As filed with the Securities and Exchange Commission on February 14, 2001
Registration No. 333-41650
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO FORM S-1
ON
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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ACTERNA CORPORATION
(formerly Dynatech Corporation)
(Exact name of registrant as specified in its charter)
Delaware 04-02258582
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3 New England Executive Park
Burlington, Massachusetts 01803-5087
(781) 272-6100 www.acterna.com
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Mark V.B. Tremallo, Esq.
Corporate Vice President, General Counsel
Acterna Corporation
3 New England Executive Park
Burlington, Massachusetts 01803-5087
(781) 272-6100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
Franci J. Blassberg, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
(212) 909-6000
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered Per Share(1) Offering Price(1) Fee
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Common Stock, par value
$.01 per share(3).....
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Debt Securities(4).....
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Preferred Stock, par
value $.01 per
share(5)..............
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Depositary Shares(6)...
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Warrants(7)............
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Total ................ $1,000,000,000(8) 100% $1,000,000,000(8) $250,000
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o) under the Securities Act of 1933 and exclusive of accrued
interest and dividends, if any.
(2) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933 in respect of the $1,000,000,000 of
previously unregistered securities registered hereunder, and includes
$30,360 that was paid on July 18, 2000.
(3) Subject to note (8) below, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold from time to
time by Acterna Corporation, including sales upon the exercise of Warrants.
(4) Subject to note (8) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold from time
to time by Acterna Corporation, including sales upon the exercise of
Warrants.
(5) Subject to note (8) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold from time
to time by Acterna Corporation, including sales upon the exercise of
Warrants.
(6) Subject to note (8) below, there is being registered hereunder an
indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event Acterna
Corporation elects to offer to the public fractional interests in shares of
the Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons purchasing such fractional interests and
shares of Preferred Stock will be issued to the Depositary under the
Deposit Agreement. No separate consideration will be received for the
Depositary Shares.
(7) Subject to note (8) below, there is being registered hereunder an
indeterminate amount and number of Warrants as may be sold from time to
time by Acterna Corporation, representing rights to purchase Debt
Securities, Preferred Stock or Common Stock. Warrants may be sold
separately or with Debt Securities, Preferred Stock or Common Stock.
(8) The prospectus included herein relates to $1,000,000,000 of Securities.
Such amount represents the principal amount of any Debt Securities issued
at their principal amount, the issue price (rather than the principal
amount) of any Debt Securities issued at an original issue discount, the
liquidation preference of any Preferred Stock, the amount computed pursuant
to Rule 457(c) for any Common Stock, the issue price of any Warrants and
the exercise price of any securities issuable upon the exercise of
Warrants. Any securities registered hereunder may be sold separately or as
units with other securities registered hereunder.
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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 in not an +
+offer to sell these securities and we are not soliciting offers to buy the +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED FEBRUARY 14, 2001
PROSPECTUS
[LOGO OF ACTERNA]
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
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By this prospectus, we may offer from time to time up to $1,000,000,000 of
any combination of the securities described in this prospectus.
We will provide specific terms of the securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest. A supplement may also change or update information contained in
this prospectus.
We will not use this prospectus to confirm sales of any of our securities
unless it is attached to a prospectus supplement.
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Investing in our securities involves risks. See "Risk Factors" on page 2.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined
whether this prospectus is truthful or complete. They have not made, nor will
they make, any determination as to whether anyone should buy these securities.
Any representation to the contrary is a criminal offense.
The date of this Prospectus is , 2001
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS....................................................... i
ACTERNA CORPORATION......................................................... 1
RISK FACTORS................................................................ 2
USE OF PROCEEDS............................................................. 9
RATIO OF EARNINGS TO FIXED CHARGES.......................................... 9
FORWARD-LOOKING STATEMENTS.................................................. 10
DESCRIPTION OF DEBT SECURITIES.............................................. 11
DESCRIPTION OF CAPITAL STOCK................................................ 20
DESCRIPTION OF WARRANTS..................................................... 26
PLAN OF DISTRIBUTION........................................................ 28
LEGAL MATTERS............................................................... 29
EXPERTS..................................................................... 29
WHERE YOU CAN FIND MORE INFORMATION......................................... 29
INCORPORATION BY REFERENCE.................................................. 30
SIGNATURES.................................................................. 36
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may sell the securities described in the
prospectus from time to time. This prospectus provides you with a general
description of the securities we may offer. We may also add, update or change
information contained in this prospectus through a supplement to this
prospectus. Any statement that we make in this prospectus will be modified or
superseded by any inconsistent statement made by us in a prospectus supplement.
You should read both this prospectus and any prospectus supplement together
with additional information described under the heading "Where You Can Find
More Information."
i
ACTERNA CORPORATION
We are the world's second largest developer, manufacturer and marketer of
instruments, systems, software and services to test, deploy, manage and
optimize communications networks, equipment and services. We are the largest
company that focuses primarily on the communications test and management
business. With over 750 sales personnel and a local presence in over 80
countries, we offer a broad range of products that test and manage the
operational performance of converged networks, including optical transmission
systems, data services, voice services, wireless services, cable services and
video delivery.
In addition to our communications test and management business, we operate
two subsidiaries, AIRSHOW, Inc. and da Vinci Systems, Inc. AIRSHOW is the
leading provider of systems that deliver real-time news, information and flight
data to aircraft passengers. da Vinci manufactures systems that correct or
enhance the accuracy of color during the process of transferring film-based
images to videotape.
We were incorporated in Massachusetts in 1959. In 1999, we reincorporated in
Delaware. Our principal offices are located at 3 New England Executive Park,
Burlington, Massachusetts 01803-5087. Our telephone number is (781) 272-6100,
and our website is http://www.acterna.com. No portion of our website or other
websites linked to it should be considered a part of this prospectus.
RISK FACTORS
You should carefully consider the risks described below and the other
information in this prospectus before deciding to purchase any securities that
we may offer. Our securities are subject to significant investment risks. Many
factors, including the risks described below and other risks we have not
recognized, could cause our business and results of operations to be negatively
affected, which could cause the price of our securities to decline.
Risks Related to Our Business
Because our quarterly operating results have fluctuated in the past and are
likely to fluctuate in the future, the prices of our securities may be volatile
and may decline.
In the past, we have experienced fluctuations in our quarterly results due
to a number of factors beyond our control. In the future, we expect that our
quarterly operating results may fluctuate and will be difficult to predict
given the nature of our business. Many factors could cause our operating
results to fluctuate from quarter to quarter in the future, including the
following:
. the size and timing of orders from our customers, in each case
exacerbated by the lengthy and unpredictable buying patterns of our
customers, and our ability to ship these orders on a timely basis;
. the degree to which our customers have allocated and spent their yearly
budgets, which has, in some cases, resulted in higher net sales in our
third quarter;
. the uneven pace of technology innovation, the development of products and
services responding to these technology innovations by us and our
competitors, and customers' acceptance of these products and innovations;
. the varied degree of price, product and technology competition, which has
been affected by the rapid changes in the telecommunications industry and
our customers' and competitors' responses to these changes;
. economic downturns or other factors reducing demand for telecommunication
equipment and services may cause our customers to reduce their spending
on testing products and services;
. potential delay or deferral of customer deployment of our products and
services;
. the relative percentages of our products and services sold domestically
and internationally; and
. the mix of the products and services we sell and the varied margins
associated with these products.
A significant portion of our operating expenses is fixed and if our net
sales are below our expectations in any quarter, we may not be able to reduce
our spending in a timely manner. If our results of operations are below the
expectations of investors or market analysts, the prices of our securities are
likely to decline.
The length and unpredictability of the order process for our products make it
difficult to forecast quarterly revenues.
Sales of our products, particularly our systems, often entail an extended
decision-making process on the part of prospective customers. We may experience
delays in obtaining orders following initial contact with a prospective
customer and expend substantial funds and management effort pursuing these
sales. Our ability to forecast the timing and amount of specific sales is
therefore limited. As a result, the uneven buying patterns of our customers may
cause fluctuations in our quarterly operating results, which could cause the
prices of our securities to decline.
2
There are other sources of delays that contribute to a long order process,
or even the loss of a potential order. These include potential customers'
internal approval and contracting procedures, procurement practices, and
testing and acceptance processes. As a result, the order process for larger
deployment of selected products typically ranges from six to 24 months for new
deployment of selected product sales, and up to six months for occasional large
selected product sales. The deferral or loss of one or more significant orders
could significantly affect operating results in a particular quarter,
especially if there are significant sales and marketing expenses associated
with the deferred or lost order.
As we acquire businesses, we will face the significant challenges of
integrating the operations of those businesses with our existing operations and
may encounter unanticipated difficulties or costs during the integration
process.
Our acquisition strategy presents us with significant challenges. It may be
difficult for us to expand our financial and management controls and reporting
systems and procedures to integrate those businesses. The successful
integration of acquired businesses and implementation of our operating strategy
could divert substantial resources and attention from our management team. If
unanticipated costs or difficulties arise, those acquisitions could have a
material adverse effect on our results of operations or competitive position.
The markets in which we operate are highly competitive. We may not adapt as
quickly as our competitors to changes in these markets.
The markets for our products are highly competitive. We compete directly or
indirectly with Agilent Technologies, Inc., Tektronix, Inc. and Anritsu
Corporation. We also compete with a number of other vendors who offer products
that address discrete portions of our market, including Spirent plc, Digital
Lightwave, Inc., Exfo Electro-Optical Engineering, Inc. and Sunrise Telecom
Incorporated. Due to the rapid evolution of the markets in which we compete,
additional competitors with significant market presence and financial
resources, including large telecommunications equipment manufacturers, may
enter our markets and further intensify competition. Increased competition
could cause us to reduce the price of our products or lose market share.
In addition, some of our current and potential competitors have greater name
recognition and greater financial, selling and marketing, technical,
manufacturing and other resources than we do. To continue to compete
effectively, we will be required to make significant investments in research
and product development, marketing and customer service and support. We may not
be able to compete effectively with our existing competitors or with new
competitors, and our competitors may succeed in adapting more rapidly and
effectively to changes in technology, in the market or in developing or
marketing products that will be more widely accepted.
The markets we serve are characterized by rapid change and innovation. We may
not be able to develop and successfully market products that account for such
changes and innovations.
The market for our products and services is characterized by rapidly
changing technologies, new and evolving industry standards and protocols and
product and service introductions and enhancements that may render our existing
offerings obsolete or unmarketable. A shift in customer emphasis from employee-
operated communications test to automated test and monitoring systems could
likewise render our existing product offerings obsolete or unmarketable, or
reduce the size of one or more of our addressed markets. In particular,
incorporation of self-testing functions in the equipment currently addressed by
our communications test instruments could render our offerings redundant and
unmarketable. Failure to anticipate or to respond rapidly to advances in
technology and to adapt our products appropriately could have a material
adverse effect on our business, financial condition and results of operations.
The development of new, technologically advanced products is a complex and
uncertain process requiring the accurate anticipation of technological and
market trends and the incurrence of substantial research and
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development costs. We may not successfully anticipate such trends or have
sufficient free cash flow to continue to incur such costs. In addition, we must
carefully manage production and inventory levels to meet product demand, new
product introductions and product transitions. Inaccuracies in our demand
forecasts could quickly result in either insufficient or excessive inventories
and disproportionate expenses. We cannot assure you that we will successfully
identify new product opportunities, develop and bring new products to market in
a timely manner achieve market acceptance of our products or that products and
technologies developed by others will not render our products or technologies
obsolete or noncompetitive.
Our manufacturing efforts could be interrupted due to component shortages,
which could reduce our ability to build and sell our products.
We use a number of components to build our products and systems that are
only available from a limited number of, or single-source, vendors. Examples of
these types of components include semiconductors that we purchase exclusively
from large manufacturers and custom application-specific integrated circuits
that are made for us by a single foundry. In addition, to obtain the components
we require to build our products and systems, we may be required to obtain
alternate sources of supply, which can be time consuming and result in higher
procurement costs. From time to time, we receive limited allocations of key
components for several of our products. To address this issue, we attempt as
appropriate to increase inventory levels of key components and to seek
additional sources of supply. We cannot assure you, however, that these
measures will be adequate to fulfill our manufacturing requirements. We also
cannot assure you that we will be able to obtain suitable substitutes for
components that become unavailable, which could potentially require us to
perform costly and time consuming redesigns of our products. If we are unable
to obtain sufficient quantities of required components, or if suppliers choose
to reduce the amount of parts they make available to us, we may be unable to
meet customer demand for our products, which would negatively affect our
business and results of operations and could materially damage customer
relationships.
Acquisitions by us of additional businesses, products or technologies could
negatively affect our business and the price of our securities.
We have acquired businesses and technologies in the past and expect to
pursue acquisitions of other companies, technologies and new and complementary
product lines in the future. Any acquisition would involve risks to our
business, including:
. an inability to integrate the operations, products and personnel of our
acquired businesses;
. an inability to retain key personnel of, or add key personnel to, the
acquired businesses;
. an inability to manufacture and sell the products of the acquired
businesses;
. a decline in demand by our customers for products of the acquired
businesses;
. an inability to expand our financial and management controls and
reporting systems and procedures to incorporate the acquired businesses;
. diversion of management's time and attention;
. potential difficulties in completing projects associated with purchased
in-process research and development;
. customer dissatisfaction or performance problems with the products or
services of an acquired firm;
. risks of entering markets in which we have no or limited direct prior
experience and where competitors in such markets have stronger market
positions;
. assumption of unknown liabilities, or other unanticipated events or
circumstances;
4
. the possibility that we may pay too much cash or issue too much of our
stock as the purchase price for an acquired business relative to the
economic benefits that we ultimately derive from operating the acquired
business; and
. the need to record significant one-time charges or amortize intangible
assets, which could lower our reported earnings.
Mergers and acquisitions of high-technology companies are inherently risky.
We cannot assure you that any business that we may acquire will achieve
anticipated net sales and operating results, which could decrease the value of
the acquisition to us. Any of these risks could materially harm our business,
financial condition and results of operations. Payment paid for future
acquisitions, if any, could be in the form of cash, stock, rights to purchase
stock or a combination of these. Dilution to existing stockholders and to
earnings per share may result in connection with any future acquisitions.
Our substantial debt could adversely affect our financial condition.
We have a significant amount of debt. Our level of debt and the terms of our
debt instruments may have important consequences for us, including, but not
limited to, the following:
. our vulnerability to adverse general economic conditions is heightened;
. we will be required to dedicate a substantial portion of our cash flow
from operations to repayment of debt, limiting the availability of cash
for other purposes;
. we are and will continue to be limited by financial and other restrictive
covenants in our ability to borrow additional funds, guarantee
obligations, pay dividends, consummate asset sales, enter into
transactions with affiliates or conduct mergers and acquisitions;
. our flexibility in planning for, or reacting to, changes in our business
and industry will be limited;
. we are sensitive to fluctuations in interest rates because some of our
debt obligations are subject to variable interest rates; and
. our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes
or other purposes may be impaired.
Our leverage and restrictions in our debt instruments may materially and
adversely affect our ability to finance our future operations or capital needs
or to capitalize on business opportunities.
Our debt agreements impose significant operating and financial restrictions,
which may prevent us from capitalizing on business opportunities.
Our debt agreements impose significant restrictions on our operations,
thereby limiting the discretion of management with respect to certain business
matters. These agreements restrict, among other things, our ability to:
. incur additional indebtedness, guarantee obligations and create liens;
. pay dividends and make other distributions;
. prepay or modify the terms of other indebtedness;
. make certain capital expenditures, investments or acquisitions, or enter
into mergers or consolidations or sales of assets; and
. engage in certain transactions with affiliates.
Our ability to comply with the restrictions contained in our debt agreements
may be affected by events beyond our control, including prevailing economic,
financial and industry conditions, and we may not be able to comply with such
restrictions in the future.
5
Economic, political and other risks associated with international sales and
operations could adversely affect our net sales.
Because we sell our products worldwide, our business is subject to risks
associated with doing business internationally. Many of our manufacturing
facilities and suppliers are located outside the United States. Accordingly,
our future results could be harmed by a variety of factors, including:
. changes in foreign currency exchange rates;
. changes in a specific country's or region's political or economic
conditions, particularly in emerging markets;
. trade protection measures and import or export licensing requirements;
. potentially negative consequences from changes in tax laws;
. challenges in staffing and managing international operations;
. differing protection of intellectual property in disparate jurisdictions;
and
. unexpected changes in regulatory requirements.
The planned divestiture of our industrial computing and communications segment
may not be successful.
We are in the process of transitioning from a portfolio of businesses to a
company that is focused primarily on the communications test business. In May
2000, our board of directors approved a plan to divest our industrial computing
and communications segment, which consists of the ICS Advent and Itronix
Corporation subsidiaries. We cannot assure you that we will be able to find a
buyer for these subsidiaries or that we will be able to obtain an attractive
price.
Several of our products must comply with significant governmental and industry-
based regulations, certifications, standards and protocols. Such compliance is
costly and time consuming, and we cannot assure you that our products will
continue to meet these standards in the future.
Several of our products must comply with significant governmental and
industry-based regulations, certifications, standards and protocols, some of
which evolve as new technologies are deployed. These regulations,
certifications, standards and protocols include those promulgated by the U.S.
Federal Communications Commission, the Underwriters Laboratories and various
foreign jurisdictions. Compliance with such regulations, certifications,
standards and protocols may prove costly and time-consuming for us. In
addition, regulatory compliance may present barriers to entry in particular
markets or reduce the profitability of our product offerings. Such regulations,
certifications, standards and protocols may also adversely affect the
communications industry, limit the number of potential customers for our
products and services or otherwise have a material adverse effect on our
business, financial condition and results of operations. Failure to comply, or
delays in compliance, with such regulations, standards and protocols or delays
in receipt of such certifications could delay the introduction of new products
or cause our existing products to become obsolete.
We may incur expenses to comply with environmental regulations.
There are aspects of our business that involve substances that could pose a
threat of contamination to the environment. We may in the future incur expenses
resulting from environmental remediation activities, or in connection with
complying with current or future environmental regulations. Environmental
remediation is costly, time consuming and could result in lengthy proceedings
that could distract our management. If we are required to remediate any
environmental hazard, our business, results of operations and financial
condition could be harmed.
6
Risks Related to Our Industry
Industry consolidation or changes in regulation could adversely affect our
business.
A substantial portion of our customers are regional telephone service
operating companies, competitive access providers, wireless service providers,
competitive local exchange carriers and other communications service providers
and industrial engineers and other users of communications test equipment.
Their industries are characterized by intense competition and consolidation.
Consolidation could reduce the number of our customers, increase their buying
power and create pressure on us to lower our prices. In addition, governmental
regulation of the communications industry could materially adversely affect our
customers and, as a result, materially limit or restrict our business. The
current trend toward deregulation of the telecommunications market, which has
resulted in increased competition among our customers as well as escalating
demand on the part of such customers for our technologies and services, may not
continue.
If service providers reduce their use of field technicians and successfully
implement a self-service installation model, demand for our products could
decrease.
To ensure quality service, our major service provider customers typically
send a technician who uses our products into the field to verify service for
installations. However, some providers have recently announced plans to
encourage their customers to install their own service and, by doing so, hope
to reduce their expenses and expedite installation for their customers. To
encourage self-installation, these companies offer financial incentives. If
service providers successfully implement these plans or choose to send
technicians into the field only after a problem has been reported, or if
alternative methods of verification become available, such as remote
verification service, the need for field technicians and the need for some of
our products could decrease, which would negatively affect our business and
results of operations.
Our operating results could be harmed if the markets into which we sell our
products experience a downturn as a result of a reduction in previously planned
capital expenditures for infrastructure expansion.
Several significant markets into which we sell our products are cyclical.
Periodic downturns in the telecommunications industry in general or a
particular segment of the industry may result in a reduction in capital
expenditures for infrastructure expansion. Industry and segment downturns have
been characterized by diminished product demand, excess manufacturing capacity
and the subsequent accelerated erosion of average selling prices. Any
significant downturn in our customers' markets or in general economic
conditions would likely result in a reduction in demand for our products and
services and could harm our business. Our customers may be unable to pay for
our products in a timely manner or they may decide to delay placing orders with
us.
Our success depends upon the quality of our key personnel. If we are unable to
retain some of our personnel, or if we are unable to continue to hire highly-
skilled personnel, our business may suffer.
Our success depends in large part upon our senior management, as well as our
ability to attract and retain highly-skilled technical, managerial, sales and
marketing personnel, particularly engineers with communications equipment
experience. Competition for such personnel is intense, and we may not be
successful in retaining our existing key personnel or attracting additional
employees. Any failure to retain our personnel, including our senior
management, could have a material adverse effect on our business, financial
condition and results of operations. In addition, continued labor market
shortages of technically-skilled personnel may lead to significant wage
increases, which could adversely affect our results of operations.
Third parties may claim we are infringing their intellectual property and, as a
result of such claims, we may face significant litigation or incur licensing
expenses or be prevented from selling our products.
Third parties may claim that we are infringing their intellectual property
rights, and we may be found to infringe those intellectual property rights.
Although we do not believe that any of our products infringe the
7
valid intellectual property rights of third parties, we may be unaware of the
intellectual property rights of others that may cover some of our technology,
products and services.
Any litigation regarding patents or other intellectual property rights could
be costly and time consuming, and divert the attentions of our management and
key personnel from our business operations. The complexity of the technology
involved and the uncertainty of intellectual property litigation increase these
risks. Claims of intellectual property infringement might also require us to
enter into costly royalty or license agreements. However, we may not be able to
obtain royalty or license agreements on terms acceptable to us, or at all. We
also may be subject to significant damages or injunctions against development
and sale of certain of our products.
Third parties may infringe on our intellectual property and, as a result, we
may expend significant resources enforcing our rights or suffer competitively.
Our success depends in large part on our intellectual property. We rely on a
combination of patents, copyrights, trademarks and trade secrets,
confidentiality provisions and licensing arrangements to establish and protect
our proprietary intellectual property. If we fail to enforce successfully our
intellectual property rights, our competitive position could suffer, which
could have a material adverse effect on our business, financial condition and
results of operations.
Our pending patent and trademark registration applications may not be
allowed or competitors may challenge the validity or scope of these patent
applications or trademarks registrations. In addition, competitors may design
alternatives to our technology or develop competing technologies. Intellectual
property rights may also be unavailable or limited in some foreign countries,
which could make it easier for our competitors to capture market share.
Our products are complex, and our failure to detect errors and defects may
subject us to costly repairs, product returns under warranty and product
liability litigation.
Our products are complex and may contain undetected defects or errors when
first introduced or as enhancements are released. These errors may occur
despite our testing and may not be discovered until after a product has been
shipped and used by our customers. This risk is compounded by the fact that we
offer many products, with multiple hardware and software configurations, which
makes it more difficult to ensure high standards of quality control in our
manufacturing process. The existence of these errors or defects could result in
costly repairs and/or returns of products under warranty, diversion of
development resources and, more generally, in delayed market acceptance of the
product or damage to our reputation and business, any of which could have a
material adverse effect on our business, financial condition and results of
operations.
8
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement, we
intend to use the proceeds from the sale of the securities offered by this
prospectus for general corporate purposes, including working capital, capital
expenditures, investments in loans to subsidiaries, acquisitions and
refinancing of debt. We will include a more detailed description of the use of
proceeds of any specific offering of securities in the prospectus supplement
pertaining to the offering.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of consolidated earnings to fixed
charges for the years and the periods indicated:
Nine Months
Ended Year Ended March 31,
December 31, ------------------------
2000 2000 1999 1998 1997 1996
------------ ---- ---- ---- ---- ----
Ratio of Consolidated Earnings to Fixed
Charges................................ * * * 20.3 22.8 7.2
* For the nine-month period ended December 31, 2000 and the years ended March
31, 1999 and 2000, earnings were insufficient to cover fixed charges by
$149.7 million, $7.9 million and $5.6 million, respectively.
For purposes of computing the ratio of consolidated earnings to fixed
charges, "earnings" consists of income/loss from continuing operations before
income taxes and extraordinary item. "Fixed charges" consists of the portion of
rental expense representative of the interest factor, interest on indebtedness,
and the amortization of debt expense.
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FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents and information
incorporated by reference in them include forward-looking statements. All
statements other than statements of historical facts included in this
prospectus, any prospectus supplement and the documents and information
incorporated by reference in them constitute forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. Although we believe that our assumptions made
in connection with the forward-looking statements are reasonable, we cannot
assure you that our assumptions and expectations will prove to have been
correct. Important factors that could cause our actual results to differ
materially from our expectations are disclosed in this prospectus (including
factors disclosed under "Risk Factors" beginning on page 2), each prospectus
supplement and the documents and information incorporated by reference in them.
These forward-looking statements are subject to various risks, uncertainties
and assumptions including, among other things:
. our outstanding debt and the restrictions imposed by our debt;
. the cyclical nature of certain of our businesses, and domestic and
international economic conditions;
. the high degree of competition in certain of our businesses, and the
potential for new competitors to enter into those businesses;
. the integration of recent and future acquired businesses with our
existing operations in a timely and efficient manner;
. the extent to which we undertake new acquisitions or enter into strategic
joint ventures or partnerships;
. future modifications to existing laws and regulations affecting the
environment, health and safety;
. discovery of unknown contingent liabilities, including environmental
contamination at our facilities;
. fluctuations in interest rates and in foreign currency exchange rates;
and
. increases in the cost of raw materials and other inputs used to make our
products.
We undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by those cautionary
statements. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus might not occur and you
should not place undue reliance upon them.
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DESCRIPTION OF DEBT SECURITIES
We may offer unsecured general obligations, which may be senior debt
securities or junior subordinated debt securities. The senior debt securities
and the subordinated debt securities are together referred to in this
prospectus as the "debt securities." The senior debt securities will have the
same rank as all of our other unsecured, unsubordinated obligations. The
subordinated debt securities will be subordinate in right of payment to the
extent and in the manner set forth in the subordinated indenture to all of our
senior debt as defined below under "Provisions Applicable Only to Subordinated
Debt Securities--Subordination."
The senior debt securities will be issued in one or more series under an
indenture, which we refer to as the "senior indenture," between us and a
trustee to be named in the prospectus supplement relating to the offering of
the senior debt securities. The subordinated debt securities will be issued in
one or more series under an indenture, which we refer to as the "subordinated
indenture," between us and a trustee to be named in the prospectus supplement
relating to the offering of the subordinated debt securities.
The following description of the terms of the indentures is a summary. It
summarizes only those portions of the indentures that we believe will be most
important to your decision to invest in our debt securities. You should keep in
mind, however, that the indentures, and not this summary, define your rights as
a debtholder. There may be other provisions in the indentures that are also
important to you. You should read the indentures for a full description of the
terms of the debt. The senior indenture and the subordinated indenture are
filed as exhibits to the Registration Statement that includes this prospectus.
See "Where You Can Find More Information" for information on how to obtain
copies of the senior indenture and the subordinated indenture. You should also
read the applicable prospectus supplement, which will contain additional
information and may update or change some of the information below.
The debt securities will be issuable in one or more series pursuant to one
or more indentures supplemental to the original indentures, or a resolution of
our board of directors or a duly authorized committee of our board of
directors.
The indentures do not contain any covenants or provisions that may afford
holders of debt securities protection in the event that we engage in a highly
leveraged transaction or other transaction that may adversely affect the
holders of the debt securities, including the incurrence or issuance of other
secured or unsecured debt.
Substantially all of our assets are owned by our subsidiaries and,
accordingly, the debt securities are effectively subordinated to all existing
and future liabilities of our subsidiaries. Our rights and the rights of our
creditors, including holders of debt securities, to participate in any
distribution of the assets of any subsidiary upon its liquidation,
recapitalization or insolvency would be subject to the prior claims of the
subsidiary's creditors, except to the extent that we might ourselves be a
creditor with recognized claims against the subsidiary.
General Terms of the Debt Securities
The aggregate principal amount of debt securities that may be issued under
the indentures is unlimited. The debt securities may be issued in one or more
series. You should refer to the applicable prospectus supplement for the
specific terms of the debt securities, including the following:
. title and aggregate principal amount;
. indenture under which the debt securities are issued;
. any applicable subordination provisions;
. percentage or percentages of principal amount at which the debt
securities will be issued and percentage or percentages of principal
amount payable upon declaration of acceleration of the maturity of the
debt securities;
. maturity date(s);
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. interest rate(s) or the method for determining the interest rate(s);
. dates on which interest will accrue or the method for determining dates
on which interest will accrue and dates on which interest will be
payable;
. interest deferral provisions, if any;
. conversion or exchange provisions, if any;
. place or places where principal, premium and interest will be payable;
. redemption or early repayment provisions;
. authorized denominations;
. amount of discount with which the debt securities will be issued;
. whether the debt securities will be issued in whole or in part in the
form of one or more global securities;
. identity of the depositary for global securities;
. whether a temporary security is to be issued with respect to the series
and whether any interest payable prior to the issuance of definitive debt
securities of the series will be credited to the account of the persons
entitled to the interest;
. the terms upon which beneficial interests in a temporary global debt
security may be exchanged in whole or in part for beneficial interests in
a definitive global debt security or for individual definitive debt
securities and the terms upon which these exchanges may be made;
. currency, currencies or currency units in which the purchase price for,
the principal of and any premium and any interest on, the debt securities
will be payable;
. time period within which, the manner in which and the terms and
conditions upon which the purchaser of the debt securities can select the
payment currency;
. securities exchange(s) on which the debt securities will be listed, if
any;
. additions to or changes in the events of default with respect to the debt
securities and any change in the right of the trustee or the holders to
declare the principal, premium and interest with respect to the debt
securities to be due and payable; and
. additional terms not inconsistent with the provisions of the indentures.
One or more series of debt securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
that at the time of issuance is below market rates. One or more series of debt
securities may be variable rate debt securities that may be exchanged for fixed
rate debt securities. The applicable prospectus supplement will describe all of
the material United States federal income tax considerations applicable to the
particular series of debt securities being offered.
Debt securities may be issued where the amount of principal and/or interest
payable is determined by reference to:
. the price of one or more commodities, derivatives or securities;
. one or more securities, derivatives or commodities exchange indices or
other indices;
. a currency or currencies (including any currency unit or units) other
than the currency in which the debt securities are issued; or
. any other variable or the relationship between any variables or
combination of variables.
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Holders of these debt securities may receive a principal amount or a payment
of interest that is greater than or less than the amount of principal or
interest that would otherwise be payable on any given payment date, depending
upon the value of the applicable currencies, commodities, securities,
derivatives, indices or other factors. Information as to the methods for
determining the amount of principal or interest, if any, payable on any given
payment date, and the currencies, commodities, securities, derivatives, indices
or other factors to which the amount payable on any given payment date is
linked, will be described in the applicable prospectus supplement.
The term "debt securities" includes debt securities denominated in U.S.
dollars or, if specified in the applicable prospectus supplement, in any other
freely transferable currency or units based on or relating to foreign
currencies.
We expect most debt securities to be issued in fully registered form without
coupons and in denominations of $1,000 and any integral multiple of $1,000.
Subject to the limitations provided in the indentures and in the prospectus
supplement, debt securities that are issued in registered form may be
registered, transferred or exchanged at the principal corporate trust office of
the trustee or at the office or agency that we will maintain for that purpose
in the Borough of Manhattan, The City of New York, without the payment of any
service charge, other than any tax or other governmental charge payable in
connection with the registration or transfer or exchange.
We may issue debt securities of any series in whole or in part in definitive
form or in the form of one or more global debt securities as described below
under "Global Securities." We may issue debt securities of a series at
different times. In addition, we may issue debt securities within a series with
terms different from the terms of other debt securities of that series.
Subject to applicable law, we or any of our affiliates may at any time
purchase or repurchase debt securities of any series in any manner and at any
price. Debt securities of any series purchased by us or any of our affiliates
may be held or surrendered by the purchaser of the debt securities for
cancellation.
Global Securities
We expect the following provisions to apply to all debt securities.
We may issue the debt securities of a series in whole or in part in the form
of one or more global securities that will be deposited with, or on behalf of,
a depositary identified in the prospectus supplement. We will issue global
securities in registered form and in either temporary or definitive form.
Unless and until it is exchanged in whole or in part for the individual debt
securities, a global security may not be transferred except as a whole by the
depositary for the global security to its nominee or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or its nominee to a successor of the depositary or a nominee of the
successor.
The specific terms of the depositary arrangement with respect to any debt
securities of a series and the rights of and limitations upon owners of
beneficial interests in a global security will be described in the prospectus
supplement. We expect that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual debt
securities represented by the global security to the accounts of persons that
have accounts with the depositary or its nominee. These accounts will be
designated by the dealers, underwriters or agents with respect to the debt
securities or by us if the debt securities are offered and sold directly by us.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with the applicable depositary, who are referred to
in this prospectus as participants, or persons that may hold interests through
participants. Ownership of
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beneficial interests in the global security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
applicable depositary or its nominee with respect to interests of participants
and the records of participants with respect to interests of persons other than
participants. The laws of some states require that some specified purchasers of
securities take physical delivery of the securities in definitive form. These
limits and laws may impair the ability to transfer beneficial interests in a
global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of a global security, the depositary or nominee, as the case
may be, will be considered the sole owner or holder of the debt securities
represented by that global security for all purposes under the indenture
governing those debt securities. Except as provided below, owners of beneficial
interests in a global security will not be entitled to have any of the
individual debt securities of the series represented by that global security
registered in their names, will not receive or be entitled to receive physical
delivery of any debt securities of the series in definitive form and will not
be considered the owners or holders of any debt securities in of the series
under the indenture governing those debt securities.
Payments of principal, premium, if any, and interest, if any, on individual
debt securities represented by a global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee, as the
case may be, as the registered owner of the global security representing the
debt securities. Neither we, the trustee for the debt securities, any paying
agent, nor the registrar for the debt securities will have any responsibility
or liability for any aspect of the records relating to or payments made by the
depositary or any participants on account of beneficial ownership interests in
the global security for the debt securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
We expect that the depositary for a series of debt securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent global security representing the debt securities, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security for the debt securities as shown on the records of the
depositary or its nominee. We also expect that payments by participants to
owners of beneficial interests in a global security held through the
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." The payments will be the responsibility of
the participants.
If the depositary for a series of debt securities notifies us at any time
that it is unwilling, unable or ineligible to continue as depositary and a
successor depositary is not appointed by us within 90 days, we will issue
definitive debt securities of that series in exchange for the global security
or securities representing that series of debt securities. In addition, we may
at any time and in our sole discretion, subject to any limitations described in
the prospectus supplement relating to the debt securities, determine not to
have any debt securities of a series represented by one or more global
securities, and, in that event, will issue definitive debt securities of that
series in exchange for the global security or securities representing that
series of debt securities. If definitive debt securities are issued, an owner
of a beneficial interest in a global security will be entitled to take physical
delivery of definitive debt securities of the series represented by that global
security equal in principal amount to that beneficial interest and to have the
debt securities registered in its name. Definitive debt securities of any
series so issued will be issued in denominations, unless otherwise specified by
us, of $1,000 and integral multiples of $1,000.
Redemption of Debt Securities
If the debt securities of a series provide for redemption at our election,
unless otherwise provided in the applicable prospectus supplement, the
redemption must be made on not less than 30 nor more than 60 days' notice and,
in the event of redemption in part, the debt securities to be redeemed will be
selected by the trustee by the method that it deems fair and appropriate.
Notice of the redemption will be mailed to holders of debt securities of the
series to their last addresses as they appear on the register of the debt
securities of the series.
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Events of Default, Notice and Waiver
Each indenture provides that, if an event of default in respect of any
series of debt securities has occurred and is continuing, either the trustee or
the holders of at least 25% in aggregate principal amount of the outstanding
debt securities of that series may declare the principal (or a portion of the
principal in the case of debt securities issued with original issue discount or
indexed debt securities) and accrued interest of all the debt securities of
that series to be due and payable, by written notice to us (and by written
notice to the trustee if given by the holders). The consequence of this action
is that the principal and accrued interest of the debt securities will be
immediately due and payable by us.
Each indenture defines events of default in respect of any series of debt
securities as:
. default for 30 days in payment of any interest installment or additional
amount when due;
. default in payment of the principal of or any premium on or any mandatory
sinking fund payment with respect to debt securities of the series when
due;
. failure to comply with specified obligations for 60 days after written
notice of non-compliance to us by the trustee or the holders of at least
25% in principal amount of the outstanding debt securities of the series;
. our commencement of a voluntary case under Title 11 of the U.S. Code or
any similar federal or state bankruptcy law;
. our consent to the entry of an order for relief against us in an
involuntary case under Title 11 of the U.S. Code or any similar federal
or state bankruptcy law
. our consent to the appointment of a receiver, trustee, assignee,
liquidator or similar official under Title 11 of the U.S. Code or any
similar federal or state bankruptcy law;
. a general assignment by us for the benefit of our creditors under Title
11 of the U.S. Code or any similar federal or state bankruptcy law;
. the entry by a court of competent jurisdiction of an order or decree
granting relief against us in an involuntary case under Title 11 of the
U.S. Code or any similar federal or state bankruptcy law where the order
or decree remains unstayed and in effect for 60 days;
. the entry by a court of competent jurisdiction of an order or decree
appointing a receiver, trustee, assignee, liquidator or similar official
for us or for substantially all of our property where the order or decree
remains unstayed and in effect for 60 days; and
. any other event of default provided for in the indenture with respect to
the debt securities of the series.
The Trust Indenture Act of 1939 and Section 6.6 of each indenture provide
that the trustee will, within 90 days after the occurrence of a default in
respect of any series of debt securities, give to the holders of that series
written notice of all uncured and unwaived defaults known to it; except that,
in the case of default in the payment of the principal of, premium on, if any,
or interest on, if any, or any sinking fund installment or analogous obligation
with respect to, any of the debt securities of that series, the trustee will be
protected in withholding the notice if it in good faith determines that the
withholding of the notice is in the interest of the holders of that series.
"Default" means any event that is, or after notice or passage of time or both
would be, an event of default with respect to debt securities of the series.
Each indenture provides that the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series may, subject
to limitations, direct the time, method and place of conducting proceedings for
any remedy available to the trustee, or exercising any trust or power conferred
on the trustee, in respect of the debt securities of that series.
Each indenture includes a covenant that we will file annually with the
trustee a certificate of compliance with all conditions and covenants under
each indenture.
15
In some cases, the holders of a majority in aggregate principal amount of
the outstanding debt securities of a series may, by providing written notice to
the trustee on behalf of the holders of all debt securities of that series,
waive any past default or event of default, except for defaults or events of
default not already cured in the payment of the principal of, or premium, if
any, or interest on, any of the debt securities of that series or any coupon
related to those debt securities or compliance with specified covenants or
provisions.
Modification of the Indentures
Each indenture contains provisions permitting us and the trustee to enter
into one or more supplemental indentures without the consent of the holders of
any of the debt securities in order to:
. evidence the succession of another corporation to us and the assumption
of our covenants and obligations by our successor;
. add to our covenants for the benefit of the holders of debt securities or
surrender any of our rights or powers;
. add additional events of default with respect to any series of debt
securities;
. add to or change any provisions of the indenture to the extent as
necessary to facilitate the issuance of debt securities in bearer form or
to facilitate the issuance of debt securities in global form;
. change or eliminate any provision of the indenture if the change or
elimination does not affect any series of debt securities created prior
to the execution of any supplemental indenture that is entitled to the
benefit of the provision;
. secure the debt securities;
. establish the form or terms of debt securities;
. evidence and provide for successor trustees and/or add to or change any
provisions of the indenture to the extent as necessary to provide for or
facilitate the appointment of a separate trustee or trustees for specific
series of debt securities;
. permit payment of principal, premium or interest in respect of debt
securities in bearer form or coupons, if any, in the United States and
other areas subject to its jurisdiction; or
. correct or supplement any inconsistent provisions or make any other
provisions with respect to matters or questions arising under the
indenture, as long as the action does not adversely affect the interests
of any holder of debt securities of any series.
Each indenture also contains provisions permitting us and the trustee, with
the consent of the holders of not less than a majority of the aggregate
principal amount of the outstanding debt securities of the affected series, to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the indenture or modifying the rights of
the holders of debt securities of that series. No supplemental indenture may,
without the consent of the holders of all of the affected debt securities,
among other things:
. change the maturity of any debt securities;
. change the currency in which the debt securities are payable;
. reduce the principal amount of the debt securities or the rate of
interest on the debt securities or any premium payable upon the
redemption of the debt securities;
. change the manner in which the amount of any principal of the debt
securities or premium, if any, or interest on the debt securities is
determined;
16
. impair the right to institute suit for the enforcement of any payment on
the debt securities at maturity or upon redemption;
. reduce the percentage of the outstanding principal amount of debt
securities the holders of which must consent to any supplemental
indenture;
. modify the indenture provisions concerning modification of the indenture
or the waiver of past defaults or specified covenants other than to
increase the required percentage to effect a modification or provide that
additional provisions may not be waived without the consent of each
holder of that series of debt securities; or
. in the case of the subordinated indenture, modify the subordination
provisions of the subordinated indenture in a manner adverse to the
holders of subordinated debt securities then outstanding.
Satisfaction and Discharge of the Indentures; Defeasance
Each indenture will generally cease to be of any further effect with respect
to a series of debt securities when:
. we have delivered all debt securities of that series to the trustee for
cancellation or
. all debt securities of that series not previously delivered to the
trustee for cancellation have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year, and we have deposited with the trustee as
trust funds the entire amount sufficient to pay at maturity or upon
redemption all debt securities of that series, and we have paid or cause
to be paid all other sums payable under the indenture by us in respect of
all debt securities of that series and we have delivered to the trustee
an officers' certificate and an opinion of counsel, each stating that all
conditions precedent in the indenture have been complied with.
The trustee will hold in trust all money deposited with it as described
above and will apply the deposited money, in accordance with the provisions of
the debt securities of the defeased series and the indenture, to the payment of
principal, premium, if any, and any interest, to the persons for whose payment
the money has been deposited with or received by the trustee, either directly
or through any paying agent, as the trustee may determine.
Record Dates
We will generally be entitled to set any date as the record date for the
purpose of determining the holders of debt securities entitled to give or take
any action under either indenture in the manner specified in the indenture. If
a record date is set, action may only be taken by persons who are holders of
debt securities on the record date. Also, unless otherwise specified in the
prospectus supplement applicable to a series of debt securities, to be
effective, any action must become effective under the applicable indenture
within six months of the record date.
Notice
Notices to holders of debt securities will be sent by mail to the holders'
addresses appearing in the applicable securities register. We and the trustee
may treat the person in whose name a debt security is registered as the owner
of that debt security for all purposes.
Governing Law
Each indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
17
Consolidation, Merger or Transfer of Assets
Each indenture provides that we may not merge or consolidate with or into
any other corporation or other entity or lease or transfer all or substantially
all of our assets, unless:
. the entity formed by or surviving the consolidation or merger or to which
the lease or transfer is made is a corporation organized under the laws
of the United States, any state of the United States or the District of
Columbia;
. the surviving entity or entity to which the lease or transfer is made
assumes by supplemental indenture all of our obligations under the
indenture; and
. immediately after giving effect to the transaction, no default or event
of default exists.
We must deliver to the trustee prior to the transaction an officer's
certificate to this effect, and an opinion of counsel stating that the
transaction and supplemental indenture complies with the indenture and that all
conditions precedent under the indenture to the consummation of the transaction
have been met.
Upon any consolidation, merger or transfer, the successor corporation formed
by the consolidation or into which we are merged or to which the transfer is
made will succeed to and be substituted for us under the indenture.
Provisions Applicable Only to Senior Debt Securities
Ranking
Senior debt securities will be our direct, unconditional and unsecured
obligations and, except for specified debts required to be preferred by law,
will rank equal among themselves and equally with all of our other unsecured
and unsubordinated obligations. The senior debt securities will rank senior to
our subordinated obligations, including any subordinated debt securities.
Provisions Applicable Only to Subordinated Debt Securities
Subordination
In the subordinated indenture, we have agreed that any subordinated debt
securities issued under the subordinated indenture are subordinated in right of
payment to all senior indebtedness, as defined below, to the extent provided in
the subordinated indenture.
In the event of any:
. insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to us, our
creditors or our property,
. proceeding for our liquidation, dissolution or other winding up,
voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings,
. assignment by us for the benefit of creditors, or
. other marshalling of our assets,
the holders of senior indebtedness will be entitled to receive payment in full
on the senior indebtedness before the holders of subordinated debt securities
will be entitled to receive or retain any payment on the subordinated debt
securities.
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No payments on account of the subordinated debt securities or interest on
the subordinated debt securities may be made if:
. we default in any payment with respect to senior indebtedness; or
. an event of default occurs with respect to any senior indebtedness
resulting in the acceleration of the maturity of the senior indebtedness.
For purposes of the subordination provisions, the payment, issuance and
delivery of cash, property or securities (other than shares of our common
stock or our equally subordinated securities), upon conversion of any
subordinated debt security will be deemed to constitute payment on account of
the principal of the subordinated debt security.
When we use the term "senior indebtedness" we mean the principal, premium,
if any, and interest on:
. all of our indebtedness, whether outstanding on the date of the
subordinated indenture or created, incurred or assumed after the date of
the subordinated indenture, that is for borrowed money, or evidenced by a
note or similar instrument given in connection with the acquisition of
any business, properties or assets, including securities;
. any indebtedness of any other person of the kind described in the
preceding bullet point for which we are responsible or liable as
guarantor or otherwise; and
. amendments, renewals, extensions and refundings of any indebtedness of
the kind described in the preceding two bullet points;
. except, however, that senior indebtedness does not include indebtedness
incurred for the purchase of goods or materials or for services obtained
in the ordinary course of business or any indebtedness which by its
express terms is equal with or subordinated to the subordinated debt
securities.
The subordinated indenture provides that the foregoing subordination
provisions, as far as they relate to any particular issue of subordinated debt
securities, may be changed prior to the issuance of the particular issue of
subordinated debt securities. Any change would be described in the prospectus
supplement relating to the relevant subordinated debt securities.
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DESCRIPTION OF CAPITAL STOCK
General
Our authorized capital stock consists of: (a) 350,000,000 shares of common
stock, par value $.01 per share, and (b) 100,000 shares of preferred stock, par
value $1.00 per share. Our common stock is listed on The Nasdaq Stock Market's
National Market under the symbol "ACTR". The transfer agent and registrar for
our common stock is Mellon Shareholder Services, L.L.C.
The following description of our capital stock is a summary. It summarizes
only those aspects of our capital stock that we believe will be most important
to your decision to invest in our capital stock. You should keep in mind,
however, that it is our Certificate of Incorporation, as amended, and our By-
Laws, and not this summary, that define your rights as a securityholder. There
may be other provisions in these documents that are also important to you. You
should read these documents for a full description of the terms of our capital
stock. Our Certificate of Incorporation, as amended, and our By-Laws are
incorporated by reference as exhibits to the Registration Statement that
includes this prospectus. See "Where You Can Find More Information" for
information on how to obtain copies of these documents.
The capital stock when offered by this prospectus and a prospectus
supplement will, when issued, be fully paid and nonassessable and will not
have, or be subject to, any preemptive or similar rights.
Common Stock
Voting
Holders of common stock have exclusive voting rights except as otherwise
required by law and to the extent that our board of directors may determine
that holders of a series of preferred stock have exclusive voting rights or
have the right to vote together as a single class with the holders of shares of
common stock. Holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders. Approval of matters brought before
the stockholders require the affirmative vote of a majority of shares present
and voting, except where a greater or lesser voting percentage may otherwise be
required by law.
Dividends
Holders of common stock will be entitled to participate in dividends as and
when declared by our board of directors out of funds legally available for
their payment.
Liquidation Rights
Subject to the rights of creditors and holders of preferred stock, holders
of common stock will be entitled to share ratably in a distribution of our
assets upon our liquidation, dissolution or winding up.
Preemptive Rights
The common stock does not carry any preemptive rights enabling a holder to
subscribe for or receive shares of our stock of any class or any other
securities convertible into shares of our common stock, with the exception of
options to purchase common stock pursuant to our stock option plans.
Classification of the Board of Directors
Our directors are classified in three staggered classes.
Registration Rights of Specified Certain Holders
Pursuant to an agreement among us, Clayton, Dubilier & Rice Fund V Limited
Partnership, Clayton, Dubilier & Rice Fund VI Limited Partnership and other
specified holders of shares of common stock, those
20
stockholders are entitled to certain demand registration rights. Pursuant to
this agreement, the stockholders may make up to four requests that we file a
registration statement under the U.S. Securities Act. Upon such request and
subject to specified conditions, we generally will be required to use our best
efforts to effect any such registration. In addition, if we propose to register
any of our securities, either for our own account or for the account of other
stockholders, we are required, with specified exceptions, to notify all holders
of registrable stock and, subject to specified limitations, to include in the
registration all of the shares of common stock requested to be included by the
holders of registrable stock. We generally are obligated to bear the expenses,
other than expenses sellers must pay under applicable law, underwriting
discounts and sales commissions, of the registration of these registrable
shares.
Preferred Stock
Authorized shares of preferred stock may be issued from time to time by our
board of directors, without stockholder approval, in one or more series.
Subject to the provisions of our Certificate of Incorporation, as amended, and
the limitations prescribed by law, our board of directors is expressly
authorized to adopt resolutions to issue the authorized shares of preferred
stock, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other
special rights, qualifications, limitations or restrictions of the preferred
shares, including dividend rights (including whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption prices, conversion rights and liquidation preferences of the shares
constituting any class or series of preferred stock, in each case without any
further action or vote by the stockholders.
We will describe in a prospectus supplement some or all of the following
terms of the series of preferred shares being offered:
. title;
. the number of shares offered;
. the liquidation preference per share;
. the purchase price;
. the dividend rates, periods and/or payment dates or methods of
calculation of the dividend rates;
. whether dividends will be cumulative or non-cumulative and, if
cumulative, the date from which dividends will accumulate;
. the procedures for any auction or remarketing, if any;
. the provisions for a sinking fund, if any;
. the provisions for redemption, if applicable;
. any listing of the preferred shares on any securities exchange or market;
. the terms and conditions, if applicable, upon which the preferred shares
will be convertible into our common shares, including the conversion
price, or manner of calculation of the conversion price, and conversion
period;
. the terms and conditions, if applicable, upon which preferred shares will
be exchanged into debt securities, including the exchange price, or
manner of calculating the exchange price, and the exchange period;
. voting rights, if any;
21
. the relative ranking and preferences of the preferred shares as to
dividend rights upon liquidation, dissolution or winding up of our
affairs;
. any limitations on issuance of any series of preferred shares ranking
senior to or equal to the series of preferred shares as to dividend
rights upon liquidation, dissolution or winding up of our affairs; and
. any other specific terms, preferences, rights, limitations or
restrictions.
The applicable prospectus supplement will describe all of the material
United States federal income tax considerations applicable to the particular
series of preferred shares being offered.
Unless otherwise specified in the prospectus supplement, the preferred
shares will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of our company, rank:
. senior to all series of our common shares, and to all equity securities
issued by us the terms of which specifically provide that such equity
securities rank junior to the preferred shares with respect to dividend
rights or rights upon liquidation, dissolution or winding up of our
company;
. equal to all equity securities issued by us, the terms of which
specifically provide that those equity securities will rank equal to the
preferred shares with respect to dividend rights or rights upon
liquidation, dissolution or winding up of our company; and
. junior to all equity securities issued by us, the terms of which
specifically provide that those equity securities rank senior to the
preferred shares with respect to dividend rights or rights upon
liquidation, dissolution or winding up of our company.
One of the effects of undesignated preferred stock may be to enable our
board of directors to render more difficult or to discourage an attempt to
obtain control of us by means of a tender offer, proxy contest, merger or
otherwise, and thereby to protect the continuity of our management. The
issuance of shares of the preferred stock pursuant to the board of directors'
authority described above may adversely affect the rights of the holders of
common stock. For example, our preferred stock may rank prior to the common
stock as to dividend rights, liquidation preference or both, may have full or
limited voting rights and may be convertible into shares of common stock.
Accordingly, the issuance of shares of preferred stock may discourage bids for
the common stock at a premium or may otherwise adversely affect the market
price of the common stock.
Depositary Shares
General Terms
We may elect to offer depositary shares representing receipts for fractional
interests in preferred stock, rather than full shares of preferred stock. In
this case, we will issue receipts for depositary shares, each of which will
represent a fraction of a share of a particular series of preferred stock.
We will deposit the shares of series of preferred stock represented by
depositary shares under a deposit agreement between us and a depositary that we
will name in a prospectus supplement. Subject to the terms of the deposit
agreement, as an owner of a depositary share you will be entitled, in
proportion to the applicable fraction of a share of preferred stock represented
by the depositary share, to all the rights and preferences of the preferred
stock represented by the depositary share, including dividend, voting,
redemption, subscription and liquidation rights.
The following description of the terms of the deposit agreement is a
summary. It summarizes only those terms of the deposit agreement that we
believe will be most important to your decision to invest in our depositary
shares. You should keep in mind, however, that it is the deposit agreement, and
not this summary, that defines your rights as a holder of depositary shares.
There may be other provisions in the deposit agreement that are also important
to you. You should read the deposit agreement for a full description of the
terms of the depositary shares. The form of the deposit agreement is filed as
an exhibit to the Registration
22
Statement that includes this prospectus. See "Where You Can Find More
Information" for information on how to obtain a copy of the deposit agreement.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received on the preferred stock to you in proportion to the
numbers of depositary shares you own.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to you in an equitable manner, unless the
depositary determines that it is not feasible to make a distribution. In that
case the depositary may sell the property and distribute the net proceeds from
the sale to you.
Redemption of Depositary Shares
If we redeem a series of preferred stock represented by depositary shares,
the depositary will redeem your depositary shares from the proceeds received by
the depositary resulting from the redemption. The redemption price per
depositary share will be equal to the applicable fraction of the redemption
price per share payable with respect to the series of the preferred stock.
Whenever we redeem shares of preferred stock held by the depositary, the
depositary will redeem as of the same redemption date the number of depositary
shares representing the shares of preferred stock redeemed. If fewer than all
the depositary shares are to be redeemed, the depositary shares to be redeemed
will be selected by lot, proportionately or by any other equitable method as
the depositary may determine.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which you are entitled to vote, the
depositary will mail to you the information contained in that notice of
meeting. Each record holder of the depositary shares on the record date will be
entitled to instruct the depositary how to vote the amount of the preferred
stock represented by that holder's depositary shares. The record date for the
depositary shares will be the same date as the record date for the preferred
stock. The depositary will endeavor, to the extent practicable, to vote the
amount of the preferred stock represented by the depositary shares in
accordance with those instructions. We will agree to take all reasonable action
that the depositary may deem necessary to enable the depositary to do so. The
depositary will abstain from voting shares of the preferred stock if it does
not receive specific instructions from you.
Amendment and Termination of the Deposit Agreement
We and the depositary may amend the form of depositary receipt evidencing
the depositary shares and any provision of the deposit agreement at any time.
However, any amendment that materially and adversely alters the rights of the
holders of depositary shares will not be effective unless the amendment has
been approved by the holders of at least a majority of the depositary shares
then outstanding.
The deposit agreement will only terminate if:
. all outstanding depositary shares have been redeemed, or
. there has been a final distribution in respect of the preferred stock,
including in connection with our liquidation, dissolution or winding up
and the distribution has been distributed to you.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of its
election to do so. We also may, at any time, remove the depositary. Any such
resignation or removal will take effect upon the appointment of a
23
successor depositary and its acceptance of such appointment. We must appoint
the successor depositary within 60 days after delivery of the notice of
resignation or removal. The successor depositary must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges
of the depositary in connection with the initial deposit of the preferred stock
and issuance of depositary receipts, all withdrawals of shares of preferred
stock by you and any redemption of the preferred stock. You will pay other
transfer and other taxes and governmental charges, as well as the other charges
that are expressly provided in the deposit agreement to be for your account.
Miscellaneous
The depositary will forward all reports and communications from us that are
delivered to the depositary and that we are required or otherwise determine to
furnish to holders of the preferred stock.
Neither we nor the depositary will be liable under the deposit agreement to
you other than for the depositary's gross negligence, willful misconduct or bad
faith. Neither we nor the depositary will be obligated to prosecute or defend
any legal proceedings relating to any depositary shares or preferred stock
unless satisfactory indemnity is furnished. We and the depositary may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting preferred stock for deposit, you or other persons believed
to be competent and on documents we and the depositary believe to be genuine.
Delaware Anti-Takeover Law
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law regulating corporate takeovers. This section prevents certain
Delaware corporations, under specified circumstances, from engaging in a
"business combination" with:
. a stockholder who owns 15% or more of our outstanding voting stock
(otherwise known as an "interested stockholder"),
. an affiliate of an interested stockholder, or
. an associate of an interested stockholder
for three years following the date that the stockholder became an "interested
stockholder." A "business combination" includes a merger or sale of more than
10% of our assets.
However, the above provisions of Section 203 do not apply if:
. our board of directors approves the transaction that made the stockholder
an "interested stockholder", prior to the date of that transaction;
. after the completion of the transaction that resulted in the stockholder
becoming an "interested stockholder", that stockholder owned at least 85%
of our voting stock outstanding at the time the transaction commenced;
. or on or subsequent to the date of the transaction, the business
combination is approved by our board of directors and authorized at a
meeting of our stockholders by an affirmative vote of at least two-thirds
of the outstanding voting stock not owned by the "interested
stockholder".
This statute could prohibit or delay mergers or other change in control
attempts, and thus may discourage attempts to acquire us.
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Limitations on Liability and Indemnification of Officers and Directors
Our Certificate of Incorporation, as amended, includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability:
. for any breach of the director's duty of loyalty to us or our
stockholders;
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. under section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or
. for any transaction from which the director derived an improper personal
benefit.
These provisions are permitted under Delaware law.
Our By-Laws provide that:
. we must indemnify our directors and officers to the fullest extent
permitted by Delaware law, subject to very limited exceptions;
. we may indemnify our other employees and agents to the same extent that
we indemnify our officers and directors, unless otherwise required by
law, our Certificate of Incorporation, as amended, our By-Laws or
agreements; and
. we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware law, subject to very limited exceptions.
The limitation of liability and indemnification provisions in our
Certificate of Incorporation, as amended, and By-Laws may discourage
stockholders from bringing a lawsuit against directors for breach of their
fiduciary duty. They may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though an action of
this kind, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder's investment may be adversely affected to the extent
we pay the costs of settlement and damage awards against directors and officers
pursuant to these indemnification provisions. However, we believe that these
indemnification provisions are necessary to attract and retain qualified
directors and officers.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees regarding which indemnification is sought,
nor are we aware of any threatened litigation that may result in claims for
indemnification.
25
DESCRIPTION OF WARRANTS
We may issue warrants, including warrants to purchase debt securities,
preferred stock, common stock or other of our securities. We may issue warrants
independently or together with any other securities, and they may be attached
to or separate from those securities. We will issue the other warrants under
warrant agreements between us and a bank or trust company, as warrant agent, as
we will describe in the prospectus supplement relating to the warrants that we
offer.
The following description of the terms of the warrants is a summary. It
summarizes only those terms of the warrants and the warrant agreement that we
believe will be most important to your decision to invest in our warrants. You
should keep in mind, however, that it is the warrant agreement and the warrant
certificate relating to the warrants, and not this summary, that define your
rights as a warrantholder. There may be other provisions in the warrant
agreement and the warrant certificate relating to the warrants that will also
be important to you. You should read those documents for a full description of
the terms of the warrants. Forms of these documents are filed as exhibits to
the Registration Statement that includes this prospectus. See "Where You Can
Find More Information" for information on how to obtain copies of these
documents.
Debt Warrants
We will describe in the applicable prospectus supplement the terms of
warrants to purchase debt securities that we may offer, the warrant agreement
relating to the debt warrants and the warrant certificates representing the
debt warrants. These terms will include the following:
. the title of the debt warrants,
. the debt securities for which such debt warrants are exercisable,
. the aggregate number of the debt warrants,
. the principal amount of debt securities that you may purchase upon
exercise of each debt warrant, and the price or prices at which we will
issue the debt warrants,
. the procedures and conditions relating to the exercise of the debt
warrants,
. the designation and terms of any related debt securities issued with the
debt warrants, and the number of the debt warrants issued with each debt
security,
. the date, if any, from which you may separately transfer the debt
warrants and the related securities,
. the date on which your right to exercise the debt warrants commences, and
the date on which your right expires,
. the maximum or minimum number of the debt warrants that you may exercise
at any time,
. if applicable, a discussion of material United States federal income tax
considerations,
. any other terms of the debt warrants and terms, procedures and
limitations relating to your exercise of the debt warrants, and
. the terms of the securities you may purchase upon exercise of the debt
warrants.
You may exchange debt warrant certificates for new debt warrant certificates
of different denominations and may exercise debt warrants at the corporate
trust office of the warrant agent or any other office that we indicate in the
applicable prospectus supplement. Prior to exercise, you will not have any of
the rights of holders of the debt securities purchasable upon that exercise and
will not be entitled to payments of principal, premium, if any, or interest on
the debt securities purchasable upon the exercise.
26
Other Warrants
We may issue other warrants. We will describe in the applicable prospectus
supplement the following terms of those warrants:
. the title of the warrant,
. the securities, which may include preferred stock or common stock, for
which you may exercise the warrants,
. the price or prices at which we will issue the warrants,
. if applicable, the designation and terms of the preferred stock or common
stock issued with the warrants, and the number of warrants issued with
each share of preferred stock or common stock,
. if applicable, the date from which you may separately transfer the
warrants and the related preferred stock or common stock,
. if applicable, a discussion of material United States federal income tax
considerations, and
. any other terms of the warrants, including terms, procedures and
limitations relating to your exchange and exercise of such warrants.
We will also describe in the applicable prospectus supplement the amount of
securities called for by the warrants, any amount of warrants outstanding, and
any provisions for a change in the exercise price or the expiration date of the
warrants and the kind, frequency and timing of any notice to be given. Prior to
the exercise of your warrants, you will not have any of the rights of holders
of the preferred stock or common stock purchasable upon that exercise and will
not be entitled to dividend payments, if any, or voting rights of the preferred
stock or common stock purchasable upon the exercise.
Exercise of Warrants
We will describe in the prospectus supplement relating to the warrants the
principal amount or the number of our securities that you may purchase for cash
upon exercise of a warrant, and the exercise price. You may exercise a warrant
as described in the prospectus supplement relating to the warrants at any time
up to the close of business on the expiration date stated in the prospectus
supplement. Unexercised warrants will become void after the close of business
on the expiration date, or any later expiration date that we determine.
We will forward the securities purchasable upon the exercise as soon as
practicable after receipt of payment and the properly completed and executed
warrant certificate at the corporate trust office of the warrant agent or other
office stated in the applicable prospectus supplement. If you exercise less
than all of the warrants represented by the warrant certificate, we will issue
you a new warrant certificate for the remaining warrants.
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PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus through agents,
underwriters, dealers or directly to purchasers.
Agents who we designate may solicit offers to purchase the securities.
. We will name any agent involved in offering or selling securities, and
any commissions that we will pay to the agent, in our prospectus
supplement.
. Unless we indicate otherwise in our prospectus supplement, our agents
will act on a best efforts basis for the period of their appointment.
. Our agents may be deemed to be underwriters under the Securities Act of
1933 of any of the securities that they offer or sell.
We may use an underwriter or underwriters in the offer or sale of our
securities.
. If we use an underwriter or underwriters, we will execute an underwriting
agreement with the underwriter or underwriters at the time that we reach
an agreement for the sale of the securities.
. We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers
will receive, in our prospectus supplement.
. The underwriters will use our prospectus supplement to sell the
securities.
We may use a dealer to sell the securities.
. If we use a dealer, we, as principal, will sell the securities to the
dealer.
. The dealer will then sell the securities to the public at varying prices
that the dealer will determine at the time it sells our securities.
. We will include the name of the dealer and the terms of our transactions
with the dealer in our prospectus supplement.
We may directly solicit offers to purchase the securities, and we may
directly sell the securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.
We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the Securities Act of 1933. Our
agents, underwriters, and dealers, or their affiliates, may be customers of,
engage in transactions with or perform services for us, in the ordinary course
of business.
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase the securities at the public offering price under
delayed delivery contracts.
. If we use delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will demand
payment and delivery of the securities under the delayed delivery
contracts.
. These delayed delivery contracts will be subject only to the conditions
that we describe in the prospectus supplement.
. We will describe in our prospectus supplement the commission that
underwriters and agents soliciting purchases of the securities under
delayed contracts will be entitled to receive.
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LEGAL MATTERS
Unless we state otherwise in the applicable prospectus supplement, the
validity of any securities offered by this prospectus will be passed upon for
us by Debevoise & Plimpton, New York, New York and for any underwriters or
agents by counsel to be named in the applicable prospectus supplement.
Debevoise & Plimpton also acts and may continue to act as counsel to Clayton,
Dubilier & Rice, Inc. and its affiliates and to us and our affiliates. Franci
J. Blassberg, Esq., a partner of Debevoise & Plimpton, is married to Joseph L.
Rice, III, who was formerly one of our directors and who is currently a
shareholder of the managing general partners of the general partners of
Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier &
Rice Fund VI Limited Partnership, our controlling stockholders.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K of Acterna Corporation for the year ended March 31,
2000 and the audited historical financial statements of Applied Digital Access,
Inc. included on pages F-1 to F-28 of Exhibit 3.0 of Acterna Corporation's Form
8-K/A dated January 14, 2000 have been so incorporated in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The audited consolidated financial statements of Wavetek Wandel Goltermann,
Inc. incorporated by reference in this prospectus and in the Registration
Statement of which this prospectus is a part have been so included in reliance
on the report of Arthur Andersen LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission. The Registration Statement, including the
attached exhibits, contains additional relevant information about us. The rules
and regulations of the Securities and Exchange Commission allow us to omit some
of the information included in the Registration Statement from this prospectus.
In addition, we file reports, proxy statements and other information with the
Securities and Exchange Commission. This information may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission at:
. Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549;
. 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048;
and
. Suite 1400, Northwestern Atrium Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60611.
Copies of this material can be obtained at prescribed rates from the Public
Reference Section of the Securities and Exchange Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The material may also be
accessed electronically by means of the Securities and Exchange Commission's
home page on the Internet at http://www.sec.gov. This Internet site contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Securities and Exchange Commission.
29
INCORPORATION BY REFERENCE
The rules of the Securities and Exchange Commission allow us to incorporate
by reference information into this prospectus. The information incorporated by
reference is considered to be a part of this prospectus, and information that
we file later with the Securities and Exchange Commission will automatically
update and supercede this information. This prospectus incorporates by
reference the documents listed below.
. Our Annual Report on Form 10-K for the year ended March 31, 2000,
. Our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2000,
September 30, 2000 December 31, 2000,
. Our Current Reports on Form 8-K filed on November 9, 1999 (as amended on
January 14, 2000), May 31, 2000 (as amended on July 18, 2000), September
11, 2000, September 22, 2000 and November 15, 2000,
. Description of our common stock and the rights associated with our common
stock contained in our registration statement on Form 8-A, dated June 29,
1998, and
. All documents filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this prospectus.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents referred to above that have been or may be
incorporated by reference in this prospectus, other than certain exhibits to
those such documents. You should direct requests for those documents to Acterna
Corporation, 3 New England Executive Park, Burlington, Massachusetts 01803-
5087, Attention: General Counsel (Telephone: 781-272-6100).
----------------
No person has been authorized to give any information or to make any
representations, other than those contained or incorporated by reference in
this prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by Acterna Corporation, or any
underwriter, agent or dealer. Neither the delivery of this prospectus nor any
sale made hereunder shall under any circumstances create any implication that
there has been no change in the affairs of Acterna Corporation since the date
hereof or that the information contained or incorporated by reference herein is
correct as of any time subsequent to the date of such information. This
prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any securities by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation.
30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth those expenses to be incurred by Acterna
Corporation in connection with the issuance and distribution of the securities
being registered. Except for the Securities and Exchange Commission filing fee,
all amounts shown are estimates.
Securities and Exchange Commission filing fee...................... $250,000
Printing and engraving expenses.................................... $ 10,000
Accountants' fees and expenses..................................... $ 75,000
Legal fees and expenses............................................ $100,000
Miscellaneous expenses............................................. $ 65,250
--------
Total............................................................ $500,250
========
Item 15. Indemnification of Directors and Officers
Acterna Corporation is incorporated under the laws of the State of Delaware.
Section 145 of the Delaware Corporation Law, as amended, and Subsection (e) of
Article Sixth of Acterna's Certificate of Incorporation, as amended, provides
for the indemnification, except in certain circumstances set forth below, of
officers, directors, employees and agents of Acterna for certain expenses
incurred in connection with any threatened, pending or completed action, suit,
or proceeding, whether civil, criminal, administrative or investigative, and
for the purchase and maintenance of insurance by Acterna on behalf of officers,
directors, employees and agents of Acterna and its subsidiaries against any
liability asserted against, and incurred by, any such officer, director,
employee or agent in such capacity. Set forth below is the text of Section 145
and the text of Subsection (e) of Article Sixth of Acterna's Certificate of
Incorporation, as amended.
Section 145 of the Delaware Corporation Law, as amended, provides as
follows:
"SECTION 145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS; INSURANCE.--(a) A corporation shall have power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if this person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
this person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection
31
with the defense or settlement of such action or suit if the person acted
in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the present or former director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not
the corporation would have the power to indemnify such person against such
liability under this section.
(h) For purposes of this section, references to 'the corporation' shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
32
(i) For purposes of this section, references to 'other enterprises'
shall include employee benefit plans; references to 'fines' shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation' shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation' as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorney's fees)."
Subsection (e) of Article Sixth of the Certificate of Incorporation of
Acterna, as amended, provides as follows:
"(e) No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of his or her fiduciary
duty as a director, provided that nothing contained in this Certificate of
Incorporation shall eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv)
for any transaction from which the director derived an improper personal
benefit."
As permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended, Acterna has purchased and maintains insurance providing
for reimbursement to elected directors and officers of Acterna and its
subsidiaries, subject to certain exceptions, of amounts they may be legally
obligated to pay, including but not limited to damages, judgments, settlements,
costs and attorneys' fees (but not including fines, penalties or matters not
insurable under the law), as a result of claims and legal actions instituted
against them to recover for their acts while serving as directors or officers.
Item 16. Exhibits
Exhibit
No. Description
------- -----------
1.1 Proposed form of Underwriting Agreement (Equity).*
1.2 Proposed form of Underwriting Agreement (Debt).*
3.1 Certificate of Incorporation of Acterna Corporation, as amended.(1)
3.2 By-Laws of Acterna Corporation.(2)
4.1 Indenture, dated May 21, 1998, among Acterna Corporation, TTC Merger
Co. LLC (now known as Acterna LLC) and State Street Bank and Trust
Company, as Trustee.(3)
4.2 Form of 9% Senior Subordinated Note due 2008 (included in Exhibit
4.1).
4.3 First Supplemental Indenture, dated May 21, 1998, between
Telecommunications Techniques Co., LLC and State Street Bank and Trust
Company, as Trustee.(3)
4.4 Form of Senior Indenture.
33
Exhibit
No. Description
------- -----------
4.5 Form of Subordinated Indenture.
4.6 Form of Depositary Receipt.*
4.7 Form of Depositary Agreement.*
4.8 Form(s) of Warrant Agreement(s), including form of Warrant.*
5 Opinion of Debevoise & Plimpton as to the legality of the securities
being registered.
12 Statement Re: Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Debevoise & Plimpton (included in Exhibit 5).
24 Powers of Attorney.+
- - --------
* To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K.
(1) Incorporated by reference to Acterna Corporation's Form 10-Q for the
quarter ended June 30, 2000 and Acterna Corporation's Form 8-K filed on
September 11, 2000.
(2) Incorporated by reference to Acterna Corporation's Form 10-Q for the
quarter ended September 30, 1999.
(3) Incorporated by reference to Acterna Corporation's Registration Statement
on Form S-4 (Registration No. 333-60893).
+ Previously filed.
Item 17. Undertakings.
(a) Rule 415 Offering.
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 set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
34
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by such registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Acceleration of Effectiveness.
Insofar as indemnifications 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 informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment 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, such registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) Rule 430A Offering.
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.
(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 therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(f) Qualification of Trust Indentures for Delayed Offerings.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of section 310 of the Trust Indenture Act ("Act") in accordance with the
rules and regulations prescribed by the Commission under section 305(b)(2) of
the Act.
35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Acterna
Corporation has duly caused this Amendment No. 1 to Form S-1 on Form S-3
Registration Statement (Registration No. 333-41650) to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Burlington,
Massachusetts, on the 14th day of February, 2001.
Acterna Corporation
/s/ Mark V.B. Tremallo
By: _________________________________
Mark V.B. Tremallo
Corporate Vice President--General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* Chairman, President and February 14, 2001
______________________________________ Chief Executive Officer
Ned. C. Lautenbach
* Director, Corporate Vice February 14, 2001
______________________________________ President, Chief
Allan M. Kline Financial Officer and
Treasurer
* Director, Corporate Vice February 14, 2001
______________________________________ President
John R. Peeler
* Director February 14, 2001
______________________________________
Brian D. Finn
* Director February 14, 2001
______________________________________
Marvin L. Mann
* Director February 14, 2001
______________________________________
Brian H. Rowe
* Director February 14, 2001
______________________________________
William O. McCoy
* Director February 14, 2001
______________________________________
Peter M. Wagner
* Director February 14, 2001
______________________________________
Victor A. Pelson
* Director February 14, 2001
______________________________________
Richard J. Schnall
*By: /s/ Mark V.B. Tremallo
______________________________________
Mark V.B. Tremallo,
as Attorney-in-Fact
36
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
1.1 Proposed form of Underwriting Agreement (Equity).*
1.2 Proposed form of Underwriting Agreement (Debt).*
3.1 Certificate of Incorporation of Acterna Corporation, as amended.(1)
3.2 By-Laws of Acterna Corporation.(2)
4.1 Indenture, dated May 21, 1998, among Acterna Corporation, TTC Merger
Co. LLC (now known as Acterna LLC) and State Street Bank and Trust
Company, as Trustee.(3)
4.2 Form of 9% Senior Subordinated Note due 2008 (included in Exhibit
4.1).
4.3 First Supplemental Indenture, dated May 21, 1998, between
Telecommunications Techniques Co., LLC and State Street Bank and Trust
Company, as Trustee. (3)
4.4 Form of Senior Indenture.
4.5 Form of Subordinated Indenture.
4.6 Form of Depositary Receipt.*
4.7 Form of Depositary Agreement.*
4.8 Form(s) of Warrant Agreement(s), including form of Warrant.*
Opinion of Debevoise & Plimpton as to the legality of the securities
5 being registered.
12 Statement Re: Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Debevoise & Plimpton (included in Exhibit 5).
24 Powers of Attorney.+
- - --------
* To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K.
(1) Incorporated by reference to Acterna Corporation's Form 10-Q for the
quarter ended June 30, 2000 and Acterna Corporation's Form 8-K filed on
September 11, 2000.
(2) Incorporated by reference to Acterna Corporation's Form 10-Q for the
quarter ended September 30, 1999.
(3) Incorporated by reference to Acterna Corporation's Registration Statement
on Form S-4 (Registration No. 333-60893).
+ Previously filed.
37