<Page>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 2001
(S-4 REGISTRATION NO. 333-62838/S-3 REGISTRATION NO. 333-62850)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
AMENDMENT NO. 1
TO
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)
----------------------------------
AMENDMENT NO. 1
TO
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)
----------------------------------
FLEETWOOD ENTERPRISES, INC.
FLEETWOOD CAPITAL TRUST II
(Exact Name of Registrant as specified in its charter)
<Table>
DELAWARE
95-1948322
DELAWARE
33-6305591
(State or other jurisdiction of incorporation or (I.R.S.
Employer Identification Number)
organization)
</Table>
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)
----------------------------------
COPY TO:
<Table>
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
</Table>
----------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
----------------------------------
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
<Table>
<Caption>
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)(7).... 7,194,244
$16.68 $120,000,000 --(8)
Common Stock, par value $1.00 per share(6)(9).... 2,464,695
$15.01 $37,000,000 $9,250
Exchange Preferred Securities Guarantee(10)...... -- --
-- --
</Table>
(1) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, this amount is
the market value as of June 12, 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) 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.
(7) Includes up to 7,194,244 shares of common stock that may be issued upon
conversion of the exchange debentures and the exchange preferred securities,
based on a conversion price equal to $16.68 per share, the last reported
sales price of our common stock on the New York Stock Exchange on August 1,
2001. Also includes such indeterminate number of shares of common stock as
may be issued pursuant to anti-dilution adjustments.
(8) No additional consideration shall be received for the common stock issuable
upon conversion of the exchange preferred securities or pursuant to
anti-dilution adjustments and therefore no registration fee is required
pursuant to Rule 457 under the Securities Act.
(9) Includes up to 2,464,695 shares of common stock that may be issued as
payment of interest on the exchange debentures and distributions on the
exchange preferred securities, based on shares valued at 90% of $16.68 per
share, the last reported sales price of our common stock on the New York
Stock Exchange on August 1, 2001. Also includes such indeterminate number of
shares of common stock as may be issued pursuant to anti-dilution
adjustments.
(10) 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 additional 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.
----------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<Page>
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.
<Page>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED AUGUST 3, 2001
[LOGO]
EXCHANGE OFFER OF
% CONVERTIBLE TRUST PREFERRED SECURITIES DUE OF FLEETWOOD CAPITAL
TRUST II
FOR UP TO $ MILLION IN AGGREGATE LIQUIDATION AMOUNT OF THE 6% CONVERTIBLE
TRUST
PREFERRED SECURITIES DUE FEBRUARY 15, 2028 OF FLEETWOOD CAPITAL TRUST
AND CASH OFFER OF
% CONVERTIBLE TRUST PREFERRED SECURITIES DUE
OF FLEETWOOD CAPITAL TRUST II
If you elect to participate in the exchange offer, you will receive from us
$ in liquidation amount of the % Convertible Trust Preferred Securities due
of Fleetwood Capital Trust II, referred to as the "exchange
preferred securities," for each $ in liquidation amount of a maximum of
$ million in aggregate liquidation amount of the outstanding 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., New York City Time, on
, 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 equal to the higher of:
- the equivalent of a % premium over the daily volume-weighted average of
the closing prices of our common stock for each of the five trading days
immediately preceding the second trading day prior to the exchange offer
expiration date, or
- $ per share,
subject to adjustment.
The distributions on the exchange preferred securities will be paid in cash
or, at our election, prior to , 2003, 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 this 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 specific
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 any 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 August 2, 2001, the last reported
sales price for our common stock on the New York Stock Exchange was $16.20 per
share.
We mailed this prospectus and the letter of transmittal on , 2001.
PLEASE SEE THE SECTION TITLED "RISK FACTORS," BEGINNING ON PAGE 21 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.
------------------------
THE DEALER MANAGER FOR THE EXCHANGE OFFER:
BANC OF AMERICA SECURITIES LLC
------------------
This prospectus is dated , 2001.
<Page>
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, D.F. KING & CO., INC., TOLL-FREE AT
(800) 290-6428 OR BY WRITING TO D.F. KING & CO., INC., 77 WATER STREET, 20TH
FLOOR, NEW YORK, NEW YORK 10005. 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.
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
<Table>
<Caption>
PAGE
--------
Summary..................................................... 4
Comparison of Terms of Exchange Preferred Securities
and Existing Preferred Securities......................... 13
Summary Financial Data...................................... 20
Risk Factors................................................ 21
Risks Relating to Our Business............................ 21
Risks Relating to the Exchange Offer, the Exchange
Preferred Securities
and Our Common Stock.................................... 29
Special Note Regarding Forward-Looking Statements........... 34
Use of Proceeds............................................. 35
Price Range of Common Stock................................. 35
Dividend Policy............................................. 35
Capitalization.............................................. 36
Selected Consolidated Financial Data........................ 37
Management's Discussion and Analysis........................ 39
Fiscal 2001 Compared to Fiscal 2000....................... 39
Fiscal 2000 Compared to Fiscal 1999....................... 42
Liquidity and Capital Resources........................... 44
Recent Developments....................................... 45
New Accounting Pronouncements............................. 49
Business.................................................... 50
General................................................... 50
Manufactured Housing...................................... 50
Manufactured Housing--Retail.............................. 51
Recreational Vehicles..................................... 52
Competitive Advantages.................................... 54
Our Business Strategy..................................... 55
Sales and Distribution of Our Products.................... 56
Financing of Our Products................................. 57
Our Principal Properties.................................. 58
Competition in Our Business............................... 58
</Table>
2
<Page>
<Table>
<Caption>
PAGE
--------
Regulatory Issues Applicable to Our Business and
Products................................................ 59
Our Intellectual Property................................. 59
Our Relationship with Our Employees....................... 60
Legal Proceedings in Which We Are Involved................ 60
The Exchange Offer.......................................... 62
Terms of the Exchange Offer; Reasons for the Exchange
Offer;
Period for Tendering Existing Preferred Securities...... 62
Minimum Conditions........................................ 62
Expiration Date........................................... 63
Extensions; Amendments.................................... 63
Procedures for Tendering Existing Preferred Securities.... 63
Our Interpretations Are Binding........................... 65
Acceptance of Existing Preferred Securities for Exchange;
Delivery of Exchange Preferred Securities............... 65
Guaranteed Delivery Procedures............................ 66
Withdrawal Rights......................................... 66
Conditions for Completion of the Exchange Offer........... 67
Legal Limitation.......................................... 69
Fees and Expenses......................................... 69
Exchange Agent............................................ 70
Consequences of Exchanging or Failing to Exchange Existing
Preferred Securities.................................... 70
Cash Offer for Additional Exchange Preferred Securities..... 71
Fleetwood Capital Trust..................................... 72
Fleetwood Capital Trust II.................................. 73
Description of Preferred Securities......................... 75
Description of the Exchange Preferred Securities.......... 75
Description of the Exchange Preferred Securities
Guarantee............................................... 96
Description of the Exchange Debentures.................... 101
Relationship Among the Exchange Preferred Securities, the
Exchange Debentures and the Exchange Preferred
Securities Guarantee.................................... 113
Description of the Existing Preferred Securities, Existing
Debentures and the Existing Preferred Securities
Guarantee............................................... 115
Description of Our Capital Stock............................ 117
Capital Stock............................................. 117
Rights.................................................... 117
United States Federal Income Tax Considerations............. 119
Classification of the Exchange Debentures................. 119
Classification of the New Trust........................... 120
Treatment of Exchange Offer............................... 120
Tax Treatment of the Ownership and Disposition of Exchange
Preferred Securities and Common Stock................... 121
Non-U.S. Holders.......................................... 125
Plan of Distribution........................................ 126
Identity and Background of Filing Persons and Security
Ownership of Certain Beneficial Owners and Management..... 128
Legal Matters............................................... 132
Experts..................................................... 132
Where You Can Find Additional Information................... 132
</Table>
3
<Page>
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. In
fiscal 2001, we sold 60,225 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. In fiscal 2001, we shipped 36,201 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.
In fiscal 2001, we generated consolidated revenues of $2.53 billion and
incurred a net loss of $284 million, due primarily to significantly reduced
sales volume in both manufactured housing and recreational vehicles caused by a
weak market environment and other charges related to goodwill impairment,
restructuring and downsizing initiatives.
Our manufacturing activities are conducted in 16 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 April 29, 2001, we operated 188 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.
4
<Page>
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 in an
equivalent principal amount, referred to as the "exchange debentures," as well
as issuing exchange preferred securities for cash. 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
the outstanding aggregate liquidation amount of our trust preferred securities,
which include the existing preferred securities and the exchange preferred
securities and are classified on our balance sheet as minority interest, from
$ to $ , and by 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 existing preferred securities that are tendered and accepted for exchange.
We expect that this cancellation will result in taxable income to us. If
$ million in liquidation amount of the existing preferred securities are
tendered and accepted for exchange, 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 minority
interest 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 covenant defaults in our previously outstanding
senior unsecured notes payable to The Prudential Insurance Company of America.
As part of this program, on July 27, 2001, we entered into a new secured
facility funded by a syndicate of banks led by Bank of America. We used part of
the proceeds of this facility to retire our senior unsecured notes payable to
Prudential.
We had earlier notified Prudential that we were in violation of some of the
balance sheet covenants related to these senior unsecured notes. Following
negotiations with Prudential, we entered into a forbearance agreement with
Prudential dated April 23, 2001. Under the terms of the forebearance agreement,
Prudential agreed to delay the enforcement of its remedies, principally
involving acceleration of its debt. We subsequently agreed to a principal
repayment on one of the Prudential notes in the amount of $4.3 million, plus
accrued interest. Meanwhile, we received a commitment for financing from Bank of
America, subject to certain conditions, and proceeded to negotiate the terms of
the financing and assemble a syndicate of lenders. On June 22, 2001, we executed
an extension to the Prudential forbearance agreement until July 31, 2001, and
paid $7.5 million as a reduction to principal plus interest on the notes.
The new senior secured facility with the syndicate of banks led by Bank of
America was funded on July 30, 2001. It is currently structured as a three-year,
syndicated revolving credit facility of $230 million with an additional two-year
term loan of $30 million. At the present time, syndicate commitments for an
aggregate of $195 million, which includes the $30 million term loan, have been
5
<Page>
finalized. The borrowers under the facilities are substantially all of our
subsidiaries and we are a guarantor of the senior secured facility. The
revolving credit facility and the related guaranties are secured by
substantially all of our and our subsidiaries' existing and future assets,
excluding assets securing the term loan (upon which a second priority lien
secures the revolving credit facility), assets of our retail subsidiaries
subject to a floor plan financing agreement with another lender, those assets at
our retail subsidiaries' sites managed by a third party, and the cash value of
our company-owned life insurance. The term loan is secured by first priority
liens on real estate owned by certain of our manufacturing subsidiaries, stock
in our folding trailer subsidiary and the future fixed assets of our folding
trailer subsidiary, as well as a second lien on the assets securing the
revolving credit facility. Under the revolving credit facility, letters of
credit totaling up to $75 million may be issued.
Revolving loans will bear interest, at our option, at a base rate of Bank of
America's prime rate or LIBOR, plus a margin. For purposes of determining the
interest rate under the revolving credit facility, the applicable margin will be
adjusted monthly, based on our liquidity and a fixed charge coverage test,
within a range of 0.0% to 1.5% for prime rate loans and within a range of 2.25%
to 3.75% for LIBOR rate loans. Borrowings under the term loan will initially
bear interest at Bank of America's prime rate plus 3% for the first year of the
loan, with escalations and amortizations for the remainder of the term.
We will be required to pay a monthly facility fee for any unused portion of
the revolving credit facility and for outstanding letters of credit, such fees
to be based upon our liquidity margin then in effect.
Our senior secured facility contains a number of affirmative and negative
covenants, including covenants requiring the maintenance of specified financial
ratios and compliance with certain financial tests.
On July 27, 2001, concurrent with the closing of the senior secured
facility, we designated an initial borrowing of $83 million. At the close of
business on July 30, the funding date, after the posting of bank clearings and
application of a portion of our cash reserves, the net outstanding loan was
$55.6 million. The net borrowings plus our cash reserves were applied as
follows:
- to retire the $68 million remaining principal balance of the Prudential
notes, along with payment of accrued interest and a yield maintenance
penalty;
- to reduce the outstanding retail flooring liability to Conseco Finance
Servicing Corp. to approximately $40 million; and
- to secure standby letters of credit that primarily underwrite self-insured
workers' compensation programs at manufacturing plants in various states.
According to the borrowing base certificate filed at the closing of the
senior secured facility, gross excess availability exceeded $90 million. After
consideration of the $50 million required minimum excess availability,
approximately $40 million was available, post-closing, to be used for general
corporate purposes.
6
<Page>
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.
<Table>
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
$ million of the $287.5
million in
liquidation amount of
outstanding 6%
Convertible Trust
Preferred Securities due
February 15, 2028. We are
offering to exchange
$ in liquidation amount
of exchange preferred
securities for each $ in
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, prior
to , 2003, 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
equal to the higher
of:
- the equivalent of a
% premium over the
daily volume-weighted
average of the closing
prices of our common
stock for each of the
five trading days
immediately preceding the
second trading day
prior to the exchange
offer expiration date,
or
- $ per share,
subject to adjustment.
Solely for purposes of
illustration, the
initial conversion price
would be $ per
share if it were
calculated as the equivalent
of a % premium over
the daily
volume-weighted average
of the closing prices
of our common stock for
each of the five
trading days immediately
preceding
, 2001.
The following table
illustrates the number of
shares of our common
stock that would be
issuable upon conversion
of each $
liquidation amount of
exchange preferred
securities for a range of
conversion prices,
calculated as the
equivalent of a % premium
over a range of sale
prices for our common
stock, including the
closing sale price per
share of our common stock
on ,
2001. This table is for
purposes of
illustration only. The
</Table>
7
<Page>
<Table>
conversion price may
exceed $ per share,
but may not be less than
$ per share.
</Table>
<Table>
<Caption>
SHARES OF FLE COMMON STOCK
ISSUED FOR EACH $
LIQUIDATION
PRICE OF FLE CONVERSION AMOUNT OF CONVERTED
EXCHANGE
COMMON STOCK PRICE PREFERRED SECURITIES
- ------------------------ ------------------------
- ------------------------------
</Table>
<Table>
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., New
York City 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., New York City
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
- 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.
Acceptance of Existing Preferred Securities for
Exchange; Pro Rata Acceptance........................ Once all of the
conditions to the exchange
offer are satisfied or
waived, we will accept,
promptly after the
expiration date, up to
$ million in
aggregate liquidation
amount of existing
preferred securities
properly tendered, and
will issue the exchange
preferred securities
promptly after acceptance
of the existing preferred
securities. If
existing preferred
securities in an aggregate
liquidation amount of
more than $
million are validly
tendered, we will accept
them for exchange on a
pro rata basis, in an
aggregate liquidation
amount per holder equal
to:
</Table>
8
<Page>
<Table>
- a fraction, the
numerator of which is the
total liquidation amount
of existing preferred
securities validly
tendered for exchange by
such holder and the
denominator of which is
the total liquidation
amount of all existing
preferred securities
tendered, multiplied by
- $ .
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 67 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 Bank of New York,
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
</Table>
9
<Page>
<Table>
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 Bank
of New York, 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, prior to
, 2003, in our
common stock, payable on
February 15, May 15,
August 15 and November 15
of each year,
beginning November 15,
2001. We cannot
determine at this time
whether we will elect
to cause distributions to
be paid on our
exchange preferred
securities in shares of our
common stock. However, if
our business
environment and our
operating results do not
significantly improve
from those we have
recently experienced, we
would likely find it
necessary to do so as
early as the November
2001 distribution.
Exchange Agent....................................... The Bank of New York.
Information Agent.................................... D.F. King & Co., Inc.
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 21 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
</Table>
10
<Page>
<Table>
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, or tendered for
exchange but not
accepted, could be
adversely affected to the
extent that existing
preferred securities are
tendered and accepted for
exchange in the
exchange offer.
In addition, we have the
right to elect to
defer distributions on
our existing preferred
securities, including
deferrals for up to
twenty consecutive
quarters. We cannot
determine at this time
whether we will elect
to defer distributions on
our existing
preferred securities. If
we do so, this will
also prevent us from
declaring dividends on
our common stock during
the period of the
deferral. However, if our
business environment
and our operating results
do not significantly
improve from those we
have recently
experienced, we would
likely find it necessary
to defer distributions on
our existing
preferred securities for
up to twenty
consecutive quarters,
beginning as early as
November 2001. We would
therefore suspend
dividends on our common
stock for at least the
same period.
Tax Consequences..................................... Please see the section
titled "United States
Federal Income Tax
Considerations," beginning
on page 119 of this
prospectus.
OUR CASH OFFER
Cash Offer for Additional Exchange Preferred
Securities........................................... We will offer 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 71 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
</Table>
11
<Page>
<Table>
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.
</Table>
12
<Page>
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 75 of this prospectus.
<Table>
<Caption>
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 and liquidation amount
and 5,750,000
in number of exchange in number, of
existing preferred
preferred securities to be issued securities. Each
existing
in the exchange offer, and an preferred security
represents a
aggregate of $ million in preferred
undivided beneficial
liquidation amount and in interest in the
assets of the
number of exchange preferred issuer.
securities to be issued in the
cash offer. Each exchange
preferred security represents a
preferred undivided beneficial
interest in the assets 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 c/o Fleetwood principal office
is c/o Fleetwood
Enterprises, Inc., 3125 Myers Enterprises, Inc.,
3125 Myers
Street in Riverside, California Street, Riverside,
California
92503, and its telephone number 92503, and its
telephone number
is (909) 351-3500. 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, prior to , of the liquidation
amount of $50
2003, in our common stock, at a per existing
preferred security.
rate of % per year of
</Table>
13
<Page>
<Table>
<Caption>
EXCHANGE PREFERRED SECURITIES EXISTING
PREFERRED SECURITIES
---------------------------------
- ---------------------------------
the liquidation amount of Distributions are
payable
$ per exchange preferred quarterly in
arrears on February
security. Holders of the exchange 15, May 15, August
15 and
preferred securities will be November 15 of
each year, unless
given notice of an election to we defer interest
payments on the
pay interest in common stock existing
debentures.
instead of cash no later than the
relevant record date, which will
be the 15th day before the
relevant distribution payment
date. We cannot determine at this
time whether we will elect to
cause distributions to be paid on
our exchange preferred securities
in shares of our common stock.
However, if our business
environment and our operating
results do not significantly
improve from those we have
recently experienced, we would
likely find it necessary to do so
as early as the November 2001
distribution. 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 November 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
</Table>
14
<Page>
<Table>
<Caption>
EXCHANGE PREFERRED SECURITIES EXISTING
PREFERRED SECURITIES
---------------------------------
- ---------------------------------
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 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.
We cannot
determine at this time
whether we will
elect to defer
distributions on
our existing
preferred
securities. If we do
so, this will also
prevent us
from declaring
dividends on our
common stock
during the period of
the deferral.
However, if our
business
environment and
operating results
do not
significantly
improve from those
we have recently
experienced, we
would likely find
it necessary to
defer
distributions on our
existing preferred
securities for
up to twenty
consecutive
quarters,
beginning as early as
November 2001. We
would therefore
suspend dividends
on our common
stock for at least
the same
period.
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 August 2, 2001 was
$48.72 per
be equal to the higher of: share of our
</Table>
15
<Page>
<Table>
<Caption>
EXCHANGE PREFERRED SECURITIES EXISTING
PREFERRED SECURITIES
---------------------------------
- ---------------------------------
- the equivalent of a % premium common stock,
which is equivalent
over the daily volume-weighted to a conversion
rate of 1.02627
average of the closing prices shares of our
common stock for
of our common stock for each of each existing
preferred security.
the five trading days This conversion
price remains
immediately preceding the subject to further
adjustment.
second trading day prior to the
exchange offer expiration date,
or
- $ per share,
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 subordinated to
all indebtedness
and 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
</Table>
16
<Page>
<Table>
<Caption>
EXCHANGE PREFERRED SECURITIES EXISTING
PREFERRED SECURITIES
---------------------------------
- ---------------------------------
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 occurs, we
may generally
cause the existing
trust to be
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
</Table>
17
<Page>
<Table>
<Caption>
EXCHANGE PREFERRED SECURITIES EXISTING
PREFERRED SECURITIES
---------------------------------
- ---------------------------------
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, 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 will not
</Table>
18
<Page>
<Table>
<Caption>
EXCHANGE PREFERRED SECURITIES EXISTING
PREFERRED SECURITIES
---------------------------------
- ---------------------------------
cash or, at our election, have sufficient
funds to make
prior to , 2003, payments on the
existing
in our common stock; and preferred
securities, in which
- our obligations under the case you will be
unable to rely
exchange preferred securities on the guarantee
for payment. Our
guarantee are senior to our obligations under
the existing
obligations under the existing preferred
securities guarantee
debentures and the existing are subordinated
to our payment
preferred securities obligations under
our senior
guarantee. 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.
preferred securities and existing However, if an
event of default
debentures. under the 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.
</Table>
19
<Page>
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 29, 2001. You
should read this summary together with the selected consolidated financial data
provided in this prospectus on pages 37 and 38, 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.
<Table>
<Caption>
FISCAL YEARS(1)
- --------------------------------------------------------------
1997
1998 1999 2000 2001
----------
- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Net sales.................................................. $2,945,777
$3,121,278 $3,555,519 $3,769,534 $2,531,463
Operating income (loss).................................... 139,559
170,195 190,311 162,176 (307,626)
Income (loss) before cumulative effect of accounting
change................................................... 124,830
111,044 118,269 94,598 (272,814)
Net income (loss) for diluted earnings per share........... 124,830
108,545 107,121 83,494 (283,990)
Earnings (loss) per share--diluted......................... 3.19
3.01 2.94 2.41 (8.67)
----------
- ---------- ---------- ---------- ----------
BALANCE SHEET DATA AT END OF PERIOD:
Total assets............................................... $ 871,547
$1,129,480 $1,531,184 $1,536,693 $1,142,461
Total liabilities.......................................... 428,452
465,954 656,981 664,388 568,813
Existing Preferred Securities.............................. --
287,500 287,500 287,500 287,500
Shareholders' equity....................................... 443,095
376,026 586,703 584,805 286,148
OTHER DATA:
Gross profit margin........................................ 17.6%
18.3% 20.5% 21.0% 19.0%
Operating income (loss) margin............................. 4.7%
5.5% 5.4% 4.3% (12.2)%
Depreciation and amortization.............................. $ 27,579 $
27,799 $ 31,841 $ 35,080 $ 36,546
Capital expenditures....................................... 56,184
37,809 49,757 55,078 36,921
EBITDA(2).................................................. 167,138
197,994 222,152 197,256 (271,080)
Cash flows from operations................................. 85,138
118,152 114,522 (4,757) 15,520
Cash flows from investing activities....................... 292,821
(231,613) (121,767) 92,516 25,722
Cash flows from financing activities....................... (355,644)
104,310 5,110 (69,715) (47,201)
Ratio of earnings to fixed charges(3)...................... 37.4
24.3 7.5 5.3 --(4)
</Table>
- ------------------------------
(1) We use a fiscal year ending on the last Sunday of April in each year.
(2) EBITDA is defined as operating income plus depreciation and amortization
expense. While 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 EBITDA is customarily used as a
measurement in evaluating companies. If EBITDA for fiscal 2001 were adjusted
to include an add-back for goodwill impairment of $165.9 million and other
asset impairment charges of $22.6 million, both of which were non-cash
charges, the adjusted EBITDA would have been $(82.6) million for fiscal
2001. However, these impairment charges are not included in any of the
EBITDA figures reported in the table.
(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) Our ratio of earnings to fixed charges for the fiscal year ended April 29,
2001 was not meaningful since earnings were inadequate to cover fixed
charges by $336.8 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 fiscal year ended April 29, 2001 is not meaningful since, on
a pro forma basis, earnings during this period would have been inadequate to
cover fixed charges by $ million.
20
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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 THE ONES THAT WE BELIEVE TO BE MATERIAL AT
THIS TIME.
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 MAY BE UNABLE TO COMPLY WITH FINANCIAL CONVENANTS CONTAINED IN OUR SENIOR
DEBT INSTRUMENTS, INCLUDING OUR SENIOR SECURED FACILITY, WHICH MAY RESULT IN A
DEFAULT UNDER OUR DEBT OBLIGATIONS.
Our senior secured facility is funded by a syndicate of banks led by the
Bank of America and requires us to maintain particular financial ratios and meet
specific financial tests. As had been the case with our senior unsecured notes
payable to The Prudential Insurance Company of America, which were repaid using
a portion of the proceeds from our senior secured facility, we may be unable to
comply with some of the financial covenants contained in our new facility or
other senior debt. For instance, if our operating results do not significantly
improve over the levels that we have recently experienced we will breach
covenants under our senior secured facility, resulting in a default under the
facility. A breach of any of the financial covenants contained in our senior
debt instruments can result in a default under our senior secured facility, and
also under our retail floor plan debt with Conseco Finance Servicing Corp. In
the event of a default under our debt obligations, we cannot assure you that our
lenders will agree to forbear from enforcing any remedies otherwise available to
them or that they will grant us waivers or amend our covenants. Our new facility
also ranks senior to the exchange preferred securities, and is secured by
substantially all of our assets, except for some of our inventories that are
used to secure our Conseco debt, and the cash value of our company-owned life
insurance. The terms of our new facility prohibit all payments by us in
connection with the existing preferred securities and the exchange preferred
securities while we are in default under the facility. Upon the occurrence of an
event of default under our senior secured facility, our lenders could elect to
declare all amounts outstanding under the facility, together with accrued
interest, to be immediately due and payable. A default under our senior secured
facility 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 debt, 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.
IF WE ARE UNABLE TO PAY OUR DEBT OBLIGATIONS WHEN DUE, WE COULD BE IN DEFAULT
UNDER OUR NEW DEBT AGREEMENTS AND OUR LENDERS COULD ACCELERATE OUR DEBT OR TAKE
OTHER ACTIONS WHICH COULD RESTRICT OUR ABILITY TO OPERATE.
Future cash flows may not be adequate to meet our debt obligations,
resulting in default. As indicated above, we recently entered into a senior
secured facility with Bank of America for a three-year revolving loan of up to
$230 million and a two-year term loan of $30 million. A default under the senior
secured facility or our other debt obligations could result in lender actions
which might:
- restrict our investment in working capital and capital expenditures;
- limit our ability to react to changes in market conditions due to a lack
of resources to develop new products;
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- hamper the marketing of our products due to a lack of funds to support
advertising expenditures;
- increase our risk of not surviving an extended downturn in the business
compared to other competitors whose capital structures are less highly
leveraged; and
- restrict our ability to merge, acquire or sell properties.
WE HAVE HAD SIGNIFICANT 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 $284 million for the fiscal year
ended April 29, 2001, after having had net income of $83.5 million and
$107.1 million, respectively, for the fiscal years ended April 30, 2000 and
April 25, 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, in turn, have a
negative effect on our sales and earnings. In addition, we will not receive any
tax benefit from our interest payments on the exchange debentures, whether these
payments are made in cash or, at our election, prior to , 2003, in our
common stock. If we continue to suffer losses, we will be unable to implement
our business and financial strategies. Our losses for fiscal 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 fiscal 2001 will not continue into fiscal 2002 and beyond.
Our losses in 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, which have been adversely affected by the
current lending environment. For example, Associates First Capital Corporation,
which had been a very important lender for our retailers in the 1990s, announced
in January 2000 that it was discontinuing its manufactured housing finance
business. Similarly, Conseco Finance Corp., the largest manufactured housing
lender, has also been affected by
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the harsh lending environment, suffering from adverse loan experience, higher
funding costs and liquidity issues. As a result of these changes, if third party
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 largely 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 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 housing 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.
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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 than we
have. 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% 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 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.
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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 fiscal 2001 will not continue to have an adverse effect in 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 some markets may delay the timing of
purchases and shipments from one quarter to another.
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 21.6% 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 1,300 during the period from
January 1994 through April 2001, 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, comprising 65
stores. We also originated more than 100 "greenfield" locations, which are
locations that we have started ourselves rather than through the acquisitions of
existing operations of third parties. The combination of the two strategies
carried us to a high of 244 stores in November 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 some of our locations to third parties, and
closing and selling other locations, we reduced the number of stores that we own
to 188 at the end
25
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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 the introduction of new features, designs and models will be
critical to the future success of our recreational vehicle 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.
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 60 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.
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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.
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, and we believe that
this resistance 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.
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POWER OUTAGES THAT 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.
WE MAY NOT BE ABLE TO OBTAIN FINANCING IN THE FUTURE, INCLUDING ANY REFINANCING
REQUIRED UPON EXPIRATION OF OUR TWO-YEAR TERM UNDER THE SENIOR SECURED FACILITY,
AND THE TERMS OF ANY FUTURE FINANCINGS MAY LIMIT OUR ABILITY TO MANAGE OUR
BUSINESS. DIFFICULTIES IN OBTAINING FINANCING ON FAVORABLE TERMS WILL HAVE A
NEGATIVE EFFECT ON OUR ABILITY TO EXECUTE OUR BUSINESS STRATEGY.
Our operations require significant amounts of cash. In addition to capital
available under the senior secured credit facility, whether or not the exchange
offer is completed, 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, the senior
secured facility contains a $30 million two-year term loan that will require
refinancing within two years, with partial amortization beginning at the start
of the second 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 FLOOR PLAN LENDERS 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. During fiscal
2001, we had repurchased 331 manufactured homes and 308 recreational vehicles,
at an aggregate gross purchase price to us of $15.3 million, which compared to
repurchases of 222 manufactured homes and 175 recreational vehicles, at an
aggregate purchase price to us of $9.9 million for fiscal 2000.
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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 SOME OF OUR 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 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 our senior secured 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 April 29, 2001, we had approximately $192.6 million of outstanding
senior debt at the parent level and, in addition, our financial statements
reflected liabilities of our subsidiaries of $154.6 million, of which
$75.4 million were accounts payable, excluding amounts due to employees,
interest bearing debt and reserves. Neither we nor our subsidiaries are
prohibited under the new indenture from incurring additional debt.
29
<Page>
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, including restrictive covenants contained
in our senior secured facility. 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 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 and disclosed in this prospectus. 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 beginning as early as the distribution for
November 2001, volatility or depressed prices for our common stock could have a
similar effect on the price of our exchange preferred securities. We cannot
determine at this time whether we will elect to defer distributions on our
existing preferred securities. If we do so, this will also prevent us from
declaring dividends on our common stock during the period of the deferral.
However, if our business environment and our operating results do not
significantly improve from those
30
<Page>
we have recently experienced, we would likely find it necessary to defer
distributions on our existing preferred securities for up to twenty consecutive
quarters, beginning as early as November 2001. We would therefore suspend
dividends on our common stock for at least the same period. Other 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, which could have a dilutive effect on
our per share results of operations and otherwise cause the market price
of our common stock to decline;
- 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
- 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.
IF THE MARKET PRICE OF OUR COMMON STOCK DECLINES DURING THE COURSE OF THE
EXCHANGE OFFER, THE CONVERSION PRICE FOR THE EXCHANGE PREFERRED SECURITIES MAY
REPRESENT MORE THAN A % PREMIUM OVER THE DAILY VOLUME-WEIGHTED AVERAGE OF THE
CLOSING PRICES OF THE COMMON STOCK FOR EACH OF THE FIVE TRADING DAYS IMMEDIATELY
PRECEDING THE SECOND TRADING DAY PRIOR TO THE EXCHANGE OFFER EXPIRATION DATE.
We have set a minimum conversion price of $ per share for the exchange
preferred securities. If, in the course of the exchange offer, the market price
of our common stock declines so that the daily volume-weighted average of the
closing prices of the common stock for each of the five trading days immediately
preceding the second trading day prior to the exchange offer expiration date is
below $ per share, the minimum conversion price will be the initial
conversion price for the exchange preferred securities. This conversion price
will represent a premium of more than % over
31
<Page>
the daily volume-weighted average of the closing prices of the common stock for
each of the five trading days immediately preceding the second trading day prior
to the exchange offer expiration date.
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 accepted for exchange
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.
WE MAY NOT ACCEPT FOR EXCHANGE ALL OF A HOLDER'S VALIDLY TENDERED EXISTING
PREFERRED SECURITIES, AND WE MAY NOT MAKE AN OFFER IN THE FUTURE FOR THE
EXISTING PREFERRED SECURITIES THAT REMAIN OUTSTANDING FOLLOWING THIS EXCHANGE
OFFER.
We will accept for exchange validly tendered existing preferred securities
in an aggregate liquidation amount of up to $ of the $ million in
aggregate liquidation amount of outstanding existing preferred securities. To
the extent that the aggregate liquidation amount of existing preferred
securities tendered for exchange exceeds $ million, we will accept existing
preferred securities for exchange on a pro rata basis. Therefore, we cannot
assure you that we will accept for exchange all of your validly tendered
existing preferred securities. Upon completion of the exchange offer, there will
remain at least $ million in aggregate liquidation amount of existing
preferred securities that have not been accepted for exchange. We do not know
whether, in the future, we will make another offer to exchange these outstanding
existing preferred securities. Holders of these securities will therefore be
subject to the risks relating to existing preferred securities outlined in this
section of the prospectus, including the risk that the liquidity of the market
for them will be limited and sporadic and the risk that we may elect to defer
payment of distributions on existing preferred securities for up to twenty
consecutive quarters, beginning as early as November 2001.
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, AND WE MAY ELECT TO
DEFER MAKING DISTRIBUTIONS ON THE EXISTING PREFERRED SECURITIES.
Our cash resources may not be sufficient to meet the payment obligations on
the exchange preferred securities. As of April 29, 2001, we had approximately
$192.6 million of outstanding senior debt at the parent level and in addition
our financial statements reflected liabilities of our subsidiaries of
$154.6 million, of which $75.4 million were accounts payable, excluding amounts
due to employees, interest bearing debt and reserves. 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 $284 million in our combined
operations for fiscal 2001, including a loss of $44.5 million in combined
operations for the fourth quarter of fiscal 2001, and we may continue to suffer
losses. Similarly, our ratio of earnings to fixed charges for the fiscal year
ended April 29, 2001 was not
32
<Page>
meaningful since earnings were inadequate to cover fixed charges by
$336.8 million. 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. Further, they are ranked
junior in right of payment to the exchange preferred securities.
In addition, we have the right to elect to defer distributions on our
existing preferred securities, including deferrals for up to twenty consecutive
quarters. We cannot determine at this time whether we will elect to defer
distributions on our existing preferred securities. If we do so, this will also
prevent us from declaring dividends on our common stock during the period of the
deferral. However, if our business environment and our operating results do not
significantly improve from those we have recently experienced, we would likely
find it necessary to defer distributions on our existing preferred securities
for up to twenty consecutive quarters, beginning as early as November 2001. We
would therefore suspend dividends on our common stock for at least the same
period.
WE EXPECT TO USE PART OF THE PROCEEDS OF THE OFFERING OF EXCHANGE PREFERRED
SECURITIES FOR CASH TO PAY TAXES RESULTING FROM THE EXCHANGE OFFER 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 debentures supporting
the existing preferred securities tendered into the exchange offer. If a maximum
of $ million in aggregate liquidation amount of 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
33
<Page>
- 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 $192.6 million as of April 29, 2001, which included the notes
payable to Prudential, and in addition our financial statements reflected
liabilities of our subsidiaries of $154.6 million, of which $75.4 million
were accounts payable, excluding amounts due to employees, interest
bearing debt and reserves;
- 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 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 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. Furthermore, any references to the safe harbor
for forward-looking statements made in reports that are incorporated by
reference into this prospectus and filed pursuant to the Securities Exchange Act
of 1934, are specifically not incorporated into this registration statement with
respect to the exchange offer.
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<Page>
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
that existing preferred securities in an aggregate liquidation amount of
$ million are exchanged in the exchange offer, which is the maximum amount
that we can accept for exchange 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
accepted for exchange. Assuming that exchange preferred securities are sold in
the cash offer having an aggregate liquidation amount equal to at least % of
the aggregate liquidation amount of the existing preferred securities accepted
for exchange in the exchange offer, we will use substantially all of our
proceeds from the sale of that percentage amount in order to settle the expected
tax liability. To the extent that we sell exchange preferred securities in the
cash offer in an aggregate liquidation amount of more than % of the aggregate
liquidation amount of the existing preferred securities accepted for exchange in
the exchange offer, we will use any proceeds from the sale of exchange preferred
securities in excess of that percentage for general corporate purposes,
including the possible repayment of corporate indebtedness.
PRICE RANGE OF COMMON STOCK
The following table lists the high and low intra-day 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.
<Table>
<Caption>
DIVIDENDS
QUARTER HIGH LOW
DECLARED
- ------- -------- --------
- ---------
Fiscal 2000
First Quarter.................................... $29.25 $22.00
$0.19
Second Quarter................................... 23.69 18.00
0.19
Third Quarter.................................... 23.13 15.94
0.19
Fourth Quarter................................... 17.25 14.00
0.19
Fiscal 2001
First Quarter.................................... $15.81 $12.94
$0.19
Second Quarter................................... 14.94 10.56
0.19
Third Quarter.................................... 16.00 8.69
0.04
Fourth Quarter................................... 15.05 8.10
0.04
Fiscal 2002
As of August 1, 2001............................. $17.00 $10.70
$0.04
</Table>
On April 29, 2001, there were approximately 1,300 shareholders of record of
our common stock.
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. In December 2000, our board of directors approved a
reduction in the quarterly dividend from $0.19 per share to $0.04 per share. We
cannot assure you that we will continue to pay dividends in the future. We have
the right to elect to defer distributions for up to twenty consecutive quarters
on our existing preferred securities. We cannot determine at this time whether
we will elect to defer distributions on our existing preferred securities. If we
do so, this will also prevent us from declaring dividends on our common stock
during the period of the deferral. However, if our business environment and our
operating results do not significantly improve from those we have recently
experienced, we would likely find it necessary to defer distributions on our
existing preferred securities for up to twenty quarters, beginning as early as
November 2001. We would therefore suspend dividends on our common stock for at
least the same period.
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<Page>
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization:
- at April 29, 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 $ 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;
- 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; and
- to reflect drawdowns under the senior secured facility and the
application of proceeds to pay down a portion of the Conseco senior
debt and pay off all of the Prudential senior debt.
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 April 29, 2001 in the following
table are derived from our audited financial statements for the fiscal year then
ended.
<Table>
<Caption>
APRIL 29,
2001
- ------------------------
ACTUAL AS
ADJUSTED
----------
- -----------
(IN
THOUSANDS)
Short-term indebtedness:
Retail flooring liability................................. 85,861
Motor home chassis inventory financing.................... 11,135
Senior unsecured notes payable(1)......................... 80,000
Total short-term indebtedness........................... $ 176,996 $
Long-term debt (less current portion)....................... --
Total indebtedness...................................... $ 568,813 $
% Convertible Trust Preferred Securities due (exchange
preferred securities)(2).................................. $ $
6% Convertible Trust Preferred Securities due 2028 (existing
preferred securities)(2).................................. 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, 32,740,000 issued and outstanding(3)........ 32,740
Capital surplus(4)........................................ 194,338
Retained earnings......................................... 62,212
Accumulated other comprehensive income (loss)............. (3,142)
Total shareholders' equity.............................. 286,148
Total capitalization.................................... $1,142,461 $
</Table>
- ------------------------------
(1) At April 29, 2001, because we were in violation of some of the balance sheet
covenants related to our senior unsecured notes payable to Prudential, we
classified those notes as short-term indebtedness. These notes were paid off
in full on July 30, 2001.
(2) 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.
(3) 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 2,380,167
shares exercisable under our stock option and purchase plans and warrants.
(4) 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.
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<Page>
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated operating data for the three years in the period ended
April 29, 2001 and the balance sheet data at April 29, 2001 and April 30, 2000
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 26, 1998 and April 27, 1997 and the balance sheet data at
April 25, 1999, April 26, 1998 and April 27, 1997, have been derived from our
consolidated financial statements audited by Arthur Andersen LLP that are not
included or incorporated by reference in this prospectus. Specific
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 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.
<Table>
<Caption>
FISCAL YEARS(1)
- --------------------------------------------------------------
1997
1998 1999 2000 2001
----------
- ---------- ---------- ---------- ----------
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
Net sales
Manufactured housing..................................... $1,490,084
$1,550,926 $1,631,076 $1,517,681 $ 981,366
Recreational vehicles.................................... 1,402,890
1,525,216 1,735,016 1,921,604 1,206,790
Housing--retail.......................................... --(2)
-- 332,309 591,895 552,904
Supply operations, corporate and other................... 52,803
47,660 48,306 54,253 35,413
Adjustments and eliminations............................. --(2)
(2,524) (191,188) (315,899) (245,010)
----------
- ---------- ---------- ---------- ----------
$2,945,777
$3,121,278 $3,555,519 $3,769,534 $2,531,463
----------
- ---------- ---------- ---------- ----------
Income (loss) from continuing operations before income
taxes, minority interest, discontinued operations and
cumulative effect of accounting change................... $ 147,050 $
178,885 $ 196,415 $ 159,059 $ (319,231)
Benefit (provision) for income taxes....................... (56,998)
(67,841) (78,146) (64,461) 57,575
Minority interest in Fleetwood Capital Trust, net of income
taxes.................................................... --
(2,499) (11,148) (11,104) (11,158)
Income (loss) from continuing operations................... 90,052
108,545 107,121 83,494 (272,814)
Income from discontinued operations, net of income taxes... 34,778
-- -- -- --
Income (loss) before cumulative effect of accounting
change................................................... 124,830
108,545 107,121 83,494 (272,814)
Cumulative effect of accounting change, net of income
taxes.................................................... --
-- -- -- (11,176)
Net income (loss) for basic earnings per share............. 124,830
108,545 107,121 83,494 (283,990)
Effect of dilutive securities:
Minority interest in Fleetwood Capital Trust............. --
2,499 11,148 11,104 --(3)
Net income (loss) for diluted earnings per share........... 124,830
111,044 118,269 94,598 (283,990)
Earnings (loss) per share--diluted:
Continuing operations.................................... 2.30
3.01 2.94 2.41 (8.33)
Discontinued operations, net of income taxes............. .89
-- -- -- --
Cumulative effect of accounting change, net of income
taxes.................................................. --
-- -- -- (.34)
Net income (loss) per share................................ $ 3.19 $
3.01 $ 2.94 $ 2.41 $ (8.67)
----------
- ---------- ---------- ---------- ----------
Weighted average common shares--diluted.................... 39,162
36,933 40,171 39,194 32,755
----------
- ---------- ---------- ---------- ----------
BALANCE SHEET DATA AT END OF PERIOD:
Cash and investments....................................... $ 110,434 $
305,722 $ 267,133 $ 135,142 $ 73,103
Property, plant and equipment, net......................... 278,331
277,211 303,934 312,067 294,813
Total assets............................................... 871,547
1,129,480 1,531,184 1,536,693 1,142,461
Total liabilities.......................................... 428,452
465,954 656,981 664,388 568,813
Capital Trust Preferred Securities......................... --
287,500 287,500 287,500 287,500
Shareholders' equity....................................... 443,095
376,026 586,703 584,805 286,148
OTHER DATA:
Gross profit margin........................................ 17.6%
18.3% 20.5% 21.0% 19.0%
Operating income (loss) margin............................. 4.7%
5.5% 5.4% 4.3% (12.2)%
Depreciation and amortization.............................. $ 27,579 $
27,799 $ 31,841 $ 35,080 $ 36,546
Capital expenditures....................................... 56,184
37,809 49,757 55,078 36,921
EBITDA(4).................................................. 167,138
197,994 222,152 197,256 (271,080)
Cash flows from operations................................. 85,138
118,152 114,522 (4,757) 15,520
Cash flows from investing activities....................... 292,821
(231,613) (121,767) 92,516 25,722
Cash flows from financing activities....................... (355,644)
104,310 5,110 (69,715) (47,201)
Ratio of earnings to fixed charges(5)...................... 37.4
24.3 7.5 5.3 --(6)
</Table>
- ------------------------------
(1) We use a fiscal year ending on the last Sunday of April in each year.
37
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(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 fiscal year ended April 29, 2001 and was, therefore, not added back to
determine diluted earnings (loss).
(4) EBITDA is defined as operating income plus depreciation and amortization
expense. While 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 EBITDA is customarily used as a
measurement in evaluating companies. If EBITDA for fiscal 2001 were adjusted
to include an add-back for goodwill impairment of $165.9 million and other
asset impairment charges of $22.6 million, both of which were non-cash
charges, the adjusted EBITDA would have been $(82.6) million for fiscal
2001. However, these impairment charges are not included in any of the
EBITDA figures reported in the table.
(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) Our ratio of earnings to fixed charges for the fiscal year ended April 29,
2001 was not meaningful since earnings were inadequate to cover fixed
charges by $336.8 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 fiscal year ended April 29, 2001 is not meaningful since, on
a pro forma basis, earnings during this period would have been inadequate to
cover fixed charges by $ million.
38
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MANAGEMENT'S DISCUSSION AND ANALYSIS
FISCAL 2001 COMPARED TO FISCAL 2000
CONSOLIDATED RESULTS
We incurred a net loss in fiscal 2001 of $284 million or $8.67 per diluted
share, the majority of which was attributable to other charges related to
goodwill impairment, restructuring and downsizing initiatives. This compares
with a profit of $83.5 million or $2.41 per diluted share for fiscal 2000. 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 fiscal 2001 earnings per
share, the impairment of goodwill, other charges and the cumulative effect of
the change in accounting amounted to approximately $5.63 and $0.34,
respectively.
We incurred a $165.9 million non-cash charge in fiscal 2001 related to the
impairment of goodwill that originated with acquisitions of retail housing
businesses in prior fiscal years. In addition, we recorded other charges
totaling $34.9 million, which were related to the downsizing of manufactured
housing, recreational vehicle and retail housing operations. The latter category
included $13.3 million for asset impairment charges related to downsizing of the
retail housing business and $9.4 million for the write-down of manufacturing
facilities, as well as employee severance payments and other plant closing
costs.
Consolidated revenues fell 33% to $2.53 billion in fiscal 2001 compared to
$3.77 billion in the prior fiscal year. Fiscal 2000 included 53 weeks compared
to 52 weeks in fiscal 2001. The revenue decline reflects continued market
weakness in the demand for both recreational vehicles and manufactured housing.
Gross profit margin in fiscal 2001 declined to 19% of sales from 21% in
fiscal 2000, reflecting lower manufacturing and retail margins. Manufacturing
gross margin fell to 17.2% of sales compared to fiscal 2000's 19.3% margin.
Lower recreational vehicle gross margins were only partially offset by improved
margins from manufactured housing. Gross margins were adversely impacted by
higher direct labor wage and benefits and inefficiencies due to lower volume.
Reduced retail housing margins reflect very competitive market conditions and
declining industry sales, as well as a $7.5 million inventory write-down to net
realizable value.
Operating expenses in fiscal 2001, excluding other charges, declined
$42 million or 7% from the prior fiscal year to $588 million. As a percentage of
sales, however, these costs rose from 16.7% in fiscal 2000 to 23.1% in fiscal
2001 due to lower sales. Selling expenses declined 11% to $247 million in fiscal
2001, but rose as a percentage of sales from 7.4% to 9.8% on the lower sales
volume. Most of the dollar reduction in selling costs resulted from reduced
expenditures for advertising, sales compensation and product warranty and
service costs. The bulk of these cost reductions occurred within the
manufactured housing segment. These reductions can be attributed not only to
volume, but enhanced cost controls.
General and administrative expenses declined 4% to $341 million in fiscal
2001, but rose as a percentage of sales from 9.3% to 13.4%. Reduced costs in the
manufacturing sector were partially offset by higher expenses for the retail
housing business, which was in an expansion mode until mid-fiscal 2001. Most of
the reduction in general and administrative costs stems from lower profit-based
incentive compensation and reduced staffing levels.
Fiscal 2001's non-operating expenses of $11.6 million were significantly
higher than fiscal 2000's $3.1 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 fiscal 2000 as a result of reduced invested balances.
39
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Our effective income tax rate declined from 40.5% in fiscal 2000 to 18% in
fiscal 2001. The decrease primarily reflects the impact of the impairment of
goodwill, which is not deductible for tax purposes.
MANUFACTURED HOUSING
Gross manufacturing revenues of $981.4 million for fiscal 2001 were off 35%
from fiscal 2000, and included $243 million of intercompany sales to retail home
centers owned by us. Manufacturing unit volume declined 39% from fiscal 2000 to
36,201 homes from 59,458 homes, but the number of sections was off a lesser 36%
for the same period to 63,944 sections from 99,329 sections, due to the
continuing shift in sales mix toward multi-section homes. Multi-section homes
represented 74% of factory sales in fiscal 2001 versus 64% in fiscal 2000.
The lower housing volume reflects a weak manufactured housing market that
has deteriorated over the past year. During the past two years, the 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.
Housing operating income, before the adjustment for intercompany
manufacturing profit, declined 67% from $83.8 million in fiscal 2000 to $27.4
million in fiscal 2001, and operating margin fell from 5.5% to 2.8% of sales.
Most of the decline was volume-related. About $12 million or 21% of the profit
decline resulted from other restructuring and impairment charges related to
plant closings and downsizing initiatives. Excluding these other charges,
operating margin for the housing group was 4% in fiscal 2001. The other charges
for fiscal 2001 included $9.4 million for the write-down of plant facilities,
$2.1 million for employee severance benefits and $700,000 of other costs. Gross
profit margin for the housing group improved slightly in fiscal 2001 from 21.5%
to 22.8% of sales as a result of lower raw material costs. More efficient
material usage, improved product pricing and lower lumber costs all contributed
to the higher gross margin percentage. Housing group operating costs, excluding
the other charges, fell 25%, 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
The retail housing division generated revenues of $553 million in fiscal
2001, 7% less than fiscal 2000 revenues. Unit sales from our retail stores fell
12% in fiscal 2001 to 12,752 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. We had 188 retail stores in operation at the end
of fiscal 2001 compared to 243 in the prior fiscal year's end. The retail
division incurred an operating loss of $77.1 million compared to a nominal
profit of $3.8 million in fiscal 2000. The current year loss includes asset
impairment charges totaling $13.3 million related to downsizing initiatives.
Earnings were also adversely affected by a $7.5 million inventory write-down in
fiscal 2001, which increased cost of sales and reduced the gross profit margin.
Excluding these unusual charges, the larger operating loss in fiscal 2001 was
due to the weaker market environment and lower gross margins stemming from
extremely competitive market conditions, along with higher overhead costs
related to the expansion of retail locations in the early part of the fiscal
year. Interest expense on inventory financing increased from $10.8 million to
$11.3 million for fiscal 2001 due to higher interest rates.
40
<Page>
RECREATIONAL VEHICLES
Recreational vehicle sales declined 37% to $1.2 billion in fiscal year 2001
compared to $1.9 billion for the prior fiscal year, primarily as a result of
sharply lower motor home sales. Motor home revenues fell 47% from $1.2 billion
to $638 million in fiscal 2001, on a 50% drop in shipments from 16,294 units to
8,148 units. This drop mainly reflects softening retail demand and high dealer
inventories at the beginning of the fiscal 2001. Sales were also weaker for
towable recreational vehicle products. In the towable recreational vehicle
categories, travel trailer sales declined 25% from $599 million in fiscal 2000
to $452 million in fiscal 2001 and folding trailer sales eased down 9% from $129
million to $117 million for the same period. Fiscal 2001 unit shipments for
travel trailers and folding trailers were 32,987 and 19,090 respectively,
representing decreases of 21% and 13%, respectively.
The recreational vehicle group incurred a $73.1 million operating loss for
fiscal 2001, mainly as a result of the significant decline in sales and slimmer
gross margins. Other significant factors that influenced results included
inefficiencies from lower operating rates, inventory writedowns, increased
dealer incentives implemented to stimulate sales and higher than normal
operating costs for the motor home division. Also, the recreational vehicle
group incurred non-recurring costs related to a plant closing and other
downsizing initiatives, which totaled $6.4 million for fiscal 2001. Gross profit
margin declined sharply to 12.3% of sales from 17.2% in fiscal 2000, largely due
to lower motor home and travel trailer margins. Both motor homes and travel
trailers experienced higher raw material and direct labor costs, which reflect
unfavorable product mix changes, higher wage and benefit costs and production
inefficiencies at lower volume levels. Recreational vehicle operating costs for
fiscal 2000 were 2% lower than operating costs for fiscal 2000, mainly due to
reduced selling expenses related to the decline in volume. General and
administrative expenses for the recreational vehicle group were 8% below
expenses for fiscal 2000, mainly due to staffing reductions and lower levels of
profit-based management incentive compensation.
SUPPLY OPERATIONS
Our supply group contributed revenues of $33 million in fiscal 2001 compared
to $50 million in fiscal 2000. Operating income fell 70% to $6.1 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.
GOODWILL AND ASSET IMPAIRMENT
Conditions in the manufactured housing market have been in a state of
decline for the past two fiscal years, but further deteriorated in the last two
quarters of fiscal 2001. Excess retail locations and inventory, combined with
tightened consumer credit standards and high consumer repossession levels,
resulted in lower sales volume as well as retail store closings. This prompted
the evaluation of the recoverability of goodwill. Based on the evaluation, a
$165.9 million impairment to reduce the value of goodwill related to prior
acquisitions of retail businesses was recorded in fiscal 2001. The impairment
was measured by calculating the fair value of each retail location based on
discounted future cash flows using a 9.5% discount rate for 15 years and
comparing the result to the carrying amount of the goodwill. The excess of the
carrying amount over fair value was recorded as a charge. Some of the factors
considered in the determination of the 15 years were:
- the effect of market and economic conditions on the business;
- the ease of entering and exiting the business;
- the sensitivity to interest rates and financing availability; and
- sustainability of the factors that contributed to paying the seller an
amount in excess of book value.
We also reduced the amortization period for goodwill from 40 years to 15 years.
The effect of this change was to increase the net loss in fiscal 2001 by
$887,000 or $0.03 per share.
41
<Page>
In addition, we evaluated the net book values of 10 closed manufactured
housing plants, four recreational vehicle plants, one retail housing
administrative office and all of the active and closed retail sales centers. We
determined that the net book values of five of the manufacturing housing plants,
the retail housing administrative office and 98 retail sales centers exceeded
estimated future cash flows. In the first quarter of fiscal 2001 we recognized a
$9.4 million impairment charge related to the five housing plants. In the third
quarter of fiscal 2001 we recorded a long-lived asset impairment charge of
$10.6 million related to the retail housing administrative office and in the
fourth quarter we recorded a $2.7 million charge in connection with the sale of
retail stores.
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 diluted 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 $3.77 billion
compared to $3.56 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 21% from 20.5% 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
19.7% to 19.3% of sales as a result of lower recreational vehicle margins.
Operating expenses rose 17% to $630 million, and also increased as a
percentage of sales from 15.1% to 16.7%. The rapidly expanding retail housing
business accounted for about $60 million or 64% of the increase in operating
costs in fiscal 2000. Selling expenses rose 11% to $278 million, with the retail
housing operation accounting for about 44% 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 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 7.1% to 7.4% and general and administrative expenses rose from 8% to 9.3%.
Non-operating items totaled a net expense of $3.1 million compared to net
income of $6.1 million for the prior fiscal year. The change 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 39.8% in fiscal 1999
to 40.5% in fiscal 2000. The increase primarily reflected the impact of the
amortization of goodwill recorded in conjunction
42
<Page>
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 $1.52 billion in fiscal
2000 from the prior fiscal year's record $1.63 billion. Sales figures include
intercompany sales to our retail housing division of $312 million in fiscal 2000
and $187 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, before the adjustment for
intercompany manufacturing profit, declined 16% in fiscal 2000 to $83.8 million
due to the lower sales volume. Gross profit margin improved slightly from 21.4%
to 21.5% of sales, mainly as a result of modest selling price increases and
stable raw material costs. As a percentage of sales, operating income in fiscal
2000 was slightly below 5.5% compared to over 6.1% in fiscal 1999.
RECREATIONAL VEHICLES
Recreational vehicle revenues in fiscal 2000 were up 11% to a record
$1.92 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 $1.19 billion, as shipments rose 9% to
16,294 units. Towable recreational vehicle products also performed well in
fiscal 2000, with travel trailer sales rising 8% to $599 million and folding
trailer sales also increasing 8% to $129 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 6.3% to 5.4% due to lower gross profit margins and
higher selling costs. Gross margins were adversely affected by changes 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
43
<Page>
$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 244 retail sales centers as of
November 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.
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 accessed external funding sources to supplement internal cash
flows due to greater working capital requirements. Cash provided from operating
activities totaled $15.5 million in fiscal 2001, compared to a use of
$4.8 million in fiscal 2000. Decreases to receivables ($146 million) and
inventories ($90 million), largely a result of the decline in volume, were the
primary sources of cash from operating activities. Cash and cash equivalents
declined from $135.1 million as of April 30, 2000, to $73.1 million at the end
of fiscal 2001. The reduced level of cash and cash equivalents in the current
fiscal year primarily resulted from the loss from operations of $58.9 million,
adjusted for non-cash charges. Other significant cash outlays in the current
fiscal year included $36.9 million for capital expenditures, $43.3 million in
paydowns of retail inventory financing, $17.3 million in distributions on
existing preferred securities and $15.1 million in dividends to holders of our
common stock.
As discussed in greater detail below in the section entitled "Management's
Discussion and Analysis--Recent Developments--Senior Debt Refinancing,"
beginning on page 45 of this prospectus, we recently finalized new outside
financing to support expected future working capital needs, to refinance the
senior notes payable to Prudential and to reduce our existing inventory flooring
liability to $40 million at July 30, 2001.
The revolving credit facility and term loan are collateralized by
substantially all of our existing and future acquired assets and those of our
subsidiaries and impose various restrictions and compliance with financial
covenants upon us and our subsidiaries. As a condition of the loan, we are
subject to cash dominion under which most cash receipts will be swept daily as
payment against the revolver. In addition, we will utilize zero-balance bank
disbursement accounts to which advances on the line of credit will be deposited
to cover checks clearing each day. Because the balance of the bank disbursement
account returns to zero at the end of each day the outstanding checks will be
reflected as a liability. The outstanding check liability will be combined with
any positive cash balance accounts to reflect a net book overdraft or a net cash
balance for financial reporting.
The senior secured facility will provide funding for the purchase of retail
housing inventory at stores we own in seven states. The majority of the retail
housing inventory is intended to be financed through one or more wholesale floor
plan arrangements. Simultaneous with the signing of the senior secured facility,
we entered into a new floor plan agreement with Conseco. We believe that the
combination of the senior secured facility and the floor plan financing will
provide sufficient capital to sustain and ultimately expand the retail housing
business.
In addition to liquidity from the senior secured facility, as a result of
the significant net loss in fiscal 2001, we received $50 million from a Federal
tax refund late in the first quarter of fiscal 2002.
We believe the combination of estimated future cash flows from operations,
the tax refund and available lines of credit will be sufficient to satisfy our
foreseeable cash requirements for the next 12 months, including up to
$35 million for capital expenditures.
We may conserve cash by causing distributions to be paid on our exchange
preferred securities in shares of our common stock, and by electing to defer
distributions on our existing preferred securities for up to twenty consecutive
quarters. If we defer distributions on our existing preferred securities, this
44
<Page>
would also prevent us from declaring dividends on our common stock during the
period of the deferral. We cannot determine at this time whether we will elect
to cause distributions to be paid on our exchange preferred securities in shares
of our common stock. However, if our business environment and our operating
results do not significantly improve from those we have recently experienced, we
would likely find it necessary to do so as early as the November 2001
distribution. Similarly, if our business environment and our operating results
do not significantly improve from those we are currently experiencing, we would
expect to defer distributions on our existing preferred securities for the
foreseeable future for up to twenty quarters. We would therefore suspend
dividends on our common stock for at least the same period.
RECENT DEVELOPMENTS
BUSINESS OUTLOOK
The operating environment in fiscal 2002 will continue to be difficult.
Results in 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 2002. 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 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 combination of reduced sales and margin pressure has had a
significant adverse impact on the profitability of the recreational vehicle
group in the final quarter of fiscal 2001, and has continued into the first
quarter of fiscal 2002.
Both the towable and motor home segments introduced lower-priced products in
fiscal year 2001, which adversely affected gross margins. In addition, we
incurred significant non-recurring costs in an effort to rightsize our
businesses, which we expect will improve results going forward. Our existing
manufacturing capacity is more than adequate to satisfy current retail demand.
With the recent interest rate decreases, declining dealer inventories,
significant rightsizing costs mostly behind us, and the introduction of new
products, we are expecting to achieve better operating results going forward.
SENIOR DEBT REFINANCING
On July 27, 2001, we entered into a senior secured facility funded by a
syndicate of banks led by Bank of America. We used part of the proceeds of this
facility to retire our senior unsecured notes payable to Prudential. Because of
cyclical downturns in both of our industries and the other factors described in
this section, we had posted net losses for each of the four quarters of fiscal
2001. As a result of the balance sheet impact of these cumulative losses, we had
notified Prudential in February 2001 that we were in violation of some of the
covenants relating to balance sheet ratios required under 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
forebearance agreement, Prudential agreed to delay the
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enforcement of its remedies, principally involving acceleration of its debt. We
subsequently agreed to a principal repayment on one of the Prudential notes in
the amount of $4.3 million, plus accrued interest. Meanwhile, we received a
commitment for financing from Bank of America, subject to certain conditions,
and proceeded to negotiate the terms of the financing and assemble a syndicate
of lenders. On June 22, 2001, we executed an extension to the Prudential
forbearance agreement until July 31, 2001, and paid $7.5 million as a reduction
to principal plus interest on the notes.
The senior secured facility was funded on July 30, 2001. It is currently
structured as a three-year, syndicated revolving credit facility of
$230 million with an additional two-year term loan of $30 million. At the
current time, syndicate commitments for an aggregate of $195 million, which
includes the $30 million term loan, have been finalized. The borrowers under the
facilities are substantially all of our subsidiaries and we are a guarantor of
the senior secured facility. The revolving credit facility and the related
guaranties are secured by substantially all of our and our subsidiaries'
existing and future assets, excluding assets securing the term loan (upon which
a second priority lien secures the revolving credit facility), assets of our
retail subsidiaries subject to a floor plan financing agreement with another
lender, those assets at our retail subsidiaries' sites managed by a third party,
and the cash value of our company-owned life insurance. The term loan is secured
by first priority liens on real estate owned by certain of our manufacturing
subsidiaries, stock in our folding trailer subsidiary and the current and future
fixed assets of our folding trailer subsidiary, as well as a second lien on the
assets securing the revolving credit facility. Under the revolving credit
facility, letters of credit totaling up to $75 million may be issued.
Advances under the revolving credit facility are available based on our
subsidiaries' accounts receivable, inventories, real estate and equipment
subject to certain exclusions for aged accounts, slow moving inventory and other
similar items. Borrowing availability under the revolving credit facility is
further limited by required minimum excess availability under the facility. The
minimum excess availability required as of the July 27, 2001 closing date was
$80 million, reducing immediately thereafter to $50 million. This required
minimum excess availability will be further reduced to $30 million if we
maintain certain financial ratio requirements for prescribed periods. The
applicable minimum excess availability requirement must be met at all times,
except during any period in which we have met liquidity requirements and obtain
the lowest interest rate margin available under the revolving credit facility,
during which periods the minimum excess availability requirements will not be
tested.
Revolving loans will bear interest, at our option, at a base rate of Bank of
America's prime rate or LIBOR, plus a margin. For purposes of determining the
interest rate under the revolving credit facility, the applicable margin will be
adjusted monthly, based on our liquidity and a fixed charge coverage test,
within a range of 0% to 1.5% for prime rate loans and within a range of 2.25% to
3.75% for LIBOR rate loans. Borrowings under the term loan will initially bear
interest at Bank of America's prime rate plus 3% for the first year of the loan,
with escalations and amortizations for the remainder of the term.
We will be required to pay a monthly facility fee for any unused portion of
the revolving credit facility and for outstanding letters of credit, such fees
to be based upon our liquidity margin then in effect.
Our senior secured facility contains a number of affirmative and negative
covenants. These covenants place restrictions on the operation of our
businesses, and if our business environment or operating results do not
significantly improve over the levels that we have recently experienced, we will
breach covenants under our senior secured facility, resulting in a default under
the facility. The covenants governing our senior secured facility include the
following:
- CAPITAL EXPENDITURES. We and our subsidiaries have agreed not to make or
incur any capital expenditure if, after giving effect to the expenditure,
the aggregate amount of all capital expenditures by us and our
subsidiaries, on a consolidated basis, including the capitalized amount of
all capital leases and the principal amount of all purchase money debt
incurred in
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connection with the capital leases, would exceed $35 million in fiscal
2002, $31.3 million in fiscal 2003 or $34.5 million in fiscal 2004;
- FIXED CHARGE COVERAGE RATIO. We have agreed to maintain, on a consolidated
and rolling four-fiscal-quarter basis, fixed charge coverage ratios of
1.05:1.00 at July 28, 2002, 1.10:1.00 at October 27, 2002, 1.15:1.00 at
January 26, 2003, and 1.20:1.00 at April 27, 2003 and for each rolling
four-fiscal-quarter period thereafter;
- EBITDA. Starting on October 28, 2001, we have agreed to maintain, on a
consolidated basis, EBITDA of at least $15 million for the two fiscal
quarters ended October 28, 2001, $25 million for the three fiscal quarters
ended January 27, 2002, $55 million for the four fiscal quarters ended
April 28, 2002, and $70 million for the four fiscal quarters ended
July 28, 2002 and for each rolling four-fiscal-quarter period thereafter;
- MINIMUM AVAILABILITY. We have agreed to maintain, at all times, a minimum
availability under the senior secured facility of $50 million in funds
unless the fixed charge coverage ratio for each of the two most recently
ended fiscal quarters is at least 1.05:1.00, in which event the minimum
availability requirement is lowered to $30 million; PROVIDED, HOWEVER, we
are not subject to a minimum availability requirement during a period
where:
- our liquidity exceeds $80 million and the fixed charge coverage ratio
for the rolling four-fiscal-quarter period is greater than 1.5:1.0 for
each of the two most recently ended fiscal quarters;
- the fixed charge coverage ratio for the two fiscal quarter period
ending on the last day of the most recent fiscal quarter is greater
than 1.5:1.0; and
- no default or event of default under our senior secured facility has
occurred and is continuing;
- DEBT. We and our subsidiaries have agreed, subject to certain narrow and
limited exceptions, not to incur or maintain any debt or voluntarily
prepay any debt;
- PAYMENTS ON SUBORDINATED DEBT; TRUST PREFERRED SECURITIES. We have agreed
not to, and will not permit any of our subsidiaries to:
- make any payments or prepayments with respect to obligations
subordinated to the obligations under our senior secured facility;
PROVIDED, HOWEVER, we may make payments in accordance with the existing
debentures and the exchange debentures as long as no default or event
of default has occurred and is continuing on the date of payment, both
before and after giving effect to such payment, and as long as we have
not exercised our option to defer payments in accordance with the
existing debentures or exchange debentures; or
- amend or otherwise modify the terms of the existing debentures, the
exchange debentures, the existing preferred securities, the exchange
preferred securities, the existing preferred securities guarantee or
the exchange preferred securities guarantee; PROVIDED, HOWEVER, we may
enter into the proposed exchange offer subject to specific conditions
and subject to other terms of the exchange offer being acceptable to
holders of a majority of the debt under our senior secured facility;
- OTHER RESTRICTIONS ON DISTRIBUTIONS. We and our subsidiaries have agreed
not to declare or make, or incur any liability to make, any distribution,
other than:
- distributions by our subsidiaries to us that allow us to make payments
of interest on the existing debentures to the existing trust, which, in
turn, may pay distributions on the existing preferred securities;
PROVIDED, THAT, there is no default or event of default that has
occurred and is continuing under our senior secured facility, both
before and after giving effect to the distribution, and we have not
given notice to defer payments under the existing debentures;
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- distributions by our subsidiaries to us that allow us to make payments
of interest on the exchange debentures to the new trust, which, in
turn, may pay distributions on the exchange preferred securities;
PROVIDED, THAT, there is no default or event of default that has
occurred and is continuing under our senior secured facility, both
before and after giving effect to the distribution, and we have not
given notice to defer payments under the exchange debentures;
- distributions by our subsidiaries to us, including certain intercompany
loans and retention of management fees, to pay consolidated taxes,
employee related expenses and up to $6 million in other general
corporate overhead and operating expenses per fiscal year;
- cash dividends on our common stock that do not exceed $0.04 per fiscal
quarter; PROVIDED, THAT, there is no default or event of default that
has occurred and is continuing under our senior secured facility, both
before and after giving effect to the dividend payment;
- payments of management fees by our subsidiaries to us, consistent with
any agreement in existence prior to July 27, 2001;
- distributions by our subsidiaries to us that allowed us to pay our debt
obligations to The Prudential Insurance Company of America and Pruco
Life Insurance Company; and
- purchases of existing preferred securities by the existing trust or
exchange preferred securities by the new trust to effect an exchange
offer;
- RESTRICTED INVESTMENTS. We and our subsidiaries have also agreed not to
declare or make, or incur any liability to make, among other things, any
investment, other than certain:
- hedge agreements with some of our lenders;
- loans or advances by some of our subsidiaries that, in the aggregate,
do not exceed $10,000,000 during the term of our senior secured
facility;
- advances by Fleetwood Retail Corp. to some of our subsidiaries for
operating expenses that the subsidiaries have an obligation to
reimburse and the aggregate amount of which is restricted to
$1 million at any time;
- capital contributions, loans or advances by us to some of our
subsidiaries that, in the aggregate, may not exceed $4 million during
the term of our senior secured facility; and
- additional capital contributions, loans or advances by us to some of
our subsidiaries that may exceed the above $4 million limitation;
PROVIDED, THAT, there is no default or event of default that has
occurred and is continuing under our senior secured facility, both
before and after giving effect to the capital contribution, and the
average amount of liquidity for each of the three most recent calendar
months minus the capital contribution is at least $80 million; and
- USE OF PROCEEDS. We may not use proceeds from the revolving credit
facility to pay down our term loan obligations if an event of default has
occurred and is continuing under our senior secured facility and, in
certain circumstances, if we are unable to maintain specific minimum
liquidity and availability requirements.
On July 27, 2001, concurrent with the closing of the senior secured
facility, we designated an initial borrowing of $83 million. At the close of
business on July 30, the funding date, after the posting of bank clearings and
application of a portion of our cash reserves, the net outstanding loan was
$55.6 million. The net borrowings plus our cash reserves were applied as
follows:
- to retire the $68 million remaining principal balance of the Prudential
notes, along with payment of interest and a yield maintenance penalty;
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- to reduce the outstanding retail flooring liability to Conseco Finance
Servicing Corp. to approximately $40 million; and
- to secure standby letters of credit that primarily underwrite self-insured
workers' compensation programs at manufacturing plants in various states.
According to the borrowing base certificate filed at the closing of the
senior secured facility, gross excess availability exceeded $90 million. After
consideration of the $50 million required minimum excess availability,
approximately $40 million was available, post-closing, to be used for general
corporate purposes.
NEW ACCOUNTING PRONOUNCEMENTS
During the first quarter of fiscal 2001, 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, some of our 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
some 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 specific 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--Fiscal 2001 Compared to Fiscal 2000," beginning on page 39 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 fiscal 2001 and 2% for fiscal 2000. Sales figures
reported elsewhere in this prospectus have not been adjusted to incorporate EITF
No. 00-10 and EITF No. 00-14.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 required companies
to record derivatives on the balance sheet as assets or liabilities measured at
fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for in income depending on the purpose of the
derivative and whether or not it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must be highly
effective in achieving offsetting changes in fair value or cash flows. SFAS
No. 133, which was amended by SFAS No. 137 and SFAS No. 138, is effective in
fiscal years beginning after June 15, 2000. Concurrent with the adoption of SFAS
No. 133, we are permitted to make a one-time reclassification of securities from
the held-to-maturity portfolio to the available-for-sale portfolio. Effective
with fiscal 2002, we will reclassify the entire held-to-maturity portfolio to
the available-for-sale portfolio. We believe the adoption of SFAS No. 133 will
not have a material impact on our results of operations or financial condition.
In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 addresses
financial accounting and reporting for business combinations and is effective
for all business combinations after June 30, 2001. SFAS No. 142 addresses
financial accounting and reporting for acquired goodwill and other intangible
assets and is effective for fiscal years beginning after December 15, 2001, with
early adoption permitted for entities with fiscal years beginning after
March 15, 2001, provided that the first interim financial statements have not
previously been issued. We are in the process of determining our planned
adoption date of SFAS No. 142, as well as the expected impact on earnings and
existing goodwill and other intangibles upon adoption which will include the
elimination of goodwill amortization and may include additional goodwill
impairment. As of April 29, 2001, goodwill totaled $86.9 million and is being
amortized over 15 years.
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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 fiscal year ended April 29, 2001, we sold 60,225 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 fiscal year ended
April 29, 2001, we shipped 36,201 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 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
1997, 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 overall industry decline over the past two calendar years reflects excessive
retail inventories and constricted availability of retail financing.
Approximately 68% of the manufactured homes produced in the United States
are placed on individually owned lots. The balance are 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 homes with the same materials as
site-built homes. Many features associated with new site-built homes
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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 1,300 retailers in 48
states. At the end of fiscal 2001, we operated 188 retail locations under the
name Fleetwood Retail Corp., with the balance of approximately 1,100 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 fiscal year
ended April 29, 2001, our average single-section home retailed for approximately
$23,000 (excluding land costs) and single-section homes represented
approximately 26% 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 fiscal year
ended April 29, 2001, our multi-section homes sold for an average retail price
of approximately $41,000 (excluding land costs) and multi-section homes
represented approximately 74% 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, a few 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 development. Additionally, a number of financial
consolidators and residential developers have entered
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the manufactured housing industry by acquiring retailers. For instance, in the
first half of calendar 1998, some of our competing manufacturers acquired
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 further 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 244 stores in November 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 retail store
operations of particular locations to a third party and closing and selling
other locations, we reduced the number of stores that we operate 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 on Class A models 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
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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 in
early 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 are the leading producer of
recreational vehicles in the United States 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
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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, four of the industry's 10 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 $7,350.
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 specific 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
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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
$19 million for fiscal 2001 and $22 million for fiscal 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 also believe that we are 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, manufacturing
and marketing cycle and those costs are absorbed over
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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 1,300
at April 29, 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% five 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 April 29, 2001,
we had facilitated the opening of 162 Fleetwood Home Centers, 89 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
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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 $257 million at April 25, 1999
to $343 million at April 30, 2000. Reflecting weaker market conditions,
inventories declined to $273 million at April 29, 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 particular 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
$132 million for the fiscal year ended April 29, 2001 and $151 million for the
fiscal year ended April 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
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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, as
defined in the agreement.
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 April 29, 2001, we operated 188 retail sales locations in 25 states, of
which 21 were owned and 167 were leased from third parties. For the fiscal year
ended April 29, 2001, the lease expense related to these properties was
approximately $13 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 20 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; Douglas, 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
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manufacturing and retail levels and is based primarily on price, product
features, reputation for service 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 specific 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
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patents on some of the distinctive features of our most prominent motor home
models and patents on 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 550 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 was filed on April 9, 1999 and 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. Plaintiffs are requesting an order compelling us to provide information
on the alleged limitations of our motor homes, compensatory damages, litigation
expenses and attorneys' fees. 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 possible 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 some
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 respect to two of the accidents involving motor homes subject to the
recall, and several claims with respect to such accidents have been resolved.
Plaintiffs filed the case of Cincinatti Insurance Co. v. Fleetwood Enterprises,
Inc. on February 21, 2001 in the Circuit Court for Madison County, Kentucky,
requesting compensatory damages and litigation expenses. Similarly, in England
v. Fleetwood Enterprises, Inc., filed on April 16, 2001 in The U.S. District
Court in South Dakota, Western Division, the plaintiffs requested compensatory
damages, litigation expenses and attorneys' fees. In addition, one lawsuit,
Wright v. Fleetwood Motor Homes of Indiana, Inc., was filed on February 25,
2000, concerning an accident that resulted in two deaths allegedly caused by a
front-tire blowout in a motor home not involved in the recall. Plaintiffs in
that case requested damages and litigation expenses and the case was
subsequently settled on May 17, 2001. We expect to provide a vigorous defense to
the insurance
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subrogation lawsuits, and believe that they and any remaining claims related to
the other accidents are covered by adequate insurance.
On February 21, 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 Standards Act and
state laws. The plaintiffs were attempting to establish a national class action
and are requesting compensatory damages, litigation expenses and injunctive
relief requiring us to pay overtime rates and keep accurate records. 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.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; REASONS FOR THE EXCHANGE OFFER; PERIOD FOR
TENDERING EXISTING PREFERRED SECURITIES
Under current rules of the New York Stock Exchange, we may not, without
specific approval by our shareholders, list on the exchange the shares of our
common stock that may be issued upon conversion of the exchange preferred
securities that are issued in the exchange offer if the total number of such
shares, combined with a portion of the shares that we may issue as payment of
distributions on the exchange preferred securities, is equal to or in excess of
20% of the number of shares of our common stock outstanding before the issuance
of exchange preferred securities in the exchange offer. In accordance with that
restriction, we are offering to exchange $ liquidation amount of exchange
preferred securities for each $ liquidation amount of a maximum of
$ million in aggregate 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. If existing
preferred securities in an aggregate liquidation amount of more than $ are
validly tendered, we will accept for exchange validly tendered existing
preferred securities on a pro rata basis, subject to the other terms and
conditions in this prospectus. Therefore, the entire aggregate liquidation
amount of existing preferred securities that you may tender in the exchange
offer may not be accepted for exchange even if it is validly tendered.
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 the outstanding aggregate liquidation amount of our trust preferred
securities, which are classified on our balance sheet as minority interest, from
$ to $ , and by 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 existing preferred securities in an aggregate
liquidation amount equal to or in excess of $ million 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 minority interest 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
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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. If an aggregate liquidation
amount of a minimum of $ million of existing preferred securities are
tendered and accepted for exchange, we will have reduced our aggregate amount of
minority interest by approximately $ million and enhanced our
shareholders' equity by approximately $ million.
EXPIRATION DATE
The expiration date for the offer is 5:00 p.m., New York City 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., New York City Time, on , 2001 or at
5:00 p.m., New York City 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,
- 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., New
York City 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
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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 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 "The Exchange Offer--Exchange Agent," beginning
on page 70 of this prospectus, prior to 5:00 p.m., New York City 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 D.F. King & Co., Inc., 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 Bank of New York, the exchange
agent. The exchange agent will act as the new trust's 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
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occurrence of any other event, The Bank of New York 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. All conditions will be
waived or satisfied prior to the expiration date and we will either issue
exchange preferred securities in return for tendered existing preferred
securities or return the tendered existing preferred securities, promptly after
the termination or withdrawal of 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 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, up to $ million in aggregate
liquidation amount of existing preferred securities properly tendered, and will
issue the exchange preferred securities promptly after acceptance of the
existing preferred securities. If existing preferred securities in an aggregate
liquidation amount of more than $ million are validly tendered, they will be
accepted for exchange on a pro rata basis, in an aggregate liquidation amount
per holder equal to:
- a fraction, the numerator of which is the total liquidation amount of
existing preferred securities validly tendered for exchange by such holder
and the denominator of which is the total liquidation amount of all
existing preferred securities validly tendered, multiplied by
- $ .
The discussion under the section titled "The Exchange Offer--Conditions for
Completion of the Exchange Offer," beginning on page 67 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.
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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 liquidation 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 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., New York City 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
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titled "The Exchange Offer--Exchange Agent," beginning on page 70 of this
prospectus, prior to 5:00 p.m., New York City 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;
- specify the existing preferred securities to be withdrawn, if not all of
the existing preferred securities tendered by the holder;
- 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., New York City 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
- 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;
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- 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
- 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 "The Exchange Offer--Withdrawal Rights" on page 66, 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.
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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, 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.
We have retained D.F. King & Co., Inc. to act as the information agent and
The Bank of New York 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
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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
The Bank of New York 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:
<Table>
The Bank of New York, Exchange Agent
By Registered & Certified Mail: By Regular or Overnight Courier,
or by Hand:
The Bank of New York The Bank of New York
101 Barclay Street--7E 101 Barclay Street--1st
Floor
New York, New York 10286 New York, New York
10286
Attention: Ms. Carolle Montrevill
By Facsimile Transmission (for Eligible Institutions only):
(212) 815-6339
Attention: Ms. Carolle Montrevill
For Information or Confirmation by Telephone call:
(212) 815-5920
</Table>
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
If you tender your existing preferred securities for exchange you will not
be obligated to pay any related transfer taxes. 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, or tendered for exchange but not accepted, could be adversely
affected to the extent that existing preferred securities are tendered and
accepted for exchange in the exchange offer.
In addition, we have the right to elect to defer distributions on our
existing preferred securities, including deferrals for up to twenty consecutive
quarters. We cannot determine at this time whether we will elect to defer
distributions on our existing preferred securities. If we do so, this will also
prevent us from declaring dividends on our common stock during the period of the
deferral. However, if our business environment and our operating results do not
significantly improve from those we have recently experienced, we would likely
find it necessary to defer distributions on our existing preferred securities
for up to twenty consecutive quarters, beginning as early as November 2001. We
would therefore suspend dividends on our common stock for at least the same
period.
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CASH OFFER FOR ADDITIONAL EXCHANGE PREFERRED SECURITIES
In addition to the exchange offer, we will offer 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 75 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.
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 new 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 96 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, prior to , 2003, in our common stock. Holders of the
exchange 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
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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 November 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 105 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 121 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 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
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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 105 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 96 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 Company," beginning
on page 93 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
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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 equal to the higher of:
- the equivalent of a % premium over the daily volume-weighted average
of the closing prices of our common stock for each of the five trading
days immediately preceding the second trading day prior to the exchange
offer expiration date, or
- $ per share,
subject to adjustment.
The daily volume-weighted average of the closing prices shall mean the daily
volume-weighted average of the closing prices 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, as soon as
practicable, exchange your exchange preferred securities for an equivalent
principal amount of exchange debentures and promptly 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 93 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 price pursuant to this bullet (as adjusted to reflect
subdivisions or combinations of our
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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 124 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 right to purchase our common
stock or any preferred securities convertible into or exchangeable for our
common stock.
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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 specified circumstances, result in
constructive distributions that could be taxable as dividends under the Internal
Revenue Code of 1984 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 124 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 specified 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 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 93 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.
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,
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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 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 107 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.
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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 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 93 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 93 of this
prospectus.
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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 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 85 of this prospectus,
- upon the entry of a decree of a judicial dissolution of us or the new
trust,
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- 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.
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
specific 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 some 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
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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 under specific circumstances described below, the holders of a majority
in aggregate 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 property trustee, or the exercise of any trust or power
conferred upon the property trustee under the new trust agreement, as long as
the holders giving such direction have given the property trustee
indemnification or security acceptable to it. 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
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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 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 93 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 under specific 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,
- 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'
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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 indemnity satisfactory to it 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 110 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 some 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 indemnity satisfactory to it
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 85 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 specific 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
- the maturity of any senior debt has been accelerated because of a default.
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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;
(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.
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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:
<Table>
<Caption>
REDEMPTION
YEAR PRICE
- ---- -----------
2003........................................................ %
2004........................................................ %
2005........................................................ %
2006........................................................ %
2007........................................................ %
2008 and thereafter......................................... 100.00%
</Table>
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 84 of this
prospectus, for a more detailed discussion.
We will also have the right to redeem the exchange debentures in some
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 85 of this prospectus, for a more detailed discussion.
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.
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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 November 15, 2001. We will
pay interest in cash or, at our election, prior to , 2003, 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 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;
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(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.
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,
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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 78 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 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
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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 specific mergers, consolidations or amalgamations
permitted by the new trust agreement; or
- certain events of bankruptcy, insolvency or reorganization of us.
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 under specific 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.
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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 particular 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 93 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 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
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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,
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;
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- 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
- 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,
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- 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.
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 specific 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
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- 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.
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.
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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 96 of this prospectus, for a more
detailed discussion.
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 75 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
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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.
DESCRIPTION OF THE EXISTING PREFERRED SECURITIES, EXISTING DEBENTURES AND THE
EXISTING PREFERRED SECURITIES GUARANTEE
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, at our election, prior to ,
2003, in our common stock, 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 the higher of:
- the equivalent of a % premium over the daily volume-weighted average
of the closing prices of our common stock for each of the five trading
days immediately preceding the second trading day prior to the exchange
offer expiration date, or
- $ per share,
subject to adjustment.
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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 August , 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 under specific 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 Preferred Securities--Description of the
Exchange Preferred Securities--Optional Redemption," beginning on page 84
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 104 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:
<Table>
<Caption>
REDEMPTION
YEAR PRICE
- ---- -----------
2001........................................................ 103.75%
2002........................................................ 103.00%
2003........................................................ 102.25%
2004........................................................ 101.50%
2005........................................................ 100.75%
2006 and thereafter......................................... 100.00%
</Table>
- 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 July 15, 2001, we had outstanding:
- 32,759,196 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
2,439,167 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 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 will 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 "United
States Federal Income Tax Considerations--Tax Treatment of the Ownership and
Disposition of Exchange Preferred Securities and Common Stock--Amortizable Bond
Premium," beginning on page 122 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 105 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 85 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 deemed disposed. A
holder's adjusted tax basis in the exchange debentures will generally equal its
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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 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
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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.
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 up to $ 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 69 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.
This offering is being made in compliance with the requirements of "Direct
Participation Programs" of the provisions of Rule 2810 of the National
Association of Securities Dealers, Inc. Conduct Rules. Accordingly, sales will
not be made to a discretionary account without the prior written consent of a
purchaser.
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IDENTITY AND BACKGROUND OF FILING PERSONS AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth specific 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.
<Table>
<Caption>
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,
Chief Financial Officer, 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) Darnall, Vice President--Retail Housing Group
Jr.(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
*
</Table>
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<Table>
<Caption>
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
</Table>
- ------------------------
* 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
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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.
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(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.
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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 29, 2001 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.
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 29, 2001;
- Current Report on Form 8-K, filed on May 30, 2001; and
- Registration Statement on Form 8-B, 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.
The 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. Futhermore, any references to the safe harbor for
forward-looking statements made in reports that are incorporated by reference
into this prospectus and filed pursuant to the Securities Exchange Act of 1934
are specifically not incorporated into this registration statement with respect
to the exchange offer.
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<Page>
The Exchange Agent:
THE BANK OF NEW YORK
<Table>
By Regular Mail or Overnight Courier, or by By Registered & Certified
Mail:
Hand:
The Bank of New York The Bank of New York
101 Barclay Street--1st Floor 101 Barclay Street--7E
New York, New York 10286 New York, New York
10286
</Table>
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 815-6339
For Information or Confirmation by Telephone:
(212) 815-5920
The Information Agent:
D.F. KING & CO., INC.
77 Water Street, 20th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 290-6428
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
9 West 57th Street, 40th Floor
New York, New York 10019
( ) -
Call Toll Free: (800) -
Attention:
<Page>
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
<Page>
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
<Page>
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:
<Table>
<Caption>
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, 1998
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).
</Table>
II-3
<Page>
<Table>
<Caption>
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.**
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.*
</Table>
- ------------------------
* To be filed pursuant to an amendment to this Registration Statement at a
later date.
** Previously filed.
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
II-4
<Page>
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(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
<Page>
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 Amendment No. 1 to the Registration Statement on Form S-4
and Amendment No. 1 to the 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 August 2, 2001.
<Table>
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
</Table>
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 Amendment No. 1 to the Registration Statement on Form S-4
and Amendment No. 1 to the 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 August 2, 2001.
<Table>
FLEETWOOD ENTERPRISES, INC.
By: /s/ NELSON
W. POTTER
- ----------------------------------------------
Nelson
W. Potter
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
</Table>
II-6
<Page>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form S-4 and Amendment No. 1 to the
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<Table>
<Caption>
SIGNATURE TITLE
DATE
--------- -----
----
/s/ GLENN F. KUMMER
--------------------------------- Chairman of the Board
August 2, 2001
Glenn F. Kummer*
/s/ NELSON W. POTTER President and Chief Executive
Officer
--------------------------------- and Director (Principal Executive
August 2, 2001
Nelson W. Potter* Officer)
Senior Vice President--Finance,
Chief
/s/ BOYD R. PLOWMAN Financial Officer and Assistant
--------------------------------- Secretary (Principal Financial and
August 2, 2001
Boyd R. Plowman* Accounting Officer)
/s/ THOMAS B. PITCHER
--------------------------------- Director
August 2, 2001
Thomas B. Pitcher*
/s/ DOUGLAS M. LAWSON
--------------------------------- Director
August 2, 2001
Douglas M. Lawson*
/s/ WALTER F. BERAN
--------------------------------- Director
August 2, 2001
Walter F. Beran*
/s/ LOREN K. CARROLL
--------------------------------- Director
August 2, 2001
Loren K. Carroll*
/s/ DAVID S. ENGELMAN
--------------------------------- Director
August 2, 2001
David S. Engelman*
/s/ JAMES L. DOTI
--------------------------------- Director
August 2, 2001
James L. Doti*
/s/ PAUL D. BORGHESANI
--------------------------------- Director
August 2, 2001
Paul D. Borghesani*
</Table>
II-7
<Page>
<Table>
<Caption>
SIGNATURE TITLE
DATE
--------- -----
----
/s/ JOHN T. MONTFORD
--------------------------------- Director
August 2, 2001
John T. Montford*
/s/ MARGARET S. DANO
--------------------------------- Director
August 2, 2001
Margaret S. Dano*
</Table>
<Table>
/s/ FORREST D. THEOBALD
By: ---------------------------------
ATTORNEY IN FACT
*By authority of powers of attorney filed with this registration statement.
</Table>
II-8
<Page>
EXHIBIT INDEX
<Table>
<Caption>
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, 1998
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).
</Table>
<Page>
<Table>
<Caption>
NUMBER DESCRIPTION
- ------
- ------------------------------------------------------------
23.3 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney.**
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.*
</Table>
- ------------------------
* To be filed pursuant to an amendment to this Registration Statement at a
later date.
** Filed previously.