing Director by at least two-thirds
of the Continuing Directors then on the Board.
"Fair Market Value" is defined in SPX's Certificate of Incorporation,
in the case of stock, as the highest closing sale price during the 30-day
period immediately preceding the date in question of a share of such stock
on the principal United States securities exchange on which such stock is
listed, and, in the case of property other than stock or stock for which no
quotation is available, the value of the property as determined in good
faith by at least two-thirds of the Continuing Directors.
"Substantial Stockholder" is defined in SPX's Certificate of
Incorporation as any person (other than the Company or any of its
subsidiaries) who or which:
(i) is the beneficial owner, directly or indirectly, or more than
ten percent of the voting power of the outstanding voting stock
of SPX; or
(ii) is an Affiliate of SPX and at any time within the two-year
period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of ten percent or
more of the voting power of the then outstanding voting stock
of SPX; or
(iii) is an assignee of or has otherwise succeeded to any shares of
the voting stock of SPX which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Substantial Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
The Company's Certificate of Incorporation does not have a comparable
provision.
BUSINESS COMBINATION STATUTES. Under Delaware law, a corporation is
prohibited from engaging in any business combination with any Interested
Stockholder (defined as the beneficial owner of 15% or more of the voting
power of a company) for a period of three years following the date that
such stockholder became an Interested Stockholder, unless:
(a) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which
resulted in the stockholder becoming an Interested Stockholder, or
(b) upon consummation of the transaction which resulted in the
stockholder becoming an Interested Stockholder, the Interested
Stockholder owned at least 85% of the voting stock of the corporation,
or
(c) on or subsequent to such date, the business combination is
approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least two-thirds of the outstanding voting
stock which is now owned by the Interested Stockholder.
Under Delaware law, a corporation has the option to opt-out of the
above business combination statute. Neither SPX's Certificate of
Incorporation nor its By-Laws excludes SPX from the restrictions imposed
thereunder.
Under Connecticut law, a corporation may not engage in any business
combination with any Interested Shareholder (defined as the beneficial
owner of 10% or more of the voting power of a corporation) for a period of
five years following the date that such stockholder became an Interested
Shareholder (the "Stock Acquisition Date"), unless, prior to the Stock
Acquisition Date, the board of directors of the corporation and a majority
of the non-employee directors (of which there shall be two) approved either
the business combination or the transaction which resulted in the
shareholder becoming an Interested Shareholder before the Stock Acquisition
Date. A corporation may opt out of the above provision through an amendment
to the corporation's certificate of incorporation or by-laws approved
through the affirmative vote of the holders of two-thirds of the voting
power of the outstanding voting stock excluding Interested Shareholders and
their affiliates and associates. However, no such amendment shall be
effective until 18 months after such shareholder vote and shall not apply
to any business combination with an Interested Shareholder whose Stock
Acquisition Date is on or prior to the effective date of such amendment.
Neither Company's Certificate of Incorporation nor its By-Laws exclude
the Company from the restrictions imposed thereunder.
Connecticut law also provides that any business combination with an
Interested Shareholder that was not approved by the board of directors
prior to the Stock Acquisition Date, must be approved by the board of
directors, 80% of the voting power and two-thirds of the voting power not
controlled by the Interested Stockholder or meet certain conditions
regarding minimum price and type of consideration.
SPX'S RIGHTS PLAN. SPX entered into the SPX Rights Agreement with The
Bank of New York, as rights agent, on June 25, 1996, as amended October 22,
1997. Under the SPX Rights Agreement, SPX's Board declared a dividend of
one SPX Right for each outstanding share of SPX Common Stock held of record
on June 25, 1996. Each SPX Right entitles its holder to purchase, upon the
occurrence of certain specified events, one one-thousandth of a share of
SPX Series A Preferred Stock, at an exercise price of $200, subject to
adjustment. At no time do the SPX Rights have any voting rights. The SPX
Rights will no longer be exercisable after the earlier of (i) June 25,
2006, (ii) the redemption of the SPX Rights or (iii) the exchange of the
SPX Rights for SPX Common Stock. The description and terms of the SPX
Rights are set forth in the SPX Rights Agreement.
In general, pursuant to the SPX Rights Agreement, upon the occurrence
of specified triggering events, such as the acquisition by any person
(other than SPX or any of its subsidiaries) of the beneficial ownership of
securities representing 20% or more of the outstanding SPX Common Stock
without the prior approval of SPX's Board, each holder of a SPX Right will
have the right to receive, upon exercise of the SPX Right, that amount of
SPX Common Stock having a market value equal to two times the exercise
price of the SPX Right. The SPX Rights Agreement further provides that if
SPX is acquired in a merger or other business combination or SPX sells more
than 50% of its assets and such transaction is not approved by SPX's Board,
SPX's stockholders will have the right to receive, with respect to each SPX
Right, common stock of the acquiring company having a value equal to two
times the exercise price of the SPX Right.
Under certain circumstances, the Company may redeem the SPX Rights for
a redemption price of $.01 per SPX Right.
THE COMPANY'S RIGHTS PLAN. The Company entered into the Rights
Agreement with The Connecticut Bank and Trust Company, N.A., as rights
agent, on June 21, 1989. The Company has reserved 600,000 shares of
Preferred Stock, without par value, for issuance under the Rights
Agreement.
Under the Rights Agreement, the Company's Board declared a dividend of
one Right for each outstanding Share held of record on June 30, 1989. Each
Right entitles its holder to purchase, upon the occurrence of certain
specified events, one one-hundredth of a share of the Company's Series A
Cumulative Participating Preferred Stock, no par value (the "Series A
Preferred Stock"), at an exercise price of $65 per one one-thousandth
share, subject to adjustment. At no time do the Rights have any voting
rights. The Rights will no longer be exercisable after the earlier of (i)
June 25, 1999, (ii) the redemption of the Rights or (iii) the exchange of
the Rights for Shares. The description and terms of the Rights are set
forth in the Rights Agreement.
In general, pursuant to the Rights Agreement, upon the occurrence of
specified triggering events, such as the acquisition by any person (other
than SPX or any of its subsidiaries) of the beneficial ownership of
securities representing 20% or more of the Company's outstanding Common
Stock without the prior approval of the Company's Board, each holder of a
Right will have the right to receive, upon exercise of the Right, that
amount of the Company's Common Stock having a market value equal to two
times the exercise price of the Right. The Rights Agreement further
provides that if the Company is acquired in a merger or other business
combination or the Company sells more than 50% of its assets and such
transaction is not approved by the Company's Board, the Company's
shareholders will have the right to receive, with respect to each Right,
common stock of the acquiring company having a market value equal to two
times the exercise price of the Right.
Under certain circumstances, the Company may redeem the Rights for a
redemption price of $.01 per Right.
CONSIDERATION OF NON-STOCKHOLDER CONSTITUENCIES. Under Delaware law, a
board of directors may consider the impact of its decisions on
constituencies other than stockholders. Such constituencies may include
creditors, customers, employees, and perhaps the community generally.
However, the interests of other constituencies may be considered only if
there are rationally related benefits accruing to the stockholders or there
is some reasonable relationship to general stockholder interests.
SPX's Certificate of Incorporation also provides that in determining
whether an Acquisition Proposal is in the best interests of SPX and its
stockholders, the Board shall consider all factors it deems relevant,
including the consideration being offered in the Proposal, not only in
relation to the then current market price, but also in relation to the then
current value of SPX in a freely negotiated transaction and in relation to
the Board's estimate of the future value of SPX as an independent entity;
and the social, legal and economic effects upon employees, suppliers,
customers and on the communities in which SPX is located, as well as on the
long term business prospects of SPX.
Under Connecticut law, a director of a corporation must consider, in
determining what he or she reasonably believes to be in the best interests
of the corporation in connection with, among other things, a plan of merger
or share exchange, (1) the long-term as well as the short-term interests of
the corporation, (2) the interests of the shareholders, long-term as well
as short-term, including the possibility that those interests may be best
served by the continued independence of the corporation, (3) the interests
of the corporation's employees, customers, creditors and suppliers, and (4)
community and societal considerations including those of any community in
which any office or other facility of the corporation is located. A
director may also consider any other factors he or she reasonably considers
appropriate in determining what he or she reasonably believes to be in the
best interests of the corporation.
MARKET PRICES AND DIVIDENDS
SPX Common Stock is listed and principally traded on the NYSE (under
the symbol "SPW") and is also listed on the PE. The Shares are listed and
principally traded on the NYSE (under the symbol "ECH"), the PE and the
International Stock Exchange in London. The following table sets forth, for
the periods indicated, the high and low sale prices per share of SPX Common
Stock and per Share as reported on the NYSE Composite Tape.
<TABLE>
<CAPTION>
SPX COMMON STOCK COMPANY SHARES
--------------------------------------------- ----------------------------------------
High Low Dividends High Low Dividends
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1995
First Quarter.................. $17-3/8 $14-1/4 $.10 $38-1/2 $29-7/8 $0.190
Second Quarter................. 15-1/8 10-3/4 .10 38-3/4 34 0.205
Third Quarter.................. 16 11-1/8 .10 39-5/8 33-7/8 0.205
Fourth Quarter................. 17 14-1/8 .10 39-1/2 33-7/8 0.205
1996
First Quarter.................. 18-1/8 13-5/8 .10 38-3/4 32-5/8 0.205
Second Quarter................. 27-1/8 18 .10 37-7/8 33-3/8 0.220
Third Quarter.................. 31-5/8 21-5/8 .10 37-5/8 29-3/4 0.220
Fourth Quarter................. 40-1/2 26-7/8 .10 34-1/4 30-1/4 0.220
1997
First Quarter.................. 49-3/4 37-3/8 .10 35-1/4 29-1/2 0.220
Second Quarter................. 70-5/8 41-7/8 - 36-1/2 31-1/8 0.225
Third Quarter.................. 65-3/4 49 - 38-9/16 33-5/8 0.225
Fourth Quarter................. 70-3/8 58-7/16 - 36-5/8 29-13/16 0.225
1998
First Quarter.................. 79-1/4 65-3/16 - 52-3/4 34-1/2 0.225
Second Quarter
(through April [ ], 1998).... [ ] [ ] - [ ] - 0.225
</TABLE>
On February 13, 1998, the last full trading day prior to the first
public announcement by SPX of the Proposed Business Combination, the
reported high and low sale prices and closing price per share of SPX Common
Stock and per Share on the NYSE Composite Tape and the per Share on an
equivalent share basis based on the Consideration of $12.00 in cash and
0.4796 share of SPX Common Stock were as follows:
<TABLE>
<CAPTION>
Per share Per equivalent share
----------------------------------- --------------------------------------
High Low Close High Low Close
---- --- ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C>
SPX................................ 75-5/8 74-3/4 75-1/16
The Company........................ 39-1/4 38-1/2 38-7/8 48-1/4 47-13/16 48
</TABLE>
On April [ ],1998, the last full trading day prior to the date of this
Prospectus, the reported high and low sale prices and closing price per
share of SPX Common Stock and per Share on the NYSE Composite Tape and per
Share on an equivalent share basis based on the Consideration of $12.00 in
cash and 0.4976 share of SPX Common Stock were as follows:
<TABLE>
<CAPTION>
Per share Per equivalent share
----------------------------------- --------------------------------------
High Low Close High Low Close
---- --- ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C>
SPX................................ [ ] [ ] [ ] [ ] [ ] [ ]
The Company........................ [ ] [ ] [ ] [ ] [ ] [ ]
</TABLE>
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR SHARES
OF SPX COMMON STOCK AND FOR THE SHARES.
COMPARATIVE PER SHARE DATA
(unaudited)
The following table presents historical per share data of SPX,
historical per share data of Company and pro forma combined per share data
as if the Proposed Business Combination had occurred as of September 1,
1996, assuming an Exchange Ratio of 0.4796. The table also presents the
Company's pro forma equivalent per share data. See "Selected Historical
Financial Data of SPX," "Selected Historical Financial Data of the
Company," and "Pro Forma Condensed Combined Financial Data of SPX and the
Company" included elsewhere herein for additional information regarding
this pro forma information. The pro forma combined per share data is
intended for information purposes, and does not purport to represent what
the combined entity's results of continuing operations would actually have
been had the transaction in fact occurred at an earlier date, or project
the results for any future date or period. Upon consummation of the
Proposed Business Combination, the actual financial position and results of
operations of the combined company will differ, perhaps significantly, from
the pro forma amounts reflected herein due to a variety of factors,
including changes in operating results between the date of the pro forma
financial information and the date on which the Proposed Business
Combination is consummated and thereafter, as well as the factors discussed
under "Risk Factors."
The pro forma condensed combined financial data does not give effect
to any integration or restructuring costs that could result from the
combination of the companies. Any integration and rationalization of the
operations of the Company may include certain costs that in turn would
result in a charge to earnings of the combined company. Such a charge,
which cannot now be quantified fully, may be material and would be
recognized in the period in which such a restructuring occurs. These costs
may include severance and related employee benefit costs, costs to
consolidate manufacturing and distribution facilities, facility
rearrangement costs, relocation and moving costs, training costs, debt
extinguishment costs, and costs associated with change of control
agreements, among others. To date, SPX's access to information related to
the Company has been limited to publicly available information. In
addition, publicly available information does not contain sufficient
details related to the Company's severance plans, employee benefit
agreements, change of control costs or debt extinguishment provisions to
enable SPX to quantify the costs associated with business integration and
rationalization actions that may be considered by SPX. Nonetheless, based
on assumptions related to headcount reductions and average annual salaries
used to compute the annualized expense savings and assuming a severance
policy that would result in an average severance term of six months, the
estimated pre-tax costs of the severance (excluding any change in control
costs) would be approximately $60.0 million.
The pro forma condensed combined financial data also does not give
effect to any costs savings that could result from the combination of the
companies. SPX management estimates that the combined company can achieve
approximately $125.0 million of annualized cost savings in the first full
year following the acquisition, and $175.0 million of annualized cost
savings in the second full year following the acquisition. These costs
savings include three categories of estimated annual savings in the second
full year; savings associated with headcount reductions of $120.0 million,
reduction in duplicative corporate costs of $20.0 million, and
manufacturing, distribution and sourcing rationization of $35.0 million.
These savings estimates are based upon assumptions made by SPX management
using available public information of the Company, certain comparative peer
group information of SPX, and SPX's own internal information.
<TABLE>
<CAPTION>
The Company
The Company Pro forma Pro forma
SPX (a) Historical Combined (b) Equivalent (c)
------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Income (loss) per
common share from
continuing operations
(primary) (d)(e):
Three months ended
November 30, 1997 $ (5.02) $ 0.52 $ (1.11) $(0.54)
Year ended August 31, 1997 (3.22) (0.75) (3.81) (1.83)
Dividends per common share (f):
Three months ended
November 30, 1997 -- 0.225 -- --
Year ended August 31, 1997 0.20 0.89 0.20 0.10
Book value per common share:
November 30, 1997 (3.63) 14.84 27.40 13.14
August 31, 1997 1.09 14.60 25.96 12.45
<FN>
(a) The three-month and twelve-month information for SPX represents SPX's
historical information as of and for the three months ended September
30, 1997 and SPX's pro forma adjusted historical information as of and
for the twelve months ended December 31, 1997, respectively, but is
presented as of November 30, 1997 and August 31, 1997, respectively,
to conform to the Company's reporting. See "Pro Forma Adjusted
Historical Financial Data of SPX."
(b) See "Pro Forma Condensed Combined Financial Data of SPX and the
Company."
(c) The Company's pro forma equivalent per share information represents
the pro forma combined per share information multiplied by an Exchange
Ratio of 0.4796.
(d) The pro forma condensed combined financial data do not give effect to
any integration or restructuring costs, nor to any cost savings, that
could result from the combination of the companies.
The comparative per share data has been affected by various special
charges and gains recorded by SPX and the Company during the periods
presented.
The pro forma condensed combined financial data of SPX and the Company
for the three months ended November 30, 1997 include special charges
of $110.0 million recorded by SPX primarily to combine two divisions
and to recognize the reduced carrying value of certain assets
resulting from the decision to combine the divisions and exit certain
product lines. See "Selected Historical Financial Data of SPX."
The pro forma condensed combined financial data of SPX and the Company
for the year ended August 31, 1997 include special charges and gains
of $304.0 million. The special charges and gains included a $4.2
million special charge recorded by SPX related to the combination of
five divisions into two divisions, a $6.5 million special charge
recorded by SPX of anticipated future legal costs associated with the
ongoing litigation with Snap-on Incorporated, a $67.8 million
write-off of goodwill recorded by SPX related to the acquisitions of
Bear Automotive and Allen Testproducts, $254.1 million of
repositioning and other special charges recorded by the Company
related to facility realignments and rationalizations and other
actions, and $28.6 million of gains from the sale of two divisions by
the Company. See "Selected Historical Financial Data of SPX" and
"Selected Historical Financial Data of the Company."
(e) FAS 128, "Earnings per Share," is a new pronouncement which was issued
in February 1997, but not effective until after December 15, 1997. The
new pronouncement established revised standards for calculating and
reporting earnings per share. On a pro forma basis, if this standard
was adopted for all of the periods presented, both basic and diluted
income (loss) per share would have been equal to primary income (loss)
per share, except that diluted income per share for the Company for
the three months ended November 30, 1997 would have been $0.51.
(f) In April of 1997, SPX eliminated its quarterly cash dividend and
stated that future distributions to shareholders would be in the form
of open market purchases of SPX Common Stock when deemed appropriate
by management.
</FN>
</TABLE>
SELECTED HISTORICAL FINANCIAL DATA OF SPX
(in millions, except per share data)
The following table presents the selected historical statement of
income and other financial data of SPX. The financial data as of and for
the fiscal years ended December 31 have been derived from the audited
financial statements of SPX. The financial data as of and for the fiscal
years ended December 31, have been derived from the audited financial
statements of SPX. SPX's selected historical financial data should be read
in conjunction with, and are qualified in their entirety by reference to,
the historical financial statements (and related notes) of SPX which are
incorporated by reference herein. See "Available Information" and
"Incorporation of Documents by Reference."
<TABLE>
<CAPTION>
As of and for the year ended December 31,
--------------------------------------------------------------------
1997(a) 1996(b) 1995 1994(c) 1993(d,e)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Statement of
income data:
- --------------
Revenues $ 922.3 $ 1,109.4 $ 1,098.1 $ 1,079.9 $ 747.2
Cost of
products sold 669.0 850.1 853.5 821.5 508.0
Selling,
general and
administrative 175.3 186.5 194.5 198.0 204.1
Other
operating
expenses,
Net (f) 3.9 1.9 8.3 2.9 53.4(c)
Special
charges (g) 116.5(h) 87.9(i) 10.7(i) --- 27.5(j)
------------ ------------ ------------ ------------ ------------
Operating
income (loss) (42.4) (17.0) 31.1 57.5 (45.8)
Other expense
(income), net (74.2)(a) (0.7) (3.0) 0.1 (102.9)(e)
Interest
expense, net 13.9 31.8 35.7 35.2 15.9
------------ ------------ ------------ ------------ ------------
Income (loss)
before income
taxes 17.9 (48.1) (1.6) 22.2 41.2
Income taxes 21.3 7.6 (0.2) 9.1 28.1
------------ ------------ ------------ ------------ ------------
Income (loss)
from
continuing
operations $ (3.4) $ (55.7) $ (1.4) $ 13.1 $ 13.1
Discontinued
operation (k) --- --- (2.8) 1.0 2.1
Cumulative
effect of
accounting
changes (l) --- --- --- --- (31.8)
Extraordinary
items, (m) (10.3) (6.6) (1.1) --- (24.0)
------------ ------------ ------------ ------------ ------------
Net income
(loss) $ (13.7) $ (62.3) $ (5.3) $ 14.1 $ (40.6)
============ ============ ============ ============ ============
Income (loss)
per share
from continuing
operations
Basic $ (0.27) $ (4.04) $ (0.10) $ 1.02 $ 1.04
Diluted (0.27) (4.04) (0.10) 1.02 1.04
Weighted
average
number of
common shares
outstanding
Basic 12.754(n) 13.785 13.173 12.805 12.604
Diluted 12.754(n) 13.785 13.173 12.805 12.604
Dividends per
share $ 0.10(n) $ 0.40 $ 0.40 $ 0.40 $ 0.40
Other financial
data:
- ---------------
Total assets 583.8 616.0 831.4 929.0 1,024.4
Total debt 205.3 229.3 319.8 415.2 430.2
Shareholders'
equity (deficit) (43.4) 105.9 162.2 158.7 145.4
Capital
expenditures 22.6 20.2 31.0 48.5 15.1
Depreciation
and amortization 25.0 40.8 43.5 38.5 24.4
Note: The accompanying notes are an integral part of the selected
historical financial data.
NOTES TO SELECTED HISTORICAL FINANCIAL DATA OF SPX
(in millions, except per share data)
<FN>
(a) During 1997, SPX sold its Sealed Power division for $223.0 in gross
cash proceeds. SPX recorded a pretax gain of $71.9, or $31.2
after-tax. Annual 1996 revenues of this division were approximately
$230.0. See "Pro Forma Adjusted Historical Financial Data of SPX."
(b) During 1996, SPX sold its Hy-Lift division for approximately $15.0.
Annual 1995 revenues of this division were approximately $45.0. See
"Pro Forma Adjusted Historical Financial Data of SPX."
(c) Effective December 31, 1993, SPX acquired the balance of Sealed Power
Technologies ("SPT") for $39.0. SPX previously owned 49% of SPT and
accounted for its investment using the equity method. SPT's 1993
revenues were $392.0. As a result of this acquisition, SPX was
required to recognize its share of SPT's losses, $26.9, in 1993. Also,
in 1993, SPX initiated consolidation of Sealed Power Europe Limited
Partnership which required recognition of cumulative losses of the
partnership since its inception, resulting in a charge of $21.5. These
charges have been included in other operating expenses, net.
(d) During 1993, SPX acquired Allen Testproducts and its related leasing
company for $102.0. Annual 1992 revenues of this acquisition were
approximately $83.0.
(e) During 1993, SPX divested its Sealed Power Replacement and Truth
divisions for a gain of $105.4 ($64.2 after-tax). Annual 1992 revenues
of these divisions were approximately $247.0.
(f) Other operating expenses, net, include goodwill/intangible
amortization, minority interest, and earnings from equity interests.
(g) Special charges include certain legal costs, restructuring charges,
and write-off of goodwill.
(h) These charges included a $99.0 restructuring charge, a $4.1 charge for
five corporate executive staff reductions, and $13.4 of costs
associated with various legal matters, including $6.5 of anticipated
future legal costs associated with the ongoing litigation with Snap-on
Incorporated, legal costs associated with a settled case in
California, and certain other matters.
SPX recorded the $99.0 restructuring charge to combine two divisions
within the Service Solution segment and to recognize reduced carrying
value of certain assets resulting from the decision to combine the
divisions and exit certain manufactured diagnostic equipment product
lines. The restructuring of the two Service Solutions businesses was
in response to changing market dynamics and changing needs of
customers. SPX decided to combine its OE Tool and Equipment business
with its Aftermarket Tool and Equipment business to provide a single
business focused on the combined market and customer needs.
Additionally, SPX decided to exit certain products to focus upon new
generation products that will better meet customer needs. The decision
results in a reduction of workforce and closing of certain facilities.
The components of the charge have been computed based on management's
estimate of the realizable value of the affected tangible and
intangible assets and estimated exit costs including severance and
other employee benefits based on existing severance policies and local
laws.
The $99.0 charge included $63.7 of restructuring costs, $25.8 of
reduced inventory value and $9.5 of reduced value of other tangible
and intangible assets related to exiting certain product lines. These
restructuring costs included $13.7 of severance related costs for
approximately 800 people, $20.3 for incremental repossession and
distribution exit costs (including the termination of lease financing
and distributor agreements), $21.2 for incremental service and
software update obligations resulting from the decision to exit these
product lines, and $8.5 of costs associated with idled facilities. The
implementation of this restructuring is expected to be substantially
complete by the end of 1998.
Of the total special charges of $116.5 million, the components of the
charge that will require the future payment of cash are $80.9 million.
Cash payments in 1997 related to the special charges were $1.5
million. The expected future cash payments include an estimated $49.0
million in 1998 with the remainder over the following two years. As
there is some uncertainty associated with the timing of the cash
payments, the remaining accrual at December 31, 1997 of $79.4 million
has been classified in other current accrued liabilities. Management
estimates that savings from the restructuring will increase operating
income by $3.0 million in 1998 and $10.0 million in 1999.
(i) During the fourth quarter of 1995, management authorized and committed
SPX to undertake two significant restructuring plans. The first plan
consolidated five Service Solutions divisions into two divisions. The
second plan closed Sealed Power division's German foundry operation
and transferred certain piston ring operations to other facilities. In
1996, three additional restructuring actions were initiated including
an early retirement program at the Service Solutions divisions, a cost
reduction initiative at several Service Solutions international
locations, and an early retirement program at the Sealed Power
division. A summary of these restructurings follows:
1996 1995
--------- ---------
Service Solutions - Five divisions
consolidated into two divisions $11.2 $ 7.0
Service Solutions - Early retirement 1.1 -
Service Solutions - International 3.5 -
SPD - Closing foundry at SP Europe - 3.7
SPD early retirement 4.2 -
------ -----
Total $20.0 $10.7
===== =====
Service Solutions Restructuring - In order to improve customer
service, reduce costs and improve productivity and asset utilization, SPX
decided to consolidate five existing Service Solutions divisions into two.
This restructuring plan involved closing two SPX owned manufacturing
facilities, and an SPX owned distribution facility, several leased service
centers and a leased sales facility in France. The plan also included
combining sales, engineering and administrative functions, and was
completed at the end of 1996. The plan included the termination of
approximately 570 employees resulting in a net reduction of approximately
310 employee positions after considering staffing requirements at remaining
facilities.
SPX recorded a $7.0 charge in 1995 and an $11.2 charge in 1996 to
complete this restructuring. These charges recognized severance and
benefits for employees to be terminated, holding costs of vacated
facilities, the adjustment to fair market value of one manufacturing
facility to be closed, and other costs to complete the consolidation of the
divisions. The distribution facility was sold during the fourth quarter of
1996 and the manufacturing facilities were sold during 1997.
Service Solutions - Early Retirement - Closely associated with the
consolidation of five divisions into two, an early retirement program was
accepted by approximately 60 people and SPX recorded a $1.1 charge in the
first quarter of 1996.
Service Solutions - International - During the second quarter of 1996,
SPX recorded a $3.5 restructuring charge principally to recognize severance
associated with the termination of 113 international employees and related
operating downsizing costs.
SPD - Closing Foundry at SP Europe - SPX closed its unprofitable
foundry operations at SP Europe and transferred certain piston ring
operations to other facilities. This closing resulted in the elimination of
approximately 200 positions and was completed at the end of the third
quarter of 1996. In 1995, SPX recorded a $3.7 restructuring charge to
accrue severance that was paid to these employees.
Sealed Power Division Early Retirement - During the second quarter of
1996, SPX recorded a $4.2 restructuring charge for the early retirement of
94 employees at the Sealed Power division.
The actual savings associated with the 1995 and 1996 restructuring
actions relate primarily to the Service Solutions restructuring actions.
The actual savings achieved in 1996 and 1997 have been consistent with the
estimated full year savings of $23.0 million by the year 1998. The actions
increased operating income by an estimated $7.0 million in 1996 and an
estimated $12.0 million in 1997.
These charges were recorded in the appropriate periods in accordance
with the requirements of Emerging Issues Task Force Pronouncement 94-3.
Certain costs incurred in connection with management's planned actions not
qualifying for accrual in 1995 were recorded in 1996, based on employee
acceptance of voluntary termination benefits and the satisfaction of other
requirements to recognize these costs. At December 31, 1997, the
restructuring actions initiated in 1995 and 1996 were complete and the
actual costs to implement the actions did not differ materially from the
estimates used to record these accruals.
Also during 1996, SPX recognized a $67.8 goodwill write-off, with no
related tax benefit. The goodwill was related to the 1998 and 1993
acquisitions of Bear Automative Company and of Allen Testproducts,
respectively.
(j) During 1993, SPX recognized a $27.5 ($18.5 after-tax) special charge
to combine its Bear Automotive operation with Allen Testproducts.
(k) During 1995, SPX sold SPX Credit Corporation and recorded a pretax
loss of $4.8 ($3.0 after-tax). The financial results of this operation
are included as a discontinued operation through the date of
divestiture.
(l) During 1993, SPX adopted a new accounting methodology for its ESOP and
reflected its 49% share of SPT's adoption of SFAS No. 106 regarding
accounting for postretirement benefits other than pensions.
(m) During 1997, SPX tendered for substantially all ($126.7) of its
outstanding 11 3/4% senior subordinated notes. SPX recorded an
extraordinary item, net of taxes, of $10.3 for the costs to purchase
the notes. During 1996, SPX purchased $99.9 of these notes and
recorded an extraordinary item, net of taxes, of $6.6 for the costs to
purchase the notes. During 1995, SPX purchased $31.7 of these notes
and recorded an extraordinary item, net of taxes, of $1.1 for the
costs to purchase the notes. During 1993, SPX recorded the costs
associated with prepayment of certain SPX and SPT indebtedness
totaling $24.0, net of taxes, as an extraordinary item.
(n) During 1997, SPX purchased 2.147 shares of SPX Common Stock through a
Dutch Auction self-tender offer for $56.00 per share. As of December
31, 1997, SPX had purchased an additional 0.390 shares through open
market purchases. Also, concurrent with the Dutch Auction, SPX
announced the elimination of quarterly cash dividends and stated that
future distributions to shareholders would be in the form of open
market purchases of common stock, when deemed appropriate by
management.
</FN>
</TABLE>
SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY
(in millions, except per share data)
The following table presents selected historical statement of income
and other financial data of the Company. The financial data as of and for
the three months ended November 30, 1997 and November 30, 1996 have been
derived from the unaudited financial statements of the Company contained in
the Company's 1998 First Quarter Form 10-Q. The financial data as of and
for the fiscal years ended August 31, have been derived from the audited
financial statements of the Company and selected financial data contained
in the Company's 1997 Form 10-K. The operating results for the three months
ending November 30, 1997 are not necessarily indicative of the results that
may be expected for the year ended August 31, 1998. The Company's selected
historical financial data should be read in conjunction with, and are
qualified in their entirety by reference to, the historical financial
statements (and related notes) of the Company which are contained herein
(except for the report of the Company's independent accountants contained
in the Company's 1997 Annual Report on Form 10-K which is not incorporated
herein by reference because the consent of the Company's independent
accountants has not yet been obtained). See "Available Information" and
"Incorporation of Documents by Reference."
<TABLE>
<CAPTION>
As of and
for three
months ended
November 30, As of and for the fiscal year ended August 31,
----------------------- ---------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
Statement of income data:
- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 889.5 $ 850.9 $ 3,568.6 $ 3,128.7 $ 2,717.9 $ 2,229.5 $ 1,944.5
Cost of goods sold 671.1 635.0 2,707.1 2,309.0 1,932.5 1,571.3 1,378.0
Selling and administrative expenses 159.2 149.2 640.1 574.6 531.3 468.5 420.4
Repositioning and other special charges (a) - - 254.1 - - - -
Gain on sales of businesses (b) - - (28.6) - - - -
-------- -------- --------- --------- --------- --------- ---------
Income (loss) from operations 59.2 66.7 (4.1) 245.1 254.1 189.7 146.1
Interest expense, net 9.8 8.0 40.6 32.9 23.6 11.7 8.5
-------- -------- --------- --------- --------- --------- ---------
Income (loss) before taxes 49.4 58.7 (44.7) 212.2 230.5 178.0 137.6
Provision for taxes 16.8 20.6 2.2 70.0 76.1 56.9 44.0
-------- -------- --------- --------- --------- --------- ---------
Income (loss) before cumulative
effect of accounting change 32.6 38.1 (46.9) 142.2 154.4 121.1 93.6
Cumulative effect of accounting change (c) - - - - - 2.6 -
-------- -------- --------- --------- --------- --------- ---------
Net income (loss) $ 32.6 $ 38.1 $ (46.9) $ 142.2 $ 154.4 $ 123.7 $ 93.6
======== ======== ========== ========= ======== ======== =========
Average shares outstanding 63.132 62.347 62.601 61.919 59.476 58.996 58.560
Primary net income (loss) per share (d) $ 0.52 $ 0.61 $ (0.75) $ 2.30 $ 2.60 $ 2.10 $ 1.60
Dividends per share $ 0.225 $ 0.22 $ 0.89 $ 0.85 $ 0.79 $ 0.73 $ 0.70
Other financial data:
- --------------------
Total assets 2,365.5 2,453.8 2,374.2 2,130.8 1,961.0 1,577.4 1,263.3
Total debt 761.4 769.9 757.9 495.9 507.1 308.3 164.2
Shareholders' equity 937.0 1,039.5 913.7 1,008.9 909.3 799.0 713.8
Capital expenditures 31.5 28.1 149.2 104.4 103.9 73.8 41.5
Depreciation and amortization 29.7 27.2 113.9 90.9 76.6 64.2 59.7
Note: The accompanying notes are an integral part of the
selected historical financial data.
NOTES TO SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY
(in millions, except per share data)
<FN>
(a) During fiscal 1997, the Company recorded repositioning and other
special charges of $254.1, pretax. The repositioning charge included
expenses related to facility realignments and rationalizations, and
the write-down to net realizable value of businesses to be disposed.
In addition, goodwill associated with brand names no longer in use was
written off, inventory related to discontinued and rationalized
product lines was written down, property, plant and equipment idled by
facility closures and product line rationalizations were reduced, and
other investments and deferred customer acquisition costs were written
off.
(b) During fiscal 1997, the Company sold two divisions for gross proceeds
of $75.9. The Company reported a pretax gain of $28.6.
(c) During fiscal 1994, the Company adopted a new accounting methodology
for income taxes.
(d) The Company indicates that pro forma diluted loss per share under FAS
128 would have been less than the reported loss per share for the year
ended August 31, 1997 and pro forma diluted earnings per share would
have been $0.51 for the quarter ended November 30, 1997.
</FN>
</TABLE>
PRO FORMA CONDENSED COMBINED FINANCIAL DATA
OF SPX AND THE COMPANY
(unaudited)
(in millions, except per share data)
The following information is presented as if the Offer and the Merger
of SPX and the Company occurred on September 1, 1996 for statement of
income and related data and on November 30, 1997 for balance sheet data.
This pro forma data assumes that the Offer and the Merger are effected by
the exchange of shares of SPX Common Stock and cash for Shares. The pro
forma data assumes SPX will exchange 0.4796 share of SPX Common Stock and
$12.00 cash for each Share, whereby 30.532 million Shares of SPX Common
Stock and $763.9 of cash are issued in exchange for all outstanding Shares
and equivalent Shares, other than those owned by SPX. The Offer and the
Merger will be accounted for as a reverse acquisition, as the shareholders
of the Company will own a majority of the outstanding shares of SPX Common
Stock upon completion of the transaction. Accordingly, for accounting
purposes, SPX is treated as the acquired company and the Company is
considered to be the acquiring company. The purchase price will be
allocated to the assets and liabilities assumed of SPX based on their
estimated fair market values at the acquisition date. Under reverse
acquisition accounting, the purchase price of SPX is based on the fair
market value of SPX Common Stock at the date of acquisition. The cash
portion of the Consideration will be accounted for as a dividend by the
combined company. SPX's financial position and results of operations will
not be included in the Company's consolidated financial statements prior to
the date the Merger is consummated.
Under reverse acquisition accounting, the purchase price of SPX is
based on the fair market value of SPX Common Stock. For purposes of this
pro forma information, the fair market value of SPX Common Stock is assumed
to be $76-5/16 per share, which reflects the closing price of SPX Common
Stock on March 31, 1998. The Consideration includes 0.4796 share of SPX
Common Stock. This is a fixed exchange ratio and will not be adjusted in
the event of any increase or decrease in the market price of SPX Common
Stock. Consequently, changes in the market price of SPX Common Stock will
not impact these pro forma financial statements other than to increase or
decrease the purchase price of SPX and the related amount of goodwill and
amortization thereof.
The pro forma condensed combined financial data are intended for
information purposes, and do not purport to represent what the combined
entity's results of continuing operations or financial position would
actually have been had the transaction in fact occurred at an earlier date,
or project the results for any future date or period. Upon consummation of
the Offer, the actual financial position and results of operations of the
combined company will differ, perhaps significantly, from the pro forma
amounts reflected herein due to a variety of factors, including changes in
operating results between the date of the pro forma condensed combined
financial data and the date on which the Offer is consummated and
thereafter, as well as the factors discussed under "Risk Factors."
The pro forma condensed combined financial data does not give effect
to any integration or restructuring costs that could result from the
combination of the companies. Any integration and rationalization of the
operations of the Company may include certain costs that in turn would
result in a charge to earnings of the combined company. Such a charge,
which cannot now be quantified fully, may be material and would be
recognized in the period in which such a restructuring occurs. These costs
may include severance and related employee benefit costs, costs to
consolidate manufacturing and distribution facilities, facility
rearrangement costs, relocation and moving costs, training costs, debt
extinguishment costs, and costs associated with change of control
agreements, among others. To date, SPX's access to information related to
the Company has been limited to publicly available information. In
addition, publicly available information does not contain sufficient
details related to the Company's severance plans, employee benefit
agreements, change of control costs or debt extinguishment provisions to
enable SPX to quantify the costs associated with business integration and
rationalization actions that may be considered by SPX. Nonetheless, based
on assumptions related to headcount reductions and average annual salaries
used to compute the annualized expense savings and assuming a severance
policy that would result in an average severance term of six months, the
estimated pre-tax costs of the severance (excluding any change in control
costs) would be approximately $60.0 million.
The pro forma condensed combined financial data also does not give
effect to any costs savings that could result from the combination of the
companies. SPX management estimates that the combined company can achieve
approximately $125.0 million of annualized cost savings in the first full
year following the acquisition, and $175.0 million of annualized cost
savings in the second full year following the acquisition. These costs
savings include three categories of estimated annual savings in the second
full year: savings associated with headcount reductions of $120.0 million;
reduction in duplicative corporate costs of $20.0 million; and
manufacturing, distribution and sourcing rationization of $35.0 million.
These savings estimates are based upon assumptions made by SPX management
using available public information of the Company, certain comparative peer
group information of the Company, and SPX's own internal information.
In the pro forma condensed combined financial data, the
Company's information was derived from the Company's 1997 Form 10-K, and
the Company's 1998 First Quarter Form 10-Q. For SPX's pro forma adjusted
historical financial data, see "Pro Forma Adjusted Historical Financial
Data of SPX," presented elsewhere herein.
The pro forma condensed combined financial data should be read in
conjunction with the financial statements and notes thereto included in
SPX's 1997 Form 10-K, SPX's 1997 Third Quarter Form 10-Q, the Company's
1997 Form 10-K and the Company's 1998 First Quarter Form 10-Q.
PRO FORMA CONDENSED COMBINED FINANCIAL DATA
OF SPX AND THE COMPANY
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997
(unaudited)
(in millions, except per share data)
<TABLE>
<CAPTION>
SPX The Company Pro forma
Historical (a) Historcial (a) Adjustments Pro forma
---------- ---------- ----------- ---------
Statement of income data:
- -------------------------
<S> <C> <C> <C> <C>
Revenues $ 241.7 $ 889.5 $ - $ 1,131.2
Cost of products sold 176.5 671.1 0.8 (d) 848.4
Selling, general and
administrative expense 45.6 159.2 0.8 (d) 205.6
Other operating expenses, net 1.0 - 5.6 (d) 6.6
Special charges(1) 110.0 - - 110.0
---------- ------------ ------------- ----------
Operating income (loss) (91.4) 59.2 (7.2) (39.4)
Other expense (income), net (1.1) - - (1.1)
Interest expense, net 3.4 9.8 20.6 (f) 33.8
---------- ------------ ------------- ----------
Income (loss) before income taxes (93.7) 49.4 (27.8) (72.1)
Provision (benefit) for income (33.7) 16.8 (8.4)(g) (25.3)
taxes ---------- ------------ ------------- ----------
Income (loss) (m) $ (60.0) $ 32.6 $ (19.4) $ (46.8)
========== ============ ============= ==========
Primary income (loss) per share (n) $ (5.02) $ (1.11)
Weighted average number of
common shares outstanding 11.943 30.079 (h) 42.022
Dividends per share (m) $ - - $ -
Other financial data:
- ---------------------
Capital expenditures 7.0 31.5 38.5
Depreciation and amortization 5.7 29.7 6.9 42.3
Note: The accompanying notes are an integral part of the pro forma
condensed combined financial data.
</TABLE>
PRO FORMA CONDENSED COMBINED FINANCIAL DATA
OF SPX AND THE COMPANY
FOR THE YEAR ENDED AUGUST 31, 1997
(unaudited)
(in millions, except per share data)
<TABLE>
<CAPTION>
SPX
Pro forma The Pro
Adjusted Company forma
Historical (b) Historical (b) Adjustments Pro forma
---------- ---------- ----------- ---------
Statement of income data:
- -------------------------
<S> <C> <C> <C> <C>
Revenues $ 848.2 $ 3,568.6 $ - $ 4,416.8
Cost of products sold 619.9 2,707.1 3.3 (d) 3,323.3
Selling, general and
administrative expense 169.6 640.1 3.3 (d) 813.0
Other operating
expenses, net 3.6 - 22.3 (d) 25.9
Special charges and
gains (k,l) 78.5 225.5 - 304.0
--------- --------- ----------- ---------
Operating income (loss) (16.4) (4.1) (28.9) (49.4)
Other expense (income),
net (2.4) - (2.4)
Interest expense, net 14.9 40.6 77.9 (f) 133.4
--------- --------- ----------- ---------
Income (loss) before
income taxes (28.9) (44.7) (106.8) (180.4)
Provision (benefit) for
income taxes 14.1 2.2 (32.1)(g) (15.8)
--------- --------- ----------- ---------
Income (loss) (c) $ (43.0) $ (46.9) $ (74.7) $ (164.6)
========= ========= =========== =========
Primary income (loss)
per share (n) $ (3.22) $ (3.81)
Weighted average number
of common shares
outstanding 13.359 29.825 (h) 43.184
Dividends per share (m) $ 0.20 $ 0.20
Other financial data:
- ---------------------
Capital expenditures 20.0 149.2 169.2
Depreciation and amortization 24.1 113.9 27.3 165.3
Note: The accompanying notes are an integral part of the pro forma
condensed combined financial data.
</TABLE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
OF SPX AND THE COMPANY
AS OF NOVEMBER 30, 1997
(unaudited)
(in millions)
SPX The Company Pro forma
Historical(a) Historical(a) Adjustments Pro forma
---------- ----------- ----------- ---------
Assets:
Current assets $ 383.5 $ 1,198.5 $ 10.3 (i) $1,577.4
(14.9) (i)
Property, plant and
equipment, net 122.1 726.0 40.0 (i) 888.1
Marketable securities - 81.3 - 81.3
Intangible assets - 318.1 - 318.1
Goodwill 60.2 - (60.2) (i) 1,010.1
1,010.1 (i)
Other assets 18.0 41.6 37.5 (e) 183.6
87.3 (i)
(0.8) (i)
---------- ---------- --------- ---------
Total assets $ 583.8 $ 2,365.5 $1,109.3 $ 4,058.6
========== ========== ========= =========
Liabilities and
Shareholders' Equity
Notes payable and current
maturities of long-term
debt $ 2.8 $ 58.7 $ - $ 61.5
Other current liabilities 283.8 590.0 - 873.8
Total long-term
liabilities 138.1 77.0 (19.4) (i) 250.4
54.7 (i)
Long-term debt 202.5 702.8 816.4 (e) 1,721.7
Total shareholders' equity
(deficit) (43.4) 937.0 1,003.0 (j) 1,151.2
(763.9) (j)
(14.9) (i)
(43.4) (j)
(10.0) (i)
---------- ---------- --------- ---------
Total liabilities and
shareholders' equity $ 583.8 $ 2,365.5 $1,109.3 $ 4,058.6
========== ========== ========= =========
Note: The accompanying notes are an integral part of the pro forma
condensed combined balance sheet.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL DATA
OF SPX AND THE COMPANY
(unaudited)
(in millions, except per share data)
(a) Pro forma information as of and for the three months ended November
30, 1997 includes the actual historical results of SPX as of and for
the three months ended December 31, 1997 (the most current fiscal
quarter end of SPX within 93 days of November 30, 1997) and the actual
historical results of the Company as of and for the three months ended
November 30, 1997.
(b) Pro forma information for the year ended August 31, 1997 includes the
pro forma adjusted historical results of SPX for the twelve months
ended September 30, 1997 (the most current fiscal twelve month period
of SPX within 93 days of August 31, 1997) and the actual historical
results of the Company for the year ended August 31, 1997. The pro
forma adjusted historical results of SPX for the twelve months ended
September 30, 1997 reflect SPX's February 1997 disposition of the
Sealed Power division and its November 1996 disposition of the Hy-Lift
division, as if such dispositions occurred on October 1, 1996. See
"Pro Forma Adjusted Historical Financial Data of SPX," presented
elsewhere herein.
(c) The pro forma condensed combined financial data reflect only results
from continuing operations. SPX recorded a $15.8 extraordinary item,
net of taxes, in the twelve months ended September 30, 1997. The
extraordinary item related to SPX's purchase of its 11 3/4% senior
subordinated notes.
(d) These pro forma adjustments reflect the impact of the allocation of
the purchase price to the assets and liabilities of SPX on the pro
forma condensed combined statement of income and other financial data.
The ultimate allocation of the purchase price to the net assets
acquired, goodwill and other intangible assets, liabilities assumed
and incomplete technology of SPX is subject to final determination of
their respective fair values, and as a result, these adjustments could
change. The following table reflects the pro forma condensed combined
statement of income impact of the purchase accounting adjustments:
Cost of Selling, Other
products general operating
sold & admin. expenses Total
-------- -------- --------- -------
Additional depreciation $ 2.5 $ 2.5 $ - $ 5.0
Pension expense adjustment 0.3 0.3 0.6
Amortization of previously
recorded goodwill - - (3.0) (3.0)
Goodwill and intangible
amortization on
transaction - - 25.3 25.3
Postretirement expense
adjustment 0.5 0.5 - 1.0
-------- -------- --------- -------
Year ended August 31, 1997 $ 3.3 $ 3.3 $ 22.3 $ 28.9
======== ======== ========= =======
Three months ended
November 30, 1997 $ 0.8 $ 0.8 $ 5.6 $ 7.2
======== ======== ========= =======
Upon consummation of the transaction, an estimated $10.0 charge for
incomplete technology will occur, however, this charge is not
reflected in the pro forma data as the charge is non-recurring and has
no continuing impact.
(e) This pro forma adjustment reflects the borrowings for the cash portion
of the Consideration, debt issuance costs for new financing, and other
estimated transaction fees of $15.0. The cash portion of the
Consideration is $763.9, which represents $12.00 per Share multiplied
by 63.661 Shares and Share equivalents outstanding. The outstanding
and equivalent Shares include Shares outstanding at November 5, 1997
and Shares issuable (treasury stock method) upon exercise of the
Company's options, less 0.416 Shares held by SPX as of December 31,
1997. The debt issuance costs are estimated at $37.5 to obtain a new
seven year $2,400 financing to effect the Proposed Business
Combination, to refinance existing debt of both SPX and the Company
and provide working capital.
(f) These pro forma adjustments reflect the interest expense associated
with the incremental borrowings ($816.4) to effect the Proposed
Business Combination, as if the incremental borrowings had occurred at
September 1, 1996. The pro forma interest expense adjustment also
reflects the refinancing of existing debt under a new seven year
$2,400 financing as of September 1, 1996. The interest expense has
been computed on an assumption that borrowings under the new credit
facility will bear interest at a rate of LIBOR plus 2 1/4% (8% was
used in these pro forma financial statements) and that debt issuance
costs are amortized over seven years. If the interest rate used in the
pro forma financial data were assumed to increase by 1/8%, the impact
would be to increase net loss by $3.4 ($0.08 per share) and by $13.9
($0.32 per share) for the three months ended November 30, 1997 and for
the year ended August 31, 1997, respectively. Average historical
outstanding debt of SPX and the Company, as used in this pro forma
presentation, was $965.5 and $973.5 for the three months ended
November 30, 1997 and for the year ended August 31, 1997,
respectively.
(g) These adjustments represent the estimated income tax effect of the pro
forma adjustments, excluding goodwill expense, which will not be
deductible for tax purposes, using an effective income tax rate of
38%.
(h) These pro forma adjustments reflect the additional shares of SPX
Common Stock to be issued in the transaction. The additional shares to
be issued are calculated assuming that the stock component of the
Consideration is 0.4796 share of SPX Common Stock, which converts
weighted average outstanding Shares to weighted average outstanding
shares of SPX Common Stock. The Shares used in these calculations
include reported weighted average outstanding Shares, less 0.416
Shares held by SPX as of December 31, 1997.
(i) These pro forma adjustments reflect the allocation to the assets and
liabilities of SPX of the difference between the market value of SPX
and SPX's book value (the "excess purchase price"). The market value
of SPX is assumed to be the sum of the fair market value of the
outstanding SPX Common Stock (less unallocated SPX Common Stock held
by SPX's KSOP and restricted SPX Common Stock) and the fair value of
SPX's outstanding options. SPX's book value is assumed to be its
shareholders' deficit adjusted by estimated transaction fees of $15.0
which are assumed to have been incurred by SPX prior to the
combination.
Market Value SPX; Shares of SPX
Common Stock outstanding 12.531
Unallocated SPX Common Stock held in
KSOP and Restricted SPX Common Stock $ (0.658)
----------
Adjusted SPX Common Stock outstanding 11.873
Market price per share of
SPX Common Stock $ 76.3125
-----------
Market value of SPX Common
Stock outstanding $ 906.0
Market value of outstanding options 97.0
---------
Market value of SPX $ 1,003.0
SPX's Book Value:
December 31, 1997 Shareholders' deficit $ (43.4)
Assumed transaction fees (15.0)
SPX's Book Value $ (58.4)
---------
Excess Purchase Price $ 1,061.4
=========
This excess purchase price has been allocated to the assets and
liabilities of SPX as follows:
Inventory $ 10.3
Property, plant & equipment 40.0
Prepaid pension (other assets) 87.3
Deferred financing fees (other assets) (0.8)
Goodwill - previously recorded (60.2)
Goodwill and intangible assets 1,010.1
Incomplete technology 10.0
Postretirement health and life insurance
liability 19.4
Deferred tax liability (54.7)
-----
$1,061.4
========
The preliminary allocations of the excess purchase price are based
upon current estimates and information available to SPX. Property, plant
and equipment reflect the adjustment to estimated fair market values of
these assets. Prepaid pension reflects the adjustment to the fair market
value of the plan assets less the projected benefit obligation. Goodwill,
previously recorded, reflects the elimination of goodwill that is included
in SPX's historical balance sheet. Goodwill and intangible assets reflects
the amount of excess purchase price remaining after allocations to all
other assets and liabilities. Incomplete technology represents the
estimated fair market value of in process product development costs.
Postretirement health and life insurance liability reflects the adjustment
of the liability to the accumulated benefit obligation. The deferred tax
liability reflects the deferred tax liabilities related to these
allocations.
The goodwill recorded as a result of these allocations will be
amortized over a 40 year life. In determining the estimated useful life,
management considered the nature, competitive position, life cycle
position, and historical and expected future operating income of SPX, as
well as management's commitment to support SPX through continued investment
in capital expenditures, operational improvements, and research and
development. After the transaction, the combined company will continually
review whether subsequent events and circumstances have occurred that
indicate the remaining estimated useful life of goodwill may warrant
revision or that the remaining balance of goodwill may not be recoverable.
If events and circumstances indicate that goodwill related to a particular
business should be reviewed for possible impairment, the combined company
will use projections to assess whether future operating income on a
non-discounted basis (before goodwill amortization) of the unit is likely
to exceed the goodwill amortization over the remaining life of the
goodwill, to determine whether a write-down of goodwill to recoverable
value is appropriate.
The ultimate allocation of the purchase price to the net assets
acquired, goodwill, other intangible assets, liabilities assumed and
incomplete technology is subject to final determination of their respective
fair values. This final allocation will be based upon the results of a
professional appraisal that will be performed upon the consummation of the
transaction. SPX management believes the above preliminary allocations of
the purchase price are reasonable and will not materially change upon
completion of the appraisal.
The pro forma adjustments include the elimination of SPX's $14.9
investment in the 0.416 shares of the Company (included in current assets).
As of November 30, 1997, there were no other intercorporate transactions
that required elimination.
(j) These pro forma adjustments reflect the effect of reverse acquisition
accounting by adding the market value of SPX ($1,003.0), subtracting
SPX's December 31, 1997 shareholder deficit ($43.4), and subtracting
the cash payout ($763.9) which is treated as a dividend by the
combined company.
(k) Reflects a reclassification to special charges of $6.5 of legal costs
that were previously classified as other expense (income), net in
SPX's 1997 Third Quarter Form 10-Q.
(l) The pro forma condensed combined financial data do not give effect to
any integration or restructuring costs, nor to any cost savings, that
could result from the combination of the companies.
The pro forma condensed combined financial data of SPX and the Company
for the three months ended November 30, 1997 include special charges
of $110.0 recorded by SPX primarily to combine two divisions and to
recognize reduced carrying value of certain assets resulting from the
decision to combine the divisions and exit certain product lines. See
"Selected Historical Financial Data of SPX."
The pro forma condensed combined financial data of SPX and the Company
for the year ended August 31, 1997 include special charges and gains
of $304.0. The special charges and gains included a $4.2 special
charge recorded by SPX related to the combination of five divisions
into two divisions, a $6.5 special charge recorded by SPX of
anticipated future legal costs associated with the ongoing litigation
with Snap-on Incorporated, a $67.8 write-off of goodwill recorded by
SPX related to the acquisitions of Bear Automotive and Allen
Testproducts, $254.1 of repositioning and other special charges
recorded by the Company related to facility realignments and
rationalizations and other actions, and $28.6 of gains from the sale
of two divisions by the Company. See "Selected Historical Financial
Data of SPX" and "Selected Historical Financial Data of the Company."
(m) Represents the historical quarterly cash dividend per share of SPX for
the periods presented. In April 1997, SPX eliminated its quarterly
cash dividend and stated that future share repurchases would be used,
when appropriate, for distributions to shareholders.
(n) FAS 128, "Earnings per Share," is a new pronouncement which was issued
in February 1997, but not effective until after December 15, 1997. The
new pronouncement established revised standards for calculating and
reporting earnings per share. On a pro forma basis, if this standard
were adopted for the periods presented, both basic and diluted income
(loss) per share would have been equal to primary income (loss) per
share.
PRO FORMA ADJUSTED HISTORICAL FINANCIAL DATA OF SPX
(unaudited)
(in millions, except per share data)
On February 7, 1997, SPX completed the sale of substantially all of
the assets and rights used in the manufacture and distribution of piston
rings and cylinder liners, known as the Sealed Power division ("SPD"). The
gross cash sales proceeds were $223.0. Additionally, effective November 1,
1996, SPX sold its Hy-Lift division to W.A. Thomas Company. Hy-Lift
manufactures and distributes engine valve train components to both the
original equipment market and the aftermarket. The gross cash sales
proceeds were $15.0.
The following historical financial data include the results of SPD
through February 7, 1997, and the results of Hy-Lift through November 1,
1996, their dates of disposition. The following unaudited pro forma
adjusted historical financial data for the twelve months ended September
30, 1997 reflects the disposition of these divisions as if they had
occurred as of October 1, 1996. The pro forma adjusted historical financial
data does not purport to represent what SPX's results of continuing
operations would actually have been had the transactions in fact occurred
as of October 1, 1996, or project the results for any future period.
The pro forma adjusted historical financial data should be read in
conjunction with the financial statements and notes thereto included in
SPX's 1997 Form 10-K, SPX's Current Report on Form 8-K dated February 21,
1997, and SPX's 1997 Third Quarter Form 10-Q.
PRO FORMA ADJUSTED HISTORICAL FINANCIAL DATA OF SPX
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1997
(unaudited)
(in millions, except per share data)
Pro forma Adjustments
---------------------
Historical Divest(a) Other Pro forma
---------- --------- ----- ---------
Statement of income data:
- -------------------------
Revenues $ 932.1 $ (83.9) $ 848.2
Cost of products sold 686.9 (74.0) 612.9
Selling, general &
administrative 173.3 (3.7) 169.6
Other operating expenses, net 3.3 0.3 3.6
Special charges (e) 78.5 - 78.5
-------- --------- ---------
Operating income (loss) $ (9.9) $ (6.5) $ (16.4)
Other (income) expense (74.3) - 71.9 (b) (2.4)
Interest expense, net 17.5 - (2.6)(c) 14.9
-------- --------- ------ ---------
Income (loss) before
income taxes $ 46.9 $ (6.5) $(69.3) $ (28.9)
Provision for income taxes 56.2 (2.3) (39.8)(d) 14.1
-------- --------- ------ ---------
Income (loss) (f) $ (9.3) $ (4.2) $(29.5) $ (43.0)
======== ========= ====== =========
Primary income (loss)
per share (g) $ (0.70) $ (3.22)
Weighted average number
of shares 13.359 13.359
Other financial data:
- ---------------------
Capital expenditures $ 23.8 (3.8) $ 20.0
Depreciation and amortization 28.3 (4.2) 24.1
(a) This column reflects the operating results of SPD and Hy-Lift through
their dates of disposition, February 7, 1997 and November 1, 1996,
respectively.
(b) Adjustment to exclude the gain on the sale of SPD. SPX's gain on the
sale of Hy-Lift was immaterial.
(c) Adjustment to interest expense, net, assuming the use of net proceeds
to reduce revolving credit and other debt.
(d) Adjustment to income tax expense to reflect the tax effect of the
adjustments.
(e) Reflects a reclassification to special charges of $6.5 of legal costs
to special charges that were previously classified as other expense
(income), net in SPX's 1997 Third Quarter Form 10-Q.
(f) Income excludes extraordinary item of $15.8, net of taxes.
(g) FAS 128, "Earnings per Share," is a new pronouncement which was issued
in February 1997, but not effective until after December 15, 1997. The
new pronouncement established revised standards for calculating and
reporting earnings per share. On a pro forma basis, if the standard
was adopted for the period presented, both basic and diluted income
(loss) per share would have been equal to primary income (loss) per
share.
VALIDITY OF SPX COMMON STOCK
The validity of the shares of SPX Common Stock offered hereby will be
passed upon for SPX by Fried, Frank, Harris, Shriver & Jacobson (a
partnership including professional corporations), One New York Plaza, New
York, New York 10004.
EXPERTS
The audited consolidated financial statements of SPX included in SPX's
1997 Form 10-K incorporated by reference in this Prospectus and elsewhere
in this Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and is incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and Rights and
any other required documents should be sent or delivered by each holder of
Shares or his broker, dealer, commercial bank, trust company or other
nominee to the Exchange Agent at one of its addresses set forth below.
THE EXCHANGE AGENT
------------------
TELEPHONE NUMBER
[ ]
(call collect)
By Mail: Facsimile Transmission By Hand or Overnight Courier:
[ ] Copy Numbers: [ ]
[ ]
[ ]
Confirm Facsimile by Telephone:
[ ]
[ ]
Any questions or requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone
numbers and locations listed below. Any requests for additional copies of
this Prospectus, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent. You may also contact
your local broker, commercial bank, trust company or nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Bankers and brokers call collect: 212-269-5550
All others call toll free:
800-758-5378
THE DEALER MANAGER FOR THE OFFER IS:
CIBC Oppenheimer Corp.
200 West Madison
Suite #2300
Chicago, IL 60606
(312) 750-8749
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorized and
empowers SPX to indemnify the directors, officers, employees and agents of
SPX against liabilities incurred in connection with, and related expenses
resulting from, any claim, action or suit brought against any such person
as a result of his relationship with SPX, provided that such persons acted
in good faith and in a manner such person reasonably believed to be in, and
not opposed to, the best interests of SPX in connection with the acts or
events on which such claim, action or suit is based. The finding of either
civil or criminal liability on the part of such persons in connection with
such acts or events is not necessarily determinative of the question of
whether such persons have met the required standard of conduct and are,
accordingly, entitled to be indemnified. The foregoing statements are
subject to the detailed provisions of Section 145 of the General
Corporation Law of the State of Delaware.
SPX's Certificate of Incorporation provides that directors and
officers of SPX and those serving at the request of SPX as a director,
officer, employee or agent of another corporation or entity will be
indemnified by SPX to the fullest extent authorized by Delaware law. The
indemnification right includes the right to be paid by SPX the expenses
incurred in defending any proceeding in advance of its final disposition.
The indemnification rights conferred by SPX's Certificate of Incorporation
are not exclusive of any other right to which persons seeking
indemnification may be entitled under any law, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. SPX is authorized to
purchase and maintain insurance on behalf of its directors and officers.
ITEM 21. EXHIBITS.
ITEM NO. DESCRIPTION
-------- -----------
3(i) Restated Certificate of Incorporation, incorporated
herein by reference from the Registrant's Annual Report
on Form 10-K, file No. 1-6948, for the year ended
December 31, 1987.
(ii) Certificate of Ownership and Merger dated April 25,
1988, incorporated herein by reference from the
Registrant's Annual Report on Form 10-K, file No.
1-6948, for the year ended December 31, 1988.
(iii) By-Laws as amended through October 25, 1995,
incorporated herein by reference from the Registrant's
Quarterly Report on Form 10-Q, file No. 1-6948, for the
quarter ended September 30, 1995.
4(i) 11 3/4% Senior Subordinated Notes due 2002,
incorporated herein by reference from the Registrant's
Amendment No. 2 to Form S-3 Registration Statement
33-52833, filed on May 27, 1994.
(ii) Indenture, dated as of June 6, 1994, between the
Registrant and The Bank of New York, as trustee,
relating to the 11 3/4% Senior Subordinated Notes due
2002, incorporated herein by reference from the
Registrant's Amendment No. 2 to Form S-3 Registration
Statement 33-52833, filed on May 27, 1994.
(iii) Rights Agreement, dated as of June 25, 1996 between the
Registrant and The Bank of New York, as Rights Agent,
relating to Rights to purchase preferred stock under
certain circumstances, incorporated herein by reference
from the Registrant's Registration Statement on Form
8-A filed on June 26, 1996.
(iv) Amendment No. 1 to Rights Agreement, effective October
22, 1997, between SPX and the Bank of New York,
incorporated herein by reference from SPX's
Registration Statement on Form 8-A filed on January 9,
1998.
(v) Credit Agreement between the Registrant and The First
National Bank of Chicago, as agent for the banks named
therein, dated as of May 7, 1997, incorporated herein
by reference from the Registrant's Quarterly Report on
Form 10-Q, file No. 1-6948, for the quarter ended March
31, 1997.
(vi) Amendment No. 1 and Waiver to Credit Agreement between
SPX Corporation and The First National Bank of Chicago,
as agent for the banks named therein, dated as of
December 19, 1997, incorporated herein by reference to
the Registrant's Annual Report on Form 10-K, file No.
1-6948, for the year ended December 31, 1997.
5 Opinion of Fried, Frank, Harris, Shriver & Jacobson as
to the legality of the shares of common stock being
offered.*
10(i) Sealed Power Corporation Executive Performance Unit
Plan, incorporated herein by reference from SPX's
Amendment No. 1 on Form 8 to the Annual Report on Form
10-K, file No. 1-6948, for the year ended December 31,
1988.
(ii) SPX Corporation Retirement Plan for Directors, as
amended and restated, incorporated herein by reference
from SPX's Amendment No. 1 on Form 8 to the Annual
Report on Form 10-K, file No. 1-6948, for the year
ended December 31, 1988.
(iii) SPX Corporation Supplemental Retirement Plan for Top
Management, as amended and restated, incorporated
herein by reference from SPX's Amendment No. 1 on Form
8 to the Annual Report on Form 10-K, file No. 1-6948,
for the year ended December 31, 1988.
(iv) SPX Corporation Excess Benefit Plan No. 3, as amended
and restated, incorporated herein by reference from
SPX's Amendment No. 1 on Form 8 to the Annual Report on
Form 10-K, file No. 1-6948, for the year ended December
31, 1988.
(v) SPX Corporation Executive Severance Agreement,
incorporated herein by reference from SPX's Amendment
No. 1 on Form 8 to the Annual Report on Form 10-K, file
No. 1-6948, for the year ended December 31, 1988.
(vi) SPX Corporation Trust Agreement for Supplemental
Retirement Plan for Top Management, Excess Benefit Plan
No. 3, and Retirement Plan for Directors, incorporated
herein by reference from SPX's Amendment No. 1 on Form
8 to the Annual Report on Form 10-K, file No. 1-6948,
for the year ended December 31, 1988.
(vii) SPX Corporation Trust Agreement for Participants in
Executive Severance Agreements, Special Separation Pay
Plan for Corporate Staff Executive Personnel Agreements
and Special Separation Pay Plan for Corporate Staff
Management and Administrative Personnel Agreements,
incorporated herein by reference from SPX's Amendment
No. 1 on Form 8 to the Annual Report on Form 10-K, file
No. 1-6948, for the year ended December 31, 1988.
(viii) SPX Corporation Stock Compensation Plan Limited Stock
Appreciation Rights Award, incorporated herein by
reference from SPX's Amendment No. 1 on Form 8 to the
Annual Report on Form 10-K, file No. 1-6948, for the
year ended December 31, 1988.
(ix) SPX Corporation Stock Ownership Plan, incorporated
herein by reference from SPX's Current Report on Form
8-K, file No. 1-6948, filed on July 26, 1989.
(x) SPX Corporation Stock Ownership Trust, incorporated
herein by reference from SPX's Current Report on Form
8-K, file No. 1-6948, filed on July 26, 1989.
(xi) SPX Corporation 1992 Stock Compensation Plan,
incorporated herein by reference from Exhibit
10(iii)(n) to SPX's Annual Report on Form 10-K, file
No. 1-6948, for the year ended December 31, 1992.
(xii) SPX Corporation Supplemental Employee Stock Ownership
Plan, incorporated herein by reference from SPX's
Annual Report on Form 10-K, file No. 1-6948, for the
year ended December 31, 1990.
(xiii) Employment agreement, and related Nonqualified Stock
Option Agreement and Restricted Shares Agreement,
between SPX Corporation and John B. Blystone dated as
of November 24, 19__, incorporated herein by reference
to SPX's Annual Report on Form 10-K, file No. 1-6948,
for the year ended December 31, 1995.
(xiv) Employment agreement between SPX Corporation and John
B. Blystone dated as of January 1, 1997, incorporated
herein by reference to SPX's Annual Report on Form
10-K, file No. 1-6948, for the year ended December 31,
1996.
21 Subsidiaries incorporated herein by reference to SPX's
Annual Report on Form 10-K, file No. 1-6948, for the
year ended December 31, 1997.
23(i) Consent of Arthur Andersen LLP.
(ii) Consents of Fried, Frank, Harris, Shriver & Jacobson.*
24 Powers of Attorney.**
99(i) Form of Letter of Transmittal and Instructions
thereto.*
99(ii) Form of Notice of Guaranteed Delivery.*
99(iii) Form of Broker Dealer Letter.*
99(iv) Form of Letter to Clients.*
99(v) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.*
99(vi) SPX Management Presentation to Shareholders.**
99(vii) Form of Summary Advertisement.*
* To be filed by amendment to this Registration Statement.
** Previously filed.
ITEM 22. 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:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
The Registrant hereby undertakes to deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act
of 1934; and, where interim financial information is required to be
presented by Article 3 of Regulations S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference to provide such interim financial
information.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against liabilities (other than the
payment by the Registrant of expenses incurred by a director, officer or
controlling person of the Registrant of expenses incurred by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW
YORK, STATE OF NEW YORK ON THIS 17th DAY OF FEBRUARY, 1998.
SPX Corporation
By: /s/ Christopher J. Kearney
-------------------------------
Christopher J. Kearney
Vice President, Secretary and
General Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS (WHO
INCLUDE ALL MEMBERS OF THE BOARD OF DIRECTORS) IN THE CAPACITIES AND ON THE
DATE INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
* Director April 2, 1998
- ------------------------
* Director April 2, 1998
- ------------------------
* Chairman, President and April 2, 1998
- ------------------------ Chief Executive Officer
and Director
* Director April 2, 1998
- ------------------------
* Director April 2, 1998
- ------------------------
* Director April 2, 1998
- ------------------------
* Director April 2, 1998
- ------------------------
* Director April 2, 1998
- ------------------------
* Director April 2, 1998
- ------------------------
* Patrick J. O'Leary April 2, 1998
- ------------------------ (Principal Financial
Officer)
* Kenneth C. Dow April 2, 1998
- ------------------------ (Principal Accounting
Officer)
*By /S/ Christopher J. Kearney
-----------------------------
Christopher J. Kearney
AS ATTORNEY-IN-FACT
Exhibit 23(i)
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 5,
1998, (except with respect to the matter discussed in Note 17 as th which
the date is February 17, 1998), included in SPX Corporation's Form 10-K for
the year ended December 31, 1997, and to all references to our Firm
included in this registration statement.
Arthur Andersen LLP
Chicago, Illinois
April 2, 1998
