AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 2003
REGISTRATION NO. 333-110955
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
FEDDERS CORPORATION
(Exact name of Registrant as specified in its charter)
<Table>
DELAWARE 22-2572390
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</Table>
505 MARTINSVILLE ROAD
LIBERTY CORNER, NEW JERSEY 07938-0813
(908) 604-8686
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
---------------------
ROBERT N. EDWARDS, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
505 MARTINSVILLE ROAD
LIBERTY CORNER, NEW JERSEY 07938-0813
(908) 604-8686
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
---------------------
COPIES TO:
MARK C. SMITH, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
(212) 735-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. 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 AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 17, 2003
PROSPECTUS
1,520,247 SHARES
FEDDERS CORPORATION
SERIES A CUMULATIVE PREFERRED STOCK
---------------------
We are distributing at no charge to the holders of our Common Stock and
Class B Stock transferable subscription rights to purchase up to an aggregate of
1,520,247 shares of our Series A Cumulative Preferred Stock. Holders of Common
Stock and Class B Stock will receive one right for each share of Common Stock or
Class B Stock, respectively. Every twenty subscription rights will entitle you
to subscribe for one share of our Series A Cumulative Preferred Stock at a
subscription price of $23.70 per share.
Shares of our Series A Cumulative Preferred Stock are quoted on the New
York Stock Exchange under the symbol "FJCPRA." The last sale price of our Series
A Cumulative Preferred Stock on , 2003 was $ per share. Our Series
A Cumulative Preferred Stock accrues dividends at a rate per share of $2.15 per
year. BASED UPON THE SUBSCRIPTION PRICE FOR THE SERIES A CUMULATIVE PREFERRED
STOCK OF $23.70 PER SHARE, THIS ANNUAL DIVIDEND RATE YIELDS APPROXIMATELY 9.1%.
SHARES OF OUR SERIES A CUMULATIVE PREFERRED STOCK ARE NOT CALLABLE BY US AND ARE
ENTITLED TO THE RECENTLY REDUCED TAX RATE OF 15% ON DIVIDENDS PAID. We
anticipate that the subscription rights will be traded on the New York Stock
Exchange under the symbol "FJC.RT."
The total purchase price of shares offered in this rights offering will be
approximately $36,029,853.90. You will not be entitled to receive any
subscription rights unless you are a stockholder of record as of the close of
business on December 22, 2003.
The subscription rights will expire if they are not exercised by 5:00 p.m.,
New York City time, on , 2004, the expected expiration date of this
rights offering. We, in our sole discretion, may extend the period for
exercising the subscription rights. We will extend the duration of the rights
offering as required by applicable law, and may choose to extend it if we decide
that changes in the market price of our Series A Cumulative Preferred Stock
warrant an extension or if we decide to give investors more time to exercise
their subscription rights in this rights offering. Subscription rights that are
not exercised by the expiration date of this rights offering will expire and
will have no value. You should carefully consider whether or not to exercise or
sell your subscription rights before the expiration date. We will not issue
fractional shares of Series A Cumulative Preferred Stock and we will not pay
cash in lieu of fractional shares.
<Table>
<Caption>
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PER SHARE TOTAL
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Subscription Price.......................................... $23.70 $36,029,853.90
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Estimated Expenses.......................................... $ 0.15 $ 230,914.82
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Net Proceeds to Fedders..................................... $23.55 $35,798,939.08
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</Table>
AN INVESTMENT IN OUR SERIES A CUMULATIVE PREFERRED STOCK INVOLVES RISKS.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 IN THIS
PROSPECTUS BEFORE EXERCISING OR SELLING YOUR SUBSCRIPTION RIGHTS.
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 date of this prospectus is , 2003
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
---------------------
TABLE OF CONTENTS
<Table>
PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 5
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING............. 10
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............. 15
SELECTED UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL DATA............................................ 18
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS........................................... 19
THE RIGHTS OFFERING......................................... 20
USE OF PROCEEDS............................................. 30
CAPITALIZATION.............................................. 31
DESCRIPTION OF CAPITAL STOCK................................ 32
DESCRIPTION OF CERTAIN INDEBTEDNESS......................... 37
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS..... 39
LEGAL MATTERS............................................... 42
EXPERTS..................................................... 43
WHERE YOU CAN FIND MORE INFORMATION......................... 43
FORWARD-LOOKING STATEMENTS.................................. 43
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 44
</Table>
i
PROSPECTUS SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. This
prospectus includes specific terms of this rights offering, as well as
information regarding our business. We encourage you to read this prospectus in
its entirety. You should pay special attention to the "Risk Factors" section of
this prospectus beginning on page 5. All references to "we," "our," "ours," and
"us," or "Fedders" in this prospectus are to Fedders Corporation and its
subsidiaries, unless otherwise indicated. However, in the descriptions of the
subscription rights and related matters, these terms refer solely to Fedders
Corporation and not to any of our subsidiaries.
We also encourage you to review the financial statements and other
information provided in the reports and other documents we file under the
Securities Exchange Act of 1934, as amended, as described in the "Where You Can
Find More Information" section of the prospectus at page 43.
FEDDERS CORPORATION
Fedders Corporation, a Delaware corporation, is making the rights offering.
We are a leading global manufacturer of air treatment products, including air
conditioners, air cleaners, dehumidifiers and humidifiers, and thermal
technology products. Fedders was established more than 100 years ago and has
been in the air treatment business for more than 50 years.
Our headquarters are located at 505 Martinsville Road, Liberty Corner, New
Jersey 07938-0813, and our telephone number is (908) 604-8686. Our Common Stock
and Series A Cumulative Preferred Stock are listed on the New York Stock
Exchange, or NYSE, under the symbol "FJC" and "FJCPRA", respectively. Our Class
B Stock is not listed for trading. For further information concerning Fedders,
please see the section of this prospectus titled "Where You Can Find More
Information."
THE RIGHTS OFFERING
Securities Offered............ We are offering to sell up to 1,520,247 shares
of our Series A Cumulative Preferred Stock upon
the exercise of the rights offered in this
prospectus.
Description of Capital
Stock -- Series A Cumulative
Preferred Stock (see page
32)........................... Our Series A Cumulative Preferred Stock is
listed on the NYSE under the symbol "FJCPRA"
and accrues dividends at a rate per share of
$2.15 per year, payable quarterly. Dividends
are cumulative and accrue whether or not paid.
Such cumulative preferred dividends are payable
on each March 1, September 1, December 1, and
June 1 of each year (each such date being
referred to herein as a "Dividend Payment
Date"), to the holders of record as they appear
in the stockholder record books of the Company,
at the close of the applicable record date
designated by the board of directors for the
payment of dividends that is not more than 30
nor less than 15 days prior to the applicable
Dividend Payment Date. The liquidation
preference of each share of Series A Cumulative
Preferred Stock is $25.00. Generally, holders
of Series A Cumulative Preferred Stock do not
have voting rights for election of directors.
Based upon the subscription price of the Series
A Cumulative Preferred Stock of $23.70 per
share, the annual dividend rate yields
approximately 9.1%.
As of December 1, 2003, 674,837 shares of
Series A Cumulative Preferred Stock were
outstanding. Following the consummation of
1
the rights offering, assuming all rights are
exercised, 2,195,084 shares will be designated
as Series A Cumulative Preferred Stock.
Dividend Payments on the
Shares of Series A Cumulative
Preferred Stock to be Issued
Pursuant to the Rights
Offering (see page 21)........ The Series A Cumulative Preferred Stock issued
upon exercise of the rights will be entitled to
receive dividend payments beginning with the
March 1, 2004 dividend payment.
Subscription Price............ $23.70 per share.
Record Date................... December 22, 2003
Expiration Date and Time (see
page 21)...................... The rights expire at 5:00 p.m., New York City
time, on , 2004, unless we decide in
our sole discretion to extend the rights
offering until some later time.
Basic Subscription Right (see
page 21)...................... We are granting each person who was a record
holder on the Record Date of Common Stock or
Class B Stock, one right for each share of
Common Stock or Class B Stock held on that
date.
You will receive one share of Series A
Cumulative Preferred Stock for every twenty
subscription rights you exercise. You are not
obligated to exercise any rights, and you may
exercise less than all of your rights. However,
you may not exercise your rights for fractional
shares of Series A Cumulative Preferred Stock.
Oversubscription Right (see
page 22)...................... Each holder who elects to exercise his or her
basic subscription rights in full may also
oversubscribe for additional shares of Series A
Cumulative Preferred Stock. We cannot assure
you that any additional shares of Series A
Cumulative Preferred Stock will be available
for purchase. Any amounts tendered by you and
not used to purchase additional shares of
Series A Cumulative Preferred Stock will be
refunded to you, without interest. You may not
exercise your rights to purchase fractional
shares of Series A Cumulative Preferred Stock.
If there are not sufficient shares of Series A
Cumulative Preferred Stock to fully satisfy all
of the oversubscription requests, the number of
shares available will be allocated on a pro
rata basis based upon the number of basic
subscription rights exercised by each person
seeking to oversubscribe as of the expiration
date of the offering.
Cancellation Rights (see page
29)........................... We may cancel the offering at any time, in
which case we will return your subscription
payment, without interest.
Transferability of Rights (see
page 27)...................... The subscription rights will be evidenced by
transferable subscription rights certificates.
The subscription rights are transferable until
the close of business on the last trading day
preceding the expiration date, at which time
they will cease to have any value. However, we
can give no assurance that a market for the
subscrip-
2
tion rights will develop, or, if a market does
develop, how long it will continue. See "The
Rights Offering -- Methods for Transferring and
Selling Subscription Rights."
Subscription Agent............ American Stock Transfer & Trust Company
Subscription Procedures (see
page 22)...................... You may exercise your basic subscription rights
and, if you elect, your oversubscription rights
by properly completing and delivering the
subscription certificate which accompanies this
prospectus to American Stock Transfer & Trust
Company, with full payment for the subscription
rights.
You may deliver the documents and payments by
mail or commercial courier. If regular mail is
used for this purpose, we recommend using
insured, registered mail. You may use an
alternative, the "Notice of Guaranteed
Delivery," if you are unable to deliver the
subscription certificate before the expiration
date, subject to the requirements of the
procedure described under "The Rights
Offering -- Guaranteed Delivery Procedures" on
page 26. Your payment may be made by a personal
check, bank certified check, cashier's check or
wire transfer.
ONCE YOU SUBMIT THE FORM OF SUBSCRIPTION
CERTIFICATE TO EXERCISE ANY RIGHTS, YOU CANNOT
REVOKE OR CHANGE THE EXERCISE OR REQUEST A
REFUND OF ANY MONIES PAID.
How Rights Holders can
Exercise Subscription Rights
Through Others (see page
26)........................... If you hold shares of our Common Stock as of
the record date through a broker, custodian
bank or other nominee, we will ask your broker,
custodian bank or other nominee to notify you
of this rights offering. If you wish to sell or
exercise your subscription rights, you will
need to have your broker, custodian bank or
other nominee act for you. To indicate your
decision, you should complete and return to
your broker, custodian bank or other nominee
the form entitled "Beneficial Owner Election
Form." You should receive this form from your
broker, custodian bank or other nominee with
the other subscription rights offering
materials. You should contact your broker,
custodian bank or other nominee if you do not
receive this form, but you believe you are
entitled to participate in this rights
offering.
How Foreign Stockholders and
Stockholders with APO or FPO
Addresses can Exercise Rights
(see page 27)................. The subscription agent will mail subscription
rights certificates to you if you are a
stockholder of record as of the rights offering
record date whose address is outside the United
States or if you have an Army Post Office or a
Fleet Post Office address. To exercise your
subscription rights, you must notify the
subscription agent on or prior to 5:00 p.m. New
York City time, on , 2004, and take
all other steps that are necessary to exercise
your subscription rights, on or prior to the
date on which this rights offering expires. If
you do not follow these procedures
3
prior to the expiration of this rights
offering, your subscription rights will expire
without value.
Information Agent............. Georgeson Shareholder Communications Inc.
Stock Certificates............ We will deliver stock certificates representing
the Series A Cumulative Preferred Stock
purchased by the exercise of rights to the
nominees or other record holders as soon as
practicable after the expiration date.
U.S. Federal Income Tax
Considerations (see page
39)........................... Our position for information reporting and
other United States federal income tax purposes
is that you will not recognize taxable income
upon the receipt of the subscription rights.
See "Certain Material U.S. Federal Income Tax
Considerations" beginning on page 39.
No Recommendation to Rights
Holders (see page 29)......... We are not making any recommendations as to
whether or not you should subscribe for shares
of our Series A Cumulative Preferred Stock. You
should decide whether to subscribe for such
shares based upon your own assessment of your
best interests and after considering all of the
information in this prospectus, including the
"Risk Factors" section of this prospectus and
all of the information incorporated by
reference in this prospectus.
Questions..................... If you have any questions about the rights
offering, including questions about
subscription procedures and requests for
additional copies of this prospectus or other
documents, please contact Georgeson Shareholder
Communications Inc. at (866) 835-2930.
Risk Factors (see page 5)..... An investment in our Series A Cumulative
Preferred Stock involves risks. You should
carefully review the "Risk Factors" section of
this prospectus beginning on page 5.
Use of proceeds (see page
30)........................... The net proceeds of the offering will be used
by us for possible future strategic
acquisitions, to decrease the use of debt for
working capital and for general corporate
purposes. We continually evaluate potential
acquisitions and intend to actively pursue
acquisition opportunities, some of which may be
material, but we do not have any agreements or
understandings with respect to the foregoing.
Ratio of earnings to combined
fixed charges and preferred
stock dividends (see page
19)........................... For the fiscal year ended August 31, 2003, the
ratio of earnings to combined fixed charges and
preferred stock dividends was 1.6x. See "Ratio
of Earnings to Combined Fixed Charges and
Preferred Stock Dividends" on page 19.
New York Stock Exchange Symbol
for our Series A Cumulative
Preferred Stock............... "FJCPRA"
Trading of the Rights......... It is anticipated that the subscription rights
will be traded on the New York Stock Exchange
under the symbol "FJC.RT".
For additional information concerning the subscription rights and our
Series A Cumulative Preferred Stock, see "The Rights Offering" beginning on page
20.
4
RISK FACTORS
An investment in our Series A Cumulative Preferred Stock involves risks.
You should carefully consider the following factors and all of the information
contained elsewhere in this prospectus and in the documents incorporated by
reference herein before deciding to exercise or sell your subscription rights.
RISKS RELATED TO OUR BUSINESS
OUR BUSINESS CAN BE ADVERSELY AFFECTED BY AN ECONOMIC DOWNTURN.
Our business is affected by a number of economic factors, including the
level of economic activity in the markets in which we operate. A decline in
economic activity in the United States could materially affect our financial
condition and results of operations. In our business, a decline in economic
activity, as a result of cyclical or other factors typically results in a
decline in purchases of our products, which would result in a decrease in our
sales volume and profitability.
COOLER THAN NORMAL SUMMERS MAY DEPRESS OUR SALES.
Demand for our products and for our services is strongly affected by the
weather. Hotter than normal summers generate strong demand for our air
conditioning products. Conversely, cooler than normal summers depress our sales.
Because a high percentage of our overhead and operating expenses is relatively
fixed throughout the year, operating earnings and net earnings tend to be lower
in quarters with lower sales.
WE MAY INCUR MATERIAL COSTS AS A RESULT OF WARRANTY AND PRODUCT LIABILITY
CLAIMS, WHICH WOULD NEGATIVELY AFFECT OUR PROFITABILITY.
The development, manufacture, sale and use of our products involve a risk
of warranty and product liability claims. Our product liability insurance
policies have limits that, if exceeded, may result in material costs that would
have an adverse effect on our future profitability. In addition, warranty claims
are not covered by our product liability insurance and there may be types of
product liability claims that are also not covered by our product liability
insurance.
OUR FAILURE TO SUCCESSFULLY INTEGRATE ANY BUSINESSES THAT WE MAY ACQUIRE IN THE
FUTURE COULD ADVERSELY AFFECT US.
We continually evaluate potential acquisitions and intend to actively
pursue acquisition opportunities, some of which may be material, but we do not
have any agreements or understandings with respect to the foregoing. We may
finance future acquisitions with internally generated funds, bank borrowings,
issuances of debt or equity securities, or a combination of the foregoing. If we
complete acquisitions, we will encounter various associated risks. These risks
include the possible inability to integrate an acquired business into our
operations, diversion of management's attention and unanticipated problems or
liabilities. Some of these risks could result in a material adverse effect on
our financial condition or operating results.
WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE IN THE HIGHLY COMPETITIVE HEATING,
VENTILATION, AIR CONDITIONING AND REFRIGERATION ("HVACR") BUSINESS.
Competition in our various markets could cause us to reduce our prices or
lose market share, or could negatively affect our cash flow, which could have an
adverse effect on our future financial results. Substantially all of the markets
in which we participate are highly competitive. The most significant competitive
factors we face are product reliability, product performance, service and price,
with the relative importance of these factors varying among our product lines.
Other factors that affect competition in the HVACR market include the
development and application of new technologies and an increasing emphasis on
the development of more efficient HVACR products. Moreover, new product
introductions are an important factor in the market categories in which our
products compete. Several of our competitors have greater financial and other
resources than we have, allowing them to invest in more extensive research and
development. We may not be
5
able to compete successfully against current and future competition and we
cannot assure you that the current and future competitive pressures faced by us
will not materially adversely affect our business and results of operations.
CURRENTLY, OUR BUSINESS DEPENDS ON OUR RELATIONSHIPS WITH A LIMITED NUMBER OF
LARGE CUSTOMERS.
In fiscal year 2003, one customer accounted for 32% of net sales and a
second customer accounted for 16% of net sales. In fiscal year 2002, one
customer accounted for 29% of net sales and a second customer accounted for 20%
of net sales. In 2001, one customer accounted for 25% of net sales and a second
customer accounted for 24% of net sales. While we have done business with most
of our principal customers for a number of years, agreements with principal
customers are reached annually and are based on purchase orders. We cannot
assure you that sales to principal customers will continue at current levels.
Further, continuation of the relationships depends on the customers'
satisfaction with the price, quality and delivery of our products. The loss of,
or a reduction in purchase levels by, a significant customer, which we are
unable to replace with new orders, would have a material adverse effect on our
business.
OUR WORKING CAPITAL REQUIREMENTS FLUCTUATE BECAUSE OF THE SEASONAL NATURE OF OUR
BUSINESS. UNAVAILABILITY OF NEEDED WORKING CAPITAL COULD ADVERSELY AFFECT US.
Because of the seasonal nature of our business, our working capital
requirements are significantly higher at certain times of the year. Additional
working capital may not be available on satisfactory terms. Unavailability of
needed working capital could have a material adverse effect on our business and
operating results.
OUR LOSS OF CERTAIN KEY MEMBERS OF MANAGEMENT OR INABILITY TO ATTRACT OTHER
QUALIFIED PERSONNEL COULD NEGATIVELY IMPACT OUR BUSINESS PROSPECTS.
We believe that our performance has been and will continue to be dependent
upon the efforts of our principal executive officers. Although we have designed
incentive and compensation programs to retain key employees, including options
to purchase our stock, we cannot assure you that our principal executive
officers will continue to be available. The loss of some or all of these
principal executive officers could have a material adverse effect on us. We
believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel.
THE UNAVAILABILITY OF AND FLUCTUATION IN THE COST OF RAW MATERIALS COULD
ADVERSELY AFFECT OUR FUTURE RESULTS.
Our operations are dependent on the supply of various raw materials,
including steel, copper and aluminum, from domestic and foreign suppliers. We
obtain substantially all of our supply of steel, copper and aluminum under
purchase orders rather than long-term supply contracts. Although to date we have
been able to obtain sufficient quantities of steel, copper and aluminum for our
manufacturing processes, supply interruptions or cost increases which we are
unable to pass on to our customers could adversely affect our future operating
results.
WE ARE SUBJECT TO VARIOUS REGULATORY LAWS THAT AFFECT OUR BUSINESS AND PRODUCTS.
We are subject to various federal, state and local laws affecting our
business. Room air conditioners are subject to federal regulations providing for
minimum energy efficiency rating ("EER") requirements. A combination of an
efficient compressor and the design of the air conditioning system using the
compressor is needed to achieve the required ratings. The required EER levels
may be changed by the Office of Energy Efficiency and Renewable Energy of the
United States Department of Energy. Any future changes in required EER levels or
other government regulations could adversely affect our industry and our
business.
6
EXPOSURE TO ENVIRONMENTAL LIABILITIES COULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS.
Our future profitability could be adversely affected by current or future
environmental laws. We are subject to extensive and changing federal, state and
local laws and regulations designed to protect the environment in the United
States and in other parts of the world. These laws and regulations could impose
liability for remediation costs and often result in civil or criminal penalties
in cases of non-compliance. Compliance with environmental laws increases our
costs of doing business. Because these laws are subject to frequent change, we
are unable to predict the future costs resulting from environmental compliance.
The United States and other countries have established programs for
limiting the production, importation and use of certain ozone depleting
chemicals, including refrigerants that we use in most of our air conditioning
and refrigeration products. Some categories of these refrigerants have been
banned completely and others are currently scheduled to be phased out in the
United States by the year 2010. The industry's failure to find suitable
replacement refrigerants for substances that have been or will be banned or the
acceleration of any phase out schedules for these substances by governments
could have an adverse effect on our future financial results.
SOME PROVISIONS IN OUR CERTIFICATE OF INCORPORATION AND OUR BY-LAWS COULD DELAY
OR PREVENT A CHANGE IN CONTROL.
Our governing documents contain provisions that make it more difficult to
implement corporate actions that may have the effect of delaying, deterring or
preventing a change in control. A stockholder might consider a change in control
in his or her best interest because he or she might receive a premium for his or
her common stock. Examples of these provisions include:
- Holders of Class B Stock are entitled to ten votes per share in any
election of directors if either:
- more than 15% of the shares of Common Stock outstanding on the record
date for such meeting are beneficially owned by a person or group of
persons acting in concert (unless such person or group is also the
beneficial owner of a majority of the shares of Class B Stock on such
record date); or
- a nomination for the board of directors is made by a person or group of
persons acting in concert, other than the board of directors (unless
such nomination is made by one or more holders of Class B Stock, acting
in concert, who beneficially own more than 15% of the outstanding shares
of Class B Stock);
- Holders of Class B Stock have the right to vote separately as a class on
certain matters, including:
- any amendment to the certificate of incorporation;
- any merger or consolidation of Fedders;
- any sale or disposition of all or substantially all of the assets of
Fedders (except where the other party to such transaction is a majority
owned subsidiary of Fedders);
- any dissolution of Fedders; and
- any additional issuance of Class B Stock (except in connection with
stock splits and stock dividends).
As of December 1, 2003, the Giordano Holding Corporation held 99.8% of the
Class B Stock.
See "Description of Capital Stock" for a more complete description of these
provisions.
OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO RISKS INHERENT IN SUCH ACTIVITIES.
Fedders has dedicated resources to participating in the international
market by establishing operations in a number of countries. Foreign operations
are subject to the risks inherent in such activities, such as foreign
regulations, unsettled political activities and exchange rate fluctuations.
7
RISKS RELATED TO THE RIGHTS OFFERING
THE SUBSCRIPTION PRICE DETERMINED FOR THIS RIGHTS OFFERING IS NOT AN INDICATION
OF OUR VALUE.
The subscription price per share for the rights offering was set by the
pricing committee of our board of directors. The pricing committee is comprised
of outside directors. The pricing committee set the subscription price at a
discount equal to six point three percent (6.3%) of the closing price per share
of our Series A Cumulative Preferred Stock on the New York Stock Exchange on
December 4, 2003. In determining the subscription price, the pricing committee
considered a number of factors, including: our need for capital; our business
prospects; the need to offer shares at a price that would be attractive to our
investors relative to the current trading price of our Series A Cumulative
Preferred Stock; the historic and current market price of our Series A
Cumulative Preferred Stock; general conditions in the securities market and the
difficult market conditions prevailing for the raising of equity capital; our
operating history; and the liquidity of our Series A Cumulative Preferred Stock.
In conjunction with their review of these factors, the pricing committee also
reviewed analyses of prior rights offerings by other public companies, including
the range of discounts to market value represented by the subscription prices in
those rights offerings. Based upon this review and other factors described
above, the pricing committee determined that 6.3% represented an appropriate
discount to the market value of our Series A Cumulative Preferred Stock. The
subscription price does not necessarily bear any relationship to the book value
of our assets, past operations, cash flows, losses, financial condition or any
other established criteria for value. You should not consider the subscription
price as an indication of the value of our Series A Cumulative Preferred Stock.
After the date of this prospectus, our Series A Cumulative Preferred Stock may
trade at prices above or below the subscription price.
OUR POSITION REGARDING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
RECEIPT OF SUBSCRIPTION RIGHTS IN THE RIGHTS OFFERING MAY NOT BE SUSTAINED BY A
COURT IF CHALLENGED BY THE INTERNAL REVENUE SERVICE.
Our position for information reporting and other United States federal
income tax purposes is that you will not recognize taxable income upon the
receipt of the subscription rights. Based on relevant Treasury regulations, the
Internal Revenue Service may assert that your receipt of the subscription rights
in the rights offering is currently taxable to you. We believe that the relevant
statutory and regulatory provisions were not intended to apply to the present
transaction. It is uncertain whether our position would be sustained by a court
if challenged by the Internal Revenue Service. See "Certain Material U.S.
Federal Income Tax Considerations" beginning on page 41.
YOU MAY NOT REVOKE YOUR SUBSCRIPTION RIGHT EXERCISE AND COULD BE COMMITTED TO
BUYING SHARES ABOVE THE PREVAILING MARKET PRICE.
Once you exercise your subscription rights, you may not revoke the exercise
and cancel the purchase of the shares in the rights offering. The public trading
market price of our Series A Cumulative Preferred Stock may decline before the
subscription rights expire. If you exercise your subscription rights and,
afterwards, the public trading market price of our Series A Cumulative Preferred
Stock decreases below the subscription price, you will have committed to buying
shares of our Series A Cumulative Preferred Stock at a price above the
prevailing market price. Our Series A Cumulative Preferred Stock is traded on
the NYSE under the symbol "FJCPRA" and the last reported sales price of our
Series A Cumulative Preferred Stock on the NYSE on , 2003 was
$ per share. Moreover, you may be unable to sell your shares of Series A
Cumulative Preferred Stock at a price equal to or greater than the subscription
price you paid for such shares.
IF WE CANCEL THIS RIGHTS OFFERING, NEITHER WE NOR THE SUBSCRIPTION AGENT WILL
HAVE ANY OBLIGATION TO YOU EXCEPT TO RETURN YOUR SUBSCRIPTION PAYMENTS.
If we elect to withdraw or terminate this rights offering, neither we nor
the subscription agent will have any obligation with respect to the subscription
rights except to return, without interest or deduction, any subscription
payments we or the subscription agent received from you.
8
IF YOU DO NOT ACT PROMPTLY AND FOLLOW SUBSCRIPTION INSTRUCTIONS, YOUR EXERCISE
OF SUBSCRIPTION RIGHTS MAY BE REJECTED.
Stockholders who desire to purchase shares in this rights offering must act
promptly to ensure that all required forms and payments are actually received by
the subscription agent prior to , 2004, the expiration date of this
rights offering. If you are a beneficial owner of shares, you must act promptly
to ensure that your broker, custodian bank or other nominee acts for you and
that all required forms and payments are actually received by the subscription
agent prior to , 2004. We shall not be responsible if your broker,
custodian or nominee fails to ensure that all required forms and payments are
actually received by the subscription agent prior to the , 2004,
expiration date of this rights offering. If you fail to complete and sign the
required subscription forms, send an incorrect payment amount, or otherwise fail
to follow the subscription procedures that apply to your exercise in this rights
offering, the subscription agent may, depending on the circumstances, reject
your subscription or accept it only to the extent of the payment received.
Neither we nor our subscription agent undertakes to contact you concerning an
incomplete or incorrect subscription form or payment, nor are we under any
obligation to correct such forms or payment. We have the sole discretion to
determine whether a subscription exercise properly follows the subscription
procedures.
NO PRIOR MARKET EXISTS FOR THE SUBSCRIPTION RIGHTS.
The subscription rights are a new issue of securities with no established
trading market and we cannot assure you that a market for the subscription
rights will develop or, if a market does develop, as to how liquid it will be.
The subscription rights are transferable until the close of business on the last
trading day prior to the expiration date of this rights offering, at which time
they will cease to have any value. If you wish to sell your subscription rights
or the subscription agent tries to sell subscription rights on your behalf in
accordance with the procedures discussed in this prospectus but such rights
cannot be sold, and either you subsequently provide the subscription agent with
instructions to exercise the subscription rights and your instructions are not
timely received by the subscription agent or you do not provide any instructions
to exercise your subscription rights, then the subscription rights will expire
and will have no further value.
IF YOU MAKE PAYMENT OF THE SUBSCRIPTION PRICE BY PERSONAL CHECK, YOUR CHECK MAY
NOT HAVE CLEARED IN SUFFICIENT TIME TO ENABLE YOU TO PURCHASE SHARES IN THIS
RIGHTS OFFERING.
Any personal check used to pay for shares to be issued in this rights
offering must clear prior to the expiration date of this rights offering, and
the clearing process may require five or more business days. If you choose to
exercise your subscription rights, in whole or in part, and to pay for shares by
personal check and your check has not cleared prior to the expiration date of
this rights offering, you will not have satisfied the conditions to exercise
your subscription rights and will not receive the shares you attempted to
purchase and you will lose the value of your subscription rights.
9
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
WHAT IS THIS RIGHTS OFFERING?
This rights offering is a distribution, at no charge, to holders of our
Common Stock and Class B Stock of one transferable subscription right for each
share of Common Stock or Class B Stock owned as of December 22, 2003, or the
"record date", for a total of approximately 30,404,940 subscription rights.
Every twenty subscription rights entitle the holder to purchase one additional
share of our Series A Cumulative Preferred Stock. The maximum gross proceeds of
this rights offering, assuming all the rights are exercised at the subscription
price of $23.70, will be $36,029,853.
WHAT ARE THE TERMS OF THE SERIES A CUMULATIVE PREFERRED STOCK?
Series A Cumulative Preferred Stock is listed on the NYSE under the symbol
"FJCPRA" and accrues dividends at a rate per share of $2.15 per year, payable
quarterly. Dividends are cumulative and accrue whether or not paid. Such
cumulative preferred dividends are payable on each March 1, June 1, September 1,
and December 1 of each year (each such date being referred to herein as a
"Dividend Payment Date"), to the holders of record as they appear in the
stockholder record books of the Company, at the close of the applicable record
date designated by the board of directors for the payment of dividends that is
not more than 30 nor less than 15 days prior to the applicable Dividend Payment
Date. The liquidation preference of each share of Series A Cumulative Preferred
Stock is $25.00. Generally, holders of Series A Cumulative Preferred Stock do
not have voting rights for election of directors. Based upon the subscription
price of the Series A Cumulative Preferred Stock of $23.70 per share, the annual
dividend rate yields approximately 9.1%.
WHICH DIVIDEND PAYMENTS WILL BE MADE ON THE SHARES OF SERIES A CUMULATIVE
PREFERRED STOCK TO BE ISSUED PURSUANT TO THE RIGHTS OFFERING?
The holders of the rights will be entitled to receive dividend payments for
all periods beginning with the March 1, 2004 dividend payment.
WHAT IS A SUBSCRIPTION RIGHT?
Each full subscription right is a right to purchase one share of our Series
A Cumulative Preferred Stock and carries with it a basic subscription right and
an over-subscription right.
HOW MANY SHARES MAY I PURCHASE IF I EXERCISE MY SUBSCRIPTION RIGHTS?
You will receive one transferable subscription right for each share of
Common Stock and Class B Stock that you own on the record date. Every twenty
subscription rights entitles you to a basic subscription right and an
over-subscription right.
WHAT IS THE BASIC SUBSCRIPTION RIGHT?
The basic subscription right entitles you to purchase one share of our
Series A Cumulative Preferred Stock at the subscription price of $23.70 per
share. You may not exercise your rights to purchase fractional shares of Series
A Cumulative Preferred Stock.
WHAT IS THE OVER-SUBSCRIPTION RIGHT?
The over-subscription right of each basic subscription right entitles you,
if you fully exercise your basic subscription right, to subscribe for additional
shares of our Series A Cumulative Preferred Stock at the same subscription price
per share on a pro rata basis if any shares are not purchased by other holders
of subscription rights under their basic subscription rights as of the
expiration date. "Pro rata" means in proportion to the number of shares of our
Series A Cumulative Preferred Stock that you and the other subscription rights
holders have purchased by exercising your basic subscription rights. You may not
exercise your rights to purchase fractional shares of Series A Cumulative
Preferred Stock.
10
WHAT IF THERE IS AN INSUFFICIENT NUMBER OF SHARES TO SATISFY THE
OVER-SUBSCRIPTION REQUESTS?
If there is an insufficient number of shares of our Series A Cumulative
Preferred Stock available to fully satisfy the over-subscription requests of
rights holders, subscription rights holders who exercised their over-
subscription right will receive the available shares pro rata based on the
number of shares each subscription rights holder subscribed for under the basic
subscription rights. Any excess subscription payments will be returned, without
interest or deduction, promptly after the expiration of this rights offering.
WHY ARE YOU ENGAGING IN THIS RIGHTS OFFERING?
This rights offering is being made to raise capital for possible future
strategic acquisitions, to decrease the use of debt for working capital and for
general corporate purposes. We continually evaluate potential acquisitions and
intend to actively pursue acquisition opportunities, some of which may be
material, but we do not have any agreements or understandings with respect to
the foregoing.
WHAT HAPPENS IF I CHOOSE NOT TO EXERCISE MY SUBSCRIPTION RIGHTS?
You will retain your current number of shares of Common Stock or Class B
Stock even if you do not exercise your subscription rights.
CAN YOUR BOARD OF DIRECTORS CANCEL THIS RIGHTS OFFERING?
Yes. Our board of directors may decide to cancel this rights offering at
any time prior to the expiration of the rights offering and for any reason. If
we cancel this rights offering, any money received from subscribing stockholders
will be refunded promptly, without interest or deduction.
WHEN WILL THIS RIGHTS OFFERING EXPIRE?
The subscription rights will expire, if not exercised, at 5:00 p.m., New
York City time, on , 2004, unless we decide to extend this rights
offering until some later time. See "The Rights Offering -- Expiration of the
Rights Offering and Extensions, Amendments and Termination." The subscription
agent must actually receive all required documents and payments before that time
and date. There is no maximum duration for this rights offering.
HOW DO I EXERCISE MY SUBSCRIPTION RIGHTS?
You may exercise your subscription rights by properly completing and
signing your subscription rights certificate. Your subscription rights
certificate, together with full payment of the subscription price, must be
received by the subscription agent on or prior to the expiration date of this
rights offering. If you use the mail, we recommend that you use insured,
registered mail, return receipt requested. If you cannot deliver your
subscription rights certificate to the subscription agent on time, you may
follow the guaranteed delivery procedures described under "The Rights
Offering -- Guaranteed Delivery Procedures."
MAY I TRANSFER OR SELL MY SUBSCRIPTION RIGHTS IF I DO NOT WANT TO PURCHASE ANY
SHARES?
Yes. The subscription rights will be evidenced by transferable subscription
rights certificates. The subscription rights are transferable until the close of
business on the last trading day preceding the expiration date of this rights
offering. However, the subscription agent will only facilitate subdivisions or
transfers of the actual subscription rights certificates until 5:00 p.m., New
York City time, on , 2004, three business days prior to the expiration
date. Furthermore, the subscription rights are a new issue of securities with no
established trading market and we cannot assure you that a market for the
subscription rights will develop, or if a market does develop, how liquid it
will be. Therefore, we cannot assure you that you will be able to sell any of
your subscription rights. See "The Rights Offering -- Methods for Transferring
and Selling Subscription Rights."
11
HOW MAY I SELL MY SUBSCRIPTION RIGHTS?
You may sell your subscription rights by contacting your broker or the
institution through which you hold your Common Stock. Any holder who wishes to
sell its rights may also seek to sell the rights through the subscription agent.
Each holder will be responsible for all fees associated with the sale of its
rights, whether the rights are sold through its own broker or dealer or the
subscription agent. We cannot assure you that any person, including the
subscription agent, will be able to sell the rights on your behalf. See "The
Rights Offering -- Methods for Transferring and Selling Subscription Rights."
WILL I BE ABLE TO TRADE MY SUBSCRIPTION RIGHTS ON THE NEW YORK STOCK EXCHANGE?
Yes. We anticipate that the subscription rights will trade on the NYSE
under the symbol "FJC.RT" and we expect that the subscription rights may be
purchased or sold until the close of business on the last trading day preceding
the expiration date of this rights offering.
Our Series A Cumulative Preferred Stock is listed on the NYSE under the
symbol "FJCPRA." On , 2003, the last trading day before the date of
this prospectus, the closing price of our Series A Cumulative Preferred Stock on
the NYSE was $ per share.
WHAT SHOULD I DO IF I WANT TO PARTICIPATE IN THIS RIGHTS OFFERING OR SELL MY
SUBSCRIPTION RIGHTS BUT MY SHARES ARE HELD IN THE NAME OF MY BROKER, CUSTODIAN
BANK OR OTHER NOMINEE?
If you hold shares of our Common Stock through a broker, custodian bank or
other nominee, we will ask your broker, custodian bank or other nominee to
notify you of this rights offering. If you wish to sell or exercise your
subscription rights, you will need to have your broker, custodian bank or other
nominee act for you. To indicate your decision, you should complete and return
to your broker, custodian bank or other nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker, custodian
bank or other nominee with the other rights offering materials. You should
contact your broker, custodian bank or other nominee if you do not receive this
form, but you believe you are entitled to participate in this rights offering.
WHAT SHOULD I DO IF I WANT TO PARTICIPATE IN THIS RIGHTS OFFERING OR SELL MY
SUBSCRIPTION RIGHTS, BUT I AM A STOCKHOLDER WITH A FOREIGN ADDRESS OR A
STOCKHOLDER WITH AN APO OR FPO ADDRESS?
Subscription rights certificates will be mailed to subscription rights
holders whose addresses are outside the United States or who have an APO or FPO
address. To exercise such subscription rights, you must notify the subscription
agent, and take all other steps which are necessary to exercise your
subscription rights on or prior to the expiration date of this rights offering.
Your subscription rights will expire and will have no value if the procedures
set forth in the preceding sentence are not followed prior to the expiration
date.
WILL I BE CHARGED A SALES COMMISSION OR A FEE IF I EXERCISE MY SUBSCRIPTION
RIGHTS?
We will not charge a brokerage commission or a fee to subscription rights
holders for exercising their subscription rights. However, if you exercise your
subscription rights through a broker, custodian bank or nominee, you will be
responsible for any fees charged by your broker, custodian bank or nominee. If
you sell your subscription rights, you will be responsible for any commissions,
taxes or brokers fees arising from any such sale. Any sales through the
subscription agent will be deemed to be effected at the weighted average sales
price of all subscription rights sold by the subscription agent on the relevant
date of sale. See "The Rights Offering -- Methods for Transferring and Selling
Subscription Rights -- Sale of Subscription Rights Through the Subscription
Agent."
WHAT IS THE RECOMMENDATION OF YOUR BOARD OF DIRECTORS REGARDING THIS RIGHTS
OFFERING?
Neither we nor our board of directors are making any recommendation as to
whether or not you should exercise or sell your subscription rights. You are
urged to make your decision based on your own assessment of this rights offering
and after considering all of the information in this prospectus, including the
"Risk Factors" section of this prospectus and all of the information
incorporated by reference in this prospectus.
12
HOW WAS THE $23.70 PER SHARE SUBSCRIPTION PRICE ESTABLISHED?
The subscription price per share for the rights offering was set by the
pricing committee of our board of directors. The pricing committee is comprised
of outside directors. The pricing committee set the subscription price at a
discount equal to six point three percent (6.3%) of the closing price per share
of our Series A Cumulative Preferred Stock on the New York Stock Exchange on
December 4, 2003. In determining the subscription price, the pricing committee
considered a number of factors, including: our need for capital; our business
prospects; the need to offer shares at a price that would be attractive to our
investors relative to the current trading price of our Series A Cumulative
Preferred Stock; the historic and current market price of our Series A
Cumulative Preferred Stock; general conditions in the securities market and the
difficult market conditions prevailing for the raising of equity capital; our
operating history; and the liquidity of our Series A Cumulative Preferred Stock.
In conjunction with their review of these factors, the pricing committee also
reviewed analyses of prior rights offerings by other public companies, including
the range of discounts to market value represented by the subscription prices in
those rights offerings. Based upon this review and the other factors described
above, the pricing committee determined that 6.3% represented an appropriate
discount to the market value of our Series A Cumulative Preferred Stock.
IS EXERCISING MY SUBSCRIPTION RIGHTS RISKY?
The exercise of your subscription rights involves risks. Exercising your
subscription rights represents a purchase of shares of our Series A Cumulative
Preferred Stock and should be considered as carefully as you would consider any
other equity investment. You should carefully consider the information under the
heading "Risk Factors" and all other information included or incorporated by
reference in this prospectus before deciding to exercise or sell your
subscription rights.
AM I REQUIRED TO SUBSCRIBE IN THIS RIGHTS OFFERING?
No.
AFTER I EXERCISE MY SUBSCRIPTION RIGHTS, CAN I CHANGE MY MIND AND CANCEL MY
PURCHASE?
No. Once you send in your subscription rights certificate and payment you
cannot revoke the exercise of your subscription rights, even if the market price
of our Series A Cumulative Preferred Stock is below the $23.70 per share
subscription price. You should not exercise your subscription rights unless you
are certain that you wish to purchase shares of our Series A Cumulative
Preferred Stock at a price of $23.70 per share. Subscription rights not
exercised prior to the expiration of this rights offering will have no value.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY SUBSCRIPTION
RIGHTS?
Our position for information reporting and other United States federal
income tax purposes is that you will not recognize any gain or loss upon the
exercise of subscription rights received in the rights offering. See "Certain
Material U.S. Federal Income Tax Considerations" beginning on page 39.
IF THIS RIGHTS OFFERING IS NOT COMPLETED, WILL MY SUBSCRIPTION PAYMENT BE
REFUNDED TO ME?
Yes. The subscription agent will hold all funds it receives in escrow until
completion of this rights offering. If this rights offering is not completed,
the subscription agent will return promptly, without interest or deduction, all
subscription payments.
HOW MANY SHARES OF COMMON STOCK, CLASS B STOCK AND SERIES A CUMULATIVE PREFERRED
STOCK WILL BE OUTSTANDING AFTER THIS RIGHTS OFFERING?
The number of shares of Common Stock, Class B Stock and Series A Cumulative
Preferred Stock that will be outstanding immediately after the completion of
this rights offering, assuming all rights are exercised, will be 27,911,879,
2,493,061 and 2,195,084 shares, respectively.
13
IF I EXERCISE MY SUBSCRIPTION RIGHTS, WHEN WILL I RECEIVE SHARES OF SERIES A
CUMULATIVE PREFERRED STOCK PURCHASED IN THIS RIGHTS OFFERING?
We will deliver to the record holders who purchase shares in this rights
offering certificates representing the shares of our Series A Cumulative
Preferred Stock purchased as soon as practicable after the expiration date of
this rights offering and after all pro rata allocations and adjustments have
been completed. We will not be able to calculate the number of shares to be
issued to each exercising holder until 5:00 p.m., New York City time, on the
third business day after the expiration date of this rights offering, which is
the latest time by which subscription rights certificates may be delivered to
the subscription agent under the guaranteed delivery procedures described under
"The Rights Offering -- Guaranteed Delivery Procedures."
WHO IS THE SUBSCRIPTION AGENT FOR THIS RIGHTS OFFERING?
The subscription agent is American Stock Transfer & Trust Company. The
address for delivery to the subscription agent is as follows:
By mail, hand delivery or overnight courier to:
American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
By facsimile:
(718) 234-5001
Your delivery to an address or other than by the methods set forth above
will not constitute valid delivery. You may call the subscription agent at (800)
937-5449.
WHAT SHOULD I DO IF I HAVE OTHER QUESTIONS?
If you have questions or need assistance, please contact Georgeson
Shareholder Communications Inc., the information agent for this rights offering,
at: (866) 835-2930. If you are a bank or a brokerage firm, please call collect
at (212) 440-9800. For a more complete description of this rights offering, see
"The Rights Offering" section included elsewhere in this prospectus.
14
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth summary consolidated financial data of
Fedders as of and for each of the periods indicated. Fedders derived the
consolidated financial data as of and for each of the annual periods presented
from Fedders' audited consolidated financial statements. This information is
only a summary and you should read it in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical consolidated financial statements, and the related schedules and
notes, contained in Fedders' Annual Report on Form 10-K, which is incorporated
by reference herein and other information that Fedders has filed with the
Securities and Exchange Commission. See "Incorporation of Certain Documents by
Reference" on page 44.
CONSOLIDATED STATEMENT OF OPERATIONS DATA
FISCAL YEAR ENDED AUGUST 31,
<Table>
<Caption>
2003 2002 2001 2000 1999
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT
PERCENT, SHARE AND PER SHARE DATA)
Net Sales................................... $421,703 $373,702 $405,697 $416,181 $362,048
Gross Profit................................ 92,868 83,050 68,700 104,828 84,591
Percent of net sales........................ 22.0 22.2 16.9 25.2 23.4
Operating income (loss)(1).................. 31,079 20,339 (15,045) 46,854 40,258
Percent of net sales........................ 7.4 5.4 (3.7) 11.3 11.1
Income (loss) before income taxes and
cumulative effect of a change in
accounting principle...................... 13,020 2,976 (33,263) 30,474 30,986
Percent of net sales........................ 3.1 .8 (8.2) 7.3 8.6
Income (loss) before cumulative effect of a
change in accounting principle............ 8,796 8,009 (22,453) 20,401 20,724
Percent of net sales........................ 2.1 2.1 (5.5) 4.9 5.7
Cumulative effect of a change in accounting
principle(2).............................. 11,906 -- -- -- --
Net (loss) income........................... (3,110) 8,009 (22,453) 20,401 20,724
Preferred Stock dividends(4)................ 618 -- -- -- --
Net (loss) income applicable to common
stockholders.............................. $ (3,728) $ 8,009 $(22,453) $ 20,401 $ 20,724
(Loss) earnings per common share(3)(4)(5):
Basic earnings (loss) per common share
before cumulative effect of a change in
accounting principle, less preferred
stock dividends........................ $ 0.27 $ 0.25 $ (0.71) $ 0.58 $ .056
Cumulative effect of a change in
accounting principle................... (0.39) -- -- -- --
-------- -------- -------- -------- --------
Basic (loss) earnings per common share.... $ (0.12) $ 0.25 $ (0.71) $ 0.58 $ 0.56
======== ======== ======== ======== ========
Diluted earnings (loss) per common share
before cumulative effect of a change in
accounting principle, less preferred
stock dividends........................ $ 0.27 $ 0.25 $ (0.71) $ 0.57 $ 0.56
Cumulative effect of a change in
accounting principle................... (0.39) -- -- -- --
-------- -------- -------- -------- --------
Diluted (loss) earnings per common
share.................................. $ (0.12) $ 0.25 $ (0.71) $ 0.57 $ 0.56
======== ======== ======== ======== ========
</Table>
15
<Table>
<Caption>
2003 2002 2001 2000 1999
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT
PERCENT, SHARE AND PER SHARE DATA)
Dividends per share declared:(3)(4)(5):
Preferred Stock........................... $ 1.613 -- -- -- --
New Common Stock.......................... 0.120 $ 0.060 -- -- --
Old Common/Class A Stock.................. -- 0.060 $ 0.120 $ 0.120 $ 0.105
New Class B Stock......................... 0.120 0.060 -- -- --
Old Class B Stock......................... -- 0.054 0.108 0.108 0.095
Other financial data:
Cash flow provided by (used in):
Operating activities...................... $ 5,617 $ 34,134 $ 5,919 $ 4,619 $ 51,989
Investing activities...................... (7,368) (14,564) (30,327) (15,037) (48,778)
Financing activities...................... (4,726) (3,383) (11,593) (19,898) 23,312
</Table>
CONSOLIDATED BALANCE SHEET DATA
FISCAL YEAR ENDED AUGUST 31,
<Table>
<Caption>
2003 2002 2001 2000 1999
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT
PERCENT, SHARE AND PER SHARE DATA)
Cash and cash equivalents................... $ 60,902 $ 67,379 $ 51,192 $ 87,193 $117,509
Total assets................................ 392,929 366,128 362,332 388,175 382,342
Long-term debt (including current
portion)(6)............................... 164,044 167,131 168,455 166,434 161,363
Stockholders' equity(3)(4)(5)(7)............ 74,928 77,818 73,014 112,260 108,933
Capital expenditures........................ 7,271 7,846 10,773 9,858 9,378
Depreciation and amortization(8)............ 9,543 14,830 15,431 13,076 10,279
======== ======== ======== ======== ========
</Table>
- ---------------
(1) Fiscal 2001 results include $8,947 of asset impairment, employee severance
and other restructuring charges, $4,031 of one-time inventory charges, a
$7,583 deferred compensation charge relating to the retirement of an officer
of the Company, an additional $2,283 of other non-recurring inventory
write-offs, $1,364 of operating losses incurred at the Tennessee and
Maryland facilities subsequent to the announcement that production at these
facilities would cease, a $726 non-cash charge for the re-pricing of a
majority of unexercised stock options and $716 of other one-time charges.
(2) In 2003, the Company recorded a transitional goodwill impairment charge of
$11.9 million as a cumulative effect of a change in accounting principle.
(3) On May 16, 2003, the Company's Board of Directors authorized the
distribution of transferable rights to the Company's Common and Class B
stockholders. Stockholders received one right for every ten shares of Common
Stock and Class B Stock they held as of July 1, 2003. Each transferable
right represented the right to purchase one share of the Company's Series A
Cumulative Preferred Stock at the subscription price of $23.70, until the
expiration date of August 12, 2003. At the expiration of the offering on
August 12, 2003, 262,316 rights had been subscribed.
(4) In October 2002, the Company's Board of Directors approved a plan pursuant
to which a new class of cumulative preferred stock would be offered to
stockholders in exchange for up to 15,000,000 shares of the Company's Common
Stock, with 0.14 shares of Series A Cumulative Preferred Stock being offered
in exchange for every share of Common Stock. The Series A Cumulative
Preferred Stock receives a cumulative annual dividend of $2.15 and has a
liquidation preference of $25.00 plus the amount of any accrued and unpaid
dividends. The holders of the Series A Cumulative Preferred Stock have no
right to
16
vote, except in limited circumstances. The exchange of 2,315,750 shares of
Common Stock for 323,947 shares of Series A Cumulative Preferred Stock was
completed on December 27, 2002.
On February 14, 2003, the Company announced an offer to exchange shares of
Series A Cumulative Preferred Stock for up to 12,500,000 shares of the
Company's Common Stock, with 0.14 shares of Preferred Stock being offered
in exchange for every share of Common Stock. The exchange of 633,082 shares
of Common Stock for 88,276 shares of Series A Cumulative Preferred Stock
was completed on March 18, 2003.
(5) On March 26, 2002, the Company's stockholders approved a recapitalization
plan (the "Plan") which became effective the same day. Under the Plan the
holder of each share of Common Stock received 1.1 shares of new Common
Stock, the holder of each share of Class A Stock received 1 share of new
Common Stock and the holder of each share of Class B Stock received 1.1
shares of new Class B Stock.
(6) In August 1999, a subsidiary of the Company issued $50,000 of 9 3/8% Senior
Subordinated Notes, proceeds of which were utilized, in part, to replenish
cash used to acquire Trion.
(7) During fiscal 2001, the Company repurchased 2,998,000 shares of old Common
and Class A Stock at an average price of $4.39 per share for a total of
$13,169, excluding commissions. During fiscal 2000, the Company repurchased
2,768,000 shares of old Common and Class A Stock at an average price of
$4.87 per share for a total of $13,484, excluding commissions. During fiscal
1999, the Company repurchased 2,601,000 shares of old Common and Class A
Stock at an average price of $5.08 per share for a total of $13,215,
excluding commissions.
(8) In accordance with SFAS No. 142, beginning September 1, 2002, the Company no
longer amortizes goodwill. Goodwill amortization expense was $3.0 million,
$2.7 million, $2.7 million, and $2.4 million in fiscal years 2002, 2001,
2000 and 1999, respectively.
17
SELECTED UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA
The unaudited pro forma consolidated condensed financial data is derived
from the application of pro forma adjustments to major categories of Fedders'
consolidated financial statements for the fiscal year ended August 31, 2003, to
illustrate the effect of the transaction related to the rights offering. The pro
forma adjustments are described in the accompanying notes and are based upon
available information that Fedders believes is reasonable. These tables do not
present all of Fedders' financial information.
The pro forma earnings per share calculations reflect the effect of the
proposed rights offering, assuming the offering occurred at the beginning of the
period presented. The information is derived from the audited Consolidated
Statements of Operations and Comprehensive Income for the fiscal year ended
August 31, 2003. The information is presented to reflect the pro forma effect of
the proposed rights offering assuming all 30,404,940 rights are converted to
1,520,247 shares of Series A Cumulative Preferred Stock at $23.70 per share.
PRO FORMA UNAUDITED COMPARATIVE CONDENSED CONSOLIDATED EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
FISCAL YEAR ENDED AUGUST 31, 2003
---------------------------------
PROPOSED
AS RIGHTS
REPORTED OFFERING(A) TOTAL
-------- ----------- --------
Net income............................................ $(3,110) 242 $ (2,868)
Preferred Stock Dividend.............................. (618) (3,268) (3,886)
------- -------- --------
Net income (loss) attributable to common
stockholders(b)..................................... $(3,728) $ (3,026) $ (6,754)
======= ======== ========
Earnings per common share(c):
Basic............................................... $ (0.12) $ (0.22)
Diluted............................................. $ (0.12) $ (0.22)
Weighted average shares:
Basic............................................... 30,638 30,638
Diluted............................................. 30,704 30,704
Cash Dividends per share(d):
Preferred Stock(e).................................... 1.6130 2.1500
New Common Stock...................................... 0.1200 0.1200
New Class B Stock..................................... 0.1200 0.1200
Book value per common share(f)........................ 2.53 2.43
</Table>
- ---------------
(a) Pro forma results assume all 30,404,940 rights are converted to 1,520,247
shares of Series A Cumulative Preferred Stock.
(b) Pro forma net income attributable to common stockholders has been adjusted
to reflect dividends on the Series A Cumulative Preferred stock in the
proposed rights offering, assuming the offering had occurred at the
beginning of the period presented.
(c) Basic and diluted earnings per share are computed by dividing net income by
the respective weighted average shares of Common and Class B Stock
outstanding for the period presented. Basic and diluted pro forma earnings
per share are adjusted to reflect the impact of the proposed rights
offering on both net income attributable to common stockholders and to the
number of weighted average shares outstanding.
(d) Pro forma net income attributable to common stockholders has been adjusted
to reflect interest income, net of tax, on cash received from the proposed
rights offering, assuming cash was invested in money market accounts at the
beginning of the period presented.
(e) Pro forma preferred stock cash dividends per share have been determined
assuming the proposed rights offering had occurred at the beginning of the
period presented.
(f) Book value per common share is computed by dividing net book value by the
outstanding shares of Common and Class B Stock as of the end of the period
presented.
18
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for Fedders on a historical basis for the
periods indicated.
<Table>
<Caption>
YEAR ENDED AUGUST 31,
---------------------------------------
2003 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ----
1.6x 1.1x -- 2.6x 3.6x 1.4x
</Table>
Fedders has issued 674,837 shares of Series A Cumulative Preferred Stock
and currently has the ability to issue up to the total 2,725,163 shares of
Series A Cumulative Preferred Stock, par value $0.01 per share. The ratio of
earnings to combined fixed charges and preferred stock dividends equals earnings
divided by fixed charges and preferred stock dividends. For purposes of
calculating the ratio of earnings to combined fixed charges and preferred stock
dividend, earnings are the sum of income (loss) from continuing operations
before income taxes plus fixed charges reduced by capitalized interest and the
preferred stock dividend. Fixed charges consist of interest expense, capitalized
interest, amortization of debt issue costs, preferred stock dividends, and that
portion of rental expense representative of the interest factor. For the year
ended August 31, 2001, earnings were insufficient to cover fixed charges by
approximately $12,061.
19
THE RIGHTS OFFERING
REASONS FOR THE RIGHTS OFFERING
On December 5, 2003, we announced that our board of directors had discussed
and authorized the commencement of this rights offering.
In reaching its conclusion, our board of directors considered a number of
factors, including:
- the results of the previous rights offering and the anticipated use of
proceeds of the rights offering.
- the opportunity that this rights offering allows our Common and Class B
stockholders on the record date to participate and acquire shares of our
Series A Cumulative Preferred Stock at a discount to the market price or,
alternatively, to realize value from the sale of the subscription rights
if a stockholder does not have the means or the interest in exercising
the subscription rights;
- the subscription price relative to our Series A Cumulative Preferred
Stock's historical and recent trading price and pricing policies
customary for transactions of this type;
- the potential effect of this rights offering on relative ownership
interests of our stockholders; and
- the potential tax consequences of this rights offering.
Neither we nor our board of directors are making any recommendation as to
whether or not you should exercise or sell your subscription rights.
THE RIGHTS
We will distribute to each holder of our Common Stock and Class B Stock who
is a record holder of our Common Stock and Class B Stock on the record date,
which is 5:00 p.m., New York City time, on December 22, 2003, at no charge, one
transferable subscription right for each share of Common Stock and Class B Stock
owned, respectively, for a total of approximately 30,409,940 subscription
rights. The subscription rights will be evidenced by transferable subscription
rights certificates. Every twenty subscription rights will allow you to purchase
one share of our Series A Cumulative Preferred Stock at a price of $23.70 per
share. If you elect to exercise your basic subscription right in full, you may
also subscribe, at the subscription price, for additional shares of our Series A
Cumulative Preferred Stock under your over-subscription right to the extent that
other rights holders do not exercise their basic subscription rights in full. If
a sufficient number of shares of our Series A Cumulative Preferred Stock is not
available to fully satisfy the over-subscription right requests, the available
shares of Series A Cumulative Preferred Stock will be sold pro rata among
subscription rights holders who exercised their over-subscription rights based
on the number of shares each subscription rights holder subscribed for under the
basic subscription right. We have not engaged an underwriter in connection with
this rights offering.
If you hold your shares in a brokerage account or through a dealer or other
nominee, please see the information included below the heading "-- Beneficial
Owners."
TERMS OF SERIES A CUMULATIVE PREFERRED STOCK
Series A Cumulative Preferred Stock is listed on the NYSE under the symbol
"FJCPRA" and accrues dividends at a rate per share of $2.15 per year, payable
quarterly. Dividends are cumulative and accrue whether or not paid. Such
cumulative preferred dividends are payable on each March 1, September 1,
December 1, and June 1 of each year (each such date being referred to herein as
a "Dividend Payment Date"), to the holders of record as they appear in the
stockholder record books of the Company, at the close of the applicable record
date designated by the board of directors for the payment of dividends that is
not more than 30 nor less than 15 days prior to the applicable Dividend Payment
Date. Cash dividends paid by the Company from time to time will be applied to
unpaid dividends in the order in which such dividends accrued. Accrued and
unpaid dividends, if any, will not bear interest or bear dividends thereon. The
liquidation preference of each share of Series A Cumulative Preferred Stock is
$25.00. Generally, holders of Series A
20
Cumulative Preferred Stock do not have voting rights for election of directors.
Based upon the subscription price of the Series A Cumulative Preferred Stock of
$23.70 per share, the annual dividend rate yields approximately 9.1%.
DIVIDEND PAYMENTS ON THE SHARES OF SERIES A CUMULATIVE PREFERRED STOCK TO BE
ISSUED PURSUANT TO THE RIGHTS OFFERING
The Series A Cumulative Preferred Stock issued upon exercise of the rights
will be entitled to receive dividend payments for all periods beginning with the
March 1, 2004 dividend payment.
NO FRACTIONAL RIGHTS
You may not purchase fractional shares of Series A Cumulative Preferred
Stock pursuant to the exercise of subscription rights. We will accept any
inadvertent subscription indicating a purchase of fractional shares by rounding
down to the nearest whole share number and, as soon as practicable, refunding
without interest any payment received for a fractional share.
You may request that the subscription agent divide your subscription rights
certificate into transferable parts, if for instance, you are the record holder
for a number of beneficial holders of our stock. However, the subscription agent
will not divide your subscription rights certificate so that you would receive
any fractional subscription rights. The subscription agent will only facilitate
subdivisions or transfers of subscription rights certificates until 5:00 p.m.,
New York City time, on December , 2004, three business days prior to the
expiration date.
EXPIRATION OF THE RIGHTS OFFERING AND EXTENSIONS, AMENDMENTS AND TERMINATION
You may exercise your subscription rights at any time before 5:00 p.m., New
York City time, on , 2004, the expiration date for this rights offering.
We may, in our sole discretion, extend the time for exercising the subscription
rights. If the commencement of this rights offering is delayed for a period of
time, the expiration date of this rights offering will be similarly extended.
We will extend the duration of the rights offering as required by
applicable law, and may choose to extend it if we decide that changes in the
market price of our Series A Cumulative Preferred Stock warrant an extension or
if we decide to give investors more time to exercise their subscription rights
in this rights offering. We may extend the expiration date of this rights
offering by giving oral or written notice to the subscription agent and
information agent on or before the scheduled expiration date. If we elect to
extend the expiration of this rights offering, we will issue a press release
announcing such extension no later than 9:00 a.m., New York City time, on the
next business day after the most recently announced expiration date.
We reserve the right, in our sole discretion, to amend or modify the terms
of this rights offering.
If you do not exercise your subscription rights before the expiration date
of this rights offering, your unexercised subscription rights will be null and
void and will have no value. We will not be obligated to honor your exercise of
subscription rights if the subscription agent receives the documents relating to
your exercise after this rights offering expires, regardless of when you
transmitted the documents, except if you have timely transmitted the documents
under the guaranteed delivery procedures described below.
SUBSCRIPTION RIGHTS
Every twenty subscription rights entitle you to a basic subscription right
and an over-subscription right.
Basic Subscription Right. With your basic subscription right, you may
purchase one share of our Series A Cumulative Preferred Stock per subscription
right, upon delivery of the required documents and payment of the subscription
price of $23.70 per share. You are not required to exercise all of your
subscription rights unless you wish to purchase shares under your
over-subscription right. We will deliver to the record holders who purchase
shares in this rights offering certificates representing the shares purchased
with a holder's basic subscription right as soon as practicable after this
rights offering has expired.
21
Over-Subscription Right. In addition to your basic subscription right, you
may subscribe for additional shares of our Series A Cumulative Preferred Stock,
upon delivery of the required documents and payment of the subscription price of
$23.70 per share, before the expiration of this rights offering. You may only
exercise your over-subscription right if you exercised your basic subscription
right in full and other holders of subscription rights do not exercise their
basic subscription rights in full.
Pro Rata Allocation. If there are not enough shares of our Series A
Cumulative Preferred Stock to satisfy all subscriptions made under the
over-subscription right, we will allocate the remaining shares of our Series A
Cumulative Preferred Stock pro rata, after eliminating all fractional shares,
among those over-subscribing rights holders. "Pro rata" means in proportion to
the number of shares of our Series A Cumulative Preferred Stock that you and the
other subscription rights holders have purchased by exercising your basic
subscription rights. If there is a pro rata allocation of the remaining shares
of our Series A Cumulative Preferred Stock and you receive an allocation of a
greater number of shares than you subscribed for under your over-subscription
right, then we will allocate to you only the number of shares for which you
subscribed. We will allocate the remaining shares among all other holders
exercising their over-subscription rights.
Full Exercise of Basic Subscription Right. You may exercise your
over-subscription right only if you exercise your basic subscription right in
full. To determine if you have fully exercised your basic subscription right, we
will consider only the basic subscription rights held by you in the same
capacity. For example, suppose that you were granted subscription rights for
shares of our Series A Cumulative Preferred Stock that you own individually and
shares of our Series A Cumulative Preferred Stock that you own collectively with
your spouse. If you wish to exercise your over-subscription right with respect
to the subscription rights you own individually, but not with respect to the
subscription rights you own collectively with your spouse, you only need to
fully exercise your basic subscription right with respect to your individually
owned subscription rights. You do not have to subscribe for any shares under the
basic subscription right owned collectively with your spouse to exercise your
individual over-subscription right.
When you complete the portion of your subscription rights certificate to
exercise your over-subscription right, you will be representing and certifying
that you have fully exercised your subscription rights as to shares of our
Series A Cumulative Preferred Stock that you hold in that capacity. You must
exercise your over-subscription right at the same time you exercise your basic
subscription right in full.
Return of Excess Payment. If you exercised your over-subscription right
and are allocated less than all of the shares of our Series A Cumulative
Preferred Stock for which you wished to subscribe, your excess payment for
shares that were not allocated to you will be returned to you by mail, without
interest or deduction, as soon as practicable after the expiration date of this
rights offering. We will deliver to the record holders who purchase shares in
this rights offering certificates representing the shares of our Series A
Cumulative Preferred Stock that you purchased as soon as practicable after the
expiration date of this rights offering and after all pro rata allocations and
adjustments have been completed.
METHOD OF SUBSCRIPTION - EXERCISE OF RIGHTS
You may exercise your subscription rights by delivering the following to
the subscription agent, at or prior to 5:00 p.m., New York City time, on
, 2004, the expiration date of this rights offering:
- Your properly completed and executed subscription rights certificate with
any required signature guarantees or other supplemental documentation;
and
- Your full subscription price payment for each share subscribed for under
your subscription privileges.
If you are a beneficial owner of shares of our Common Stock whose shares
are registered in the name of a broker, custodian bank or other nominee, you
should instruct your broker, custodian bank or other nominee to exercise your
rights and deliver all documents and payment on your behalf prior to 5:00 p.m.,
New York City time on , 2004, the expiration date of this rights
offering.
Your subscription rights will not be considered exercised unless the
subscription agent receives from you, or your broker, custodian or nominee, as
the case may be, all of the required documents and your full
22
subscription price payment prior to 5:00 p.m., New York City time, on ,
2004, the expiration date of this rights offering.
METHOD OF PAYMENT
Your payment of the subscription price must be made in U.S. dollars for the
full number of shares of Series A Cumulative Preferred Stock for which you are
subscribing by either:
- check or bank draft drawn upon a U.S. bank or postal, telegraphic or
express money order payable to the subscription agent; or
- wire transfer of immediately available funds, to the subscription account
maintained by the subscription agent at JPMorgan Chase, ABA No.
021-0000021, Account No. [ ].
RECEIPT OF PAYMENT
Your payment will be considered received by the subscription agent only
upon:
- Clearance of any uncertified check;
- Receipt by the subscription agent of any certified check or bank draft
drawn upon a U.S. bank or of any postal, telegraphic or express money
order; or
- Receipt of collected funds in the subscription account designated above.
CLEARANCE OF UNCERTIFIED CHECKS
If you are paying by uncertified personal check, please note that
uncertified checks may take at least five (5) business days to clear. If you
wish to pay the subscription price by uncertified personal check, we urge you to
make payment sufficiently in advance of the time this rights offering expires to
ensure that your payment is received by the subscription agent and clears by the
rights offering expiration date. We urge you to consider using a certified or
cashier's check, money order or wire transfer of funds to avoid missing the
opportunity to exercise your subscription rights should you decide to exercise
your subscription rights.
DELIVERY OF SUBSCRIPTION MATERIALS AND PAYMENT
You should deliver your subscription rights certificate and payment of the
subscription price or, if applicable, notices of guaranteed delivery, to the
subscription agent by one of the methods described below:
By mail, hand delivery or overnight courier to:
American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
By facsimile:
(718) 234-5001
You may call the subscription agent at (800) 937-5449.
Your delivery to an address or by any method other than as set forth above
will not constitute valid delivery.
CALCULATION OF SUBSCRIPTION RIGHTS EXERCISED
If you do not indicate the number of subscription rights being exercised,
or do not forward full payment of the total subscription price for the number of
subscription rights that you indicate are being exercised, then you will be
deemed to have exercised your basic subscription right with respect to the
maximum number of subscription rights that may be exercised with the aggregate
subscription price payment you delivered to the
23
subscription agent. If your aggregate subscription price payment is greater than
the amount you owe for your subscription, you will be deemed to have exercised
your over-subscription right to purchase the maximum number of shares of our
Series A Cumulative Preferred Stock with your over-payment. If we do not apply
your full subscription price payment to your purchase of shares of our Series A
Cumulative Preferred Stock, we or the subscription agent will return the excess
amount to you by mail, without interest or deduction, as soon as practicable
after the expiration date of this rights offering.
EXERCISING A PORTION OF YOUR SUBSCRIPTION RIGHTS
If you subscribe for fewer than all of the shares of our Series A
Cumulative Preferred Stock represented by your subscription rights certificate,
you may request from the subscription agent a new subscription rights
certificate representing your unused subscription rights and then attempt to
sell your unused subscription rights. See "-- Methods for Transferring and
Selling Subscription Rights." Alternatively, you may transfer a portion of your
subscription rights and request from the subscription agent a new subscription
rights certificate representing the rights you did not transfer. HOWEVER, THE
SUBSCRIPTION AGENT WILL ONLY FACILITATE SUBDIVISIONS OR TRANSFERS OF
SUBSCRIPTION RIGHTS CERTIFICATES UNTIL 5:00 P.M., NEW YORK CITY TIME, ON
, 2004, THREE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE. All
subscription rights must be exercised prior to the expiration date of this
rights offering, or else your subscription rights will be null and void. We will
not issue any subscription rights certificates for unexercised subscription
rights after the rights offering expiration date.
YOUR FUNDS WILL BE HELD BY THE SUBSCRIPTION AGENT UNTIL SHARES OF OUR SERIES A
CUMULATIVE PREFERRED STOCK ARE ISSUED
The subscription agent will hold your payment of the subscription price in
a segregated account with other payments received from other subscription rights
holders until we issue your shares of our Series A Cumulative Preferred Stock to
you upon consummation of the rights offering.
MEDALLION GUARANTEE MAY BE REQUIRED
Your signature on each subscription rights certificate must be guaranteed
by an eligible institution, such as a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the U.S., subject to standards and procedures adopted by the
subscription agent, unless:
- Your subscription rights certificate provides that shares are to be
delivered to you as record holder of those subscription rights; or
- You are an eligible institution.
NOTICE TO BENEFICIAL HOLDERS
If you are a broker, a trustee or a depositary for securities who holds
shares of our Common Stock for the account of others on the record date, you
should notify the respective beneficial owners of such shares of this rights
offering as soon as possible to find out their intentions with respect to
exercising or selling their subscription rights. You should obtain instructions
from the beneficial owner with respect to their subscription rights, as set
forth in the instructions we have provided to you for your distribution to
beneficial owners. If the beneficial owner so instructs, you should complete the
appropriate subscription rights certificates and submit them to the subscription
agent with the proper payment. If you hold shares of our stock for the
account(s) of more than one beneficial owner, you may exercise the number of
subscription rights to which all such beneficial owners in the aggregate
otherwise would have been entitled had they been direct record holders of our
stock on the rights offering record date, provided that you, as a nominee record
holder, make a proper showing to the subscription agent by submitting the form
entitled "Nominee Holder Certification" that we will provide to you with your
rights offering materials. If you did not receive this form, you should contact
the subscription agent to request a copy.
24
BENEFICIAL OWNERS
If you are a beneficial owner of shares of our Common Stock or will receive
your subscription rights through a broker, custodian bank or other nominee, we
will ask your broker, custodian bank or other nominee to notify you of this
rights offering. If you wish to exercise or sell your subscription rights, you
will need to have your broker, custodian bank or other nominee act for you. If
you hold certificates of our stock directly and would prefer to have your
broker, custodian bank or other nominee act for you, you should contact your
nominee and request it to effect the transactions for you. To indicate your
decision with respect to your subscription rights, you should complete and
return to your broker, custodian bank or other nominee the form entitled
"Beneficial Owners Election Form." You should receive this form from your
broker, custodian bank or other nominee with the other rights offering
materials. If you wish to obtain a separate subscription rights certificate, you
should contact the nominee as soon as possible and request that a separate
subscription rights certificate be issued to you. You should contact your
broker, custodian bank or other nominee if you do not receive this form, but you
believe you are entitled to participate in this rights offering. We are not
responsible if you do not receive the form from your broker, custodian bank or
nominee or if you receive it without sufficient time to respond.
INSTRUCTIONS FOR COMPLETING YOUR SUBSCRIPTION RIGHTS CERTIFICATE
You should read and follow the instructions accompanying the subscription
rights certificates carefully.
You are responsible for the method of delivery of your subscription rights
certificate(s) with your subscription price payment to the subscription agent.
If you send your subscription rights certificate(s) and subscription price
payment by mail, we recommend that you send them by registered mail, properly
insured, with return receipt requested. You should allow a sufficient number of
days to ensure delivery to the subscription agent prior to the time this rights
offering expires. Because uncertified personal checks may take at least five (5)
business days to clear, you are strongly urged to pay, or arrange for payment,
by means of a certified or cashier's check, money order or wire transfer of
funds.
DETERMINATIONS REGARDING THE EXERCISE OR SALE OF YOUR SUBSCRIPTION RIGHTS
We will decide all questions concerning the timeliness, validity, form and
eligibility of the exercise of your subscription rights and any such
determinations by us will be final and binding. We, in our sole discretion, may
waive, in any particular instance, any defect or irregularity, or permit, in any
particular instance, a defect or irregularity to be corrected within such time
as we may determine. We will not be required to make uniform determinations in
all cases. We may reject the exercise or sale of any of your subscription rights
because of any defect or irregularity. We will not accept any exercise of
subscription rights until all irregularities have been waived by us or cured by
you within such time as we decide, in our sole discretion.
Neither we, the subscription agent nor the information agent will be under
any duty to notify you of any defect or irregularity in connection with your
submission of subscription rights certificates and we will not be liable for
failure to notify you of any defect or irregularity. We reserve the right to
reject your exercise of subscription rights if your exercise is not in
accordance with the terms of this rights offering or in proper form. We will
also not accept the exercise of your subscription rights if our issuance of
shares of our Series A Cumulative Preferred Stock to you could be deemed
unlawful under applicable law.
REGULATORY LIMITATION
We will not be required to issue to you shares of our Series A Cumulative
Preferred Stock pursuant to this rights offering if, in our opinion, you would
be required to obtain prior clearance or approval from any state or federal
regulatory authorities to own or control such shares if, at the time this rights
offering expires, you have not obtained such clearance or approval.
25
GUARANTEED DELIVERY PROCEDURES
If you wish to exercise your subscription rights, but you do not have
sufficient time to deliver the subscription rights certificate evidencing your
subscription rights to the subscription agent on or before the time this rights
offering expires, you may exercise your subscription rights by the following
guaranteed delivery procedures:
- Deliver to the subscription agent on or prior to the rights offering
expiration date your subscription price payment in full for each share
you subscribed for under your subscription rights in the manner set forth
above in "-- Method of Payment";
- Deliver to the subscription agent on or prior to the expiration date the
form entitled "Notice of Guaranteed Delivery," substantially in the form
provided with the "Instructions as to the Use of Fedders Corporation
Subscription Rights Certificates" distributed with your subscription
rights certificates; and
- Deliver the properly completed subscription rights certificate evidencing
your subscription rights being exercised and the related nominee holder
certification, if applicable, with any required signature guarantee, to
the subscription agent within three (3) New York Stock Exchange trading
days following the date of your Notice of Guaranteed Delivery.
Your Notice of Guaranteed Delivery must be delivered in substantially the
same form provided with the Instructions as to the Use of Fedders Corporation
Subscription Rights Certificates, which will be distributed to you with your
subscription rights certificate. Your Notice of Guaranteed Delivery must come
from an eligible institution, or other eligible guarantee institutions that are
members of, or participants in, a signature guarantee program acceptable to the
subscription agent.
In your Notice of Guaranteed Delivery, you must state:
- Your name;
- The number of subscription rights represented by your subscription rights
certificates, the number of shares of our Series A Cumulative Preferred
Stock for which you are subscribing under your basic subscription right
and the number of shares of our Series A Cumulative Preferred Stock for
which you are subscribing under your over-subscription right, if any; and
- Your guarantee that you will deliver to the subscription agent any
subscription rights certificates evidencing the subscription rights you
are exercising within three (3) business days following the date the
subscription agent receives your Notice of Guaranteed Delivery.
You may deliver your Notice of Guaranteed Delivery to the subscription
agent in the same manner as your subscription rights certificates at the address
set forth above under "-- Delivery of Subscription Materials and Payment." You
may alternatively transmit your Notice of Guaranteed Delivery to the
subscription agent by facsimile transmission (Telecopy No.: (718) 234-5001). To
confirm facsimile deliveries, you may call (800) 937-5449.
The information agent will send you additional copies of the form of Notice
of Guaranteed Delivery if you request them. Please call toll-free (866) 835-2930
to request any copies of the form of Notice of Guaranteed Delivery. Banks and
brokerage firms please call collect at (212) 440-9800.
QUESTIONS ABOUT EXERCISING OR SELLING SUBSCRIPTION RIGHTS
If you have any questions or require assistance regarding the method of
exercising or selling your subscription rights or requests for additional copies
of this prospectus, the Instructions as to the Use of Fedders Corporation
Subscription Rights Certificates or the Notice of Guaranteed Delivery, you
should contact the information agent at the address and telephone number set
forth above under "Questions and Answers About the Rights Offering."
26
SUBSCRIPTION AGENT AND INFORMATION AGENT
We have appointed American Stock Transfer & Trust Company to act as the
subscription agent and Georgeson Shareholder Communications Inc. to act as the
information agent for this rights offering. We will pay all fees and expenses of
the subscription agent and the information agent related to this rights offering
and have also agreed to indemnify the subscription agent and the information
agent from liabilities that they may incur in connection with this rights
offering.
NO REVOCATION
Once you have exercised your subscription rights, you may not revoke your
exercise. Subscription rights not exercised prior to the expiration date of this
rights offering will expire and will have no value.
PROCEDURES FOR DTC PARTICIPANTS
We expect that the exercise of your basic subscription right and your
over-subscription right may be made through the facilities of the Depository
Trust Company. If your subscription rights are held of record through DTC, you
may exercise your basic subscription right and your over-subscription right by
instructing DTC to transfer your subscription rights from your account to the
account of the subscription agent, together with certification as to the
aggregate number of subscription rights you are exercising and the number of
shares of our Series A Cumulative Preferred Stock you are subscribing for under
your basic subscription right and your over-subscription right, if any, and your
subscription price payment for each share of our Series A Cumulative Preferred
Stock that you subscribed for pursuant to your basic subscription right and your
over-subscription right.
SUBSCRIPTION PRICE
The subscription price is $23.70 per share. For more information with
respect to how the subscription price was determined, see "Questions and Answers
About the Rights Offering" included elsewhere in this prospectus.
FOREIGN AND OTHER STOCKHOLDERS
Subscription rights certificates will be mailed to subscription rights
holders whose addresses are outside the United States or who have an APO or FPO
address. To exercise such subscription rights, you must notify the subscription
agent, and take all other steps which are necessary to exercise your
subscription rights on or prior to the expiration date of this rights offering.
Your subscription rights will expire and will have no value if the procedures
set forth in the preceding sentence are not followed prior to the expiration
date.
METHODS FOR TRANSFERRING AND SELLING SUBSCRIPTION RIGHTS
We anticipate that the subscription rights will be traded on the NYSE under
the symbol "FJC.RT". We expect that subscription rights may be purchased or sold
until the close of business on the last trading day preceding the expiration
date. You may sell your subscription rights by contacting your broker or the
institution through which you hold your securities. In addition, if you are a
record holder of our stock, you may sell your rights through the subscription
agent (as described below). However, there has been no prior public market for
the subscription rights, and we cannot assure you that a trading market for the
subscription rights will develop or, if a market develops, that the market will
remain available throughout the subscription period. We also cannot assure you
of the price at which the subscription rights will trade, if at all. If you do
not exercise or sell your subscription rights you will lose any value inherent
in the subscription rights. See "-- General Considerations Regarding the Partial
Exercise, Transfer or Sale of Subscription Rights" below.
Transfer of Subscription Rights. You may transfer subscription rights in
whole by endorsing the subscription rights certificate for transfer. Please
follow the instructions for transfer included in the information sent to you
with your subscription rights certificate. If you wish to transfer only a
portion of the subscription rights, you should deliver your properly endorsed
subscription rights certificate to the subscription
27
agent. With your subscription rights certificate, you should include
instructions to register such portion of the subscription rights evidenced
thereby in the name of the transferee (and to issue a new subscription rights
certificate to the transferee evidencing such transferred subscription rights).
You may only transfer whole subscription rights and not fractions of a
subscription right. If there is sufficient time before the expiration of this
rights offering, the subscription agent will send you a new subscription rights
certificate evidencing the balance of your subscription rights that you did not
transfer to the transferee. You may also instruct the subscription agent to send
the subscription rights certificate to one or more additional transferees. If
you wish to sell your remaining subscription rights, you may request that the
subscription agent send you certificates representing your remaining (whole)
subscription rights so that you may sell them through your broker or dealer.
If you wish to transfer all or a portion of your subscription rights, you
should allow a sufficient amount of time prior to the time the subscription
rights expire for the subscription agent to:
- Receive and process your transfer instructions; and
- Issue and transmit a new subscription rights certificate to your
transferee or transferees with respect to transferred subscription
rights, and to you with respect to any subscription rights you retained.
If you wish to transfer your subscription rights to any person other than a
bank or broker, the signatures on your subscription rights certificate must be
guaranteed by an eligible institution.
Sales of Subscription Rights Through the Subscription Agent. If you are a
record holder of our stock and choose not to sell your subscription rights
through your broker or dealer, you may choose to sell your subscription rights
through the subscription agent. If you wish to have the subscription agent seek
to sell your subscription rights, you must deliver your properly executed
subscription rights certificate, with appropriate instructions, to the
subscription agent. If you want the subscription agent to seek to sell only a
portion of your subscription rights, you must send the subscription agent
instructions setting forth what you would like done with the subscription rights
along with your subscription rights certificate.
If the subscription agent sells subscription rights for you, it will send
you a check for the net proceeds from the sale of any of your subscription
rights, less any applicable commissions, taxes or broker fees, as soon as
practicable following the sale. If your subscription rights can be sold, the
sale will be deemed to have been made at the weighted average net sale price of
all subscription rights sold by the subscription agent on the relevant date of
sale. We cannot assure you, however, that a market will develop for the purchase
and sale of the subscription rights or that the subscription agent will be able
to sell your subscription rights.
You must deliver your order to sell your subscription rights to the
subscription agent before 11:00 a.m., New York City time, on , 2004, the
third business day before the expiration date. If less than all sales orders
received by the subscription agent are filled, it will prorate the sales
proceeds among you and the other subscription rights holders based upon the
number of subscription rights that each holder has instructed the subscription
agent to sell during that period, irrespective of when during the period the
instructions are received by it. The subscription agent is required to sell your
subscription rights only if it is able to find buyers.
IF YOU SELL YOUR SUBSCRIPTION RIGHTS THROUGH YOUR BROKER OR DEALER, YOU MAY
RECEIVE A DIFFERENT AMOUNT OF SALES PROCEEDS THAN IF YOU SELL THE SAME AMOUNT OF
SUBSCRIPTION RIGHTS THROUGH THE SUBSCRIPTION AGENT. IF YOU SELL YOUR
SUBSCRIPTION RIGHTS THROUGH YOUR BROKER OR DEALER INSTEAD OF THE SUBSCRIPTION
AGENT, YOUR SALES PROCEEDS WILL BE THE ACTUAL SALES PRICE OF YOUR SUBSCRIPTION
RIGHTS LESS ANY APPLICABLE BROKERS COMMISSION, TAXES OR OTHER FEES, RATHER THAN
THE WEIGHTED AVERAGE NET SALE PRICE OF ALL SUBSCRIPTION RIGHTS SOLD BY THE
SUBSCRIPTION AGENT ON THE RELEVANT DATE DESCRIBED ABOVE.
General Considerations Regarding the Partial Exercise, Transfer or Sale of
Subscription Rights. The amount of time needed by your transferee to exercise
or sell its subscription rights depends upon the method by which you, as the
transferor, deliver the subscription rights certificates, the method of payment
made by
28
your transferee and the number of transactions that the holder instructs the
subscription agent to effect. You should also allow up to ten business days for
your transferee to exercise or sell the subscription rights that you transferred
to it. Neither we nor the subscription agent will be liable to a transferee or
transferor of subscription rights if subscription rights certificates or any
other required documents are not received in time for exercise or sale prior to
the expiration date.
You will receive a new subscription rights certificate upon a partial
exercise, transfer or sale of subscription rights only if the subscription agent
receives your properly endorsed subscription rights certificate no later than
5:00 p.m., New York City time, three business days before the expiration date.
If your instructions and subscription rights certificate are received by the
subscription agent after that time and date, you will not receive a new
subscription rights certificate and therefore will not be able to sell or
exercise your remaining subscription rights.
You are responsible for all commissions, fees and other expenses (including
brokerage commissions and transfer taxes) incurred in connection with the
purchase, sale or exercise of your subscription rights, except that we will pay
any fees of the subscription agent and information agent associated with this
rights offering. Any amounts you owe will be deducted from your account.
If you do not exercise or sell your subscription rights before the
expiration date, your subscription rights will expire without value and will no
longer be exercisable.
CANCELLATION RIGHTS
Our board of directors may cancel this rights offering, in whole or in
part, in its sole discretion at any time prior to the time this rights offering
expires for any reason (including a change in the market price of our Series A
Cumulative Preferred Stock). If we cancel this rights offering, any funds you
paid to the subscription agent will be promptly refunded, without interest or
deduction.
NO BOARD RECOMMENDATION
An investment in shares of our Series A Cumulative Preferred Stock must be
made according to each investor's evaluation of its own best interests and after
considering all of the information in this prospectus, including the "Risk
Factors" section of this prospectus and all of the information incorporated by
reference in this prospectus. Neither we nor our board of directors make any
recommendation to subscription rights holders regarding whether they should
exercise or sell their subscription rights.
SHARES OF SERIES A CUMULATIVE PREFERRED STOCK OUTSTANDING AFTER THE RIGHTS
OFFERING
Based on the 674,837 shares of our Series A Cumulative Preferred Stock
issued and outstanding as of December 1, 2003, assuming all rights are
exercised, approximately 2,195,084 shares of our Series A Cumulative Preferred
Stock will be issued and outstanding after this rights offering expires, an
increase in the number of outstanding shares of our Series A Cumulative
Preferred Stock of approximately 325%.
OTHER MATTERS
We are not making this rights offering in any state or other jurisdiction
in which it is unlawful to do so, nor are we distributing or accepting any
offers to purchase any shares of our Series A Cumulative Preferred Stock from
subscription rights holders who are residents of those states or other
jurisdictions or who are otherwise prohibited by federal or state laws or
regulations from accepting or exercising the subscription rights. We may delay
the commencement of this rights offering in those states or other jurisdictions,
or change the terms of this rights offering, in whole or in part, in order to
comply with the securities law or other legal requirements of those states or
other jurisdictions. We may decline to make modifications to the terms of this
rights offering requested by those states or other jurisdictions, in which case,
if you are a resident of those states or jurisdictions or if you are otherwise
prohibited by federal or state laws or regulations from accepting or exercising
the subscription rights you will not be eligible to participate in this rights
offering.
29
USE OF PROCEEDS
If all of the subscription rights are exercised, the aggregate net proceeds
to Fedders from this offering would be approximately $35,798,939.08, after
deducting fees and estimated expenses of approximately $230,914.82. We currently
anticipate that we will apply such net proceeds for possible future strategic
acquisitions, to decrease the use of debt for working capital and for general
corporate purposes. We continually evaluate potential acquisitions and intend to
actively pursue acquisition opportunities, some of which may be material, but we
do not have any agreements or understandings with respect to the foregoing.
30
CAPITALIZATION
The unaudited pro forma consolidated capitalization table represents the
effect on stockholders' equity of the rights offering as proposed herein,
assuming that the offering has been completed as of August 31, 2003. The
unaudited capitalization data is derived from the Consolidated Balance Sheet of
Fedders as of August 31, 2003.
PRO FORMA CONSOLIDATED CONDENSED UNAUDITED
CAPITALIZATION TABLE (AS OF AUGUST 31, 2003)
(AMOUNTS IN THOUSANDS)
<Table>
<Caption>
PRO FORMA
ADJUSTMENTS
-----------
PROPOSED
AS OF RIGHTS
AUGUST 31, OFFERING AS
2003 (A) ADJUSTED
---------- ----------- --------
Cash...................................................... $ 60,902 35,799 $ 96,701
Stockholders' Equity
Preferred Stock, $0.01 par value, 15,000,000 shares
authorized, 674,837 shares issued and outstanding,
actual; 2,195,084 shares issued and outstanding as
adjusted............................................. $ 7 15 $ 22
Common Stock, $0.01 par value, 70,000,000 shares
authorized; 35,300,633 shares issued, actual and as
adjusted............................................. 353 353
Class B Stock, $0.01 par value, 5,000,000 shares
authorized; 2,493,047 shares issued and outstanding,
actual and as adjusted............................... 25 25
Paid in capital......................................... 74,025 35,784 109,809
Retained earnings....................................... 40,179 40,179
Treasury stock, at cost, 8,158,400 shares of Common
Stock actual, and as adjusted........................ (37,322) (37,322)
Deferred compensation................................... (94) (94)
Accumulated comprehensive loss.......................... (2,245) (2,245)
-------- -------- --------
Total stockholders' equity.............................. $ 74,928 $ 35,799 $110,727
======== ======== ========
</Table>
- ---------------
Notes to the Pro Forma Consolidated Condensed Unaudited Capitalization Table
(a) Pro forma adjustments assume all 1,520,247 Series A Cumulative Preferred
Stock were subscribed at $23.70 per share.
31
DESCRIPTION OF CAPITAL STOCK
This section contains a description of our capital stock. This description
includes a summary of the terms of the Common Stock, Class B Stock and the
Series A Cumulative Preferred Stock. The summaries of the Common Stock, the
Class B Stock and the Series A Cumulative Preferred Stock are qualified in their
entirety by reference to the full text of our Restated Certificate of
Incorporation (the "Charter"), including the Amended Certificate of Designation
of the Series A Cumulative Preferred Stock, the By-laws and the General
Corporation Law of the State of Delaware, or DGCL.
Under the Charter, our authorized capital stock consists of 70,000,000
shares of Common Stock, 5,000,000 shares of Class B Stock and 15,000,000 shares
of Preferred Stock.
COMMON STOCK
As of December 1, 2003, there were 27,911,879 shares of Common Stock
outstanding. The Common Stock has a par value of $0.01 per share.
DIVIDENDS
Subject to the prior rights of the holders of the Series A Cumulative
Preferred Stock, holders of Common Stock are entitled to receive such dividends
and other distributions in cash, stock or property of Fedders as may be declared
thereon by our board of directors from time to time out of assets or funds
legally available therefor, provided that in the case of cash dividends, if at
any time a cash dividend is paid on the Common Stock, a cash dividend must be
paid on the Class B Stock in an amount per share equal to the amount of the cash
dividend paid on each share of Common Stock. In the case of a dividend or other
distributions payable in stock of Fedders other than Series A Cumulative
Preferred Stock, which occur after the initial issuance of shares of Common
Stock by Fedders, only shares of Common Stock may be distributed with respect to
Common Stock.
VOTING RIGHTS
Each share of Common Stock is entitled to one vote per share on all matters
submitted to our stockholders, including election of directors. The holders of
the Common Stock generally vote together with the holders of Class B Stock as a
single class. However, any amendment to the Charter, any merger or consolidation
of Fedders or any sale or disposition of all or substantially all of the assets
of Fedders (except where the other party to such transaction is a majority-owned
subsidiary of Fedders) or the dissolution of Fedders, requires the approval of a
majority of the shares of Common Stock and Class B Stock voting as separate
classes.
LIQUIDATION RIGHTS
In the event of any dissolution, liquidation or winding up of the affairs
of Fedders, after payment or provision for payment of our debts and other
liabilities and any amounts to which the holders of the Series A Cumulative
Preferred Stock are entitled, our remaining assets and funds will be divided
among the holders of the Common Stock and Class B Stock as follows:
(i) first, before any payment or distribution of our assets is made to
or set apart for the holders of Class B Stock, the holders of the shares of
Common Stock (including those persons who will become holders of Common
Stock by reason of converting their shares of Class B Stock) will be
entitled to receive $0.25 per share;
(ii) second, before any additional payment or distribution of our
assets is made to or set apart for the holders of Common Stock following
the initial $0.25 per share payment to the Common stockholders, the holders
of Class B Stock will be entitled to receive $0.50 per share;
(iii) third, before any additional payment or distribution of our
assets is made to or set apart for the holders of Class B Stock following
the $0.25 per share payment to the holders of Common Stock and the
32
$0.50 per share payment to the holders of Class B Stock, the holders of
Common Stock (including those persons who shall become holders of Common
Stock by reason of converting their shares of Class B Stock) will be
entitled to receive an additional $0.25 per share; and
(iv) fourth, following the payment or setting apart for payment of the
amounts in items (i) through (iii) above, the holders of Common Stock and
Class B Stock will participate pari passu and be entitled to receive, on a
pro rata basis, our remaining assets or proceeds therefrom available for
distribution to the holders of Common Stock and Class B Stock.
LISTING AND TRANSFER AGENT
Our Common Stock is listed on the New York Stock Exchange under the symbol
"FJC." American Stock Transfer & Trust Company is the transfer agent and
registrar for the Fedders Common Stock.
CLASS B STOCK
As of December 1, 2003, there were 2,943,061 shares of Class B Stock
outstanding. The Class B Stock has a par value of $0.01 per share.
DIVIDENDS
Subject to the prior rights of the holders of the Series A Cumulative
Preferred Stock, holders of Class B Stock are entitled to receive such dividends
and other distributions in cash, stock or property of Fedders as may be declared
thereon by our board of directors from time to time out of assets or funds
legally available therefor, provided that in the case of cash dividends, if at
any time a cash dividend is paid on the Common Stock, a cash dividend must be
paid on the Class B Stock in an amount per share of Class B Stock equal to the
amount of the cash dividend paid on each share of Common Stock. In the case of a
dividend or other distributions payable in stock of Fedders other than Series A
Cumulative Preferred Stock, which occur after the initial issuance of shares of
Class B Stock by Fedders, only shares of Class B Stock may be distributed with
respect to Class B Stock.
VOTING RIGHTS
Each share of Class B Stock is entitled to one vote on all matters
submitted to our stockholders, provided that each share of Class B Stock is
entitled to ten votes per share in any election of directors if either:
- more than 15% of the shares of Common Stock outstanding on the record
date for such meeting are beneficially owned by a person or group of
persons acting in concert (unless such person or group is also the
beneficial owner of a majority of the shares of Class B Stock on such
record date); or
- a nomination for the board of directors is made by a person or group of
persons acting in concert, other than the board of directors (unless such
nomination is made by one or more holders of Class B Stock, acting in
concert, who beneficially own more than 15% of the shares of Class B
Stock outstanding on such record date).
In addition, under the Charter, the holders of the Class B Stock have the
right to vote separately as a class on certain matters. These matters include
any amendment to the Charter, any merger or consolidation of Fedders or any sale
or disposition of all or substantially all of our assets (except where the other
party to such transaction is a majority-owned subsidiary of Fedders), any
dissolution of Fedders and any additional issuance of Class B Stock (except in
connection with stock splits and stock dividends).
LIQUIDATION RIGHTS
The Class B Stock will have the liquidation rights described in the section
of this Offering Circular titled "Description of Capital Stock -- Common
Stock -- Liquidation Rights."
33
RESTRICTIONS ON TRANSFER
Under the provisions of the Charter, the ability of a holder of Class B
Stock to transfer such stock whether by sale, assignment, gift, bequest,
appointment or otherwise, can only be made to a permitted transferee (as defined
in the Charter).
CONVERSION RIGHTS
Each share of Class B Stock is convertible at any time by the holder
thereof into one share of Common Stock, with no payment or adjustment on account
of dividends accrued or in arrears on Class B Stock surrendered for conversion
or on account of any dividends on the Common Stock issuable on such conversion.
Any conversion of Class B Stock is deemed to occur on the date the certificate
therefor is surrendered, and the person or persons entitled to receive Common
Stock issuable upon conversion of Class B Stock are treated for all purposes as
the record holder or holders of such Common Stock on such date. In addition, at
any time when the number of outstanding shares of Class B Stock falls below 2.5%
of the aggregate number of the issued and outstanding shares of Common Stock and
Class B Stock, or our board of directors and the holders of a majority of the
outstanding shares of Class B Stock approve the conversion of all of the Class B
Stock into Common Stock, then, immediately upon the occurrence of either such
event, the outstanding shares of our Class B Stock are converted into shares of
our Common Stock.
LISTING
Our Class B Stock is not listed for trading and there are restrictions on
its transfer. Fedders acts as the transfer agent and registrar for the Class B
Stock.
PREFERRED STOCK
Under the Charter, our board of directors has the authority, without
further stockholder action, to issue from time to time up to a maximum of
15,000,000 shares of Preferred Stock, in one or more series and for such
consideration as may be fixed from time to time by the board, and to fix before
the issuance of any shares of Preferred Stock of a particular series, the
designation, relative rights, preferences and limitations of such shares and of
each series, the number of shares to comprise such series, the dividend rate or
rates payable with respect to the shares of each series, the redemption price or
prices, if any, and the terms and conditions of any redemption, the voting
rights, any sinking fund provisions for the redemption or purchase of the shares
of such series, the terms and conditions upon which the shares are convertible
or exchangeable, if they are convertible or exchangeable, the rights of the
shares of each series in the event of voluntary or involuntary liquidation,
dissolution or winding up of Fedders, and any other relative rights, preferences
and limitations pertaining to such series.
SERIES A CUMULATIVE PREFERRED STOCK
Fedders has 15,000,000 authorized shares of Preferred Stock, 3,400,000 of
which are designated as Series A Cumulative Preferred Stock. Following the
consummation of the rights offering, assuming all rights are exercised,
2,195,084 shares of Series A Cumulative Preferred Stock will be outstanding. As
of December 1, 2003, there were 674,837 shares of Series A Cumulative Preferred
Stock outstanding. The Series A Cumulative Preferred Stock has a par value of
$0.01 per share.
DIVIDENDS
Each holder of Series A Cumulative Preferred Stock is entitled to receive
quarterly cumulative preferential dividends when, as and if declared by the
board, of $2.15 per share, per year ($0.5375 per share, per quarter). Such
cumulative preferred dividends are payable beginning on March 1, 2003 and then
on each June 1, September 1, December 1, and March 1 of each year or if any such
day is not a business day, on the next succeeding business day, (each such date
being referred to herein as a "Dividend Payment Date"), to the holders of record
as they appear in the stockholder record books of the Corporation at the close
of the applicable record date, which shall be the date designated by the board
of directors for the payment of
34
dividends, that is not more than 30 nor less than 15 days prior to the
applicable Dividend Payment Date. To the extent not paid, such dividends on the
Series A Cumulative Preferred Stock shall accumulate. Unless full cumulative
preferred dividends on all outstanding shares of Series A Cumulative Preferred
Stock for all past dividend periods (including all accrued and unpaid dividends)
shall have been declared and paid in cash, or declared and a sufficient sum for
the payment thereof set apart, then: (i) no dividend shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any class or
series of stock of Fedders, if any, ranking junior to the Series A Cumulative
Preferred Stock, including, but not limited to the Common Stock and the Class B
Stock (the "Junior Securities"); (ii) no other distribution shall be declared or
made upon, or any sum set apart for the payment of any distribution upon, any
shares of Junior Securities, other than a distribution consisting solely of
Junior Securities; (iii) no shares of Junior Securities shall be purchased,
redeemed or otherwise acquired or retired for value (excluding an exchange or
conversion for shares of other Junior Securities (or purchases, redemptions or
other acquisitions of Junior Securities of former employees)) by Fedders or any
of its subsidiaries; and (iv) no monies shall be paid into or set apart or made
available for a sinking or other fund for the purchase, redemption or other
acquisition or retirement for value of any shares of Junior Securities.
VOTING RIGHTS
Except as set forth below or as required by law, the holders of shares of
Series A Cumulative Preferred Stock shall have no voting rights and their
consent shall not be required for taking any corporate action.
Fedders will not, without the affirmative vote or consent of the holders of
two-thirds (2/3) of the shares of Series A Cumulative Preferred Stock then
outstanding: (i) amend or alter its Charter or By-laws in any manner that
materially adversely affects the powers, preferences or special rights of the
Series A Cumulative Preferred Stock; (ii) create, authorize or issue any class
or series of stock, ranking as to payment of dividends or upon liquidation,
dissolution or winding up of Fedders, senior to Series A Cumulative Preferred
Stock; (iii) amend or alter the Amended Certificate of Designation in any manner
that materially adversely affects the powers, preferences, or special rights of
the Series A Cumulative Preferred Stock; or (iv) waive compliance with any
provision of the Amended Certificate of Designation.
However, Fedders may without the vote of any holders of Series A Cumulative
Preferred Stock:
- increase the amount of authorized and issued Series A Cumulative
Preferred Stock;
- create, authorize or issue any class or series of stock ranking as to
payment of dividends or upon liquidation, dissolution or winding up of
Fedders, pari passu to the Series A Cumulative Preferred Stock; and
- amend or supplement the Amended Certificate of Designation to cure any
ambiguity, defect or inconsistency or to make any change that would
provide any additional rights or benefits to the holders of Series A
Cumulative Preferred Stock or that does not adversely affect the legal or
economic rights under the Amended Certificate of Designation of any such
holder.
If at any time dividends on any Series A Cumulative Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the holders
of Series A Cumulative Preferred Stock will be entitled to vote separately as a
class to elect two additional directors by making such increase in the number of
directors as shall be necessary to permit their election. This right shall
extend until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on all
shares of Series A Cumulative Preferred Stock then outstanding shall have been
declared and paid or set apart for payment.
LIQUIDATION RIGHTS
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Fedders (the date of such occurrence, the "Liquidation Date"), we shall out of
our assets available for distribution in respect of its stock, make the
following payments in respect of our stock: first, payments due in connection
with any class or series of stock of Fedders, if any, ranking senior to the
Series A Cumulative Preferred Stock on the Liquidation Date
35
("Senior Securities"); second, on a pro rata basis, payments (i) on shares of
the Series A Cumulative Preferred Stock equal to $25.00 per share of Series A
Cumulative Preferred Stock plus the amount of any accrued and unpaid dividends
as of the Liquidation Date, and (ii) due in connection with any class or series
of stock of Fedders, if any, ranking pari passu to the Series A Cumulative
Preferred Stock on the Liquidation Date (the "Parity Securities"); and third,
payments on any class or series of Junior Securities.
If, upon any voluntary or involuntary liquidation, dissolution or winding
up of Fedders, after payment in full of all amounts due in connection with any
Senior Securities, the amounts payable to holders of Series A Cumulative
Preferred Stock and any other Parity Securities are not paid in full, the
holders of Series A Cumulative Preferred Stock and of such other Parity
Securities will share ratably in any such distribution of our assets in
proportion to the full respective preferential amounts to which they are
entitled.
LISTING
Our Series A Cumulative Preferred Stock is listed on the New York Stock
Exchange under the symbol "FJCPRA." American Stock Transfer & Trust Company is
the transfer agent and registrar for the Fedders Series A Cumulative Preferred
Stock.
DESCRIPTION OF PROVISIONS OF OUR CHARTER AND BY-LAWS AND DELAWARE LAW
The Charter specifies that each director on our board of directors shall be
elected by the stockholders at each annual meeting and shall hold office until
the next annual meeting of stockholders and until such director's successor
shall have been elected and qualified. Our By-laws provide that the number of
directors on the board may be fixed by the board only. In the interim period
between annual meetings of stockholders or of special meetings of stockholders,
vacancies and newly created directorships may be filled by the board of
directors. Any directors so elected will hold office until the next annual
meeting. The board of directors has been fixed at and currently consists of 9
directors.
The Charter also provides that a director shall not personally be liable to
Fedders or our stockholders for monetary damages for breach of fiduciary duty as
a director except for liability (i) for any breach of the director's duty of
loyalty to Fedders or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.
Section 203 of the DGCL generally prohibits a public Delaware corporation,
including Fedders, from engaging in a Business Combination (as defined below)
with an Interested Stockholder (as defined below) for a period of three years
after the date of the transaction in which an Interested Stockholder became
such, unless: (i) the board of directors of such corporation approved, prior to
the date such Interested Stockholder became such, either such Business
Combination or such transaction; (ii) upon consummation of such transaction,
such Interested Stockholder owns at least 85% of the voting shares of such
corporation (excluding specified shares) outstanding at the time the transaction
commenced; or (iii) such Business Combination is approved by the board of
directors of such corporation and authorized by the affirmative vote (at an
annual or special meeting and not by written consent) of at least 66 2/3% of the
outstanding voting shares of such corporation (excluding shares held by such
Interested Stockholder). A "Business Combination" includes (i) mergers,
consolidations and sales or other dispositions of 10% or more of the assets of a
corporation to or with an Interested Stockholder, (ii) certain transactions
resulting in the issuance or transfer to an Interested Stockholder of any stock
of such corporation or its subsidiaries, and (iii) certain other transactions
resulting in a financial benefit to an Interested Stockholder. An "Interested
Stockholder" is a person who owns (or, if such person is an affiliate or
associate of the corporation, within a three-year period did own) 15% or more of
a corporation's stock entitled to vote generally in the election of directors
and, the affiliates and associates of such person.
36
DESCRIPTION OF CERTAIN INDEBTEDNESS
9 3/8% SENIOR SUBORDINATED NOTES
On August 18, 1997 and August 19, 1999, Fedders North America, Inc., a
wholly owned subsidiary of Fedders Corporation, issued and sold in a private
placement $100,000,000 and $50,000,000, respectively, in aggregate principal
amount of 9 3/8% Senior Subordinated Notes due 2007 (collectively, the "Old
Notes"). Subsequently, these notes were exchanged pursuant to a registered
exchange offer for registered notes identical in all material respects (other
than with respect to transfer restrictions) to the Old Notes (collectively, the
"Notes"). The Notes are fully and unconditionally guaranteed by Fedders
Corporation.
RANKING
The Notes are subordinate to all of Fedders North America's existing and
future senior indebtedness (as defined in the indenture governing the Notes),
and equal or senior to any of Fedders North America's other existing or future
indebtedness. The guarantee of the Notes will be subordinated to all of Fedders
Corporation's existing and future senior indebtedness (as defined in the
indenture governing the Notes) to the same extent that the notes are
subordinated to Fedders North America's senior indebtedness, and the guarantee
will be equal or senior to any of Fedders Corporation's other existing or future
indebtedness.
CERTAIN COVENANTS
The indenture governing the Notes contains certain covenants that will,
among other things, limit the ability of Fedders North America and the ability
of certain of its subsidiaries to (a) incur additional indebtedness or issue
preferred stock, (b) repay certain other indebtedness, (c) pay dividends on,
redeem or repurchase their capital stock, (d) sell assets, (e) engage in certain
transactions with affiliates, (f) enter into sale and leaseback transactions,
(g) create certain liens and (h) consolidate, merge or sell all or substantially
all of the assets of Fedders North America. We believe that we are currently in
compliance with these covenants and currently intend to continue to pay
dividends on the Series A Cumulative Preferred Stock. The indenture governing
the Notes does not contain covenants restricting Fedders Corporation or any of
its subsidiaries other than Fedders North America and its subsidiaries.
CHANGE OF CONTROL
After the occurrence of a change of control (as defined in the indenture
governing the Notes), holders of the Notes may require Fedders North America to
repurchase all or a portion of the notes at 101% of the principal amount
thereof, plus accrued and unpaid interest.
WORKING CAPITAL CREDIT FACILITY
Fedders North America and all of its direct and indirect subsidiaries are
parties to a revolving credit facility as borrowers or guarantors of the
borrowers' obligations, entered into on December 23, 1992, as amended. The
revolving credit facility provides for loans to Fedders North America of up to
$100.0 million based on certain customary percentages of accounts receivable and
inventory. The obligations of Fedders North America under the revolving credit
facility are also guaranteed by Fedders Corporation and certain of its other
subsidiaries (other than Fedders North America and its subsidiaries). While the
revolving credit facility is intended principally to provide financing for our
working capital requirements, we may use up to $15.0 million of the amount
available under the revolving credit facility for general corporate purposes.
At our option, borrowings under the revolving credit facility bear interest
at a rate per annum (i) based upon the London interbank offered rate (LIBOR)
plus 2.0% (provided that not more than 80% of loans outstanding at any time may
be based upon LIBOR); or (ii) equal to the prime rate of Wachovia Bank, National
Association.
In addition, we must pay (i) an unused line fee of 0.5% per annum on the
amount by which $60.0 million ($50.0 million effective February 2004) exceeds
the average outstanding daily principal balance of loans
37
outstanding; (ii) an early termination fee equal to 1.0% of the maximum
availability if the revolving credit facility is terminated prior to February 1,
2004 and 0.5% of the maximum availability if the revolving credit facility is
terminated during the period from February 2, 2004 through January 31, 2006, the
expiration date of the revolving credit facility; (iii) an amendment fee of
$200,000; and (iv) a service fee of $60,000 annually.
Borrowings under the revolving credit facility are secured by collateral
assignments or other security interests in substantially all of the assets of
Fedders Corporation and its subsidiaries including: (i) all material contracts;
(ii) substantially all property, plant, equipment, inventory and other tangible
assets; (iii) all receivables of Fedders North America; (iv) all intellectual
property and other intangible assets; and (v) all capital stock of the direct
and indirect subsidiaries of Fedders.
The revolving credit facility contains negative covenants that limit the
ability of Fedders Corporation and its direct and indirect subsidiaries to do
the following: (i) create liens and other encumbrances; (ii) incur indebtedness;
(iii) enter into transactions with affiliates; (iv) make loans, investments or
guarantees; and (v) pay dividends. We believe that we are currently in
compliance with these covenants and currently intend to pay dividends on the
Series A Cumulative Preferred Stock.
In addition, the revolving credit facility requires that Fedders
Corporation meet certain financial tests including: (i) consolidated net worth
of not less than $60.0 million; and (ii) consolidated working capital of not
less than $25.0 million.
The revolving credit facility contains customary events of default
including: (i) non-payment of principal or interest; (ii) breach of any term,
covenant, condition or provision of the revolving credit facility; (iii)
material breach of representations and warranties; (iv) bankruptcy, insolvency
or assignment for the benefit of creditors; (v) cross-defaults on other
indebtedness; (vi) material adverse change in the business, assets or financial
condition; and (vii) a change in control.
38
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain United States federal income
tax consequences to United States holders of the receipt of subscription rights
in the rights offering. This discussion also addresses certain United States
federal income tax consequences arising from the ownership, exercise, and
disposition of subscription rights. This discussion applies only to our holders
of Common Stock and Class B Stock that hold their stock as a capital asset
within the meaning of section 1221 of the Internal Revenue Code (the "Code").
Further, this discussion does not address all of the United States federal
income tax consequences that may be relevant to you in light of your individual
circumstances or if you are subject to special rules, such as if you are a:
- financial institution,
- foreign person,
- mutual fund,
- tax-exempt organization,
- insurance company,
- dealer in securities or foreign currencies,
- person (including a trader in securities) using a mark-to-market method
of accounting,
- person who holds shares of Common Stock or Class B Stock as a hedge
against currency risk or as part of a straddle, constructive sale,
conversion transaction or other integrated transaction,
- person who acquired your shares of Common Stock or Class B Stock upon the
exercise of employee stock options or otherwise as compensation,
- person that actually or constructively owns 20% or more of our Common
Stock or Class B Stock, or
- an entity that is treated as a partnership for United States federal
income tax purposes.
The discussion is based upon the Code, laws, regulations, rulings, and
decisions in effect as of the date of this Prospectus, all of which are subject
to change, possibly with retroactive effect. Tax consequences under state,
local, and foreign laws are not addressed herein.
YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO
YOU OF THE RIGHTS OFFERING, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL,
AND FOREIGN INCOME AND OTHER TAX LAWS BASED ON YOUR PARTICULAR FACTS AND
CIRCUMSTANCES.
TREATMENT OF THE SUBSCRIPTION RIGHTS
Receipt of the Subscription Rights. Our position for information reporting
and other United States federal income tax purposes is that you will not
recognize taxable income upon the receipt of the subscription rights. Based on
relevant Treasury regulations, the Internal Revenue Service may assert that your
receipt of the subscription rights in the rights offering is currently taxable
to you, with the consequences described below under the heading "Alternate
Treatment of the Subscription Rights." We believe that the relevant statutory
and regulatory provisions were not intended to apply to the present transaction.
It is uncertain whether our position would be sustained by a court if challenged
by the Internal Revenue Service. The remainder of the discussion under this
heading "Treatment of the Subscription Rights" assumes that you will not
recognize taxable income upon the receipt of subscription rights in the rights
offering.
Tax Basis in and Holding Period of the Subscription Rights. Except as
provided in the following sentence, your tax basis in the subscription rights
you receive in the rights offering will be zero. If either (i) the fair market
value of the subscription rights on the date such subscription rights are
distributed is equal to at least 15% of the fair market value on such date of
your Common Stock or Class B Stock with respect to which the subscription rights
are received or (ii) you elect, in your United States federal income tax return
for the taxable year in which the subscription rights are received, to allocate
part of the tax basis in such Common
39
Stock or Class B Stock to the subscription rights, then upon exercise or
transfer of the subscription rights, your tax basis in such Common Stock or
Class B Stock will be allocated between the Common Stock or Class B Stock and
the subscription rights in proportion to their respective fair market values on
the date the subscription rights are distributed. Your holding period for the
subscription rights received in the rights offering will include your holding
period for the Common Stock or Class B Stock with respect to which the
subscription rights were received.
Sale or Taxable Disposition of the Subscription Rights. Unless you can
establish to the satisfaction of the Internal Revenue Service that neither the
distribution of subscription rights nor the subsequent sale or taxable
disposition (collectively, a "disposition") of such subscription rights is in
pursuance of a plan having one of its principal purposes the avoidance of United
States federal income tax, the subscription rights will constitute "Section 306
stock," the disposition of which could result in ordinary income to you on a
sale or other taxable disposition of such right. In general, your amount
realized upon a disposition of subscription rights will be treated as ordinary
income (and will not be offset by your adjusted tax basis, if any, in such
rights) to the extent that such amount does not exceed the fair market value of
the subscription rights at the time they are distributed. Any excess of the
amount realized over the sum of the fair market value of the subscription rights
at the time they are distributed plus your adjusted tax basis, if any, in such
rights will be treated as capital gain. No loss will be recognized upon such a
disposition of your subscription rights. Any adjusted tax basis in the
subscription rights that you dispose of which is not used to offset your amount
realized from such disposition under the foregoing rules generally will be added
to the adjusted tax basis in any Common Stock or Class B Stock you actually own.
A disposition of subscription rights will not give rise to ordinary income if
such disposition terminates your entire actual and constructive ownership
interest in us. Under recently enacted legislation (see discussion
below -- "Recent Legislation"), which generally reduced the maximum rate of tax
on most dividends received by individuals, ordinary income that arises upon a
disposition of "Section 306 stock" will generally be treated as a dividend for
purposes of applying the reduced tax rates. YOU SHOULD CONSULT YOUR TAX ADVISOR
CONCERNING THE TAX CONSEQUENCES TO YOU UNDER THESE PROVISIONS IN YOUR PARTICULAR
CIRCUMSTANCES.
Expiration of the Rights. If your subscription rights lapse without being
exercised, you will not recognize any gain or loss, and the tax basis, if any,
of your Common Stock or Class B Stock with respect to which such subscription
rights were distributed will be equal to the tax basis in such Common Stock or
Class B Stock immediately before the receipt of the subscription rights in the
rights offering.
Exercise of the Subscription Rights; Tax Basis in and Holding Period of the
Series A Cumulative Preferred Stock. You will not recognize any gain or loss
upon the exercise of subscription rights received in the rights offering. Your
tax basis in the Series A Cumulative Preferred Stock acquired upon such exercise
will equal the sum of the subscription price for the Series A Cumulative
Preferred Stock and your tax basis, if any, in the subscription rights, as
described above. Your holding period for the Series A Cumulative Preferred Stock
acquired through exercise of the subscription rights will begin on the date the
subscription rights are exercised. See "Ownership of the Series A Cumulative
Preferred Stock," below, for a discussion of additional United States federal
income tax consequences of the ownership and disposition of Series A Cumulative
Preferred Stock.
ALTERNATE TREATMENT OF THE SUBSCRIPTION RIGHTS
Receipt of the Subscription Rights. If the Internal Revenue Service
successfully asserted that you should recognize taxable income for United States
federal income tax purposes upon the receipt of subscription rights in the
rights offering, you would recognize ordinary dividend income equal to the fair
market value of the subscription rights on the date they are distributed. Your
tax basis in such rights would be equal to such fair market value and your
holding period for the rights would begin upon receipt. The remainder of the
discussion under this heading "Alternate Treatment of the Subscription Rights"
assumes that your receipt of subscription rights in the rights offering is a
taxable event.
40
Disposition of the Subscription Rights. Upon the disposition of
subscription rights, you would recognize short-term capital gain or loss in an
amount equal to the difference between the amount realized from such disposition
and your tax basis in the subscription rights sold.
Expiration of the Rights. If your subscription rights lapse without being
exercised, you would recognize a short-term capital loss equal to your tax basis
in such expired subscription rights. For United States federal income tax
purposes, capital losses of individuals may be offset against capital gains and,
if in excess of capital gains, against up to $3,000 ($1,500 for a married
individual filing a separate return) of ordinary income. Capital losses of
corporations may be offset only against capital gains. Capital losses not used
in the year realized may, with certain limitations, be carried over to other
taxable years.
Exercise of the Subscription Rights; Tax Basis in and Holding Period of the
Series A Cumulative Preferred Stock. You would not recognize any gain or loss
upon the exercise of subscription rights you receive in the rights offering.
Your tax basis in the Series A Cumulative Preferred Stock you acquire through
exercise of the subscription rights would equal the sum of the subscription
price for the Series A Cumulative Preferred Stock and your tax basis in the
subscription rights, as described above. Your holding period for the Series A
Cumulative Preferred Stock acquired through exercise of the subscription rights
would begin on the date the subscription rights are exercised. See "Ownership of
the Series A Cumulative Preferred Stock," below, for a discussion of additional
United States federal income tax consequences of the ownership and disposition
of Series A Cumulative Preferred Stock.
OWNERSHIP OF THE SERIES A CUMULATIVE PREFERRED STOCK
Cash Distributions with respect to the Series A Cumulative Preferred
Stock. Cash distributions with respect to the Series A Cumulative Preferred
Stock generally will be treated as dividends, taxable as ordinary income to you
to the extent of your ratable share of our current and accumulated earnings and
profits. If such cash distributions exceed our earnings and profits, such excess
will be applied to reduce, but not below zero, your adjusted tax basis in your
Series A Cumulative Preferred Stock, and any excess generally will be taxable as
capital gain to you. If you are a corporation, you may be eligible for a
dividends-received deduction for cash distributions with respect to the Series A
Cumulative Preferred Stock. The dividends-received deduction is, however,
subject to various limitations which depend on your particular circumstances,
including certain holding period requirements under section 246 of the Code and
limitations on the use of debt financing with respect to the Series A Cumulative
Preferred Stock under section 246A of the Code. In addition, the
dividends-received deduction with respect to cash distributions on the Series A
Cumulative Preferred Stock may be subject to section 1059 of the Code. Section
1059 of the Code would require you to reduce your adjusted tax basis in the
Series A Cumulative Preferred Stock by the amount of the dividends-received
deduction resulting from any "extraordinary dividend" paid on the Series A
Cumulative Preferred Stock. An extraordinary dividend for purposes of section
1059 of the Code includes, among other items, a dividend that exceeds 5% of your
adjusted tax basis in the Series A Cumulative Preferred Stock. You should
consult your tax advisor regarding the availability of the dividends received
deduction and the possible application of section 1059 of the Code or other
limitations with respect to your particular circumstances.
Disposition of the Series A Cumulative Preferred Stock. In general, unless
your Series A Cumulative Preferred Stock is considered Section 306 stock, the
disposition of your Series A Cumulative Preferred Stock, including a sale of
such shares to us (a "redemption") in a transaction that is treated as a sale or
exchange under section 302 of the Code, will result in capital gain or loss
equal to the difference between the amount realized from such disposition and
your adjusted tax basis in the Series A Cumulative Preferred Stock immediately
before such disposition.
Under section 302 of the Code, a redemption of Series A Cumulative
Preferred Stock generally will be treated as a sale or exchange if such
redemption completely terminates your entire actual and constructive stock
interest in our equity or is "not essentially equivalent to a dividend" with
respect to you. In determining whether either of these two tests is met, you
must take into account the shares of stock actually owned by you as well as the
shares of stock constructively owned by you under the constructive ownership
rules of section 318 of the Code. Under these constructive ownership rules, you
will be deemed to own any shares of
41
our stock that are owned, actually and in some cases constructively, by certain
related individuals or entities and any shares of our stock that you have a
right to acquire by exercise of an option or by conversion or exchange of a
security.
A redemption of shares of your Series A Cumulative Preferred Stock will be
treated as "not essentially equivalent to a dividend" if you experience a
"meaningful reduction" in your percentage interest in our equity as a result of
the redemption. Depending on your particular circumstances, even a small
reduction in your stock ownership interest in us may satisfy this test. For
example, the Internal Revenue Service has ruled that a redemption of any amount
of nonvoting preferred stock is not essentially equivalent to a dividend if the
redeeming shareholder does not own actually or constructively stock of any other
class of the redeeming corporation.
Any Series A Cumulative Preferred Stock acquired upon the exercise of a
subscription right that constitutes Section 306 stock will also be treated as
Section 306 stock, and rules similar to those described above under the heading
"Treatment of the Subscription Rights -- Disposition of the Subscription Rights"
generally would apply to a subsequent disposition (other than in redemption) of
Series A Cumulative Preferred Stock received upon the exercise of subscription
rights received in the rights offering (i.e., a portion of the amount realized
from such disposition, in an amount equal to the fair market value of the
subscription rights on the date of their distribution, generally would be
treated as ordinary income). In general, the amount realized by you in
redemption of the Series A Cumulative Preferred Stock will not be offset by your
adjusted tax basis in such stock and will result in dividend income treatment to
the extent of our available earnings and profits unless the redemption
completely terminates your entire actual and constructive ownership interest in
our equity or is a redemption in partial or complete liquidation of us. You
should consult your tax advisor as to the particular consequences to you in such
case.
RECENT LEGISLATION
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act"),
enacted on May 28, 2003, reduces the maximum rate of tax imposed on most
dividends received by individuals from the higher marginal income tax rates to
15% (5% for individuals in the lower tax brackets and 0% for these taxpayers in
2008) (the "Reduced Rate"). This provision applies to dividends received in
taxable years beginning after December 31, 2002 and before January 1, 2009. In
order to be eligible for the Reduced Rate, an individual stockholder generally
must own our Series A Cumulative Preferred Stock for more than 60 days during
the 120 day period beginning 60 days before the ex-dividend date. Furthermore,
if an individual receives an "extraordinary dividend" within the meaning of
section 1059 of the Code (i.e., a dividend which equals or exceeds 5% of the
individual's tax basis in our Series A Cumulative Preferred Stock) which is
eligible for the Reduced Rate, any loss on a subsequent sale of the stock with
respect to which such dividend is made is treated as a long-term capital loss to
the extent of such dividend. In addition, ordinary income recognized on the
disposition of "Section 306 stock" will generally be treated as a dividend under
these rules. For purposes of determining the amount of deductible investment
interest, a dividend is treated as investment income only if the individual
elects to treat the dividend as not eligible for the Reduced Rate. For sales and
exchanges of capital assets on or after May 6, 2003 and before January 1, 2009,
the Act also reduces the top individual tax rate on adjusted net capital gains
from 20% (10% for individuals in the lower tax brackets) to 15% (5% for
individuals in the lower tax brackets and 0% for these taxpayers in 2008). You
should consult your tax advisor regarding the specific tax consequences to you
that may result from the Act.
LEGAL MATTERS
The validity of the subscription rights and the shares of Series A
Cumulative Preferred Stock offered pursuant to this rights offering will be
passed upon for us by Robert N. Edwards, Esq., Vice President and General
Counsel of Fedders. Mr. Edwards holds options to acquire shares of our Common
Stock.
42
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from our Annual Report on
Form 10-K for the year ended August 31, 2003 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements other
information with the Securities and Exchange Commission, or the SEC. You may
read or copy any document we file at the public reference room maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this
information may also be obtained by mail from the SEC's Public Reference Branch
at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, our filings with
the SEC are also available to the public on the SEC's internet Web site at
www.sec.gov. Our Common Stock and Series A Cumulative Preferred Stock are listed
on the New York Stock Exchange, and our reports, proxy statements and other
information concerning us may also be read and copied at the offices of the
NYSE.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933 with respect to this rights offering. This prospectus
does not contain all of the information set forth in the registration statement
and its exhibits. Statements made by us in this prospectus as to the contents of
any contract, agreement or other document referred to in this prospectus are not
necessarily complete. For a more complete description of these contracts,
agreements or other documents, you should carefully read the exhibits to the
registration statement and the documents which we reference under the caption
"Incorporation of Certain Documents by Reference."
The registration statement, together with its exhibits and schedules, which
we filed with the SEC, may also be reviewed and copied at the public reference
facilities of the SEC located at the addresses set forth above. Please call the
SEC at 1-800-SEC-0330 for further information on its public reference
facilities.
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information contained, or incorporated by reference
in, this prospectus. We have not authorized anyone to provide information
different from that contained in, or incorporated by reference in, this
prospectus. This prospectus is not an offer to sell or a solicitation of an
offer to buy these securities in any state where the offer or sale is not
permitted. This prospectus is not an offer to sell or a solicitation of an offer
to buy these securities in any circumstance under which the offer or
solicitation is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are identified by terms and phrases such as "anticipate," "believe,"
"intend," "estimate," "expect," "continue," "should," "could," "may," "plan,"
"project," "predict," "will" and similar expressions and include references to
assumptions and relate to our future prospects, developments and business
strategies.
Factors that could cause our actual results to differ materially from those
expressed or implied in such forward-looking statements include, but are not
limited to:
- greater price competition resulting from industry overcapacity or other
factors;
- a significant decline in industry sales resulting from slowing economic
growth;
- seasonal fluctuations in sales of air conditioning units and other
climate-related products;
43
- climatic conditions, particularly cool summer conditions; and
- varying costs of electricity.
We undertake no obligation to revise the forward-looking statements
included in this prospectus to reflect any future events or circumstances. Our
actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements. Factors
that could cause or contribute to such differences are discussed in this
prospectus under the caption "Risk Factors" as well as elsewhere in this
prospectus and Fedders' other filings with the SEC. See "Where You Can Find More
Information."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC, allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. Specifically, we are incorporating by
reference the following documents listed below and any future filings that we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, until the completion of the
offering:
- Annual Report on Form 10-K for the fiscal year ended August 31, 2003; and
- Registration Statement on Form 8-A filed on December 20, 2002.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Fedders Corporation
505 Martinsville Road
Liberty Corner, New Jersey 07938-0813
Telephone: (908) 604-8686
Any statement contained in this prospectus or in a document, all or a
portion of which is incorporated or deemed to be incorporated by reference in
this prospectus, shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus or
in any other subsequently filed document that also is deemed to be incorporated
by reference in this prospectus modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1,520,247 SHARES
FEDDERS CORPORATION
SERIES A CUMULATIVE PREFERRED STOCK
-------------------------
PROSPECTUS
-------------------------
, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered, other than underwriting discounts and commissions, to be paid by the
Registrant.
<Table>
Securities and Exchange Commission Registration Fee......... $ 2,914.82
Printing and Engraving Fees and Expenses.................... 80,000.00
Accounting Fees and Expenses................................ 3,000.00
Legal Fees and Expenses..................................... 75,000.00
Miscellaneous............................................... 70,000.00
-----------
Total..................................................... $230,914.82
===========
</Table>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware, or
DGCL, empowers a Delaware corporation to indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer or director of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal
proceedings, had no reasonable cause to believe his or her conduct was illegal.
A Delaware corporation may indemnify officers and directors against expenses
(including attorneys' fees) in connection with the defense or settlement of an
action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses which such officer or director actually and reasonably incurred.
Article Fifth of the by-laws of Fedders provides that Fedders will
indemnify any person who is, or is threatened to be made, a party to any
threatened, pending or completed legal action, suit or proceeding (other than an
action by or in the right of Fedders), by reason of the fact that such person
was an officer or director of Fedders, or is or was serving at the request of
Fedders as a director, officer, employee or agent of another corporation or
enterprise. Fedders will indemnify such person against judgments, fines, amounts
paid in settlement and the reasonable expenses (including attorneys' fees)
actually incurred as result of such action or proceeding, or any appeal thereof,
to the full extent permissible under the DGCL.
Article Eighth of the restated certificate of incorporation of Fedders
limits the personal liability of the directors of Fedders for violations of
their fiduciary duty. This provision eliminates each director's liability to
Fedders or its stockholders for monetary damages except (i) for any breach of
the director's duty of loyalty to Fedders or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions, or (iv) for any transaction from which a director derived an
improper personal benefit. The effect of this provision is to eliminate the
personal liability of directors for monetary damages for actions involving a
breach of their fiduciary duty of care, including any such actions involving
gross negligence.
II-1
Fedders is insured for liabilities it may incur pursuant to its restated
certificate of incorporation relating to the indemnification of its directors,
officers and employees. In addition, directors, officers and certain key
employees are insured against certain losses which may arise out of their
employment and which are not recoverable under the indemnification provisions of
Fedders' restated certificate of incorporation.
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this
registration statement on Form S-3, including those incorporated in this
registration statement by reference.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
4.1 Certificate of Designation, Preferences, Rights and
Limitations of Series A Cumulative Preferred Stock***
4.2 Form of Subscription Rights Certificate**
4.3 Amended Certificate of Designation, Preferences, Rights and
Limitations of Series A Cumulative Preferred Stock****
5.1 Opinion of Robert N. Edwards, Esq. Regarding the legality of
the securities being registered*
23.1 Consent of Deloitte & Touche LLP, Independent Auditors*
24.1 Powers of Attorney (contained on signature page of this
Registration Statement)**
99.1 Form of Instructions for Use of Fedders Corporation
Subscription Rights Certificates**
99.2 Form of Notice of Guaranteed Delivery**
99.3 Form of Letter to Stockholders Who are Recordholders**
99.4 Form of Letter to Stockholders Who are Beneficial Owners**
99.5 Form of Letter to Clients of Stockholders Who are Beneficial
Owners**
99.6 Form of Nominee Holder Certification**
99.7 Form of Beneficial Owner Election Form**
</Table>
- ---------------
* Filed herewith
** Previously filed
*** Incorporated herein by reference to Exhibit 99(d)(1) of the Schedule TO,
filed with the Commission on February 14, 2003
**** Incorporated herein by reference to Exhibit 4.3 of Amendment No. 1 to the
Registration Statement on Form S-3, filed with the Commission on June 27,
2003
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information 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 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
II-2
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel that
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered in any such amendment, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Liberty Corner, New Jersey, on December 17, 2003.
FEDDERS CORPORATION
By: *
------------------------------------
Name: Michael Giordano
Title: Executive Vice President,
Finance and Administration
Each person whose signature appears below hereby constitutes and appoints
Michael Giordano, Kent E. Hansen, and Robert N. Edwards, and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all (1) amendments (including post-effective
amendments) and additions to this Registration Statement and (2) Registration
Statements, and any and all amendments thereto (including post-effective
amendments), relating to the offering contemplated pursuant to Rule 462(b) under
the Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 Registration Statement has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman, Chief Executive December 17, 2003
------------------------------------------------ Officer and Director (Principal
Sal Giordano, Jr. Executive Officer)
* Executive Vice President, December 17, 2003
------------------------------------------------ Finance and Administration and
Michael Giordano Chief Financial Officer
(Principal Financial &
Accounting Officer)
* Director December 17, 2003
------------------------------------------------
William J. Brennan
* Director December 17, 2003
------------------------------------------------
David C. Chang
* Director December 17, 2003
------------------------------------------------
Michael L. Ducker
</Table>
II-4
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
* Director December 17, 2003
------------------------------------------------
Joseph Giordano
* Director December 17, 2003
------------------------------------------------
C. A. Keen
* Director December 17, 2003
------------------------------------------------
Howard S. Modlin
* Director December 17, 2003
------------------------------------------------
S. A. Muscarnera
* Director December 17, 2003
------------------------------------------------
Anthony E. Puleo
*By: /s/ KENT E. HANSEN Attorney-in-fact December 17, 2003
------------------------------------------
Name: Kent E. Hansen
Title: Executive Vice President
and Secretary
</Table>
II-5
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
4.1 Certificate of Designation, Preferences, Rights and
Limitations of Series A Cumulative Preferred Stock***
4.2 Form of Subscription Rights Certificate**
4.3 Amended Certificate of Designation, Preferences, Rights and
Limitations of Series A Cumulative Preferred Stock****
5.1 Opinion of Robert N. Edwards, Esq. Regarding the legality of
the securities being registered*
23.1 Consent of Deloitte & Touche LLP, Independent Auditors*
24.1 Powers of Attorney (contained on signature page of this
Registration Statement)**
99.1 Form of Instructions for Use of Fedders Corporation
Subscription Rights Certificates**
99.2 Form of Notice of Guaranteed Delivery**
99.3 Form of Letter to Stockholders Who are Recordholders**
99.4 Form of Letter to Stockholders Who are Beneficial Owners**
99.5 Form of Letter to Clients of Stockholders Who are Beneficial
Owners**
99.6 Form of Nominee Holder Certification**
99.7 Form of Beneficial Owner Election Form**
</Table>
- ---------------
* Filed herewith
** Previously filed
*** Incorporated herein by reference to Exhibit 99(d)(1) of the Schedule TO
filed with the Commission on February 14, 2003
**** Incorporated herein by reference to Exhibit 4.3 of Amendment No. 1 to the
Registration Statement on Form S-3, filed with the Commission on June 27,
2003