<PAGE> 1
Pursuant to Rule 424(b)(2)
Registration No. 33-60419
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 17, 1995
2,500,000 Depositary Shares
(ADVANTA LOGO)
Corp.
Each Representing a One-Hundredth Interest in a Share of
6 3/4% Convertible Class B Preferred Stock, Series 1995
(Stock Appreciation Income Linked Securities (SAILS)(SM)*)
------------------
Advanta Corp. (the "Company") is hereby offering for sale 2,500,000 depositary
shares (the "Depositary Shares"), each representing a one-hundredth interest in
a share of Stock Appreciation Income Linked Securities (SAILS)(SM)*, or
SAILS(SM)* ("SAILS"). The SAILS will be deposited with the Depositary (as
defined herein). Each Depositary Share will entitle its holder, through the
Depositary, to all proportional rights and preferences of the SAILS
represented thereby (including dividend, voting, redemption,
conversion and liquidation rights). The Depositary Shares are
evidenced by the Depositary Receipts (as defined herein). See
"Description of Depositary Shares." The SAILS constitute a series of
the Company's Class B Preferred Stock, designated as 6 3/4%
Convertible Class B Preferred Stock, Series 1995 (Stock
Appreciation Income Linked Securities (SAILS)). The annual
dividend payment applicable to each of the Depositary Shares is
$2.4975 (being one-hundredth of the annual dividend of $249.75
payable with respect to each share of the SAILS). Dividends
will be cumulative from the date of issue and will be
payable quarterly in arrears on each December 15, March 15,
June 15, and September 15, commencing December 15, 1995.
The liquidation preference applicable to each of the
Depositary Shares (being one-hundredth of the
liquidation preference payable with respect to each
share of the SAILS) is equal to the sum of (i) the
price per Depositary Share to the public shown
below and (ii) the amount of accrued and unpaid
dividends applicable thereto.
On September 15, 1999 (the "Mandatory Conversion Date"), unless either
previously redeemed by the Company or converted at the option of the holder,
each share of the SAILS will automatically convert into 100 shares of Class B
Common Stock, par value $.01 per share, of the Company (the "Class B Common
Stock") (equivalent to a rate of one share of Class B Common Stock for each
Depositary Share), subject to adjustment in certain events, and the right
to receive an amount in cash or, at the Company's option, Class B Common
Stock equal in value to all accrued and unpaid dividends thereon as set
forth herein. The SAILS (and the related Depositary Shares) are not
redeemable prior to September 15, 1998. At any time and from time to
time on or after September 15, 1998 until immediately prior to the
Mandatory Conversion Date, the Company may redeem any or all of the
outstanding SAILS (and the related Depositary Shares). Upon any such
redemption, each holder will receive, in exchange for each of the
Depositary Shares so redeemed, a number of shares of Class B
Common Stock equal in value to the result obtained by dividing
(x) the sum of (i) $37.6244, declining periodically after
December 14, 1998 as set forth herein to $37.00 and (ii) all
accrued and unpaid dividends applicable thereto (the "Call Price")
by (y) the Current Market Price (as defined herein) on the
applicable date of determination, but in no event shall a
holder receive less than .8197 of a share of Class B Common
Stock in exchange for each Depositary Share so redeemed.
At any time prior to the Mandatory Conversion Date, unless previously redeemed,
each share of the SAILS (and thereby each of the Depositary Shares) is
convertible, at the option of the holder, into Class B Common Stock at the
rate of 81.97 shares of Class B Common Stock for each share of SAILS
(equivalent to a rate of .8197 of a share of Class B Common Stock for
each Depositary Share and a conversion price of $45.14 per share of
Class B Common Stock (the "Conversion Price")), subject to
adjustment in certain events. The number of shares of Class B
Common Stock that a holder will receive upon redemption, and
the value of the shares received upon conversion, will vary
depending on the market price of the Class B Common Stock
from time to time, all as set forth herein.
The per share value of the Class B Common Stock received by holders of
Depositary Shares may be more or less than the amount paid for each of the
Depositary Shares offered hereby, due to fluctuations in the
market price of the Class B Common Stock. For a detailed
discussion of the terms of the Depositary
Shares, see "Description of Depositary
Shares."
The Depositary Shares have been approved for listing on the Nasdaq National
Market under the symbol "ADVNZ," subject to notice of issuance. Trading
of the Depositary Shares on the Nasdaq National Market is expected
to commence within a 30 day period after the date of this
Prospectus Supplement. See "Underwriting." On August
15, 1995, the last reported sale price of the
Class B Common Stock on the Nasdaq
National Market was $37.00 per share.
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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 SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Company(1)(2)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Depositary Share......................... $37.00 $1.015 $35.985
Total(3)..................................... $92,500,000 $2,537,500 $89,962,500
</TABLE>
(1) Plus accrued dividends, if any, from the date of issue.
(2) Before deduction of expenses payable by the Company estimated at $275,000.
(3) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus Supplement, to purchase a maximum of
375,000 additional Depositary Shares to cover over-allotments of Depositary
Shares. If the option is exercised in full, the total Price to Public will
be $106,375,000, Underwriting Discounts and Commissions will be $2,918,125
and Proceeds to Company will be $103,456,875.
------------------
The Depositary Shares are offered by the several Underwriters when, as and
if issued by the Company, delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the Depositary Shares will be made on or about August 21, 1995.
*CS First Boston, Inc. has filed applications with the United States Patent and
Trademark Office for the registration of the Stock Appreciation Income Linked
Securities (SAILS) and SAILS servicemarks.
CS First Boston
Salomon Brothers Inc
Merrill Lynch & Co.
William Blair & Company
The date of this Prospectus Supplement is August 15, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE DEPOSITARY
SHARES OR THE CLASS B COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ
NATIONAL MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS DOCUMENT.
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<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus Supplement, in the accompanying Prospectus and in the documents
incorporated by reference therein. Unless otherwise indicated, all numbers of
shares of SAILS and Depositary Shares appearing in this Prospectus Supplement
are presented assuming no exercise of the Underwriters' over-allotment option.
The Company's operations are conducted through its subsidiaries. The term the
"Company" as used in this Prospectus Supplement refers to Advanta Corp., a
Delaware corporation, and its subsidiaries, unless the context requires
otherwise.
THE COMPANY
The Company is a highly focused direct marketer of select consumer
financial services. The Company primarily originates and services credit cards
and mortgage loans. Other businesses include small ticket equipment leasing,
credit insurance and deposit products. See "Advanta Corp." in the accompanying
Prospectus. At June 30, 1995, assets under management totaled approximately $11
billion.
The Company, which has been in the credit card business since 1983, issues
gold and standard MasterCard(R) and VISA(R) credit cards nationwide. The Company
has built a substantial cardholder base which, as of June 30, 1995, totaled 4.2
million accounts and $7.5 billion in managed receivables.
For the six months ended June 30, 1995, approximately 74% of total revenues
were derived from credit cards marketed through carefully targeted direct mail
campaigns. By focusing primarily on the no fee gold card, the Company has
successfully grown to one of the ten largest issuers of gold cards. For the six
months ended June 30, 1995, mortgage services contributed approximately 8% of
total revenues.
The Company believes that its targeted marketing strategy and its emphasis
on satisfying customers have enabled it to attract and retain a portfolio of
credit card accounts with a loss ratio which, based on reports published by
MasterCard(R) and VISA(R), has been below industry averages for the past three
years. As of the date of this Prospectus Supplement, Colonial National Bank USA
("Colonial National"), a wholly owned subsidiary of the Company, originates
substantially all of the Company's credit card receivables and bank deposits.
With customers in all 50 states, the Company's credit card portfolio is
geographically diversified. The Company believes that, for more than a decade,
its growth strategy has resulted in growth rates in operating earnings and
managed assets in excess of industry averages and that it is well-positioned in
terms of strategy, management experience and capacity to continue to grow.
The Company's subsidiary, Advanta Mortgage Corp. USA, originates,
purchases, securitizes and services non-conforming credit first and second
mortgage loans for itself and for Colonial National's "Advanta Mortgage USA"
Division. Loan production is generated through a centralized direct origination
center, a broker network serviced by selected sales locations, and correspondent
relationships. Approximately 75% of the managed portfolio is secured by first
mortgages and the balance is secured by second mortgages. At June 30, 1995, the
Company managed $1.5 billion of mortgage receivables.
The Company's subsidiary, Advanta Business Services Corp. ("ABS"), formerly
Advanta Leasing Corp., engages primarily in non-cancelable financing leases of
equipment, including computers, security systems, copiers and telephone systems,
primarily to professionals and small businesses. At June 30, 1995, ABS managed a
portfolio of $317 million of net lease receivables. In the third quarter of
1994, ABS began marketing business credit cards.
Through unaffiliated insurance carriers, the Company offers credit life,
disability and unemployment insurance to its credit cardholders and credit life
insurance and a limited life/disability/unemployment insurance product to its
mortgage loan customers.
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<PAGE> 4
RECENT DEVELOPMENTS
In June 1995, the Company and The Royal Bank of Scotland entered into a
joint venture agreement to establish a new company, RBS Advanta, which will
issue credit cards in the United Kingdom. The Company and The Royal Bank of
Scotland intend that the new credit card operation, to be based in Edinburgh,
will offer Visa(R) and MasterCard(R) credit cards to consumers in the United
Kingdom that will seek to offer a better value than what is generally available
in that market today.
On July 20, 1995, the Company announced record quarterly earnings for the
second quarter of 1995 with net income of $33.4 million and earnings per share
of $.80, increases of 30% and 27%, respectively, over the $25.8 million and $.63
per share results reported for the second quarter of 1994. Earnings for the six
months ended June 30, 1995 were also records and totaled $64.2 million or $1.54
per share, increases of 27% and 25%, respectively, over the $50.7 million or
$1.23 per share reported for the first half of 1994. Highlights for the second
quarter of 1995 include growth of 67% in managed credit card receivables from
$4.5 billion at June 30, 1994 to $7.5 billion at June 30, 1995; a decline in the
net charge-off rate on managed credit card receivables to 2.5%, compared to 2.7%
in the second quarter of 1994; the addition of over 450,000 new credit card
accounts during the second quarter of 1995 compared to 344,000 in the second
quarter of 1994; and an increase in the managed net interest margin for the
second quarter of 1995 to 5.96% from 5.94% in the first quarter of 1995,
although this ratio did decline from 6.95% in the comparable period of 1994.
During the second quarter of 1995, rapid growth in new credit card business with
low introductory rates decreased average yields compared to the second quarter
of 1994.
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<PAGE> 5
SELECTED FINANCIAL DATA
ADVANTA CORP. AND SUBSIDIARIES
The following table contains selected consolidated financial data for
Advanta Corp. and its subsidiaries for the five years ended December 31, 1994
and the six-month periods ended June 30, 1995 and June 30, 1994. The financial
data for each of the years ended December 31, 1990 through 1994 have been
derived from audited financial statements. The financial data for the six months
ended June 30, 1995 and June 30, 1994 have been derived from unaudited financial
statements and reflect, in the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
information for such interim periods. Results for the interim periods are not
necessarily indicative of results to be expected for the full year. The summary
below should be read in conjunction with the Consolidated Financial Statements
of the Company and the related Notes thereto and Management's Discussion and
Analysis of Financial Condition and Results of Operations which are contained in
each of the Company's Annual Reports on Form 10-K for the years ended December
31, 1990 through 1994 and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995. See "Incorporation of Certain Information by
Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------- --------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net interest income(1).......... $ 34,282 $ 37,690 $ 70,381 $ 78,644 $ 73,176 $ 73,990 $ 62,964
Noninterest revenues............ 245,072 187,286 395,808 255,580 193,144 133,357 85,894
Net operating revenues(2)....... 279,354 206,624 447,837 334,224 266,320 207,347 139,948
Provision for credit losses..... 17,508 22,263 34,198 29,802 47,138 55,461 42,411
Operating expenses(1)........... 162,012 123,034 266,784 181,167 142,082 112,567 83,917
Income before income taxes and
extraordinary items........... 99,834 79,679 165,207 123,255 77,100 39,319 22,530
Income before extraordinary
items......................... 64,183 50,681 106,063 77,920 48,037 25,165 15,095
Net income...................... 64,183 50,681 106,063 76,647 48,037 25,165 15,095
PER COMMON SHARE DATA
Income before extraordinary
items......................... $ 1.54 $ 1.23 $ 2.58 $ 1.95 $ 1.38 $ 0.81 $ 0.53
Net income...................... 1.54 1.23 2.58 1.92 1.38 0.81 0.53
FINANCIAL CONDITION -- YEAR END
Investments and money market
instruments................... $ 669,162 $ 517,360 $ 671,661 $ 542,222 $ 521,567 $ 270,267 $ 187,631
Gross receivables
Owned......................... 1,867,800 1,329,740 1,964,444 1,277,305 998,244 1,273,420 1,129,493
Securitized................... 7,502,826 4,603,381 6,190,793 3,968,856 2,721,726 1,573,164 980,856
Managed....................... 9,370,626 5,933,121 8,155,237 5,246,161 3,719,970 2,846,584 2,110,349
Total assets
Owned......................... 3,058,098 2,191,842 3,113,048 2,140,195 1,775,067 1,716,350 1,450,942
Managed....................... 10,560,924 6,795,223 9,303,841 6,109,051 4,496,793 3,289,514 2,431,798
Deposits........................ 1,097,581 1,041,005 1,159,358 1,254,881 1,204,486 1,205,035 1,052,322
Long-term debt.................. 780,078 424,716 666,033 368,372 173,668 112,609 80,990
Stockholders' equity............ 510,848 389,218 441,690 342,741 174,870 118,859 70,895
Stockholders' equity and
long-term debt................ 1,290,926 813,934 1,107,723 711,113 348,538 231,468 151,885
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------- ---------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----- ----- ----- ----- ----- ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS
Return on average assets............................... 4.35% 4.53% 4.47% 3.91% 2.82% 1.63% 1.09%
Return on average equity............................... 26.78 27.49 26.97 27.50 33.32 27.09 23.28
Equity/Owned assets.................................... 16.70 17.76 14.27 16.01 9.85 6.93 4.88
Dividend payout........................................ 9.55 8.94 9.24 9.56 7.69 7.85 6.90
Owned net interest margin.............................. 2.95 4.07 3.67 4.85 5.07 5.68 5.48
Managed net interest margin(3)......................... 5.95 7.15 6.72 7.77 8.05 7.54 6.70
Allowance for credit losses at period end as a
percentage of gross owned receivables................ 2.1 3.8 2.1 2.4 4.0 2.9 2.8
Allowance for credit losses at period end as a
percentage of impaired assets........................ 110.2 103.1 96.1 138.6 127.4 92.4 73.9
Impaired assets at period end as a percentage of gross
owned receivables.................................... 1.9 3.7(4) 2.2 1.8 3.2 3.1 3.8
Owned net charge-offs as a percentage of average gross
receivables.......................................... 2.3 2.3 2.6 2.4 3.9 4.0 3.4
Risk-based capital ratios of Colonial National(5):
Tier I............................................... 7.45 7.44 7.95 7.19 9.84 6.84 7.08
Tier I and II........................................ 12.14 12.44 12.04 12.06 11.12 8.35 8.59
Leverage ratio....................................... 7.62 6.56 8.15 6.03 7.57 6.79 6.57
Ratio of earnings to fixed charges..................... 2.34x 2.84x 2.71x 2.52x 1.81x 1.36x 1.20x
Ratio of earnings to combined fixed charges and
preferred stock dividends............................ 2.34 2.84 2.71 2.52 1.81 1.35 1.20
</TABLE>
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(1) Financial data for the years ended December 31, 1993, 1992, 1991 and 1990
reflect the reclassification of the amortization of credit card net deferred
origination costs from net interest income to operating expenses.
(2) Excludes gains on sales of credit card accounts in 1990 and 1994.
(3) Combination of owned interest earning assets/interest-bearing liabilities
and securitized credit card assets/liabilities.
(4) In 1994, the Company repurchased nonperforming assets from its securitized
mortgage portfolios.
(5) See "Regulation -- Colonial National" in the accompanying Prospectus for a
description of this subsidiary of the Company.
S-6
<PAGE> 7
THE OFFERING
Securities.................... Depositary Shares, each representing a
one-hundredth interest in a share of SAILS and
entitling the holder to that portion of all
the rights, preferences and percentages of a
share of SAILS (including dividend, voting,
conversion and liquidation rights and
preferences represented thereby). The SAILS
constitute a series of the Company's Class B
Preferred Stock, designated as 6 3/4%
Convertible Class B Preferred Stock, Series
1995 (Stock Appreciation Income Linked
Securities (SAILS)), and rank prior to the
Company's Class A Common Stock, par value $.01
per share (the "Class A Common Stock") and
Class B Common Stock as to payment of
dividends and distribution of assets upon
liquidation. The SAILS (and the related
Depositary Shares) will automatically convert
into shares of Class B Common Stock on
September 15, 1999 (the "Mandatory Conversion
Date"), and the Company has the option to
redeem the SAILS (and the related Depositary
Shares), in whole or in part, at any time and
from time to time on or after September 15,
1998 and prior to the Mandatory Conversion
Date at the Call Price (as defined herein),
payable in shares of Class B Common Stock. In
addition, the SAILS (and the related
Depositary Shares) are convertible into shares
of Class B Common Stock at the option of the
holder at any time prior to the Mandatory
Conversion Date as set forth below.
Dividends..................... Holders of Depositary Shares will be entitled
to receive annual cumulative dividends at a
rate per annum of 6 3/4% of the initial price
to the public thereof (equivalent to a rate of
$2.4975 per annum for each of the Depositary
Shares, being one-hundredth of the annual
dividend rate of $249.75 payable with respect
to each of the SAILS), from the date of
initial issuance, payable quarterly in arrears
on each December 15, March 15, June 15 and
September 15 or, if any such date is not a
business day, on the next succeeding business
day, commencing December 15, 1995. See
"Description of SAILS -- Dividends" and
"Description of Depositary Shares--Dividends
and Other Distributions."
Mandatory Conversion.......... On the Mandatory Conversion Date, unless
previously redeemed or converted, each share
of the SAILS (and the related Depositary
Shares) will automatically convert into (i)
shares of Class B Common Stock at the rate
described below, subject to adjustment upon
certain events as described herein, and (ii)
at the option of the Company, the right to
receive either (A) cash in an amount equal to
all accrued and unpaid dividends thereon or
(B) a number of shares of Class B Common Stock
having a value (based on the Current Market
Price (as defined in "Description of
SAILS--Optional Redemption")) equal to such
accrued and unpaid dividends. The SAILS will
convert into Class B Common Stock at the rate
of 100 shares of Class B Common Stock for each
share of the SAILS (equivalent to a rate of
one share of Class B Common Stock for each
Depositary Share). The per share value of the
Class B Common Stock that will be received by
holders of Depositary Shares upon their
mandatory conversion may be more or less than
the price to the public of each of the
Depositary
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<PAGE> 8
Shares offered hereby because of fluctuations
in the market price of the Class B Common
Stock. See "Description of SAILS--Mandatory
Conversion," "Description of Depositary
Shares--Conversion and Call Provisions" and
"Description of Depositary Shares--Dividends
and Other Distributions."
Optional Redemption........... The SAILS (and the related Depositary Shares)
are not redeemable prior to September 15,
1998. At any time and from time to time on or
after September 15, 1998 until immediately
prior to the Mandatory Conversion Date, the
Company may redeem any or all of the
outstanding SAILS (and thereby the related
Depositary Shares). Upon any such redemption,
each holder of a Depositary Share will
receive, in exchange for each of the
Depositary Shares so redeemed, the number of
shares of Class B Common Stock equal in value
to the result obtained by dividing (A) the sum
of (i) $37.6244 (equivalent to $3,762.44 for
each share of SAILS), declining periodically
after December 14, 1998 as set forth herein to
$37.00 (equivalent to $3,700.00 for each share
of SAILS), and (ii) all accrued and unpaid
dividends applicable thereto (the "Call
Price"), by (B) the Current Market Price on
the applicable date of determination, but in
no event will such holder receive less than
.8197 of a share of Class B Common Stock,
subject to adjustment upon certain events as
described herein. The number of shares of
Class B Common Stock to be delivered in
payment of the redemption price will be
determined on the basis of the Current Market
Price of the Class B Common Stock prior to the
announcement of the redemption, and the market
price of the Class B Common Stock may vary
between the date of such determination and the
subsequent delivery of such shares. See
"Description of SAILS--Optional Redemption"
and "Description of Depositary
Shares--Conversion and Call Provisions."
Conversion at the Option of
the Holder.................. At any time prior to the Mandatory Conversion
Date, unless previously redeemed, each of the
SAILS is convertible at the option of the
holder thereof into 81.97 shares of Class B
Common Stock (equivalent to a rate of .8197 of
a share of Class B Common Stock for each
Depositary Share), equivalent to a conversion
price of $45.14 per share of Class B Common
Stock (the "Conversion Price"), subject to
adjustment upon certain events as described
herein. The per share value of Class B Common
Stock that will be received by holders of
Depositary Shares upon their optional
conversion may be more or less than the price
to the public of each of the Depositary Shares
offered hereby because of fluctuations in the
market price of the Class B Common Stock. The
right of holders to convert SAILS (and the
related Depositary Shares) called for
redemption will terminate immediately prior to
the close of business on any redemption date
with respect to such SAILS. See "Description
of SAILS--Conversion at the Option of the
Holder" and "Description of Depositary
Shares--Dividends and Other Distributions."
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<PAGE> 9
Enhanced Dividend Yield: Less
Equity Appreciation Than
Class B Common Stock........ Dividends will accrue on the SAILS (and
thereby the related Depositary Shares) at the
rate of 6 3/4% per annum, a higher rate than
the rate at which dividends are currently paid
on the Class B Common Stock. The opportunity
for equity appreciation afforded by an
investment in the Depositary Shares is less
than that afforded by an investment in the
Class B Common Stock because the Conversion
Price is higher than the per share price to
the public of the Depositary Shares, and the
Company may, at its option, redeem the SAILS
(and thereby the Depositary Shares) at any
time on or after September 15, 1998 and prior
to the Mandatory Conversion Date, and may be
expected to do so if, among other
circumstances, the Current Market Price of the
Class B Common Stock exceeds the Call Price.
In such event, a holder will receive for each
of the Depositary Shares held less than one
share of Class B Common Stock, but in no event
will such holder receive less than .8197 of a
share of Class B Common Stock (subject to
adjustment upon certain events as described
herein). A holder may also surrender for
conversion any Depositary Shares called for
redemption up to the close of business on any
applicable redemption date, and a holder that
so elects to convert will receive .8197 of a
share of Class B Common Stock (subject to
adjustment upon certain events as described
herein) for each of the Depositary Shares
held. The per share value of the Class B
Common Stock received by holders of Depositary
Shares may be more or less than the per share
amount paid for the Depositary Shares offered
hereby because of fluctuations in the market
price of the Class B Common Stock. See
"Description of SAILS--Enhanced Dividend
Yield; Less Equity Appreciation than Class B
Common Stock" and "Description of Depositary
Shares--Dividends and Other Distributions."
Voting Rights................. The holders of SAILS (and the related
Depositary Shares) will not have voting rights
except as required by law and except as
follows: (i) in the event that dividends on
the SAILS (and thereby the related Depositary
Shares) or any other series of Preferred Stock
(as defined herein) with like voting rights
are in arrears and unpaid for six quarterly
dividend periods, and in certain other
circumstances, the holders of SAILS (voting
separately as a class with holders of all
other series of outstanding Preferred Stock
upon which like voting rights have been
conferred and are exercisable) will be
entitled to vote, on the basis of one hundred
votes for each share of the SAILS (equivalent
to one vote for each of the Depositary
Shares), for the election of two Directors of
the Company, such Directors to be in addition
to the number of Directors constituting the
Board of Directors immediately prior to the
accrual of such right, and (ii) the holders of
SAILS will have voting rights with respect to
certain alterations of the Company's
Certificate of Incorporation and certain other
matters, voting on the same basis or
separately as a series. The holders of
Depositary Shares will be entitled to direct
the voting of the shares of SAILS
S-9
<PAGE> 10
represented thereby. See "Description of
SAILS--Voting Rights" and "Description of
Depositary Shares--Voting of SAILS."
Liquidation Preference and
Ranking..................... The SAILS (and the related Depositary Shares)
will rank prior to the Class A Common Stock,
the Class B Common Stock and other classes of
capital stock of the Company ranking junior to
the SAILS as to payment of dividends and
distribution of assets upon liquidation and
will rank pari passu with the Company's
outstanding Class A Preferred Stock, par value
$1,000 per share (the "Class A Preferred
Stock"). The liquidation preference of each of
the SAILS is an amount equal to the sum of (i)
the per share price to the public of the
Depositary Shares shown on the cover page of
this Prospectus Supplement multiplied by 100
(in the case of the Depositary Shares, such
preference to be equivalent to the per share
price to the public) and (ii) all accrued and
unpaid dividends thereon. See "Description of
SAILS--Dividends" and " --Liquidation Rights"
and "Description of Depositary Shares."
Deposit Agreement............. The purchasers of the Depositary Shares
offered hereby will be deemed to have entered
into and agreed to the provisions of the
Deposit Agreement among such purchasers, the
Company and the Depositary (as defined
herein).
Nasdaq National Market Symbol
of Class B Common Stock..... ADVNB.
Listing....................... The Depositary Shares have been approved for
listing on the Nasdaq National Market under
the symbol "ADVNZ," subject to notice of
issuance. Trading of the Depositary Shares on
the Nasdaq National Market is expected to
commence within a 30 day period after the date
of this Prospectus Supplement. See
"Underwriting."
Use of Proceeds............... The net proceeds to the Company from the sale
of the Depositary Shares offered hereby are
expected to be used to support future growth
and for general corporate purposes. See "Use
of Proceeds."
S-10
<PAGE> 11
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Depositary Shares
offered hereby are expected to be used by the Company to support future growth
and for general corporate purposes.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Class A Common Stock and Class B Common Stock are listed on the Nasdaq
National Market and traded under the symbols "ADVNA" and "ADVNB," respectively.
The following table sets forth, for the periods indicated, (i) the high and low
sales prices for the Class A Common Stock and the Class B Common Stock as
reported on the Nasdaq National Market, and (ii) the dividends declared on the
Class A Common Stock and the Class B Common Stock.
<TABLE>
<CAPTION>
PRICE RANGE
------------------
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
CLASS B COMMON STOCK
Fiscal Year Ended December 31, 1993
First Quarter.............................................. $25.33 $16.00 $.040
Second Quarter............................................. 26.50 20.17 .050
Third Quarter.............................................. 36.50 25.33 .050
Fourth Quarter............................................. 38.50 25.00 .060
Fiscal Year Ended December 31, 1994
First Quarter.............................................. $33.25 $26.00 $.060
Second Quarter............................................. 37.50 28.75 .060
Third Quarter.............................................. 34.75 26.50 .060
Fourth Quarter............................................. 30.50 23.25 .080
Fiscal Year Ending December 31, 1995
First Quarter.............................................. $32.25 $24.50 $.080
Second Quarter............................................. 38.75 30.75 .080
Third Quarter (through July 31)............................ 40.75 37.50 --
CLASS A COMMON STOCK
Fiscal Year Ended December 31, 1993
First Quarter.............................................. $29.33 $19.00 $.033
Second Quarter............................................. 32.50 24.17 .042
Third Quarter.............................................. 41.50 29.83 .042
Fourth Quarter............................................. 46.75 29.25 .050
Fiscal Year Ended December 31, 1994
First Quarter.............................................. $36.00 $26.50 $.050
Second Quarter............................................. 41.75 30.50 .050
Third Quarter.............................................. 37.50 28.25 .050
Fourth Quarter............................................. 33.50 24.25 .067
Fiscal Year Ending December 31, 1995
First Quarter.............................................. $34.75 $25.50 $.067
Second Quarter............................................. 42.50 33.00 .067
Third Quarter (through July 31)............................ 46.00 41.50 --
</TABLE>
For a recent closing sales price for the Class B Common Stock, as reported
on the Nasdaq National Market, see the cover page of this Prospectus Supplement.
As of August 1, 1995, the approximate number of holders of record of the Class A
Common Stock and Class B Common Stock was 650 and 850, respectively.
S-11
<PAGE> 12
The Company has paid cash dividends on the Class A Common Stock each year
since 1989 and on the Class B Common Stock since its original issuance in 1992.
The Company intends to continue the payment of dividends, although future
dividend payments will depend upon the Company's level of earnings, financial
requirements and other relevant factors, including dividend restrictions
contained in the Company's debt instruments.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of June 30, 1995 and as adjusted to give effect to the sale by the
Company of the 2,500,000 Depositary Shares at $37.00 per share (equivalent to
25,000 shares of SAILS at $3,700.00 per share) offered hereby, assuming
transaction expenses and underwriting discounts and commissions estimated to be
$2,812,500.
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term Debt.................................................... $ 780,078 $ 780,078
Stockholders' Equity:
Class A Preferred Stock, $1,000 par value; 1,010 shares
authorized,
issued and outstanding....................................... 1,010 1,010
Class B Preferred Stock, $.01 par value; authorized 1,000,000
shares; issued and outstanding 0 shares (actual) and 25,000
shares (as adjusted)......................................... 0 0
Class A Common Stock, $.01 par value; authorized 200,000,000
shares; issued and outstanding 17,441,924 shares............. 174 174
Class B Common Stock, $.01 par value; authorized 200,000,000
shares; issued and outstanding 23,805,822 shares............. 238 238
Additional paid in capital, net................................. 182,966 272,653
Retained earnings, net.......................................... 326,712 326,712
Less: Treasury Stock at cost, 10,431 shares of Class B Common
Stock........................................................ (252) (252 )
---------- -----------
Total stockholders' equity.............................. 510,848 600,535
---------- -----------
Total Capitalization.............................................. $1,290,926 $1,380,613
========= ===========
</TABLE>
DESCRIPTION OF SAILS
The SAILS are a separate series of Class B Preferred Stock of the Company
designated as 6 3/4% Convertible Class B Preferred Stock, Series 1995 (Stock
Appreciation Income Linked Securities (SAILS)). The following summary of the
terms of the SAILS does not purport to be complete and is subject to and
qualified in its entirety by reference to all of the provisions of the form of
Certificate of Designations, Preferences, Rights and Limitations relating to the
SAILS (the "Certificate of Designations"), a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus Supplement is a
part.
The SAILS will be deposited with the Depositary. Each of the Depositary
Shares represents beneficial ownership of one-hundredth of a share of SAILS and
entitles the owner to that proportion of all the rights, preferences and
privileges of the SAILS represented thereby. See "Description of Depositary
Shares." The SAILS will not be listed on any exchange, and the Company does not
expect that there will be any trading market for the shares of SAILS except as
represented by the Depositary Shares.
DIVIDENDS
Holders of SAILS (and thereby the Depositary Shares) will be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cash dividends from the date of initial issuance of the
SAILS at the rate per annum of 6 3/4% of the initial per share price to the
public (equivalent to $249.75 per annum or $62.4375 per quarter for each of the
SAILS and $2.4975 per annum or $.624375 per quarter for each of the related
Depositary Shares), payable quarterly in arrears on each December 15, March 15,
June 15 and September 15 or, if any such date is not a business day, on the next
S-12
<PAGE> 13
succeeding business day, commencing December 15, 1995; provided, however, that
with respect to any dividend period during which a redemption occurs, the
Company may, at its option, declare accrued dividends to, and pay such dividends
on, the date fixed for redemption, in which case such dividends would be payable
in cash to the holders of SAILS as of the record date for such dividend payment
and would not be included in the calculation of the related Call Price as
described under "-- Optional Redemption" below. The first dividend period will
be from the date of initial issuance of the SAILS to but excluding December 15,
1995, and the first dividend will be payable on December 15, 1995. Dividends
will cease to accrue in respect of the SAILS on September 15, 1999 (the
"Mandatory Conversion Date") or on the date of their earlier conversion or
redemption.
Dividends will be payable to holders of record on such record dates, not
less than 10 nor more than 60 days preceding the payment date thereof, as shall
be fixed by the Board of Directors. Dividends payable on the SAILS for any
period less than a full quarterly dividend period will be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any period less than one month.
Dividends on the SAILS will accrue whether or not there are funds legally
available for the payment of such dividends and whether or not such dividends
are declared. Accrued but unpaid dividends on the SAILS will accumulate as of
the dividend payment date on which they first become payable, but no interest
will accrue on accumulated but unpaid dividends on the SAILS.
The SAILS (and thereby the Depositary Shares) will rank on a parity, both
as to payment of dividends and distribution of assets upon liquidation, with the
Class A Preferred Stock and any future Preferred Stock issued by the Company
that by its terms ranks pari passu with the SAILS.
As long as any of the SAILS are outstanding, no dividends (other than
dividends payable in shares of, or warrants, rights or options exercisable for
or convertible into shares of, Class B Common Stock or any other capital stock
of the Company ranking junior to the SAILS as to the payment of dividends and
the distribution of assets upon liquidation ("Junior Stock") and cash in lieu of
fractional shares in connection with any such dividend) will be paid or declared
in cash or otherwise, nor will any other distribution be made (other than a
distribution payable in Junior Stock and cash in lieu of fractional shares in
connection with any such distribution), on any Junior Stock unless (i) full
dividends on Preferred Stock (including the SAILS) that does not constitute
Junior Stock ("Parity Preferred Stock") have been paid, or declared and set
aside for payment, for all dividend periods terminating at or before the date of
such Junior Stock dividend or distribution payment to the extent such dividends
are cumulative; (ii) dividends in full for the current quarterly dividend period
have been paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative; (iii) the Company has paid or
set aside all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement and sinking funds, if any, for any Parity
Preferred Stock; and (iv) the Company is not in default on any of its
obligations to redeem any Parity Preferred Stock.
In addition, as long as any of the SAILS are outstanding, no shares of any
Junior Stock may be purchased, redeemed or otherwise acquired by the Company or
any of its subsidiaries (except in connection with: (i) a reclassification or
exchange of any Junior Stock through the issuance of other Junior Stock; (ii)
the purchase, redemption or other acquisition of any Junior Stock with any
Junior Stock and, in either case, cash in lieu of fractional shares in
connection therewith; or (iii) the acquisition by the Company of Junior Stock
from former employees of the Company, without payment to such individuals, as
the result of forfeiture of such shares which had been issued to such
individuals pursuant to incentive compensation, or otherwise issued as
restricted shares, subject to forfeiture upon termination of employment), nor
may any funds be set aside or made available for any sinking fund for the
purchase, redemption or other acquisition of any Junior Stock, unless: (a) full
dividends on Parity Preferred Stock have been paid, or declared and set aside
for payment, for all dividend periods terminating at or before the date of such
purchase or redemption to the extent such dividends are cumulative; (b)
dividends in full for the current quarterly dividend period have been paid, or
declared and set aside for payment, on all Parity Preferred Stock to the extent
such dividends are cumulative; (c) the Company has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement and sinking funds, if any, for any Parity Preferred Stock;
and (d) the Company is not in default on any of its obligations to redeem any
Parity Preferred Stock.
S-13
<PAGE> 14
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on the shares of any Junior
Stock from time to time and Junior Stock may be purchased, redeemed or otherwise
acquired by the Company or any of its subsidiaries from time to time. In the
event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of any Parity Preferred Stock, to share therein according
to their respective interests.
As long as any of the SAILS are outstanding, dividends or other
distributions may not be declared or paid on any shares of Parity Preferred
Stock (other than dividends or other distributions payable in Junior Stock and
cash in lieu of fractional shares in connection therewith), and the Company may
not purchase, redeem or otherwise acquire any shares of Parity Preferred Stock
(except with any Junior Stock and cash in lieu of fractional shares in
connection therewith), unless either: (i) (a) full dividends on all shares of
Parity Preferred Stock have been paid, or declared and set aside for payment,
for all dividend periods terminating at or before the date of such Parity
Preferred Stock dividend, distribution, purchase, redemption or other
acquisition payment to the extent such dividends are cumulative; (b) dividends
in full for the current quarterly dividend period have been paid, or declared
and set aside for payment, on all shares of Parity Preferred Stock to the extent
such dividends are cumulative; (c) the Company has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement and sinking funds, if any, for any shares of Parity
Preferred Stock; and (d) the Company is not in default on any of its obligations
to redeem any shares of Parity Preferred Stock; or (ii) with respect to the
payment of dividends only, any such dividends will be declared and paid pro rata
so that the amounts of any dividends declared and paid on each share of the
SAILS and each other share of Parity Preferred Stock will in all cases bear to
each other the same ratio that accrued dividends (including any accumulation
with respect to unpaid dividends for prior dividend periods, if such dividends
are cumulative) on each share of the SAILS and on each of such shares of Parity
Preferred Stock bear to each other.
MANDATORY CONVERSION
Unless previously either redeemed, as described under "-- Optional
Redemption" below, or converted at the option of the holder into Class B Common
Stock as described under "-- Conversion at the Option of the Holder" below, on
the Mandatory Conversion Date each share of the SAILS (and the related
Depositary Shares) will automatically convert into (i) shares of Class B Common
Stock at the Common Equivalent Rate (as defined below) in effect on such date
and (ii) the right to receive, at the option of the Company, either (a) cash in
an amount equal to all accrued and unpaid dividends thereon or (b) a number of
shares of Class B Common Stock having a value (based on the Current Market Price
(as defined herein) as of the second trading day immediately preceding the
Mandatory Conversion Date) equal to such accrued and unpaid dividends (in each
case, other than previously declared dividends payable to a holder of record as
of a date prior to the Mandatory Conversion Date) to but excluding the Mandatory
Conversion Date, whether or not declared, out of funds legally available for the
payment of dividends. Such mandatory conversion shall be subject to the right of
the Company to redeem the SAILS on or after September 15, 1998, and before the
Mandatory Conversion Date, as described under "-- Optional Redemption" below,
and subject to the conversion of the SAILS at the option of the holder at any
time before the Mandatory Conversion Date, as described under "-- Conversion at
the Option of the Holder" below. The "Common Equivalent Rate" is initially 100
shares of Class B Common Stock for each share of the SAILS (equivalent to one
share of Class B Common Stock for each of the Depositary Shares), subject to
adjustment as described under "-- Conversion Adjustments" below. Upon issuance
of the Class B Common Stock on conversion, the SAILS (and thereby the related
Depositary Shares) shall cease to be outstanding on the Mandatory Conversion
Date.
Because the market price of the Class B Common Stock is subject to
fluctuations, the per share value of the Class B Common Stock that will be
received by holders of the Depositary Shares upon the mandatory conversion of
the SAILS may be more or less than the price to the public of each of the
Depositary Shares offered hereby. In addition, the number of shares of Class B
Common Stock that may be delivered, at the option of the Company, in payment of
accrued and unpaid dividends on the SAILS will be determined on the basis of the
Current Market Price of the Class B Common Stock prior to the Mandatory
Conversion Date, and
S-14
<PAGE> 15
the market price of the Class B Common Stock may vary between the date of such
determination and the subsequent delivery of such shares.
OPTIONAL REDEMPTION
The SAILS (and thereby the related Depositary Shares) are not redeemable by
the Company before September 15, 1998. At any time and from time to time on or
after that date until immediately before the Mandatory Conversion Date, the
Company will have the right to redeem the outstanding SAILS (and thereby the
related Depositary Shares), in whole or in part. Upon any such redemption, the
Company will deliver to the holder thereof in exchange for each of the
Depositary Shares so redeemed the greater of: (i) the number of shares of Class
B Common Stock determined by dividing the applicable Call Price (as described
below) in effect on the redemption date by the Current Market Price of the Class
B Common Stock (subject to adjustment as described below), determined as of the
second trading day immediately preceding the Notice Date (as defined below), and
(ii) .8197 of a share of Class B Common Stock (subject to adjustment in the same
manner that the Optional Conversion Rate (as defined below) is adjusted).
Dividends will cease to accrue on the SAILS on the date fixed for their
redemption.
The Call Price of each of the Depositary Shares is the sum of (i) $37.6244
($3,762.44 for each share of SAILS) on and after September 15, 1998 to and
including December 14, 1998; $37.4683 ($3,746.83 for each share of SAILS) on and
after December 15, 1998 to and including March 14, 1999; $37.3122 ($3,731.22 for
each share of SAILS) on and after March 15, 1999 to and including June 14, 1999;
$37.1561 ($3,715.61 for each share of SAILS) on and after June 15, 1999 to and
including August 14, 1999; and $37.00 (being the per share price to the public
of the Depositary Shares appearing on the cover page of this Prospectus
Supplement) ($3,700.00 for each share of SAILS) on and after August 15, 1999 to
and including September 14, 1999; and (ii) all accrued and unpaid dividends
thereon to but not including the date fixed for redemption (other than
previously declared dividends payable to a holder of record as of a prior date).
The "Current Market Price" per share of the Class B Common Stock on any
date of determination means the lesser of (i) the average of the closing sale
prices of the Class B Common Stock as reported on the Nasdaq National Market for
the 15 consecutive trading days ending on and including such date of
determination and (ii) the closing sale price of the Class B Common Stock as
reported on the Nasdaq National Market for such date of determination; provided,
however, that, with respect to any redemption of SAILS (and thereby the related
Depositary Shares), if any event resulting in an adjustment as described under
"Conversion Adjustments" below occurs during the period beginning on the first
day of such 15-day period and ending on the applicable redemption date, the
Current Market Price as determined pursuant to the foregoing will be
appropriately adjusted to reflect the occurrence of such event. The "Notice
Date" with respect to any notice given by the Company in connection with a
redemption of the SAILS means the date on which first occurs either the public
announcement of such redemption or the commencement of mailing of such notice to
the holders of the SAILS.
The number of shares of Class B Common Stock that may be delivered in
payment of the redemption price will be determined on the basis of the Current
Market Price of the Class B Common Stock prior to the announcement of the
redemption, and the market price of the Class B Common Stock may vary between
the date of such determination and the subsequent delivery of shares.
If fewer than all the outstanding SAILS are to be called for redemption,
the SAILS so called will be selected by the Company by lot or pro rata (as
nearly as may be) or by any other method determined by the Board of Directors in
its sole discretion to be equitable.
The Company will provide notice of any redemption of SAILS to holders of
record of the SAILS to be called for redemption not less than 15 nor more than
60 days before the date fixed for redemption. Accordingly, the earliest Notice
Date for any call for redemption of SAILS will be July 17, 1998. Any such notice
will be provided by mail, sent to the holders of record of SAILS to be redeemed.
On and after the redemption date, all rights of the holders of the SAILS called
for redemption will terminate except the right to receive the redemption price
(unless the Company defaults on the payment of the redemption price). A public
announcement of any call for redemption will be made by the Company before, or
at the time of, the mailing
S-15
<PAGE> 16
of such notice of redemption. For a description of notices to holders of
Depositary Shares, see "Description of Depositary Shares--Record Date."
Each holder of SAILS called for redemption must surrender the certificates
evidencing such SAILS to the Company at the place designated in the notice of
redemption and will thereupon be entitled to receive certificates for shares of
Class B Common Stock and cash for any fractional share amount as described under
"Fractional Shares" below.
For further discussion of the optional redemption of the Depositary Shares,
see "Description of Depositary Shares--Conversion and Call Provisions" and
"--Record Date."
CONVERSION AT THE OPTION OF THE HOLDER
The SAILS (and thereby the related Depositary Shares) are convertible, in
whole or in part, at the option of the holders thereof, at any time before the
Mandatory Conversion Date, unless previously redeemed, into shares of Class B
Common Stock at a rate of 81.97 shares of Class B Common Stock for each share of
the SAILS (the "Optional Conversion Rate") (equivalent to a rate of .8197 of a
share of Class B Common Stock for each of the Depositary Shares), subject to
adjustment as described under "Conversion Adjustments" below, equivalent to a
conversion price of $45.14 per share of Class B Common Stock, before conversion
adjustments (the "Conversion Price"). The per share value of Class B Common
Stock that holders of Depositary Shares will receive upon their optional
conversion may be more or less than the price to the public of each of the
Depositary Shares offered hereby because of fluctuations in the market price of
the Class B Common Stock. The right to convert SAILS (and thereby the related
Depositary Shares) called for redemption will terminate immediately before the
close of business on the date of such redemption.
Conversion of SAILS at the option of the holder may be effected by
delivering certificates evidencing such SAILS, together with written notice of
conversion and a proper assignment of such certificates to the Company or in
blank, to the office of the transfer agent for the SAILS or to any other office
or agency maintained by the Company for that purpose and otherwise in accordance
with conversion procedures established by the Company. Each optional conversion
will be deemed to have been effected immediately before the close of business on
the date on which the foregoing requirements have been satisfied. The conversion
will be at the Optional Conversion Rate in effect at such time and on such date.
Holders of SAILS at the close of business on a record date for any payment
of declared dividends will be entitled to receive the dividends payable on those
SAILS on the corresponding dividend payment date notwithstanding the optional
conversion of those SAILS following such record date and before such dividend
payment date. Except as provided above, upon any optional conversion of SAILS,
the Company will make no payment of or allowance for unpaid dividends, whether
or not in arrears, on such SAILS, or for previously declared dividends or
distributions on the shares of Class B Common Stock issued upon such conversion.
The Depositary Shares may be voluntarily converted by the holders thereof
upon the same terms and conditions (including those as to notice) as the shares
of SAILS represented by such Depositary Shares, adjusted to reflect the fact
that 100 Depositary Shares are the equivalent of one share of SAILS. See
"Description of Depositary Shares--Conversion and Call Provisions."
ENHANCED DIVIDEND YIELD; LESS EQUITY APPRECIATION THAN CLASS B COMMON STOCK
Dividends on the SAILS (and thereby the related Depositary Shares) will
accrue at a higher rate than the rate at which dividends are currently paid on
the Class B Common Stock. The opportunity for equity appreciation afforded by an
investment in the Depositary Shares is less than that afforded by an investment
in the Class B Common Stock because the Conversion Price is higher than the per
share price to the public of the Depositary Shares and the Company, at its
option, may redeem the SAILS (and thereby the Depositary Shares) at any time on
or after September 15, 1998 and before the Mandatory Conversion Date, and may be
expected to do so if, among other circumstances, the Current Market Price of the
Class B Common Stock exceeds the Call Price. In such event, a holder will
receive for each Depositary Share less than one share of Class B Common Stock,
but in no event will a holder receive less than .8197 of a share of Class B
Common
S-16
<PAGE> 17
Stock. A holder may also surrender for conversion any SAILS (and the related
Depositary Shares) called for redemption up to the close of business on the
redemption date, and a holder so electing to convert will receive 81.97 shares
of Class B Common Stock for each share of the SAILS so converted (equivalent to
.8197 of a share of Class B Common Stock for each of the Depositary Shares). The
per share value of Class B Common Stock received by holders of the Depositary
Shares may be more or less than the initial price to the public of the
Depositary Shares offered hereby because of fluctuations in the market price of
the Class B Common Stock.
As a result of these provisions, holders of the SAILS (and thereby the
related Depositary Shares) will realize no equity appreciation if the Current
Market Price of the Class B Common Stock is below the Conversion Price, and less
than all of such appreciation if the Current Market Price of the Class B Common
Stock is above the Conversion Price. Conversely, if the Current Market Price of
the Class B Common Stock is less than the initial per share price to the public
of the Depositary Shares, the holders will realize a corresponding decline in
the value of the Depositary Shares.
CONVERSION ADJUSTMENTS
The Common Equivalent Rate and the Optional Conversion Rate are each
subject to adjustment as appropriate in certain circumstances, including if the
Company (i) pays a stock dividend or makes a distribution with respect to the
Class B Common Stock in shares of the Class B Common Stock; (ii) subdivides or
splits the outstanding Class B Common Stock; (iii) combines the outstanding
Class B Common Stock into a smaller number of shares; (iv) issues by
reclassification of the shares of Class B Common Stock any shares of the Class B
Common Stock; (v) issues certain rights or warrants to all holders of the Class
B Common Stock; or (vi) pays a dividend or distributes to all holders of the
Class B Common Stock evidences of its indebtedness, cash or other assets
(including capital stock of the Company other than the Class B Common Stock but
excluding any cash dividends or distributions, other than Extraordinary Cash
Distributions (as defined below), and dividends referred to in clauses (i) and
(ii) above). In addition, the Company will be entitled (but will not be
required) to make upward adjustments in the Common Equivalent Rate, the Optional
Conversion Rate and the Call Price as the Company, in its discretion, determines
to be advisable, in order that any stock dividend, subdivision of shares,
distribution of rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock (or any transaction that
could be treated as any of the foregoing transactions under Section 305 of the
Internal Revenue Code of 1986, as amended) hereafter made by the Company to its
stockholders will not be taxable. "Extraordinary Cash Distribution" means, with
respect to any consecutive 12-month period, all cash dividends and cash
distributions on the Class B Common Stock during such period (other than cash
dividends and cash distributions for which a prior adjustment to the Common
Equivalent Rate and Optional Conversion Rate was previously made) to the extent
such dividends and distributions exceed, on a per share of Class B Common Stock
basis, 10% of the average daily per share closing price of the Class B Common
Stock over such period. All adjustments to the Common Equivalent Rate and the
Optional Conversion Rate will be calculated to the nearest 1/100th of a share of
Class B Common Stock. No adjustment in the Common Equivalent Rate or the
Optional Conversion Rate will be required unless such adjustment would require
an increase or decrease of at least one percent therein; provided, however, that
any adjustments that, by reason of the foregoing, are not required to be made
will be carried forward and taken into account in any subsequent adjustment. All
adjustments will be made successively.
Whenever the Common Equivalent Rate, the Optional Conversion Rate and/or
the Call Price are adjusted as provided in the preceding paragraph, the Company
will file with the transfer agent for the shares of SAILS a certificate with
respect to such adjustment, make a prompt public announcement thereof and mail a
notice to holders of the SAILS providing specified information with respect to
such adjustment. At least 10 business days before taking any action that could
result in certain adjustments in the Common Equivalent Rate and the Optional
Conversion Rate, the Company will notify each holder of SAILS concerning such
proposed action.
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ADJUSTMENT FOR CERTAIN CONSOLIDATIONS OR MERGERS
In case of (i) any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the shares of Class B Common Stock
outstanding immediately before the merger or consolidation remain unchanged),
(ii) any sale or transfer to another corporation of the property of the Company
as an entirety or substantially as an entirety or (iii) any statutory exchange
of securities with another corporation (other than in connection with a merger
or acquisition), the SAILS, after consummation of such transaction, will be
subject to (A) conversion at the option of the holders thereof into the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Class B Common Stock
into which such SAILS might have been converted immediately before consummation
of such transaction, (B) conversion on the Mandatory Conversion Date into the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Class B
Common Stock into which such SAILS would have been converted if the conversion
on the Mandatory Conversion Date had occurred immediately before the date of
consummation of such transaction, plus the right to receive cash in an amount
equal to all accrued and unpaid dividends on such SAILS (other than previously
declared dividends to a holder of record as of a prior date), and (C) redemption
on any redemption date in exchange for the kind and amount of securities, cash
or other property receivable upon consummation of such transaction by a holder
of the number of shares of Class B Common Stock that would have been issuable at
the Call Price in effect on such redemption date upon a redemption of the SAILS
immediately before consummation of such transaction, assuming that, if the
Notice Date for such redemption is not before such transaction, the Notice Date
had been the date of such transaction; and assuming in each case that such
holder of shares of Class B Common Stock failed to exercise rights of election,
if any, as to the kind or amount of securities, cash or other property
receivable upon consummation of such transaction (provided that, if the kind or
amount of securities, cash or other property receivable upon consummation of
such transaction is not the same for each non-electing share, then the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction for each non-electing share will be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares). The
kind and amount of securities into or for which the SAILS will be convertible or
redeemable after consummation of such transaction will be subject to adjustment
as described under "Conversion Adjustments" above following the date of
consummation of such transaction. The Company may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
FRACTIONAL SHARES
No fractional shares of Class B Common Stock will be issued upon redemption
or conversion of the SAILS. In lieu of any fractional share otherwise issuable
to any holder in respect of the aggregate number of SAILS held by that holder
that are redeemed or converted on any redemption date or upon mandatory
conversion or any optional conversion, such holder will be entitled to receive
an amount in cash equal to the same fraction of (i) the Current Market Price of
the Class B Common Stock, determined as of the second trading day immediately
preceding the Notice Date, in the case of redemption, or (ii) the Closing Price
(as defined in the Certificate of Designations) of the Class B Common Stock
determined (A) as of the fifth trading day immediately preceding the Mandatory
Conversion Date, in the case of mandatory conversion, or (B) as of the second
trading day immediately preceding the effective date of conversion, in the case
of an optional conversion by a holder.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Company, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding SAILS (and thereby the
related Depositary Shares) are entitled to a liquidation preference. The holders
of outstanding SAILS are entitled to receive an amount equal to the per share
price to the public of the Depositary Shares shown on the cover page of this
Prospectus Supplement multiplied by 100 and the holders of Depositary Shares are
entitled to receive an amount equal to the initial per share price to the public
of the Depositary
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Shares, in each case plus accrued and unpaid dividends thereon, out of the
assets of the Company available for distribution to stockholders, before any
distribution of assets is made to holders of the Class A Common Stock and the
Class B Common Stock or other Junior Stock upon liquidation, dissolution or
winding up.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of the Company, the assets of the Company are insufficient to permit the payment
of the full preferential amounts payable with respect to the SAILS and all other
series of Parity Preferred Stock, the holders of the SAILS and of all other
series of Parity Preferred Stock will share ratably in any distribution of
assets of the Company in proportion to the full respective preferential amounts
to which they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of the SAILS will not be
entitled to any further participation in any distribution of assets by the
Company. A consolidation or merger of the Company with or into one or more other
corporations (whether or not the Company is the corporation surviving such
consolidation or merger), or a sale, lease or exchange of all or substantially
all of the assets of the Company will not be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
The holders of SAILS will not have any voting rights except as required by
law and except as set forth below.
In the event that dividends on the SAILS or any other series of Preferred
Stock with like voting rights are in arrears and unpaid for six quarterly
dividend periods, the holders of the SAILS (voting separately as a class with
holders of all other series of Preferred Stock upon which like voting rights
have been conferred and are exercisable), with each share of the SAILS entitled
to one hundred votes on this and other matters in which Preferred Stock votes as
a group (equivalent to one vote per Depositary Share), will be entitled to vote
for the election of two Directors(the "Preferred Stock Directors"), such
Directors to be in addition to the number of Directors constituting the Board of
Directors immediately before the accrual of such right. Such right, when vested,
will continue until all dividends in arrears and payable on the SAILS and such
other series of Preferred Stock have been paid in full and the right of any
other series of Preferred Stock to exercise voting rights, separate from the
Class B Common Stock, to elect Preferred Stock Directors of the Company
terminates or has terminated, and, when so paid and any such termination occurs
or has occurred, such right of the holders of the SAILS will cease. The term of
office of any Director elected by the holders of the SAILS and such other series
will terminate on the earlier of (i) the next annual meeting of stockholders at
which a successor has been elected and qualified or (ii) the termination of the
right of holders of the SAILS and such other series of Preferred Stock to vote
for such Directors. The holders of Depositary Shares will be entitled to direct
the voting of the shares of SAILS represented thereby. See "Description of
Depositary Shares -- Voting of SAILS."
In addition, the approval of the holders of at least 66 2/3 percent of the
SAILS then outstanding will be required by the Company to: (i) amend, alter or
repeal any of the provisions of the Certificate of Incorporation or By-Laws of
the Company so as to affect adversely the powers, preferences or rights of the
holders of SAILS then outstanding or reduce the minimum time for any required
notice to which the holders of SAILS then outstanding may be entitled (an
amendment of the Certificate of Incorporation to authorize or create, or to
increase the authorized amount of, Class B Common Stock or other Junior Stock or
any Parity Preferred Stock (including "blank check" Preferred Stock) being
deemed not to affect adversely the powers, preferences or rights of the holders
of the SAILS); (ii) authorize or create, or increase the authorized amount of,
any stock of any class, or any security convertible into capital stock of any
class, ranking prior to the SAILS either as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Company; or (iii) merge or consolidate with or into any other corporation,
unless each holder of SAILS immediately preceding such merger or consolidation
receives or continues to hold in the resulting corporation the same number of
shares, with substantially the same rights and preferences, as correspond to the
SAILS so held.
Notwithstanding the provisions summarized in the preceding paragraph, no
such approval described therein of holders of the SAILS will be required if, at
or before the time when such amendment, alteration, or repeal is to take effect
or when the authorization, creation or increase of any such prior ranking stock
or
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<PAGE> 20
security is to be made, or when such consolidation or merger is to take effect,
as the case may be, provision is made for the redemption of all of the SAILS at
the time outstanding.
The shares of Class B Common Stock into which the SAILS (and thereby the
related Depositary Shares) are convertible have limited voting rights as more
fully described under "Description of Class B Common Stock of Advanta--Class B
Common Stock--General" in the accompanying Prospectus.
TRANSFER AGENT AND REGISTRAR
Mellon Securities Trust Company will act as transfer agent and registrar
for, and paying agent for the payment of dividends on, the SAILS.
MISCELLANEOUS
Upon issuance, the SAILS will be fully paid and nonassessable. Holders of
the SAILS have no preemptive rights. The Company will at all times reserve and
keep available out of the authorized and unissued Class B Common Stock, solely
for issuance upon the conversion or redemption of SAILS, such number of shares
of Class B Common Stock as will from time to time be issuable upon the
conversion or redemption of all of the SAILS then outstanding. SAILS that are
redeemed for, or converted into, Class B Common Stock of the Company or
otherwise reacquired by the Company will resume the status of authorized and
unissued shares of Class B Preferred Stock, undesignated as to series, and will
be available for subsequent issuance.
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DESCRIPTION OF DEPOSITARY SHARES
The following summary of the terms and provisions of the Depositary Shares
does not purport to be complete and is subject to, and qualified in its entirety
by, the Deposit Agreement (as defined below) which contains the form of the
Depositary Receipt (as defined below).
Each Depositary Share represents one-hundredth of a share of SAILS
deposited under the Deposit Agreement, dated as of August 15, 1995 (the "Deposit
Agreement"), among the Company, Mellon Securities Trust Company, as depositary
(including any successor, the "Depositary"), and the holders from time to time
of depositary receipts executed and delivered thereunder (the "Depositary
Receipts"). The purchasers of the Depositary Shares offered hereby will be
deemed to have entered into and agreed to the provisions of the Deposit
Agreement. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, to all the rights, preferences
and privileges of the shares of SAILS represented thereby (including dividend,
voting, conversion, and liquidation rights), and subject to all of the
limitations of the shares of SAILS represented thereby, contained in the
Certificate of Designations and summarized under "Description of SAILS." The
principal executive office of Mellon Securities Trust Company is located at 120
Broadway, 13th Floor, New York, New York 10274.
The Depositary Shares are evidenced by Depositary Receipts. Copies of the
Deposit Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement forms a part, are available for
inspection at the Depositary's Office (as defined in the Deposit Agreement).
EXECUTION AND DELIVERY OF DEPOSITARY RECEIPTS
Immediately following the issuance of the shares of SAILS by the Company,
the shares of SAILS will be deposited by the Company with the Depositary, which
will then execute and deliver the Depositary Receipts to the Underwriters.
Depositary Receipts will be executed and delivered evidencing only whole
Depositary Shares.
WITHDRAWAL OF SAILS
Upon surrender of Depositary Receipts at the Depositary's Office, the owner
of the Depositary Shares evidenced thereby is entitled to delivery at such
office of certificates evidencing the number of shares of SAILS (but only in
whole shares of SAILS) represented by such Depositary Receipts. If the
Depositary Receipts delivered by the holders evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of SAILS to be withdrawn, the Depositary will at the same time
deliver to such holder a new Depositary Receipt or Receipts evidencing such
excess number of Depositary Shares. In no event will fractional shares of SAILS
(or cash in lieu thereof) be distributed by the Depositary. Consequently, a
holder of a Depositary Receipt representing a fractional share of SAILS would be
able to liquidate his position only by sale of the Depositary Shares evidenced
thereby to a third party (in a public trading market transaction or otherwise)
unless the Depositary Shares are redeemed by the Company or converted by the
holder. The Company does not expect that there will be any public trading market
for the shares of SAILS except as represented by the trading market for the
Depositary Shares.
CONVERSION AND CALL PROVISIONS
Mandatory Conversion or Call. As described under "Description of
SAILS--Mandatory Conversion," "--Optional Redemption" and "--Conversion
Adjustments," the shares of SAILS are subject to mandatory conversion into
shares of Class B Common Stock on the Mandatory Conversion Date, and to the
right of the Company to call the shares of SAILS, at the Company's option, for
redemption. The Depositary Shares are subject to mandatory conversion or call
upon substantially the same terms and conditions (including as to notice to the
owners of Depositary Shares) as the shares of SAILS, except that the number of
shares of Class B Common Stock received upon mandatory conversion or redemption
of each Depositary Share will be equal to the number of shares of Class B Common
Stock received upon mandatory conversion or redemption of each share of SAILS
divided by 100.
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<PAGE> 22
If fewer than all of the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be selected by lot or pro rata or by any
other equitable method determined by the Depositary to be consistent with the
method determined by the Board of Directors with respect to the shares of SAILS.
If fewer than all of the Depositary Shares evidenced by a Depositary Receipt are
called for redemption, the Depositary will deliver to the holder of such
Depositary Receipt upon its surrender to the Depositary, together with the
redemption payment, a new Depositary Receipt evidencing the Depositary Shares
evidenced by such prior Depositary Receipt and not called for redemption.
Conversion at the Option of the Holder. As described under "Description of
SAILS--Conversion at the Option of the Holder," the shares of SAILS may be
converted, in whole or in part, into shares of Class B Common Stock at the
option of the holder of shares of SAILS at any time prior to the Mandatory
Conversion Date, unless previously redeemed. The Depositary Shares may, at the
option of holders thereof, be converted into shares of Class B Common Stock upon
substantially the same terms and conditions as the shares of SAILS, except that
the number of shares of Class B Common Stock received upon conversion of each
Depositary Share will be equal to the number of shares of Class B Common Stock
received upon conversion of each share of SAILS divided by 100. To effect such
an optional conversion, a holder of Depositary Shares must deliver Depositary
Receipts evidencing the Depositary Shares to be converted, together with a
written notice of conversion and a proper assignment of the Depositary Receipts
to the Company or in blank, to the Depositary or its agent. Each optional
conversion of Depositary Shares shall be deemed to have been effected
immediately prior to the close of business on the date on which all of the
foregoing requirements shall have been satisfied. The conversion shall be at the
Optional Conversion Rate in effect at such time and on such date, adjusted to
reflect the fact that 100 Depositary Shares are the equivalent of one share of
SAILS.
Shares of SAILS may be converted in part so long as such shares are held by
the Depositary pursuant to the Deposit Agreement. A share of SAILS delivered to
a holder of Depositary Receipts other than the Depositary upon surrender of
Depositary Receipts may be converted in whole but not in part. If only a portion
of the Depositary Shares evidenced by a Depositary Receipt is to be converted, a
new Depositary Receipt or Receipts will be issued for any Depositary Shares not
converted. No fractional shares of Class B Common Stock will be issued upon
conversion or redemption of Depositary Shares, and, if such conversion or
redemption would otherwise result in a fractional share of Class B Common Stock
being issued, an amount will be paid in cash as described in "Description of
SAILS--Fractional Shares" or as set forth in the Deposit Agreement.
After the date fixed for conversion or redemption, the Depositary Shares
that are converted or called for redemption will no longer be deemed to be
outstanding and all rights of the holders of such Depositary Shares will cease,
except the right to receive the Class B Common Stock and amounts payable on such
conversion or redemption and any money or other property to which the holders of
such Depositary Shares were entitled upon such conversion or redemption, upon
surrender to the Depositary of the Depositary Receipt or Receipts evidencing
such Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions in respect of the shares of SAILS to the record holders of
Depositary Shares in proportion, insofar as practicable, to the number of
Depositary Shares owned by such holders. See "Description of SAILS--Dividends."
In the event of a distribution other than cash in respect of the shares of
SAILS, the Depositary will distribute property received by it to the record
holders of Depositary Shares in proportion, insofar as practicable, to the
number of Depositary Shares owned by such holders, unless the Depositary
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including sale (at public or private sale) of such property and distribution of
the net proceeds from such sale to such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
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<PAGE> 23
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the shares of SAILS,
or (ii) the Depositary shall receive notice of any meeting at which holders of
shares of SAILS are entitled to vote or of which holders of shares of SAILS are
entitled to notice or of any election on the part of the Company to call for
redemption any shares of SAILS, the Depositary shall in each such instance fix a
record date (which shall be the same date as the record date for the shares of
SAILS) for the determination of the holders of Depositary Shares (x) who shall
be entitled to receive such dividend, distribution, rights, preferences, or
privileges or the net proceeds of the sale thereof, (y) who shall be entitled to
give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or (z) who shall be subject to such redemption,
subject to the provisions of the Deposit Agreement.
VOTING OF SAILS
Upon receipt of notice of any meeting at which holders of shares of SAILS
are entitled to vote, the Depositary will mail the information contained in such
notice of meeting to the record holders of Depositary Shares. Each record holder
of Depositary Shares on the record date (which will be the same date as the
record date for the shares of SAILS) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the number of shares of
SAILS represented by such holder's Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the number of shares of SAILS
represented by such Depositary Shares in accordance with such instructions, and
the Company has agreed to take all reasonable action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting shares of SAILS to the extent it
does not receive specific written voting instructions from the holders of
Depositary Shares representing such shares of SAILS. See "Description of
SAILS--Voting Rights."
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment that imposes any fees, taxes or other charges payable by
holders of Depositary Shares (other than taxes and other governmental charges,
fees, and other expenses payable by such holders as stated under "Charges of
Depositary"), or that otherwise prejudices any substantial existing right of
holders of Depositary Shares, will not take effect as to outstanding Depositary
Shares until the expiration of 90 days after notice of such amendment has been
mailed to the record holders of outstanding Depositary Shares. Every holder of
Depositary Shares at the time any such amendment becomes effective shall be
deemed to consent and agree to such amendment and to be bound by the Deposit
Agreement, as so amended. In no event may any amendment impair the right of any
owner of Depositary Shares, subject to the conditions specified in the Deposit
Agreement, upon surrender of the Depositary Receipts evidencing such Depositary
Shares, to receive shares of SAILS or, upon conversion or redemption of the
shares of SAILS, an interest in which is represented by the Depositary Shares,
to receive shares of Class B Common Stock, and in each case any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record holders
of all Depositary Shares then outstanding at least 30 days prior to the date
fixed in such notice for such termination. The Depositary may likewise terminate
the Deposit Agreement if at any time 45 days shall have expired after the
Depositary shall have delivered to the Company a written notice of its election
to resign and a successor depositary shall not have been appointed and accepted
its appointment. If any Depositary Shares are then outstanding after the date of
termination, the Depositary thereafter will discontinue the transfer of
Depositary Shares, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the
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Depositary will continue (i) to collect dividends on the shares of SAILS and any
other distributions with respect thereto and (ii) to deliver the shares of SAILS
together with such dividends and distributions and the net proceeds of any sales
of rights, preferences, privileges, or other property, without liability for
interest thereon, in exchange for Depositary Shares surrendered. At any time
after the expiration of two years from the date of termination, the Depositary
may sell the shares of SAILS then held by it at public or private sale, at such
place or places and upon such terms as it deems proper and may thereafter hold
the net proceeds of any such sale, together with any money and other property
then held by it, without liability for interest thereon, for the pro rata
benefit of the holders of Depositary Shares which have not been surrendered. The
Company does not intend to terminate the Deposit Agreement or to permit the
resignation of the Depositary without appointing a successor depositary. In the
event the Deposit Agreement is terminated (whether by the Company or by the
Depositary) and a sufficient number of shares of SAILS remain outstanding, the
Company will use its best efforts to cause the shares of SAILS to be split 100
to one (subject to adjustments) (so that each Depositary Share then represents
one share of SAILS) and to have the shares of SAILS included for quotation on
the Nasdaq National Market (unless the holders of a majority of the outstanding
shares of SAILS shall consent to the Company not effecting such listing).
CHARGES OF DEPOSITARY
The Company will pay all charges of the Depositary, including charges in
connection with the initial deposit of the shares of SAILS, the initial
execution and delivery of the Depositary Receipts, the distribution of
information to the holders of Depositary Shares with respect to matters on which
shares of SAILS are entitled to vote, withdrawals of the shares of SAILS by the
holders of Depositary Shares, or redemption or conversion of the shares of
SAILS, except for taxes (including transfer taxes, if any) and other
governmental charges and such other charges as are provided in the Deposit
Agreement to be at the expense of holders of Depositary Shares or persons
depositing shares of SAILS.
GENERAL
The Depositary will make available for inspection by holders of Depositary
Receipts at the Depositary's Office any reports and communications from the
Company that are delivered to the Depositary and made generally available to the
holders of the shares of SAILS.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing its
obligations under the Deposit Agreement.
In accordance with the provisions of the Deposit Agreement, holders of
Depositary Shares may be required from time to time to file such proof of
residence or other information, to execute such certificates and to make such
representations and warranties as the Depositary or the Company may reasonably
deem necessary or proper.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion represents the opinion of the Company's counsel,
Wolf, Block, Schorr and Solis-Cohen ("Wolf, Block"), as to certain of the
material United States federal income tax consequences of the purchase,
ownership and disposition of the Depositary Shares (relating to the shares of
SAILS). The Company does not intend to seek a ruling from the Internal Revenue
Service ("IRS") with respect to any of these tax consequences. This summary is
based upon laws, including certain amendments to the Internal Revenue Code of
1986, as amended (the "Code"), that have not yet been subject to definitive
interpretation by the IRS or the courts, and upon Treasury Regulations, rulings
and judicial decisions now in effect, all of which are subject to change
(possibly on a retroactive basis). There can be no assurance that future changes
in applicable law or administrative and judicial interpretations thereof will
not adversely affect the tax consequences summarized herein or that there will
not be differences of opinion as to the interpretation of applicable law.
Securities having terms closely resembling those of the SAILS (and the related
Depositary Shares) have not been the subject of any regulation, ruling or
judicial decision currently in effect, and there can be no assurance that the
IRS will adopt the positions set forth below. This summary does not discuss all
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<PAGE> 25
aspects of federal income taxation that may be relevant to a particular holder
in light of his or its individual investment circumstances (for example, persons
who hold the Depositary Shares as part of a "straddle," "hedging transaction" or
"conversion transaction") or to certain types of holders subject to special
treatment under the federal income tax laws (for example, banks, life insurance
companies, securities brokers and dealers and tax-exempt organizations), nor
does it discuss any aspect of state, local or foreign taxation. This summary
also assumes that all of the SAILS (and the related Depositary Shares) are or
will be held by the holders thereof as capital assets as defined in the Code.
This summary does not discuss the tax consequences to a person who is a
shareholder, partner, or beneficiary of a holder of the Depositary Shares. In
addition, except to the extent discussed below, this summary is generally
limited to the federal income tax consequences to a "U.S. Holder." For this
purpose, a U.S. Holder is (i) a citizen or resident of the United States, (ii)a
corporation or partnership created or organized in the United States or under
the laws of the United States or any state thereof, or (iii) an estate or trust
whose income is includable in gross income for federal income tax purposes
regardless of its source.
THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION PURPOSES
ONLY. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF THE DEPOSITARY SHARES IS URGED TO
CONSULT A TAX ADVISOR WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES OF
PURCHASING, OWNING AND DISPOSING OF THE DEPOSITARY SHARES, AS WELL AS ANY OTHER
FEDERAL TAX CONSEQUENCES AND ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS
OF ANY STATE, LOCAL OR FOREIGN JURISDICTION.
DIVIDENDS
Dividends paid on the SAILS (and thereby the related Depositary Shares)
will be taxable as ordinary income to the extent of the Company's current or
accumulated earnings and profits. Dividends received by corporations out of such
earnings and profits generally will qualify for the 70% dividends-received
deduction, so long as the holder had held its Depositary Shares for the
requisite period of time (generally more than 45 days) and the Depositary Shares
were not acquired with borrowed funds directly attributable to the investment in
the Depositary Shares under Section 246A of the Code. Where the
dividends-received deduction is available, a portion of the amount deducted may
have to be included by a corporation in computing its alternative minimum
taxable income for the purpose of ascertaining its liability for alternative
minimum tax.
Under Section 1059(a) of the Code, a corporate holder of Depositary Shares
that receives an "extraordinary dividend" generally will be required, if it has
not held the Depositary Shares for more than two years as of the date the
dividend was announced, to reduce its tax basis in the Depositary Shares by the
portion of the extraordinary dividend that was not taxed because of the
dividends-received deduction. The definition of an extraordinary dividend is
contained in Section 1059(c) of the Code. In most circumstances, the quarterly
dividends on the Depositary Shares, if not in arrears, are not likely to be
extraordinary dividends under Section 1059(c) of the Code.
In addition, Section 1059(f) of the Code states that any dividend received
with respect to "disqualified preferred stock" will be treated as an
extraordinary dividend subject to Section 1059(a) of the Code (regardless of the
period over which the holder has held the stock). Disqualified preferred stock
is any stock preferred as to dividends if (i) the issue price for such stock
exceeds its liquidation rights or its stated redemption price, (ii) when issued,
such stock has a dividend rate which declines (or can reasonably be expected to
decline) in the future, or (iii) such stock is otherwise structured to avoid the
other provisions of Section 1059 and to enable corporate stockholders to reduce
tax through a combination of the dividends-received deduction and a loss on the
disposition of the stock.
The IRS could assert that Section 1059(f) of the Code requires all
dividends on the Depositary Shares to be treated as extraordinary because the
issue price of the Depositary Shares could exceed the value of the Class B
Common Stock issued upon conversion if such Class B Common Stock declines in
value after issuance of the Depositary Shares. The IRS has not issued any
regulations implementing this provision, although it has express authority to do
so, nor has it issued any rulings interpreting the provision. Although the issue
is not free from doubt, Wolf, Block does not believe that the provisions of
Section 1059(f) should apply
S-25
<PAGE> 26
to the Depositary Shares. Nevertheless, the IRS could issue regulations that
could affect this conclusion and such regulations could be applied
retroactively.
REDEMPTION PREMIUM
Under Section 305 of the Code and related Treasury Regulations, if the
redemption price of redeemable preferred stock exceeds its issue price, and such
redemption premium is not considered reasonable, such premium may be taxable in
certain circumstances as a constructive dividend taken into account by the
holder each year, generally in the same manner as original issue discount would
be taken into account were the preferred stock treated as a debt instrument for
federal income tax purposes. Any such constructive dividends would be subject to
the same rules applicable to the stated quarterly dividends, as described in the
discussion of "Dividends" above. Such constructive dividends would also be taken
into account for purposes of applying the extraordinary dividend rules of
Section 1059 of the Code, and the amount or period over which such constructive
dividends are taken into account could in certain circumstances cause some or
all of the stated quarterly dividends to be treated as extraordinary dividends.
The IRS has not issued any regulations implementing this provision, although it
has express authority to do so, nor has it issued any rulings interpreting the
provision. While the issue is not free from doubt, Wolf, Block believes that no
amount should be included in gross income on account of any redemption premium
under Section 305 of the Code. Nevertheless, the IRS could issue regulations
that could affect this conclusion and such regulations could be applied
retroactively.
CONVERSION INTO CLASS B COMMON STOCK
As a general rule, no gain or loss will be recognized by a stockholder upon
the conversion of the SAILS (and thereby the related Depositary Shares) into
shares of Class B Common Stock. Income will generally be recognized, however, to
the extent Class B Common Stock is received in payment of dividends in arrears.
Such income should be treated as dividend income, with the consequences
discussed above under "Dividends." In addition, gain or loss may be recognized
to the extent that a stockholder receives cash in lieu of fractional shares of
Class B Common Stock. Such gain or loss should be capital gain or loss measured
by the difference between the cash received for the fractional share interest
and the holder's basis in the fractional share interest.
Generally, a holder's basis in the Class B Common Stock received upon
conversion of the Depositary Shares, other than shares of Class B Common Stock
taxed as dividends upon receipt, will equal the adjusted tax basis of the
converted Depositary Shares (exclusive of any basis allocable to a fractional
share interest) and the holding period of such Class B Common Stock will include
the holding period of the converted Depositary Shares. As a general rule, a
holder's basis in shares of Class B Common Stock taxed as dividends upon receipt
will equal the fair market value thereof and the holding period for such Class B
Common Stock will begin on the day following the conversion.
ADJUSTMENT OF CONVERSION RATE
Certain adjustments (or the failure to make adjustments) to the conversion
rate to reflect the Company's issuance of certain rights, warrants, evidences of
indebtedness, securities or other assets to holders of Class B Common Stock may
result in constructive distributions taxable as dividends to the holders of the
Depositary Shares, which may constitute (and may cause other dividends,
including regular dividends, to constitute) extraordinary dividends to corporate
holders.
CALL TREATMENT
It is possible that the IRS might assert that the Depositary Shares should
be treated for federal income tax purposes as if the purchaser (a) acquired
shares of Class B Common Stock and (b) granted to the Company a call on the
shares so acquired in exchange for payments equal to the excess of the
"dividends" paid on the Depositary Shares over the dividends paid to holders of
shares of Class B Common Stock over the period prior to conversion. Such
position, if successfully asserted, could, among other things, cause a portion
of
S-26
<PAGE> 27
the stated dividends not to be eligible for the dividends-received deduction.
Because (i) the rights embodied in the Depositary Shares do not trade separately
and (ii) the terms of the Depositary Shares differ in significant respects from
those of the Class B Common Stock, Wolf, Block believes that the Depositary
Shares should have the tax consequences set forth in the preceding sections and
should not be treated as an equity interest and a separate call, although the
IRS could assert a contrary position.
BACKUP WITHHOLDING
Under the Code, a holder of the Depositary Shares may be subject, under
certain circumstances, to "backup withholding" at a 31% rate with respect to
dividends thereon or gross proceeds or purchase price received therefor. This
withholding generally applies only if the holder (i) fails to furnish his or its
social security or other taxpayer identification number ("TIN") within a
reasonable time after the request therefor, (ii) furnishes an incorrect TIN,
(iii) fails to report properly interest or dividends, or (iv) fails, under
certain circumstances, to provide a certified statement signed under penalty of
perjury, that the TIN provided is his or its correct number and that he or it is
not subject to backup withholding. Any amount withheld from a payment to a
holder under backup withholding rules is allowable as a credit against such
holder's federal income tax liability, provided that the required information is
furnished to the IRS. Holders of the Depositary Shares should consult their tax
advisors as to their qualification for exemption from withholding and the
procedure for obtaining such exemption.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following general discussion is a summary of certain material federal
income and estate tax consequences of the purchase, ownership and disposition of
the Depositary Shares applicable to Non-U.S. Holders. A "Non-U.S. Holder" is a
holder other than a U.S. Holder. For purposes of the withholding tax on
dividends discussed below, a non-resident fiduciary of an estate or trust will
be considered a Non-U.S. Holder.
DIVIDENDS
In general, dividends (including any amounts received that are treated as
dividends as described above) paid to a Non-U.S. Holder of the Depositary Shares
will be subject to federal income tax withholding at a 30% rate unless such rate
is reduced by an applicable income tax treaty. Dividends that are effectively
connected with such holder's conduct of a trade or business in the United States
or, if a tax treaty applies, attributable to a permanent establishment, or, in
the case of an individual, a "fixed base," in the United States ("U.S. trade or
business income") are generally subject to federal income tax at regular rates,
but are not generally subject to the 30% withholding tax if the Non-U.S. Holder
files the appropriate Internal Revenue Service form with the payor. Any U.S.
trade or business income received by a Non-U.S. Holder that is a corporation may
also be subject to an additional "branch profits tax" at a 30% rate or such
lower rate as may be applicable under an income tax treaty.
Dividends paid to an address in a foreign country are presumed (absent
actual knowledge to the contrary) to be paid to a resident of such country for
purposes of the withholding tax discussed above and, under the current
interpretation of Treasury Regulations, for purposes of determining the
applicability of a tax treaty rate. Under proposed Treasury Regulations not
currently in effect, however, a Non-U.S. Holder of the Depositary Shares who
wishes to claim the benefit of an applicable treaty rate would be required to
satisfy applicable certification and other requirements, which would include
filing a form that contains the holder's name and address and an official
statement by the competent authority in the foreign country (as designated in
the applicable tax treaty) attesting to the holder's status as a resident
thereof.
A Non-U.S. Holder of the Depositary Shares that is eligible for a reduced
rate of federal withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing a claim for a refund with the
IRS.
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<PAGE> 28
DISPOSITION OF THE DEPOSITARY SHARES
Non-U.S. Holders generally will not be subject to federal income tax on any
gain recognized on a disposition of the Depositary Shares provided that: (i) the
gain is not U.S. trade or business income; (ii) the Non-U.S. Holder is not an
individual who is present in the United States for 183 or more days in the
taxable year of the disposition and who meets certain other requirements; (iii)
the Non-U.S. Holder is not subject to tax pursuant to the provisions of the
federal tax law applicable to certain United States expatriates; and (iv) either
(x) the Company is not a "United States Real Property Holding Company" for
federal income tax purposes or (y) the Non-U.S. Holder has not held, directly or
indirectly, at any time during the 5-year period ending on the date of
disposition, more than 5% of the outstanding Depositary Shares and the
Depositary Shares are "regularly traded on an established securities market."
Payments in respect of accrued and unpaid dividends that are treated as dividend
income will be taxed as provided in the section above entitled "Dividends."
FEDERAL ESTATE TAXES
In general, an individual who is a Non-U.S. Holder for federal estate tax
purposes will incur liability for federal estate tax if the fair market value of
the property included in such individual's taxable estate for federal estate tax
purposes exceeds the statutory threshold amount. Depositary Shares or shares of
Class B Common Stock owned, or treated as owned, by an individual who is a
Non-U.S. Holder at the time of death will be included in the individual's
taxable estate for federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Company must report annually to the IRS and to each Non-U.S. Holder the
amount of dividends paid to, and the tax withheld with respect to, each Non-U.S.
Holder. These reporting requirements apply whether or not withholding was
reduced or eliminated by an applicable tax treaty. Copies of these information
returns may also be made available under the provisions of a specific treaty or
agreement to the tax authorities in the country in which the Non-U.S. Holder
resides. Federal backup withholding generally will not apply to dividends paid
on the Depositary Shares to a Non-U.S. Holder at an address outside the United
States.
Non-U.S. Holders will not be subject to information reporting or backup
withholding with respect to the payment of proceeds from the disposition of the
Depositary Shares effected by the foreign office of a broker; provided, however,
that, if the broker is a U.S. person or a "U.S. related person," information
reporting (but not backup withholding) would apply unless the broker has
documentary evidence in its records as to the Non-U.S. Holder's foreign status,
or the Non-U.S. Holder certifies as to its foreign status under penalty of
perjury or otherwise establishes an exemption. For this purpose, a "U.S. related
person" is (i) a "controlled foreign corporation" for federal income tax
purposes, or (ii) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for the part of such period that the broker has been
in existence) is derived from activities that are effectively connected with the
conduct of a U.S. trade or business.
Non-U.S. Holders will be subject to information reporting and backup
withholding at a rate of 31% with respect to the payment of proceeds from the
disposition of the Depositary Shares effected by, to, or through the United
States office of a broker, U.S. or foreign, unless the Non-U.S. Holder certifies
as to its foreign status under penalty of perjury or otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a credit against such Non-U.S. Holder's
federal income tax liability, and any amounts withheld in excess of such
Non-U.S. Holder's federal income tax liability would be refunded, provided that
the required information is furnished to the IRS.
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<PAGE> 29
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated August 15, 1995 (the "Underwriting Agreement"), the underwriters
named below (the "Underwriters"), for whom CS First Boston Corporation, Salomon
Brothers Inc, Merrill Lynch, Pierce, Fenner & Smith Incorporated and William
Blair & Company are acting as the representatives (the "Representatives"), have
severally agreed to purchase from the Company the following respective numbers
of Depositary Shares.
<TABLE>
<CAPTION>
Number of
Underwriters Depositary Shares
------------------------------------------------------------- -----------------
<S> <C>
CS First Boston Corporation.................................. 370,000
Salomon Brothers Inc......................................... 370,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........... 370,000
William Blair & Company...................................... 370,000
Bear, Stearns & Co. Inc. .................................... 60,000
Alex. Brown & Sons Incorporated.............................. 60,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc. ................. 60,000
Donaldson, Lufkin & Jenrette Securities Corporation.......... 60,000
A.G. Edwards & Sons, Inc. ................................... 60,000
Fox-Pitt, Kelton Inc. ....................................... 30,000
Furman Selz Incorporated..................................... 30,000
Goldman, Sachs & Co. ........................................ 60,000
Hambrecht & Quist LLC........................................ 60,000
Keefe, Bruyette & Woods, Inc. ............................... 60,000
Lehman Brothers Inc. ........................................ 60,000
J.P. Morgan Securities Inc. ................................. 60,000
Morgan Stanley & Co. Incorporated............................ 60,000
PaineWebber Incorporated..................................... 60,000
Smith Barney Inc. ........................................... 60,000
UBS Securities Inc. ......................................... 60,000
S.G. Warburg & Co. Inc. ..................................... 60,000
Wheat, First Securities, Inc. ............................... 60,000
-----------------
Total.............................................. 2,500,000
=============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Depositary Shares offered
hereby (other than those Depositary Shares covered by the over-allotment option
referred to below) if any are purchased. The Underwriting Agreement provides
that, in the event of a default by an Underwriter, in certain circumstances the
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Company has granted to the Underwriters an option, exercisable by CS
First Boston Corporation, expiring at the close of business on the 30th day
after the date of the Prospectus Supplement, to purchase up to 375,000
additional Depositary Shares at the initial public offering price, less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus Supplement. Such option may be exercised only to cover
over-allotments in the sale of the Depositary Shares offered hereby. To the
extent such option is exercised, each Underwriter will become obligated, subject
to certain conditions, to purchase approximately the same percentage of such
additional Depositary Shares as it was obligated to purchase pursuant to the
Underwriting Agreement.
The Company has been advised by the Representatives that the Underwriters
propose to offer the Depositary Shares to the public initially at the public
offering price set forth on the cover page of this Prospectus Supplement and,
through the Representatives, to certain dealers at such price less a concession
of
S-29
<PAGE> 30
$.60 for each of the Depositary Shares, and that the Underwriters and such
dealers may allow a discount of $.10 for each of the Depositary Shares on sales
to certain other dealers. After the initial public offering, the public offering
price and concession and discount to dealers may be changed by the
Representatives.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make in respect
thereof.
The Company has agreed that, until November 15, 1995, it will not, without
the prior written consent of CS First Boston Corporation, on behalf of the
Underwriters, offer, sell, announce its intention to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Securities and Exchange
Commission a registration statement under the Securities Act relating to, any
additional shares of its Class A Common Stock or Class B Common Stock or
securities convertible into or exchangeable or exercisable for its Class A
Common Stock or Class B Common Stock, other than to or with the consent of the
Underwriters pursuant to the Underwriting Agreement, subject to certain
exceptions set forth therein.
Prior to this offering, there has been no public market for the Depositary
Shares. The initial price to the public for the Depositary Shares will be
determined by negotiation between the Company and the Representatives and will
be based on, among other things, the market price of the Company's Class B
Common Stock, the Company's financial and operating history and condition, an
assessment of the Company's recent results of operations, its prospects and the
prospects for its industry in general, the management of the Company and the
market prices for securities of companies in businesses similar to that of the
Company. There can be no assurance that an active trading market will develop
for the Depositary Shares or that the Depositary Shares will trade in the public
market subsequent to the offering at or above the initial public offering price.
The Depositary Shares have been approved for listing on the Nasdaq National
Market under the symbol "ADVNZ," subject to notice of issuance. Trading of the
Depositary Shares on the Nasdaq National Market is expected to commence within a
30 day period after the date of this Prospectus Supplement. The Representatives
have advised the Company that they intend to make a market in the Depositary
Shares prior to the commencement of trading on the Nasdaq National Market.
Certain of the Underwriters have performed various investment banking
services for the Company for which they have received customary compensation.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Depositary Shares in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Depositary Shares are effected. Accordingly, any resale of the
Depositary Shares in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction, and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Depositary Shares.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Depositary Shares in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Depositary Shares without
the benefit of a prospectus qualified under such securities laws, (ii) where
required by law, such purchaser is purchasing as principal and not as agent and
(iii) such purchaser has reviewed the text above under "Resale Restrictions."
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<PAGE> 31
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against the issuer or such
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Depositary Shares to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Depositary Shares acquired by such purchaser pursuant to this offering. Such
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #88/5, a copy of which may be obtained from the Company. Only
one such report must be filed in respect of Depositary Shares acquired on the
same date and under the same prospectus exemption.
S-31
<PAGE> 32
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary.......... S-3
Use of Proceeds........................ S-11
Price Range of Common Stock and
Dividends............................ S-11
Capitalization......................... S-12
Description of SAILS................... S-12
Description of Depositary Shares....... S-21
Certain Federal Income Tax
Consequences......................... S-24
Underwriting........................... S-29
Notice to Canadian Residents........... S-30
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Information by
Reference............................ 2
Advanta Corp........................... 3
Advanta Capital L.L.C.................. 5
Certain Ratios......................... 5
Regulation............................. 6
Use of Proceeds........................ 9
Description of Debt Securities of
Advanta.............................. 9
Description of Class B Preferred Stock
of Advanta........................... 16
Description of Class B Common Stock of
Advanta.............................. 18
Issuance of Capital Securities of
Advanta Upon Conversion or
Exchange............................. 21
Description of Securities Warrants of
Advanta.............................. 22
Description of Stock Purchase Contracts
and Stock Purchase Units of
Advanta.............................. 23
Description of Preferred Shares of
Advanta Capital...................... 24
Plan of Distribution................... 25
Legal Opinions......................... 26
Experts................................ 26
</TABLE>
------------------------------------------------------
------------------------------------------------------
(ADVANTA LOGO)
Corp.
2,500,000
Depositary Shares
Each Representing a
One-Hundredth Interest
In a Share of 6 3/4%
Convertible Class B Preferred Stock, Series 1995
(Stock Appreciation Income
Linked Securities (SAILS)(SM))
PROSPECTUS SUPPLEMENT
CS First Boston
Salomon Brothers Inc
Merrill Lynch & Co.
William Blair & Company
------------------------------------------------------
(RECYCLE LOGO)
