AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 2001
(S-4 REGISTRATION NO. 333- /S-3 REGISTRATION NO. 333- )
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(with respect to the % Convertible Trust Preferred Securities, % Convertible
Subordinated Debentures
and the Guarantee being issued in connection with the exchange offer)
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(with respect to the % Convertible Trust Preferred Securities being offered
for cash
and the related issuance of % Convertible Subordinated Debentures and the
Guarantee)
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FLEETWOOD ENTERPRISES, INC.
FLEETWOOD CAPITAL TRUST II
(Exact Name of Registrant as specified in its charter)
DELAWARE 95-1948322
DELAWARE 33-6305591
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
3125 MYERS STREET
RIVERSIDE, CALIFORNIA 92503
(909) 351-3500
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's principal executive offices)
NELSON W. POTTER
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER
FLEETWOOD ENTERPRISES, INC.
3125 MYERS STREET
RIVERSIDE, CALIFORNIA 92503
(909) 351-3500
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of agent for service)
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COPY TO:
MARK W. SHURTLEFF WINTHROP B. CONRAD, JR.
GIBSON, DUNN & CRUTCHER LLP DAVIS POLK & WARDWELL
JAMBOREE CENTER 450 LEXINGTON AVENUE
4 PARK PLAZA, SUITE 1700 NEW YORK, NY 10017
IRVINE, CA 92614 (212) 450-4000
(949) 451-3800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is filed a post-effective amendment filed pursuant to
Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
Convertible Trust Preferred Securities of
Fleetwood Capital Trust II (the "exchange
preferred securities")......................... $120,000,000 100% $120,000,000(1) $30,000(2)
Convertible Trust Preferred Securities of
Fleetwood Capital Trust II(3).................. -- -- $65,000,000(4) $16,250
Convertible Subordinated Debentures due of
Fleetwood Enterprises, Inc.(5)................. -- -- -- --
Common Stock, par value $1.00 per share(6)....... -- -- -- --
Exchange Preferred Securities Guarantee(7)....... -- -- -- --
(1) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, this amount is
the market value as of June , 2001 of the maximum amount of 6% Convertible
Trust Preferred Securities (the "existing preferred securities") that may be
received by Fleetwood Capital Trust II from tendering holders in the
exchange offer.
(2) The registration fee has been calculated pursuant to Rule 457(f) under the
Securities Act of 1933.
(3) We are registering an additional amount of exchange preferred securities to
be offered for cash to prospective investors and holders of existing
preferred securities who participate in the exchange offer.
(4) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act of 1933.
(5) Convertible Subordinated Debentures due of Fleetwood
Enterprises, Inc. (the "exchange debentures") will be issued to Fleetwood
Capital Trust II in connection with the exchange preferred securities. These
exchange debentures may be distributed, under certain circumstances, to the
holders of exchange preferred securities for no additional consideration.
(6) Such indeterminate number of shares of common stock as shall be issuable
upon conversion of the exchange preferred securities and exchange debentures
being registered hereunder and an indeterminate number of shares of common
stock that may be issued as payment of interest on the exchange debentures
and the exchange preferred securities and pursuant to anti-dilution
adjustments. Includes the associated Preferred Share Purchase Rights issued
under the Rights Agreement dated as of September 15, 1998, as amended on
April 30, 2001, by and between Fleetwood Enterprises, Inc. and Fleet
National Bank, f/k/a BankBoston, N.A., as Rights Agent. No additional
consideration shall be received for the common stock issuable upon
conversion of the exchange preferred securities and therefore no
registration fee is required pursuant to Rule 457 under the Securities Act
of 1933.
(7) Includes the rights of holders of the exchange preferred securities under
the guarantee agreement entered into by Fleetwood Enterprises, Inc.,
relating to the exchange preferred securities. No separate consideration
will be received for the Exchange Preferred Securities Guarantee and
therefore no registration fee is required pursuant to Rule 457 under the
Securities Act of 1933.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS MAY CHANGE. WE MAY NOT SELL THESE SECURITIES
UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES, AND IT IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT
THE REGISTRANTS THAT IS NOT INCLUDED IN OR DELIVERED WITH THE DOCUMENT, WHICH
INFORMATION IS AVAILABLE WITHOUT CHARGE TO SECURITY HOLDERS UPON WRITTEN OR ORAL
REQUEST BY CALLING OUR INFORMATION AGENT, , TOLL-FREE AT
(800) OR BY WRITING TO . TO OBTAIN TIMELY DELIVERY,
SECURITY HOLDERS MUST REQUEST THE INFORMATION NO LATER THAN , 2001,
FIVE BUSINESS DAYS BEFORE THE DATE THEY MUST MAKE THEIR INVESTMENT DECISION.
PROSPECTUS
[LOGO]
EXCHANGE OFFER OF
% CONVERTIBLE TRUST PREFERRED SECURITIES DUE OF FLEETWOOD CAPITAL
TRUST II
FOR THE 6% CONVERTIBLE TRUST
PREFERRED SECURITIES DUE FEBRUARY 15, 2028 OF FLEETWOOD CAPITAL TRUST
If you elect to participate in the exchange offer, you will receive from us
liquidation amount of the % Convertible Trust Preferred Securities due
of Fleetwood Capital Trust II, referred to as the "exchange
preferred securities," for each $ liquidation amount of the 6% Convertible
Trust Preferred Securities due February 15, 2028 of Fleetwood Capital Trust,
referred to as the "existing preferred securities." In conjunction with the
exchange offer, we are also offering investors the right to purchase up to an
aggregate of $ million in liquidation amount of additional exchange preferred
securities for cash.
This exchange offer will expire at 5:00 p.m., Eastern Standard Time, on July
, 2001, unless we extend the offer.
The exchange offer is subject to there being tendered in the exchange offer,
and not withdrawn, a minimum of $ million in aggregate liquidation amount
of existing preferred securities. The exchange offer and the cash offer are also
subject to the sale in the cash offer of exchange preferred securities having an
aggregate liquidation amount equal to at least % of the aggregate liquidation
amount of the exchange preferred securities subscribed for in the exchange
offer.
The exchange preferred securities will be convertible into shares of our
common stock in the manner described in this prospectus at an initial conversion
price that is equivalent to a % premium over the average of the daily volume
weighted average price of our common stock for each of the five trading days
immediately preceding the second trading day prior to the exchange offer
expiration date, subject to adjustment. The distributions on the exchange
preferred securities will be paid in cash or, at our election, in our common
stock. At any time after , 2003, we may cause the payment of
distributions on the exchange preferred securities to be deferred for up to 20
consecutive quarterly periods in the manner described in the prospectus.
We may cause all or some of the exchange preferred securities to be redeemed
at any time on or after , 2003, at the applicable redemption price
plus any accumulated and unpaid distributions, on the terms and conditions
described in this prospectus.
Prior to , 2003, if our common stock price exceeds certain targets
described in this prospectus, we may cause the exchange preferred securities to
be redeemed for a price of 100% of the liquidation amount per exchange preferred
security, plus accumulated and unpaid distributions. In the case of such
redemption prior to , 2003, we will cause additional distributions to
be paid in cash or common stock in an amount equal to two years' worth of
distributions, less any distributions that have actually been paid, on any
exchange preferred securities that are converted following the notice of
redemption and prior to the date of redemption.
Our common stock is traded on the New York Stock Exchange and the Pacific
Stock Exchange under the symbol "FLE." On June 11, 2001, the last reported sales
price for our common stock on the New York Stock Exchange was $12.75 per share.
We mailed this prospectus and the letter of transmittal on , 2001.
Please see the section titled "Risk Factors," beginning on page 19 of this
prospectus, for a discussion of factors that you should consider before you
decide to participate in this exchange offer or purchase additional exchange
preferred securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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THE DEALER MANAGER FOR THE EXCHANGE OFFER:
BANC OF AMERICA SECURITIES LLC
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This prospectus is dated , 2001.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these preferred securities in any state where the offer is not
permitted. You should not assume the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
TABLE OF CONTENTS
PAGE
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Summary..................................................... 4
Comparison of Terms of Exchange Preferred Securities
and Existing Preferred Securities......................... 11
Summary Financial Data...................................... 18
Risk Factors................................................ 19
Risks Relating to Our Business............................ 19
Risks Relating to the Exchange Offer, the Exchange
Preferred Securities
and Our Common Stock.................................... 27
Special Note Regarding Forward-Looking Statements........... 31
Use of Proceeds............................................. 31
Price Range of Common Stock................................. 32
Dividend Policy............................................. 32
Capitalization.............................................. 33
Selected Consolidated Financial Data........................ 34
Management's Discussion and Analysis........................ 36
39 Weeks Ended January 28, 2001 Compared to 40 Weeks Ended
January 30, 2000........................................ 36
Fiscal 2000 Compared to Fiscal 1999....................... 38
Fiscal 1999 Compared to Fiscal 1998....................... 40
Liquidity and Capital Resources........................... 40
Recent Developments....................................... 41
New Accounting Pronouncements............................. 43
Business.................................................... 44
General................................................... 44
Manufactured Housing...................................... 44
Manufactured Housing--Retail.............................. 45
Recreational Vehicles..................................... 46
Competitive Advantages.................................... 48
Our Business Strategy..................................... 49
Sales and Distribution of Our Products.................... 50
Financing of Our Products................................. 51
Our Principal Properties.................................. 52
Competition in Our Business............................... 52
Regulatory Issues Applicable to Our Business and
Products................................................ 53
Our Intellectual Property................................. 53
Our Relationship with Our Employees....................... 54
Legal Proceedings in Which We Are Involved................ 54
The Exchange Offer.......................................... 56
Terms of the Exchange Offer; Reasons for the Exchange
Offer;
Period for Tendering Existing Preferred Securities...... 56
Minimum Conditions........................................ 56
Expiration Date........................................... 56
2
PAGE
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Extensions; Amendments.................................... 56
Procedures for Tendering Existing Preferred Securities.... 57
Our Interpretations Are Binding........................... 58
Acceptance of Existing Preferred Securities for Exchange;
Delivery of Exchange Preferred Securities............... 59
Guaranteed Delivery Procedures............................ 59
Withdrawal Rights......................................... 60
Conditions for Completion of the Exchange Offer........... 60
Legal Limitation.......................................... 62
Fees and Expenses......................................... 62
Exchange Agent............................................ 63
Consequences of Exchanging or Failing to Exchange Existing
Preferred Securities.................................... 63
Cash Offer for Additional Exchange Preferred Securities..... 64
Fleetwood Capital Trust..................................... 65
Fleetwood Capital Trust II.................................. 66
Description of Preferred Securities......................... 68
Description of the Exchange Preferred Securities.......... 68
Description of the Exchange Preferred Securities
Guarantee............................................... 89
Description of the Exchange Debentures.................... 94
Relationship Among the Exchange Preferred Securities, the
Exchange Debentures and the Exchange Preferred
Securities Guarantee.................................... 107
Description of the Existing Preferred Securities, Existing
Preferred Securities Guarantee and Existing
Debentures.............................................. 109
Description of Our Capital Stock............................ 111
Capital Stock............................................. 111
Rights.................................................... 111
United States Federal Income Tax Considerations............. 113
Classification of the Exchange Debentures................. 113
Classification of the New Trust........................... 114
Treatment of Exchange Offer............................... 114
Tax Treatment of the Ownership and Disposition of Exchange
Preferred Securities and Common Stock................... 115
Non-U.S. Holders.......................................... 119
Plan of Distribution........................................ 121
Identity and Background of Filing Persons and Security
Ownership of Certain Beneficial Owners and Management..... 123
Legal Matters............................................... 127
Experts..................................................... 127
Where You Can Find Additional Information................... 127
3
SUMMARY
This summary does not contain all the information you should consider before
exchanging your existing preferred securities for the exchange preferred
securities or investing in additional exchange preferred securities. You should
read this entire prospectus carefully. Unless otherwise indicated, "we," "us,"
"our" and similar terms refer to Fleetwood Enterprises, Inc. Throughout this
prospectus, we use the term "fiscal," as it applies to a year, to represent the
fiscal year ending on the last Sunday in April. When we refer to a specific
fiscal year, the year reference is to the calendar year in which the fiscal year
ends. For example, "fiscal 2001" represents the fiscal year that ends on
April 29, 2001. Similarly, our fiscal quarters end on the last Sunday of each of
the months of July, October, January and April.
FLEETWOOD ENTERPRISES, INC.
We are the nation's largest manufacturer of recreational vehicles, including
motor homes, travel trailers, folding trailers and slide-in truck campers, and
one of the nation's largest producers and retailers of manufactured housing. For
the 39 weeks ended January 28, 2001, we sold 45,849 recreational vehicles. In
calendar 2000, we had a 23% share of the overall recreational vehicle market,
consisting of a 22% share of the motor home market, a 19% share of the travel
trailer market and a 40% share of the folding trailer market, and in each of
these categories we held the leading market share. For the 39 weeks ended
January 28, 2001, we shipped 29,272 manufactured homes and were the second
largest producer of HUD-Code homes in the United States in terms of units sold.
In calendar 2000, we also had a 3% share of the single-family housing market and
an 18% share of the manufactured housing market.
Our manufacturing activities are conducted in 17 states within the U.S., and
to a much lesser extent in Canada. In addition, we operate five supply companies
that provide components for our manufactured housing and recreational vehicle
operations, while also generating outside sales.
We entered the manufactured housing retail business in fiscal 1999 through a
combination of key acquisitions and internal development of new retail sales
centers. At January 28, 2001, we controlled 237 retail sales locations in 25
states, and were one of the four largest retailers of manufactured homes in the
U.S.
Our business began in 1950 and our principal executive offices are located
at 3125 Myers Street in Riverside, California 92503, and our telephone number is
(909) 351-3500. Fleetwood Capital Trust and Fleetwood Capital Trust II are
wholly owned subsidiaries of ours and, accordingly, we are deemed an affiliate
of each of these entities, which are also affiliates of each other.
FLEETWOOD CAPITAL TRUST
Fleetwood Capital Trust, referred to as the "existing trust," is a Delaware
business trust. The existing trust was organized in 1998 for the sole purpose of
issuing the existing preferred securities and the existing common securities and
investing the proceeds of that issuance in an equivalent principal amount of 6%
Convertible Subordinated Debentures due February 15, 2028, also referred to as
the "existing debentures." The existing trust's assets consist principally of
the existing debentures and payments under the existing debentures are its sole
source of revenue. The principal executive offices of the existing trust are
located at 3125 Myers Street in Riverside, California 92503, and its telephone
number is (909) 351-3500.
FLEETWOOD CAPITAL TRUST II
Fleetwood Capital Trust II, referred to as the "new trust," is a Delaware
business trust. The new trust was organized in 2001 for the sole purpose of
issuing the exchange preferred securities and the new common securities in
exchange for % Convertible Subordinated Debentures due
4
in an equivalent principal amount, referred to as the "exchange debentures." The
new trust's assets consist principally of the exchange debentures and payments
under the exchange debentures are its sole source of revenue. The principal
executive offices of the new trust are located at 3125 Myers Street in
Riverside, California 92503, and its telephone number is (909) 351-3500.
OUR REFINANCING PLAN
We are offering to exchange the exchange preferred securities for the
existing preferred securities, and we are also offering to sell up to $ million
in aggregate liquidation amount of exchange preferred securities for cash.
We are making the exchange offer to enhance our balance sheet by reducing
overall debt and increasing shareholders' equity. The proceeds of the cash offer
will be used primarily to pay the taxes we expect to incur as a result of the
cancellation upon exchange of the existing debentures supporting the tendered
existing preferred securities. We expect that this cancellation will result in
taxable income to us. If all of the existing preferred securities are tendered
into the exchange offer, we anticipate incurring a tax liability of
approximately $ million. If the exchange offer and the cash offer are fully
subscribed, we will have reduced our aggregate principal amount of debt
outstanding by approximately $ million and enhanced our shareholders' equity by
approximately $ million. The effect of these offers on our cash flow will
be determined once we have set the terms of the offers prior to commencement. We
anticipate that the effect of the offers on our balance sheet will be to provide
us with greater flexibility in exploring financing opportunities in the future.
The exchange offer is an integral part of a larger program to reduce our
debt obligations and to remedy prior covenant defaults in our existing senior
notes. In February 2001, we notified The Prudential Insurance Company of America
that we were in violation of certain balance sheet covenants related to our
senior unsecured notes payable to Prudential. At the same time, we informed
Prudential that we intended to remedy the violations through a debt
restructuring based upon a proposal from Bank of America to provide us with a
loan commitment for a senior secured credit facility totaling $260 million.
Following negotiations with Prudential, we entered into a forbearance
agreement with Prudential dated April 23, 2001. Under the terms of the
agreement, Prudential agreed to delay the enforcement of its remedies,
principally involving acceleration of its debt. We have since agreed to a
principal repayment on one of the Prudential notes in the amount of
$4.3 million, plus accrued interest. Meanwhile, we have received a commitment
for financing from Bank of America, subject to certain conditions, and we are in
the process of negotiating the terms of the financing proposed by Bank of
America.
The secured facility led by Bank of America will be structured as a
three-year, $230 million syndicated revolver with an additional $30 million
available as a one-year term loan. We can give no assurance that we will be able
to execute definitive documentation with Bank of America. In any event, the
closing of the facility would be subject to certain contingencies, including the
successful syndication of the facility and the absence of material adverse
changes in our business and operations. The facility is to be secured by
substantially all of our assets except certain inventories and the cash value of
our company-owned life insurance. If it can be completed, we believe the new
facility would be completed and funded during our first quarter in fiscal 2002.
5
If we obtain funds from the new facility, we intend to apply them as
follows:
- To utilize approximately $80 million to retire the remaining principal
balance of the Prudential notes, along with payment of interest and a
yield maintenance penalty;
- To reduce our outstanding retail flooring liability to Conseco;
- To retire the remaining balance of motor home chassis flooring at the time
of funding;
- To secure standby letters of credit that primarily underwrite self-insured
workers compensation programs at manufacturing plants in various states;
and
- To utilize the remainder, net of an excess required by Bank of America
pursuant to the loan agreement, for general corporate purposes.
6
OUR EXCHANGE OFFER
We have summarized the terms of the exchange offer in this section. Before
you decide whether to tender your existing preferred securities in this offer,
you should read the detailed description of the offer under "The Exchange Offer"
and of the exchange preferred securities under "Description of Preferred
Securities" for further information.
Terms of the Exchange Offer.......................... We are offering up to an aggregate of $
million in liquidation amount of new %
Convertible Trust Preferred Securities due
for up to an aggregate of
$287.5 million in liquidation amount of 6%
Convertible Trust Preferred Securities due
February 15, 2028. We are offering to exchange
$ liquidation amount of exchange preferred
securities for each $ liquidation amount of
existing preferred securities. You may tender
all, some or none of your existing preferred
securities. We will pay distributions on the
exchange preferred securities in cash or, at
our election, in shares of our common stock,
par value $1.00 per share.
Conversion Price..................................... The exchange preferred securities will be
convertible into shares of our common stock at
any time prior to maturity at an initial
conversion price that is equivalent to a %
premium over the average of the daily volume
weighted average price of the common stock for
each of the five trading days immediately
preceding the second trading day prior to the
exchange offer expiration date, subject to
adjustment.
To ascertain the conversion price to be used
two days prior to the expiration date, holders
may call .
Expiration Date; Extension; Termination.............. The exchange offer and withdrawal rights will
expire at 5:00 p.m., Eastern Standard Time, on
, 2001, or any subsequent date to
which we extend it. We may extend the
expiration date for any reason. In the case of
any extension, we will issue a press release
or other public announcement no later than
9:00 a.m., Eastern Standard Time, on the next
business day after the previously scheduled
expiration date. You must tender your existing
preferred securities prior to this date if you
wish to participate in the offer. We have the
right to:
- extend the period during which the exchange
offer is open and retain all tendered
existing preferred securities, subject to
your right to withdraw your tendered
preferred securities, or
7
- waive any condition or otherwise amend the
terms of the exchange offer in any respect,
other than the condition that the
registration statement be declared
effective.
Conditions to the Exchange Offer..................... The exchange offer is subject to:
- the registration statement and any
post-effective amendment to the registration
statement covering the exchange preferred
securities being effective under the
Securities Act of 1933;
- an aggregate liquidation amount of a minimum
of $ million of existing preferred
securities being tendered into the exchange
offer and not withdrawn;
- an aggregate liquidation amount of exchange
preferred securities being purchased in our
cash offer, described below, equal to at
least % of the aggregate liquidation
amount of exchange preferred securities
subscribed for in the exchange offer; and
- other customary conditions.
Please read the section titled "The Exchange
Offer--Conditions for Completion of The
Exchange Offer," beginning on page 60 of this
prospectus, for more information.
Withdrawal Rights.................................... You may withdraw a tender of your existing
preferred securities at any time before the
exchange offer expires by delivering a written
notice of withdrawal to , the
exchange agent, before the expiration date. If
you change your mind, you may retender your
existing preferred securities by again
following the exchange offer procedures before
the exchange offer expires.
You may also withdraw a tender of your
existing preferred securities after the
expiration of 40 business days from the
commencement date of the exchange offer if
your tender has not yet been accepted for
payment.
Procedures for Tendering Existing Preferred
Securities........................................... If you hold existing preferred securities
through a broker, dealer, commercial bank,
trust company or other nominee, you should
contact that person promptly if you wish to
tender your existing preferred securities.
Tenders of your existing preferred securities
will be effected by book-entry transfers
through The Depository Trust Company.
If you hold your existing preferred securities
through a broker, dealer, commercial bank,
trust
8
company or other nominee, you may also comply
with the procedures for guaranteed delivery.
Please do not send letters of transmittal to
us. You should send those letters to
, the exchange agent. The exchange
agent can answer your questions regarding how
to tender your existing preferred securities.
Distributions........................................ Distributions on the exchange preferred
securities will be payable, in cash, or, at
our election, in our common stock, payable on
February 15, May 15, August 15 and
November 15 of each year, beginning
August 15, 2001.
Exchange Agent.......................................
Information Agent....................................
For information regarding the exchange offer,
please call toll-free at .
Dealer Manager....................................... Banc of America Securities LLC.
Risk Factors......................................... You should consider carefully the matters
described under "Risk Factors," beginning on
page 19 of this prospectus, as well as other
information set forth in this prospectus and
in the letter of transmittal.
Deciding Whether to Participate in the
Exchange Offer....................................... Neither we nor our officers or directors make
any recommendation as to whether you should
tender or refrain from tendering all or any
portion of your existing preferred securities
in the exchange offer. Further, we have not
authorized anyone to make any such
recommendation. You must make your own
decision as to whether to tender your existing
preferred securities in the exchange offer
and, if so, the aggregate amount of existing
preferred securities to tender after reading
this prospectus and the letter of transmittal
and consulting with your advisers, if any,
based on your own financial position and
requirements.
Consequences of Not Exchanging Existing Preferred
Securities........................................... If you do not exchange your existing preferred
securities in the exchange offer, our
obligation to make payments that are
distributed to you as holders of the existing
preferred securities will be subordinated to
our obligation to make payments that are
distributed to holders of the exchange
preferred securities. Further, the liquidity
of the trading market for existing preferred
securities not tendered for exchange could be
adversely affected to the extent that existing
preferred securities are tendered and accepted
for exchange in the exchange offer.
9
Tax Consequences..................................... Please see the section titled "United States
Federal Income Tax Considerations," beginning
on page 113 of this prospectus.
OUR CASH OFFER
Cash Offer for Additional Exchange Preferred
Securities........................................... We will offer up to an aggregate of $ million
in liquidation amount of additional exchange
preferred securities for cash pursuant to the
cash offer. The discussion under the section
titled "Cash Offer for Additional Exchange
Preferred Securities," beginning on page 64 of
this prospectus, provides further information
regarding the cash offer.
Use of Proceeds...................................... We will not receive any proceeds from the
exchange offer. We will use proceeds from the
sale of additional exchange preferred
securities to pay taxes we expect to incur as
a result of the exchange offer. We will use
any additional proceeds of the cash offer for
general corporate purposes.
Placement Agent...................................... Banc of America Securities LLC. Banc of
America Securities LLC's duties as placement
agent are undertaken on a best efforts basis
only. Banc of America Securities LLC is not
making a commitment to take or purchase
exchange preferred securities from us and has
not assured us that these securities will be
placed successfully in the cash offer.
Conditions to the Cash Offer......................... The cash offer is subject to:
- the sale of exchange preferred securities
having an aggregate liquidation value equal to
at least % of the aggregate
liquidation amount of the exchange preferred
securities subscribed for in the exchange
offer; and
- other customary conditions.
10
COMPARISON OF TERMS OF
EXCHANGE PREFERRED SECURITIES AND EXISTING PREFERRED SECURITIES
The following is a brief summary of the terms of the exchange preferred
securities and existing preferred securities. For a more complete description,
see the section titled "Description of Preferred Securities--Description of the
Exchange Preferred Securities," beginning on page 68 of this prospectus.
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
Title.................... % Convertible Trust Preferred 6% Convertible Trust Preferred
Securities due . Securities due February 15, 2028.
Preferred Securities..... Up to an aggregate of $ An aggregate of $287.5 million in
million in liquidation amount of liquidation amount of existing
exchange preferred securities. preferred securities. Each
Each exchange preferred security existing preferred security
represents a preferred undivided represents a preferred undivided
beneficial interest in the assets beneficial interest in the assets
of the issuer. of the issuer.
Issuer................... Fleetwood Capital Trust II, a Fleetwood Capital Trust, a
Delaware business trust. The Delaware business trust. The
address of the new trust's address of the existing trust's
principal office is 3125 Myers principal office is c/o Fleetwood
Street in Riverside, California Enterprises, Inc., 3125 Myers
92503, and its telephone number Street, Riverside, California
is (909) 351-3500. 92503, and its telephone number
is (909) 351-3500.
Common Securities........ The new trust will issue its new The existing trust issued its
common securities to us. The new existing common securities to us.
common securities represent The existing common securities
common undivided beneficial represent common undivided
interests in the assets of the beneficial interests in the
trust. We will own all of the new assets of the trust. We own all
common securities. of the existing common
securities.
Debentures............... In consideration for the new The existing trust used the
trust issuing the exchange proceeds from the sale of the
preferred securities, we will existing preferred securities to
issue the % Convertible purchase from us 6% Convertible
Subordinated Debentures due Subordinated Debentures due
to the new trust. The February 15, 2028. The existing
exchange debentures will have the debentures have the same
same financial terms as the financial terms as the existing
exchange preferred securities, preferred securities, including
including conversion rights. conversion rights.
Distributions............ Distributions on the exchange Distributions on the existing
preferred securities will be preferred securities are payable
payable in cash or, at our in cash at a rate of 6% per year
election, in our common stock, at of the liquidation amount of $50
a rate of % per year of the per existing preferred security.
liquidation amount of $ per Distributions are payable
exchange preferred security. quarterly in arrears on February
Holders of the exchange preferred 15, May 15, August 15 and
securities will be given notice November 15 of each year, unless
of an election to pay interest we defer interest
11
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
in common stock instead of cash payments on the existing
no later than the relevant record debentures.
date, which will be the 15th day
before the relevant distribution
payment date. We cannot determine
at this time whether we will in
fact elect to cause distributions
to be paid on our exchange
preferred securities in shares of
our common stock. If business
conditions or our operating
conditions do not improve from
current conditions, it would
increase the likelihood that we
would cause distributions to be
paid in common stock in the near
term. As a result of our having
the right to elect to pay
interest in shares of our common
stock, the interest payments will
not be deductible by us for
income tax purposes. If we cause
distributions to be paid in our
common stock, the shares of
common stock will be valued at
90% of the average of the closing
prices for the five trading days
immediately preceding the second
trading day prior to the
distribution payment date.
Distributions will be payable
quarterly in arrears on February
15, May 15, August 15 and
November 15 of each year,
commencing August 15, 2001,
unless we defer interest payments
on the exchange debentures.
Distribution Deferral.... Same terms for the exchange We can, on one or more occasions,
preferred securities and exchange defer interest payments on the
debentures as for the existing existing debentures for up to 20
preferred securities and existing consecutive quarterly periods
debentures, except that we may unless we are in default in the
not defer interest payments on payment of interest on the
the exchange debentures or debentures. Interest payments are
distributions on the exchange not due and payable on the
preferred securities prior to existing debentures during a
, 2003. deferral period. We cannot,
however, defer interest payments
beyond the maturity date of the
existing debentures, which is
February 15, 2028. If we defer
interest payments on the existing
debentures, the existing trust
defers distribution
12
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
payments on the existing
preferred securities and the
existing common securities.
During a deferral period,
distributions continue to
accumulate on the existing
preferred securities. Additional
cash distributions will
accumulate on any deferred
distributions.
Compounded interest accrues on
any deferred interest payments.
While interest payments on the
existing debentures are deferred,
we are generally not permitted to
pay any dividend on or purchase
any shares of our capital stock
or pay on debt that is equal with
or junior in rank to the existing
debentures.
Conversion Into Common
Stock.................... Unless we have redeemed the Unless we redeem the existing
exchange debentures, you will debentures, you have the right to
have the right to convert your convert your existing preferred
exchange preferred securities securities into shares of our
into shares of our common stock common stock at any time prior to
at any time prior to maturity. maturity. The conversion price on
The initial conversion price will June 11, 2001 was $48.72 per
be equivalent to a % premium share of our common stock, which
over the average of the daily is equivalent to a conversion
volume weighted average price of rate of 1.02627 shares of our
our common stock for each of the common stock for each existing
five trading days immediately preferred security. This
preceding the second trading day conversion price remains subject
prior to the exchange offer to further adjustment.
expiration date, subject to
adjustment under the same
provisions that require
adjustment of the conversion
price of the existing preferred
securities.
Ranking.................. The exchange preferred securities The existing preferred securities
represent preferred undivided represent preferred undivided
beneficial interests in the beneficial interests in the
assets of the new trust, which assets of the existing trust,
will consist of the exchange which consist of the existing
debentures. Our payment debentures. Our payment
obligations under the exchange obligations under the existing
debentures are subordinated to debentures are subordinated to
our payment obligations under our our payment obligations under our
senior debt, but senior to our senior debt, including our
obligations under the existing obligations under the exchange
debentures and the existing debentures and the exchange
preferred securities guarantee. preferred securities guarantee.
They are also effectively They are also effectively
subordinated to all indebtedness
and
13
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
subordinated to all indebtedness other liabilities of our
and other liabilities of our subsidiaries, including
subsidiaries, including intercompany liabilities to the
intercompany liabilities to the extent that the instruments
extent that the instruments governing these intercompany
governing these intercompany liabilities provide for
liabilities provide for subordination.
subordination.
Optional
Redemption............... Same terms for the exchange The existing trust will redeem
preferred securities and exchange all of its outstanding existing
debentures as for the existing preferred securities and existing
preferred securities and existing common securities when the
debentures, except that we cannot existing debentures are paid at
make the new trust redeem all or maturity on February 15, 2028. In
some of the exchange preferred addition, we can make the
securities by redeeming exchange existing trust redeem all or some
debentures at any time until of the existing preferred
, 2003, unless our common securities at any time on or
stock price has exceeded 200% of after February 15, 2001, by
the conversion price for at least redeeming the existing debentures
20 days during a 30-day trading at the applicable redemption
period ending five trading days price, plus any accrued and
prior to the notice of unpaid distributions, upon not
redemption. This notice must be less than 30 but not more than 60
delivered not more than 30 and days' notice.
not less than 15 days prior to
the date of redemption.
Special Event Redemption
or Distribution.......... Same terms for the exchange Upon the occurrence of a tax
preferred securities and exchange event described below, we may
debentures as for the existing redeem all outstanding existing
preferred securities and existing debentures at a redemption price
debentures, except that the non- equal to 100% of the principal
deductibility of interest amount of the existing debentures
payments on the existing plus accrued and unpaid interest
debentures will not constitute a to the redemption date (and thus
tax event. cause the redemption of the
existing preferred securities at
that price). Upon the occurrence
of a tax event, we may,
alternatively, elect to pay
additional interest to the
existing trust so that the
distributions to holders of the
existing preferred securities are
not reduced because of the tax
event. In addition, if a tax
event or a change in law that
could require the trust to
register as an investment company
under the Investment Company Act
of 1940, as amended, occurs, we
may generally cause the existing
trust to be
14
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
dissolved and, after satisfaction
of liabilities to creditors of
the existing trust, cause the
existing debentures to be
distributed to the holders of the
existing preferred securities.
A tax event generally means
specified tax changes that could
result in:
- the trust being subject to
United States federal income
taxes or more than a de minimis
amount of other governmental
charges, or
- the non-deductibility of
interest payments on the existing
debentures.
Additional Redemption.... Prior to , 2003, we may None.
elect to redeem the exchange
debentures, and therefore cause
the new trust to redeem the
corresponding exchange preferred
securities, for a price equal to
100% of the liquidation amount
per exchange preferred security,
if our common stock price has
exceeded 200% of the conversion
price for at least 20 trading
days during a 30-day trading
period ending five trading days
prior to the notice of
redemption. Prior to the
redemption date, holders of
exchange preferred securities
will have the right to convert
their exchange preferred
securities, and therefore the
corresponding exchange
debentures, into shares of our
common stock at the conversion
price in effect at the time. In
the case of such a redemption
prior to , 2003, we will
pay additional interest, and the
new trust will make corresponding
distribution payments, in cash or
common stock, in an amount equal
to two years' worth of interest
payments on any exchange
debentures that are converted
following the notice of
redemption and prior to the date
of redemption,
15
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
less any interest actually paid
prior to the date of conversion.
Liquidation
Preference............... If the new trust is liquidated If the existing trust is
and the exchange debentures are liquidated and the exchange
not distributed to you, you will debentures are not distributed to
generally be entitled to receive you, you will generally be
$ per exchange preferred entitled to receive $50 per
security plus any accumulated and existing preferred security plus
unpaid distributions on each any accumulated and unpaid
exchange preferred security you distributions on each existing
hold. preferred security you hold.
The Guarantee............ We will guarantee the new trust's We have guaranteed the existing
payment obligations on the trust's payment obligations on
exchange preferred securities on the existing preferred securities
the same terms as the terms on to the extent described in this
which we have guaranteed the prospectus. Under the existing
existing trust's obligations on preferred securities guarantee,
the existing preferred we guarantee the existing trust's
securities, except that: payment obligations, but only to
- the exchange preferred the extent that the existing
securities guarantee covers both trust has sufficient funds to
distribution payments in cash make payments on the existing
and in our common stock, since preferred securities. If we do
we have the option to pay not make payments on the existing
interest on the exchange debentures, the existing trust
debentures in cash or common will not have sufficient funds to
stock; and make payments on the existing
- our obligations under the preferred securities, in which
exchange preferred securities case you will be unable to rely
guarantee are senior to our on the guarantee for payment. Our
obligations under the existing obligations under the existing
debentures and the existing preferred securities guarantee
preferred securities are subordinated to our payment
guarantee. obligations under our senior
debt, including our obligations
under the exchange debentures and
the exchange preferred securities
guarantee. They are also
effectively subordinated to all
indebtedness and other
liabilities of our subsidiaries,
including intercompany
liabilities.
Form of Preferred
Securities............... Same form as for the existing The existing preferred securities
preferred securities. are represented by a global
certificate registered in the
name of Cede & Co., as nominee of
The Depository Trust Company.
Voting Rights............ Same terms for the exchange Generally, you will not have any
preferred securities and exchange voting rights as a holder of
debentures as for the existing existing preferred securities.
However, if an
16
EXCHANGE PREFERRED SECURITIES EXISTING PREFERRED SECURITIES
--------------------------------- ---------------------------------
preferred securities and existing event of default under the
debentures. existing indenture governing the
existing debentures occurs and is
continuing, the holders of 25% of
the aggregate liquidation amount
of the outstanding existing
preferred securities may direct
the property trustee, one of the
trustees of the existing trust,
to declare the principal and
interest on the existing
debentures immediately due and
payable. If the property trustee
fails to enforce its rights under
the existing debentures, or the
guarantee trustee fails to
enforce its rights under the
existing preferred securities
guarantee, a holder of existing
preferred securities may
institute a proceeding directly
against us to enforce these
rights without first instituting
any legal proceeding against any
other person or entity.
Listing.................. The exchange preferred securities The existing preferred securities
are expected to trade in the trade in the over-the-counter
over-the-counter market. market.
17
SUMMARY FINANCIAL DATA
The following is a summary of our selected consolidated financial data for
each of the fiscal years in the five-year period ended April 30, 2000 and
selected unaudited consolidated financial data for the 39 weeks ended
January 28, 2001 and the 40 weeks ended January 30, 2000. You should read this
summary together with the selected consolidated financial data provided in this
prospectus on pages 34 and 35, our financial statements and accompanying notes
which are incorporated into this prospectus by reference, and our management's
discussion and analysis of our operations contained in this prospectus and in
the reports containing our financial statements.
FISCAL YEARS(1)
------------------------------------------------------------------------------------------
40 WEEKS 39 WEEKS
ENDED ENDED
JANUARY 30, JANUARY 28,
1996 1997 1998 1999 2000 2000 2001
---------- ---------- ---------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Net sales......................... $2,809,277 $2,874,426 $3,050,567 $3,490,163 $3,712,965 $2,819,082 $1,962,484
Operating income (loss) margin.... 4.7% 4.9% 5.6% 5.5% 4.4% 4.9% (12.7)%
Income (loss) before cumulative
effect of accounting change..... 69,901 90,052 108,545 107,121 83,494 72,054 (228,309)
Earnings (loss) per
share--diluted.................. 1.71 3.19 3.01 2.94 2.41 2.04 (7.31)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA AT END OF
PERIOD:
Total assets...................... $1,108,932 $ 871,547 $1,129,480 $1,531,184 $1,536,693 $1,534,128 $1,221,744
Total liabilities................. 459,795 428,452 465,954 656,981 664,388 666,889 601,579
Capital Trust Preferred
Securities...................... -- -- 287,500 287,500 287,500 287,500 287,500
Shareholders' equity.............. 649,137 443,095 376,026 586,703 584,805 579,739 332,665
OTHER DATA:
Gross profit margin............... 19.0% 18.8% 19.5% 21.6% 22.2% 22.4% 21.0%
Depreciation and amortization..... $ 27,084 $ 27,579 $ 27,799 $ 31,841 $ 35,080 $ 26,223 $ 27,023
Capital expenditures.............. 32,916 56,184 37,809 49,757 55,078 42,455 26,546
EBITDA(2)......................... 158,616 167,138 197,994 222,152 197,256 163,638 (58,006)
Ratio of earnings to fixed
charges(3)...................... 78.7 37.4 24.3 7.5 5.3(4) 6.0 --(5)
- ------------------------------
(1) We use a fiscal year beginning on the day following the last Sunday of April
in each year.
(2) Adjusted EBITDA is defined as operating income plus depreciation and
amortization expense plus impairment of goodwill. While adjusted EBITDA
should not be considered as a substitute for net income, cash flows from
operating activities, or other income statement data or cash flow statement
data prepared in accordance with Generally Accepted Accounting Principles,
or GAAP, or as a measure of profitability or liquidity, our management
understands that adjusted EBITDA is customarily used as a measurement in
evaluating companies.
(3) The ratio of earnings to fixed charges is unaudited for all periods
presented. For purposes of computing these ratios, earnings represent income
before income taxes, minority interest, discontinued operations and
cumulative effect of changes in accounting principles and fixed charges less
distributions on existing preferred securities of Fleetwood Capital Trust.
Fixed charges include all interest expense and distributions on the existing
preferred securities.
(4) On a pro forma basis, after giving effect to each of the exchange offer and
cash offer, the ratio of earnings to fixed charges would have been
approximately x in fiscal 2000.
(5) Our ratio of earnings to fixed charges for the 39 weeks ended January 28,
2001 was not meaningful since earnings were inadequate to cover fixed
charges by $269.5 million. Similarly, after giving effect to each of the
exchange offer and cash offer, the pro forma ratio of earnings to fixed
charges for the 39 weeks ended January 28, 2001 was not meaningful since, on
a pro forma basis, earnings during this period would have been inadequate to
cover fixed charges by $ million.
18
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO
EXCHANGE YOUR EXISTING PREFERRED SECURITIES FOR EXCHANGE PREFERRED SECURITIES OR
TO BUY ADDITIONAL EXCHANGE PREFERRED SECURITIES FOR CASH. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING US. ADDITIONAL RISKS
AND UNCERTAINTIES THAT WE DO NOT PRESENTLY KNOW OR THAT WE CURRENTLY DEEM
IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.
IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, THEY COULD MATERIALLY
ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS. IN THAT
CASE, THE TRADING PRICE OF OUR COMMON STOCK AND THE EXISTING PREFERRED
SECURITIES COULD DECLINE.
RISKS RELATING TO OUR BUSINESS
WE ARE CURRENTLY NOT IN COMPLIANCE WITH SOME OF THE FINANCIAL COVENANTS
CONTAINED IN SOME OF OUR SENIOR DEBT INSTRUMENTS AND MAY NOT BE IN COMPLIANCE
WITH THESE COVENANTS, AS THEY ARE CURRENTLY SET, AT ANY TIME PRIOR TO COMPLETION
OF THE PROPOSED EXCHANGE OFFER, WHICH MAY RESULT IN A DEFAULT UNDER OUR DEBT
OBLIGATIONS.
Our outstanding senior unsecured notes payable to The Prudential Insurance
Company of America require us to maintain specified financial ratios and satisfy
certain financial tests. We are currently not in compliance with some of these
financial covenants. Furthermore, we may not be in compliance with these
covenants, as they are currently set, at any time prior to completion of the
proposed exchange offer. A breach of any of the financial covenants in these
senior notes can result in a default under our retail floor plan debt with
Conseco Finance Servicing Corp. Prudential has temporarily agreed to forbear
from enforcing the remedies otherwise available to it arising from our
non-compliance as to prior periods. We cannot assure you that Prudential will
continue to forbear, or that it will grant us waivers or amend our covenants. We
are in the process of negotiating an alternative senior debt facility to replace
the Prudential notes. We cannot give you any assurance that we will be
successful in obtaining this or any other alternative facility. Even if we are
successful in refinancing our senior notes, our new credit facility will rank
senior to the exchange preferred securities, and will likely be secured by
substantially all of our assets, except certain inventories and the cash value
of our company-owned life insurance. Upon the occurrence of an event of default
under our senior notes, the lenders could elect to declare all amounts
outstanding, together with accrued interest, to be immediately due and payable.
A default under our senior notes could also cause a default under our retail
floor plan debt with Conseco. If we were unable to repay all outstanding amounts
under our senior debt, the lenders could proceed against our assets, and any
proceeds realized upon the sale of assets would be used first to satisfy all
amounts outstanding under our senior notes, and thereafter, any of our other
liabilities, including liabilities relating to the exchange preferred securities
and the existing preferred securities. In addition, we may be prevented from
borrowing additional amounts under our other existing credit agreements,
including our retail inventory floor plan facility and our chassis inventory
financing facility.
WE HAVE HAD LOSSES IN RECENT QUARTERS AND WE MAY NOT BE ABLE TO REGAIN
PROFITABILITY IN THE FORESEEABLE FUTURE, WHICH COULD CAUSE US TO LIMIT FUTURE
CAPITAL EXPENDITURES AND ALSO RESULT IN A FAILURE TO IMPLEMENT OUR BUSINESS AND
FINANCE STRATEGIES.
We had net losses totaling approximately $239.5 million for the 39 weeks
ended January 28, 2001, after having had net income of $72.1 million and
$82.6 million, respectively, for the 40 weeks ended January 30, 2000 and the 39
weeks ended January 24, 1999. Continued losses may cause us to reduce our
expenditures on capital improvements, machinery and equipment, and research and
development. This could have a negative effect on our ability to maintain
production schedules, manufacture products of high quality, and develop and
manufacture new products that will achieve market acceptance. This could have a
negative effect on our sales and earnings. In addition, we will not be
19
able to deduct our interest payments on the exchange debentures, in cash or
common stock, and as a result, will not receive any tax benefit from the
interest payments. If we continue to suffer losses, we will be unable to
implement our business and financial strategies. Our losses for the 39 weeks
ended January 28, 2001 were principally caused by:
- reduced demand in the manufactured housing and recreational vehicle
industries;
- excess capacity;
- excess retail inventories;
- some wholesale and retail lenders abandoning the manufactured housing
market;
- remaining retail lenders tightening credit standards in the manufactured
housing market;
- relatively high interest rates for manufactured homes as opposed to
site-built homes;
- competition with resellers of repossessed manufactured homes; and
- weaker general economic conditions, stock market declines, and declining
consumer confidence.
We cannot assure you that the conditions that have resulted in our
substantial losses in the first three quarters of fiscal 2001 will not continue
into the fourth quarter, fiscal 2002 and beyond. Our losses in the first three
quarters of fiscal 2001 were also caused in part by:
- charges related to the impairment of goodwill that originated with our
acquisitions of retail housing businesses in prior years, some of which we
are now closing or downsizing; and
- downsizing initiatives within our manufacturing and retail housing
businesses, including asset impairment charges, writedown of idled
manufacturing facilities, employee severance payments and plant closing
costs.
REDUCED AVAILABILITY OF FINANCING FOR OUR RETAILERS OR CUSTOMERS WOULD CONTINUE
TO AFFECT OUR SALES VOLUME.
Our retailers, as well as retail buyers of our products, generally secure
financing from third party lenders. If such financing were to become unavailable
or were to be further restricted, this could have a material adverse effect on
our results of operations. Reduced availability of such financing and higher
interest rates are currently having an adverse effect on the manufactured
housing business and our housing sales. These factors are dependent on the
lending practices of financial institutions, governmental policies and economic
conditions, all of which are beyond our control. With respect to our housing
business, most states classify manufactured homes as personal property rather
than as real property for purposes of taxation, lien perfection and length of
loan terms. Interest rates for manufactured homes are generally higher and the
terms of the loans shorter than for site-built homes. As the industry is now
experiencing, financing for the purchase of manufactured homes is sometimes more
difficult to obtain than conventional home mortgages. There can be no assurance
that affordable wholesale or retail financing for either manufactured homes or
recreational vehicles will continue to be available on a widespread basis.
EXCESS INVENTORIES OF OUR PRODUCTS AMONG RETAILERS COULD CONTINUE TO HAVE A
NEGATIVE EFFECT ON OUR SALES VOLUME AND PROFIT MARGINS.
The level of manufactured housing and recreational vehicle retail
inventories and the existence of repossessed homes in the market can have a
significant impact on manufacturing shipments and operating results, as
evidenced in the manufactured housing industry during the past year. For
example, due to the rapid over-expansion of the retail distribution network in
the manufactured housing industry, retailers' overstocking based on inflated
expectations of future business and excessive wholesale
20
financing, there is currently an imbalance among the number of retail dealers,
industry retail inventories and consumer demand for manufactured homes.
Considering current retail demand, it is estimated that there may be as much as
a six month supply of manufactured homes in retailer inventories industry-wide.
The recent deterioration in the availability of retail financing has already
extended the inventory adjustment period beyond what was originally expected.
Competition from repossessed homes has further extended this inventory
adjustment period. More liberal lending standards in the past resulted in loans
to less-qualified customers. Many of these customers are now defaulting on these
loans and the lenders are repossessing the customers' homes and reselling them,
thereby increasing competition for manufacturers of new homes. If these trends
were to continue, or if retail demand were to significantly weaken further, the
inventory overhang could result in intense price competition and pressure on
profit margins within the industry and could have an adverse impact on our
operating results.
THE MANUFACTURED HOUSING AND RECREATIONAL VEHICLE INDUSTRIES ARE HIGHLY
COMPETITIVE AND SOME OF OUR COMPETITORS HAVE STRONGER BALANCE SHEETS AND CASH
FLOW, AS WELL AS GREATER ACCESS TO CAPITAL, THAN WE DO, AND THIS COULD RESULT IN
DECREASED SALES VOLUME AND EARNINGS FOR US.
The manufactured housing industry is highly competitive. Some of these
competitors have stronger balance sheets and cash flow than we do, and may
likewise have greater access to capital. This competition may result in
decreased sales volume and margins, which could have a material adverse effect
on our results of operations and financial condition. As of December 31, 2000,
there were approximately 70 manufacturers and approximately 8,900 retail sales
centers. The 10 largest manufacturers accounted for approximately 79% of the
wholesale manufactured housing market in calendar 2000, including our sales,
which represented 18% percent of the market. The manufactured housing retail
market is much more fragmented, with the five largest companies accounting for
approximately 26% of the market in calendar 2000.
Competition with other manufacturers on both the manufacturing and retail
levels is based primarily on price, product features, reputation for service and
quality, retail inventory, sales promotions, merchandising and the terms and
availability of wholesale and retail customer financing. Recent growth in
manufacturing capacity in the southern United States has increased competition
at both the manufacturing and retail levels and has resulted in both regional
and national competitors increasing their presence in the region. Overproduction
of manufactured housing in this region could lead to greater competition and
result in decreased margins, which could have a material adverse effect on our
results of operations.
In addition, manufactured homes compete with new and existing site-built
homes, apartments, townhouses and condominiums. The supply of such housing has
increased in recent years with the increased availability of construction
financing, and this reduces the demand for manufactured homes.
Manufactured homes also compete with resales of homes that have been
repossessed by financial institutions as a result of credit defaults by dealers
or customers. Repossession rates for manufactured homes have increased recently
and there can be no assurance that repossession rates will not continue to
increase, thereby adversely affecting our sales volume and profit margins.
The manufactured housing industry, as well as the site-built housing
development industry, have experienced consolidations in recent years, which
could result in the emergence of competitors, including developers of site-built
homes, that are larger than us and have greater financial resources. This could
adversely affect our business.
The recreational vehicle market is also highly competitive as we have
numerous competitors and potential competitors in this industry. Sales from the
five largest manufacturers represented approximately 59.0% of the market in
calendar 2000, including our sales, which represented 23.3% of the market.
Competitive pressures, especially in the entry-level segment of the recreational
vehicle
21
market for travel trailers, have recently resulted in a reduction of profit
margins. Sustained increases in competitive pressures could have a material
adverse effect on our results of operations. There can be no assurance that
existing or new competitors will not develop products that are superior to our
recreational vehicles or that achieve better consumer acceptance, thereby
adversely affecting our sales volume and profit margins.
OUR BUSINESS IS CYCLICAL AND THIS CAN LEAD TO FLUCTUATIONS IN OUR OPERATING
RESULTS.
The industries in which we operate are highly cyclical and there can be
substantial fluctuations in our manufacturing shipments and operating results,
and the results for any prior period may not be indicative of results for any
future period. Companies within both the manufactured housing and recreational
vehicle industries are subject to volatility in operating results due to
external factors such as economic, demographic and political changes. Factors
affecting the manufactured housing industry include:
- interest rates and the availability of financing, both of which have had a
particularly adverse effect on our business in the past year;
- defaults by retail customers resulting in repossessions, which have also
had a particularly adverse effect on our business during the past 12
months;
- inventory levels, which have had an adverse effect on our business during
the past 12 months;
- availability of manufactured home sites;
- employment trends;
- consumer confidence; and
- general economic conditions.
Factors affecting the recreational vehicle industry include:
- overall consumer confidence and the level of discretionary consumer
spending, which have had an adverse effect on our business during the past
12 months;
- inventory levels, which have had an adverse effect on our business during
the past 12 months;
- general economic conditions;
- interest rates;
- employment trends; and
- fuel availability and prices.
We cannot assure you that the factors that have adversely affected our
business in the first three quarters of fiscal 2001 will not continue to have an
adverse effect in the fourth quarter, fiscal 2002 and beyond.
OUR BUSINESS IS SEASONAL, AND THIS LEADS TO FLUCTUATIONS IN SALES, PRODUCTION
AND NET INCOME.
We have experienced, and expect to continue to experience, significant
variability in sales, production and net income as a result of seasonality in
our businesses. Demand in both the manufactured housing and recreational vehicle
industries generally declines during the winter season, while sales and profits
are generally highest during the spring and summer months. In addition,
unusually severe weather conditions in certain markets may delay the timing of
purchases and shipments from one quarter to another.
22
WE HAVE REPLACED SOME OF OUR MANUFACTURED HOUSING RETAILERS, AND SOME OF OUR
RETAILERS HAVE BEEN ACQUIRED. THIS MAY LEAD TO A DECREASE IN OUR SALES VOLUME
AND A LOSS OF OUR MARKET SHARE.
Our market share in the manufactured housing market, based on unit
shipments, declined from 22% in calendar 1994 to 18% in calendar 2000. The
reason for this change was, in part, our reduction of the number of our retail
distribution points from approximately 1,800 to 1,400 during the period from
January 1994 through December 2000, in order to concentrate on larger dealers
that share our approach towards merchandising and customer satisfaction. We have
also, from time to time in the past, lost significant retailers that were
acquired by competitors. Such acquisitions can reduce our retail distribution
network and market share, as these retail outlets may choose not to sell our
products. There can be no assurance that we will be able to adequately replace
retailers acquired by competitors if they cease selling our manufactured homes,
or that we will be able to maintain our sales volume or market share in these
competitive markets.
WE ESTABLISHED A NETWORK OF COMPANY-OWNED RETAIL STORES, WHICH HAS REQUIRED
SIGNIFICANT RESTRUCTURING AND DOWNSIZING, BUT WE MAY NOT SUCCEED IN
RESTRUCTURING THIS NEW BUSINESS IN A SATISFACTORY MANNER AND MAKING IT
PROFITABLE.
We responded to the retail consolidation in the manufactured housing sector,
beginning in fiscal 1998, by forming our own retail business and establishing a
network of company-owned stores to replace distribution points lost to
competitors. We made numerous acquisitions between June 1998 and August 2001,
the largest of which was the purchase of HomeUSA in August 1998, comprised of 65
stores. We also originated more than 100 "greenfield" locations. The combination
of the two strategies carried us to a high of 243 stores in October 2000. Since
its inception, this business segment has operated at a loss, and as the retail
market for manufactured housing has slowed, the losses have grown. During fiscal
2001, we implemented a downsizing strategy to better match our retail capacity
to market demand. By assigning management of certain locations to third parties,
and closing and selling other locations, we have reduced the number of stores
that we operate to 188 at the end of fiscal 2001. These actions have resulted in
restructuring charges and other costs including severance payments to employees,
which payments will continue through at least the second quarter of fiscal 2002.
Given existing industry conditions and the performance of this new business to
date, there can be no assurance that we will be able to complete the
restructuring of our retail network as a successful and profitable part of our
manufactured housing group in the future, or that it will become an important or
successful part of our business strategy. In addition, we may have to undergo
additional downsizing of this business depending on the length of time that the
current factors affecting our business continue to have a negative impact.
CHANGES IN CONSUMER PREFERENCES FOR OUR PRODUCTS OR OUR FAILURE TO GAUGE THOSE
PREFERENCES COULD LEAD TO REDUCED SALES AND ADDITIONAL COSTS.
We cannot be certain that historical consumer preferences for our products
in general, and recreational vehicles in particular, will remain unchanged. We
believe that, with respect to our recreational vehicle operations, the
introduction of new features, designs and models will be critical to the future
success of these operations. Delays in the introduction of new models or product
features, or a lack of market acceptance of new features, designs or models
could have a material adverse effect on our business. For example, we may incur
significant additional costs in designing or redesigning models that are not
accepted in the marketplace. Products may not be accepted for a number of
reasons, including changes in consumer preferences, or our failure to properly
gauge consumer preferences. We cannot be certain that new product introductions
will not reduce revenues from existing models and adversely affect our results
of operations. There can be no assurance that any of these new models or
products will be introduced to the market on time or that they will be
successful when introduced.
23
IF THE FREQUENCY AND SIZE OF PRODUCT LIABILITY AND OTHER CLAIMS AGAINST US,
INCLUDING WRONGFUL DEATH, RISES, OUR BUSINESS, RESULTS OF OPERATIONS AND
FINANCIAL CONDITION MAY BE HARMED.
We are frequently subject, in the ordinary course of business, to litigation
involving product liability and other claims, including wrongful death, against
us related to personal injury and warranties. We partially self-insure our
product liability claims and purchase excess product liability insurance in the
commercial insurance market. We cannot be certain that our insurance coverage
will be sufficient to cover all future claims against us. Any increase in the
frequency and size of these claims, as compared to our experience in prior
years, may cause the premium that we are required to pay for insurance to rise
significantly. It may also increase the amounts we pay in punitive damages, not
all of which are covered by our insurance. We are also presently party to
actions in litigation that the plaintiffs are seeking to have certified as class
actions. If any of these actions is certified as a class action and decided in a
manner adverse to us, the resulting liability may be significant. These factors
may have a material adverse effect on our results of operations and financial
condition. In addition, if these claims rise to a level of frequency or size
that is significantly higher than in the case of similar claims made against our
competitors, our reputation and business will be harmed. For a more detailed
discussion of some of the legal proceedings we are involved in, please see the
section titled "Business--Legal Proceedings in Which We Are Involved," beginning
on page 54 of this prospectus.
WHEN WE INTRODUCE NEW PRODUCTS WE MAY INCUR EXPENSES THAT WE DID NOT ANTICIPATE,
SUCH AS RECALL EXPENSES, RESULTING IN REDUCED EARNINGS.
The introduction of new models is critical to our future success,
particularly in our recreational vehicle business. We may incur unexpected
expenses, however, when we introduce new models. For example, we may experience
unexpected engineering or design flaws that will force a recall of a new
product. The costs resulting from these types of problems could be substantial,
and would have a significant adverse effect on our earnings.
FUEL SHORTAGES, OR HIGHER PRICES FOR FUEL, COULD HAVE A NEGATIVE EFFECT ON SALES
OF RECREATIONAL VEHICLES.
Gasoline or diesel fuel is required for the operation of motor homes and
most vehicles used to tow travel trailers and folding trailers. There can be no
assurance that the supply of these petroleum products will continue
uninterrupted, that rationing will not be imposed or that the price of or tax on
these petroleum products will not significantly increase in the future. The
recent rise in gasoline prices and the speculation about potential fuel
shortages appear to have had an unfavorable effect on consumer demand for motor
homes in the past few months, thereby having an adverse effect on our sales
volume.
IF WE DO NOT SUCCESSFULLY UPGRADE OUR COMPUTER SYSTEMS, WE WILL LOSE SALES TO
THOSE OF OUR COMPETITORS THAT HAVE MORE SOPHISTICATED AND BETTER INTEGRATED
SYSTEMS THAN US.
Our computer systems are not as sophisticated as those that are currently
available, and are not fully integrated. We are in the process of upgrading our
computer systems, but we are in the early stages of this process. We must update
our computer systems if we are to remain competitive in our industry.
Competitors with more sophisticated and fully integrated computer systems will
have efficiencies that may lead to lower costs and faster delivery schedules,
and that may make it difficult for us to compete with them. We will be required
to expend significant resources to fully implement a system suitable for a
business as large and complex as ours. It is possible that the cost of building
a computer system of this nature will be higher than budgeted, and that the
system, when built, will not work as originally planned. This would increase our
costs and disrupt our business.
24
THE MARKET FOR OUR MANUFACTURED HOMES IS HEAVILY CONCENTRATED IN THE SOUTHERN
PART OF THE UNITED STATES, AND A CONTINUED DECLINE IN DEMAND IN THAT AREA COULD
HAVE A MATERIAL NEGATIVE EFFECT ON SALES.
The market for our manufactured homes is geographically concentrated, with
the top 15 states accounting for over 67% of the industry's total shipments in
calendar 2000. The southern United States accounts for a significant portion of
our manufactured housing sales. As is the case with our other markets, we have
experienced a downturn in economic conditions in the southern states, and a
continuing downturn in this region that is worse than that of other regions
could have a disproportionately material adverse effect on our results of
operations. There can be no assurance that the demand for manufactured homes
will not continue to decline in the southern United States or other areas in
which we experience high product sales and any such decline could have a
material adverse effect on our results of operations.
CHANGES IN ZONING REGULATIONS COULD AFFECT THE NUMBER OF SITES AVAILABLE FOR OUR
MANUFACTURED HOMES, AND ZONING REGULATIONS COULD AFFECT THE MARKET FOR OUR NEW
PRODUCTS, BOTH OF WHICH COULD AFFECT OUR SALES.
Any limitation on the growth of the number of sites available for
manufactured homes, or on the operation of manufactured housing communities,
could adversely affect our sales. In addition, new product opportunities that we
may wish to pursue for our manufactured housing business could cause us to
encounter new zoning regulations and affect the potential market for these new
products. Manufactured housing communities and individual home placements are
subject to local zoning ordinances and other local regulations relating to
utility service and construction of roadways. In the past, there has been
resistance by property owners to the adoption of zoning ordinances permitting
the location of manufactured homes in residential areas, which resistance we
believe has adversely affected the growth of the industry. The inability of the
manufactured home industry to change these zoning ordinances could have a
material adverse effect on our results of operations and we cannot be certain
that manufactured homes will receive widespread acceptance or that localities
will adopt zoning ordinances permitting the location of manufactured homes.
POWER OUTAGES WHICH CURRENTLY IMPACT COMPANIES WITH FACILITIES IN CALIFORNIA MAY
ADVERSELY AFFECT OUR CALIFORNIA FACILITIES.
We conduct substantial operations in the state of California and rely on a
continuous power supply to do so. The deregulation of the energy industry
instituted in 1996 by the California government and shortages in wholesale
electricity supplies have caused power prices to increase. If power prices
continue to increase, our operating expenses will likely increase which will
have a negative effect on our operating results. In addition, if our electricity
supply is interrupted, we may be unable to supply products to our customers on a
timely basis, and this would have a negative effect on our sales. California's
current energy crisis could substantially disrupt our operations and increase
our expenses. In the event of an acute power shortage, that is, when power
reserves for the state of California fall below 1.5%, California has on some
occasions implemented, and may in the future continue to implement, rolling
blackouts throughout the state. Although state lawmakers are working to minimize
the impact, if blackouts interrupt our power supply, we may be temporarily
unable to continue operations at our facilities. Any such interruption in our
ability to continue operations at our facilities could delay the production and
development of our products and disrupt communications with our customers,
suppliers or our manufacturing operations. Future interruptions could damage our
reputation and could result in lost revenue, either of which could substantially
harm our business and results of operations.
25
WE MAY NOT BE ABLE TO OBTAIN FINANCING IN THE FUTURE, INCLUDING ANY REFINANCING
REQUIRED UPON EXPIRATION OF OUR PROPOSED ONE-YEAR TERM LOAN FROM BANK OF
AMERICA, AND THE TERMS OF ANY FUTURE FINANCINGS MAY LIMIT OUR ABILITY TO MANAGE
OUR BUSINESS, AND THESE FACTORS WILL HAVE A NEGATIVE EFFECT ON OUR ABILITY TO
EXECUTE OUR BUSINESS STRATEGY.
Our operations require significant amounts of cash. Whether or not the
exchange offer is completed, and whether or not we are able to refinance our
senior debt, we anticipate that we will be required to seek additional capital
in the future. There can be no assurance that we will be able to obtain any
future financings on acceptable terms, if at all. For instance, if we are able
to obtain the new facility from Bank of America, that facility contains a
$30 million one-year term loan that will require refinancing within one year. If
we are unable to obtain alternative or additional financing arrangements in the
future, we may not be able to execute our business strategy. Moreover, the terms
of any such additional financing may restrict our financial flexibility,
including the debt we may incur in the future, or may restrict our ability to
manage our business as we had intended.
OUR REPURCHASE AGREEMENTS WITH OUR RETAILERS COULD RESULT IN INCREASED COSTS.
In accordance with customary practice in the manufactured housing and
recreational vehicle industries, we enter into repurchase agreements with
various financial institutions pursuant to which we agree, in the event of a
default by an independent retailer in its obligation to these credit sources, to
repurchase product at declining prices over the term of the agreements,
typically 12 to 18 months. The difference between the gross repurchase price and
the price at which the repurchased product can then be resold, which is
typically at a discount to the original sale price, is an expense to us. Thus,
if we were obligated to repurchase a substantially greater number of
manufactured homes or recreational vehicles in the future, this would increase
our costs, which could have a negative effect on our earnings. For the 39 weeks
ended January 28, 2001, we had repurchased 182 manufactured homes and 180
recreational vehicles, at an aggregate gross purchase price to us of
$8.2 million.
INCREASED COSTS, INCLUDING LABOR COSTS AND COSTS OF COMPONENT PARTS, AND CHANGES
IN LABOR RATES AND PRACTICES COULD REDUCE OUR OPERATING INCOME.
Our results of operations may be significantly affected by the availability
and pricing of manufacturing components and labor, as well as changes in labor
rates and practices. Although we attempt to offset the effect of any escalation
in components and labor costs by increasing the sales prices of our products, we
cannot be certain that we will be able to do so without it having an adverse
impact on the demand for our products. Changes in labor rates and practices,
including changes resulting from union activity, could significantly affect our
costs and thereby reduce our operating income. If we cannot successfully offset
increases in our manufacturing costs, this could have a material adverse impact
on our margins, operating income and cash flows. Even if we were able to offset
higher manufacturing costs by increasing the sales prices of our products, the
realization of any such increases often lags behind the rise in manufacturing
costs, especially in our manufactured housing operations, due in part to our
commitment to give our retailers price protection with respect to previously
placed customer orders.
FOR CERTAIN COMPONENTS, WE DEPEND ON A SMALL GROUP OF SUPPLIERS, AND THE LOSS OF
ANY OF THESE SUPPLIERS COULD AFFECT OUR ABILITY TO OBTAIN COMPONENTS AT
COMPETITIVE PRICES, WHICH WOULD DECREASE OUR MARGINS.
Most recreational vehicle and manufactured home components are readily
available from a variety of sources. However, a few components are produced by
only a small group of quality suppliers that have the capacity to supply large
quantities on a national basis. Primarily, this occurs in the case of
gasoline-powered motor home chassis, where Ford Motor Company is the dominant
supplier. Shortages, production delays or work stoppages by the employees of
such suppliers could have a
26
material adverse effect on our sales. If we cannot obtain an adequate chassis
supply, this could result in a decrease in our sales and earnings.
RISKS RELATING TO THE EXCHANGE OFFER, THE EXCHANGE
PREFERRED SECURITIES AND OUR COMMON STOCK
THE EXCHANGE PREFERRED SECURITIES AND EXCHANGE PREFERRED SECURITIES GUARANTEE
ARE SUBORDINATED TO OUR SENIOR DEBT, BUT SENIOR IN PAYMENT TO THE EXISTING
PREFERRED SECURITIES AND THE EXISTING PREFERRED SECURITIES GUARANTEE.
The exchange preferred securities and exchange preferred securities
guarantee are senior to the existing preferred securities and the existing
preferred securities guarantee, but will be unsecured and subordinated in right
of payment to our senior debt, including the Prudential notes and our proposed
senior debt facility. They are also effectively subordinated to all indebtedness
and other liabilities of our subsidiaries, including intercompany liabilities to
the extent that the instruments governing these intercompany liabilities provide
for subordination. The exchange preferred securities and exchange preferred
securities guarantee may also be subordinated to any debt we may issue in the
future. As a result of this subordination, in the event of our liquidation or
insolvency, a payment default with respect to our senior debt, a covenant
default with respect to our senior debt, or an acceleration of the exchange
preferred securities due to an event of default, our assets will be available to
pay obligations on the exchange preferred securities only after all senior debt
has been paid in full, and there may not be sufficient assets remaining to pay
amounts due on any or all of the exchange preferred securities then outstanding.
As of January 28, 2001, we had approximately $233.0 million of outstanding
senior debt at the parent level and in addition we had $69.1 million of
subsidiary obligations, comprised of accounts payable. Neither we nor our
subsidiaries are prohibited under the new indenture from incurring additional
debt.
DISTRIBUTIONS ON OUR EXCHANGE PREFERRED SECURITIES AND EXISTING PREFERRED
SECURITIES DEPEND ON OUR RECEIVING DISTRIBUTIONS FROM OUR SUBSIDIARIES.
The exchange preferred securities are obligations exclusively of Fleetwood
Capital Trust II and, as a result of the exchange preferred securities
guarantee, of us. Substantially all of our operations are conducted through our
subsidiaries and substantially all of our earnings and cash flows were generated
by our subsidiaries. As a result, our cash flow and our ability to service our
debt, including the exchange preferred securities, is dependent on the earnings
of our subsidiaries. In addition, we are dependent on the distribution of our
subsidiaries' earnings, loans and other payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. They have no
obligation to pay any amounts due on the exchange preferred securities or to
provide us with funds for our payment obligations, whether by dividends,
distributions, loans or other payments. In addition, any payment of dividends,
distributions, loans or advances by our subsidiaries to us could be subject to
statutory or contractual restrictions. Payments to us by our subsidiaries will
also be contingent upon our subsidiaries' earnings and business considerations.
IF AN ACTIVE MARKET FOR THE EXCHANGE PREFERRED SECURITIES FAILS TO DEVELOP OR IS
NOT SUSTAINED, THE TRADING PRICE AND LIQUIDITY OF THE EXCHANGE PREFERRED
SECURITIES COULD BE MATERIALLY ADVERSELY AFFECTED.
Prior to the offering, there has been no trading market for the exchange
preferred securities. The dealer manager, Banc of America Securities LLC, has
advised us that it currently intends to make a market in the exchange preferred
securities. The liquidity of the trading market for the exchange
27
preferred securities will depend in part on the level of participation of the
holders of existing preferred securities in the exchange offer. The greater the
participation in the exchange offer, the greater the liquidity of the trading
market for the exchange preferred securities and the lesser the liquidity of the
trading market for the existing preferred securities not tendered in the
exchange offer. However, Banc of America Securities LLC is not obligated to make
a market and may discontinue this market making activity at any time without
notice. In addition, market making activity by Banc of America Securities LLC
will be subject to the limits imposed by the Securities Act of 1933 and the
Securities Exchange Act of 1934, both as amended. As a result, we cannot assure
you that any market for the exchange preferred securities will develop or, if
one does develop, that it will be maintained. If an active market for the
exchange preferred securities fails to develop or be sustained, the trading
price and liquidity of the exchange preferred securities could be materially
adversely affected.
THE MARKET PRICE OF OUR COMMON STOCK HAS BEEN DEPRESSED, AND MAY DECLINE
FURTHER. THIS DECLINE WOULD AFFECT THE VALUE OF THE COMMON STOCK YOU RECEIVE
UPON CONVERSION OF THE EXCHANGE PREFERRED SECURITIES OR AS PAYMENT OF
DISTRIBUTIONS ON THE EXCHANGE PREFERRED SECURITIES. THIS DECLINE COULD ALSO
ADVERSELY AFFECT THE TRADING PRICE OF THE EXCHANGE PREFERRED SECURITIES. WE
EXPECT THE TRADING PRICE OF THE EXCHANGE PREFERRED SECURITIES TO BE HIGHLY
VOLATILE.
The market price of our common stock has fluctuated significantly and
generally declined, from a market price of $47.44 per share on March 6, 1998 to
$8.15 per share on April 6, 2001. The market price of our common stock may
decline further as a result of a number of factors, including our ability to
restructure our existing debt or pay principal and interest on our debt when
due. Because the exchange preferred securities are convertible into common
stock, and because we may cause distributions on the exchange preferred
securities to be paid in common stock in the near term, volatility or depressed
prices for our common stock could have a similar effect on the price of our
exchange preferred securities. Factors resulting in fluctuations in the market
price of our common stock, and hence of the exchange preferred securities,
include:
- actual and anticipated variations in our operating results;
- general economic and market conditions;
- interest rates, which directly impact the price of our exchange preferred
securities and indirectly affect the price of our common stock;
- general conditions, including changes in demand, in the manufactured
housing and recreational vehicle industries;
- future issuances of our common stock, including issuances of common stock
in payment of interest on our exchange debentures and payment of
distributions on the exchange preferred securities or upon conversion of
our exchange preferred securities;
- perceptions of the strengths and weaknesses of the manufactured housing
and recreational vehicle industries;
- developments in our relationships with our customers and/or suppliers;
- announcements of alliances, mergers or other relationships by or between
our competitors and/or our suppliers and customers;
- announcements and the introduction of new products and models by us or our
competitors and the success or failure of these new products and models;
- developments related to regulatory and zoning regulations;
- the effects of the exchange offer and cash offer; and
28
- any future decision by our board of directors to alter its historic
practice as to the payment of dividends on our common stock.
We expect this volatility to continue in the future. In addition, any
shortfall or changes in our revenue, gross margins, earnings or other financial
results could also cause the price of our common stock to fluctuate
significantly. In recent years, the stock market in general has experienced
extreme price and volume fluctuations that have particularly affected the
manufactured housing and recreational vehicle industries and that may be
unrelated to the operating performance of the companies within these industries.
These broad market fluctuations may adversely affect the market price of our
common stock and exchange preferred securities. Volatility in the price of
stocks of companies in our industries has been particularly high.
THE LIQUIDITY OF THE MARKET FOR EXISTING PREFERRED SECURITIES THAT ARE NOT
EXCHANGED IN THE EXCHANGE OFFER WILL BE LIMITED AND SPORADIC.
The existing preferred securities are currently traded over-the-counter.
Accordingly, trading in the existing preferred securities has been limited and
sporadic. Any existing preferred securities tendered and exchanged in the
exchange offer will reduce the aggregate number of existing preferred securities
outstanding. Consequently, any existing trading market for the existing
preferred securities that remain outstanding after the exchange offer will be
even more limited and sporadic.
THE EXCHANGE OFFER MAY NOT REPRESENT A FAIR VALUATION OF THE EXISTING PREFERRED
SECURITIES.
Our board of directors has made no determination that the exchange offer
represents a fair valuation of the existing preferred securities. We have not
obtained a fairness opinion from any financial advisor about the fairness of the
exchange offer to you or us. We cannot assure you that if you tender your
existing preferred securities that you will receive more value than if you had
chosen to keep them.
WE MAY NOT BE ABLE TO MEET PAYMENT OBLIGATIONS ON THE EXCHANGE PREFERRED
SECURITIES OR OUR EXISTING PREFERRED SECURITIES WHEN DUE.
Our cash resources may not be sufficient to meet the payment obligations on
the exchange preferred securities. As of January 28, 2001, we had approximately
$233.0 million of outstanding senior debt at the parent level and in addition we
had $69.1 million of subsidiary obligations, comprised of accounts payable. Our
ability to meet the payment obligations on the exchange preferred securities,
and to meet our other financial obligations, depends on our operating
performance, the availability of cash flow, the availability of new sources of
funding, the state of the financial markets and other factors, many of which are
beyond our control. We may not be able to generate enough cash flow to meet our
payment obligations on existing debt. For instance, we suffered a loss of
$239.5 million in our combined operations for the 39 weeks ended January 28,
2001, including a loss of $248.3 million in combined operations for the third
quarter of fiscal 2001, and we may continue to suffer losses. Accordingly, we
cannot assure you that we will be able to meet our payment obligations on the
exchange preferred securities when they become due. Our existing preferred
securities are subject to the same risks that we may be unable to meet our
payment obligations when due. In addition, they are ranked junior in right of
payment to the exchange preferred securities.
WE EXPECT TO USE PART OF THE PROCEEDS OF THE OFFERING OF EXCHANGE PREFERRED
SECURITIES TO PAY TAXES RESULTING FROM THIS TRANSACTION AND THE PROCEEDS WILL,
TO THAT EXTENT, BE UNAVAILABLE FOR USE IN OUR BUSINESS OPERATIONS.
We expect the exchange of exchange preferred securities for existing
preferred securities to result in a tax liability to us, as a result of the
taxable income generated by the cancellation of existing
29
debentures supporting the existing preferred securities tendered into the
exchange offer. If all of the existing preferred securities are exchanged for
exchange preferred securities, we anticipate incurring a tax liability of
approximately $ million. The proceeds of the offering of additional exchange
preferred securities for cash described in this prospectus will be applied first
to pay this expected tax liability, and the remainder, if any, will be used in
the operation of our business. Accordingly, the proceeds of the cash offering of
exchange preferred securities may not result in any benefit to our business
operations.
IF WE BECOME INSOLVENT, A COURT MAY VOID OUR GUARANTEE IN RESPECT OF THE
EXCHANGE PREFERRED SECURITIES OR SUBORDINATE THE GUARANTEE TO OUR OTHER
OBLIGATIONS, AND A COURT MAY ALSO PROVIDE THAT THE AMOUNT OF YOUR CLAIM WILL BE
LESS THAN THE LIQUIDATION AMOUNT PER EXCHANGE PREFERRED SECURITY.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, if a court were to find that, at the time we, as
guarantor of the exchange preferred securities, incurred the debt evidenced by
our guarantee, we:
- were insolvent or rendered insolvent by reason of such incurrence; were
engaged in a business or transaction for which our remaining assets
constituted unreasonably small capital; or intended to incur, or believed
that we would incur, debts beyond our ability to pay such debts as they
mature; and
- received less than reasonably equivalent value or fair consideration for
the incurrence of such debt;
then the court could void the guarantee, or claims by holders of the securities
under that guarantee could be subordinated to all of our other debts except the
existing preferred securities. In addition, any payment by us under our
guarantee could be required to be returned to us, or to a fund for the benefit
of our creditors.
The measures of insolvency for purposes of the above will vary depending on
the law applied in any proceeding. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater that
the saleable value of all of its assets at a fair valuation; or
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
In addition, if we become insolvent, a court may provide that the amount of
your claim will be less than the liquidation amount per exchange preferred
security.
THE EXISTING PREFERRED SECURITIES WILL BE SUBORDINATED TO THE EXCHANGE PREFERRED
SECURITIES.
The existing preferred securities are unsecured obligations and rank in
right of payment behind:
- all of our existing and future senior debt at the parent level,
aggregating $233.0 million as of January 28, 2001, which includes the
notes payable to Prudential, and $69.1 million in subsidiary obligations,
comprised of accounts payable;
- up to an aggregate of $ million in liquidation amount of exchange
preferred securities that may be issued in the exchange offer, and the
offer of additional exchange preferred securities for cash.
Also, the existing preferred securities are effectively subordinated to the
liabilities of our subsidiaries, including intercompany liabilities to the
extent that the instruments governing these
30
intercompany liabilities provide for subordination. The existing preferred
securities may also be subordinated to any debt we may issue in the future.
We may not make any distributions to holders of, or purchase, redeem or
otherwise retire, the existing preferred securities, if payments on any of our
senior debt or the distributions to holders of the exchange preferred securities
are not made when due. The owners of our senior debt and exchange preferred
securities will be entitled to receive payment of all amounts due to them before
the owners of the existing preferred securities upon any payment or distribution
of our assets to our creditors upon our liquidation or other insolvency or
reorganization proceedings.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the sections entitled "Summary" and "Risk
Factors," contains forward-looking information. This forward-looking information
is subject to risks and uncertainties including the factors listed under "Risk
Factors," as well as elsewhere in this prospectus. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue," or the negative of these terms or other
comparable terminology. These statements are only predictions and may be
inaccurate. Actual events or results may differ materially. In evaluating these
statements, you should specifically consider various factors, including the
risks outlined under "Risk Factors." These factors may cause our actual results
to differ materially from any forward-looking statement. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. The safe harbor for forward-looking statements made in
connection with the exchange offer pursuant to the registration statement or the
Tender Offer Statement on Schedule TO-I are not and have not been protected
under the Securities Litigation Reform Act.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. We will use
proceeds from the sale of additional exchange preferred securities for cash to
pay taxes that we expect to incur as a result of the exchange offer. Assuming
all of the existing preferred securities are exchanged in the exchange offer, we
anticipate incurring a tax liability of $ million as a result of the taxable
income generated by the cancellation of existing debentures supporting the
existing preferred securities tendered in the exchange offer. We will use for
general corporate purposes any proceeds that are not utilized to settle the
expected tax liability.
31
PRICE RANGE OF COMMON STOCK
The following table lists the high and low closing sales prices for our
common stock during the past two fiscal years as reported on the New York Stock
Exchange Composite Tape, along with information on dividends declared per share
during the same periods. Our common stock is listed on the New York Stock
Exchange and the Pacific Stock Exchange and trades on various regional exchanges
(Ticker Symbol: FLE). Call options are traded on the American Stock Exchange.
DIVIDENDS
QUARTER HIGH LOW DECLARED
- ------- -------- -------- ---------
Fiscal 2000
First Quarter.................................... $26.94 $22.13 $ .19
Second Quarter................................... 23.25 18.25 .19
Third Quarter.................................... 22.25 16.13 .19
Fourth Quarter................................... 17.13 14.44 .19
Fiscal 2001
First Quarter.................................... $15.56 $12.13 $ .19
Second Quarter................................... 14.44 11.00 .19
Third Quarter.................................... 15.75 8.94 .04
Fourth Quarter................................... 14.26 8.15 .04
Fiscal 2002
As of June 11, 2001.............................. $12.79 $12.61 *
On April 29, 2001, there were approximately 1,300 shareholders of record of
our common stock.
- ------------------------
* None declared as of June 11, 2001.
DIVIDEND POLICY
The declaration and payment of dividends on our common stock is at the
discretion of our board of directors and depends on our results of operations,
financial condition, capital requirements and such other factors as our board of
directors deems relevant.
32
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization:
- at January 28, 2001, on an actual basis; and
- as adjusted to:
- give effect to the issuance of the exchange preferred securities in the
exchange offer on the assumption that $287.5 million in aggregate
liquidation amount of the outstanding existing preferred securities
were validly tendered and accepted for exchange, after deducting fees
to the dealer manager and estimated expenses;
- give effect to the issuance and sale for cash of approximately $
million in aggregate liquidation amount of additional exchange
preferred securities, after deducting fees of the placement agent and
estimated expenses; and
- reflect an increase to capital surplus of $ million on the assumed
early extinguishments of all outstanding existing preferred securities,
net of taxes imputed to us.
To the extent that existing preferred securities are not validly tendered or
accepted in the exchange offer, the amount attributed to the exchange preferred
securities would decrease and the amount attributed to the existing preferred
securities would increase. The financial data at January 28, 2001 in the
following table are derived from our unaudited financial statements for the 39
weeks ended January 28, 2001.
JANUARY 28, 2001
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
Current liabilities:
Accounts payable.......................................... $ 69,147 $
Retail flooring liability................................. 110,701
Motor home chassis inventory financing.................... 26,851
Current portion of long-term debt (unsecured senior
debt)................................................... 80,000
Other current liabilities................................. 222,157
Total current liabilities............................... $ 508,856 $
Deferred compensation and retirement benefits............... $ 66,920 $
Insurance reserves.......................................... 25,803
Long-term debt (less current portion)....................... --
Total liabilities....................................... $ 601,579 $
Contingent liabilities
% Convertible Trust Preferred Securities due (exchange
preferred securities)(1).................................. $ $
6% Convertible Trust Preferred Securities due 2028 (existing
preferred securities)(1).................................. 287,500
Shareholders' equity:
Preferred stock, par value $1.00 per share, 10,000,000
shares authorized, none issued and outstanding.......... $ -- $ --
Common stock, par value $1.00 per share, 75,000,000 shares
authorized, 32,739,885 issued and outstanding(2)........ 32,740
Capital surplus(3)........................................ 194,338
Retained earnings......................................... 108,026
Accumulated other comprehensive income (loss)............. (2,439)
Total shareholders' equity.............................. 332,665
Total capitalization.................................... $1,221,744 $
- ------------------------------
(1) We report our operations and those of our subsidiaries on a consolidated
basis. Consequently, the existing preferred securities and exchange
preferred securities are reported on our balance sheet as Company-obligated
mandatorily redeemable convertible preferred securities of Fleetwood Capital
Trust or Fleetwood Capital Trust II, as the case may be, in respect of the
debentures that we have issued or will issue to the existing trust and the
new trust, as the case may be.
(2) Outstanding shares exclude the shares reserved for issuance upon conversion
of the existing preferred securities and the exchange preferred securities,
payment of interest on the exchange preferred securities and 2,773,517
shares issuable under our stock option and purchase plans and warrants.
(3) The increase to capital surplus of $ reflects the reduction in the stated
value of the exchange preferred securities, net of taxes imputed to us, as a
result of the early extinguishment of all outstanding existing preferred
securities. This amount is excluded from net income (loss) and included in
income available to common shareholders in a manner similar to a preferred
stock dividend.
33
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated operating data for the three years in the period ended
April 30, 2000 and the balance sheet data at April 30, 2000 and April 25, 1999
are derived from our consolidated financial statements audited by Arthur
Andersen LLP, independent public accountants, which are incorporated by
reference in this prospectus. Please refer to the complete consolidated
financial statements and related notes incorporated by reference in this
prospectus for more information. The consolidated operating data for the fiscal
years ended April 27, 1997 and April 28, 1996, and the balance sheet data at
April 26, 1998, April 27, 1997 and April 28, 1996, have been derived from our
consolidated financial statements audited by Arthur Andersen LLP that are not
included or incorporated by reference in this prospectus. The consolidated
operating data for the 39 weeks ended January 28, 2001 and 40 weeks ended
January 30, 2000 and the consolidated balance sheet data as of January 28, 2001
and January 30, 2000 are derived from our unaudited consolidated financial
statements, and include all adjustments, including normal recurring adjustments,
that in the opinion of our management are necessary to present fairly the
financial information therein. Certain reclassifications have been made in the
financial data below in order to more clearly present the distributions on the
existing preferred securities as a minority interest in the existing preferred
securities of Fleetwood Capital Trust. The distributions were previously
included in other income in our consolidated financial statements incorporated
by reference in this prospectus. These results are not necessarily indicative of
the results that may be expected for future periods and have not been adjusted
to reflect Emerging Issues Task Force No. 00-10 "Accounting for Shipping and
Handling Costs" and No. 00-14 "Accounting for Certain Sales Incentives," which
we adopted in the fourth quarter of fiscal 2001.
40 WEEKS 39 WEEKS
FISCAL YEARS(1) ENDED ENDED
-------------------------------------------------------------- JANUARY 30, JANUARY 28,
1996 1997 1998 1999 2000 2000 2001
---------- ---------- ---------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales
Manufactured housing............... $1,443,016 $1,426,940 $1,487,650 $1,563,966 $1,454,821 $1,136,419 $ 757,951
Recreational vehicles.............. 1,317,494 1,395,163 1,518,163 1,729,034 1,914,516 1,415,823 920,542
Housing--retail.................... (2) (2) -- 332,309 591,895 465,013 458,670
Supply operations, corporate and
other............................ 48,767 52,323 47,278 47,945 53,763 37,745 24,333
Adjustments and eliminations....... (2) (2) (2,524) (183,091) (302,030) (235,918) (199,012)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$2,809,277 $2,874,426 $3,050,567 $3,490,163 $3,712,965 $2,819,082 $1,962,484
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations before income taxes,
minority interest, discontinued
operations and cumulative effect of
accounting change.................. $ 110,993 $ 147,050 $ 178,885 $ 196,415 $ 159,059 $ 136,165 $ (256,374)
Benefit (provision) for income
taxes.............................. (41,543) (56,998) (67,841) (78,146) (64,461) (55,759) 36,434
Minority interest:
In net loss of subsidiary.......... 451 -- -- -- -- -- --
In Fleetwood Capital Trust, net of
income taxes..................... -- -- (2,499) (11,148) (11,104) (8,352) (8,369)
Income (loss) from continuing
operations......................... 69,901 90,052 108,545 107,121 83,494 72,054 (228,309)
Income from discontinued operations,
net of income taxes................ 9,708 34,778 -- -- -- -- --
Income (loss) before cumulative
effect of accounting change........ 79,609 124,830 108,545 107,121 83,494 72,054 (228,309)
Cumulative effect of accounting
change, net of income taxes........ -- -- -- -- -- -- (11,176)
Net income (loss) for basic earnings
per share.......................... 79,609 124,830 108,545 107,121 83,494 72,054 (239,485)
Effect of dilutive securities:
Minority interest in Fleetwood
Capital Trust.................... -- -- 2,499 11,148 11,104 8,352 --(3)
Net income (loss) for diluted
earnings per share................. 79,609 124,830 111,044 118,269 94,598 80,406 (239,485)
Earnings (loss) per share--diluted:
Continuing operations.............. 1.50 2.30 3.01 2.94 2.41 2.04 (6.97)
Discontinued operations, net of
income taxes..................... .21 .89 -- -- -- -- --
Cumulative effect of accounting
change, net of income taxes...... -- -- -- -- -- -- (.34)
34
40 WEEKS 39 WEEKS
FISCAL YEARS(1) ENDED ENDED
-------------------------------------------------------------- JANUARY 30, JANUARY 28,
1996 1997 1998 1999 2000 2000 2001
---------- ---------- ---------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income (loss) per share.......... $ 1.71 $ 3.19 $ 3.01 $ 2.94 $ 2.41 $ 2.04 $ (7.31)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average common
shares--diluted.................... 46,469 39,162 36,933 40,171 39,194 39,355 32,755
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA AT END OF PERIOD:
Cash and investments................. $ 287,930 $ 110,434 $ 305,722 $ 267,133 $ 135,142 $ 137,769 $ 102,823
Property, plant and equipment, net... 266,587 278,331 277,211 303,934 312,067 324,076 303,235
Total assets......................... 1,108,932 871,547 1,129,480 1,531,184 1,536,693 1,534,128 1,221,744
Total liabilities.................... 459,795 428,452 465,954 656,981 664,388 666,889 601,579
Capital Trust Preferred Securities... -- -- 287,500 287,500 287,500 287,500 287,500
Shareholders' equity................. 649,137 443,095 376,026 586,703 584,805 579,739 332,665
OTHER DATA:
Gross profit margin.................. 19.0% 18.8% 19.5% 21.6% 22.2% 22.4% 21.0%
Operating income (loss) margin....... 4.7% 4.9% 5.6% 5.5% 4.4% 4.9% (12.7)%
Depreciation and amortization........ $ 27,084 $ 27,579 $ 27,799 $ 31,841 $ 35,080 $ 26,223 $ 27,023
Capital expenditures................. 32,916 56,184 37,809 49,757 55,078 42,455 26,546
EBITDA(4)............................ 158,616 167,138 197,994 222,152 197,256 163,638 (58,006)
Ratio of earnings to fixed
charges(5)......................... 78.7 37.4 24.3 7.5 5.3(6) 6.0 --(7)
- ------------------------------
(1) We use a fiscal year beginning on the day following the last Sunday of April
in each year.
(2) Prior to fiscal 1998, we did not report retail sales and adjustments and
eliminations as separate segments or line items.
(3) The effect of the distributions on preferred securities was anti-dilutive in
the 39 weeks ended January 28, 2001 and was, therefore, not added back to
determine diluted earnings (loss).
(4) Adjusted EBITDA is defined as operating income plus depreciation and
amortization expense plus impairment of goodwill. While adjusted EBITDA
should not be considered as a substitute for net income, cash flows from
operating activities, or other income statement data or cash flow statement
data prepared in accordance with GAAP, or as a measure of profitability or
liquidity, management understands that adjusted EBITDA is customarily used
as a measurement in evaluating companies.
(5) The ratio of earnings to fixed charges is unaudited for all periods
presented. For purposes of computing these ratios, earnings represent income
before income taxes, minority interest, discontinued operations and
cumulative effect of changes in accounting principles and fixed charges less
distributions on existing preferred securities of Fleetwood Capital Trust.
Fixed charges include all interest expense and distributions on the existing
preferred securities.
(6) On a pro forma basis, after giving effect to each of the exchange offer and
cash offer, the ratio of earnings to fixed charges would have been
approximately x in fiscal 2000.
(7) Our ratio of earnings to fixed charges for the 39 weeks ended January 28,
2001 was not meaningful since earnings were inadequate to cover fixed
charges by $269.5 million. Similarly, after giving effect to each of the
exchange offer and cash offer, the pro forma ratio of earnings to fixed
charges for the 39 weeks ended January 28, 2001 was not meaningful since, on
a pro forma basis, earnings during this period would have been inadequate to
cover fixed charges by $ million.
35
MANAGEMENT'S DISCUSSION AND ANALYSIS
39 WEEKS ENDED JANUARY 28, 2001 COMPARED TO 40 WEEKS ENDED JANUARY 30, 2000
CONSOLIDATED RESULTS
For the first 39 weeks of fiscal 2001, we incurred a net loss of
$239.5 million or $7.31 per diluted share. This compares with a profit of
$72.1 million or $2.04 per diluted share for the similar period last year. The
loss in the current period primarily resulted from non-recurring charges related
to goodwill impairment and restructuring and downsizing initiatives. The loss
also stems from significantly reduced sales volume in both manufactured housing
and recreational vehicles caused by a weak market environment. A change in
accounting for credit retail housing sales, which was adopted in the first
quarter, also contributed to the loss. In terms of earnings per share, the
non-recurring charges and the cumulative effect of the change in accounting
amounted to approximately $5.40 and $0.34, respectively.
Consolidated revenues for the 39 weeks ended January 28, 2001 fell 30% to
$1.96 billion compared to $2.82 billion for last year's similar period. Fiscal
2000's nine-month period included 40 weeks compared to 39 weeks in fiscal 2001.
Gross profit margin fell to 21% of sales compared to 22% last year, mainly
due to lower recreational vehicle and retail housing margins. Overall
manufacturing gross margin declined from 21% to 19% as an improved housing
margin was more than offset by the decline in the recreational vehicle sector.
Retail margins were impacted by the third quarter inventory writedown described
above.
Operating expenses, excluding non-recurring charges, declined 5% to
$468 million, down from $493 million in the 40 weeks ended January 30, 2000. As
a percentage of sales, however, operating costs rose from 18% to 24% due to the
lower sales volume. Selling expenses declined 6% to $217 million, but increased
as a percentage of sales from 8% to 11%. Lower product warranty and service
costs within the housing group led to the expense reduction.
General and administrative expenses fell 4% to $251 million, but increased
as a percentage of sales from 9% to 13% on the lower sales. Reduced general and
administrative costs in the manufacturing sector were partially offset by higher
expenses for the retail housing business, which has expanded the number of
retail locations since the 40 weeks ended January 30, 2000. Most of the
reduction in general and administrative costs stems from lower profit-based
incentive compensation and reduced staffing levels.
Non-recurring charges included $163.2 million for the writedown of goodwill
and $28.3 million of other charges. The latter category included $10.6 million
for asset impairment charges related to downsizing of our retail housing
business. Also included was $9.4 million for the writedown of manufacturing
facilities, as well as employee severance payments and other plant closing
costs.
Non-operating expenses of $21.3 million were 48% higher than last year's
$14.4 million, mainly due to higher interest expense and lower investment
income. Interest expense was higher due to additional short-term and long-term
borrowings and higher interest rates. Investment income was down 28% from the
prior year period as a result of reduced invested balances.
MANUFACTURED HOUSING
Gross manufacturing revenues in the first 39 weeks of fiscal 2001 were
$758 million, down 33% from the 40 weeks ended January 30, 2000, and included
$199 million of intercompany sales to our retail sales centers. Manufacturing
unit volume declined 37% to 29,272 homes, but the number of housing sections was
off a lesser 34% to 51,387 due to the continuing shift in sales mix toward
multi-section homes. Multi-section homes represented 73% of factory sales for
the first 39 weeks of fiscal 2001 versus 63% for the 40 weeks ended January 30,
2000.
36
The weakness in housing sales reflects a soft manufactured housing market
that has deteriorated over the past year. During the past two years, the
manufactured housing industry has been adversely affected by excessive retail
inventories and restrictive retail financing conditions. Lenders have imposed
more stringent credit standards, higher down payment requirements for retail
buyers and higher spreads between their cost of funds and retail financing
rates. Additionally, several key lenders have reduced their financing budgets,
which has limited the amount of funding available to the industry. These
actions, compounded with higher interest rates, have eliminated many potential
buyers of manufactured homes. We anticipate that industry wholesale shipments
will continue to be weak until the current inventory imbalance is resolved, the
timing of which depends largely on the availability and terms of retail
financing.
Operating income, before intercompany profit adjustments, declined 69% from
$67.8 million to $21.2 million, and operating margin fell from 6% to 3% of
sales. Approximately $12 million, or one-fourth, of the profit decline resulted
from non-recurring restructuring and impairment charges related to plant
closings and downsizing initiatives. Excluding these non-recurring charges, the
operating margin for our housing group was 4% for the 39 weeks ended
January 28, 2001. The non-recurring charges included $9.4 million for the
writedown of plant facilities, $1.9 million for employee severance benefits and
$700,000 of other costs. Gross profit margin for our housing group improved from
22% to 24% of sales, mainly as a result of lower raw material costs. More
efficient material usage, improved product pricing and lower lumber costs also
contributed to the higher gross margin. Housing group operating costs, excluding
the aforementioned non-recurring charges, fell 22%, mainly as a result of lower
product warranty and service costs, reduced selling expenses and lower employee
compensation. Compensation costs reflect lower profit-based incentive
compensation and staffing reductions resulting from downsizing efforts.
RETAIL HOUSING OPERATIONS
Our retail housing division generated revenues of $459 million for the 39
weeks ended January 28, 2001, compared to $465 million in the 40 weeks ended
January 30, 2000. Unit sales for the retail operation were down 6% to 10,521
homes. As a result of a change in accounting for retail credit sales, we
incurred a one-time cumulative charge against earnings of $11.2 million after
taxes. For the 39 weeks ended January 28, 2001, our retail division incurred an
operating loss of $47.3 million before interest expense on inventory financing,
compared to an operating profit of $8.3 million for the 40 weeks ended
January 30, 2000. The loss for the 39 weeks ended January 28, 2001 included
non-recurring asset impairment charges totaling $10.6 million related to
downsizing initiatives. The retail division also took a $9.8 million inventory
writedown in the third quarter of fiscal 2001. Excluding these unusual items,
the earnings decline mainly resulted from the weak manufactured housing market,
lower gross margins and high selling expenses stemming from competitive market
conditions, along with higher overhead costs related to the expansion of retail
locations. Interest expense on inventory financing increased from $8.4 million
for the 40 weeks ended January 30, 2000 to $9.4 million for the 30 weeks ended
January 28, 2001, reflecting the increase in inventories associated with new
store openings and higher interest rates.
RECREATIONAL VEHICLES
Recreational vehicle revenues declined 35% to $921 million, primarily as a
result of sharply lower motor home sales. Motor home revenues fell 45% to
$492 million on a 49% decrease in unit volume. This decrease mainly reflects
softening retail demand and high dealer inventories. Sales were also weaker for
towable recreational vehicle products. Travel trailer revenues declined 21% to
$344 million and folding trailer sales fell 8% to $85 million. Unit shipments
for travel trailers and folding trailers were 25,148 and 14,584, respectively,
representing decreases of 19% and 11%.
37
Our recreational vehicle group incurred an operating loss of $43.1 million
for the 39 weeks ended January 28, 2001, mainly as a result of lower sales
volume. Other significant factors which influenced results included
inefficiencies from lower operating rates, inventory writedowns and higher than
normal operating costs for our motor home division. Also, the recreational
vehicle group incurred non-recurring costs related to a plant closing and other
downsizing initiatives that totaled $3.4 million for the 39 weeks ended
January 28, 2001. Recreational vehicle gross profit margin declined to 16% of
sales from 19% for the first 39 weeks of fiscal 2000, due to lower motor home
and travel trailer margins. The motor home division experienced higher raw
material and direct labor costs, which reflect raw material inventory
obsolescence and related writedowns, along with production inefficiencies at
lower volume levels. Despite the decline in sales volume, recreational vehicle
operating costs were virtually unchanged from the first 40 weeks of fiscal 2000.
Motor home and travel trailer selling costs increased significantly as a result
of dealer incentives implemented to stimulate sales. General and administrative
expenses were lower, mainly due to reduced incentive compensation, which is
based on profitability. General and administrative cost reduction efforts were
partially offset by the impact of employee severance payments related to
downsizing efforts.
SUPPLY OPERATIONS
Our supply group contributed revenues of $24 million for the 39 weeks ended
January 28, 2001, compared to $38 million for the 40 weeks ended January 30,
2000. Operating income fell 68% to $5.1 million mainly due to reduced sales
volume, which was adversely affected by lower internal sales and declining
external sales to the heavy truck building industry.
FISCAL 2000 COMPARED TO FISCAL 1999
CONSOLIDATED RESULTS
Earnings for fiscal 2000 declined 22% to $83.5 million or $2.41 per diluted
share compared to $107.1 million and $2.94 per share for the prior fiscal year.
The earnings contraction mainly reflects reduced profits from our housing
business as a result of weakening demand for manufactured housing. An increase
in non-operating expenses also contributed to the earnings decline.
Consolidated operating income fell 15% to $162 million compared to
$190 million in fiscal 1999, largely as a result of an 18% decrease in combined
housing profits from manufacturing and retail operations. A 5% decrease in
recreational vehicle earnings and a significant increase in health insurance
costs also reduced operating income.
Revenues for fiscal 2000 rose 6% to an all-time high of $3.71 billion
compared to $3.49 billion in fiscal 1999. This revenue growth resulted from
healthy sales of recreational vehicles and the continuing expansion of our
retail housing business.
Gross profit margin for fiscal 2000 rose to 22.2% from 21.6% for the prior
fiscal year, primarily due to the favorable effect of the growing retail housing
business. The retail operation generally carries higher gross margins, and there
was a positive impact on the consolidated gross profit percentage with the
addition of retail gross profits combined with the elimination of intercompany
manufacturing sales to retail. Manufacturing gross margin declined slightly from
20.9% to 20.6% of sales as a result of lower recreational vehicle margins.
Operating expenses rose 17% to $661 million, and also increased as a
percentage of sales from 16% to 18%. The rapidly expanding retail housing
business accounted for about $60 million or 62% of the increase in operating
costs in fiscal 2000. Selling expenses rose 11% to $309 million, with the retail
housing operation accounting for about 40% of the increase. Higher selling costs
were incurred in manufacturing operations for sales promotion and product
warranty and service. General and administrative expenses of $352 million were
up 23%, primarily due to the addition of $52 million in
38
retail costs, which represented about 78% of the overall increase. The increase
attributable to manufacturing was primarily due to higher costs for employee
health benefits, casualty insurance and recreational vehicle product development
activities. Most of the rise in the "Corporate and other" operating loss as
shown in the business segment information was attributable to the cost increases
in health benefits and casualty insurance. As a percentage of sales, selling
expenses increased from 8.0% to 8.3% and general and administrative expenses
rose from 8.2% to 9.5%.
Non-operating items totaled a net expense of $20.6 million compared to net
expense of $11.4 million for the prior fiscal year. The increase was mainly
caused by a 33% reduction in investment income and a $4.5 million increase in
interest expense on retail inventory floor plan financing. Investment income was
lower because of reduced cash balances available for investment purposes. The
rise in interest expense on inventory financing largely reflected the growth in
retail inventories associated with the expansion of retail operations.
Our effective income tax rate rose from approximately 40% in fiscal 1999 to
41% in fiscal 2000. The increase primarily reflected the impact of the
amortization of goodwill recorded in conjunction with retail acquisitions, which
is not deductible for tax purposes. The impact of the higher tax rate on
earnings per share amounted to approximately three cents per share.
MANUFACTURED HOUSING
Factory sales of manufactured housing declined 7% to $1.45 billion in fiscal
2000 from the prior fiscal year's record $1.56 billion. Sales figures include
intercompany sales to our retail housing division of $298 million in fiscal 2000
and $179 million in fiscal 1999. Factory shipments for the year were off 10% to
59,458 homes.
Weak market conditions in the manufactured housing industry reduced sales
volume and factory operating efficiencies in fiscal 2000. Industry wholesale
shipments to retailers declined since May 1999, mainly as a result of too much
manufacturing and retail capacity and excess inventories in the retail sector.
The imbalance between supply and demand was exacerbated by unfavorable
developments in the financing area. During fiscal 2000, lenders increased credit
standards and down payment requirements for retail buyers. These actions and
higher interest rates prevented many potential buyers from purchasing
manufactured homes.
Operating income for our housing group declined 17% in fiscal 2000 to
$69.4 million due to the lower sales volume. Gross profit margin improved
slightly from 22.5% to 22.7% of sales, mainly as a result of modest selling
price increases and stable raw material costs. Operating income is net of
intercompany profit eliminated in consolidation, which amounted to
$14.4 million in fiscal 2000 and $16.0 million in fiscal 1999. As a percentage
of sales, operating income in fiscal 2000 was slightly below 5% compared to over
5% in fiscal 1999.
RECREATIONAL VEHICLES
Recreational vehicle revenues in fiscal 2000 were up 11% to a record
$1.91 billion. As a result of a healthy market environment, all three of our
recreational vehicle divisions posted record sales in fiscal 2000. Motor home
sales increased 13% to a new high of $1.20 billion, as shipments rose 9% to
16,294 units. Towable recreational vehicle products also performed well in
fiscal 2000, with travel trailer sales rising 7% to $590 million and folding
trailer sales also increasing 7% to $124 million. Travel trailer shipments were
up 9% to 41,936 units, while folding trailer unit volume increased 3% to 21,890.
Recreational vehicle operating income in fiscal 2000 was $104.1 million, off
5% from the prior fiscal years record $109.9 million. As a percentage of sales,
operating income fell from 6% to 5% due to lower gross profit margins and higher
selling costs. Gross margins were adversely affected by changes
39
in product mix within the motor home and travel trailer divisions, reflecting
increased sales of competitively-priced products with lower profit margins. This
change mainly reflects our decision to expand our product offerings to include
lower-priced entry-level travel trailers and Class C motor homes, both of which
represent a significant and growing part of the market. The rise in recreational
vehicle selling expenses was mainly driven by higher product warranty costs for
all recreational vehicle divisions and motor home sales promotion programs.
SUPPLY OPERATIONS
Revenue for our supply group rose 15% to $50 million in fiscal 2000, up from
$44 million in fiscal 1999. The increase mainly reflects higher sales from
fiberglass manufacturing operations. Operating income of $20.5 million in fiscal
2000 was up 26% from fiscal 1999 as a result of the higher fiberglass sales, as
well as volume increases related to imported parts and components.
RETAIL HOUSING OPERATIONS
Fleetwood's retail housing division recorded revenues of $592 million in
fiscal 2000 on the sale of 14,528 homes relative to revenues of $332 million on
the sale of 8,255 homes in fiscal 1999. Operating income, before interest
expense on inventory floor plan financing, declined to $3.8 million from
$4.9 million in fiscal 1999. Although sales volume improved with the continuing
expansion in the number of retail outlets, profits were constrained by the
challenging market environment and higher operating costs. As expected, higher
operating costs were incurred for new store openings and the building of
infrastructure and systems for this new business. The retail business commenced
operations in fiscal 1999, and grew rapidly to 243 retail sales centers as of
April 30, 2000. Interest expense for inventory financing, a non-operating
expense, increased to $10.8 million in fiscal 2000 from $6.3 million in fiscal
1999.
FISCAL 1999 COMPARED TO FISCAL 1998
For a comparison of fiscal 1999 compared to fiscal 1998, please see the
discussion contained in our Annual Report on Form 10-K filed with the Securities
and Exchange Commission on July 6, 2000.
LIQUIDITY AND CAPITAL RESOURCES
We have historically relied upon internally generated cash flows to satisfy
working capital needs and to fund capital expenditures. In recent periods,
however, we have used external funding sources to supplement internal cash flows
due to greater working capital requirements. There was virtually no cash
provided by operating activities for the 39 weeks ended January 28, 2001,
compared to $19.9 million provided by operating activities during the 40 weeks
ended January 30, 2000. Cash and cash equivalents declined from $137.8 million
at January 30, 2000 to $102.8 million at January 28, 2001. The reduced level of
cash and cash equivalents in fiscal 2001 largely resulted from unprofitable
operations.
Cash outlays in the first 39 weeks of fiscal 2001 included $13.8 million in
dividends to shareholders and $26.5 million for net capital expenditures.
Dividends for the 40 weeks ended January 30, 2000 were $18.7 million and net
capital expenditures totaled $42.4 million. We are in the process of negotiating
arrangements for additional outside financing to support expected future working
capital needs, to replace the $80 million in senior debt and to reduce our
existing inventory flooring liability. If negotiations are successfully
completed, we believe that these credit facilities are likely to be in place
sometime during the first quarter of fiscal 2002. We discuss these negotiations
in greater detail below in the section entitled "Management's Discussion and
Analysis--Recent Developments--Senior Debt Refinancing," beginning on page 42 of
this prospectus.
In our management's opinion, the combination of existing cash resources,
expected future cash flows from operations, expected additional outside
financing and available lines of credit will be
40
sufficient to satisfy our foreseeable cash requirements for the next 12 months.
For a discussion of the factors that can materially adversely affect our
liquidity and capital resources, please read the section titled "Risk Factors,"
beginning on page 19 of this prospectus.
RECENT DEVELOPMENTS
PRELIMINARY SALES RESULTS
On May 3, 2001, we announced preliminary results of sales for the fourth
quarter and fiscal 2001. Sales of recreational vehicles and manufactured homes
generated revenues of $2.53 billion on a combined basis, a decline of 33%
compared to revenues of $3.77 billion for the prior fiscal year. Sales for the
fourth quarter were $545 million, a decline of 40% from sales of $906 million in
the fourth quarter of the prior fiscal year.
Sales of recreational vehicles for fiscal 2001 were $1.21 billion, a decline
of 37% compared with sales of $1.92 billion for the prior fiscal year. Motor
home sales dropped to $638 million from $1.20 billion in the prior fiscal year;
travel trailer sales for fiscal 2001 declined to $452 million from $599 million
in the prior fiscal year; and folding trailer sales declined to $117 million
from $129 million in the prior fiscal year.
Recreational vehicle sales for the fourth quarter of fiscal 2001 were
$289 million, a decline of 42% compared with sales of $500 million for the
corresponding quarter in the prior fiscal year. Each recreational vehicle
division posted lower fourth quarter revenues than it had in the fourth quarter
of the prior fiscal year. Motor home sales fell to $155 million compared with
$307 million one year ago. In the towable recreational vehicle categories,
travel trailer sales declined from $160 million in the fourth quarter of fiscal
2000 to $106 million in the quarter ended April 2001, and folding trailer sales
declined from $33 million in the fourth quarter of fiscal 2000 to about
$29 million in the fourth quarter of fiscal 2001.
Sales of manufactured housing for fiscal 2001 were $1.29 billion, a decline
of 28% compared with $1.80 billion in the prior fiscal year. Sales for fiscal
2001 included $737 million from manufacturing operations and $553 million from
retail stores. Sales for the comparable period in the prior fiscal year were
$1.21 billion and $592 million, respectively. Gross manufacturing sales,
including intercompany sales of $243 million, were approximately $979 million in
fiscal 2001 compared with $1.52 billion, including intercompany sales of $312
million, for the prior fiscal year.
During the fourth quarter of fiscal 2001, manufactured housing revenues
declined by 37% to approximately $247 million compared with $394 million in the
corresponding quarter of the prior fiscal year. Manufactured housing sales for
the quarter included net manufacturing sales of $153 million to independent
retailers and retail sales of $94 million from our company-owned sales centers,
which compares with $267 million and $127 million, respectively, for the
corresponding quarter in the prior fiscal year. Fourth quarter fiscal 2001 gross
manufacturing sales declined 44% to $187 million, including intercompany sales
of $34 million to our company-owned retail stores, from $332 million in the
fourth quarter of fiscal 2000, including intercompany sales of $65 million to
our company-owned retail stores.
BUSINESS OUTLOOK
We do not expect to report that we operated profitably during the fourth
quarter of fiscal 2001. Results of sales for the fourth quarter of fiscal 2001
were adversely affected by continuing weakness in the manufactured housing
market and the slowdown in recreational vehicle sales and these trends have
continued into the first quarter of fiscal year 2002. We will also incur further
charges for the fourth quarter of fiscal 2001 for impairment, restructuring and
downsizing initiatives. For about two years, the manufactured housing industry
has been adversely affected by excess capacity, high retail inventories and a
slowing of retail sales caused by restrictive financing conditions. Competition
from repossessed
41
homes, together with more stringent lending standards and relatively high
interest rates, contributed to the further decline in the fourth quarter of
fiscal 2001. Although industry manufacturing and retail capacity have been
reduced, weak market conditions are expected to continue until the inventory
imbalance is resolved. To a large degree, the length of the inventory adjustment
period will depend on retail financing conditions.
In the recreational vehicle sector, which has tended to be a leading
economic indicator, retail demand for motor homes began to weaken immediately
after the stock market began to show signs of weakness late in fiscal 2000, and
dealers began to reduce their relatively high inventories at that time. In
addition, a softening of demand for travel trailers emerged in the third quarter
of fiscal 2001. These factors led to a slowdown in factory shipments, which
persisted throughout fiscal 2001 and is continuing in the first quarter of
fiscal 2002. The lower recreational vehicle sales levels experienced in fiscal
2001 have also continued in the first quarter of fiscal 2002. We believe we will
report that the combination of reduced sales and margin pressure have had a
noticeable adverse impact on the profitability of the recreational vehicle group
in the final quarter of fiscal 2001, and have continued into the first quarter
of fiscal 2002.
SENIOR DEBT REFINANCING
Because of cyclical downturns in both of our industries and the other
factors described in this section, we posted net losses for each of the first
three quarters of fiscal 2001 and we expect to post a net loss also for the
fourth quarter of fiscal 2001. As a result of the balance sheet impact of these
cumulative losses, we notified Prudential in February 2001 that we were in
violation of certain balance sheet covenants related to our senior unsecured
notes held by Prudential. At the same time, we informed Prudential that we
intended to remedy the violations through a debt restructuring based on a
proposal from Bank of America to provide us with a loan commitment for a senior
secured credit facility totaling $260 million.
Following negotiations with Prudential, we entered into a forbearance
agreement with Prudential dated April 23, 2001. Under the terms of the
agreement, Prudential agreed to delay the enforcement of its remedies,
principally involving acceleration of its debt. We have since agreed to a
principal repayment on one of the Prudential notes in the amount of
$4.3 million, plus accrued interest. Meanwhile, we have received a commitment
for financing from Bank of America, subject to certain conditions, and we are in
the process of negotiating the terms of the financing proposed by Bank of
America.
The secured facility, led by Bank of America, will be structured as a
three-year, $230 million syndicated revolver with an additional $30 million
available as a one-year term loan. There is no assurance that we will be able to
execute definitive documentation with Bank of America. In any event, the closing
of the facility would be subject to certain contingencies, including the
successful syndication of the facility and the absence of material adverse
changes in our business and operations. The facility is to be secured by
substantially all of our assets except certain inventories and the cash value of
our company-owned life insurance. If it can be completed, we believe the new
facilities would be completed and funded during our first quarter in fiscal
2002.
If we obtain funds from the new facility, we intend to apply them as
follows:
- To utilize approximately $80 million to retire the remaining principal
balance of the Prudential notes, along with payment of interest and a
yield maintenance penalty;
- To reduce the outstanding retail flooring liability to Conseco;
- To retire the remaining balance of motor home chassis flooring at the time
of funding;
42
- To secure standby letters of credit that primarily underwrite self-insured
workers' compensation programs at manufacturing plants in various states;
and
- To utilize the remainder, net of an excess required by Bank of America
pursuant to the loan agreement, for general corporate purposes.
NEW ACCOUNTING PRONOUNCEMENTS
During the first quarter of fiscal 2000, the Emerging Issues Task Force
(EITF) issued pronouncement No. 00-14 "Accounting for Certain Sales Incentives."
EITF No. 00-14 addresses the recognition, measurement and statement of earnings
classification of various sales incentives such as coupons, rebates and other
discounts and we adopted this pronouncement during the fourth quarter of fiscal
2001. As a result, certain sales incentives that were previously accounted for
as selling expenses were treated as a reduction in revenue.
During the second quarter of fiscal 2001, the EITF also issued pronouncement
No. 00-10 "Accounting for Shipping and Handling Fees and Costs." EITF No. 00-10
governs the accounting treatment and classification of our delivery revenues and
certain of our delivery expenses and was also adopted by us during the fourth
quarter of fiscal 2001. The adoption of this EITF affected the classification of
revenues from shipments to customers and certain expenses related to shipping
and handling of our product and did not affect our net income (loss). Sales
figures as reported above in the section entitled "Management's Discussion and
Analysis--Recent Developments--Preliminary Sales Results," beginning on page 41
of this prospectus, have been adjusted to incorporate EITF No. 00-10 and EITF
No. 00-14. The net effect has been an overall increase in reported sales figures
of approximately 1% for the 39 weeks ended January 28, 2001 and 2% for the 40
weeks ended January 30, 2000. Sales figures reported elsewhere in this
prospectus have not been adjusted to incorporate EITF No. 00-10 and EITF
No. 00-14.
43
BUSINESS
GENERAL
We are the nation's largest manufacturer of recreational vehicles, including
motor homes, travel trailers, folding trailers and slide-in truck campers, and
one of the nation's largest producers and retailers of manufactured housing. For
the 39 weeks ended January 28, 2001, we sold 45,849 recreational vehicles. In
calendar 2000, we had a 23% share of the overall recreational vehicle market,
consisting of a 22% share of the motor home market, a 19% share of the travel
trailer market and a 40% share of the folding trailer market, and in each of
these categories we held the leading market share. For the 39 weeks ended
January 28, 2001, we shipped 29,272 manufactured homes and were the second
largest producer of HUD-Code homes in the United States in terms of units sold.
In calendar 2000, we also had a 3% share of the single-family housing market and
an 18% share of the manufactured housing market.
MANUFACTURED HOUSING
INDUSTRY OVERVIEW. A manufactured home is a single-family house constructed
entirely in a factory environment rather than at the home site, and is
constructed in accordance with HUD construction and safety standards. There are
two basic categories of manufactured housing: single-section and multi-section.
The manufactured housing industry has grown significantly since 1991. According
to the Manufactured Housing Institute, domestic shipments increased from 170,713
homes in calendar 1991 to 372,843 homes in calendar 1998, before declining to
250,550 in calendar 2000. Total retail sales increased from approximately
$4.7 billion in calendar 1991 to more than $12.0 billion in calendar 2000. In
addition, the manufactured housing industry's share of new single-family housing
increased significantly, from about 17% in calendar 1991 to 24% in calendar
1998, before declining to 17% in calendar 2000. We believe that the growth in
the last decade resulted from increasing consumer acceptance of and preference
for manufactured housing, which was driven by the following:
- improved product quality and design, and enhanced features;
- the significant disparity in the average price per square foot between
site-built housing and manufactured housing;
- favorable demographic and regional economic trends;
- improving business practices in the manufactured home retail industry; and
- increased attractiveness of financing terms available to manufactured
housing retailers and consumers.
As acceptance of manufactured housing has increased among higher income
buyers, demand has shifted toward larger, multi-section homes, which accounted
for 64% of industry shipments in calendar 2000, up from 47% in calendar 1991.
The industry decline in calendar 2000 reflects excessive retail inventories and
constricted availability of retail financing.
Approximately 68% of the manufactured homes produced in the United States in
calendar 1999 were placed on individually owned lots. The balance were located
on leased sites in manufactured housing communities. Most manufactured housing
is sold in rural regions and towns outside of major urban areas.
Today's manufactured homes offer customers similar quality to many
site-built homes at a much more affordable price. Manufactured homes are
constructed in a factory environment utilizing assembly line techniques, which
allows for volume purchases of materials and components and more efficient use
of labor. The quality of manufactured homes has increased significantly over the
past 20 years, as manufactured home producers offer most of the amenities of
site-built housing and generally build
44
homes with the same materials as site-built homes. Many features associated with
new site-built homes are included in manufactured homes, such as central
heating, name brand appliances, carpeting, cabinets, walk-in closets, vaulted
ceilings, wall coverings and porches. In addition, optional features include
such amenities as fireplaces, wet bars, spa tubs and garages, as well as
retailer-installed options such as central air conditioning and furniture
packages.
The manufactured housing industry is cyclical, and is affected by general
economic conditions and consumer confidence. It has also, however, been
adversely affected for the past two years by excess capacity, high retail
inventories and a slowing of retail sales. This has largely been caused by
restrictive financing conditions. High inventories have also been caused by the
rapid over-expansion of the retail distribution network and retailers' inflated
expectation of future business. With respect to financing conditions, interest
rates are generally higher and the terms of loans shorter than for site-built
homes. In addition, some lenders have abandoned the business of extending loans
to finance the purchase of manufactured homes. Thus, financing for manufactured
homes has become more expensive and more difficult to obtain than financing for
site-built homes. Similarly, a large number of defaults on loans that were
previously made by retail lenders to less-qualified applicants has resulted in
an excessive number of repossessions, and manufacturers must compete with
resellers of these repossessed homes. Further, relatively higher interest rates
in the first quarter of calendar 2001 contributed to a decrease in consumer
demand for new manufactured housing. Industry manufacturing and retail capacity
have been reduced in response to this inventory imbalance, but we expect weak
market conditions will continue until the retail imbalance is resolved, and this
will depend to a large degree on the continued availability of retail financing,
as well as on a reduction in the number of retail dealers.
OUR MANUFACTURED HOUSING BUSINESS. We are the second largest producer of
HUD-Code manufactured housing in the United States in terms of units sold, and
distribute our products through a network of approximately 1,380 retailers in 48
states. At January 28, 2001, we controlled 237 retail locations under the name
Fleetwood Retail Corp., with the balance of approximately 1,140 locations owned
and operated by independent retailers. In calendar 2000, approximately 88% of
our manufactured homes were shipped to retailers in the 20 states with the
highest retail sales, including Texas, North Carolina, Georgia, Florida and
Tennessee. Our share of the manufactured housing market, based on shipments to
retailers, was 18% in calendar 2000 and we are a leading producer of both
single-section and multi-section manufactured homes.
We held a 17% share of the single-section manufactured housing market in
calendar 2000, as measured by shipments to retailers. Our single-section homes
range in size from 550 square feet to 1,290 square feet. For the 39 weeks ended
January 28, 2001, our average single-section home retailed for approximately
$23,000 (excluding land costs) and single-section homes represented
approximately 27% of our manufactured housing unit shipments. Our single-section
homes are designed for the affordable housing market that includes first-time,
retiree and value-oriented buyers.
We held a 18% share of the multi-section manufactured housing market in
calendar 2000, as measured by shipments to retailers. Our multi-section homes
range in size from 930 square feet to 2,340 square feet. For the 39 weeks ended
January 28, 2001, our multi-section homes sold for an average retail price of
approximately $41,000 (excluding land costs) and multi-section homes represented
approximately 73% of our manufactured housing unit shipments.
MANUFACTURED HOUSING--RETAIL
INDUSTRY OVERVIEW. With the exception of several vertically integrated
entities, most companies in the manufactured housing industry, including us,
traditionally marketed their homes through independent retailers. In recent
years, however, certain manufactured housing producers began to acquire
retailers. These acquisitions occurred for a variety of reasons, including
manufacturers' desire to control retail distribution and upgrade marketing and
merchandising efforts, including brand name
45
development. Additionally, a number of financial consolidators and residential
developers have entered the manufactured housing industry by acquiring
retailers. For instance, in the first half of calendar 1998, certain of our
competing manufacturers announced acquisitions of several of our important
retailers, which collectively accounted for approximately $277 million in
purchases from us. These developments created a risk that independent
distribution channels for our homes would not be as readily available as they
had been in the past.
One factor leading to the current imbalance between retail inventories and
consumer demand in the manufactured housing industry is the large number of
retail dealers, each of which must maintain adequate inventory at its dealer
location to appeal to potential customers. A reduction in the number of
financially weaker dealers likely would be a factor in resolving this retail
imbalance. In addition, the acquisition of retailers by manufactured housing
producers may result in an increase in the number of retail outlets having an
exclusive relationship with a particular manufacturer.
OUR MANUFACTURED HOUSING--RETAIL BUSINESS. In order to protect our
distribution channels and to take advantage of business opportunities in the
manufactured housing retail industry, we acquired HomeUSA, Inc., the nation's
largest independent retailer of manufactured homes. In addition, we completed
several other acquisitions of independent retailers during fiscal 1999 and
fiscal 2000. We also expanded our company-owned retail network through the
development of new "greenfield" locations. The combination of these two
strategies carried us to a high of 243 stores in October 2000. Since then, as
the retail market for manufactured housing has continued to slow down and losses
in our retail operation have risen, we have implemented a downsizing strategy to
better match our retail capacity to market demand. By assigning management of
certain locations to third parties, and closing and selling other locations, we
have reduced the number of stores that we own to 188 at the end of fiscal 2001.
We expect that these downsizing efforts will extend into fiscal 2002 until we
achieve a target level of about 150 stores.
RECREATIONAL VEHICLES
INDUSTRY OVERVIEW. Recreational vehicles include motor homes, travel
trailers, folding trailers and slide-in truck campers. Recreational vehicles are
either driven or towed and are primarily used for vacations, camping trips and
other leisure activities.
A motor home is a self-propelled mobile unit used primarily as a temporary
dwelling during vacation and camping trips. It consists of a truck or bus
chassis with a living unit built onto it. The living area and driver's
compartment are designed and produced by the recreational vehicle manufacturer.
Motor homes are classified by the Recreational Vehicle Industry Association
(RVIA) into three categories: Class A, Class B and Class C. Conventional, or
Class A, motor homes are constructed directly on medium-duty truck chassis which
include the engine and drive train components. They are fully self-contained,
typically include a driver area and kitchen, bathroom, dining and sleeping
accommodations for four to eight people, and have such optional features as air
conditioning, an auxiliary power generator and home electronics such as a
stereo, television and VCR. Class B models are panel-type trucks to which
sleeping, kitchen and toilet facilities are added. These models also have a top
extension added to them for more head room. Since we do not manufacture Class B
motor homes, the Class B motor home comparison is not included in this
prospectus. Compact, or Class C, models are mini motor homes, built on a
cut-away van-type chassis, onto which the manufacturer constructs a living area
with access to the driver's compartment. Class C models have basically the same
features and options as Class A products.
RVIA reported factory shipments of 41,000 Class A motor homes and 16,500
Class C motor homes for calendar 2000. These figures compare to shipments of
23,500 Class A motor homes and 15,200 Class C motor homes as reported by RVIA
for calendar 1991. There are numerous competitors and potential competitors in
this industry. The five largest manufacturers, including us, represented
46
approximately 69% of the combined Class A and Class C motor home markets for
calendar 2000. Our sales represented approximately 22% of the combined Class A
and Class C markets for calendar 2000.
There are two major classes of towable recreational vehicles: travel
trailers and folding trailers. Travel trailers are designed to be towed by
pickup trucks, vans or other tow vehicles, and are similar to motor homes in use
and features. Typically, travel trailers include sleeping, eating and bathroom
facilities and are self-contained units with their own lighting, heating,
refrigeration, fresh water storage tanks and sewage holding tanks so that they
can be used for short periods without being attached to utilities. RVIA
identifies travel trailers as being either conventional or fifth-wheel trailers.
For calendar 2000, RVIA reported factory shipments of 114,500 conventional
trailers and 62,300 fifth-wheel trailers, compared to shipments of 49,300 and
28,300, respectively, for calendar 1991. The five largest manufacturers in
calendar 2000, including us, represented approximately 61% of the total travel
trailer market.
The other major class of towable recreational vehicles, folding trailers,
are smaller and lighter than their travel trailer counterparts and are
consequently less expensive and easier to tow. Folding trailers typically
include sleeping and eating facilities, fresh water storage and either a
built-in icebox or a refrigerator. RVIA reported shipments of 51,300 folding
trailers in calendar 2000, which number was significantly higher than the 33,900
shipments in calendar 1991. Of all of the markets for recreational vehicles, the
folding trailer market is the most concentrated, with the five largest
manufacturers, including us, holding almost 84% of the market in calendar 2000.
Slide-in truck campers represent another class of towable recreational
vehicles, but have a less significant presence in the towable sector. Slide-in
truck campers are similar to travel trailers in terms of use and features, but
are designed to fit in the bed of a pickup truck. For calendar 2000, RVIA
reported factory shipments of 11,100 slide-in truck campers, compared to
shipments of 9,600 for calendar 1991.
Sales of recreational vehicles tend to be a leading economic indicator, and
indeed sales started to decline when the stock market began to show signs of
weakness late in fiscal 2000. Dealers began to reduce inventories of motor homes
at that time. Demand for towable recreational vehicles also began to soften
later in fiscal 2001. Recreational vehicles typically are a discretionary
purchase for consumers, and sales are therefore affected principally by general
economic conditions and consumer confidence, and to a lesser extent by fuel
availability and prices. Retail financing conditions have historically been a
somewhat less significant factor affecting the recreational vehicle industry
than the manufactured housing industry since the finance industry has continued
to participate in this market at substantially the same levels as previously. In
addition, purchasers of recreational vehicles generally present a more affluent
profile than purchasers of manufactured homes, such that purchasers of
recreational vehicles are more likely to obtain satisfactory financing and are
less likely to default on their loans than are purchasers of manufactured homes.
OUR RECREATIONAL VEHICLE BUSINESS. We have been the leading producer of
recreational vehicles in the United States since 1973 and distribute our
products through a network of approximately 1,140 independent retailers in 49
states and Canada. In calendar 2000, approximately 80% of our recreational
vehicles were shipped to retailers in the 25 states with the highest retail
sales, including California, Texas, Michigan, Florida and Ohio. In the same
period, we were the market share leader in terms of units sold in all but one of
the top 25 recreational vehicle states. Our total unit sales for Class A motor
homes and Class C motor homes were 11,100, 16,000 and 14,400, which represented
a market share of 19%, 24% and 24% for the calendar years 2000, 1999 and 1998,
respectively.
We manufacture motor homes under the brand names FLAIR, STORM, TERRA,
FIESTA, BOUNDER, PACE ARROW, SOUTHWIND, PACE ARROW VISION, EXPEDITION, BOUNDER
DIESEL, DISCOVERY, AMERICAN TRADITION, AMERICAN DREAM, AMERICAN EAGLE, AMERICAN
HERITAGE, TIOGA and JAMBOREE. Our Class A motor homes are available in a variety
of models ranging in length from 25 to 45 feet and retail for an average price
47
of approximately $118,000. Class C units are available in various models ranging
in length from 19 to 31 feet and retail for an average price of approximately
$54,000. For calendar 2000, five of the industry's 12 top-selling Class A motor
homes were manufactured by us, as well as two of the top five Class C motor
homes.
We manufacture a variety of travel trailers under the PROWLER, TERRY,
WILDERNESS, MALLARD, PIONEER and AVION brand names. Most of our travel trailers
are 8 feet wide, vary in length from 18 to 39 feet (including trailer hitch) and
retail for an average price of approximately $17,500. For calendar 2000, three
of the industry's five top-selling travel trailers were manufactured by us.
We are the largest manufacturer of folding trailers under the
industry-leading trademarks, Coleman-Registered Trademark- and Coleman
Parallelogram with Lantern Logo-Registered Trademark-. Our folding trailers
range in length from 17 to 26 feet when deployed and retail for an average price
of approximately $7,500.
We also produce slide-in truck campers at one of our travel trailer
factories under the brand names CARIBOU, ELKHORN and ANGLER. Most of our
slide-in truck campers vary in length from 8 to 11 feet and retail for an
average price of approximately $13,000.
COMPETITIVE ADVANTAGES
We believe that we have certain competitive advantages as described below.
COMMITMENT TO QUALITY AND CUSTOMER SATISFACTION. Our quality improvement
process focuses on increasing customer satisfaction by improving the quality and
design of Fleetwood products and enhancing the customer's shopping experience.
In this regard, we have developed a number of ongoing processes, including:
- designing our products with materials that frequently exceed government
requirements and industry standards;
- training both our employees and our retailers' employees in customer
satisfaction techniques and quality improvement procedures;
- providing additional services, such as comprehensive training of our
retailers' employees and contractors regarding proper installation
techniques for manufactured homes;
- offering some of the most extensive warranties in the manufactured housing
and recreational vehicle industries; and
- responding quickly and effectively to customer inquiries and concerns.
We use independent consumer surveys to determine whether retail customers
are satisfied with the quality of our products and the level of service provided
by us and the retailer. An independent consumer research firm conducts telephone
surveys and communicates customer responses to our manufacturing entities and
retailers to reinforce quality performance and minimize customer problems. Each
year, specific customer satisfaction goals are established for our manufacturing
operations and independent retailers. Retailers who meet these performance
standards are recognized with our Circle of Excellence Award, and our
manufacturing centers are similarly honored for meeting targeted levels of
customer satisfaction. We believe that these efforts have resulted in increased
awareness by our employees and retailers of the importance of product quality
and service, which in turn has significantly improved our customer satisfaction
ratings.
FOCUS ON ENGINEERING AND INNOVATIVE PRODUCT DEVELOPMENT. We conduct our
product development activities on a national basis for recreational vehicles and
on a regional basis, in order to reflect regional preferences and trends, for
manufactured housing. As a result of our approach to product development in our
manufactured housing business, for instance, we have introduced multi-story
housing in some urban communities in select regions. During fiscal 2001, our
recreational vehicle group
48
invested significant time and resources into the redesign and reengineering of
our product development function. With the assistance of an outside consulting
firm, specializing in the Product Development Process (PDP) that is patterned
largely after methodologies employed by Japanese automobile manufacturers, we
undertook a comprehensive review of our approach to the development of new
products. Upon completion of the review, the consulting firm issued a broad set
of recommendations calling for comprehensive changes to our approach. To ensure
successful implementation of the recommendations, we recruited and employed the
seasoned consultant that headed up the outside team, leveraging his significant
automotive experience. We have appointed this individual to the position of vice
president of recreational vehicle product development, with overall
responsibility for both travel trailer and motor home product development
functions.
Our new system, which is currently being phased in, is designed to
facilitate a faster response to market changes. Under this system, product
development projects will be carefully evaluated throughout the process from a
business perspective, and we are developing new products and product
enhancements through an integrated approach that involves cross-functional teams
including engineering, manufacturing and marketing personnel. We also integrate
feedback received through our customer surveys into our product development
process. As a result, we believe that we are able to proactively design and
manufacture products that address both industry trends and specific customer
requirements in an efficient, cost-effective and timely manner. The system is
designed to enforce the disciplines required to deliver quality products.
Amounts spent on engineering and product development totaled approximately
$15.0 million for the 39 weeks ended January 28, 2001 and $15.9 million for the
40 weeks ended January 30, 2000.
EXPERIENCED MANAGEMENT TEAM. We and our manufactured housing and
recreational vehicle group's benefit from the significant experience of our
senior managers, many of whom have over 20 years of operating expertise with us.
As previously noted, both of our core businesses are subject to significant
cyclical swings, similar to the one we are presently experiencing. Current
circumstances in our industries are not unlike those encountered in previous
downturns in the 1979-80 and 1990-91 periods. Many of our managers have
previously executed through times such as these and possess valuable know-how
and skills that are uniquely suited to our current challenges.
OUR BUSINESS STRATEGY
Our goals are to enhance our position as the leading provider of affordable,
high quality manufactured homes and recreational vehicles, to sustain long-term
profitable growth, and to enhance shareholder value by generating returns in
excess of our cost of capital. The key components of our business strategy are
described below.
PROVIDING THE BEST PRODUCT AND VALUE PROPOSITION TO OUR CUSTOMER. We remain
committed to consistently offering the highest quality product at an attractive
value that is not necessarily price driven. Recognizing the differences between
the buyer populations of each of the segments of our business, but not
differences in expectations of high quality standards, we aim to achieve the
value proposition by focusing on the individual needs and preferences of the
buyer populations at different price points by product and at scale. We employ
our competitive advantages of commitment to loyalty and satisfaction at the
front-end of the consumer experience in areas such as design and quality
manufacturing as evidenced by our thorough customer service and warranty
follow-up practices. We are also effective at controlling cost factors despite
high quality standards because of our critical mass at the production level in
such areas as volume cost absorption, purchasing efficiencies, and a
leverageable fixed infrastructure. Our focus on engineering and innovative
product development enables us to design and produce products that address
ever-changing consumer preferences at the business unit level for recreational
vehicles and at the regional factory floor for manufactured housing. For
example, because of the affluence of the recreational vehicle buyer and the
discretionary nature of the recreational vehicle purchase, the design process is
critical and is embedded throughout the development,
49
manufacturing and marketing cycle and those costs are absorbed over significant
unit volumes because of the economies of our market penetration and volumes. Our
customers expect consistency and quality because of the brand reputation and
awareness in the market of our products. Finally, we believe that the customer's
experience with our products remains consistent through changing economic and
social cycles because of the depth and background of our management who have
extraordinary experience at managing in different environments and quickly
responding to change.
UPGRADING AND EXPANDING OUR RETAIL DISTRIBUTION NETWORKS. Since 1991, we
have reduced the number of independent retail distribution centers approved to
sell our manufactured housing products from approximately 1,800 to about 1,400
at January 28, 2001. We believe that this action has allowed us to focus our
efforts on larger retailers that share our approach to merchandising homes and
customer satisfaction. Historically, we have not focused on exclusive retailer
arrangements and most retailers sold competitive lines; however, in recent
years, we have developed exclusive retailer arrangements. Currently,
approximately 56% of our manufactured housing retailers are exclusive, up from
approximately 30% six years ago. During fiscal 2000, our housing group
introduced the Pinnacle Retailer Program, which is designed to encourage more
exclusive retailer relationships. This program includes a number of attractive
retailer incentives, including funding for signage and additional marketing
support not available to non-exclusive retailers. We have increased our efforts
to develop and implement retail "best practices" for our retailers through our
sponsored training programs and manuals. Topics of recent training seminars have
included professional selling techniques and proper home installation
procedures. We actively seek to expand our manufactured housing retail network
by adding retailers that meet our criteria.
With respect to recreational vehicles, we are actively implementing "best
practices" across our retail network and developing programs to increase the
share of our products sold by independent retailers. This last initiative also
includes increasing the number of exclusive recreational vehicle retailers. In
addition, we have developed private label recreational vehicle programs to
expand retail sales through distribution channels that traditionally have not
sold recreational vehicles.
PROMOTING AND EXPANDING RECOGNITION OF THE "FLEETWOOD" BRAND NAME. We seek
to expand consumer awareness of the "Fleetwood" name in both our manufactured
housing and recreational vehicle operations. Beginning in fiscal 1997, we began
working with selected manufactured housing retailers to develop "Fleetwood Home
Centers," which exclusively carry our products, have consistent signage
identifying the location as a Fleetwood Home Center and meet our highest
standards for home presentation and customer satisfaction. As of January 28,
2001, we had facilitated the opening of 156 Fleetwood Home Centers, 94 of which
were owned by us. We have promoted the Fleetwood Homes "Quality for Life" theme
through a major national advertising campaign, including television, radio,
direct marketing, print, billboards and outdoor advertising.
In the recreational vehicle group, we have leading brand names in each
segment. However, we seek to promote each individual brand as a part of the
Fleetwood family of recreational vehicles. As an example, we are sponsoring a
NASCAR driver and team, Dale Jarrett and the Robert Yates Racing Team. As part
of the sponsorship arrangement, we have our logo on Dale Jarrett's race car and
equipment. We have also been involved in other NASCAR promotions and believe
that the large NASCAR audience, estimated at 90 million, aligns with our
targeted customer categories for recreational vehicles.
SALES AND DISTRIBUTION OF OUR PRODUCTS
Consistent with industry practice, we have historically marketed our
products through many independent retailers, none of which individually
accounted for a material part of our total sales. We expect this industry
practice to continue with respect to recreational vehicles. However, the
acquisition activity in recent years in the retail sector of the manufactured
housing industry has prompted us to
50
modify our manufactured housing sales and distribution strategies. We have
responded to this industry trend by upgrading our manufactured home retail
distribution network, developing alternatives to replace retailers purchased by
competitors, and promoting and expanding recognition of the Fleetwood brand name
through exclusive "Fleetwood Home Centers" and through our own retail
strategies, including acquisitions and the opening of stores owned by us. Our
entry into the manufactured housing retail business required that we maintain an
inventory of finished homes for purposes of display and immediate sale to retail
homebuyers. This is a distinct departure from our manufacturing policy of
building homes to order and not maintaining factory inventories of completed
homes. Largely as a result of the move into the retail business, inventories
increased sharply during fiscal 2000, rising from $261.1 million at January 24,
1999 to $315.8 million at January 30, 2000. Reflecting weaker market conditions,
inventories declined to $324.1 million at January 28, 2001.
As part of the sales process, we offer purchasers of our recreational
vehicles comprehensive one-year warranties against defects in materials and
workmanship, excluding only certain components separately warranted by a
supplier. The warranty period for motor homes is one year or until the unit has
been driven 15,000 miles, whichever occurs first, except for structural items,
which are covered for three years. Our recreational vehicle group has recently
installed an electronic dealer communications network that facilitates the
processing of product warranty claims and parts ordering. With respect to
manufactured homes, our warranty now covers a two-year period, and includes
coverage for factory-installed appliances. Prior to March 1, 2000, our home
warranty covered a one-year period, except for structural, plumbing, heating and
electrical systems, which were covered for five years. Beginning in fiscal 2001,
we have been offering an optional three-year extended warranty service contract
under the name "Fleetguard" for our home buyers who wish to purchase it. Our
annual expenses for product warranties and service were approximately
$103.3 million for the 39 weeks ended January 28, 2001 and $114.9 million for
the 40 weeks ended January 30, 2000. We believe that our warranty program is an
investment that enhances our reputation for quality and reliability.
FINANCING OF OUR PRODUCTS
Sales of recreational vehicles and manufactured housing are generally made
to retailers under commitments by financial institutions that have agreed to
finance retailer purchases. Product financing for recreational vehicles is
currently readily available from a variety of sources including commercial
banks, savings and loan institutions, credit unions and consumer finance
companies. With respect to manufactured housing, wholesale and retail financing
has historically been provided by similar lending sources, although highly
concentrated with a few very large institutions. Our experience is that Conseco
Finance Corp., GreenPoint Financial Corp. and Associates First Capital
Corporation provided approximately two-thirds of our retail financing and our
management believes that this level of lender concentration is representative of
the manufactured housing industry. Associates, which had been a very important
lender for our retailers during the 1990s, announced in January 2000 that it was
discontinuing its manufactured housing finance business. In addition, several
other smaller lenders have exited the business during the past 18 months.
Conseco, which acquired Green Tree Financial Corp. and is the largest
manufactured housing lender, has recently been affected by adverse loan
experience, higher funding costs and liquidity issues. Repossessions have
increased in past months due to the fact that some lenders had made loans 18 to
36 months earlier to less qualified applicants, and a significant number of
these borrowers had begun to default on their loans, resulting in a large number
of repossessions of these homes. The result has been a reduction in Conseco's
manufactured housing finance volume, along with less favorable financing terms
for wholesale and retail borrowers. Therefore, manufactured housing lenders in
general have recently experienced higher loan losses and a more difficult
funding environment. Access to the asset-backed securities market as a source of
funding similarly has been constricted and the cost of funds has risen sharply.
Lenders have reacted by tightening credit standards for manufactured housing
borrowers and by increasing interest rate spreads
51
significantly. These unfavorable developments have created a very restrictive
retail financing environment which in turn has constrained sales activity at
both the wholesale and retail levels.
Until May 1996, we owned Fleetwood Credit Corp., which provided a
substantial portion of the wholesale and retail financing for sales of our
recreational vehicles. We sold Fleetwood Credit Corp. to Associates in
May 1996. In connection with the sale, an agreement was signed to assure
continuing cooperation between us and Associates and to facilitate wholesale and
retail financing for our retailers and customers. Early in calendar 1999,
Fleetwood Credit Corp. was sold by Associates to Bank of America. We agreed to
an assignment of the operating agreement to the new owner. Under the agreement,
we agreed not to promote any other finance company's recreational vehicle
financing programs so long as Fleetwood Credit Corp. remains competitive.
OUR PRINCIPAL PROPERTIES
We own our executive offices which are located at 3125 Myers Street in
Riverside, California. The corporate administrative offices, which occupy
173,500 square feet, are situated on parcels of land owned by us, totaling
approximately 18.1 acres. Our manufactured housing regional offices are located
in California, Florida and Texas and occupy a total of 16,400 square feet of
leased office space. We also own additional property and buildings utilized for
manufacturing, research and development and administrative purposes, which, for
the most part, are owned by us.
At January 28, 2001, we controlled 237 retail sales locations in 25 states,
of which 21 were owned and 216 were leased from third parties. For the 39 weeks
ended January 28, 2001, the lease expense related to these properties was
approximately $9.7 million.
At the end of fiscal 2001, we had 56 active facilities, 52 of which were
manufacturing operations (28 manufactured housing, 13 travel trailers, 5 motor
homes, 1 folding trailer and 5 supply) and 4 that were service facilities (2
manufactured housing and 2 motor homes). One of the motor home service
facilities in Riverside, California is currently being converted for partial use
as a manufacturing operation. At the end of fiscal 2000, we had 63 active
facilities, 61 of which were manufacturing operations (36 manufactured housing,
14 travel trailers, 5 motor homes, 1 folding trailer and 5 supply) and 2 motor
home service facilities.
We also had 16 idle manufactured housing facilities at the end of fiscal
2001 and 10 idle facilities, including a deactivated service facility, at the
end of fiscal 2000. During fiscal 2001, active manufacturing capacity for the
manufactured housing group was reduced by the closure of facilities in Alma,
Georgia; Pearson, Georgia; Lexington, Mississippi; Mooresville, North Carolina;
Roxboro, North Carolina; Waco, Texas and Rocky Mount Virginia; and a facility in
Cushing, Oklahoma that had been previously leased was idled. Capacity in the
recreational vehicle group was downsized by the closure of travel trailer
facilities in Omaha, Nebraska and Winchester, Virginia, and a motor home
facility in Decatur, Indiana. During the year, an idle travel trailer facility
in Longview, Texas was activated to produce the Avion product previously built
in Omaha, Nebraska, an idle motor home service facility in Paxinos, Pennsylvania
was activated as an addition to manufacturing capacity and an idle motor home
manufacturing facility in Riverside, California was activated as a combination
manufacturing/service facility. An idle manufactured housing facility in
Hamilton, Alabama, and a building previously used as a motor home service
facility in Riverside, California, were sold during fiscal 2001.
COMPETITION IN OUR BUSINESS
The manufactured housing industry is highly competitive. For calendar 2000,
there were approximately 70 manufacturers, with the 10 largest companies
accounting for 79% of the market, including our sales which represented 18% of
the market. Manufactured homes compete with new and existing site-built homes,
apartments, townhomes and condominiums. Competition exists on both the
manufacturing and retail levels and is based primarily on price, product
features, reputation for service
52
and quality, depth of field inventory, sales promotions, merchandising, and the
terms and availability of dealer and retail customer financing. Recent growth in
the manufactured housing market in the southern United States has increased
competition at both the manufacturing and retail levels and has resulted in both
regional and national competitors increasing their presence in the region.
The recreational vehicle market is also highly competitive and we have
numerous competitors and potential competitors in this industry. The five
largest manufacturers represented approximately 59% of the market in calendar
2000, including our sales, which represented 23% of the market. There can be no
assurance that either existing or new competitors, will not develop products
that are superior to our recreational vehicles or achieve better consumer
acceptance.
REGULATORY ISSUES APPLICABLE TO OUR BUSINESS AND PRODUCTS
Our manufactured housing operations are subject to provisions of the Housing
and Community Development Act of 1974, under which the U.S. Department of
Housing and Urban Development establishes construction and safety standards for
manufactured homes, and also may require manufactured housing producers to send
notifications to customers of noncompliance with standards or to repair or
replace manufactured homes that contain certain hazards or defects. Our
recreational vehicle operations are subject to a variety of Federal, state and
local regulations, including the National Traffic and Motor Vehicle Safety Act,
under which the National Highway Traffic Safety Administration may require
manufacturers to recall recreational vehicles that contain safety-related
defects, and numerous state consumer protection laws and regulations relating to
the operation of motor vehicles, including so-called "Lemon Laws." Amendments to
any of these regulations and the implementation of new regulations could
significantly increase the costs of manufacturing, purchasing, operating or
selling our products and could have a material adverse effect on our results of
operations.
Our failure to comply with present or future regulations could result in
fines being imposed on us, potential civil and criminal liability, suspension of
sales or production, or cessation of operations. In addition, a major product
recall could have a material adverse effect on our results of operations.
Certain U.S. tax laws currently afford favorable tax treatment for the
purchase and sale of recreational vehicles that are used as the equivalent of
second homes. These laws and regulations have historically been amended
frequently, and it is likely that further amendments and additional regulations
will be applicable to us and our products in the future. Amendments to these
laws and regulations and the implementation of new regulations could have a
material adverse effect on our results of operations.
Our operations are subject to a variety of Federal and state environmental
regulations relating to the use, generation, storage, treatment, emission and
disposal of hazardous materials and wastes and noise pollution. Although we
believe that we are currently in material compliance with applicable
environmental regulations, our failure to comply with present or future
regulations could result in fines being imposed on us, potential civil and
criminal liability, suspension of production or operations, alterations to the
manufacturing process, or costly cleanup or capital expenditures.
OUR INTELLECTUAL PROPERTY
FLEETWOOD, FLEETWOOD HOMES and the principal brand and series names utilized
by us in connection with our recreational vehicles and manufactured homes are
registered trademarks of ours. The trademarks Coleman-Registered Trademark- and
Coleman Parallelogram with Lantern Logo-Registered Trademark- are utilized by us
in connection with our folding trailers, in accordance with a license from The
Coleman Company, Inc., which extends through June 2005 with an option in our
favor to renew through June 2010. We have no reason to believe that a further
extension cannot be obtained. We believe that our trademarks and trade names are
significant to our business, and vigorously protect them against infringement.
Aside from design patents on certain distinctive features of our most prominent
motor home models and patents on
53
certain unique features of our recreational vehicles, we have not typically
obtained patent protection on our products. In addition to our trademarks and
patents, we have developed numerous trade secrets in connection with the design,
manufacture, sales and marketing of our products. We believe that these trade
secrets are of great significance to our business success and take reasonable
steps to prevent their disclosure to competitors.
OUR RELATIONSHIP WITH OUR EMPLOYEES
As of April 29, 2001, we and our subsidiaries had approximately 14,000
employees. Most full-time employees are provided with paid annual vacations,
group life insurance, medical and hospitalization benefits, a retirement plan
and other fringe benefits. Approximately 530 of these employees hold management
or supervisory positions.
As of April 29, 2001, collective bargaining agreements were in effect at two
of our manufacturing locations covering a total of approximately 1,000
employees. Expiration dates for these agreements are in September 2003 and
October 2005. Except for employees at these plants, none of our other employees
are represented by a certified labor organization. In recent years, we have
experienced labor union organizing activity at several other manufacturing
locations, but employees at all these locations voted against union
representation.
LEGAL PROCEEDINGS IN WHICH WE ARE INVOLVED
We are a defendant in a purported class action in the case of MCMANUS V.
FLEETWOOD ENTERPRISES, INC., which is pending in the U.S. District Court for the
Western District of Texas, San Antonio Division. The complaint attempts to
establish a class of purchasers of our Class A motor homes for the model years
1994-1999 and makes claims with respect to the alleged breach of express and
implied warranties, negligent misrepresentation, fraudulent concealment, and
violation of various state statutes in connection with the ability of such motor
homes to tow an automobile or other vehicle or cargo. Only limited discovery has
been completed. We continue to deny the material allegations in the complaint
while asserting a vigorous defense to that end. It is not possible at this time
to properly assess the risk of an adverse verdict or the magnitude of likely
exposure.
As discussed in our Annual Report on Form 10-K for fiscal 2000, we initiated
a recall under the National Highway Traffic Safety Act with respect to
approximately 3,400 of our luxury American Coach Class A motor homes because
owners of some of the motor homes had experienced front-tire blowouts, several
of which have resulted in accidents and serious injuries, including deaths.
Under the recall, we provided two new larger capacity front tires to owners of
the motor homes, adjusted the weight distribution on the front axle of certain
motor homes to correct a weight imbalance and provided reinforcement of consumer
education about the importance of proper tire maintenance, especially with
respect to proper tire pressure. Insurance subrogation lawsuits have been filed
with the Circuit Court for Madison County, Kentucky and the U.S. District Court
in South Dakota, Western Division, with respect to two of the accidents
involving motor homes subject to the recall, and several claims with respect to
such accidents have been resolved. In addition, one lawsuit has been filed
concerning an accident that resulted in two deaths allegedly caused by a
front-tire blowout in a motor home not involved in the recall. We expect to
provide a vigorous defense to these lawsuits, and believe that they and any
remaining claims related to the other accidents are covered by adequate
insurance.
In February 2000, we and two of our subsidiaries were served with a
purported class action filed on behalf of nine present or former associates of
our Idaho manufactured housing facility. The complaint in the matter of BRISTOW
ET AL., V. FLEETWOOD ENTERPRISES, INC. ET AL., was filed in the U.S. District
Court in Idaho and alleges that, as a result of our management incentive pay
system and other policies, associates have been permitted or encouraged to work
off the clock and through lunch and rest breaks and that overtime pay claims
have been suppressed in violation of the Federal Fair Labor
54
Standards Act and state laws. On February 20, 2001, the Magistrate Judge
conditionally certified a class of plaintiffs comprised of certain production
associates and supervisors of our housing and recreational vehicle groups.
Notice to potential class members will be issued. We continue to deny the
material allegations in the complaint and are asserting a vigorous defense to
that end.
On August 14, 2000, another purported class action complaint was filed by
Ms. Bristow along with a Jane Doe alleging sexual harassment. On January 19,
2001, an amended complaint, entitled BOGEN, ET AL., V. FLEETWOOD
ENTERPRISES, INC., was filed in the U.S. District Court in Idaho by six
plaintiffs, including Ms. Bristow, alleging gender discrimination and sexual
harassment as a result of a sexually hostile environment at four manufacturing
centers. The plaintiffs are attempting to establish a national class action and
are requesting compensatory and punitive damages, litigation expenses and
attorneys' fees. We have denied the material allegations in the amended
complaint and plan to assert a vigorous defense.
We are also subject to other litigation from time to time in the ordinary
course of business. Our liability under some of this litigation is covered in
whole or in part by insurance. Although the amount of any liability with respect
to such claims and litigation over and above our insurance coverage cannot
presently be determined, in the opinion of our management such liability is not
expected to have a material adverse effect on our financial condition or results
of operations.
55
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; REASONS FOR THE EXCHANGE OFFER; PERIOD FOR
TENDERING EXISTING PREFERRED SECURITIES
We are offering to exchange $ liquidation amount of exchange preferred
securities for each $ liquidation amount of existing preferred securities that
are validly tendered on the terms and subject to the conditions set forth in
this prospectus and in the accompanying letter of transmittal.
Holders must tender existing preferred securities in a liquidation amount of
$ and any integral multiple of $ .
You may tender all, some or none of your existing preferred securities. The
exchange offer will be open for twenty business days from commencement of the
offer, unless extended by us.
The exchange offer is not being made to, and we will not accept tenders for
exchange from, holders of existing preferred securities in any jurisdiction in
which the exchange offer or the acceptance of the offer would not be in
compliance with the securities or blue sky laws of that jurisdiction.
Our board of directors and officers do not make any recommendation to the
holders of existing preferred securities as to whether or not to tender all or
any portion of their existing preferred securities. In addition, we have not
authorized anyone to make any recommendation. You must make your own decision
whether to tender your existing preferred securities and, if so, the amount of
existing preferred securities to tender.
We are making the exchange offer in order to enhance our balance sheet, by
reducing overall debt and increasing the amount of our equity. The proceeds of
the cash offer will be used primarily to pay the taxes we expect to incur as a
result of the cancellation upon exchange of the existing debentures supporting
the tendered existing preferred securities. We expect that this cancellation
will result in income to us. If all of the existing preferred securities are
tendered into the exchange offer, we anticipate incurring a tax liability of
approximately $ million. If the exchange offer and the cash offer are fully
subscribed, we will have reduced our aggregate amount of debt outstanding by
approximately $ million and enhanced our shareholders' equity by approximately
$ million. The effect of these offers on our cash flow will be determined once
we have set the terms of the offers prior to commencement. We anticipate the
effect of the offers on our balance sheet will be to provide us with greater
flexibility in exploring financing opportunities in the future.
MINIMUM CONDITIONS
The exchange offer is subject to there being tendered in the exchange offer,
and not withdrawn, a minimum of $ million in aggregate liquidation amount
of existing preferred securities. The exchange offer and the cash offer are also
subject to the sale in the cash offer of exchange preferred securities having an
aggregate liquidation value equal to at least % of the aggregate liquidation
amount of the exchange preferred securities subscribed for in the exchange
offer.
EXPIRATION DATE
The expiration date for the offer is 5:00 p.m., Eastern Standard Time, on
, 2001, unless we extend the offer. We may extend this expiration
date for any reason. The last date and time on which tenders will be accepted,
whether at 5:00 p.m., Eastern Standard Time, on , 2001 or at
5:00 p.m., Eastern Standard Time, on any later date to which the exchange offer
may be extended, is referred to as the expiration date.
EXTENSIONS; AMENDMENTS
We expressly reserve the right, in our discretion, for any reason to:
- delay the acceptance of existing preferred securities for exchange,
56
- extend the time period during which the exchange offer is open, by giving
oral or written notice of an extension to the holders of existing
preferred securities in the manner described below. During any extension,
all existing preferred securities previously tendered and not withdrawn
will remain subject to the exchange offer, and
- amend the terms of the exchange offer other than the condition that the
registration statement becomes effective under the Securities Act.
If we consider an amendment to the exchange offer to be material, or if we
waive a material condition of the exchange offer, we will promptly disclose the
amendment in a prospectus supplement, and if required by law, we will extend the
exchange offer for a period of 5 to 10 business days.
We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the existing preferred
securities as promptly as practicable. In the case of any extension, we will
issue a press release or other public announcement no later than 9:00 a.m.,
Eastern Standard Time, on the next business day after the previously scheduled
expiration date.
PROCEDURES FOR TENDERING EXISTING PREFERRED SECURITIES
Your tender to us of existing preferred securities and our acceptance of
your tender will constitute a binding agreement between you and us upon the
terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal.
TENDER OF EXISTING PREFERRED SECURITIES HELD THROUGH A CUSTODIAN. If you
are a beneficial holder of the existing preferred securities that are held of
record by a custodian bank, depository institution, broker, dealer, trust
company or other nominee, you must instruct the custodian to tender the existing
preferred securities on your behalf. Your custodian will provide you with their
instruction letter which you must use to give these instructions. Any beneficial
owner of existing preferred securities held of record by The Depository Trust
Company, also referred to as the DTC, or its nominee, through authority granted
by DTC may direct the DTC participant, through which the beneficial owner's
existing preferred securities are held in DTC, to tender on the beneficial
owner's behalf.
TENDER OF EXISTING PREFERRED SECURITIES HELD THROUGH DTC. To effectively
tender existing preferred securities that are held through DTC, DTC participants
should transmit their acceptance through the Automated Tender Offer Program, or
ATOP, for which the transaction will be eligible, and DTC will then edit and
verify the acceptance and send an agent's message to the exchange agent for its
acceptance. Delivery of tendered existing preferred securities must be made to
the exchange agent pursuant to the book-entry delivery procedures set forth
below or the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below. No letters of transmittal will be required to tender
existing preferred securities through ATOP.
In addition, the exchange agent must receive:
- a completed and signed letter of transmittal or an electronic confirmation
pursuant to DTC's ATOP system indicating the liquidation amount of
existing preferred securities to be tendered and any other documents, if
any, required by the letter of transmittal, and
- prior to the expiration date, a confirmation of book-entry transfer of
such existing preferred securities into the exchange agent's account at
DTC, in accordance with the procedure for book-entry transfer described
below, or
- the holder must comply with the guaranteed delivery procedures described
below.
Your existing preferred securities must be tendered by book-entry transfer.
The exchange agent will establish an account with respect to the existing
preferred securities at DTC for purposes of the exchange offer within two
business days after the commencement of the exchange offer. Any financial
institution that is a participant in DTC must make book-entry delivery of
existing preferred securities
57
by having DTC transfer such existing preferred securities into the exchange
agent's account at DTC in accordance with DTC's procedures for transfer.
Although your existing preferred securities will be tendered through the DTC
facility, the letter of transmittal, or facsimile, or an electronic confirmation
pursuant to DTC's ATOP system, with any required signature guarantees and any
other required documents, if any, must be transmitted to and received or
confirmed by the exchange agent at its address set forth in the section titled
"Exchange Agent," beginning on page 63 of this prospectus, prior to 5:00 p.m.,
Eastern Standard Time, on the expiration date. You or your broker must ensure
that the exchange agent receives an agent's message from DTC confirming the
book-entry transfer of your existing preferred securities. An agent's message is
a message transmitted by DTC and received by the exchange agent that forms a
part of the book-entry confirmation that states that DTC has received an express
acknowledgment from the DTC participant tendering the shares that such
participant agrees to be bound by the terms of the letter of transmittal.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
If you are an institution that is a participant in DTC's book-entry transfer
facility, you should follow the same procedures that are applicable to persons
holding existing preferred securities through a financial institution.
Do not send letters of transmittal or other exchange offer documents to us,
Banc of America Securities LLC, or , the information agent.
It is your responsibility that all necessary materials get to the exchange
agent before the expiration date. If the exchange agent does not receive all of
the required materials before the expiration date, your existing preferred
securities will not be validly tendered.
Any existing preferred securities not accepted for exchange for any reason
will be returned without expense to the tendering holder as promptly as
practicable after the expiration or termination of the exchange offer.
We will have accepted the validity of tendered existing preferred securities
if and when we give oral or written notice to , the exchange agent.
The exchange agent will act as the tendering holders' agent for purposes of
receiving the exchange preferred securities from us. If we do not accept any
tendered existing preferred securities for exchange because of an invalid tender
or the occurrence of any other event, will return those existing
preferred securities to you, without expense, promptly after the expiration date
via book-entry transfer through DTC.
OUR INTERPRETATIONS ARE BINDING
We will determine, in our sole discretion, all questions as to the validity,
form, eligibility and acceptance of existing preferred securities tendered for
exchange. Our determination will be final and binding. We reserve the absolute
right to reject any and all tenders of any particular existing preferred
securities not properly tendered or to not accept any particular existing
preferred security which acceptance might, in our judgment or our counsel's
judgment, be unlawful. We also reserve the absolute right to waive any defects
or irregularities or conditions of the exchange offer as to any particular
existing preferred securities either before or after the expiration date,
including the right to waive the ineligibility of any holder who seeks to tender
existing preferred securities in the exchange offer. Our interpretation of the
terms and conditions of the exchange offer as to any particular existing
preferred security either before or after the expiration date, including the
letter of transmittal and the instructions to such letter of transmittal, will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of existing preferred securities for
exchange must be cured within such reasonable period of time as we shall
determine. Neither we, the exchange agent nor any other person shall be under
any duty to give notification of any defect or irregularity with respect
58
to any tender of existing preferred securities for exchange, nor shall any of
them incur any liability for failure to give such notification.
ACCEPTANCE OF EXISTING PREFERRED SECURITIES FOR EXCHANGE; DELIVERY OF EXCHANGE
PREFERRED SECURITIES
Once all of the conditions to the exchange offer are satisfied or waived, we
will accept, promptly after the expiration date, all existing preferred
securities properly tendered, and will issue the exchange preferred securities
promptly after acceptance of the existing preferred securities. The discussion
under the section titled "Conditions for Completion of the Exchange Offer,"
beginning on page 60 of this prospectus, provides further information regarding
the conditions to the exchange offer. For purposes of the exchange offer, we
shall be deemed to have accepted properly tendered existing preferred securities
for exchange when, as and if we have given oral or written notice to the
exchange agent, with written confirmation of any oral notice to be given
promptly after giving such notice.
For each $ liquidation amount of existing preferred securities accepted for
exchange, the holder of such existing preferred security will receive an
exchange security having a liquidation amount of $ . The exchange preferred
securities will bear interest from the issue date. Existing preferred securities
accepted for exchange will cease to accrue interest from and after the date of
consummation of the exchange offer. Holders of existing preferred securities
whose existing preferred securities are accepted for exchange will not receive
any payment in respect of accrued interest on those existing preferred
securities.
In all cases, issuance of exchange preferred securities for existing
preferred securities that are accepted for exchange in the offer will be made
only after timely receipt by the exchange agent of:
- a timely book-entry confirmation of such existing preferred securities
into the exchange agent's account at the book-entry transfer facility,
- a properly completed and duly executed letter of transmittal or an
electronic confirmation of the submitting holder's acceptance through
DTC's ATOP system, and
- all other required documents, if any.
If we do not accept any tendered existing preferred securities for any
reason set forth in the terms and conditions of the exchange offer, or if
existing preferred securities are submitted for a greater principal amount than
the holder desires to exchange, the unaccepted or non-exchanged existing
preferred securities tendered by book-entry transfer into the exchange agent's
account at the book-entry transfer facility will be returned in accordance with
the book-entry procedures described above, and the existing preferred securities
that are not exchange preferred securities will be credited to an account
maintained with DTC, as promptly as practicable after the expiration or
termination of the exchange offer.
Any validly tendered existing preferred securities acquired in the exchange
offer will be retired and will not be reissuable.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your existing preferred securities and you cannot
complete the procedures for book-entry transfer set forth above on a timely
basis, you may still tender your existing preferred securities if:
- your tender is made through an eligible institution,
- prior to the expiration date, the exchange agent received from the
eligible institution a properly completed and duly executed letter of
transmittal, or a facsimile of such letter of transmittal or
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an electronic confirmation pursuant to DTC's ATOP system, and notice of
guaranteed delivery, substantially in the form provided by us, by
facsimile transmission, mail or hand delivery, that:
- sets forth the name and address of the holder of existing preferred
securities and the amount of existing preferred securities tendered,
- states that the tender is being made thereby, and
- guarantees that within three New York Stock Exchange trading days after
the expiration date a book-entry confirmation and any other documents
required by the letter of transmittal, if any, will be deposited by the
eligible institution with the exchange agent; and
- book-entry confirmation and all other documents, if any, required by the
letter of transmittal are received by the exchange agent within three New
York Stock Exchange trading days after the expiration date.
WITHDRAWAL RIGHTS
You may withdraw your tender of existing preferred securities at any time
prior to 5:00 p.m., Eastern Standard Time, on the expiration date. You may also
withdraw a tender of your existing preferred securities after the expiration of
40 business days from the commencement date of the exchange offer if your tender
has not yet been accepted for exchange.
For a withdrawal to be effective, the exchange agent must receive a written
notice of withdrawal at the address or, in the case of eligible institutions, at
the facsimile number, set forth under the section titled "Exchange Agent,"
beginning on page 63 of this prospectus, prior to 5:00 p.m., Eastern Standard
Time, on the expiration date. Any notice of withdrawal must:
- specify the name of the person who tendered the existing preferred
securities to be withdrawn;
- contain a statement that you are withdrawing your election to have your
existing preferred securities exchanged;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the existing preferred securities were
tendered, including any required signature guarantees; and
- specify, on the notice of withdrawal, the name and number of the account
at DTC to be credited with the withdrawn existing preferred securities and
otherwise comply with the procedures of such facility, if you tendered
your existing preferred securities in accordance with the procedure for
book-entry transfer described above.
Any existing preferred securities that have been tendered for exchange, but
which are not exchanged for any reason, will be credited to an account
maintained with the book-entry transfer facility for the existing preferred
securities, as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn existing preferred
securities may be retendered by following the procedures described under
"Procedures for Tendering Existing Preferred Securities" above at any time on or
prior to 5:00 p.m., Eastern Standard Time, on the expiration date.
CONDITIONS FOR COMPLETION OF THE EXCHANGE OFFER
We will not accept existing preferred securities for exchange and may
terminate or not complete the exchange offer if:
- the registration statement and any post-effective amendment to the
registration statement covering the exchange preferred securities is not
effective under the Securities Act;
- an aggregate liquidation amount of a minimum of $ million of existing
preferred securities is not tendered into the exchange offer without being
withdrawn; and
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- an aggregate liquidation amount of exchange preferred securities equal to
at least % of the aggregate liquidation amount of exchange preferred
securities subscribed for in the exchange offer is not purchased in our
cash offer.
We may not accept existing preferred securities for exchange and may
terminate or not complete the exchange offer if:
- any action, proceeding or litigation seeking to enjoin, make illegal or
delay completion of the exchange offer or otherwise relating in any manner
to the exchange offer is instituted or threatened;
- any order, stay, judgment or decree is issued by any court, government,
governmental authority or other regulatory or administrative authority and
is in effect, or any statute, rule, regulation, governmental order or
injunction shall have been proposed, enacted, enforced or deemed
applicable to the exchange offer, any of which would or might restrain,
prohibit or delay completion of the exchange offer or impair the
contemplated benefits of the exchange offer to us;
- any of the following occurs and the adverse effect of such occurrence
shall, in our reasonable judgment, be continuing:
- any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market in the United States;
- any extraordinary or material adverse change in U.S. financial markets
generally, including, without limitation, a decline of at least twenty
percent in either the Dow Jones Average of Industrial stocks or the
Standard & Poor's 500 Index from , 2001;
- a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States;
- any limitation, whether or not mandatory, by any governmental entity
on, or any other event that would reasonably be expected to materially
adversely affect, the extension of credit by banks or other lending
institutions;
- a commencement of a war or other national or international calamity
directly or indirectly involving the United States, which would
reasonably be expected to affect materially and adversely, or to delay
materially, the completion of the exchange offer; or
- if any of the situations described above existed at the time of
commencement of the exchange offer and that situation deteriorates
materially after commencement of the exchange offer;
- any tender or exchange offer, other than this exchange offer by us, with
respect to some or all of our outstanding common stock or any merger,
acquisition or other business combination proposal involving us shall have
been proposed, announced or made by any person or entity;
- any event or events occur that have resulted or may result, in our
judgment, in an actual or threatened change in the business condition,
income, operations, stock ownership or prospects of us and our
subsidiaries, taken as a whole;
- as the term "group" is used in Section 13(d)(3) of the Securities Exchange
Act,
- any person, entity or group acquires more than 5% of our outstanding
shares of common stock, other than a person, entity or group that had
publicly disclosed such ownership with the Securities and Exchange
Commission, or SEC, prior to , 2001,
- any such person, entity or group that had publicly disclosed such
ownership prior to such date shall acquire additional common stock
constituting more than 2% of our outstanding shares, or
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- any new group shall have been formed that beneficially owns more than
five percent of our outstanding shares of common stock,
that in our judgment in any such case, and regardless of the circumstances,
makes it inadvisable to proceed with the exchange offer or with such acceptance
for exchange of existing preferred securities.
If any of the above events occur, we may:
- terminate the exchange offer and as promptly as practicable return all
tendered existing preferred securities to tendering security holders;
- extend the exchange offer and, subject to the withdrawal rights described
in "Withdrawal Rights" on page 60, retain all tendered existing preferred
securities until the extended exchange offer expires;
- amend the terms of the exchange offer; or
- waive the unsatisfied condition and, subject to any requirement to extend
the period of time during which the exchange offer is open, complete the
exchange offer.
LEGAL LIMITATION
The above conditions are for our sole benefit. We may assert these
conditions with respect to all or any portion of the exchange offer regardless
of the circumstances giving rise to them. We may waive, in our discretion, any
condition, in whole or in part, at any time prior to the expiration date of the
exchange offer. Our failure at any time to exercise our rights under any of the
above conditions does not represent a waiver of these rights. Each right is an
ongoing right that may be asserted at any time prior to the expiration date of
the exchange offer. Any determination by us concerning the conditions described
above will be final and binding upon all parties.
If a stop order issued by the SEC is threatened or in effect with respect to
the registration statement of which this document is a part, or with respect to
the qualification of the new indenture under the Trust Indenture Act of 1939, as
amended, we will not:
- accept for exchange any existing preferred securities tendered, or
- issue any exchange preferred securities in exchange for any existing
preferred securities.
FEES AND EXPENSES
Banc of America Securities LLC is acting as the dealer manager in connection
with the exchange offer. Banc of America Securities LLC will receive a fee in
the manner described below for its services as dealer manager, in addition to
being reimbursed for its reasonable out-of-pocket expenses, including attorneys'
fees, incurred in connection with the exchange offer. The fees will be payable
if and when the exchange offer is completed.
Banc of America Securities LLC will receive a fee in the amount of % of
the aggregate liquidation amount of existing preferred securities tendered for
exchange, which will amount to approximately $ million if all existing
preferred securities are tendered.
We have agreed to indemnify Banc of America Securities LLC against specified
liabilities relating to or arising out of the offer, including civil liabilities
under the federal securities laws, and to contribute to payments that Banc of
America Securities LLC may be required to make in respect thereof. However, in
the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. Banc of
America Securities LLC may, from time to time, hold existing preferred
securities, exchange preferred securities and our common stock in its
proprietary accounts, and to the extent it owns existing preferred securities in
these accounts at the time of the exchange offer, Banc of America Securities LLC
may tender these existing preferred securities.
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We have retained to act as the information agent and
to act as the exchange agent in connection with the exchange offer.
The information agent may contact holders of existing preferred securities by
mail, telephone, facsimile transmission and personal interviews and may request
brokers, dealers and other nominee stockholders to forward materials relating to
the exchange offer to beneficial owners. The information agent and the exchange
agent each will receive reasonable compensation for their respective services,
will be reimbursed for reasonable out-of-pocket expenses and will be indemnified
against liabilities in connection with their services, including liabilities
under the federal securities laws.
Neither the information agent nor the exchange agent has been retained to
make solicitations or recommendations. The fees they receive will not be based
on the liquidation amount of existing preferred securities tendered under the
exchange offer.
We will not pay any fees or commissions to any broker or dealer or any other
person, other than Banc of America Securities LLC, for soliciting tenders of
existing preferred securities under the exchange offer. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by us for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers. The cash expenses to be incurred in connection
with the exchange offer will be paid by us. We estimate these expenses in the
aggregate to be approximately $ .
EXCHANGE AGENT
has been appointed as the exchange agent for the exchange offer. All
executed letters of transmittal should be directed to the exchange agent at the
address set forth below. Questions, requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for notices of guaranteed delivery should be directed to the exchange
agent addressed as follows:
, Exchange Agent
By Registered & Certified Mail: By Regular or Overnight Courier:
In Person by Hand Only:
For Information Call:
By Facsimile Transmission (for Eligible
Institutions only):
Attention:
Confirm by Telephone
If you deliver the letter of transmittal to an address other than as set
forth above or transmit instructions via facsimile other than as set forth
above, then such delivery or transmission does not constitute a valid delivery
of the letter of transmittal.
CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE EXISTING PREFERRED SECURITIES
Holders who tender their existing preferred securities for exchange will not
be obligated to pay any related transfer taxes. The existing preferred
securities that are not exchanged for exchange preferred securities pursuant to
the exchange offer will be subordinate in payment to the exchange preferred
securities. In addition, the liquidity of the trading market for the existing
preferred securities not tendered for exchange may be adversely affected to the
extent existing preferred securities are tendered and accepted for exchange in
the exchange offer.
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CASH OFFER FOR ADDITIONAL EXCHANGE PREFERRED SECURITIES
In addition to the exchange offer, we will issue up to an aggregate of $
million in liquidation amount of additional exchange preferred securities for
cash, which we refer to as the "cash offer." The exchange preferred securities
in the cash offer are identical in all respects to the exchange preferred
securities issued in the exchange offer as described in the section titled
"Description of Preferred Securities--Description of the Exchange Preferred
Securities," beginning on page 68 of this prospectus.
Banc of America Securities LLC is the placement agent for the cash offer and
is undertaking its duties on a best efforts basis only. Banc of America
Securities LLC is not making a commitment to purchase exchange preferred
securities from us and has not assured us that these securities will be placed
successfully in the cash offer. Offers to purchase additional exchange
preferred securities must be in denominations of liquidation amount of $ and
any integral multiple of $ .
The exchange offer and the cash offer are subject to the sale in the cash
offer of exchange preferred securities having an aggregate liquidation value
equal to at least % of the aggregate liquidation amount of the exchange
preferred securities subscribed for in the exchange offer.
You may indicate your interest in purchasing additional exchange preferred
securities on the letter of transmittal or by contacting Banc of America
Securities LLC directly at .
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FLEETWOOD CAPITAL TRUST
Fleetwood Capital Trust, which is referred to as the existing trust, is a
statutory business trust formed under the Delaware Business Trust Act. It was
created under a trust agreement between us and the existing trust's initial
trustees, and the filing of a certificate of trust with the Secretary of State
of Delaware. The trust agreement was amended and restated in its entirety on
February 10, 1998. The existing trust was organized for the sole purpose of
issuing the existing preferred securities and the existing common securities and
investing the proceeds of that issuance in an equivalent amount of convertible
subordinated debentures, referred to as the existing debentures. We issued the
existing debentures under an indenture dated February 10, 1998, referred to as
the existing indenture, between us and The Bank of New York, as indenture
trustee. We guaranteed the payment of distributions and other payments on the
existing preferred securities to the extent that we had made corresponding
interest and other payments, as and to the extent set forth in a guarantee
agreement dated February 10, 1998. The trust agreement, the existing indenture
and the existing preferred securities guarantee are qualified under the Trust
Indenture Act of 1939, as amended.
The capital stock of the existing trust consists of the existing preferred
securities and the existing common securities, collectively referred to as the
"existing trust securities." We have acquired existing common securities in an
amount equal to at least 3% of the total capital of the existing trust and we
directly own all of the issued and outstanding existing common securities.
The rights of the holders of the existing trust securities are as set forth
in the trust agreement, the Delaware Business Trust Act and the Trust Indenture
Act. The trust agreement does not permit the existing trust to borrow money or
make any investment other than in the existing debentures. In the existing
indenture we have agreed to pay for:
- all debts, obligations, costs and expenses of the existing trust, other
than with respect to the existing trust securities, and
- all costs and expenses of the existing trust, including:
- the fees and expenses of the trustees, and
- any income taxes, duties and other governmental charges, and all costs
and expenses related to these charges, to which the existing trust may
become subject, except for United States withholding taxes.
The existing trust has five trustees. Three of them, referred to as
administrative trustees, are employees or officers of or are otherwise
affiliated with us. The Bank of New York (Delaware) is the existing trust's
Delaware Trustee and The Bank of New York is the property trustee. Also, for
purposes of compliance with the Trust Indenture Act, The Bank of New York acts
as guarantee trustee under the guarantee and as debt trustee under the existing
indenture. We, as the holder of all of the existing common securities, have the
right to appoint, remove or replace any of the trustees and to increase or
decrease the number of trustees. The existing trust has a term of approximately
30 years but may terminate earlier as provided in the trust agreement.
The property trustee has legal title to and holds the existing debentures
for the benefit of the existing trust and the holders of the existing trust
securities, and the property trustee has the power to exercise all rights,
powers and privileges under the existing indenture as the holder of the existing
debentures. In addition, the property trustee maintains exclusive control of a
segregated non-interest bearing "property account" to hold all payments made in
respect of the existing debentures for the benefit of the holders of the
existing trust securities. The property trustee will, as soon as practicable,
make distributions and payments on liquidation, redemption and otherwise to the
holders of the existing trust securities out of funds from the property account.
The guarantee trustee holds the guarantee for the benefit of the holders of the
existing preferred securities.
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The rights of the holders of the existing preferred securities, including
economic rights, rights to information and voting rights, are set forth in the
trust agreement, the Delaware Business Trust Act and the Trust Indenture Act.
For financial reporting purposes, the existing trust is treated as a subsidiary
of ours and, accordingly, the financial statements of the existing trust are
included in our consolidated financial statements as a minority interest. Under
GAAP, the existing preferred securities are shown in our balance sheet entitled
"Company-obligated mandatorily redeemable convertible preferred securities of
Fleetwood Capital Trust holding solely 6% Convertible Subordinated Debentures of
the Company" and appropriate disclosures about the existing preferred
securities, the existing preferred securities guarantee and the existing
debentures are included in the notes to our consolidated financial statements.
For financial reporting purposes, we record distributions payable on the
existing preferred securities as a minority interest in the consolidated
statements of operations.
FLEETWOOD CAPITAL TRUST II
Fleetwood Capital Trust II, which is referred to as the new trust, is a
statutory business trust formed under the Delaware Business Trust Act. It was
created under a trust agreement between us and the new trust's initial trustees,
and the filing of a certificate of trust with the Secretary of State of
Delaware. The new trust agreement will be amended and restated in its entirety
as of the date the new trust initially issues the exchange preferred securities.
The new trust agreement will be qualified as an indenture, referred to as the
"new indenture," under the Trust Indenture Act.
The capital stock of the new trust consists of the exchange preferred
securities and the new common securities, collectively referred to as the "new
trust securities." We will acquire new common securities in an amount equal to
at least 3% of the total capital of the new trust and will initially own,
directly or indirectly, all of the issued and outstanding new common securities.
The new trust's assets consist principally of the exchange debentures and
payments under the exchange debentures are its sole revenue. The new trust
exists for the exclusive purposes of:
- issuing the new trust securities in exchange for exchange debentures in an
aggregate principal amount equal to the aggregate liquidation amount of
the new trust securities, and
- engaging in other activities that are incidental to those listed above,
such as receiving payments on the exchange debentures and making
distributions to holders of the new trust securities, furnishing notices
and other administrative tasks.
The rights of the holders of the new trust securities are as set forth in
the new trust agreement, the Delaware Business Trust Act and the Trust Indenture
Act. The new trust agreement does not permit the new trust to borrow money or
make any investment other than in the exchange debentures. We have agreed to pay
for:
- all debts and obligations of the new trust, other than with respect to the
new trust securities, and
- all costs and expenses of the new trust, including:
- the fees and expenses of the new trustees, and
- any income taxes, duties and other governmental charges, and all costs
and expenses related to these charges, to which the new trust may
become subject, which shall not include United States withholding taxes
but shall include liabilities imposed on the trust as withholding
agent.
The new trust will initially have five trustees. Three of them, referred to
as administrative trustees, are employees or officers of or otherwise affiliated
with us. Initially, The Bank of New York (Delaware) will serve as the new
trust's Delaware trustee and The Bank of New York will serve as the new trust's
property trustee. Also, for the purpose of compliance with the Trust Indenture
Act, The Bank of New
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York will act as guarantee trustee under the exchange preferred securities
guarantee and as indenture trustee under the new indenture.
We, as the direct or indirect holder of all the new trust securities, will
have the right to appoint, remove or replace any of the new trustees and to
increase or decrease the number of new trustees. The new trust has a term of
approximately years but may terminate earlier as provided in the new trust
agreement.
The property trustee will hold the exchange debentures for the benefit of
the new trust and the holders of the new trust securities, and will have the
power to exercise all rights, powers and privileges under the new indenture as
the holder of the exchange debentures. In addition, the property trustee will
maintain exclusive control of a segregated non-interest bearing "property
account" to hold all payments made in respect of the exchange debentures for the
benefit of the holders of the new trust securities. The property trustee will,
as soon as practicable, make distributions and payments on liquidation,
redemption and otherwise to the holders of the new trust securities out of funds
from the property account. The guarantee trustee will hold the exchange
preferred securities guarantee for the benefit of the holders of the exchange
preferred securities.
We will pay all fees and expenses related to the new trust and the offering
of the new trust securities.
For financial reporting purposes, the new trust is treated as a subsidiary
of ours and, accordingly, the financial statements of the new trust are included
in our consolidated financial statements as a minority interest. Under GAAP, the
exchange preferred securities are shown in our balance sheet entitled
"Company-obligated mandatorily redeemable convertible preferred securities of
Fleetwood Capital Trust II holding solely % Convertible Subordinated
Debentures of the Company" and appropriate disclosures about the exchange
preferred securities, the exchange preferred securities guarantee and the
exchange debentures are included in the notes to our consolidated financial
statements. For financial reporting purposes, we record distributions payable on
the exchange preferred securities as a minority interest in the consolidated
statements of operations.
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DESCRIPTION OF PREFERRED SECURITIES
DESCRIPTION OF THE EXCHANGE PREFERRED SECURITIES
The new trust will issue the exchange preferred securities pursuant to the
terms of the new trust agreement. The new trust agreement incorporates by
reference the terms of the Delaware Business Trust Act and the Trust Indenture
Act. The Bank of New York, as property trustee, will act as indenture trustee
for the exchange preferred securities for purposes of compliance with the Trust
Indenture Act. The terms of the exchange preferred securities include those
stated in the new trust agreement and those made part of the new trust agreement
by the Trust Indenture Act and the Delaware Business Trust Act. We have
summarized the material provisions of the new trust agreement and the exchange
preferred securities below. This summary may omit a term or provision that you
would consider important. For a complete description of the exchange preferred
securities, we encourage you to read the new trust agreement. We have filed a
form of the new trust agreement with the SEC.
GENERAL
The new trust agreement authorizes the new trust to issue the exchange
preferred securities and new common securities. The exchange preferred
securities represent preferred undivided beneficial interests in the assets of
the new trust. The new common securities represent common undivided beneficial
interests in the assets of the trust. We will own all the new common securities.
The exchange preferred securities and the common securities will rank equal with
each other, and will generally have equivalent terms. Payments on the new common
securities will be made on a pro rata basis with the exchange preferred
securities. However, the terms of the exchange preferred securities and the new
common securities will differ in the following two respects:
- if an event of default under the new trust agreement occurs and is
continuing, the rights of the holders of the new common securities to
payments in respect of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights
of the holders of the exchange preferred securities; and
- the holders of the new common securities will have the exclusive right to
appoint, remove or replace the trustees and to increase or decrease the
number of trustees.
The new trust may not:
- issue any securities other than the exchange preferred securities and the
new common securities,
- incur any indebtedness, or
- make any investment other than in the exchange debentures.
The property trustee will own and hold the exchange debentures as trust
assets for the benefit of the holders of the exchange preferred securities and
the new common securities. We will guarantee the payment of distributions and
payments on redemption or liquidation of the new trust on a subordinated basis,
but only if, and to the extent, we have made corresponding payments to the new
trust on the exchange debentures. Please read the section titled "Description of
Preferred Securities--Description of the Exchange Preferred Securities
Guarantee," beginning on page 89 of this prospectus, for a more detailed
discussion.
DISTRIBUTIONS
If you purchase exchange preferred securities, you will be entitled to
receive distributions at an annual rate of % of the stated liquidation amount
of $ per exchange preferred security. Distributions will be paid in cash or, at
our election, in our common stock. Holders of the exchange
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preferred securities will be given notice of our election to pay interest in
common stock instead of cash no later than the relevant record date, which will
be the 15th day before the relevant distribution payment date. If distributions
are paid in common stock, the shares of common stock will be valued at 90% of
the average of the closing prices for the five trading days immediately
preceding the second trading day prior to the distribution payment date.
To the extent permitted by applicable law, distributions in arrears for more
than one quarter will accumulate additional distributions at the annual rate of
%, compounded quarterly. We use the term "distributions" in this prospectus to
mean the quarterly distributions and any additional distributions, unless we
state otherwise. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months and, for any
period of less than a full calendar month, the actual number of days elapsed in
that month.
Distributions are cumulative, will accumulate from the date of original
issuance of the exchange preferred securities, and will be payable quarterly in
arrears on February 15, May 15, August 15 and November 15 of each year,
commencing August 15, 2001 unless we defer interest payments on the exchange
debentures, as described below. Distributions will be made by the property
trustee, except as otherwise described below.
OPTION TO DEFER DISTRIBUTIONS
At any time after , 2003, we may, on one or more occasions, defer
interest payments on the exchange debentures for up to 20 consecutive quarterly
periods, unless an event of default with respect to the exchange debentures has
occurred and is continuing. Interest payments will not be due and payable on the
exchange debentures during a deferral period. If we defer interest payments on
the exchange debentures, the new trust will defer distribution payments on the
exchange preferred securities and the new common securities. Distributions will
continue to accumulate on the exchange preferred securities and the new common
securities at an annual rate of % of the liquidation amount of $ per exchange
preferred security or new common security during a deferral period. Also,
additional distributions will accumulate on any deferred distributions at the
annual rate of %, compounded quarterly. Additional distributions will only
accumulate, however, to the extent permitted by applicable law, but not at a
rate greater than the rate at which interest is then accruing on the exchange
debentures.
We will be subject to restrictions during a deferral period on our ability
to pay dividends on, take other payments with respect to, or redeem, purchase or
acquire our capital stock or to make payments on, or repay, repurchase or redeem
other debt securities that are equal with or junior to the exchange debentures.
For a more detailed discussion please read the section titled "Description of
Preferred Securities--Description of the Exchange Debentures--Option to Extend
Interest Payment Period," beginning on page 98 of this prospectus.
If we exercise our right to defer payments of interest on the exchange
debentures after , 2003, the exchange debentures thereafter will be
considered to have been issued with original issue discount. In such case,
holders of exchange debentures will be required to accrue their pro rata share
of original issue discount, even in the absence of cash distributions with
respect to the exchange debentures. For a more detailed discussion, see the
section titled "United States Federal Income Tax Considerations--Tax Treatment
of the Ownership and Disposition of Exchange Preferred Securities and Common
Stock--Ability to Defer Interest Payments and Exercise of Right to Defer
Interest Payments," beginning on page 115 of this prospectus.
We may extend a deferral period prior to the period's termination. We may
not, however, extend a deferral period, including all previous and further
extensions of the period, beyond 20 consecutive quarterly interest periods or
beyond the maturity date of the exchange debentures. A deferral period may not
end on a date other than a distribution payment date. Once a deferral period
ends and we
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make all payments due on the exchange debentures, we can commence a new deferral
period. We may also prepay all or any portion of the interest accrued during a
deferral period at any time. Consequently, there could be multiple deferral
periods of varying lengths throughout the term of the exchange debentures.
Please read the section titled "Description of Preferred Securities--Description
of the Exchange Debentures--Option to Extend Interest Payment Period," beginning
on page 98 of this prospectus, for a more detailed discussion.
If distributions are deferred, the property trustee will pay the deferred
distributions and, to the extent permitted by law, interest accrued on the
distributions, to holders of record of the exchange preferred securities as they
appear on the books and records of the new trust at the close of business on the
record date for the distribution payment date upon which the deferral period
terminates.
PAYMENT OF DISTRIBUTIONS
The new trust must pay distributions on the exchange preferred securities on
the distribution payment dates to the extent that the property trustee has cash
or common stock on hand to make distributions. The only funds or common stock
the property trustee will have to distribute to the holders of exchange
preferred securities will be from payments received from us on the exchange
debentures. If we do not make interest payments on the exchange debentures, the
property trustee will not have funds or common stock available to make
distributions to you on the exchange preferred securities. If and to the extent
that we make interest payments on the exchange debentures, the property trustee
is obligated to make distributions on the exchange preferred securities and the
new common securities on a pro rata basis. We will guarantee the payment of
distributions and other payments on the exchange preferred securities on a
subordinated basis, but only if, and to the extent that, we have made
corresponding payments to the new trust on the exchange debentures and, as a
result, the property trustee has funds available to make distributions on the
exchange preferred securities. Please read the section titled "Description of
Preferred Securities--Description of the Exchange Preferred Securities
Guarantee," beginning on page 89 of this prospectus, for a more detailed
discussion.
METHOD OF PAYMENT OF DISTRIBUTIONS
The new trust will pay distributions to the holders of the exchange
preferred securities as they appear on the books and records of the new trust on
the relevant record date, which will be the 15th day before the relevant
distribution payment date.
If the new trust fails to punctually pay distributions on the exchange
preferred securities on any distribution payment date as a result of our failure
to make the corresponding interest payments on the exchange debentures, then the
distributions will no longer be payable to the registered holders of the
exchange preferred securities on the relevant record date for the exchange
preferred securities. The new trust will instead make any such defaulted
distribution payments to the registered holders of the exchange preferred
securities on a special record date established by the administrative trustees.
The special record date will correspond to the special record date or other
specified date determined in accordance with the new indenture. Distributions
will not be payable on any distribution payment date falling within a deferral
period unless we have elected to make a full or partial payment of interest
accrued on the exchange debentures on that distribution payment date.
The property trustee will pay distributions on the exchange preferred
securities out of payments received on the exchange debentures and held for the
benefit of the holders of the exchange preferred securities and the new common
securities. Subject to any applicable laws and regulations and the provisions of
the new trust agreement, each such payment with respect to the exchange
preferred securities will be made as described under the section titled
"Description of Preferred Securities--Description of the Exchange Preferred
Securities--Book-Entry Only Issuance; The Depository Trust
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Company," beginning on page 86 of this prospectus. The property trustee will pay
any cash distributions on exchange preferred securities that are not in
book-entry form at the option of the new trust by check mailed to the address of
the holder entitled to it as it appears on the register or by wire transfer to
an account in the United States appropriately designated by the holder entitled
to it, prior to the record date for the corresponding distribution payment date.
Any distribution payments in common stock on exchange preferred securities that
are not in book-entry form will be made by mailing a stock certificate to the
address of the holder entitled to those payments as it appears on the register.
A holder of exchange preferred securities having an aggregate liquidation amount
of $1,000,000 or more may instruct the new trust to make the payment by wire
transfer.
If a distribution payment date is not a business day, the new trust will
make distributions on:
- the next succeeding day that is a business day without any interest or
other payment in respect of any such delay, or
- the immediately preceding business day, if the next succeeding day that is
a business day is in the next succeeding calendar year,
in each case with the same force and effect as if the distribution was made on
the date it was originally payable. A "business day" is a day other than:
- a Saturday or Sunday;
- a day on which banking institutions in New York City are authorized or
required by law or executive order to remain closed; or
- a day on which the property trustee's corporate trust office or the debt
trustee's corporate trust office is closed for business.
The payment dates and record dates for the exchange preferred securities
will be the same as the payment dates and record dates for the exchange
debentures.
CONVERSION RIGHTS
Holders of the exchange preferred securities may convert them into shares of
our common stock at any time prior to:
- the close of business on , or
- in the case of exchange preferred securities called for redemption, the
close of business on the business day prior to the redemption date.
The exchange debentures will be convertible into common stock at an initial
conversion price that is equivalent to a % premium over the average of the
daily volume weighted average price of our common stock for each of the five
trading days immediately preceding the second trading day prior to the exchange
offer expiration date, subject to adjustment. The average of the daily volume
weighted average price shall mean the daily volume weighted average price of our
common stock, based on a trading day from 9:00 a.m. to 4:00 p.m., on the New
York Stock Exchange as reported by Bloomberg Financial. We will notify holders
of the conversion price after such determination. The initial conversion price
is subject to adjustment as described under the sections titled "Description of
Preferred Securities--Description of the Exchange Preferred
Securities--Conversion Price Adjustments--General" and "--Fundamental Change"
set forth below.
Accumulated distributions will not be paid on exchange preferred securities
that are converted into shares of our common stock, except that holders of
exchange preferred securities at the close of business on a record date for a
distribution will receive the distribution on the distribution payment date even
though the exchange preferred securities are converted after the record date but
on or prior
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to the distribution payment date. We will make no payment or allowance for
distributions on the shares of our common stock issued upon conversion of
exchange preferred securities, except to the extent that the shares are held of
record on the record date for any such distributions. Each conversion will be
deemed to have been effected immediately prior to the close of business on the
date on which the related conversion notice was received by the conversion
agent.
If you wish to exercise your conversion right, you must surrender your
exchange preferred securities together with an irrevocable conversion notice to
the property trustee, as conversion agent. The conversion agent will exchange
your exchange preferred securities for an equivalent principal amount of
exchange debentures and immediately convert the exchange debentures into shares
of our common stock. You may obtain copies of the required form of the
conversion notice from the conversion agent. If a book-entry system for the
exchange preferred securities is in effect, however, procedures for converting
the exchange preferred securities into shares of our common stock will differ.
Please read the section titled "Description of Preferred Securities--Book-Entry
Only Issuance; The Depository Trust Company," beginning on page 86 of this
prospectus.
We will not issue any fractional shares of our common stock as a result of
any conversion of exchange preferred securities. We will pay cash in lieu of a
fractional share of common stock. The cash payment will be based on the current
market price of our common stock on the date the exchange preferred securities
are surrendered for conversion or, if not a trading day, on the next trading
day.
CONVERSION PRICE ADJUSTMENTS
The initial conversion price is subject to adjustment for some events,
including:
(1) the issuance of shares of our common stock as a dividend or distribution
on our common stock;
(2) any subdivision, combination or reclassification of shares of our common
stock;
(3) the issuance to all holders of shares of our common stock of certain
rights or warrants to subscribe for or purchase shares of our common
stock at less than the then current market price;
(4) the distribution to all holders of our common stock of shares of our
capital stock, other than our common stock, evidences of our indebtedness
and/or other assets, including preferred securities, but excluding:
- any rights or warrants referred to in (3) above,
- any rights or warrants to acquire any capital stock of any entity other
than us or any of our subsidiaries,
- any dividends or distributions in connection with our liquidation,
dissolution or winding-up,
- any dividends or distributions payable solely in cash that may from
time to time be fixed by our board of directors, and
- any dividends or distributions referred to in (1) or (2) above;
(5) dividends or distributions to all holders of our common stock consisting
solely of cash, excluding:
- any cash dividends to the extent that the aggregate cash dividends per
share of our common stock in any consecutive 12-month period do not
exceed the greater of (1) the amount per share of our common stock of
the cash dividends paid on our common stock in the immediately
preceding 12-month period, to the extent that such dividends for the
immediately preceding 12-month period did not require an adjustment of
the conversion
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price pursuant to this bullet (as adjusted to reflect subdivisions or
combinations of our common stock), and (2) 15% of the average of the
current market price of our common stock for 10 consecutive trading
days prior to the date of declaration of such dividend, and
- any dividend or distribution in connection with our liquidation,
dissolution or winding-up or a redemption of any rights issued under a
rights agreement; provided that no adjustment will be made pursuant to
this bullet if that distribution would otherwise constitute a
fundamental change and be reflected in a resulting adjustment described
below; and
(6) payment to holders of our common stock in respect of a tender or
exchange offer by us or any of our subsidiaries for shares of our common
stock in excess of 110% of the current market price of our common stock
as of the trading day next succeeding the last date tenders or exchanges
may be made in the tender or exchange offer.
If any adjustment is required by (5) above as a result of a distribution that is
a dividend described in the first bullet of (5) above, that adjustment would be
based upon the amount by which the distribution exceeds the amount of the
dividend permitted to be excluded pursuant to the first bullet of (5). If an
adjustment is required to be made as described in (5) above as a result of a
distribution that is not such a dividend, such adjustment would be based upon
the full amount of such distribution. Any adjustment required by (6) above would
be calculated based upon the amount by which the aggregate consideration paid
for our common stock acquired in the tender or exchange offer exceeds 110% of
the value of such shares based on the first reported sale price of our common
stock on the trading day next succeeding the last date tenders or exchanges may
be made in the tender or exchange offer.
In the case of certain dividends or distributions, instead of adjusting the
conversion price, we may provide that upon the conversion of the exchange
preferred securities, the holder converting such exchange preferred securities
will receive, in addition to the shares of our common stock (if any) to which
the holder is entitled, the cash, preferred securities or other property that
the holder would have received if it had, immediately prior to the record date
for such dividend or distribution, converted its exchange preferred securities
into shares of our common stock.
If any action would require adjustments of the conversion price under more
than one of the provisions described above, only one adjustment will be made and
that adjustment will be the amount of adjustment that has the highest absolute
value to the holders of the exchange preferred securities. No adjustment in the
conversion price will be required unless the adjustment would require a change
of at least 1% in the conversion price then in effect. However, any adjustment
that would otherwise be required to be made will be carried forward and taken
into account in any subsequent adjustment.
There will be no adjustment of the conversion price in the event of the
issuance of rights pursuant to a stockholder rights plan or similar plan or the
repurchase or redemption of those rights or the issuance of common stock,
options or other preferred securities under any officer, director or employee
benefit plan in existence on the date of this prospectus.
From time to time we may, to the extent permitted by law, reduce the
conversion price by any amount for any period of at least 20 business days, in
which case we will give at least 15 days' notice of the reduction. In addition,
we have the option to make reductions in the conversion price, in addition to
those described above, as we deem advisable to avoid or diminish any income tax
to holders of our common stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for tax
purposes. Please read the section titled "United States Federal Income Tax
Considerations--Tax Treatment of the Ownership and Disposition of Exchange
Preferred Securities and Common Stock--Adjustment of Conversion Price,"
beginning on page 118 of this prospectus, for a more detailed discussion.
Except as stated above, the conversion price will not be adjusted for the
issuance of our common stock or any preferred securities convertible into or
exchangeable for our common stock or carrying the
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right to purchase our common stock or any preferred securities convertible into
or exchangeable for our common stock.
FUNDAMENTAL CHANGE
If we are a party to any transaction or series of transactions that results
in shares of our common stock being converted into the right to receive, or
being exchanged for, preferred securities, cash or other property of a third
party, the conversion price may be adjusted as described below.
In the event we are a party to:
- any recapitalization or reclassification of our common stock, other than a
change in par value or a change from par value to no par value or from no
par value to par value, or as a result of a subdivision or combination of
our common stock;
- any consolidation or merger with or into another corporation, other than a
merger that does not result in a reclassification, conversion, exchange or
cancellation of our outstanding common stock;
- any sale or transfer of all or substantially all of our assets; or
- any compulsory share exchange;
in each case, as a result of which shares of our common stock will be converted
into the right to receive other preferred securities, cash or other property,
then we will ensure that appropriate provision is made so that the holder of
each exchange preferred security then outstanding will have the right thereafter
to convert the exchange preferred securities only into:
- in the case of any transaction other than a transaction involving a Common
Stock Fundamental Change (as defined below), the kind and amount of the
preferred securities, cash or other property that would have been
receivable upon the consummation of the transaction by a holder of the
number of shares of our common stock issuable upon conversion of such
exchange preferred securities immediately prior to the transaction, or
- in the case of a transaction involving a Common Stock Fundamental Change,
shares of common stock of the kind received by holders of our common stock
as a result of the Common Stock Fundamental Change,
but in each case after giving effect to any adjustment discussed below relating
to a Fundamental Change if the transaction constitutes a Fundamental Change.
However, in the event of a Common Stock Fundamental Change in which:
- 100% of the value of the consideration received by a holder of our common
stock in shares of common stock of the successor, acquirer or other third
party (and cash, if any, paid with respect to any fractional interests in
the shares of common stock resulting from the Common Stock Fundamental
Change), and
- all of our common stock will have been exchanged for, converted into, or
acquired for, shares of common stock (and cash, if any, with respect to
fractional interests) of the successor, acquirer or other third party,
the conversion price per share of our common stock immediately following the
Common Stock Fundamental Change will be the conversion price in effect
immediately prior to the Common Stock Fundamental Change divided by the number
of shares of common stock of the successor, acquirer, or other third party
received by a holder of one share of our common stock as a result of the Common
Stock Fundamental Change.
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Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion of the exchange preferred securities.
For example, in the event of a Non-Stock Fundamental Change, the holder has the
right to convert exchange preferred securities into the kind and amount of the
preferred securities, cash or other property as is determined by the number of
shares of our common stock that would have been receivable upon conversion of
exchange preferred securities at the conversion price as adjusted in the manner
described above. However, in the event of a Common Stock Fundamental Change in
which less than 100% of the value of the consideration received by a holder of
our common stock is common stock of the successor, acquirer or other third
party, a holder of exchange preferred securities who converts the exchange
preferred securities following the Common Stock Fundamental Change will receive
consideration in the form of that common stock only. A holder who converted the
exchange preferred securities prior to the Common Stock Fundamental Change would
have received consideration in the form of that common stock as well as any
other preferred securities or assets (which may include cash) received by
holders of our common stock in the transaction.
The conversion price adjustments described above are designed, in some
circumstances, to reduce the conversion price that would be applicable in
Fundamental Change transactions where all or substantially all of our common
stock is converted into preferred securities, cash, or property and not more
than 50% of the value received by the holders of our common stock consists of
stock listed or admitted for listing subject to notice of issuance on a national
securities exchange or quoted on the NASDAQ National Market of the NASDAQ Stock
Market, Inc. (a Non-Stock Fundamental Change, as defined below). This reduction
would result in an increase in the amount of the preferred securities, cash or
property into which each exchange preferred security is convertible over that
which would have been obtained in the absence of those conversion price
adjustments. However, the maximum amount of the increase will be limited in
cases where the relevant Applicable Price is lower than the applicable Reference
Market Price.
In a Common Stock Fundamental Change transaction, the adjustments described
above are designed to provide in effect that:
- where our common stock is converted partly into that listed or NASDAQ
National Market-traded common stock and partly into other preferred
securities, cash, or property, each exchange preferred security will be
convertible solely into a number of shares of that common stock determined
so that the initial value of such shares (measured as described in the
definition of Purchaser Stock Price below) equals the value of the shares
of our common stock into which each exchange preferred security were
convertible immediately before the transaction (measured as described
above), and
- where our common stock is converted solely into that listed or NASDAQ
National Market-traded common stock, each exchange preferred security will
be convertible into the same number of shares of the common stock
receivable by a holder of the number of shares of our common stock into
which each exchange preferred security was convertible immediately before
that transaction.
In determining the amount and type of consideration received by a holder of
our common stock in the event of a Fundamental Change, we will disregard
consideration received by a holder of our common stock pursuant to a statutory
right of appraisal.
The term "Applicable Price" means:
- in the case of a Non-Stock Fundamental Change in which the holders of our
common stock receive only cash, the amount of cash receivable by a holder
of one share of our common stock; and
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- in the case of any other Fundamental Change, the average of the Closing
Prices (as defined below) for one share of our common stock during the 10
trading days immediately prior to the record date for the determination of
the holders of our common stock entitled to receive cash, preferred
securities, property or other assets in connection with that Fundamental
Change or, if there is no record date, prior to the date on which the
holders of the our common stock will have the right to receive such cash,
preferred securities, property or other assets.
The term "Closing Price" means on any day, the last reported sales price on
that day or, if no sales take place on that day, the average of the reported
closing bid and asked prices on that day, in each case on the New York Stock
Exchange, or, if the common stock is not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange or
quotation system on which the common stock is listed or admitted to trading or,
if not quoted or listed or admitted to trading on any national securities
exchange or quotation system, the average of the closing bid and asked prices of
the common stock in the over-the-counter market on that day as reported by the
National Quotation Bureau Incorporated, or a similarly generally accepted
reporting service or, if not available in that manner, as furnished by any New
York Stock Exchange member firm, selected by us under the new indenture for that
purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value, as determined in good faith by our board of
directors, of the consideration received by holders of our common stock consists
of shares of common stock that for each of the 10 consecutive trading days
immediately prior to the Fundamental Change has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the NASDAQ National Market; provided, however, that a
Fundamental Change will not be a Common Stock Fundamental Change unless either:
- we continue to exist after the occurrence of that Fundamental Change and
the outstanding exchange preferred securities continue to exist as
outstanding exchange preferred securities, or
- the outstanding exchange preferred securities continue to exist as
exchange preferred securities and are convertible into shares of common
stock of our successor.
The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of our common stock is exchanged for, converted into, acquired for or
constitutes solely the right to receive cash, preferred securities, property or
other assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise). However, in the case of any of these series of transactions or
events, for purposes of adjustment of the conversion price, the Fundamental
Change will be deemed to have occurred when substantially all of our common
stock has been exchanged for, converted into, or acquired for or constitutes
solely the right to receive cash, preferred securities, property or other assets
but the adjustment will be based upon the consideration that the holders of our
common stock received in the transaction or event as a result of which more than
50% of the our common stock shall have been exchanged for, converted into or
acquired for, or shall constitute solely the right to receive cash, preferred
securities, properties or other assets.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for one share of common
stock received by holders of our common stock in the Common Stock Fundamental
Change during the 10 trading days immediately prior to the record date for the
determination of the holders of our common stock entitled to receive such shares
of common stock or, if there is no record date, prior to the date upon which the
holders of our common stock will have the right to receive the shares of common
stock.
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The term "Reference Market Price" will initially mean $ (which is equal
to approximately % of the last reported sale price per share of our common
stock on the New York Stock Exchange on ). In the event of any
adjustment to the conversion price other than as a result of a Fundamental
Change, the Reference Market Price will also be adjusted so that the ratio of
the Reference Market Price to the conversion price after giving effect to any
adjustment will always be the same as the ratio of the initial Reference Market
Price to the initial conversion price of the exchange preferred securities.
Conversions of the exchange preferred securities may be effected by
delivering them to the office or agency maintained by us for that purpose.
Conversion price adjustments may, in certain circumstances, result in
constructive distributions that could be taxable as dividends under the Internal
Revenue Code of 1984, as amended, to holders of exchange preferred securities
or, in the case of a failure to make those adjustments, to holders of our common
stock issued upon conversion of the exchange preferred securities. Please read
the section titled "United States Federal Income Tax Considerations--Tax
Treatment of the Ownership and Disposition of Exchange Preferred Securities and
Common Stock--Adjustment of Conversion Price" beginning on page 118 of this
prospectus, for a more detailed discussion.
We could, in the future, enter into certain transactions, including certain
recapitalizations or distributions, that would not constitute a Fundamental
Change, but that would increase the amount of our consolidated indebtedness or
reduce the amount of our shareholders' equity.
OPTIONAL REDEMPTION
The exchange debentures mature on . In addition, we have the
option to redeem the exchange debentures:
- in whole or in part, at any time on or after , 2003;
- in whole but not in part, prior to , 2003, if our common stock
price has exceeded 200% of the conversion price for at least 20 trading
days during a 30-day trading period ending five trading days prior to the
notice of redemption; and
- at any time, in certain circumstances, upon the occurrence of a tax event
as described below.
Upon the repayment of the exchange debentures, whether at stated maturity or
upon redemption, the proceeds from the repayment will simultaneously be applied
to redeem exchange preferred securities and new common securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
exchange debentures repaid or redeemed at the applicable redemption price, plus
accumulated and unpaid distributions. However, except in the case of redemption
upon maturity of the exchange debentures and redemption prior to ,
2003, holders of exchange preferred securities and new common securities will be
given not less than 30 nor more than 60 days' notice of the redemption. The
applicable redemption price per exchange preferred security will be equal to the
redemption price per $ principal amount of exchange debentures. Please read
the section titled "Description of Preferred Securities--Description of the
Exchange Debentures--Optional Redemption," beginning on page 97 of this
prospectus, for a more detailed discussion.
If fewer than all of the outstanding exchange preferred securities and new
common securities are to be redeemed, the exchange preferred securities and the
new common securities will be redeemed on a pro rata basis and, in that case,
the redemption of exchange preferred securities will be made as described under
'Description of Preferred Securities--Description of the Exchange Preferred
Securities--Book-Entry Only Issuance; The Depository Trust Company," beginning
on page 86 of this prospectus. However, if an event of default under the new
trust agreement has occurred and is
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continuing, the exchange preferred securities will have a priority over the new
common securities with respect to the payment of the redemption price.
In the case of redemption prior to , 2003, notice must be
delivered not more than 30 and not less than 15 days prior to the date of
redemption. Prior to the redemption date, holders of exchange preferred
securities will have the right to convert their exchange preferred securities
into shares of our common stock at the conversion price in effect at the time.
In the case of such a redemption prior to , 2003, we will pay
additional interest in cash or our common stock, at our election, in an amount
equal to two years' worth of interest payments on any exchange debentures that
are converted following the notice of redemption and prior to the date of
redemption, less any interest actually paid prior to the date of conversion.
SPECIAL EVENT DISTRIBUTION; TAX EVENT REDEMPTION
A "tax event" occurs if the administrative trustees receive an opinion of
nationally recognized independent tax counsel experienced in these matters to
the effect that as a result of:
- any amendment to, or change, including any announced prospective change,
in the laws or any regulations thereunder, of the United States or any
political subdivision or taxing authority of the United States or any
political subdivision,
- any amendment to, or change in, an interpretation or application of any
such laws or regulations by any legislative body, court or governmental or
regulatory agency or authority, including the enactment of any legislation
and the publication of any judicial decision or regulatory determination,
or
- any official interpretation or pronouncement by any legislative body,
court or governmental or regulatory agency or authority that provides for
a position with respect to such laws or regulations that differs from its
previously generally accepted position,
in each case on or after the date of this prospectus, there is more than an
insubstantial risk that:
- the new trust is, or will be within 90 days of the date of the opinion,
subject to federal income tax with respect to interest accrued or received
on the exchange debentures, or
- the new trust is, or will be within 90 days of the date of the opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
An "investment company event" occurs if the administrative trustees receive
an opinion of a nationally recognized independent counsel experienced in these
matters to the effect that, as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, there
is more than an insubstantial risk that the new trust is or will be considered
an investment company that is required to be registered under the Investment
Company Act of 1940, as amended.
If a tax event or investment company event has occurred and is continuing,
at any time, the new trust may, with our prior written consent, unless the
exchange debentures are redeemed in the limited circumstances described below,
be dissolved. As a result, after satisfaction of liabilities to creditors of the
new trust, if any, exchange debentures with:
- an aggregate principal amount equal to the aggregate stated liquidation
amount of,
- an interest rate identical to the annual rate of distributions on, and
- accrued and unpaid interest equal to accumulated and unpaid distributions
on,
the exchange preferred securities and new common securities outstanding at that
time would be distributed to the holders of the exchange preferred securities
and new common securities in
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liquidation of their interests in the new trust, on a pro rata basis, within
90 days following the occurrence of the tax event or investment company event.
However, in the case of a tax event, as a condition of the dissolution and
distribution, the administrative trustees will have received an opinion of
nationally recognized independent tax counsel experienced in these matters,
which opinion may rely on published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the exchange preferred securities
will not recognize any gain or loss for federal income tax purposes as a result
of the dissolution and distribution of exchange debentures. If, at the time, the
new trust has the opportunity to eliminate, within the 90-day period, the tax
event or investment company event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that in our sole judgment would not adversely affect the new trust, the
holders of the exchange preferred securities, or us, and will involve no
material cost, the new trust will pursue that measure instead of dissolving
itself.
Further, if, in the case of a tax event, the administrative trustees have
been informed by nationally recognized independent tax counsel experienced in
these matters that they cannot deliver an opinion to the effect that the holders
of the exchange preferred securities will not recognize any gain or loss for
federal income tax purposes as a result of the dissolution and distribution of
the exchange debentures, we will have the right, upon not less than 30 nor more
than 60 days' notice, to redeem the exchange debentures. In that event, we can
redeem the exchange debentures, in whole but not in part, for cash at a
redemption price equal to 100% of the principal amount of the exchange
debentures plus accrued and unpaid interest to the redemption date, within
90 days following the occurrence of the tax event. Promptly following the
redemption, the exchange preferred securities will be redeemed by the new trust
at a redemption price equal to the liquidation amount of the exchange preferred
securities plus accumulated and unpaid distributions. However, if, at the time,
either we or the new trust has the opportunity to eliminate, within the 90-day
period, the tax event by taking some ministerial action, such as filing a form
or making an election, or pursuing some other similar reasonable measure that in
our sole judgment would not adversely affect the new trust, the holders of the
exchange preferred securities, or us, and will involve no material costs, we or
the new trust will pursue that measure instead of redeeming the exchange
debentures and the exchange preferred securities.
If we decline to consent to a dissolution of the new trust and distribution
of the exchange debentures or decline to redeem the exchange debentures as
described above, the exchange preferred securities will remain outstanding and
we may be obligated to pay additional interest described under the section
titled "Description of Preferred Securities--Description of the Exchange
Debentures--Additional Interest," beginning on page 101 of this prospectus.
After the date fixed for any distribution of exchange debentures upon
dissolution of the new trust:
- the exchange preferred securities will no longer be deemed to be
outstanding,
- the depository or its nominee, as the record holder of the global
certificates, will receive a registered global certificate or certificates
representing the exchange debentures to be delivered upon such
distribution, and
- any certificates representing exchange preferred securities not held by
the depository or its nominee will be deemed to represent exchange
debentures having an aggregate principal amount equal to the aggregate
stated liquidation amount of the exchange preferred securities, with an
interest rate identical to the annual rate of distributions on, and
accrued and unpaid interest equal to accumulated and unpaid distributions
on, the exchange preferred securities, until the certificates are
presented to us or our agent for transfer, exchange or reissuance.
We cannot give you any assurance as to the market price for the exchange
debentures that may be distributed in exchange for exchange preferred securities
if a dissolution and liquidation of the new trust were to occur. Accordingly,
the exchange debentures that you may subsequently receive on
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dissolution and liquidation of the new trust may trade at a discount to the
price of the exchange preferred securities exchanged. If the exchange debentures
are distributed to the holders of exchange preferred securities upon the
dissolution of the new trust, we will use our reasonable best efforts to list
the exchange debentures on the New York Stock Exchange or on another national
securities exchange or similar organization.
PROCEDURES FOR REDEMPTION BY THE NEW TRUST
After , 2003, the new trust may not redeem fewer than all of the
outstanding exchange preferred securities unless all accumulated and unpaid
distributions have been or contemporaneously are paid on all exchange preferred
securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
If the new trust gives notice of redemption in respect of exchange preferred
securities, which notice will be irrevocable, then on the redemption date,
provided that we have paid to the property trustee a sufficient amount of cash
in connection with the related redemption of the exchange debentures, the new
trust will irrevocably deposit with the depository funds sufficient to pay the
applicable redemption price and irrevocable instructions and authority to pay
the redemption price to the holders of the exchange preferred securities. Please
read the section titled "Description of Preferred Securities--Description of the
Exchange Preferred Securities--Book-Entry Only Issuance; The Depository Trust
Company," beginning on page 86 of this prospectus.
If notice of redemption shall have been given and funds deposited as
required, then, on the date fixed for redemption, distributions will cease to
accumulate and all rights of holders of the exchange preferred securities called
for redemption will cease, except for the right of holders of the exchange
preferred securities to receive the redemption price and all accumulated and
unpaid distributions. In the event of a redemption prior to , 2003,
holders that convert their exchange preferred securities after the notice of
redemption is given will receive distributions in an amount equal to two years'
worth of additional distributions on the converted exchange preferred
securities, less any distributions actually paid prior to the date of
conversion.
If the redemption date is not a business day, then payment of the redemption
price payable on that date will be made on the next succeeding day that is a
business day, and without any interest or other payment in respect of any such
delay. If that business day falls in the next calendar year, however, the
payment will be made on the immediately preceding business day.
In the event that we or the new trust, pursuant to the exchange preferred
securities guarantee described in the section titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities Guarantee,"
improperly withhold or refuse to pay the applicable redemption price, then
distributions on the exchange preferred securities will continue to accumulate
at the then applicable rate, from the original redemption date to the date the
redemption price is actually paid. Under these circumstances, the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the redemption price.
In the event that fewer than all of the outstanding exchange preferred
securities and new common securities are to be redeemed, the exchange preferred
securities and the new common securities will be redeemed on a pro rata basis
and, in that case, the redemption of exchange preferred securities will be made
as described in the section titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities--Book-Entry Only
Issuance; The Depository Trust Company," beginning on page 86 of this
prospectus.
In the event of any redemption in part, the new trust will not:
- issue, register the transfer of, or exchange, any certificated security
during a period beginning at the opening of business 15 days before any
exchange preferred securities are selected for
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redemption and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given to
all holders of exchange preferred securities to be redeemed, or
- register the transfer of, or exchange, any certificated preferred
securities selected for redemption, in whole or in part, except for the
unredeemed portion of any certificated preferred securities being redeemed
in part.
Subject to the provisions described above and applicable law, including
United States federal securities laws, we or any of our subsidiaries may at any
time, and from time to time, purchase outstanding exchange preferred securities
by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution of the new trust,
the then holders of the exchange preferred securities will be entitled to
receive out of the assets of the new trust, after satisfaction of liabilities to
creditors, distributions in an amount equal to the aggregate of the stated
liquidation amount of $ per exchange preferred security plus accumulated and
unpaid distributions to the date of payment unless, in connection with the
liquidation, exchange debentures in an aggregate stated principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to, the annual rate of distributions on, and accrued and unpaid interest equal
to accumulated and unpaid distributions on, the exchange preferred securities,
have been distributed on a pro rata basis to the holders of the exchange
preferred securities and the new common securities.
If, upon any dissolution, the liquidation distribution can be paid only in
part because the new trust has insufficient assets available to pay in full the
aggregate liquidation distribution, then the amounts payable directly by the new
trust on the exchange preferred securities shall be paid on a pro rata basis.
The holders of the new common securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
exchange preferred securities, except that if an event of default under the new
trust agreement has occurred and is continuing, the exchange preferred
securities will have priority over the new common securities.
The new trust will dissolve:
- on , the expiration of its term,
- upon our bankruptcy or the bankruptcy of the holder of the new common
securities,
- upon the filing of a certificate of dissolution or its equivalent with
respect to us or the holder of the new common securities, after obtaining
the consent of the holders of at least a majority in liquidation amount of
the exchange preferred securities and new common securities voting
together as a single class, to the filing of a certificate of cancellation
with respect to the new trust, or the revocation of our charter and the
expiration of 90 days after the date of revocation without a reinstatement
of the charter,
- upon the occurrence of a tax event or investment company event except in
the limited circumstance described in the section titled "Description of
Preferred Securities--Description of the Exchange Preferred
Securities--Special Event Distribution; Tax Event Redemption," beginning
on page 78 of this prospectus,
- upon the entry of a decree of a judicial dissolution of us or the new
trust,
- upon the redemption of all of the exchange preferred securities and new
common securities, or
- upon the conversion of all outstanding exchange preferred securities
pursuant to the new trust agreement.
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EVENTS OF DEFAULT
An event of default under the new indenture constitutes an event of default
under the new trust agreement. Pursuant to the new trust agreement, the holder
of the new common securities will be deemed to have waived any event of default
with respect to the new common securities until all events of default with
respect to the exchange preferred securities have been cured, waived or
otherwise eliminated. Until all events of default with respect to the exchange
preferred securities have been cured, waived, or otherwise eliminated, the
property trustee will be deemed to be acting solely on behalf of the holders of
the exchange preferred securities and only the holders of the exchange preferred
securities will have the right to direct the property trustee with respect to
certain matters under the new trust agreement, and therefore the new indenture.
If the property trustee fails to enforce its rights under the exchange
debentures, holders of exchange preferred securities, to the fullest extent
permitted by law, may institute a legal proceeding against us to enforce the
property trustee's rights under the exchange debentures. However, if an event of
default has occurred and is continuing under the new trust agreement and the
event is attributable to our failure to pay interest or principal on the
exchange debentures on the date the interest or principal is otherwise payable,
or in the case of redemption, the redemption date, a holder of exchange
preferred securities may institute a direct action for enforcement of payment to
the holder directly of the principal of or interest on exchange debentures
having an aggregate principal amount equal to the aggregate liquidation amount
of the exchange preferred securities of the holder on or after the respective
due date specified in the exchange debentures. In connection with that direct
action, we will remain obligated to pay the principal or interest on the
exchange debentures and will be subrogated to the rights of such holders of
exchange preferred securities under the new trust agreement to the extent of any
payment made by us to such holder of exchange preferred securities in the direct
action. The holders of exchange preferred securities will not be able to
exercise directly any other remedy available to the holders of the exchange
debentures.
The property trustee is required to notify holders of the exchange preferred
securities, within 90 days of an event of default under the new trust agreement,
of all defaults with respect to the exchange preferred securities actually known
to the property trustee. However, under certain circumstances, the property
trustee may withhold that notice if the property trustee determines in good
faith that the withholding of notice is in the interests of the holders of the
exchange preferred securities. Upon the occurrence of an event of default under
the new trust agreement, the property trustee as the sole holder of the exchange
debentures will have the right under the new indenture to declare the principal
of and interest on the exchange debentures to be immediately due and payable.
We and the new trust are each required to provide to the property trustee
annually an officer's certificate as to our compliance with all conditions and
covenants under the new trust agreement.
VOTING RIGHTS
Except as described below, under the Delaware Business Trust Act, the Trust
Indenture Act and under the section titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities
Guarantee--Modification of the Exchange Preferred Guarantee; Assignment," and as
otherwise required by law and the new trust agreement, the holders of the
exchange preferred securities will have no voting rights. In the event that we
elect to defer payments of interest on the exchange debentures as described in
the section titled "Description of Preferred Securities--Description of the
Exchange Preferred Securities--Distributions," the holders of the exchange
preferred securities do not have the right to appoint a special representative
or trustee to protect their interests.
Subject to the requirement that the trustees of the new trust obtain a tax
opinion in certain circumstances described below, the holders of a majority in
aggregate liquidation amount of the
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exchange preferred securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the property
trustee, or the exercise of any trust or power conferred upon the property
trustee under the new trust agreement. This includes the right to direct the
property trustee, as holder of the exchange debentures, to:
- exercise the remedies available under the new indenture,
- waive any past event of default under the new indenture and its
consequences, to the extent they can be waived under the new indenture,
- exercise any right to rescind or annul a declaration that the principal of
all the exchange debentures shall be due and payable, or
- consent to any amendments, modifications or termination of the new
indenture or the exchange debentures requiring the consent of the holders
of the exchange debentures.
However, if an event of default has occurred and is continuing under the new
indenture, the holders of 25% of the aggregate liquidation amount of the
exchange preferred securities then outstanding may direct the property trustee
to declare the principal and interest of the exchange debentures immediately due
and payable.
Where a consent or action under the new indenture would require the consent
of:
(1) holders of exchange debentures representing a specified percentage
greater than a majority in principal amount of the exchange debentures,
or
(2) each holder of exchange debentures affected by the consent,
no such consent will be given by the property trustee without the prior consent
of, in the case of (1) above, holders of exchange preferred securities
representing at least that specified percentage of the aggregate liquidation
amount of the exchange preferred securities, or, in the case of (2) above, each
holder of exchange preferred securities affected by the consent.
The property trustee will notify all holders of the exchange preferred
securities of any notice of default received from the indenture trustee with
respect to the exchange debentures. The notice will state that the event of
default also constitutes an event of default under the new trust agreement.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the property trustee will not take any of the actions
described above unless it has obtained an opinion of nationally recognized tax
counsel experienced in these matters to the effect that, following those
actions, the new trust will be classified as a grantor trust for United States
federal income tax purposes and each holder will be treated as owning an
undivided beneficial interest in the exchange debentures.
In the event that the consent of the property trustee, as the holder of the
exchange debentures, is required under the new indenture with respect to any
amendment, modification or termination of the new indenture, the property
trustee will request the direction of the holders of the exchange preferred
securities and new common securities with respect to that amendment,
modification or termination and will vote with respect to that amendment,
modification or termination as directed by a majority in liquidation amount of
the exchange preferred securities and new common securities voting together as a
single class. However, where a consent under the new indenture would require the
consent of holders of exchange debentures representing a specified percentage
greater than a majority in principal amount of the exchange debentures, the
property trustee may only give such consent at the direction of the holders
representing such specified percentage in liquidation amount of the exchange
preferred securities and new common securities. The property trustee will be
under no obligation to take any such action in accordance with the directions of
the holders of the exchange preferred securities and new common securities
unless each of the new trustees has obtained an opinion of nationally
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recognized tax counsel experienced in those matters to the effect that for
United States federal income tax purposes, the new trust will not be classified
as other than a grantor trust.
A waiver of an event of default under the new indenture will constitute a
waiver of the corresponding event of default under the new trust agreement.
Any required approval or direction of holders of exchange preferred
securities may be given at a separate meeting of holders of exchange preferred
securities convened for that purpose, at a meeting of all of the holders of
exchange preferred securities and new common securities, or pursuant to written
consent. The administrative trustees will cause a notice of any meeting at which
holders of exchange preferred securities are entitled to vote, or of any matter
upon which action by written consent of those holders is to be taken, to be
mailed to each holder of record of exchange preferred securities. Each notice
will include a statement setting forth:
- the date of the meeting or the date by which the action is to be taken,
- a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which
written consent is sought, and
- instructions for the delivery of proxies or consents.
No vote or consent of the holders of exchange preferred securities will be
required for the new trust to redeem and cancel exchange preferred securities or
distribute exchange debentures in accordance with the new trust agreement.
Notwithstanding that holders of exchange preferred securities are entitled
to vote or consent under any of the circumstances described above, any of the
exchange preferred securities that are owned at that time by us or by an
affiliate of ours, will not be entitled to vote or consent and will, for
purposes of such vote or consent, be treated as if they were not outstanding.
The procedures by which holders of exchange preferred securities in
book-entry form may exercise their voting rights are described in the section
titled "Description of Preferred Securities--Description of the Exchange
Preferred Securities--Book-Entry Only Issuance; The Depository Trust Company,"
beginning on page 86 of this prospectus.
You will have no rights to increase or decrease the number of the new
trustees, or to appoint or remove trustees, who may be appointed, removed or
replaced solely by us as the indirect or direct holder of all of the new common
securities.
MODIFICATION OF THE NEW TRUST AGREEMENT
The administrative trustees (and in certain circumstances the property
trustee or the Delaware trustee) may modify and amend the new trust agreement,
provided that if any proposed amendment provides for, or the administrative
trustees otherwise propose to effect:
- any action that would adversely affect the powers, preferences or special
rights of the exchange preferred securities or the new common securities,
whether by way of amendment to the new trust agreement or otherwise, or
- the dissolution, winding-up or termination of the new trust other than
pursuant to the terms of the new trust agreement,
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then the holders of the exchange preferred securities and new common securities
voting together as a single class will be entitled to vote on the amendment or
proposal and the amendment or proposal will not be effective except with the
approval of at least two-thirds in liquidation amount of the exchange preferred
securities and new common securities affected by it, voting together as a single
class. If any amendment or proposal referred to in the first bullet above would
adversely affect only the exchange preferred securities or the new common
securities, then only the affected class will be entitled to vote on the
amendment or proposal and the amendment or proposal will not be effective except
with the approval of at least two-thirds in liquidation amount of the exchange
preferred securities or the new common securities, as the case may be.
Notwithstanding the foregoing, no amendment or modification may be made to
the new trust agreement if the amendment or modification would:
- cause the new trust to be classified for United States federal income tax
purposes as other than a grantor trust,
- reduce or otherwise adversely affect the powers of the property trustee in
contravention of the Trust Indenture Act, or
- cause the new trust to be deemed an "investment company" which is required
to be registered under the Investment Company Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The new trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below or as otherwise provided in the new trust agreement. The new
trust may, with the consent of a majority of the administrative trustees and
without the consent of the holders of the exchange preferred securities and new
common securities, the property trustee or the Delaware trustee, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state of the United States, provided that:
- if the new trust is not the survivor, the successor entity either
- expressly assumes all of the obligations of the new trust under the
exchange preferred securities and new common securities, or
- substitutes for the exchange preferred securities other preferred
securities having substantially the same terms as the exchange
preferred securities, so long as the successor preferred securities
rank the same as the exchange preferred securities rank with respect to
distributions and payments upon liquidation, redemption and otherwise,
- if the new trust is not the survivor, we expressly acknowledge or appoint
a trustee of the successor entity possessing the same powers and duties as
the property trustee as the holder of the exchange debentures,
- the exchange preferred securities or any successor preferred securities
are listed, or any successor preferred securities will be listed upon
notification of issuance, on any national securities exchange or with
another organization on which the exchange preferred securities are then
listed or quoted,
- the merger, consolidation, amalgamation or replacement does not cause the
exchange preferred securities, including any successor preferred
securities, to be downgraded by any nationally recognized statistical
rating organizations,
- the merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the
exchange preferred securities and new common
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securities, including any successor preferred securities, in any material
respect (other than with respect to any dilution of the holders' interest
in the new entity, if any),
- the successor entity has a purpose substantially identical to that of the
new trust,
- prior to the merger, consolidation, amalgamation or replacement, we have
received an opinion of a nationally recognized independent counsel to the
new trust experienced in these matters to the effect that:
- the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the exchange preferred securities and new common securities,
including any successor preferred securities, in any material respect
(other than with respect to any dilution of the holders' interest in
the new entity),
- following the merger, consolidation, amalgamation or replacement,
neither the new trust nor the successor entity, if any, will be
required to register as an investment company under the Investment
Company Act, and
- following the merger, consolidation, amalgamation or replacement, the
new trust, or the successor entity, will be treated as a grantor trust
for United States federal income tax purposes, and
- if the new trust is not the survivor, we guarantee the obligations of
the successor entity under the successor preferred securities at least
to the extent provided by the exchange preferred securities guarantee.
Notwithstanding the general provisions described above, the new trust will
not, except with the consent of holders of 100% in liquidation amount of the
exchange preferred securities and new common securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
the consolidation, amalgamation, merger or replacement would cause the new trust
or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE; THE DEPOSITORY TRUST COMPANY
The exchange preferred securities will be issued in the form of registered
preferred securities in global form. Each global security will be deposited
with, or on behalf of, The Depository Trust Company, or DTC, and registered in
the name of Cede & Co., as nominee of DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act. DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
direct participants and by the New York Stock Exchange, the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through or maintain a
direct or indirect custodial relationship with a direct participant either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the SEC.
Purchases of exchange preferred securities within the DTC system must be
made by or through direct participants, which will receive a credit for the
exchange preferred securities on DTC's records.
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The ownership interest of each actual purchaser of each exchange preferred
security, to which we refer in this prospectus as the beneficial owner, is in
turn to be recorded on the direct and indirect participants' records. Beneficial
owners will not receive written confirmation from DTC of their purchases, but
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners purchased exchange
preferred securities. Transfers of ownership interests in the exchange preferred
securities are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in the exchange preferred
securities, except in the event that use of the book-entry system for the
exchange preferred securities is discontinued or in certain other limited
circumstances.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the exchange preferred securities represented thereby
for all purposes under the new trust agreement and the exchange preferred
securities. No beneficial owner of an interest in a global certificate will be
able to transfer that interest except in accordance with DTC's applicable
procedures, in addition to those provided for under the new trust agreement.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If a holder
requires physical delivery of exchange preferred securities in fully registered,
certificated form for any reason, including to sell exchange preferred
securities to persons in states which require such delivery of the exchange
preferred securities or to pledge the exchange preferred securities, the holder
must transfer its interest in the global security in accordance with the normal
procedures of DTC and the procedures set forth in the new trust agreement.
DTC has advised us that it will take any action permitted to be taken by a
holder of exchange preferred securities, including the presentation of exchange
preferred securities for exchange as described below, only at the direction of
one or more participants to whose account the DTC interests in the global
preferred securities are credited and only in respect of that portion of the
aggregate liquidation amount of exchange preferred securities as to which the
participant or participants has or have given such direction. However, if there
is an event of default with respect to the exchange preferred securities, DTC
will exchange the global exchange preferred securities for certificated exchange
preferred securities, which it will distribute to its participants.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements that may be in
effect from time to time.
Redemption notices in respect of exchange preferred securities held in
book-entry form will be sent to Cede & Co. If less than all of the exchange
preferred securities are being redeemed, DTC will reduce the amount of the
interest of each direct participant in such exchange preferred securities in
accordance with its procedures.
Although voting with respect to the exchange preferred securities is
limited, in those cases where a vote is required, neither DTC nor Cede & Co.
will itself consent or vote with respect to exchange preferred securities. Under
its usual procedures, DTC would mail an omnibus proxy to the new trust as soon
as possible after the record date. The omnibus proxy assigns the consenting or
voting rights of Cede & Co. to those direct participants to whose accounts
exchange preferred securities are credited on the record date (identified in a
listing attached to the omnibus proxy).
Any distribution payments in cash on the exchange preferred securities held
in book-entry form will be made to DTC in immediately available funds. DTC's
practice is to credit direct participants'
87
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with preferred securities held for the account of
customers in bearer form or registered in "street name," and such payments will
be the responsibility of the participant and not of DTC, the new trust or us,
subject to any statutory or regulatory requirements to the contrary that may be
in effect from time to time. Payment of distributions to DTC is the
responsibility of the new trust, disbursement of such payments to direct
participants is the responsibility of DTC, and disbursement of such payments to
the beneficial owners is the responsibility of direct and indirect participants.
Although DTC has agreed to the procedures described above in order to
facilitate transfers of interests in the global exchange preferred securities
among participants of DTC, DTC is under no obligation to perform or continue to
perform these procedures, and these procedures may be discontinued at any time.
None of us, the new trust, the indenture trustee or the new trustees will have
any responsibility for the performance by DTC or its participants or indirect
participants under the rules and procedures governing DTC. DTC may discontinue
providing its services as securities depository with respect to the exchange
preferred securities at any time by giving reasonable notice to the new trust.
Under those circumstances, in the event that a successor securities depository
is not obtained, exchange preferred securities certificates are required to be
printed and delivered. Additionally, the administrative trustees (with our
consent) may decide to discontinue use of the system of book-entry transfers
through DTC (or any successor depository) with respect to the exchange preferred
securities. In that event, certificates for the exchange preferred securities
will be printed and delivered. In each of the above circumstances, if no paying
agent has previously been appointed, we will appoint a paying agent with respect
to the exchange preferred securities.
Except as described herein, a beneficial owner in a global exchange
preferred securities certificate will not be entitled to receive physical
delivery of exchange preferred securities. Accordingly, each beneficial owner
must rely on the procedures of DTC to exercise any rights under the exchange
preferred securities.
The information in this section and elsewhere in this prospectus concerning
DTC and DTC's book-entry system has been obtained from sources that we and the
new trust believe to be reliable, but neither we nor the new trust take
responsibility for the accuracy of this information.
PAYMENTS IN RESPECT OF THE EXCHANGE PREFERRED SECURITIES
Payments in respect of the exchange preferred securities will be made to
DTC, which will credit the relevant accounts at DTC on the applicable
distribution dates or, in the case of certificated exchange preferred
securities, the payments will be made by check mailed to the address of the
holder entitled to the payments as the address will appear on the register.
INFORMATION CONCERNING THE PROPERTY TRUSTEE, TRANSFER AGENT, REGISTRAR AND
PAYING AGENT, AND CONVERSION AGENT
The Bank of New York will initially act as property trustee, transfer agent,
registrar and paying agent, and conversion agent for the exchange preferred
securities, but the new trust may designate an additional or substitute transfer
agent, registrar and paying agent, or conversion agent. The paying agent will be
permitted to resign as paying agent upon 30 days' written notice to the
administrative trustees. In the event that The Bank of New York will no longer
be the paying agent, the new trust will appoint a successor to act as paying
agent (which must be a bank or trust company).
In the event that the exchange preferred securities do not remain in
book-entry-only form, registration of transfers of exchange preferred securities
will be effected without charge by or on behalf of the new trust, but upon
payment of any tax or other governmental charges that may be imposed in
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connection with the transfer and/or the giving of such indemnity as the new
trust may require with respect to the transfer. Exchanges of exchange preferred
securities for exchange debentures will be effected without charge by or on
behalf of the new trust, but upon payment of any tax or other governmental
charges which may be imposed and/or the giving of such indemnity as the new
trust may require with respect to the exchange in connection with the issuance
of any exchange debentures in the name of any person other than the registered
holder of the exchange preferred security for which the exchange debenture is
being exchanged or for any reason other than the exchange. The new trust will
not be required to register or cause to be registered the transfer of exchange
preferred securities after the exchange preferred securities have been called
for redemption or exchange.
The property trustee, prior to the occurrence of a default with respect to
the exchange preferred securities or new common securities and after the curing
of any defaults that may have occurred, undertakes to perform only the duties
that are specifically set forth in the new trust agreement and, after default,
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to these provisions, the property
trustee is under no obligation to exercise any of the powers vested in it by the
new trust agreement at the request of any holder of exchange preferred
securities, unless it is offered reasonable indemnity by the holder against the
costs, expenses and liabilities that it might incur. The holders of exchange
preferred securities will not be required to offer such indemnity in the event
that those holders, by exercising their voting rights, direct the property
trustee to take any action it is empowered to take under the new trust agreement
following an event of default under the new trust agreement. The property
trustee also serves as trustee under the exchange preferred securities guarantee
and the new indenture.
We may maintain banking and other commercial relationships with the property
trustee and its affiliates in the ordinary course of business.
GOVERNING LAW
Delaware law will govern the new trust agreement and the exchange preferred
securities.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the new trust in such a way so that:
- the new trust will not be required to register as an "investment company"
under the Investment Company Act,
- the new trust will not be characterized as other than a grantor trust for
United States federal income tax purposes, and
- the exchange debentures will be treated as our indebtedness for United
States federal income tax purposes.
In this connection, we and the administrative trustees are authorized to
take any action, not inconsistent with applicable law or the new trust
agreement, that each of us and the administrative trustees determine in our
respective discretion to be necessary or desirable to achieve that end, as long
as the action does not adversely affect the interests of the holders of exchange
preferred securities or vary the terms or the exchange preferred securities.
The holders of the exchange preferred securities have no preemptive rights.
DESCRIPTION OF THE EXCHANGE PREFERRED SECURITIES GUARANTEE
We have summarized below the material provisions of the guarantee that we
will execute and deliver, from time to time, for the benefit of the holders of
the exchange preferred securities. This
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summary may omit a term or provision that you would consider important. For a
complete description of the exchange preferred securities guarantee, we
encourage you to read the guarantee, a form of which is filed with the SEC. The
exchange preferred securities guarantee incorporates by reference the terms of
the Trust Indenture Act. The exchange preferred securities guarantee will be
qualified under the Trust Indenture Act. The Bank of New York, as the guarantee
trustee, will hold the guarantee for the benefit of the holders of the exchange
preferred securities.
GENERAL
To the extent described below, we will agree to pay the following amounts in
full if they are not paid by the new trust:
- any accumulated and unpaid distributions that are required to be paid on
the exchange preferred securities to the extent we have made corresponding
payments on the exchange debentures to the property trustee;
- the amount payable upon redemption of the exchange preferred securities,
to the extent we have made corresponding payments on the exchange
debentures to the property trustee; and
- upon a liquidation of the new trust, the lesser of:
- the aggregate of the liquidation amount and all accumulated and unpaid
distributions on the exchange preferred securities to the date of
payment, to the extent the new trust has funds available for those
payments, and
- the amount of assets of the new trust remaining available for
distribution to holders of the exchange preferred securities.
We may satisfy our obligation to make a guarantee payment by either making
payments directly to the holders of exchange preferred securities or by causing
the new trust to make the payments to them.
The exchange preferred securities guarantee is a guarantee from the time of
issuance of the exchange preferred securities. We will be obligated to make the
guarantee payments when due, regardless of any defense, right of set-off or
counterclaim that the new trust may have or assert. The exchange preferred
securities guarantee does not cover any payment of distributions and other
payments on the exchange preferred securities when the new trust does not have
sufficient funds to make those distributions or other payments. If we do not
make interest payments on the exchange debentures held by the property trustee,
the new trust will not pay distributions on the exchange preferred securities
and will not have funds available for those payments. Please read the section
titled "Description of Preferred Securities--Description of the Exchange
Debentures--Our Covenants Applicable to the Exchange Debentures," beginning on
page 103 of this prospectus, for a more detailed description.
We have also agreed to irrevocably guarantee the obligations of the new
trust with respect to the new common securities to the same extent as the
guarantee with respect to the exchange preferred securities, except that if an
event of default under the new indenture has occurred and is continuing, holders
of exchange preferred securities will have priority over holders of new common
securities with respect to distributions and payments on liquidation, redemption
or otherwise.
MODIFICATION OF THE EXCHANGE PREFERRED SECURITIES GUARANTEE; ASSIGNMENT
We may amend the exchange preferred securities guarantee without the consent
of any holder of exchange preferred securities if the amendment does not
adversely affect the rights of the holders in any material respect. In all other
cases, we may amend the exchange preferred securities guarantee only with the
prior approval of the holders of at least two-thirds in aggregate stated
liquidation amount of the outstanding exchange preferred securities.
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All guarantees and agreements contained in the exchange preferred securities
guarantee will bind our successors, assigns, receivers, trustees and
representatives and will inure to the benefit of the holders of the exchange
preferred securities then outstanding. Except in connection with any merger or
consolidation of us with or into another entity or any sale, transfer or lease
of our assets to another entity permitted under the new indenture, we may not
assign our rights or delegate our obligations under the exchange preferred
securities guarantee without the prior approval of the holders of at least
two-thirds of the aggregate stated liquidation amount of the exchange preferred
securities then outstanding.
TERMINATION
The exchange preferred securities guarantee will terminate upon:
- full payment of the redemption price of, plus accumulated and unpaid
distributions on, all exchange preferred securities,
- distribution of the exchange debentures held by the new trust to the
holders of the exchange preferred securities or the conversion, if
applicable, of all of the exchange preferred securities into our common
stock or other preferred securities, or
- full payment of the amounts payable upon liquidation of the new trust.
The exchange preferred securities guarantee will continue to be effective or
will be reinstated if at any time any holder of the exchange preferred
securities must repay any amounts paid on those exchange preferred securities or
under the exchange preferred securities guarantee.
EVENTS OF DEFAULT
An event of default under the exchange preferred securities guarantee will
occur upon:
- our failure to perform any of our payment or other obligations under the
exchange preferred securities guarantee, or
- our failure to deliver common stock or other applicable preferred
securities upon an appropriate election by the holder or holders of the
exchange preferred securities to convert the exchange preferred securities
into shares of our common stock or other applicable preferred securities,
as the case may be.
In the exchange preferred securities guarantee, we will agree that, so long
as any exchange preferred securities remain outstanding, we will not make the
payments and distributions described below if:
- we have elected to defer interest payments on the exchange debentures and
that deferral period is continuing,
- we are in default with respect to our payment or other obligations under
the exchange preferred securities guarantee,
- any event of default under the new trust agreement has occurred, or
- any event has occurred and is continuing that, with the giving of notice
or the lapse of time or both, would constitute an event of default under
the new indenture.
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In the above circumstances, we will agree that we will not:
- declare or pay dividends on, or make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect
to, any of our capital stock, other than:
(1) purchases or acquisitions of shares of our capital stock (or capital
stock equivalents) relating to existing benefit plans (or any options
or other instruments issued under those plans) or relating to any
existing contract or security requiring us to purchase shares of our
capital stock (or capital stock equivalents),
(2) purchases of shares of our capital stock (or capital stock
equivalents) from our officers, directors or employees or those of
our subsidiaries under existing employment agreements or upon
termination of employment or retirement,
(3) as a result of a reclassification, combination or subdivision of our
capital stock or the exchange or conversion of one class or series of
our capital stock for another class or series of our capital stock,
(4) dividends or distributions of shares of common stock on common stock,
(5) the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital
stock or any security being converted or exchanged into the capital
stock,
(6) purchases or other acquisitions of common stock relating to an
existing dividend reinvestment or other similar plan,
(7) any dividend or distribution of capital stock (or capital stock
equivalents) relating to an existing stockholders rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights under the plan, or
- guarantee payments with respect to any of (1) through (7) above;
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any exchange debentures issued by us that rank PARI
PASSU with or junior to the exchange debentures; or
- make any guarantee payments with respect to the two bullets above, other
than pursuant to the exchange preferred securities guarantee or our
guarantee of the new common securities.
We will provide to the guarantee trustee, in the form of an officer's
certificate or otherwise, evidence of compliance with any conditions provided
for in the exchange preferred securities guarantee. The guarantee trustee will
notify holders of the exchange preferred securities, within 90 days of any event
of default under the exchange preferred securities guarantee, of all defaults
known to the guarantee trustee. However, under certain circumstances, the
guarantee trustee may withhold the notice if it determines in good faith that
the withholding of notice is in the interests of the holders of the exchange
preferred securities.
The holders of a majority in liquidation amount of the exchange preferred
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee or to direct the
exercise of any trust or power the guarantee trustee has under the exchange
preferred securities guarantee. If the guarantee trustee fails to enforce the
exchange preferred securities guarantee, any holder of exchange preferred
securities may institute a legal proceeding directly against us to enforce the
guarantee trustee's rights, without first instituting a legal proceeding against
the new trust, the guarantee trustee or any other person or entity. We will
waive any right or remedy to require that any action be brought first against
the new trust or any other person or entity before proceeding directly against
us.
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SUBORDINATED STATUS OF THE EXCHANGE PREFERRED SECURITIES GUARANTEE
Our obligation under the exchange preferred securities guarantee to make
guarantee payments will be unsecured and will rank:
- subordinate and junior in right of payment to all our senior debt,
- pari passu in right of payment with the most senior preferred or
preference stock issued by us now or in the future, if any, and with any
guarantee entered into by us relating to any preferred or preference stock
of any of our affiliates and,
- senior in right of payment to:
- our common stock, and
- the existing debentures and the existing preferred securities
guarantee.
The term "senior debt" means:
(1) any liability of ours:
- for borrowed money or under any reimbursement obligation relating to a
letter of credit, surety bond or similar instrument,
- evidenced by a bond, note, debenture or similar instrument,
- for obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course
of business,
- for the payment of money relating to a capitalized lease obligation, or
- for the payment of money under any swap agreement;
(2) any liability of others described in (1) that we have guaranteed or that
is otherwise our legal liability; and
(3) any deferral, renewal, extension or refunding of any liability of the
types referred to in (1) and (2) above.
However, senior debt will not include:
- the existing debentures or the existing preferred securities guarantee;
- the exchange debentures;
- any indebtedness or guarantees between or among us and our affiliates,
unless the instrument creating or evidencing those obligations expressly
provides otherwise; or
- any liabilities made equal or subordinate to the exchange debentures by
their terms.
Our obligations under the exchange preferred securities guarantee will be
effectively junior to all debt and other liabilities and preferred stock of our
subsidiaries. By your acceptance of the exchange preferred securities, you agree
to the subordination provisions and other terms of the exchange preferred
securities guarantee.
The new indenture does not limit or prohibit us from incurring liabilities
that will be senior in right of payment to the exchange preferred securities
guarantee. Upon our bankruptcy, liquidation or winding-up, our obligations under
the exchange preferred securities guarantee will rank junior to all of our other
liabilities, except as described above. In those circumstances, funds may not be
available for payment under the exchange preferred securities guarantee.
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The exchange preferred securities guarantee will constitute a guarantee of
payment and not merely of collection. This means that you may institute a legal
proceeding directly against us to enforce the rights of the guarantee trustee
under the exchange preferred securities guarantee without first instituting a
legal proceeding against any other person or entity.
We will deposit the exchange preferred securities guarantee with the
guarantee trustee to be held for the benefit of the holders of exchange
preferred securities. The guarantee trustee will have the right to enforce the
exchange preferred securities guarantee on behalf of those holders. The holders
of a majority in liquidation amount of the exchange preferred securities have
the right to direct the time, method and place of:
- conducting any proceeding for any remedy available to the guarantee
trustee, or
- exercising any trust or power conferred upon the trustee under the
exchange preferred securities guarantee.
If the guarantee trustee fails to enforce the exchange preferred securities
guarantee, you may institute a legal proceeding directly against us to enforce
the rights of the guarantee trustee under the exchange preferred securities
guarantee, without first instituting a legal proceeding against the new trust,
the guarantee trustee or any other person or entity.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, prior to the occurrence of a default with respect to
the exchange preferred securities guarantee, will perform only those duties
specifically given to it in the exchange preferred securities guarantee. After
default, the guarantee trustee will exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs. The
guarantee trustee will become obligated to exercise any of its powers under the
exchange preferred securities guarantee at the request of any holder of the
exchange preferred securities only if it is offered reasonable indemnity against
the costs, expenses and liabilities that it might incur. The guarantee trustee
also serves as property trustee and indenture trustee.
DESCRIPTION OF THE EXCHANGE DEBENTURES
We will issue the exchange debentures under a new indenture between us and
The Bank of New York, as indenture trustee. The new indenture will be qualified
under the Trust Indenture Act. The terms of the exchange debentures include
those stated in the new indenture and those made part of the new indenture by
the Trust Indenture Act. The financial terms for the exchange debentures are the
same as those for the exchange preferred securities, including the right to
convert to shares of common stock. We have summarized the material terms of the
new indenture and the exchange debentures below. This summary may omit a term or
provision that you would consider important. For a complete description of the
debentures, we encourage you to read the new indenture. We have filed a form of
the new indenture with the SEC.
You may receive exchange debentures if we exercise our right to terminate
the new trust. Therefore, you should carefully review all the information
regarding the exchange debentures contained in this prospectus. Please read the
section titled "Description of Preferred Securities--Description of the Exchange
Preferred Securities--Special Event Distribution; Tax Event Redemption,"
beginning on page 78 of this prospectus.
If you receive exchange debentures, we will use our best efforts to have the
exchange debentures listed on the New York Stock Exchange or on another national
securities exchange or similar organization.
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GENERAL
The exchange debentures will be unsecured and rank junior and subordinate in
right of payment to all of our senior debt. The exchange debentures will be
limited in aggregate principal amount to $ million, which is the sum of:
- the aggregate stated liquidation of the exchange preferred securities, and
- the capital contributed by us in exchange for the new common securities.
The exchange debentures will not be subject to a sinking fund provision. The
entire principal amount of the exchange debentures will mature and become due
and payable, together with any accrued and unpaid interest on the exchange
debentures, if any, on .
If the exchange debentures are distributed to holders of exchange preferred
securities in liquidation of their interests in the new trust, the exchange
debentures will, unless held in certificated form, initially be issued as a
global security. As described in the section titled "Description of Preferred
Securities--Description of the Exchange Debentures--Book-Entry and Settlement,"
under certain limited circumstances, the exchange debentures may be issued in
certificate form in exchange for a global security. In the event that the
exchange debentures are issued in certificated form, they will be in
denominations of $ and integral multiples of $ and may be transferred or
exchanged at the corporate trust office of the indenture trustee in New York,
New York.
Payments on exchange debentures issued as a global security will be made to
DTC, a successor depository or, in the event that no depository is used, to a
paying agent for the exchange debentures. In the event exchange debentures are
issued in certificated form, principal and interest will be payable, the
transfer of the exchange debentures will be registrable and the exchange
debentures will be exchangeable for exchange debentures of other denominations
of a like aggregate principal amount at the corporate trust office of the
indenture trustee in New York, New York. However, payment of interest may be
made at our option by check mailed to the address of the holder entitled thereto
or by wire transfer to an account in the United States appropriately designated
by the holder prior to the record date for the corresponding interest payment
date. Notwithstanding that provision, so long as the holder of any exchange
debentures is the property trustee, the payment of principal and interest, if in
cash, on the exchange debentures held by the property trustee will be made by
wire transfer at the place and to the account in the United States designated by
the property trustee.
We will deliver the exchange debentures for authentication by the indenture
trustee in connection with the original issuance of the exchange debentures, on
, 2001. In the future, we may deliver registered exchange debentures for
authentication and deposit with DTC. The indenture trustee will authenticate the
exchange debentures pursuant to our written order. In connection with that
order, we must provide to the indenture trustee the certificates and opinions
required under the Trust Indenture Act or reasonably requested by the indenture
trustee.
SUBORDINATION
Payment of principal of, or any premium and interest on, the exchange
debentures will generally be subordinated in right of payment to the prior
payment in full of all of our current and future senior debt. In addition,
payments of principal and interest on the exchange debentures will be
effectively junior to all debt and other liabilities and preferred stock of our
subsidiaries.
We may make no payment of principal (including redemption payments) of, or
any premium or interest on, the exchange debentures if:
- we are in default of our obligation to pay principal of, or any premium,
sinking funds, or interest on, any of our senior debt, or
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- the maturity of any senior debt has been accelerated because of a default.
This restriction on payment will continue until the default is cured or
waived or ceases to exist, or until we have discharged or paid the accelerated
senior debt in full.
If our assets are distributed upon any dissolution, winding-up, liquidation
or reorganization:
- all senior debt will first be paid in full before any payment on account
of the principal of, or any premium or interest on, the exchange
debentures is made,
- any payment or distribution of our assets to which the holders of the
exchange debentures would be entitled except for the subordination
provisions of the new indenture will be paid directly to the holders of
our senior debt, to the extent necessary to make payment in full of all
remaining unpaid senior debt, after giving effect to any concurrent
payment or distribution to the holders of the senior debt, and
- in the event that, notwithstanding the provisions described above, any
payment or distribution of our assets is received by the property trustee
or the holders of any of the exchange debentures before all of our senior
debt is paid in full, the payment or distribution will be paid over to
those holders of senior debt for application to the payment of all the
remaining unpaid senior debt until all the senior debt has been paid in
full, after giving effect to any concurrent payment or distribution to the
holders of the senior debt.
Subject to the payment in full of all senior debt upon any such distribution
of our assets, the holders of the exchange debentures will be subrogated to the
rights of the holders of the senior debt to receive payments or distributions of
our cash, property or preferred securities applicable to senior debt until the
principal of, and any premium and interest on, the exchange debentures will be
paid in full.
As a result of this subordination, in the event of any distribution of our
assets upon dissolution, winding-up, liquidation, reorganization or other
similar proceedings:
- holders of our senior debt will be paid in full before payments may be
made on the exchange debentures and the holders of exchange debentures
will be required to pay over their share of the distribution, to the
extent it related to the exchange debentures, to the holders of senior
debt until all the senior debt is paid in full, and
- our creditors who are neither holders of exchange debentures nor holders
of senior debt may recover less, on a proportionate basis, than holders of
senior debt and may recover more, ratably, than the holders of the
exchange debentures.
As a result, payments to the holders of exchange debentures may be reduced
or eliminated. These subordination provisions will not apply to any money and
exchange preferred securities held in trust pursuant to the discharge,
defeasance and covenant defeasance provisions of the new indenture. The term
"senior debt" means:
(1) any liability of ours:
- for borrowed money or under any reimbursement obligation relating to a
letter of credit, surety bond or similar instrument,
- evidenced by a bond, note, debenture or similar instrument,
- for obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course
of business,
- for the payment of money relating to a capitalized lease obligation, or
- for the payment of money under any swap agreement;
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(2) any liability of others described in (1) that we have guaranteed or that
is otherwise our legal liability; and
(3) any deferral, renewal, extension or refunding of any liability of the
types referred to in (1) and (2) above.
However, senior debt will not include:
- the existing debentures or the existing preferred securities guarantee;
- the exchange preferred securities guarantee;
- any other indebtedness or guarantees between or among us and our
affiliates unless the instrument creating or evidencing those obligations
expressly provides otherwise; or
- any liabilities made equal or subordinate to the exchange debentures by
their terms.
Our obligations under the exchange debentures will be effectively junior to
all debt and other liabilities and preferred stock of our subsidiaries.
The new indenture does not limit the amount of senior debt that we may
incur. As a result of the subordination of the exchange debentures, if we became
insolvent, holders of exchange debentures may receive less on a proportionate
basis than other creditors.
OPTIONAL REDEMPTION
We will have the right to redeem the exchange debentures, in whole or in
part, from time to time, on or after , 2003, upon not less than 30
nor more than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount of the exchange debentures) together with
accrued and unpaid interest, including, to the extent permitted by applicable
law, compound interest to, but excluding, the redemption date, if redeemed
during the 12-month period beginning:
REDEMPTION
YEAR PRICE
- ---- -----------
2003........................................................ %
2004........................................................ %
2005........................................................ %
2006........................................................ %
2007........................................................ %
2008 and thereafter......................................... 100.00%
If we redeem the exchange debentures on any date in the period beginning on
any record date and ending on the next February 15, May 15, August 15 or
November 15, accrued and unpaid interest will be payable to holders of record on
the relevant record date.
Prior to , 2003, we also have the right to redeem the exchange
debentures in certain circumstances when our common stock price has exceeded
200% of our conversion price for a specified period of time. Please read the
section titled "Description of Preferred Securities--Description of the Exchange
Preferred Securities--Optional Redemption," beginning on page 77 of this
prospectus, for a more detailed discussion.
We will also have the right to redeem the exchange debentures in certain
circumstances upon the occurrence of a tax event. Please read the section titled
"Description of Preferred Securities--Description of the Exchange Preferred
Securities--Special Event Distribution; Tax Event Redemption," beginning on page
78 of this prospectus, for a more detailed discussion.
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So long as the corresponding exchange preferred securities and new common
securities are outstanding, the new trust will use the proceeds from the
redemption of any of the exchange debentures to redeem the exchange preferred
securities and the new common securities.
We may not redeem any exchange debentures unless all accrued and unpaid
interest has been paid in full on all outstanding exchange debentures for all
quarterly interest payment periods terminating on or prior to the date of notice
of redemption.
If a partial redemption of the exchange preferred securities resulting from
a partial redemption of the exchange debentures would result in the delisting of
the exchange preferred securities from any national securities exchange on which
the exchange preferred securities are then listed, we may only redeem the
exchange debentures in whole.
INTEREST
Each exchange debenture bears interest at the annual rate of % from the
first date of issuance, payable quarterly in arrears on February 15, May 15,
August 15, and November 15 of each year, commencing August 15, 2001. We will pay
interest in cash or, at our election, in our common stock. If we elect to pay
interest in shares of our common stock, the shares of common stock will be
valued at 90% of the average of the closing prices for the five trading days
immediately preceding the second trading day prior to the interest payment date.
Interest will generally be paid to the person in whose name the exchange
debenture is registered at the close of business on the business day next
preceding an interest payment date. We will provide notice of our election to
pay interest in common stock instead of cash no later than the record date prior
to such interest payment date. The record date with respect to each interest
payment date will be 15 days prior to the related interest payment date. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and, for any period of less than a full
calendar month, the actual number of days elapsed in such 30-day month.
If an interest payment date is not a business day, interest will be paid on:
- the next succeeding day that is a business day without any interest or
other payment in respect of any such delay, or
- the immediately preceding business day, if the next succeeding day that is
a business day is in the next succeeding calendar year,
in each case with the same force and effect as if the interest was paid on the
date it was originally payable.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as we are not in default on the payment of interest on the exchange
debentures, we have the right at any time after , 2003, and from time
to time after that date, during the term of the exchange debentures, to defer
interest payments for up to 20 consecutive quarterly periods. At the end of each
deferral period, we will pay all interest then accrued and unpaid, together with
interest on that interest at the stated annual rate, which is %, compounded
quarterly, to the extent permitted by applicable law.
During any deferral period, we will not:
- declare or pay dividends on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of our capital stock, other than:
(1) purchases or acquisitions of shares of our capital stock (or capital
stock equivalents) relating to benefit plans (or any options or other
instruments issued under those plans) or
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relating to any contract or security requiring us to purchase shares
of our capital stock (or capital stock equivalents);
(2) purchases of shares of our capital stock (or capital stock
equivalents) from our officers, directors or employees or those of
our subsidiaries under existing employment agreements or upon
termination of employment or retirement;
(3) as a result of a reclassification, combination or subdivision of our
capital stock or the exchange or conversion of one class or series of
our capital stock for another class or series of our capital stock;
(4) dividends or distributions of shares of common stock on common stock;
(5) the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital
stock or any security being converted or exchanged into the capital
stock;
(6) dividends or distribution in shares of our capital stock of the same
class on which the dividend or distribution is being made and
conversions or exchanges of common stock of one class into common
stock of another class;
(7) purchases or other acquisitions of common stock relating to a
dividend reinvestment or other similar plan;
(8) any dividend or distribution of capital stock (or capital stock
equivalents) relating to a stockholders' rights plan, or the issuance
of stock under any such plan in the future, or the redemption or
repurchase of rights under the plan; or
(9) guarantee payments made with respect to any of (1) through
(8) above;
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by us that rank PARI PASSU
with or junior to the exchange debentures; or
- make any guarantee payments with respect to the two bullets above, other
than pursuant to the exchange preferred securities guarantee or our
guarantee of the new common securities.
We may extend a deferral period prior to the period's termination. We may
not, however, extend a deferral period, including all previous and further
extensions of the period, beyond 20 consecutive quarterly interest periods, or
beyond the maturity of the exchange debentures. A deferral period may not end on
a date other than an interest payment date.
Upon the termination of any deferral period and the payment of all amounts
then due on the exchange debentures, we may commence a new deferral period, on
the terms described in this section. No interest will be due or payable on the
exchange debentures during a deferral period, except at the end of the period.
We do not currently intend to defer interest payments on the exchange
debentures.
We must give the property trustee, the administrative trustees and the
indenture trustee notice of our election to begin a deferral period at least one
business day prior to the earliest of:
- the date the distribution on the exchange preferred securities would have
otherwise been payable,
- the date the administrative trustees are required to give notice to the
New York Stock Exchange, the NASDAQ National Market or other applicable
self-regulatory organization or to holders of the exchange preferred
securities of the record date, or
- the date the distribution is payable, but in any event not less than one
business day prior to the record date.
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The indenture trustee will give notice of our election to begin a deferral
period to the holders of the exchange debentures, and the administrative
trustees will give notice of our election to the holders of the exchange
preferred securities.
CONVERSION OF THE EXCHANGE DEBENTURES
Holders of the exchange debentures may convert them into our common stock at
any time prior to:
- the close of business on , or
- the close of business on the business day prior to the redemption date, in
the case of exchange debentures called for redemption,
at the initial conversion price, subject to the conversion price adjustments
described in the section titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities--Conversion
Rights," beginning on page 71 of this prospectus. The new trust has agreed not
to convert exchange debentures held by it except pursuant to a notice of
conversion delivered to the conversion agent by a holder of exchange preferred
securities or new common securities.
Upon surrender of an exchange preferred security to the conversion agent for
conversion, the new trust will distribute exchange debentures to the conversion
agent on behalf of the holder of the exchange preferred securities so converted.
Upon such delivery, the conversion agent will convert the exchange debentures to
our common stock on behalf of the holder. Our delivery to the holders of the
exchange debentures, through the conversion agent, of the fixed number of shares
of our common stock into which the exchange debentures are convertible, together
with the cash payment, if any, in lieu of fractional shares, will be deemed to
satisfy our obligation to pay the principal amount of the exchange debentures so
converted, and the accrued and unpaid interest, including compounded interest,
accrued on the exchange debentures at the time of the conversion.
If any exchange debenture is surrendered for conversion after the close of
business on a record date for payment of interest and on or before the
corresponding interest payment date, then, notwithstanding such conversion, the
interest payable on the interest payment date with respect to the exchange
debenture will be paid to the new trust, which will distribute that interest to
the holder of the applicable exchange preferred securities or new common
securities at the close of business on the record date, or to such other person
in whose name the exchange debentures are registered at the close of business on
the record date, as the case may be.
We will make no payment or allowance for distributions on the shares of our
common stock issued upon such conversion, except to the extent that such shares
of our common stock are held of record on the record date for any such
distributions. Each conversion will be deemed to have been effected immediately
prior to the close of business on the day on which the related conversion notice
was received by the conversion agent.
ADDITIONAL REDEMPTION
Prior to , 2003, we may elect to redeem the exchange debentures if
the price of our common stock has exceeded 200% of the conversion price for at
least 20 trading days during a 30-day trading period ending five trading days
prior to the notice of redemption. We must give the holders of the exchange
debentures and the indenture trustee notice of the redemption not more than 30
and not less than 15 days before the date of redemption.
In the case of such a redemption prior to , 2003, we will pay
additional interest in cash or common stock on exchange debentures converted
after the notice of redemption. This additional
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interest will be in an amount equal to two years' worth of interest payments,
less any interest actually paid prior to the date of conversion.
COMPOUNDED INTEREST
Payments of compounded interest, if any, on the exchange debentures held by
the new trust, will make funds available for the payment of additional
distributions on distributions in arrears in respect of the exchange preferred
securities, pursuant to the terms of those exchange preferred securities and to
the extent permitted by law.
ADDITIONAL INTEREST
If at any time when the property trustee is the holder of any exchange
debentures, the new trust or the property trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature other than
withholding taxes imposed on distributions to holders of exchange preferred
securities, imposed by the United States, or any other taxing authority, then we
will pay as additional interest on the exchange debentures held by the property
trustee, to the extent permitted by applicable law, the additional amounts
required so that the net amounts received and retained by the new trust and the
property trustee after paying those taxes, duties, assessments or other
governmental charges will be equal to the amounts the new trust and the property
trustee would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
NEW INDENTURE EVENTS OF DEFAULT
If any new indenture event of default occurs and is continuing, the property
trustee, as the holder of the exchange debentures, or the holders of not less
than 25% in principal amount of the outstanding exchange debentures, may declare
the principal of and the interest on the exchange debentures to be due and
payable.
The following are events of default with respect to the exchange debentures:
- failure to pay interest on the exchange debentures for 30 days past the
date specified for payment;
- failure to pay principal of or any premium, if any, on any exchange
debenture when due;
- failure by us to deliver shares of our common stock upon an appropriate
election by a holder of exchange debentures to convert those exchange
debentures;
- failure to comply with any other covenant or warranty in the new indenture
for a period after 90 days after written notice to us by the indenture
trustee or the holders of at least 25% in aggregate principal amount of
the exchange debentures then outstanding;
- the dissolution, winding-up or termination of the new trust, except in
connection with the distribution of exchange debentures to the holders of
exchange preferred securities and new common securities in liquidation of
the new trust upon the occurrence of a tax event or an investment company
event:
- upon the redemption of all outstanding exchange preferred securities,
- upon the conversion of all outstanding exchange preferred securities,
or
- in connection with certain mergers, consolidations or amalgamations
permitted by the new trust agreement; or
- certain events of bankruptcy, insolvency or reorganization of us.
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An event of default under the new indenture also constitutes an event of
default under the new trust agreement. The holders of exchange preferred
securities in certain circumstances have the right to direct the property
trustee to exercise its rights as the holder of the exchange debentures, which
are described in the sections titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities--Events of Default"
and "--Voting Rights."
Notwithstanding the provisions described above, a holder of exchange
preferred securities may directly institute a proceeding against us for
enforcement of payment to that holder of interest or principal if:
- an event of default under the new trust agreement has occurred and is
continuing, and
- that event is attributable to our failure to pay interest or principal on
the exchange debentures on the date the interest or principal is otherwise
payable or, in the case of redemption, the redemption date.
In any such proceeding, we will be subrogated to the rights of the holder
under the new trust agreement to the extent of any payment we make to the holder
in the proceeding. The holders of exchange preferred securities will not be able
to exercise directly any other remedy available to the holders of the exchange
debentures.
BOOK-ENTRY AND SETTLEMENT
If any exchange debentures are distributed to holders of exchange preferred
securities, the exchange debentures will, except under the limited circumstances
described below, be issued in the form of one or more global certificates, which
we refer to as global debentures, registered in the name of the depository or
its nominee. Except under the limited circumstances described below, exchange
debentures represented by the global debenture will not be exchangeable for, and
will not otherwise be issuable as, exchange debentures in definitive form. The
global debentures may not be transferred except by the depository to a nominee
of the depository, or by a nominee of the depository to the depository or
another nominee of the depository or to a successor depository or its nominee.
The laws of some jurisdictions may require that certain purchasers of
preferred securities take physical delivery of such preferred securities in
definitive form. Such laws may impair the ability to transfer or pledge
beneficial interests in a global debenture.
Except as provided below, owners of beneficial interests in a global
debenture will not be entitled to receive physical delivery of exchange
debentures in definitive form and will not be considered the holders (as defined
in the new indenture) of exchange debentures for any purpose under the new
indenture and no global debenture representing exchange debentures will be
exchangeable, except for another global debenture of like denomination and tenor
to be registered in the name of the depository or its nominee or a successor
depository or its nominee. Accordingly, each beneficial owner must rely on the
procedures of the depository or if that person is not a participant, on the
procedures of the participant or indirect participant through which that person
owns its interest to exercise any rights of a holder under the new indenture.
THE DEPOSITORY
If exchange debentures are distributed to holders of exchange preferred
securities in liquidation of the interests of those holders in the new trust,
DTC will act as securities depository for the exchange debentures. For a
description of DTC and the specific terms of the depository arrangements, please
read the section titled "Description of Preferred Securities--Description of the
Exchange Preferred Securities--Book-Entry Only Issuance; The Depository Trust
Company," beginning on page 86 of this prospectus. As of the date of this
prospectus, the description in that section of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to
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the exchange preferred securities apply in all material respects to any debt
obligations represented by one or more global debentures held by DTC. We may
appoint a successor to DTC or any successor depository in the event that DTC or
its successor depository is unable or unwilling to continue as a depository for
the global debentures.
None of us, the new trust, the property trustee, the indenture trustee, any
paying agent, any transfer agent or any other agent of ours or the indenture
trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
global debentures for the exchange debentures or for maintaining, supervising or
reviewing any records relating to those beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITORY'S SERVICES
DTC is under no obligation to provide services as depository for the global
debenture and may discontinue providing those services at any time. Neither we,
the new trust, the indenture trustee nor the trustees of the new trust will have
any responsibility for the performance by DTC or its participants or indirect
participants under the rules and procedures governing DTC.
In the event that:
- DTC notifies us that it is unwilling or unable to continue as a depository
for the global debenture, or at any time DTC ceases to be a clearing
agency registered as such under the Securities Exchange Act, and no
successor depository has been appointed within 90 days of us being
notified or becoming aware that DTC is no longer so registered,
- in our sole discretion, we execute and deliver to the indenture trustee an
order to the effect that the global debenture shall be so exchangeable, or
- an event of default under the new indenture has occurred and is continuing
with respect to the exchange debentures,
we will prepare and deliver certificates for the exchange debentures in exchange
for beneficial interests in the global debenture. Any global debenture that is
exchangeable as described in the preceding sentence will be exchangeable for
exchange debentures registered in such names as the depository will direct. We
expect that those instructions will be based upon directions received by the
depository from its participants with respect to ownership of beneficial
interests in the global debenture.
OUR COVENANTS APPLICABLE TO THE EXCHANGE DEBENTURES
The new indenture does not limit the amount of indebtedness, guarantees or
lease obligations that we may incur. It does not contain provisions that would
give holders of the exchange debentures the right to require us to repurchase
their exchange debentures in the event of a decline in the credit rating of our
debt securities resulting from a takeover, recapitalization or similar
restructuring.
In the new indenture we will agree that, so long as any exchange debentures
are outstanding, if:
- an event of default has occurred and is continuing, or an event of default
has occurred that, with the giving of notice or the lapse of time or both,
would constitute an event of default, or
- we are in default on our guarantee payments or other payment obligations
under the exchange preferred securities guarantee,
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then we will not:
- declare or pay dividends on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to
any of our capital stock, other than:
(1) purchases or acquisitions of shares of our common stock relating to
employee benefit plans or relating to any existing contract or
security requiring us to purchase shares of our common stock;
(2) as a result of a reclassification of our capital stock or the
exchange or conversion of one class or series of our capital stock
for another class or series of our capital stock;
(3) the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital
stock or the security being converted or exchanged; or
(4) making guarantee payments with respect to (1) through (3) above; and
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by us that rank equally
with or junior to the exchange debentures.
We may, however, declare and pay a stock dividend where the dividend stock
is the same stock as that on which the dividend is paid.
So long as the exchange preferred securities and the new common securities
remain outstanding, we will agree to:
- directly or indirectly maintain 100% ownership of the new common
securities of the new trust, provided that any permitted successor of ours
under the new indenture may succeed to our ownership of the new common
securities;
- not cause, as sponsor of the new trust, or permit, as the holder of the
new common securities, the termination, dissolution or winding-up of the
new trust, except in connection with a distribution of exchange debentures
under the new trust agreement and in connection with certain mergers,
consolidations or amalgamations as permitted by the new trust agreement;
and
- use our reasonable efforts to cause the new trust to:
- remain a statutory business trust, except in connection with the
distribution of exchange debentures to the holders of exchange
preferred securities and new common securities in liquidation of the
new trust, the redemption of all of the exchange preferred securities
and new common securities, or certain mergers, consolidations or
amalgamations, as permitted by the new trust agreement, and
- continue to be classified as a grantor trust for United States federal
income tax purposes.
We will be required to provide annually to the indenture trustee a
certificate as to whether or not we are in compliance with all the conditions
and covenants under the new indenture.
CONSOLIDATION, MERGER AND SALE
We will agree under the new indenture that we will consolidate with or merge
into any entity or dispose of all or substantially all of our properties and
assets only if:
- we are the continuing corporation;
- if we are not the continuing corporation, the successor is a corporation
organized and existing under the laws of any United States jurisdiction
and assumes all of our obligations under the new indenture; and
104
- in either case, immediately after giving effect to the transaction, no
event of default under the new indenture, and no event which, after notice
or lapse of time or both, would become an event of default, has occurred
and is continuing.
MODIFICATIONS AND WAIVERS
We and the indenture trustee may amend the new indenture from time to time
if the holders of a majority in principal amount of the outstanding exchange
debentures consent to it. Without the consent of the holder of each outstanding
exchange debenture affected, however, no amendment or supplement may:
- change the stated maturity of the principal of, or any premium or
installment of interest on, any exchange debentures,
- reduce the principal amount of any exchange debentures or any redemption
premium on any exchange debentures,
- reduce the rate of interest on any exchange debentures,
- change any place where, or the currency in which, any exchange debentures
or interest on them is payable,
- impair the right to institute suit to enforce the payment of any exchange
debentures on or after the stated maturity of those debentures (as
extended under the terms of the exchange debentures),
- make any change that adversely affects the right, if any, to convert or
exchange the exchange debentures for other preferred securities in
accordance with their terms,
- reduce the percentage of exchange debentures whose holders must consent to
a modification, amendment or waiver,
- reduce the requirements for a quorum or voting at a meeting of holders of
the exchange debentures, or
- modify any of the provisions of the new indenture relating to
subordination of the exchange debentures or the definition of senior debt
in a manner adverse to the holders of the exchange debentures.
If the new trust or the property trustee holds exchange debentures, no
amendment, modification or waiver that requires approval of holders of a certain
percentage in principal amount of the outstanding exchange debentures will be
effective as to the exchange debentures, without the approval of the holders of
at least the same percentage of aggregate liquidation amount of outstanding
exchange preferred securities and new common securities.
We and the indenture trustee may amend or supplement the new indenture
without the consent of the holders of any exchange debentures issued under the
new indenture:
- to add to the events of default or our covenants for the benefit of the
holders of the exchange debentures, and
- to cure any ambiguity or correct or supplement any provision in the new
indenture that may be defective or inconsistent with other provisions in
the new indenture, or to make any other provisions with respect to matters
or questions arising under the new indenture that are not inconsistent
with the provisions of the new indenture, in each case without adversely
affecting the interests of the holders of exchange debentures.
105
The holders of at least two-thirds in aggregate principal amount of the
outstanding exchange debentures may, on behalf of the holders of all of the
exchange debentures, waive any past default, except a default:
- in the payment of principal, premium, if any, or interest on the exchange
debentures, and
- in respect of a covenant or provision that cannot be modified or amended
without the consent of the holder of each outstanding exchange debenture.
However, while any of the exchange preferred securities are outstanding, the
new indenture does not permit the waiver of any event of default with respect to
the exchange debentures without the consent of holders of at least two-thirds in
aggregate liquidation amount of the exchange preferred securities then
outstanding.
SATISFACTION AND DISCHARGE
Upon our direction, the new indenture shall cease to be of further effect
with respect to the exchange debentures, except for the survival of provisions
relating to conversion and registration of transfer or exchange of exchange
debentures, and the obligation to pay additional amounts to the extent described
below, when:
- either:
- all outstanding exchange debentures have been delivered to the
indenture trustee for cancellation, subject to certain exceptions, or
- all exchange debentures have become due and payable or will become due
and payable at their stated maturity within one year or are to be
called for redemption within one year, and we have deposited, in trust,
funds in United States dollars with respect to the exchange debentures
in an amount sufficient to pay the entire indebtedness on the exchange
debentures in respect of principal (and premium, if any) and interest,
including additional payments, if any, to the date of the deposit, if
the exchange debentures have become due and payable, or to the maturity
of the exchange debentures, as the case may be; and
- we have paid all other sums payable under the new indenture with respect
to the exchange debentures.
GOVERNING LAW
New York law will govern the new indenture and the exchange debentures.
MISCELLANEOUS
We may maintain banking and other commercial relationships with the
indenture trustee and its affiliates in the ordinary course of business.
We will pay all fees and expenses related to:
- the offering of the exchange preferred securities and the exchange
debentures,
- the organization, maintenance and dissolution of the new trust,
- the retention of the property trustee, and
- the enforcement by the property trustee of the rights of the holders of
the exchange preferred securities.
We will fully and unconditionally guarantee the payment of these fees and
expenses.
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RELATIONSHIP AMONG THE EXCHANGE PREFERRED SECURITIES, THE EXCHANGE DEBENTURES
AND THE EXCHANGE PREFERRED SECURITIES GUARANTEE
When taken together, the terms of the exchange preferred securities, the
exchange debentures, the new trust agreement and the exchange preferred
securities guarantee provide a full, irrevocable and unconditional guarantee by
us of the payments due on the exchange preferred securities. No single document
standing alone or operating in conjunction with fewer than all the other
documents constitutes the full guarantee. The following summary briefly explains
the interrelationship between the exchange preferred securities, the exchange
debentures and the exchange preferred securities guarantee.
THE NEW TRUST WILL BE ABLE TO MAKE PAYMENTS ON THE EXCHANGE PREFERRED SECURITIES
IF WE MAKE PAYMENTS ON THE EXCHANGE DEBENTURES
As long as we make payments of interest and other payments when due on the
exchange debentures, the new trust will have sufficient funds to make
distribution and other payments when due on the exchange preferred securities
for the following reasons:
- the new trust will hold exchange debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of the exchange
preferred securities and the new common securities;
- the interest rate and the interest and other payment dates on the exchange
debentures will match the distribution rate and distribution and other
payment dates for the exchange preferred securities;
- we have agreed to pay for all of the new trust's debt and obligations,
other than with respect to the exchange preferred securities and new
common securities, and costs and expenses, including the fees and expenses
of the new trustees, except for United States withholding taxes; and
- the new trustees may not cause or permit the new trust to engage in any
activity that is not consistent with its limited purposes.
WE WILL GUARANTEE THAT PAYMENTS WILL BE MADE ON THE EXCHANGE PREFERRED
SECURITIES IF WE MAKE PAYMENTS ON THE EXCHANGE DEBENTURES
If we make interest or other payments on the exchange debentures, the
property trustee will be obligated to make corresponding distribution or other
payments on the exchange preferred securities. We will guarantee, on a
subordinated basis, such payments if the new trust fails to make them. If we do
not make interest payments on the exchange debentures purchased by the new
trust, the new trust will not have sufficient funds to pay distributions on the
exchange preferred securities. The exchange preferred securities guarantee only
covers the payment of distribution and other payments on the exchange preferred
securities if and to the extent that we have made corresponding payments on the
exchange debentures. The guarantee trustee will have the right to enforce the
exchange preferred securities guarantee on behalf of the holders of the exchange
preferred securities if we fail to make any required guarantee payments. If the
guarantee trustee fails to enforce the exchange preferred securities guarantee,
the exchange preferred securities guarantee provides a mechanism whereby the
holders of the exchange preferred securities may direct the guarantee trustee to
enforce its rights under the exchange preferred securities guarantee. If the
guarantee trustee fails to enforce the exchange preferred securities guarantee,
you may institute a legal proceeding directly against us to enforce the
guarantee trustee's rights under the exchange preferred securities guarantee
without first instituting a legal proceeding against the new trust, the
guarantee trustee, or any other person or entity. Please read the section titled
"Description of Preferred Securities--Description of the Exchange Preferred
Securities Guarantee," beginning on page 89 of this prospectus, for a more
detailed discussion.
107
THE PROPERTY TRUSTEE MAY INSTITUTE LEGAL PROCEEDINGS AGAINST US IF WE FAIL TO
MAKE PAYMENTS ON THE EXCHANGE DEBENTURES
If we do not make interest or other payments on the exchange debentures when
due (taking account of any deferral period), the new trust agreement provides a
mechanism whereby a holder of the exchange preferred securities, using the
procedures described in the sections titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities--Voting Rights" and
"--Book-Entry Only Issuance; The Depository Trust Company," may direct the
property trustee to enforce its rights under the exchange debentures.
Notwithstanding these provisions, in such circumstances, a holder of exchange
preferred securities may institute a legal proceeding directly against us for
payment on or after the respective due dates specified in the exchange
debentures. In connection with that proceeding, we will remain obligated to pay
the principal or interest on the exchange debentures and will be subrogated to
the rights of the holder of exchange preferred securities to the extent of any
payment made by us to that holder of exchange preferred securities in the
proceeding. Please read the section titled "Description of Preferred
Securities--Description of the Exchange Preferred Securities," beginning on page
68 of this prospectus, for a more detailed discussion.
IN THE EVENT OF ANY DISSOLUTION OF THE NEW TRUST, EACH HOLDER OF THE EXCHANGE
PREFERRED SECURITIES OR NEW COMMON SECURITIES WILL BE ENTITLED TO RECEIVE
EXCHANGE DEBENTURES OR DISTRIBUTIONS FROM THE NEW TRUST
In the event of any voluntary or involuntary dissolution of the new trust,
the then holders of the exchange preferred securities or the new common
securities will be entitled to receive, after satisfaction of liabilities to
creditors, distributions in an amount equal to the aggregate of the stated
liquidation amount of $ per exchange preferred security plus accumulated and
unpaid distributions to the date of payment unless, in connection with the
liquidation, exchange debentures in an aggregate stated principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to, the annual rate of distributions on, and accrued and unpaid interest equal
to accumulated and unpaid distributions on, the exchange preferred securities,
have been distributed on a pro rata basis to the holders of the exchange
preferred securities and the new common securities.
Upon any voluntary or involuntary liquidation or bankruptcy of us, the
property trustee, as holder of the exchange debentures, would be subordinated in
right of payment to all senior debt as set forth in the new indenture, but
entitled to receive payment in full of principal (and premium, if any) and
interest, before any of the holders of our existing debentures and existing
preferred securities guarantee, and our stockholders receive payments or
distributions. Because we will be the guarantor under the exchange preferred
securities guarantee and will agree to pay for all costs, expenses and
liabilities of the new trust, the positions of a holder of exchange preferred
securities and a holder of exchange debentures relative to other creditors and
to our stockholders in the event of our liquidation or bankruptcy are expected
to be substantially the same.
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DESCRIPTION OF THE EXISTING PREFERRED SECURITIES, EXISTING PREFERRED SECURITIES
GUARANTEE AND EXISTING DEBENTURES
The existing preferred securities were issued by the existing trust under a
trust agreement amended and restated as of February 10, 1998. We own all of the
existing common securities representing common undivided beneficial interests in
the assets of the existing trust. The existing trust was organized for the sole
purpose of issuing the existing preferred securities and the existing common
securities and investing the proceeds of that issuance in an equivalent amount
of convertible subordinated debentures, referred to as the existing debentures.
We issued the existing debentures under the existing indenture, dated as of
February 10, 1998, between us and The Bank of New York, as indenture trustee. We
guaranteed the payment of distributions and other payments on the existing
preferred securities to the extent that we had made corresponding interest and
other payments, as and to the extent set forth in a guarantee agreement dated as
of February 10, 1998.
The existing preferred securities, existing common securities, trust
agreement, debentures, existing indenture and existing preferred securities
guarantee referred to above are respectively identical, in all material
respects, to the exchange preferred securities, new common securities, new trust
agreement, new indenture and exchange preferred securities guarantee described
in the sections titled "Fleetwood Capital Trust II," "Description of Preferred
Securities--Description of the Exchange Preferred Securities," "Description of
Preferred Securities--Description of the Exchange Preferred Securities
Guarantee" and "Description of Preferred Securities--Description of the Exchange
Debentures," except in the following respects:
- DISTRIBUTION/INTEREST RATE. Distributions on the exchange preferred
securities, and corresponding interest payments on the exchange
debentures, are payable at an annual rate of %, whereas distributions on
the existing preferred securities, and corresponding interest payments on
the existing debentures, are payable at an annual rate of 6%.
- DISTRIBUTION/INTEREST PAYMENTS. Distributions on the exchange preferred
securities, and corresponding interest payments on the exchange
debentures, may be in cash or common stock, at our election, whereas
distributions on the existing preferred securities, and corresponding
interest payments on the existing debentures, will only be in cash.
- LIQUIDATION AMOUNT PER PREFERRED SECURITY. The liquidation amount per
exchange preferred security is $ , whereas the liquidation amount per
existing preferred security is $50.
- CONVERSION PRICE. The exchange preferred securities, and the corresponding
exchange debentures, are convertible into our common stock at an initial
conversion price that is equivalent to a % premium over the average of
the daily volume weighted average price of our common stock for each of
the five trading days immediately preceding the second trading day prior
to the exchange offer expiration date, subject to adjustment. The existing
preferred securities, and the corresponding existing debentures, are
convertible into our common stock at an initial conversion price of $48.72
per share of our common stock, which is equivalent to a conversion rate of
1.02627 shares of our common stock for each existing preferred security,
subject to the same provisions that require adjustment of the conversion
price for the exchange preferred securities and the exchange debentures.
The conversion price of the existing preferred securities on June 11, 2001
was $48.72 per share of common stock, which is equivalent to a conversion
rate of 1.02627 shares of common stock for each existing preferred
security. This conversion price remains subject to further adjustment.
- OPTIONAL REDEMPTION. Prior to , 2003, we also have the right to
redeem the exchange debentures in certain circumstances when our common
stock price has exceeded 200% of our conversion price for a specified
period, whereas there is no such right with respect to the existing
debentures or existing preferred securities. Please read the section
titled "Description of
109
Preferred Securities--Description of the Exchange Preferred
Securities--Optional Redemption," beginning on page 77 of this prospectus,
for a more detailed discussion.
- OPTIONAL REDEMPTION. We may redeem the exchange debentures on or after
, 2003, in whole or in part, on not less than 30 but not more
than 60 days' notice, at the redemption prices set forth in the section
titled "Description of Preferred Securities--Description of the Exchange
Debentures--Optional Redemption," beginning on page 97 of this prospectus.
We may redeem the existing debentures on or after February 15, 2001, in
whole or in part, subject to the same notice requirement that applies to
optional redemption of the exchange debentures, at the redemption prices
below:
REDEMPTION
YEAR PRICE
- ---- -----------
2001........................................................ 103.75%
2002........................................................ 103.00%
2003........................................................ 102.25%
2004........................................................ 101.50%
2005........................................................ 100.75%
2006 and thereafter......................................... 100.00%
- SUBORDINATION/RANKING. The exchange preferred securities guarantee and the
exchange debentures are senior in right of payment to the existing
preferred securities guarantee and the existing debentures.
Currently, there is no established trading market for the existing preferred
securities and the exchange preferred securities.
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DESCRIPTION OF OUR CAPITAL STOCK
CAPITAL STOCK
Our authorized capital stock consists of 75,000,000 shares of common stock
and 10,000,000 shares of preferred stock, each with a par value of $1.00 per
share. At June 1, 2001, we had outstanding:
- 32,739,885 shares of common stock (as well as the same number of "rights"
to purchase junior participating preferred shares under the terms of our
rights plan discussed below);
- exercisable stock options to purchase an aggregate of approximately
2,380,167 shares of our common stock;
- no shares of preferred stock; and
- an aggregate of approximately $287.5 million in liquidation amount of
existing preferred securities. Holders of these existing preferred
securities have the right to convert their securities into an aggregate of
5,901,053 shares of our common stock, subject to adjustment.
Subject to the rights of holders of our existing preferred securities, our
common stock holders are entitled to receive dividends if and when they are
declared by our board of directors from legally available funds and, in the
event of liquidation, to receive pro rata all assets remaining after payment of
all obligations. Each holder of our common stock is entitled to one vote for
each share held and to cumulate his votes for the election of directors. Our
stockholders do not have preemptive rights.
The authorized shares of our preferred stock are issuable, without further
stockholder approval, in one or more series as determined by our board of
directors. Our board of directors also determines the voting rights,
designations, powers, preferences, and the relative participating, optional or
other rights of each series of our stock, as well as any qualifications,
limitations or restrictions.
Our certificate of incorporation provides for a classified board of
directors, approximately one-third of which is elected annually for a three-year
term. Our certificate of incorporation also requires a vote of holders of at
least 80% of our voting stock to adopt or modify our bylaws, or to approve a
merger, a sale of substantially all of our assets or certain other transactions
between us and any other corporation holding directly or indirectly more than 5%
of our voting stock, unless the merger, sale or other transaction was approved
by our board of directors prior to the other corporation's acquisition of more
than 5% of our voting stock. The above provisions cannot be changed unless the
change is approved by the affirmative vote of at least 80% of our voting stock.
EquiServe, L.P. is the transfer agent and registrar for our common stock.
RIGHTS
On September 15, 1998, our board of directors declared a dividend
distribution on each then outstanding share of our common stock of one right to
acquire one one-thousandth of a share of our series A junior participating
preferred stock at an exercise price of $160.00, subject to adjustment. These
rights are also issued with any shares of our common stock that are issued after
the initial dividend distribution and before the occurrence of certain specified
events.
The rights may only be exercised:
- 10 days after public announcement that a person or group of affiliated
persons has acquired or obtained the right to acquire beneficial ownership
of 15% or more of our outstanding common stock;
- 10 business days after commencement of a tender offer or exchange offer
that would result in a person or group of affiliated persons beneficially
owning 15% or more of our common stock; or
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- 10 business days after our board of directors determines that any person,
alone or together with its affiliates and associates, has become the
beneficial owner of an amount of our common stock that our board
determines to be substantial, which amount shall in no event be less than
15% of our shares of common stock outstanding, and at least a majority of
our board of directors who are not officers, after reasonable inquiry and
investigation, determine that such beneficial ownership is for the purpose
of greenmail or is reasonably likely to cause a material adverse impact on
us (any such person being referred to as an "acquiring person").
If a party acquires 15% or more of our outstanding shares of common stock in
accordance with certain defined terms or our board of directors determines that
any person has become an acquiring person, each right will entitle its holder to
purchase, at the right's then current exercise price, a number of shares of our
common stock having a market value of twice the right's then current exercise
price.
The rights do not have voting or dividend rights and expire on
September 15, 2008, if not redeemed, exchanged or tendered prior to this date.
The rights may be redeemed in whole, but not in part, by us at a price of $0.002
per right at any time prior to the earlier of:
- the expiration of the rights;
- 10 days following a person or group's acquisition of 15% or more of our
outstanding common stock; or
- our board of directors' determination of a person to be an acquiring
person.
If we are acquired, under certain circumstances each right entitles the
holder to purchase, at the right's then current exercise price, a number of the
acquiring company's common shares having a market value of twice the right's
then current exercise price.
Unless and until the rights become exercisable, the rights trade only with
our shares of common stock and are represented by the stock certificates
representing our common stock. If the rights become exercisable, separate
certificates representing the rights will be delivered to the holders of our
common stock at that time, and the rights will then trade separately from our
shares of common stock. Upon conversion of the exchange preferred securities and
existing preferred securities, the holders of these securities will receive, in
addition to the common stock issuable upon such conversion, the rights that
would have attached to the shares of our common stock if the rights had not
become separated from the common stock. The rights will not become exercisable
or separately tradable as a result of this offering.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences relating to the exchange offer and the ownership and disposition of
the exchange preferred securities and common stock received upon a conversion of
exchange preferred securities by holders that receive their exchange preferred
securities in the exchange offer or purchase their exchange preferred securities
in the cash offer. This discussion does not purport to address all aspects of
United States federal income taxation that may be relevant to particular holders
in light of their personal circumstances, the United States federal income tax
consequences to certain types of holders subject to special treatment under the
Code, or the effect of any applicable state, local or foreign tax laws. The
discussion assumes that the existing preferred securities are held, and the
exchange preferred securities will be held, as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code").
This discussion is based upon provisions of the Code, the Treasury
Regulations, and judicial and administrative interpretations of the Code and
Treasury Regulations, all as in effect as of the date hereof, and all of which
are subject to change (possibly on a retroactive basis) or different
interpretation. There can be no assurance that the Internal Revenue Service (the
"Service") will not challenge one or more of the tax consequences described
herein, and we have not obtained, nor do we intend to obtain, a ruling from the
Service with respect to the federal income tax consequences of the exchange
offer, the treatment of the exchange debentures as debt for federal income tax
purposes, or whether the new trust will be classified as a grantor trust for
federal income tax purposes.
Investors considering the exchange of existing preferred securities in the
exchange offer are urged to consult their own tax advisors to determine their
particular tax consequences of the exchange offer and the ownership and
disposition of the exchange preferred securities under federal and applicable
state, local and foreign tax laws.
If a partnership (including for any this purpose any entity treated as a
partnership for U.S. tax purposes) is a beneficial owner of the exchange
preferred securities or the shares of our common stock into which the exchange
preferred securities are converted, the treatment of a partner in the
partnership will generally depend on the status of the partner and upon the
activities of the partnership. A holder of exchange preferred securities that is
a partnership and partners in such partnership should consult their tax advisors
about the U.S. federal income tax consequences of holding and disposing of the
exchange preferred securities or the shares of our common stock into which the
exchange preferred securities are converted.
As used herein, a "U.S. holder" means a beneficial holder of existing
preferred securities or exchange preferred securities received in the exchange
offer that is a citizen or resident (within the meaning of Section 7701(b) of
the Code) of the United States, a corporation or other entity taxed as a
corporation for federal income tax purposes formed under the laws of the United
States or any political subdivision thereof, an estate, the income of which is
subject to United States federal income taxation regardless of its source, and a
trust subject to the primary supervision of a court within the United States and
the control of a United States fiduciary as described in Section 7701(a)(30) of
the Code or any other person whose income or gain with respect to an exchange
note is effectively connected with the conduct of a United States trade or
business. A "non-U.S. holder" is any holder other than a U.S. holder.
CLASSIFICATION OF THE EXCHANGE DEBENTURES
In connection with the issuance of exchange preferred securities, Gibson,
Dunn & Crutcher LLP, counsel to us and the new trust, will render its opinion
that the exchange debentures will be classified for United States federal income
tax purposes as indebtedness under current law. We, the new trust, and the
holders of the exchange preferred securities (by acceptance of a beneficial
interest in an
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exchange preferred security) will agree to treat the exchange debentures as
indebtedness and the exchange preferred securities as evidences of a beneficial
ownership interest in the exchange debentures for all United States federal
income tax purposes. No assurance can be given, however, that such position will
not be challenged by the Service or, if challenged, that such challenge will not
be successful. The remainder of this discussion assumes that the exchange
debentures will be classified for United States federal income tax purposes as
indebtedness. No portion of the amounts received on the exchange preferred
securities will be eligible for the dividends-received deduction.
CLASSIFICATION OF THE NEW TRUST
In connection with the issuance of the exchange preferred securities,
Gibson, Dunn & Crutcher LLP, counsel to us and the new trust, will render its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the new trust agreement and the new indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the new trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, each holder of exchange preferred securities will be
considered the owner of a pro rata portion of the exchange debentures held by
the new trust and will be required to include in gross income its pro rata share
of income paid or accrued on the exchange debentures.
TREATMENT OF EXCHANGE OFFER
As discussed above under "Classification of the New Trust," each holder of
exchange preferred securities will be considered the owner of a pro rata portion
of the exchange debentures. Similarly, each holder of existing preferred
securities is considered the owner of a pro rata portion of the existing
debentures. Thus, the exchange of existing preferred securities for exchange
preferred securities pursuant to the exchange offer should be treated for United
States federal income tax purposes as an exchange of existing debentures for
exchange debentures.
The tax treatment of a U.S. holder's exchange of existing debentures for
exchange debentures pursuant to the exchange offer will depend on whether that
exchange is treated as a recapitalization. The exchange will be treated as a
recapitalization only if both the existing debentures and the exchange
debentures constitute "securities" within the meaning of the provisions of the
Code governing reorganizations. This, in turn, depends upon the facts and
circumstances surrounding the origin and nature of these debt instruments and
upon the interpretation of numerous judicial decisions. Based on these
considerations, we believe that the exchange offer should be treated as a
recapitalization for United States federal income tax purposes. As such, a U.S.
holder will not recognize gain or loss on the exchange. A U.S. holder's tax
basis in the exchange preferred securities and in its pro rata share of the
underlying exchange debentures will equal the U.S. holder's adjusted tax basis
in the existing preferred securities and in its pro rata share of the underlying
existing debentures. The U.S. holder's holding period for the exchange preferred
securities and for its pro rata share of the underlying exchange debentures will
include the period in which the U.S. holder held the existing preferred
securities and its pro rata share of the underlying existing debentures.
A non-U.S. holder generally will not recognize gain or loss for United
States federal income tax purposes on the exchange of existing debentures for
exchange debentures, irrespective of whether gain or income realized on the
disposition of exchange debentures or our common stock acquired upon a
conversion is effectively connected with the non-U.S. holder's conduct of a
United States trade or business, as described in "Non-U.S. Holders."
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TAX TREATMENT OF THE OWNERSHIP AND DISPOSITION OF EXCHANGE PREFERRED SECURITIES
AND COMMON STOCK
The following discussion is a summary of the principal United States federal
income tax consequences resulting from the ownership and disposition of exchange
preferred securities and common stock by U.S. holders.
STATED INTEREST AND ORIGINAL ISSUE DISCOUNT ON THE EXCHANGE PREFERRED SECURITIES
We anticipate that the exchange debentures (whether acquired in the exchange
or acquired in the cash offer) will be issued without original issue discount.
Even if there were original issue discount on the exchange debentures, if the
amount of original issue discount were less than 1/4 of 1 percent of the stated
redemption price at maturity of the exchange debentures multiplied by the number
of complete years to maturity, the original issue discount on the exchange
debentures would be considered de minimis and would be deemed to be zero.
As a result, we anticipate that a U.S. holder will not be subject to tax on
original issue discount but instead will be subject to tax only on stated
interest on the exchange debentures. The stated interest on the exchange
debentures will be includable in a U.S. holder's gross income as ordinary income
for United States federal income tax purposes at the time it is paid or accrued
in accordance with the U.S. holder's regular method of tax accounting, decreased
by any amortizable bond premium as described in the section titled "Tax
Treatment of the Ownership and Disposition of Exchange Preferred Securities and
Common Stock--Amortizable Bond Premium," beginning on page 116 of this
prospectus.
ABILITY TO DEFER INTEREST PAYMENTS AND EXERCISE OF RIGHT TO DEFER INTEREST
PAYMENTS
Our ability to defer the payment of interest from time to time during the
term of the exchange debentures, however, may create original issue discount.
The amount of original issue discount on a debt instrument generally is
equal to the difference between the stated redemption price at maturity of the
debt instrument and the debt instrument's issue price. The stated redemption
price at maturity of a debt instrument will equal the sum of all amounts
provided under the debt instrument, regardless of whether denominated as
principal or interest, other than "qualified stated interest" payments. For such
purposes, "qualified stated interest" generally means stated interest that is
"unconditionally payable" in cash or property, other than debt instruments of
the issuer, at least annually at a single fixed rate.
Interest is considered to be "unconditionally payable" only if reasonable
legal remedies exist to compel timely payment or the debt instrument otherwise
provides terms and conditions that make the likelihood of late payment (other
than late payment that occurs within a reasonable grace period) or nonpayment a
"remote contingency."
Under the new indenture, we have the right, at any time after ,
2003, and from time to time after that date during the term of the exchange
debentures, to defer payments of interest by extending the interest payment
period for a period not exceeding 20 consecutive quarters with respect to each
extension period. Unless the likelihood of exercise of such right to defer is
remote, the exchange debentures would be issued with original issue discount.
During any extension period, (a) we will not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of our capital stock, and (b) we will
not be permitted to make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees)
issued by us that rank pari passu with or junior to the exchange debentures
(although these restrictions will not apply to our dividends and in certain
other limited situations). See the section titled "Description of the Preferred
Securities--Description of Exchange Debentures--Option to Extend Interest
Payment Period," beginning on page 98 of this
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prospectus. We currently believe that the adverse impact that the imposition of
such restrictions would have on us and the value of our equity securities makes
the likelihood of exercising our right to defer payments of interest on the
exchange debentures remote. Accordingly, we intend to treat the stated interest
on the exchange debentures as unconditionally payable for purposes of the
original issue discount provisions of the Code and Treasury Regulations and,
therefore, the exchange debentures should not be considered to have been issued
with original issue discount under these rules.
Our determination that there is generally a remote likelihood of exercising
our right to defer the payment of interest on the exchange debentures is binding
on all holders of exchange preferred securities. However, our determination is
not binding on a holder that explicitly discloses that its determination is
different from our determination. Unless otherwise prescribed by the Service,
the disclosure must be made on a statement attached to the holder's timely filed
federal tax return for the taxable year that includes the acquisition date of
the exchange preferred securities. While our determination is generally binding
on all holders, the Service is not bound by such determination and there can be
no assurance that the Service will agree with our determination.
If we exercise our right to defer payments of interest thereon, the exchange
debentures will be considered to be retired and reissued for their adjusted
issue price at such time, and the exchange debentures thereafter will be
considered to have been issued with original issue discount. In such case,
holders of the exchange debentures will be required to accrue their pro rata
share of original issue discount (which will include both stated interest and
the de minimis original issue discount, if any, on the exchange debentures).
Furthermore, thereafter, the exchange debentures will be taxed as original issue
discount instruments for as long as they remain outstanding.
A U.S. holder, other than a holder with amortizable bond premium, must
include any original issue discount on the exchange debentures as ordinary
interest income as it accrues (in advance of the receipt of any cash payments
attributable to such income) in accordance with a constant yield method based on
a compounding of interest, regardless of such U.S. holder's regular method of
tax accounting. Subject to making an appropriate election, a U.S. holder
generally will be permitted to include all interest that accrues or is to be
paid on the exchange debentures in income under the constant yield method
applicable to original issue discount, subject to limitations and exceptions.
Consequently, in the event that the payment of interest is deferred, a
holder would be required to include original issue discount into income on an
economic accrual basis notwithstanding that we will not make any interest
payments on the exchange preferred securities during such extension period.
AMORTIZABLE BOND PREMIUM
Under the amortizable bond premium rule, a holder that "purchases" a debt
instrument at a premium does not include any original issue discount in income.
The exchange of existing debentures for exchange debentures will be such a
"purchase," and a U.S. holder may have amortizable bond premium with respect to
the holder's beneficial interest in the exchange debentures acquired in the
exchange. A U.S. holder will have amortizable bond premium if the holder's basis
in its pro rata share of the underlying exchange debentures immediately after
the exchange exceeds the sum of all amounts payable on the exchange debentures
(other than payments of qualified stated interest) after the exchange date.
As discussed above under "Treatment of Exchange Offer," a U.S. holder will
receive a tax basis in the exchange debentures equal to the U.S. holder's
adjusted tax basis in the existing debentures exchanged for the exchange
debentures. A holder's basis in the exchange debentures for purposes of
determining the amount of amortizable bond premium will be this carryover basis
reduced by an amount equal to the value of the conversion option a holder
possesses with respect to the exchange debentures.
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If a holder has amortizable bond premium, it can make an election to
amortize the premium by offsetting interest income with bond premium in the
holder's timely filed federal income tax return for the first taxable year to
which the holder desires the election to apply. The holder should attach to the
return a statement that the holder is making such an election under Section 171
of the Code. In general, a holder with amortizable bond premium amortizes the
premium by offsetting the interest allocable to an accrual period with the bond
premium allocable to the accrual period. Bond premium is allocable to an accrual
period under the constant yield method.
MARKET DISCOUNT
A debt instrument will be considered to be a market discount instrument if
the stated redemption price at maturity of the debt instrument at the time of
acquisition exceeds the initial tax basis of the debt instrument immediately
after its acquisition by the holder by more than 1/4 of 1% of the stated
redemption price of the debt instrument multiplied by the number of complete
years to maturity (after the holder acquired the debt instrument).
For U.S. holders that acquire exchange debentures pursuant to the exchange
offer, accrued market discount on existing debentures will carry over to the
exchange debentures received in the exchange offer. Any gain recognized on the
receipt of payments on or disposition of exchange debentures will be treated as
ordinary income to the extent that this gain does not exceed the accrued market
discount on the exchange debentures.
A U.S. holder that exchanges existing debentures for exchange debentures
pursuant to the exchange offer will have unaccrued market discount on the
exchange debentures only if the existing debentures exchanged by the U.S. holder
had market discount and only if the U.S. holder's tax basis in the exchange
debentures immediately after the exchange is less than the issue price of the
exchange debentures. The amount of the unaccrued market discount in such case
would be the excess of the issue price of the exchange debentures over the sum
of the U.S. holder's tax basis in the exchange debentures immediately after the
exchange and the accrued market discount on the existing debentures not
previously included in the holder's gross income and which carries over to the
exchange debentures.
DISTRIBUTION OF EXCHANGE DEBENTURES TO HOLDERS OF THE EXCHANGE PREFERRED
SECURITIES
Under current law, a distribution by the new trust of the exchange
debentures will be nontaxable as described under the section titled "Description
of Preferred Securities--Description of the Exchange Preferred
Securities--Special Event Distribution; Tax Event Redemption," beginning on page
78 of this prospectus, and will result in the holder receiving directly its pro
rata share of the exchange debentures previously held indirectly through the new
trust, with a holding period and tax basis equal to the holding period and
adjusted tax basis such holder was considered to have had in its pro rata share
of the underlying exchange debentures prior to such distribution. If, however,
the new trust were characterized for United States federal income tax purposes
as an association taxable as a corporation at the time of its dissolution, the
distribution of the exchange debentures would constitute a taxable event to
holders of exchange preferred securities and a holder's holding period for the
exchange debentures would begin on the date the exchange debentures were
received.
DISPOSITION OF THE EXCHANGE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the exchange preferred
securities (including a distribution of cash in redemption of a holder's
exchange preferred securities upon redemption or repayment of the underlying
exchange debentures, but excluding the distribution of exchange debentures), a
holder will be considered to have disposed of all or part of its pro rata share
of the exchange debentures, and will recognize gain or loss equal to the
difference between the amount realized and the holder's adjusted tax basis in
its pro rata share of the underlying exchange debentures
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deemed disposed. A holder's adjusted tax basis in the exchange debentures will
generally equal its initial purchase price of the existing preferred securities,
if the exchange preferred securities are acquired in the exchange, or the
initial purchase price of the exchange preferred securities, if the exchange
preferred securities are acquired in the cash offer. If we exercise our right to
defer payment of interest on the exchange debentures, a holder's adjusted tax
basis (generally its initial purchase price) will be increased by any accrued
original issue discount. Such gain or loss will be long-term capital gain or
loss if the exchange preferred securities have been held by the holder for more
than one year.
The exchange preferred securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
exchange debentures. A holder that uses the accrual method of accounting (and a
cash method holder if the exchange debentures are issued with original issue
discount) and that disposes of its exchange preferred securities between record
dates for payments of distributions thereon will nevertheless be required to
include in income accrued but unpaid interest on the exchange debentures through
the date of disposition, and to add such amount to its adjusted tax basis in its
pro rata share of the underlying exchange debentures deemed disposed.
Accordingly, such a holder will recognize a capital loss to the extent the
selling price (which may not fully reflect the value of accrued but unpaid
interest) is less than the holder's adjusted tax basis (which will include
accrued but unpaid interest). Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
CONVERSION OF THE EXCHANGE PREFERRED SECURITIES TO OUR COMMON STOCK
A holder of exchange preferred securities will not recognize income, gain or
loss upon the conversion through the conversion agent of exchange debentures
into our common stock, except with respect to any amount treated as paid with
respect to interest. A holder of exchange preferred securities will, however,
recognize gain upon the receipt of cash in lieu of a fractional share of our
common stock equal to the amount of cash received less such holder's tax basis
in such fractional share. Such holder's tax basis in our common stock received
upon conversion will generally be equal to such holder's tax basis in the
exchange preferred securities delivered to the conversion agent for exchange,
less the basis allocated to any fractional share for which cash is received.
Such holder's holding period in our common stock received upon conversion will
generally include the holder's holding period of the exchange preferred
securities delivered to the conversion agent for exchange, except with respect
to our common stock received in respect of interest, the holding period of which
will generally begin the day following receipt.
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under section 305 of the Code would treat
holders of exchange preferred securities as having received a constructive
distribution from us in certain events pursuant to which the conversion price of
the exchange debentures is adjusted. Thus, under certain circumstances, a
reduction in the conversion price for the exchange debentures may result in
deemed dividend income to holders of exchange preferred securities to the extent
of our current or accumulated earnings and profits, if any. Holders of exchange
preferred securities are advised to consult their tax advisors as to the income
tax consequences of adjustments in the conversion rate of exchange preferred
securities.
COMMON STOCK
Distributions, if any, paid on our common stock after a conversion, to the
extent made from our current or accumulated earnings and profits, will be
included in a U.S. holder's income as ordinary income as they are paid. Gain or
loss realized on a sale or exchange of common stock will equal the difference
between the amount realized on such sale or exchange and the holder's adjusted
tax basis in such stock. Such gain or loss will generally be long-term capital
gain or loss if the U.S. holder's holding
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period in the common stock is more than one year. However, under the market
discount rules, any gain recognized by a U.S. holder will be ordinary income to
the extent of the accrued market discount that has not previously been included
in income. For these purposes, any market discount that the U.S. holder had in
the existing preferred securities that carried over to the exchange preferred
securities, and has not been previously included in income, will be considered
to be market discount with respect to the common stock.
NON-U.S. HOLDERS
The following summary discusses the United States federal income tax
consequences to non-U.S. holders.
We will not withhold on payments of principal and interest to you on the
exchange debentures, provided that: (a) you do not actually (or constructively)
own 10% or more of the total combined voting power of all classes of our voting
stock within the meaning of the Code and the Treasury Regulations; (b) you are
not a controlled foreign corporation that is related to us through stock
ownership; (c) you are not a bank whose receipt of interest on the exchange
debentures is described in section 881(c)(3)(A) Code; and (d) either (A) you
provide your name and address on an IRS Form W-8BEN, and certify, under penalty
of perjury, that you are not a United States person or (B) a financial
institution holding the exchange preferred securities on your behalf certifies,
under penalty of perjury, that it has received an IRS Form W-8BEN from the
beneficial owner and provides us with a copy.
We generally will withhold tax at a rate of 30% on the dividends paid on the
shares of our common stock acquired upon a conversion. You may reduce the 30%
withholding tax applicable to you on dividends if you provide us with a properly
executed IRS Form W-8BEN claiming a reduction of or an exemption from
withholding under an applicable tax treaty.
Any gain or income realized on the disposition of an exchange preferred
security, or our common stock acquired upon a conversion generally will not be
subject to United States federal income or withholding tax unless: (a) that gain
or income is effectively connected with your conduct of a trade or business in
the United States; (b) you are an individual who is present in the United States
for 183 days or more in the taxable year of that disposition, and certain other
conditions are met; or (c) we are or have been a "U.S. real property holding
corporation" for United States federal income tax purposes.
We believe that it is unlikely that we are or will become a "U.S. real
property holding corporation" for United States federal income tax purposes. If
we were or became a U.S. real property holding corporation, so long as our
common stock continues to be regularly traded on an established securities
market, you would not be subject to U.S. federal income tax on the disposition
of an exchange preferred security or our common stock if you held at all times
less than 5% of the total outstanding exchange preferred securities or shares of
our common stock, respectively.
Special rules may apply to you if you are a "controlled foreign
corporation," "passive foreign investment company" or "foreign personal holding
company" and are subject to special treatment under the Code. If you are such an
entity, you should consult your own tax advisor to determine the United States
federal, state, local and other tax consequences that may be relevant to you.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
If you are a non-U.S. holder, no backup withholding will be required with
respect to payments made by us if a statement described above under "Non-U.S.
Holders" has been received and we do not have actual knowledge or reason to know
that you are a U.S. holder.
Amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax liability
provided the required information is furnished to the IRS.
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PLAN OF DISTRIBUTION
We have engaged Banc of America Securities LLC as the dealer manager in
connection with our offer to exchange an aggregate of up to $ in liquidation
amount of exchange preferred securities for $287.5 million in aggregate
liquidation amount of existing preferred securities. We have also engaged Banc
of America Securities LLC to use its best efforts to find purchasers for any or
all of the $ million of additional exchange preferred securities to be issued
by us for cash pursuant to the cash offer. Banc of America Securities LLC is not
making a commitment to take or purchase exchange preferred securities from us
and has not assured us that these securities will be placed successfully in the
cash offer. The purchase price for the additional exchange preferred securities
is % of the liquidation amount of the exchange preferred securities, plus
accrued distributions from the issue date. As compensation for its services as
dealer manager, we are paying Banc of America Securities LLC a dealer manager
fee in connection with the exchange offer which is discussed in the section
titled "The Exchange Offer--Fees and Expenses," beginning on page 62 of this
prospectus. As compensation for its services as placement agent, we are paying
Banc of America Securities LLC a placement agent fee of % of the aggregate
liquidation amount of exchange preferred securities sold by us in the cash
offer.
We have entered into a dealer manager agreement with Banc of America
Securities LLC in connection with the exchange offer. We have also entered into
a distribution agreement with Banc of America Securities LLC in connection with
the cash offer. Each of the dealer manager agreement and the distribution
agreement provides that the obligations of Banc of America Securities LLC are
subject to certain conditions precedent.
We intend to offer the additional exchange preferred securities in the cash
offer to investors and holders tendering their existing preferred securities in
the exchange offer that wish to purchase exchange preferred securities in
addition to those received in exchange for their existing preferred securities.
Each of the dealer manager agreement and the distribution agreement provides
that we will indemnify Banc of America Securities LLC against specific
liabilities, including liabilities under the Securities Act.
All of our executive officers and directors have entered into lock-up
agreements with Banc of America Securities LLC. Under those agreements, our
executive officers and directors may not, without the prior written consent of
Banc of America Securities LLC, which consent may be withheld in its sole
discretion, directly or indirectly sell, offer, contract or grant any option to
sell (including any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act or otherwise dispose of any rights to, or interests in, any shares
of our common stock, any options or warrants to acquire any shares of our common
stock or any preferred securities convertible into, exercisable for or
exchangeable for shares of our common stock owned as of the date of this
prospectus or subsequently owned either of record or beneficially by them, or
publicly announce the intention to do any of the actions described above, for a
period commencing on the date of this prospectus and continuing through the
close of trading on the date 90 days after that date. However, Banc of America
Securities LLC, may, in its sole discretion and at any time without notice,
release all or any portion of the preferred securities subject to lock-up
agreements.
In addition, we and the new trust have agreed that during the period
commencing on the date of this prospectus and continuing through the close of
trading on the date 90 days after that date, we will not, nor will we publicly
announce our intention to, without the prior written consent of Banc of America
Securities LLC, which consent may be withheld in its sole discretion, issue,
directly or indirectly sell, offer, contract or grant any option to sell
(including any short sale), pledge, transfer or otherwise dispose of any rights
to, or interests in, any shares of our common stock, any options or warrants to
acquire any shares of our common stock or any preferred securities convertible
into, exercisable for or exchangeable for shares of our common stock, other than
our issuance and sale of
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exchange preferred securities in this offering, the issuance of shares of our
common stock upon the exercise of outstanding options or warrants and the grant
of options to purchase shares of common stock under our existing employee stock
option, stock ownership or equity incentive plans, or the issuance of shares of
common stock upon conversion of the existing preferred securities and the
exchange preferred securities. We have also agreed not to enter into any
transaction, including a derivative transaction, having an economic effect
similar to that of a sale of any of our shares or any of our preferred
securities that are substantially similar to the shares or which are convertible
into, exercisable for or exchangeable for, or represent the right to receive,
shares or preferred securities that are substantially similar to the shares,
subject to certain exceptions, without the prior consent of Banc of America
Securities LLC.
Prior to this offering, there has been no market for the exchange preferred
securities. We have been advised by Banc of America Securities LLC that it
presently intends to make a market in the exchange preferred securities as
permitted by applicable laws and regulations. Banc of America Securities LLC has
no obligation, however, to make a market in the exchange preferred securities
and may discontinue market making at any time without notice. As a result, we
can give you no assurance regarding the liquidity of the exchange preferred
securities or trading markets for the exchange preferred securities.
We have been advised by Banc of America Securities LLC that certain persons
participating in this offering may engage in transactions, including stabilizing
bids that may have the effect of stabilizing or maintaining the market price of
the exchange preferred securities. Stabilization bids are bids for, or the
purchase of, exchange preferred securities on behalf of Banc of America
Securities LLC for the purpose of fixing or maintaining the price of the
exchange preferred securities.
122
IDENTITY AND BACKGROUND OF FILING PERSONS AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 31, 2001
(except as noted otherwise) regarding ownership of our shares of common stock
by:
- each of our executive officers or directors, and
- each of the new trust's trustees.
Unless otherwise stated, the address of each of the foregoing persons is c/o
Fleetwood Enterprises, Inc., 3125 Myers Street in Riverside, California 92503.
None of the persons listed below owns any of the existing preferred securities.
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS TITLE OWNERSHIP(1) SHARES(2)
- ---------------- ------------------------------------ ------------ ------------
Glenn F. Kummer(3).......... Chairman of the Board 755,000 2.3%
Nelson W. Potter(4)......... President, Chief Executive Officer,
Director and Regular Trustee for
Fleetwood Capital Trust II 253,000 *
Douglas M. Lawson(5)........ Director 22,000 *
Walter F. Beran(6).......... Director 29,510 *
Dr. James L. Doti(7)........ Director 20,658 *
Thomas Pitcher(8)........... Director 13,037 *
Paul D. Borghesani(9)....... Director 10,188 *
Loren K. Carroll(10)........ Director 12,188 *
David S. Engelman(11)....... Director 11,688 *
John T. Montford(12)........ Director 8,927 *
Margaret S. Dano(13)........ Director 4,000 *
Charles A. Wilkinson(14).... Senior Vice President--Housing Group 40,500 *
Carl D. Betcher(15)......... Senior Vice President--Recreational
Vehicle Group 36,500 *
Boyd R. Plowman(16)......... Senior Vice President--Finance,
Assistant Secretary and Regular
Trustee for Fleetwood Capital Trust
II 31,000 *
Forrest D. Theobald(17)..... Vice President--General Counsel and
Secretary 1,010 *
Lyle N. Larkin(18).......... Vice President--Treasurer, Assistant
Secretary and Regular Trustee for
Fleetwood Capital Trust II 82,500 *
Dundee Kelbel(19)........... Vice President--Corporate Strategy
and Human Resource Development 2,500 *
Todd L. Inlander............ Vice President--Information
Technology 0 0
James F. Smith(20).......... Vice President--Controller 6,000 *
John H. (Jack) Vice President--Retail Housing Group
Darnall(21)................. 5,535 *
Charles Lott(22)............ Vice President--Eastern Region--
Housing Group 42,000 *
Jimmy L. Holmes(23)......... Vice President--Western Region--
Housing Group 23,995 *
Larry L. Mace(24)........... Vice President--Supply Subsidiaries
and Administration 54,500 *
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AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS TITLE OWNERSHIP(1) SHARES(2)
- ---------------- ------------------------------------ ------------ ------------
John M. Green............... Vice President--Motor Home
Operations 300 *
William F. Bockoven(25)..... Vice President--Towable Operations 1,000 *
Patrick O. Scanlon(26)...... Vice President--Folding Trailers 24,500 *
Gary L. Johnson(27)......... Vice President--Materials and
International Business Development--
Housing Group 28,400 *
J. Wesley Chancey(28)....... Vice President--Sales & Marketing--
Housing Group 37,155 *
Robert L. Jordan(29)........ Vice President--Channel Marketing--
Housing Group 4,000 *
William Byrnes(30).......... Vice President--Service & Field
Installation--Housing Group 5,000 *
Ronald L. Brewer............ Vice President--Manufacturing &
Engineering--Housing Group 0 0
Kevin L. Hull............... Vice President--Sales--Housing Group 400 *
John C. Draheim............. Vice President--Sales and
Marketing--Recreational Vehicle
Group 0 0
Dennis K. Ogawa............. Vice President--Product
Development--Recreational Vehicle
Group 0 0
The Bank of New York ....... Delaware Trustee for Fleetwood
(Delaware) Capital Trust II
101 Barclay Street
21 West
New York, NY 10286 0 0
The Bank of New York ....... Property Trustee for Fleetwood
101 Barclay Street Capital Trust II
21 West
New York, NY 10286 0 0
- ------------------------
* Less than 1 percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Unless otherwise noted, and subject to
applicable community property laws, each individual has sole voting and
investment power with respect to the shares indicated. Shares of common
stock subject to options currently exercisable or exercisable within
60 days after May 31, 2001, are deemed outstanding for computing the share
amount and the percentage ownership of the person holding such stock
options, but are not deemed outstanding for computing the percentage of any
other person.
(2) Applicable percentage of ownership is based on 32,739,885 shares of our
common stock outstanding on May 31, 2001.
(3) Includes 705,000 shares subject to options held by Mr. Kummer that are
currently exercisable or will become exercisable within 60 days of May 31,
2001. Mr. Kummer, as sole trustee, holds the voting and dispositive power
of 50,000 shares held in The Glenn F. Kummer Trust.
(4) Includes 250,000 shares subject to options held by Mr. Potter that are
currently exercisable or will become exercisable within 60 days of May 31,
2001. Mr. Nelson shares the voting and dispositive
124
power of 1,000 shares with his wife as joint tenant, and shares the voting
and dispositive power of 2,000 shares with Ms. Nelson as co-trustee, in The
Potter Family Trust.
(5) Includes 20,000 shares subject to options held by Mr. Lawson that are
currently exercisable or will become exercisable within 60 days of May 31,
2001.
(6) Includes 22,510 shares subject to options held by Mr. Beran that are
currently exercisable or will become exercisable within 60 days of May 31,
2001. Mr. Beran individually holds 3,000 shares in a pension plan and
shares the voting and dispositive power of 4,000 shares with his wife as
co-trustee of The Beran Family Trust.
(7) Includes 18,658 shares subject to options held by Dr. Doti that are
currently exercisable or will become exercisable within 60 days of May 31,
2001. Dr. Doti holds 2,000 shares in The James & Lynne Pierson Doti
Revocable Living Trust, for which he holds, as sole trustee, the voting and
dispositive power of these shares.
(8) Includes 12,537 shares subject to options held by Mr. Pitcher that are
currently exercisable or will become exercisable within 60 days of May 31,
2001.
(9) Includes 9,688 shares subject to options held by Mr. Borghesani that are
currently exercisable or will become exercisable within 60 days of May 31,
2001. Mr. Borghesani jointly holds with his wife the voting and dispositive
power of 500 shares of common stock.
(10) Includes 9,688 shares subject to options held by Mr. Carroll that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001. Mr. Carroll shares with his wife, as a tenant in common, the
voting and dispositive power of 2,500 shares of common stock.
(11) Includes 9,688 shares subject to options held by Mr. Engelman that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(12) Includes 8,887 shares subject to options held by Mr. Montford that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(13) Includes 4,000 shares subject to options held by Ms. Dano that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(14) Includes 40,500 shares subject to options held by Mr. Wilkinson that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(15) Includes 36,500 shares subject to options held by Mr. Betcher that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(16) Includes 26,000 shares subject to options held by Mr. Plowman that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001. Mr. Plowman jointly holds with his wife the voting and
dispositive power of 5,000 shares of common stock.
(17) Includes 1,000 shares subject to options held by Mr. Theobald that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001. Mr. Theobald jointly holds with his wife the voting and
dispositive power of 10 shares of common stock.
(18) Includes 80,500 shares subject to options held by Mr. Larkin that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(19) Includes 2,500 shares subject to options held by Mr. Kelbel that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(20) Includes 4,000 shares subject to options held by Mr. Smith that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
125
(21) Mr. Darnall shares with his wife, as co-trustee of The Darnall Living
Trust, the voting and dispositive power of 5,535 shares of common stock.
(22) Includes 41,000 shares subject to options held by Mr. Lott that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(23) Includes 20,500 shares subject to options held by Mr. Holmes that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(24) Includes 51,500 shares subject to options held by Mr. Mace that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(25) Includes 1,000 shares subject to options held by Mr. Bockoven that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(26) Includes 23,000 shares subject to options held by Mr. Scanlon that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(27) Includes 28,000 shares subject to options held by Mr. Johnson that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(28) Includes 30,000 shares subject to options held by Mr. Chancey that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001. Mr. Chancey jointly holds with his wife the voting and
dispositive power of 7,155 shares of common stock.
(29) Includes 4,000 shares subject to options held by Mr. Jordan that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
(30) Includes 5,000 shares subject to options held by Mr. Byrnes that are
currently exercisable or will become exercisable within 60 days of
May 31, 2001.
126
LEGAL MATTERS
Certain legal matters with respect to the validity of the exchange preferred
securities have been passed upon for us and the new trust by Morris, Nichols,
Arsht & Tunnell, special Delaware counsel to us and the new trust. Certain legal
matters with respect to the validity of the exchange preferred securities
guarantee and our common stock issuable upon conversion of the exchange
preferred securities and certain United States federal income taxation matters
have been passed upon for us and the new trust by Gibson, Dunn & Crutcher LLP,
Orange County, California, special counsel to us and the new trust. Certain
legal matters will be passed upon for the dealer manager and placement agent by
Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements included in our annual report on
form 10-K for the fiscal year ended April 30, 2000 and incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
With respect to the unaudited interim financial information for the quarters
ended July 30, 2000, October 29, 2000 and January 28, 2001, Arthur Andersen LLP
has applied limited procedures in accordance with professional standards for a
review of that information. However, their separate reports thereon state that
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on that
information should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because these reports are
not "reports" or a "part" of the registration statement prepared or certified by
the accountants within the meaning of Sections 7 and 11 of the Securities Act.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file reports, proxy statements and other information with the SEC, in
accordance with the Exchange Act. You may read and copy the registration
statement, the documents that we incorporate by reference into the prospectus,
the Tender Offer Statement on Schedule TO-I, as well as our other reports, proxy
statements and other information filed by us at the public reference facilities
maintained by the SEC at Room 1024, 45 Fifth Street, N.W., Washington, D.C.
20549 and at the SEC's regional offices located at 7 World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You may obtain copies from the public reference room by
calling the SEC at 1-800-SEC-0330. In addition, we are required to file
electronic copies of these materials with the SEC through the SEC's EDGAR
system. You may access the information we file with the SEC over the Internet at
the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we filed
with them, which means that we can disclose important information by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our
offering is complete:
- Annual Report on Form 10-K for the fiscal year ended April 30, 2000;
- Quarterly Reports on Form 10-Q for the fiscal quarters ending July 30,
2000, October 29, 2000 and January 28, 2001;
127
- Current Report on Form 8-K, filed on March 2, 2001;
- Current Report on Form 8-K, filed on May 30, 2001; and
- Registration Statement on Form 8B, filed on September 21, 1977.
You may request a copy of these filings, at no cost to you, by writing or
telephoning us at the following address:
Investor Relations Department, Fleetwood Enterprises, Inc., 3125 Myers
Street, Riverside, California 92503, (909) 351-3500.
128
The Exchange Agent:
, National Association
By Regular Mail or Overnight Courier: By Registered & Certified Mail:
In Person by Hand Only:
By Facsimile Transmission
(For Eligible Institutions Only):
( ) -
For Information or Confirmation by Telephone:
( ) -
The Information Agent:
Banks and Brokers Call Collect: ( ) -
Call Toll Free: (800) -
Any questions or requests for assistance or additional copies of this prospectus
and the letter of transmittal may be directed to the information agent at its
telephone number and location set forth above. You may also contact your broker,
dealer, commercial bank or trust company or other nominee for assistance
concerning the exchange offer.
The dealer manager for the exchange offer:
BANC OF AMERICA SECURITIES LLC
( ) -
Call Toll Free: (800) -
Attention:
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF FLEETWOOD ENTERPRISES, INC.
Fleetwood Enterprises, Inc. is a Delaware corporation. Section 145(a) of the
DGCL provides that a Delaware corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of Fleetwood Enterprises)
by reason of the fact that such person is or was a director, officer, employee
or agent of Fleetwood Enterprises, or is or was serving at the request of
Fleetwood Enterprises as a director, officer, employee or agent of another
corporation or enterprise, against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
Fleetwood Enterprises, and, with respect to any criminal action or proceeding,
had no cause to believe his or her conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
Fleetwood Enterprises to procure a judgment in its favor by reason of the fact
that such person acted in any of the capacities set forth above, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if he or she acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his or her duty to Fleetwood
Enterprises unless and only to the extent that the court in which such action or
suit was brought shall determine that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, such officer or director shall be indemnified
against expenses actually and reasonably incurred by him or her in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that Fleetwood Enterprises may purchase and maintain insurance on behalf of
a director or officer of Fleetwood Enterprises against any liability asserted
against such officer or director and incurred by him or her in any such capacity
or arising out of his or her status as such, whether or not Fleetwood
Enterprises would have the power to indemnify him or her against such
liabilities under Section 145.
Fleetwood Enterprises' Charter contains no provisions regarding
indemnification of officers and directors. Fleetwood Enterprises' Bylaws provide
that the corporation shall, to the fullest extent permitted by law, indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including a derivative action) by
reason of the fact that he is or was a director or officer of Fleetwood
Enterprises, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of Fleetwood Enterprises, and, with respect to any criminal
action or proceeding, had no reasonable cause
II-1
to believe his conduct was unlawful. The Bylaws authorize the advance of
expenses in certain circumstances and authorize the corporation to provide
indemnification or advancement of expenses to any person, by agreement or
otherwise, on such terms and conditions as the board of directors may approve.
The Bylaws also authorize Fleetwood Enterprises to purchase and maintain
insurance on behalf of a director, officer, employee, agent of Fleetwood
Enterprises or a person acting at the request of Fleetwood Enterprises as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a member of any committee or similar
body against any liability incurred by him in any such capacity whether or not
the corporation would have the power to indemnify him.
In addition to the indemnification provisions in Fleetwood Enterprises'
Bylaws, Fleetwood Enterprises has entered into indemnity agreements with
individuals serving as officers of the corporation. Therein, Fleetwood
Enterprises has agreed to pay on behalf of the officer and his executors,
administrators or assigns, any amount which he is or becomes legally obligated
to pay because of any act or omission or neglect or breach of duty, including
any actual or alleged error or misstatement or misleading statement, which he
commits or suffers while acting in his capacity as officer of the corporation
and solely because of his being an officer. Fleetwood Enterprises has agreed to
pay damages, judgments, settlements and costs, costs of investigation, costs of
defense of legal actions, claims or proceedings and appeals therefrom, and costs
of attachment or similar bonds. Fleetwood Enterprises has also agreed that if it
shall not pay within a set period of time after written claim, the officer may
bring suit against Fleetwood Enterprises and shall be entitled to be paid for
prosecuting such claim. Fleetwood Enterprises has not agreed to pay fines or
fees imposed by law or payments which it is prohibited by applicable law form
paying as indemnity and has not agreed to make any payment in connection with a
claim made against the officer for which payment was made to the officer under
an insurance policy, for which the officer is entitled to indemnity otherwise
than under the agreement, and which is based upon the officer gaining any
personal profit or advantage to which he was not legally entitled, in addition
certain other payments.
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF FLEETWOOD CAPITAL TRUST II
The Declaration provides that no Trustee of the new trust, affiliate of any
Trustee of the new trust, or any officers, directors, shareholders, members,
partners, employees, representatives or agent of any Trustee of the new trust,
or any employee or agent of the new trust or its affiliates (each an
"Indemnified Person") shall be liable, responsible or accountable in damages or
otherwise to the new trust or any officer, director, trustee, shareholder,
partner, member, representative, employee or agent of the new trust or its
affiliates or any holder of the new trust securities for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the new trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by the Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
(except as otherwise provided, in the case of the Property Trustee, in the Trust
Indenture Act) with respect to such acts or omissions.
The Declaration also provides that to the fullest extent permitted by
applicable law, Fleetwood Enterprises shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage, liability, tax, penalty,
expense or claim of any kind or nature whatsoever incurred by such Indemnified
Person by reason of the creation, operation or termination of the new trust or
any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the new trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by the Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
II-2
The Declaration further provides that to the fullest extent permitted by
applicable law, expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by Fleetwood Enterprises prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by Fleetwood Enterprises of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified under the Declaration.
ITEM 21. EXHIBITS.
The following exhibits are filed as part of this Registration Statement:
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------
1.1 Dealer Manager Agreement with Banc of America Securities
LLC, dated as of , 2001.*
1.2 Distribution Agreement with Banc of America Securities LLC,
dated as of , 2001.*
4.1 Rights Agreement dated September 15, 1998, as amended on
April 30, 2001, by and between Fleetwood Enterprises, Inc.
and Fleet National Bank, f/k/a BankBoston, N.A.,
(incorporated by reference to Fleetwood Enterprises, Inc.'s
Current Reports on Form 8-K filed on November 10, 1988 and
May 30, 2001).
4.2 Amended and Restated Declaration of Trust of Fleetwood
Capital Trust dated as of February 10, 1998, by and among
Fleetwood Enterprises, Inc. and individual trustees of the
Trust (incorporated by reference to Fleetwood Enterprises,
Inc.'s Registration Statement on Form S-4 filed April 9,
1998).
4.3 Declaration of Trust of Fleetwood Capital Trust II dated as
of , 2001, by and among Fleetwood Enterprises,
Inc. and the individual trustees of the Trust.*
4.4 Indenture dated as of February 10, 1998, by and between
Fleetwood Enterprises, Inc. and The Bank of New York, as
Trustee, used in connection with Fleetwood Enterprises
Inc.'s 6% Convertible Subordinated Debentures due 2028
(incorporated by reference to Fleetwood Enterprises Inc.'s
Registration Statement on Form S-4 filed April 9, 1998).
4.5 Indenture dated as of , 2001, by and between
Fleetwood Enterprises, Inc. and The Bank of New York, as
Trustee, used in connection with Fleetwood Enterprises
Inc.'s % Convertible Subordinated Debentures due .*
4.6 Preferred Securities Guarantee Agreement dated as of
February 10, 1998, by and between Fleetwood Enterprises,
Inc. and The Bank of New York, as preferred guarantee
trustee (incorporated by reference to Fleetwood Enterprises
Inc.'s Current Report on Form 8-K filed on November 10,
1988).
4.7 Preferred Securities Guarantee Agreement dated as of
, 2001, by and between Fleetwood Enterprises
Inc. and The Bank of New York, as preferred guarantee
trustee.*
4.8 Form of 6% Convertible Trust Preferred Security due
February 15, 2028 (included in Indenture filed as Exhibit
4.4).
4.9 Form of % Convertible Trust Preferred Security due
(included in Indenture filed as Exhibit 4.5).
4.10 Registration Rights Agreement dated February 10, 1998, by
and among Fleetwood Capital Trust, Fleetwood Enterprises
Inc. and PaineWebber Incorporated (incorporated by reference
to Fleetwood Enterprises Inc.'s Annual Report on Form 10-K
for the year ended April 24, 1994).
II-3
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------
5.1 Opinion of Morris, Nichols, Arsht & Tunnell as to the
validity of certain of the securities being registered.*
5.2 Opinion of Gibson, Dunn & Crutcher LLP as to the validity of
certain of the securities being registered.*
8.1 Opinion of Gibson, Dunn & Crutcher LLP as to certain tax
matters.*
12.1 Statement setting forth computation of ratio of earnings to
fixed charges.
15.1 Letter of Arthur Andersen LLP regarding unaudited interim
financial information.
23.1 Consent of Morris, Nichols, Arsht & Tunnell (included in
Exhibit 5.1)
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibits
5.2 and 8.1)
23.3 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (follows the signature page in Part II of
the Registration Statement).
25.1 Statement of Eligibility and Qualification on Form T-l of
The Bank of New York, as Trustee, with respect to the %
Convertible Trust Preferred Securities due .*
25.2 Statement of Eligibility and Qualification on Form T-l of
The Bank of New York, as Trustee, with respect to the %
Convertible Subordinated Debentures due .*
25.3 Statement of Eligibility and Qualification on Form T-l of
The Bank of New York, as Trustee, with respect to the
Guarantee of % Convertible Trust Preferred Securities.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.*
99.4 Form of Letter to Clients.*
99.5 Form of Fleetwood Enterprises, Inc. Letter to Existing
Debenture Holders and Depository Trust Company.*
99.6 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
- ------------------------
* To be filed pursuant to an amendment to this Registration Statement at a
later date.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrants each hereby undertake to respond to requests
for information that is incorporated by reference into the Prospectus pursuant
to Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first-class mail or
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement throughout the
date responding to the request.
(b) The undersigned Registrants each hereby undertake to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(c) Fleetwood Enterprises, Inc. hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of Fleetwood
Enterprises Inc.'s annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new
II-4
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have each been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(e) The undersigned registrants each hereby undertake:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by
Fleetwood Enterprises pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Fleetwood Capital Trust II certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and Form S-4 and
has duly caused this Registration Statement on Form S-4 and Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Riverside, State of California, on June 12,
2001.
FLEETWOOD CAPITAL TRUST II
By: /s/ NELSON W. POTTER
----------------------------------------------
Nelson W. Potter
REGULAR TRUSTEE
By: /s/ BOYD R. PLOWMAN
----------------------------------------------
Boyd R. Plowman
REGULAR TRUSTEE
By: /s/ LYLE N. LARKIN
----------------------------------------------
Lyle N. Larkin
REGULAR TRUSTEE
Pursuant to the requirements of the Securities Act of 1933, as amended,
Fleetwood Enterprises, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and Form S-4 and
has duly caused this Registration Statement on Form S-4 and Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Riverside, State of California, on June 12,
2001.
FLEETWOOD ENTERPRISES, INC.
By: /s/ NELSON W. POTTER
----------------------------------------------
Nelson W. Potter
PRESIDENT AND CHIEF EXECUTIVE OFFICER
II-6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints BOYD R. PLOWMAN and FORREST D. THEOBALD, and each
of them individually, as his or her true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities to sign the Registration
Statement filed herewith and any or all amendments to said Registration
Statement (including post-effective amendments and registration statements filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended and
otherwise), and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission granting
unto said attorneys-in-fact and agents the full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the foregoing, as full to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or her substitute, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 and Registration Statement on Form S-3 has
been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GLENN F. KUMMER
--------------------------------- Chairman of the Board June 12, 2001
Glenn F. Kummer
/s/ NELSON W. POTTER
--------------------------------- President and Chief Executive Officer and June 12, 2001
Nelson W. Potter Director (Principal Executive Officer)
Senior Vice President--Finance, Chief
/s/ BOYD R. PLOWMAN Financial Officer and Assistant
--------------------------------- Secretary (Principal Financial and June 12, 2001
Boyd R. Plowman Accounting Officer)
/s/ THOMAS B. PITCHER
--------------------------------- Director June 12, 2001
Thomas B. Pitcher
/s/ DOUGLAS M. LAWSON
--------------------------------- Director June 12, 2001
Douglas M. Lawson
/s/ WALTER F. BERAN
--------------------------------- Director June 12, 2001
Walter F. Beran
II-7
SIGNATURE TITLE DATE
--------- ----- ----
/s/ LOREN K. CARROLL
--------------------------------- Director June 12, 2001
Loren K. Carroll
/s/ DAVID S. ENGELMAN
--------------------------------- Director June 12, 2001
David S. Engelman
/s/ JAMES L. DOTI
--------------------------------- Director June 12, 2001
James L. Doti
/s/ PAUL D. BORGHESANI
--------------------------------- Director June 12, 2001
Paul D. Borghesani
/s/ JOHN T. MONTFORD
--------------------------------- Director June 12, 2001
John T. Montford
/s/ MARGARET S. DANO
--------------------------------- Director June 12, 2001
Margaret S. Dano
II-8
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------
1.1 Dealer Manager Agreement with Banc of America Securities
LLC, dated as of , 2001.*
1.2 Distribution Agreement with Banc of America Securities LLC,
dated as of , 2001.*
4.1 Rights Agreement dated September 15, 1998, as amended on
April 30, 2001, by and between Fleetwood Enterprises, Inc.
and Fleet National Bank, f/k/a BankBoston, N.A.,
(incorporated by reference to Fleetwood Enterprises, Inc.'s
Current Reports on Form 8-K filed on November 10, 1988 and
May 30, 2001).
4.2 Amended and Restated Declaration of Trust of Fleetwood
Capital Trust dated as of February 10, 1998, by and among
Fleetwood Enterprises, Inc. and individual trustees of the
Trust (incorporated by reference to Fleetwood Enterprises,
Inc.'s Registration Statement on Form S-4 filed April 9,
1998).
4.3 Declaration of Trust of Fleetwood Capital Trust II dated as
of , 2001, by and among Fleetwood Enterprises,
Inc. and the individual trustees of the Trust.*
4.4 Indenture dated as of February 10, 1998, by and between
Fleetwood Enterprises, Inc. and The Bank of New York, as
Trustee, used in connection with Fleetwood Enterprises
Inc.'s 6% Convertible Subordinated Debentures due 2028
(incorporated by reference to Fleetwood Enterprises Inc.'s
Registration Statement on Form S-4 filed April 9, 1998).
4.5 Indenture dated as of , 2001, by and between
Fleetwood Enterprises, Inc. and The Bank of New York, as
Trustee, used in connection with Fleetwood Enterprises
Inc.'s % Convertible Subordinated Debentures due .*
4.6 Preferred Securities Guarantee Agreement dated as of
February 10, 1998, by and between Fleetwood Enterprises,
Inc. and The Bank of New York, as preferred guarantee
trustee (incorporated by reference to Fleetwood Enterprises
Inc.'s Current Report on Form 8-K filed on November 10,
1988).
4.7 Preferred Securities Guarantee Agreement dated as of
, 2001, by and between Fleetwood Enterprises
Inc. and The Bank of New York, as preferred guarantee
trustee.*
4.8 Form of 6% Convertible Trust Preferred Security due
February 15, 2028 (included in Indenture filed as Exhibit
4.4).
4.9 Form of % Convertible Trust Preferred Security due
(included in Indenture filed as Exhibit 4.5).
4.10 Registration Rights Agreement dated February 10, 1998, by
and among Fleetwood Capital Trust, Fleetwood Enterprises
Inc. and PaineWebber Incorporated (incorporated by reference
to Fleetwood Enterprises Inc.'s Annual Report on Form 10-K
for the year ended April 24, 1994).
5.1 Opinion of Morris, Nichols, Arsht & Tunnell as to the
validity of certain of the securities being registered.*
5.2 Opinion of Gibson, Dunn & Crutcher LLP as to the validity of
certain of the securities being registered.*
8.1 Opinion of Gibson, Dunn & Crutcher LLP as to certain tax
matters.*
12.1 Statement setting forth computation of ratio of earnings to
fixed charges.
15.1 Letter of Arthur Andersen LLP regarding unaudited interim
financial information.
23.1 Consent of Morris, Nichols, Arsht & Tunnell (included in
Exhibit 5.1)
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibits
5.2 and 8.1)
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------
23.3 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (follows the signature page in Part II of
the Registration Statement).
25.1 Statement of Eligibility and Qualification on Form T-l of
The Bank of New York, as Trustee, with respect to the %
Convertible Trust Preferred Securities due .*
25.2 Statement of Eligibility and Qualification on Form T-l of
The Bank of New York, as Trustee, with respect to the %
Convertible Subordinated Debentures due .*
25.3 Statement of Eligibility and Qualification on Form T-l of
The Bank of New York, as Trustee, with respect to the
Guarantee of % Convertible Trust Preferred Securities.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.*
99.4 Form of Letter to Clients.*
99.5 Form of Fleetwood Enterprises, Inc. Letter to Existing
Debenture Holders and Depository Trust Company.*
99.6 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
- ------------------------
* To be filed pursuant to an amendment to this Registration Statement at a
later date.