As filed with the Securities and Exchange Commission on December 3, 1996
Registration No. 333-4436
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EQUITY CORPORATION INTERNATIONAL
(Exact name of registrant as specified in its charter)
Delaware 75-2521142
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
W. Cardon Gerner
Senior Vice President -
415 South First Street Chief Financial Officer
Suite 210 415 South First Street, Suite 210
Lufkin, Texas 75901 Lufkin, Texas 75901
(409) 634-1033 (409) 634-1033
(Address, including zip code, (Name, address, including zip code,
and telephone number, including and telephone number, including
area code, of registrant's area code, of agent for service)
principal executive offices)
------------------
Copy to:
William N. Finnegan, IV
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
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Approximate date of commencement of proposed sale to the public: From
time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| ___________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
|_| ___________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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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.
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<PAGE>
EXPLANATORY NOTE
Equity Corporation International (the "Company") has previously
registered 45,325 shares of its common stock, par value $.01 per share ("Common
Stock"), on Form S-3 (Registration No. 333-4436) (the "Registration Statement"),
none of which shares have been sold as of the date hereof. This Post-Effective
Amendment No. 1 to the Registration Statement ("Post-Effective Amendment No. 1")
is filed in accordance with Rule 416(b) under the Securities Act of 1933, as
amended, to reflect an increase in the number of shares of Common Stock
registered. Pursuant to said Rule 416(b), the Registration Statement is deemed
to cover an additional 22,662 shares of Common Stock (for an aggregate of 67,987
shares of Common Stock) resulting from the dividend of .5 shares of Common Stock
per issued and outstanding share of Common Stock paid on October 2, 1996 to
stockholders of record on September 23, 1996. This Post-Effective Amendment No.
1, which also generally updates the information contained in the prospectus
included in the Registration Statement, is filed prior to the offering of such
additional shares of Common Stock.
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<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 3, 1996
67,987 Shares
EQUITY CORPORATION INTERNATIONAL
Common Stock
---------------------------
This Prospectus relates to 67,987 shares (the "Offered Shares") of
common stock, par value $0.01 per share (the "Common Stock"), of Equity
Corporation International ("ECI" or the "Company") which are being sold by the
selling stockholder named herein (the "Selling Stockholder"). The Company will
not receive any of the proceeds from the sale of the Offered Shares by the
Selling Stockholder, but will incur certain expenses in connection with the
offering.
See "Selling Stockholder."
The Selling Stockholder may from time to time sell all or a portion of
the Offered Shares only in transactions directly with a "market maker" (as that
term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), at market prices then prevailing or related to the then
current market price or at negotiated prices. See "Plan of Distribution." The
Selling Stockholder and any "market maker" participating in the distribution of
the Offered Shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any profit on the
sale of the Offered Shares by the Selling Stockholder and any commissions
received by any such "market maker" may be deemed to be underwriting commissions
or discounts under the Securities Act.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "ECII." The last reported sale price of the Common Stock on the Nasdaq
National Market on December 2, 1996 was $21 1/2 per share.
The Offered Shares have not been registered for sale under the
securities laws of any state as of the date of this Prospectus. Brokers or
dealers effecting transactions in the Offered Shares should confirm the
registration thereof under the securities laws of the states in which such
transactions occur, or the existence of an exemption from registration.
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED CAREFULLY BY PROSPECTIVE INVESTORS BEFORE
PURCHASING THE COMMON STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and the rules and regulations promulgated thereunder and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549-1004, and at the following Regional Offices of the Commission:
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and New York Regional Office, 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material may also be obtained at the prescribed
rates from the Public Reference Section of the Commission at its principal
office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004.
The Company's Common Stock is quoted on the Nasdaq National Market and, as a
result, the Company also files reports, proxy statements and other information
with The Nasdaq Stock Market, and such reports, proxy statements and other
information are available for inspection at the offices of The Nasdaq Stock
Market at 1735 K Street, N.W., Washington, D.C. 20006. The Registration
Statement and other information filed by the Company with the Commission are
also available at the web site of the Commission at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (Reg. No. 333-4436) (the "Registration Statement") under the Securities
Act, with respect to the Common Stock offered by this Prospectus. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement or the
exhibits and schedules thereto. For further information pertaining to the Common
Stock offered by this Prospectus and the Company, reference is made to the
Registration Statement and the exhibits and schedules thereto. Statements made
in this Prospectus as to the contents of any agreement or other document are not
necessarily complete, and in each instance reference is made to the exhibit for
a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. The Registration
Statement, including the exhibits and schedules thereto, may be inspected,
without charge, at the public reference facilities maintained by the Commission
in Washington, D.C. and copies of such material may be obtained from the
Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996;
(iii)the Company's Current Report on Form, 8-K, dated September 22,
1995, as amended by the Form 8-K/A, filed November 6, 1995, and
the Company's Current Reports on Form 8-K, dated April 24, 1996,
September 11, 1996, September 18, 1996 and September 30, 1996;
(iv) the Report of Independent Accountants, Coopers & Lybrand L.L.P.,
dated July 15, 1994 and the consolidated balance sheet of MLI/The
Loftis Corporation as of December 31, 1992 and 1993, and the
related consolidated statements of income, stockholders' equity
(deficit) and cash flows of MLI/The Loftis Corporation for the
three years in the period ended December 31, 1993 included in the
Company's Registration Statement on Form S-1 (Reg. No. 33-82546);
(v) the pro forma statement of operations of the Company for the year
ended December 31, 1995 included in the Company's Registration
Statement on Form S-3 (Reg. No. 333-2744); and
(vi) the description of the Common Stock contained in the Company's
registration statement on Form 8-A (File No. 0-24728) filed with
the Commission on August 23, 1994 pursuant to Section 12 of the
Exchange Act, as amended by Amendment No. 1 on Form 8-A/A filed
with the Commission
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<PAGE>
on October 6, 1994 and Amendment No. 2 on Form 8-A/A filed with
the Commission on September 11, 1996.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the Offered
Shares shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of the documents, including exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
made to: Equity Corporation International, 415 South First Street, Suite 210,
Lufkin, Texas 75901, Attention: Corporate Secretary; telephone (409) 634-1033.
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<PAGE>
RISK FACTORS
In addition to the other information set forth or incorporated by
reference in this Prospectus, the following factors should be considered
carefully by prospective investors before purchasing the Common Stock offered
hereby.
COMPETITION FOR ACQUISITIONS
To date, the Company has expanded its operations principally through
the acquisition of established funeral homes and cemeteries. Acquisitions of
premier funeral homes and cemeteries primarily in non-metropolitan areas of the
United States with demographic profiles that the Company believes are favorable
will continue to be a key component of the Company's business strategy.
Competition in the acquisition market is currently intense, and prices paid for
funeral homes and cemeteries have increased substantially in recent years. In
addition, the three largest publicly held North American death care companies,
all of which have significantly greater financial and other resources than the
Company, are actively engaged in acquiring funeral homes and cemeteries in a
number of markets, including certain non-metropolitan areas. Accordingly, no
assurance can be given that the Company will be successful in expanding its
operations through acquisitions or that funeral homes and cemeteries will be
available at reasonable prices or on reasonable terms.
TREND TOWARD CREMATION
There is an increasing trend in the United States toward cremation as
an alternative to traditional burial. According to industry studies, cremations
represented approximately 21% of all dispositions of human remains in the United
States in 1994, as compared with approximately 10% in 1980. Cremation is
increasingly marketed as part of a complete death care package that includes a
funeral service and traditional memorialization. While cremations have
historically generated gross profit percentages similar to those for traditional
funeral services, cremations generally result in lower average revenue and gross
profit dollars when compared to traditional funeral services. A substantial
increase in the rate of cremations performed by the Company could have a
material adverse effect on the Company's results of operations.
CONTROL BY PRINCIPAL STOCKHOLDER
As of November 1, 1996, Service Corporation International ("SCI")
(through its wholly owned subsidiary, Investment Capital Corporation ("ICC"))
owned approximately 41.6% of the outstanding shares of Common Stock. As a result
of SCI's ownership of Common Stock, it is likely that SCI will be able to
effectively control the outcome of elections of the Company's directors and
certain other matters requiring the vote of the Company's stockholders.
POTENTIAL CONFLICTS OF INTEREST WITH SCI
SCI is a major provider of death care services and products in the
United States. T. Craig Benson, a Vice President of SCI and the President of
ICC, is a director of the Company. Conflicts of interest may arise between the
Company and SCI to the extent that competition exists or develops in the future
between the funeral home and cemetery operations of the Company and SCI or in
connection with their respective acquisition programs. Currently, there are only
a limited number of geographic areas where both the Company and SCI operate
funeral homes or cemeteries. The Company, however, has from time to time found
itself in competition with SCI for specific acquisitions. There can be no
assurance that competition with SCI, for acquisitions or otherwise, will not
increase in the future.
FEDERAL TRADE COMMISSION CONSENT ORDERS
SCI is subject to five consent orders (the "Consent Orders") issued by
the Federal Trade Commission (the "FTC"), pursuant to which SCI and its
subsidiaries are prohibited for certain specified periods from acquiring
existing funeral homes, cemeteries and cremation facilities in specified market
areas without giving prior notice to the FTC.
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<PAGE>
The Consent Orders prohibit SCI and its subsidiaries from acquiring existing (i)
funeral homes in Waycross, Gainesville and Rome, Georgia and Fort Smith,
Arkansas and surrounding areas until October 2001, (ii) funeral homes in certain
portions of San Bernardino and Riverside Counties, California until February
2002, (iii) funeral homes in Chattanooga and Soddy Daisy, Tennessee and La
Fayette and Savannah, Georgia and surrounding areas until June 2004, (iv)
funeral homes and cemeteries in Jackson County, Oregon until June 2005, (v)
funeral homes, cemeteries and cremation facilities in Amarillo, Texas until
April 2006, (vi) funeral homes and cemeteries in Brevard County, Florida until
April 2006 and (vii) funeral homes in Lee County, Florida until April 2006,
without giving prior notice to the FTC. Because of the extent of SCI's
beneficial ownership of Common Stock, acquisitions by the Company of funeral
homes, cemeteries and cremation facilities in the covered market areas without
giving prior notice to the FTC might result in a violation of such Consent
Order. The Company believes that compliance with these Consent Orders, if
required, will not materially adversely affect the Company's funeral home and
cemetery acquisition program.
DEPENDENCE UPON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the abilities and continued efforts of its existing
senior management. The loss of key members of the Company's senior management
could adversely affect the Company's continued ability to compete in the death
care industry. The Company has entered into employment agreements with its
principal executive officers. The Company's future success will also depend upon
its ability to attract and retain skilled funeral home and cemetery management
personnel.
REGULATION
The Company's operations are subject to regulation, supervision and
licensing under numerous federal, state and local laws, ordinances and
regulations, including extensive regulations concerning trust funds, preneed
sales of funeral and cemetery products and services and various other aspects of
the Company's business. The impact of such laws, ordinances and regulations
varies depending on the location of the Company's funeral homes and cemeteries.
Among the regulations applicable to the Company are those requiring the
establishment and maintenance of trust accounts for the deposit of certain funds
obtained from the purchasers of preneed funeral contracts and preneed cemetery
merchandise and trust accounts for the perpetual care of cemetery properties.
The Company has put in place various safeguards in an effort to ensure that
funds are deposited in such trust accounts as required and that improper
withdrawals from such trust accounts do not occur.
From time to time, federal and state regulatory agencies have
considered and may enact additional legislation or regulations that could affect
the death care industry. If adopted, such legislation or regulations could have
a material adverse effect on the Company's results of operations.
Approximately 54% of the Company's funeral home net revenues
(approximately 31% of the Company's total net revenues) for the year ended
December 31, 1995 was attributable to funeral home operations in Texas, and
approximately 32% of the Company's cemetery net revenues (approximately 14% of
the Company's total net revenues) for the year ended December 31, 1995 was
attributable to cemetery operations in North Carolina. Any material adverse
change in the regulatory requirements applicable to Texas funeral home
operations or North Carolina cemetery operations could have a material adverse
effect on the Company's results of operations.
ANTI-TAKEOVER PROVISIONS
The Company's Amended and Restated Certificate of Incorporation
("Charter") and Amended and Restated Bylaws ("Bylaws") contain certain
provisions that may have the effect of discouraging, delaying or preventing a
change in control of the Company or unsolicited acquisition proposals that a
stockholder might consider favorable, including provisions authorizing the
issuance of "blank check" preferred stock, providing for a Board of Directors
with staggered, three-year terms, requiring supermajority or class voting to
effect certain amendments to the Charter and Bylaws, limiting the persons who
may call special stockholders' meetings, limiting stockholder action by written
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<PAGE>
consent and establishing advance notice requirements for nominations for
election to the Board of Directors or for proposing matters that can be acted
upon at stockholders' meetings. In addition, the Company's Board of Directors
has adopted a preferred share rights plan. The rights plan, as well as certain
provisions of Delaware law, may also have the effect of discouraging, delaying
or preventing a change in control of the Company or an unsolicited acquisition
proposal.
SHARES ELIGIBLE FOR FUTURE SALE
As of November 1, 1996, there were 19,216,334 shares of Common Stock
issued and outstanding. Approximately 8,700,000 shares of Common Stock held by
existing stockholders of the Company are "restricted securities" within the
meaning of Rule 144 under the Securities Act. The Company believes that a
substantial number of these "restricted" shares of Common Stock are currently
eligible for resale subject to the volume, manner of sale and other limitations
of Rule 144. The Company is a party to an agreement with SCI and an executive
officer of the Company that grants them certain registration rights. In addition
to the shares of Common Stock offered by this Prospectus, the Company maintains
a shelf registration statement for the benefit of participants in a stock option
plan of SCI covering, as of October 31, 1996, the offer and sale of up to
696,501 shares of the Company's Common Stock and a shelf registration statement
covering up to 1,484,601 shares of Common Stock which may be offered and issued
from time to time by the Company in connection with its acquisition of the
securities and assets of other businesses.
An aggregate of 1,950,000 shares of Common Stock are currently reserved
for issuance pursuant to the Company's 1994 Long-Term Incentive Plan (the
"Incentive Plan"). As of November 1, 1996, there were 818,652 shares of Common
Stock issuable upon the exercise of options granted under the Incentive Plan,
266,919 of which were immediately exercisable. The Company has registered all
shares of Common Stock issuable pursuant to the Incentive Plan pursuant to a
registration statement on Form S-8 filed with the Commission.
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION
The shares offered hereunder may only be offered if a current
prospectus relating to the shares is then in effect under the Securities Act and
such securities are qualified for sale under applicable state securities or
"blue sky" laws or exemptions from such registration and qualification
requirements are available.
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This Prospectus, including the documents incorporated or deemed to be
incorporated by reference herein, contains forward-looking statements and
information that are based on management's belief as well as assumptions made by
and information currently available to management. When used in this Prospectus,
or in the documents incorporated or deemed to be incorporated by reference
herein, the words "anticipate," "believe," "estimate" and "expect" and similar
expressions are intended to identify forward-looking statements. Such statements
reflect the Company's current views with respect to future events and are
subject to certain risks, uncertainties and assumptions, including the risk
factors described in this Prospectus and in any of the documents incorporated or
deemed to be incorporated by reference herein. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, believed, estimated
or expected. The Company does not intend to update these forward-looking
statements and information.
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<PAGE>
THE COMPANY
The Company is the fourth largest publicly traded provider of death
care services and products in the United States, primarily serving communities
located in non-metropolitan areas. As of November 1, 1996, the Company operated
168 funeral homes and 62 cemeteries in 23 states.
The Company commenced operations in May 1990 with the acquisition of 71
funeral homes and 3 cemeteries from SCI. Effective January 1, 1994, the Company
significantly expanded its cemetery operations through the acquisition of
MLI/The Loftis Corporation ("MLI"), which operated 40 cemeteries and 4 funeral
homes. In addition to its acquisition of MLI, the Company acquired 12 funeral
homes and 5 cemeteries in 1994 for purchase prices totaling approximately $13.5
million and 27 funeral homes and 13 cemeteries in 1995 for purchase prices
totaling approximately $41.1 million.
The Company's funeral homes perform all of the services related to
funerals, provide funeral facilities and vehicles and sell related merchandise.
The Company's funeral homes are primarily located in communities with
populations ranging from 10,000 to 250,000 residents. The Company's cemeteries
perform all of the services related to interment and sell cemetery interment
rights, mausoleum spaces and related merchandise. The Company's cemeteries are
primarily located in communities with populations ranging from 75,000 to 500,000
residents. In order to improve the efficiency and profitability of its
operations, the Company's funeral homes and cemeteries are generally operated in
"clusters" or groups within a given geographic area. The clustering of funeral
homes and the clustering of cemeteries provide opportunities to share personnel,
vehicles and other resources, effect operating and administrative cost
reductions and implement revenue enhancing cross-marketing programs.
ECI believes it is differentiated from the other large, national death
care companies by its focus on the consolidation of funeral homes and cemeteries
in non-metropolitan areas of the United States. The Company has focused on
non-metropolitan areas in order to take advantage of the unique opportunities
offered by such areas as compared to metropolitan areas, including (i) the
opportunity to establish and maintain higher market shares as a result of the
smaller number of death care providers typically found in a non-metropolitan
area, (ii) the relatively lower level of competition for acquisitions and (iii)
the Company's belief that there is the stronger preference for traditional
funeral services and burials.
The Company's principal executive office is located at 415 South First
Street, Suite 210, Lufkin, Texas 75901, and its telephone number is (409)
634-1033.
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the
Offered Shares by the Selling Stockholder.
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<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The following table presents selected financial and operating data for
the Company as of the dates and for the periods indicated. The financial data
presented below has been derived from the Company's consolidated financial
statements. The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's consolidated financial statements and notes
thereto incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
Year ended December 31,
1995 1994 1993(1) 1992(1) 1991(1)
---- ---- ------- ------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues:
Funeral............................................... $ 36,261 $ 27,382 $ 21,432 $ 19,525 $ 19,413
Cemetery.............................................. 27,740 21,919 847 865 773
------ ------ ------ ------ ------
Total net revenues.................................. 64,001 49,301 22,279 20,390 20,186
Gross profit:
Funeral............................................... 8,819 7,580 6,118 3,399 2,917
Cemetery.............................................. 8,477 6,157 47 59 78
----- ----- ----- ----- -----
Total gross profit.................................. 17,296 13,737 6,165 3,458 2,995
General and administrative expenses..................... 4,782 3,885 1,521 1,093 765
----- ----- ----- ----- -----
Income from operations.................................. 12,514 9,852 4,644 2,365 2,230
Interest expense........................................ 2,207 3,178 701 556 533
----- ----- ----- ----- -----
Income before income taxes and extraordinary item....... 10,307 6,674 3,943 1,809 1,697
Provision for income taxes.............................. 4,071 2,728 1,388 598 807
Extraordinary item, net................................. -- (198) -- -- --
----- ----- ----- ----- -----
Net income.............................................. 6,236 3,748 2,555 1,211 890
Preferred stock dividends............................... -- -- 1,563 1,563 1,531
----- ----- ----- ----- -----
Net income (loss) attributable to common stock.......... $ 6,236 $ 3,748 $ 992 $ (352) $ (641)
========= ======== ======== ====== =========
Continuing operations................................. $ 0.42 $ 0.39 $ 0.15 $ (0.49) $ (0.89)
Extraordinary item.................................... -- (0.02) -- -- --
----- ----- ----- ----- ----
Net income (loss)..................................... $ 0.42 $ 0.37 $ 0.15 $ (0.49) $ (0.89)
========= ======= ======= ======= =========
shares outstanding (2).............................. 14,835 10,002 6,613 717 717
== ====== ====== ===== === ===
BALANCE SHEET DATA:
Working capital......................................... $ 9,093 $ 4,495 $ 5,973 $ 6,208 $ 4,225
Preneed funeral contracts............................... 102,889 72,318 48,817 41,520 37,227
Total assets............................................ 302,827 210,366 83,095 72,244 66,805
Deferred preneed funeral contract revenues.............. 107,969 76,447 51,640 44,032 39,222
Long-term debt, net of current maturities............... 54,518 4,037 8,244 6,998 4,729
Redeemable preferred stock (3).......................... -- -- 20,844 20,844 20,844
Stockholders' equity (deficit).......................... 91,665 84,083 (503) (1,495) (1,143)
</TABLE>
(footnotes on following page)
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<PAGE>
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1995 1994 1993(1) 1992(1) 1991(1)
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Funeral Operations:
Funeral homes in operation at end of period.. 119 95 79 76 82
Funeral services performed................... 8,332 6,181 5,127 4,753 5,096
Preneed funeral contracts sold or obtained
through acquisitions...................... 12,415 6,397 2,124 2,462 1,652
Backlog of preneed funeral contracts at
end of period............................. 32,199 21,084 16,103 14,979 13,370
Cemetery Operations:
Cemeteries in operation at end of period..... 61 48 3 3 3
Interments performed......................... 7,080 6,283 293 264 286
</TABLE>
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(1) The Company's financial and operating data as of and for the years ended
December 31, 1993, 1992 and 1991 do not reflect the operations of MLI,
which were acquired effective January 1, 1994. As a result of the MLI
acquisition and certain other factors, the Company believes that its
results of operations for 1995 and 1994 are not necessarily comparable
with its results of operations for prior periods. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated by reference in this Prospectus.
(2) Earnings (loss) per share is based on the weighted average number of
common and equivalent shares outstanding during the period which takes
into consideration (i) for 1995, the dilutive effect of stock options and
restricted stock issued under the Company's Incentive Plan based on the
treasury stock method, (ii) for 1994, 1993, 1992 and 1991, the issuance of
228,375 shares of Common Stock at a price of approximately $6.13 per share
in June 1994 reflected under the treasury stock method prior to issuance
and (iii) for 1993, the dilutive effect of a warrant exercisable for
common shares held by SCI. The redeemable preferred stock dividends are
deducted from the 1993, 1992 and 1991 net income for purposes of
calculating earnings (loss) per share. The weighted average number of
common and equivalent shares outstanding reflects a 579-for-one stock
dividend in June 1994 and a 3-for-2 stock dividend in October 1996.
(3) Effective January 1, 1994, the Company's redeemable preferred stock and
the warrant exercisable for common shares held by SCI were exchanged for
5,896,860 shares of Common Stock and the common shares held by James P.
Hunter, III, the Chairman of the Board of Directors, President and Chief
Executive Officer of the Company, were exchanged for 628,410 shares of
Common Stock.
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<PAGE>
SELLING STOCKHOLDER
This Prospectus relates to the sale by the Selling Stockholder from
time to time of up to 67,987 shares of Common Stock. The Selling Stockholder and
the Company are parties to a registration rights agreement that was entered into
in connection with the Company's acquisition of a funeral home business. The
Selling Stockholder acquired the shares of Common Stock in connection with the
Company's acquisition of such funeral home business. The shares of Common Stock
offered by the Selling Stockholder are included in the Registration Statement of
which this Prospectus is a part pursuant to such registration rights agreement.
Under such registration rights agreement, the Company and the Selling
Stockholder have agreed to indemnify each other against certain liabilities that
may arise in connection with the Registration Statement, including liabilities
under the Securities Act. The following table sets forth as of November 1, 1996
certain information with respect to the Selling Stockholder.
<TABLE>
<CAPTION>
Number of
Shares Beneficially Number of Shares Beneficially
Owned Before Shares Owned After
Selling Stockholder Offering Being Offered Offering (2)
------------------- ---------- ------------- -------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Duane B. Nelson Revocable Trust............. 67,987 (1) 67,987 -0-
</TABLE>
- ----------
(1) Less than 1%.
(2) Assumes all Offered Shares are sold in this offering. There is no
assurance that the Selling Stockholderwill sell any or all of the
Offered Shares.
The Selling Stockholder has agreed to utilize this Prospectus to sell
the shares offered by it only in transactions directly with a "market marker"
(as that term is defined in the Exchange Act) acceptable to the Company.
The Company will pay all costs and expenses incurred in connection with
the registration under the Securities Act of the Offered Shares including, but
not limited to, all registration and filing fees, the Nasdaq National Market
listing fee, printing expenses and fees and disbursements of counsel and
accountants for the Company. The Selling Stockholder will pay all brokerage fees
and commissions, if any, incurred in connection with the sale of the Offered
Shares.
-10-
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholder may sell the Offered Shares from time to time
only in transactions directly with a "market maker" at market prices then
prevailing or related to the then current market price or at negotiated prices.
The Selling Stockholder and any "market maker" participating in the distribution
of the Offered Shares may be deemed to be "underwriters" within the meaning of
the Securities Act, and any profit on the sale of the Offered Shares by the
Selling Stockholder and any such "market maker" may be deemed to be underwriting
discounts or commissions under the Securities Act.
The Company and the Selling Stockholder have agreed to indemnify each
other against certain liabilities, including liabilities arising under the
Securities Act. The Selling Stockholder may indemnify any "market maker" that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
The Selling Stockholder may sell the Offered Shares only if such
securities are qualified for sale under applicable state securities or "blue
sky" laws or exemptions from such registration and qualification requirements
are available.
LEGAL MATTERS
The validity of the Offered Shares will be passed upon by Andrews &
Kurth L.L.P., Houston, Texas.
EXPERTS
The consolidated balance sheet of the Company as of December 31, 1995
and 1994 and the consolidated statements of operations, changes in stockholders'
equity and cash flows of the Company for each of the three years in the period
ended December 31, 1995, and related financial statement schedule; the
consolidated balance sheet of MLI as of December 31, 1993 and 1992 and the
consolidated statements of income, stockholders' equity and cash flows of MLI
for each of the three years in the period ended December 31, 1993; and the
combined balance sheet as of December 31, 1994 of Byrd Funeral Home, Inc. and
Byrd-Williams Funeral Home, Inc., Gray Brown-Service Mortuary and Mickelson
Brown-Service Funeral Home, Inc., and Hollis-Thurmond-Hall, Inc. (the "Acquired
Businesses") and the combined statements of operations, stockholders' equity and
cash flows of the Acquired Businesses for the year ended December 31, 1994,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
-11-
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesman or any other person has been authorized to give any
information or to make any representations not contained in or incorporated by
reference in this Prospectus in connection with the offering herein, and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, any securities other than
those specifically offered hereby in any jurisdiction to any person to whom it
is unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that the information herein is correct as
of any time subsequent to its date.
---------------------------
TABLE OF CONTENTS
Page
Available Information........................ 2
Incorporation of Certain Documents
by Reference.............................. 2
Risk Factors................................. 4
The Company.................................. 7
Use of Proceeds.............................. 7
Selected Financial and Operating Data........ 8
Selling Stockholder.......................... 10
Plan of Distribution......................... 11
Legal Matters................................ 11
Experts...................................... 11
<PAGE>
- --------------------------------------------------------------------------------
67,987 Shares
EQUITY CORPORATION
INTERNATIONAL
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
, 1996
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this
Registration Statement shall have the meanings assigned to them in the
Prospectus which forms a part of this Registration Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by the Company in connection with
this offering are as follows:
Securities and Exchange Commission registration fee ..............$ 449
Accounting fees and expenses...................................... 1,000
Legal fees and expenses........................................... 3,000
Miscellaneous..................................................... 551
------
Total....................................................... $ 5,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law
Subsection (a) of Section 145 of the General Corporation Law of the
State of Delaware empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he 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 his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsections (a) and (b) of
Section 145 or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may
II-1
<PAGE>
be entitled; that indemnification provided by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and administrators; and empowers the
corporation to purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware provides that a certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director or the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit.
Amended and Restated Certificate of Incorporation
Paragraph 13 of the Company's Amended and Restated Certificate of
Incorporation provides that no director of the corporation shall be liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of Delaware or (iv) for
any transaction from which the director derived an improper personal benefit.
Amended and Restated Bylaws
Article VIII of the Company's Amended and Restated Bylaws further
provides that the Company shall indemnify its directors, officers, employees and
agents to the fullest extent permitted by applicable law. The Company is
generally required to indemnify its directors, officers, employees and agents
against all judgments, fines, settlements, legal fees and other expenses
incurred in connection with pending or threatened legal proceedings because of
the person's position with the Company or another entity that the person serves
at the Company's request, subject to certain conditions, and to advance funds to
enable them to defend against such proceedings.
Indemnification Agreements
The Company has entered into indemnification agreements with each of
its directors and executive officers, which agreements contain provisions
indemnifying such parties against certain liabilities within the scope required
by the Company's Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws.
Insurance
The Company maintains directors' and officers' liability insurance
covering such persons in their official capacities with the Company and its
subsidiaries.
II-2
<PAGE>
ITEM 16. LIST OF EXHIBITS.
5.1 Opinion of Andrews & Kurth L.L.P.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)
24.1* Powers of attorney (included on the signature page contained
in Part II of this Registration Statement)
- ----------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
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 post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(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 purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (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.
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 such liabilities (other than the payment of the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF LUFKIN, STATE OF TEXAS, ON THE 3RD DAY OF DECEMBER,
1996.
EQUITY CORPORATION INTERNATIONAL
By: /s/ James P. Hunter, III
---------------------------------
James P. Hunter, III
Chairman of the Board, President
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 3RD DAY OF DECEMBER, 1996, BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
Signature Title
--------- -----
/s/ James P. Hunter, III Chairman of the Board, President
------------------------ and Chief Executive Officer
James P. Hunter, III (Principal executive officer)
/s/ W. Cardon Gerner Senior Vice Presodent - Chief
------------------------ Financial Officer (Principal
W. Cardon Gerner financial and accounting officer)
Director
------------------------
T. Craig Benson
Director
------------------------
Jack T. Hammer
THOMAS R. McDADE* Director
------------------------
Thomas R. McDade
KENNETH W. SMITH* Director
------------------------
Kenneth W. Smith
*By: /s/ W. Cardon Gerner Director
------------------------
W. Cardon Gerner
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ----
5.1 Opinion of Andrews & Kurth L.L.P.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Andrews & Kurth L.L.P.
(included in Exhibit 5.1)
24.1* Power of attorney (included on the
signature page contained in Part II
of this Registration Statement)
- ----------------
*Previously filed
II-5
Exhibit 5.1
December 3, 1996
Equity Corporation International
415 South First Street, Suite 210
Lufkin, Texas 75901
Gentlemen:
We have acted as counsel to Equity Corporation International,
a Delaware corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-3 (the "Registration Statement") relating to
the registration under the Securities Act of 1933, as amended, of the offering
by the selling stockholder named in the Registration Statement of up to 67,987
shares of the Company's common stock, $.01 par value (the "Shares").
As the basis for the opinions hereinafter expressed, we have
examined such statutes, regulations, corporate records and documents,
certificates of public officials and such other instruments as we have deemed
necessary for the purposes of the opinion contained herein. As to all matters of
fact material to such opinion, we have relied upon the representations of
officers of the Company. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with the original documents of all documents submitted to us as copies.
Based upon the foregoing and having due regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares have
been duly authorized and are validly issued, fully paid and nonassessable.
We hereby consent to the inclusion of this opinion as an
exhibit to the Registration Statement and reference to our firm under the
caption "Legal Matters" in the Prospectus included therein.
Sincerely,
/s/ Andrews & Kurth L.L.P.
1208/1203/2606
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of (i) our reports dated
March 8, 1996, on our audits of the consolidated financial statements of Equity
Corporation International (the "Company") as of December 31, 1995 and 1994, and
for each of the three years in the period ended December 31, 1995 and the
related financial statement schedule; (ii) our report dated November 1, 1995, on
our audit of the combined financial statements of Byrd Funeral Home, Inc. and
Byrd-Williams Funeral Home, Inc., Gray Brown-Service Mortuary and Mickelson
Brown-Service Funeral Home, Inc. and Hollis-Thurmond-Hall, Inc. as of December
31, 1994 and for the year then ended; and (iii) our report dated July 15, 1994,
on our audits of the consolidated financial statements of MLI/The Loftis
Corporation as of December 31, 1993 and 1992, and for each of the three years in
the period ended December 31, 1993, in the registration statement on Form S-3
(Reg. No. 333-4436) relating to the registration of 67,987 shares of the
Company's Common Stock. We also consent to the reference to our firm under the
caption "Experts."
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
Houston, Texas
December 3, 1996
