AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 2002
REGISTRATION STATEMENT NO. 333-84826
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
L-3 COMMUNICATIONS L-3 COMMUNICATIONS
HOLDINGS, INC. CORPORATION
(Exact Name of Registrants as Specified in Their Charters)
DELAWARE DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
13-3937434 13-3937436
(I.R.S. Employer Identification Number)
600 THIRD AVENUE 600 THIRD AVENUE
NEW YORK, NEW YORK 10016 NEW YORK, NEW YORK 10016
(212) 697-1111 (212) 697-1111
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrants' Principal Executive Offices)
--------------
SEE TABLE OF ADDITIONAL REGISTRANTS
--------------
CHRISTOPHER C. CAMBRIA, ESQ.
600 THIRD AVENUE
NEW YORK, NY 10016
(212) 697-1111
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
--------------
Copy to:
VINCENT PAGANO, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective as determined by
market conditions and other factors.
--------------
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,
lease check the following box. [ ]
--------------
(Continued on following page)
================================================================================
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
PROPOSED MAXIMUM PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SECURITY(1) OFFERING PRICE(1) FEE
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities of L-3 Communications Holdings, Inc. and
L-3 Communications Corporation and Preferred Stock,
Common Stock, Stock Purchase Contracts, Stock
Purchase Units and Warrants of L-3 Communications
Holdings, Inc.(2) ..................................... $1,000,000,000 100%(3) $1,000,000,000(3) $92,000.00*
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantees of L-3 Communications Holdings, Inc. of Debt
Securities of L-3 Communications Corporation and
Guarantees of Subsidiary Guarantors of Debt Securities
of L-3 Communications Holdings, Inc. and L-3
Communications Corporation ............................ (4) (4) (4) None
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock(5) ........................................ 1,000,000 shares(6) $ 55.63(7) $ 55,630,000(7) $ 5,117.96*
====================================================================================================================================
* Paid on March 22, 2002
(1) Pursuant to General Instructions II. D to Form S-3, the Amount to be
Registered, the Proposed Maximum Aggregate Offering Price Per Security
and Proposed Maximum Aggregate Offering Price have been omitted for each
class of securities which are registered hereby, other than with respect
to the specified shares of common stock to be sold by the selling
stockholders.
(2) The debt securities of L-3 Communications Holdings and L-3 Communications
Corporation registered hereby include such additional amount as may be
necessary so that, if debt securities of L-3 Communications Holdings and
L-3 Communications Corporation are issued with an original issue
discount, the aggregate initial offering prices of all debt securities of
L-3 Communications Holdings and L-3 Communications Corporation will equal
no more than $1,000,000,000. The initial public offering price of any
debt securities of L-3 Communications Holdings and L-3 Communications
Corporation denominated in any foreign currency shall be the U.S. dollar
equivalent thereof based on the prevailing exchange rates at the
respective times such securities are first offered. There are also being
registered hereunder an indeterminate number of shares of common stock as
shall be issuable upon conversion or redemption of preferred stock or
debt securities of L-3 Communications Holdings registered hereby.
(3) Estimated solely for purposes of calculating the registration fee.
(4) No separate consideration will be received for the guarantees. Pursuant
to Rule 457(n) of the Securities Act of 1933 there is no filing fee with
respect to the guarantees.
(5) Represents shares of common stock to be sold by certain selling
stockholders identified herein.
(6) On April 23, 2002, the board of directors of L-3 Communications Holdings
announced a two-for-one stock split to shareholders of record on May 6,
2002. The 1,000,000 shares of common stock registered hereby represent
the 500,000 shares of common stock initially registered hereby and,
pursuant to Rule 416(b) under the Securities Act, the additional 500,000
shares of common stock to be issued in connection with the two-for-one
stock split.
(7) Estimated solely for the purpose of determining the registration fee and
calculated in accordance with Rule 457(c) under the Securities Act on the
basis of the last price of L-3 Communications Holdings' common stock on
March 22, 2002, as adjusted for the two-for-one stock split discussed
above.
Any securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
--------------
TABLE OF ADDITIONAL REGISTRANTS
STATE OR OTHER ADDRESS, INCLUDING ZIP CODE,
JURISDICTION OF IRS EMPLOYER AND TELEPHONE NUMBER, INCLUDING
EXACT NAME OF REGISTRANT INCORPORATION OR IDENTIFICATION AREA CODE, OF REGISTRANT'S
AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES
- ------------------------------------------------ ------------------ ---------------- --------------------------------
AMI Instruments, Inc. Oklahoma 73-1122637 600 Third Avenue
New York, NY 10016
(212) 697-1111
Apcom, Inc. Maryland 52-1291447 600 Third Avenue
New York, NY 10016
(212) 697-1111
Celerity Systems Incorporated California 77-0365380 600 Third Avenue
New York, NY 10016
(212) 697-1111
Coleman Research Corporation Florida 59-2039476 600 Third Avenue
New York, NY 10016
(212) 697-1111
EER Systems, Inc. Virginia 54-1349668 600 Third Avenue
New York, NY 10016
(212) 697-1111
Electrodynamics, Inc Arizona 36-3140903 600 Third Avenue
New York, NY 10016
(212) 697-1111
Henschel, Inc. Delaware 23-2554418 600 Third Avenue
New York, NY 10016
(212) 697-1111
Hygienetics Environmental Services, Inc. Delaware 13-3992505 600 Third Avenue
New York, NY 10016
(212) 697-1111
Interstate Electronics Corporation California 95-1912832 600 Third Avenue
New York, NY 10016
(212) 697-1111
KDI Precision Products, Inc. Delaware 31-0740721 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications AIS GP Corporation Delaware 13-4137187 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications Analytics Corporation California 54-1035921 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications Atlantic Science and New Jersey 22-2547554 600 Third Avenue
Technology Corporation New York, NY 10016
(212) 697-1111
L-3 Communications Aydin Corporation Delaware 23-1686808 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications DBS Microwave, Inc. California 68-0281617 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications ESSCO, Inc. Delaware 04-2281486 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications ILEX Systems, Inc. Delaware 13-3992952 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications Investments, Inc. Delaware 51-0260723 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications SPD Technologies, Inc. Delaware 23-2869511 600 Third Avenue
New York, NY 10016
(212) 697-1111
L-3 Communications Storm Control Systems, Inc. California 77-0268547 600 Third Avenue
New York, NY 10016
(212) 697-1111
STATE OR OTHER ADDRESS, INCLUDING ZIP CODE,
JURISDICTION OF IRS EMPLOYER AND TELEPHONE NUMBER, INCLUDING
EXACT NAME OF REGISTRANT INCORPORATION OR IDENTIFICATION AREA CODE, OF REGISTRANT'S
AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES
- -------------------------------------------- ------------------ ---------------- --------------------------------
L-3 Communications Integrated Systems L.P. Delaware 03-0391841 600 Third Avenue
New York, NY 10016
(212) 697-1111
Microdyne Communications Technologies Maryland 59-3500774 600 Third Avenue
Incorporated New York, NY 10016
(212) 697-1111
Microdyne Corporation Maryland 52-0856493 600 Third Avenue
New York, NY 10016
(212) 697-1111
Microdyne Outsourcing Incorporated Maryland 33-0797639 600 Third Avenue
New York, NY 10016
(212) 697-1111
MPRI, Inc. Delaware 54-1439937 600 Third Avenue
New York, NY 10016
(212) 697-1111
Pac Ord, Inc. Delaware 23-2523436 600 Third Avenue
New York, NY 10016
(212) 697-1111
Power Paragon, Inc. Delaware 33-0638510 600 Third Avenue
New York, NY 10016
(212) 697-1111
Southern California Microwave, Inc. California 13-0478540 600 Third Avenue
New York, NY 10016
(212) 697-1111
SPD Holdings, Inc. Delaware 23-2977238 600 Third Avenue
New York, NY 10016
(212) 697-1111
SPD Electrical Systems, Inc. Delaware 23-2457758 600 Third Avenue
New York, NY 10016
(212) 697-1111
SPD Switchgear, Inc. Delaware 23-2510039 600 Third Avenue
New York, NY 10016
(212) 697-1111
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ARE PART OF A REGISTRATION STATEMENT
FILED WITH THE SEC. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS ARE NOT OFFERS TO SELL THESE SECURITIES OR OUR SOLICITATION OF YOUR
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THAT WOULD NOT BE
PERMITTED OR LEGAL.
SUBJECT TO COMPLETION, DATED MAY 24, 2002
PROSPECTUS SUPPLEMENT
(To Prospectus dated )
SHARES
[L-3 COMMUNICATIONS LOGO OMITTED]
COMMON STOCK
- --------------------------------------------------------------------------------
We are selling shares of our common stock. We will receive all of
the net proceeds from the sale of these shares.
Our common stock is traded on the New York Stock Exchange under the symbol
"LLL." On May 23, 2002, the last reported sale price of our common stock on the
New York Stock Exchange was $63.74 per share.
Investing in our common stock involves risks. See "Risks Related To Our Common
Stock" beginning on page S-8 of this prospectus supplement and "Risk Factors"
beginning on page 5 of the accompanying prospectus.
PER SHARE TOTAL
----------- --------
Public Offering Price ........................... $ $
Underwriting Discounts and Commissions .......... $ $
Proceeds to Us (before expenses) ................ $ $
We have granted the underwriters a 30-day option to purchase up to an
additional shares of our common stock to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Lehman Brothers, on behalf of the underwriters, expects to deliver the shares
to purchasers on or about , 2002.
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
, 2002
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT -----
About This Prospectus Supplement .............. i
Forward-Looking Statements .................... ii
Prospectus Supplement Summary ................. S-1
Risks Related to Our Common Stock ............. S-8
Use of Proceeds ............................... S-10
Dividend Policy ............................... S-10
Price Range of Common Stock ................... S-11
Capitalization ................................ S-12
Unaudited Pro Forma Condensed
Consolidated Financial Information ......... S-13
Certain U.S. Federal Tax Consequences to
Non-U.S. Holders ........................... S-23
Underwriting .................................. S-25
Legal Matters ................................. S-28
Experts ....................................... S-28
Available Information ......................... S-29
Incorporation of Certain Documents by
Reference .................................. S-29
PAGE
PROSPECTUS -----
Prospectus Summary ............................ 3
Risk Factors .................................. 5
The Company ................................... 12
Ratio of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges
and Preferred Stock Dividends .............. 12
Use of Proceeds ............................... 12
Dividend Policy ............................... 13
Description of Debt Securities ................ 14
Description of Capital Stock .................. 20
Description of Stock Purchase Contracts
and Stock Purchase Units ................... 24
Description of Warrants ....................... 24
Selling Stockholders .......................... 25
Plan of Distribution .......................... 26
Legal Matters ................................. 26
Experts ....................................... 26
Available Information ......................... 26
Incorporation of Certain Documents by
Reference .................................. 27
---------------------
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus supplement or the accompanying prospectus is accurate as of any date
other than the date on the front of this prospectus supplement.
---------------------
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement contains the terms of this offering. A
description of our common stock is contained in the accompanying prospectus
beginning on page 20.
This prospectus supplement is part of and should be read in conjunction
with the accompanying prospectus. The information we present in this prospectus
supplement may add, update or change information included in the accompanying
prospectus. If information in this prospectus supplement, or the information
incorporated by reference in the accompanying prospectus, is inconsistent with
the accompanying prospectus, this prospectus supplement, or the information
incorporated by reference in the accompanying prospectus, will apply and will
supersede that information in the accompanying prospectus.
Unless the context otherwise requires, references in this prospectus
supplement to "L-3," "we," "us" and "our" refer to L-3 Communications Holdings,
Inc. and its subsidiaries, including L-3 Communications Corporation, its wholly
owned subsidiary.
i
FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this prospectus supplement and the
accompanying prospectus and the documents incorporated herein and therein by
reference contain some forward-looking statements. Certain of the matters
discussed concerning our operations, cash flows, financial position, economic
performance and financial condition, including, in particular, the likelihood
of our success in developing and expanding our business and the realization of
sales from backlog include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Statements that are predictive in nature, that depend upon or refer to
future events or conditions or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. Although we believe that these
statements are based upon reasonable assumptions, including projections of
orders, sales, operating margins, earnings, cash flows, research and
development costs, working capital, capital expenditures and other projections,
they are subject to several risks and uncertainties, and therefore, we can give
no assurance that these statements will be achieved.
Our forward-looking statements will also be influenced by factors such as:
o our dependence on the defense industry and the business risks peculiar
to that industry, including changing priorities or reductions in the U.S.
Government defense budget;
o our reliance on contracts with a limited number of agencies of, or
contractors to, the U.S. Government and the possibility of termination of
government contracts by unilateral government action or for failure to
perform;
o our ability to obtain future government contracts on a timely basis;
o the availability of government funding and changes in customer
requirements for our products and services;
o our significant amount of debt and the restrictions contained in our
debt agreements;
o collective bargaining agreements and labor disputes;
o economic conditions, competitive environment, international business and
political conditions, timing of international awards and contracts;
o our extensive use of fixed price contracts as compared to cost plus
contracts;
o our ability to identify future acquisition candidates or to integrate
acquired operations;
o the rapid change of technology and high level of competition in the
communications equipment industry;
o our introduction of new products into commercial markets or our
investments in commercial products or companies;
o pension, environmental or legal matters or proceedings and various other
market, competition and industry factors, many of which are beyond our
control; and
o the fair values of assets including goodwill and other intangibles of
our businesses which can be impaired or reduced by the other factors
discussed above.
You are cautioned that our forward-looking statements are not guarantees
of future performance and the actual results or developments may differ
materially from the expectations expressed in the forward-looking statements.
As for the forward-looking statements that relate to future financial
results and other projections, actual results will be different due to the
inherent uncertainty of estimates, forecasts and projections and may be better
or worse than projected. Given these uncertainties, you should not place any
ii
reliance on these forward-looking statements. These forward-looking statements
also represent our estimates and assumptions only as of the date that they were
made. We expressly disclaim a duty to provide updates to these forward-looking
statements, and the estimates and assumptions associated with them, after the
date of this prospectus to reflect events or changes in circumstances or
changes in expectations or the occurrence of anticipated events.
We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
Form 10-K, Form 10-Q and Form 8-K reports to the Securities and Exchange
Commission. Also note that we provide a cautionary discussion of risks and
uncertainties under the caption "Risks Related to Our Common Stock" in this
prospectus supplement and "Risk Factors" in the accompanying prospectus. These
are factors that we think could cause our actual results to differ materially
from expected results. Other factors besides those listed here could also
adversely affect us. This discussion is provided as permitted by the Private
Securities Litigation Reform Act of 1995.
iii
PROSPECTUS SUPPLEMENT SUMMARY
Because this is a summary, it may not contain all the information that is
important to you. You should carefully read the entire prospectus supplement
and the accompanying prospectus, including the documents incorporated by
reference, which are described under "Incorporation of Certain Documents By
Reference."
L-3
We are a leading merchant supplier of secure communications and
intelligence, surveillance and reconnaissance (ISR) systems, training,
simulation and support services, aviation products and aircraft modernization,
as well as specialized products. Our business areas employ proprietary
technologies and capabilities, and we believe they have leading positions in
their respective primary markets. Our customers include the U.S. Department of
Defense and prime contractors thereof, certain U.S. Government intelligence
agencies, major aerospace and defense contractors, foreign governments,
commercial customers and certain other U.S. federal, state and local government
agencies. For the year ended December 31, 2001, direct and indirect sales to
the U.S. Department of Defense provided 64.7% of our sales, and sales to
commercial customers, foreign governments and U.S. federal, state and local
government agencies other than the U.S. Department of Defense provided 35.3% of
our sales. For the year ended December 31, 2001, we had sales of $2,347.4
million, of which U.S. customers accounted for 82.1% and foreign customers
accounted for 17.9%, operating income of $275.3 million and diluted earnings
per share of $1.47. For the three months ended March 31, 2002, we had sales of
$696.8 million, operating income of $71.3 million and diluted earnings per
share of $0.36.
For the year ended December 31, 2001, on a pro forma basis for our
acquisitions since January 1, 2001, we would have had sales of $3,557.3
million, operating income of $367.2 million and diluted earnings per share of
$ . For the three months ended March 31, 2002, on a pro forma basis for our
acquisitions since January 1, 2002, we would have had sales of $910.2 million,
operating income of $75.6 million and diluted earnings per share of $ .
Except for its outstanding 5.25% Convertible Senior Subordinated Notes due
2009 and for its outstanding 4.00% Senior Subordinated Convertible Contingent
Debt Securities ("CODES") due 2011, L-3 Communications Holdings has no assets
or liabilities and conducts no operations other than through L-3 Communications
Corporation. L-3 Communications Holdings has guaranteed the senior credit
facilities of L-3 Communications Corporation.
At December 31, 2001, we had two reportable segments: Secure Communication
Systems and Specialized Products. Effective as of January 1, 2002, primarily as
a result of our recent acquisitions, including our acquisition of Aircraft
Integration Systems business from Raytheon Company, we will present our
businesses as four reportable segments: (1) Secure Communications & ISR; (2)
Training, Simulation & Support Services; (3) Aviation Products & Aircraft
Modernization; and (4) Specialized Products.
Secure Communications & ISR. This segment provides products and services
for the global ISR market, specializing in signals intelligence and
communications intelligence systems, which provide the unique ability to
collect and analyze unknown electronic signals from command centers,
communication nodes and air defense systems for real-time situation awareness
and response in real-time to the warfighter. This segment also provides secure,
high data rate communications systems for military and other U.S. Government
and foreign government reconnaissance and surveillance applications. We believe
our systems and products are critical elements of virtually all major
communication, command and control, intelligence gathering and space systems.
Our systems and products are used to connect a variety of airborne, space,
ground and sea-based communication systems and are used in the transmission,
processing, recording, monitoring and dissemination functions of these
communication systems. The major secure communication programs and systems
include:
S-1
o secure data links for airborne, satellite, ground and sea-based remote
platforms for real time information collection and dissemination to
users;
o highly specialized fleet management and support including procurement,
systems integration, sensor development, modifications and maintenance
for signals intelligence and ISR special mission aircraft and airborne
surveillance systems;
o strategic and tactical signal intelligence systems that detect, collect,
identify, analyze and disseminate information;
o secure telephone and network equipment and encryption management; and
o communication systems for surface and undersea vessels and manned space
flights.
Training, Simulation & Support Services. This segment provides a full
range of services, including:
o services designed to meet customer training requirements for aircrews,
navigators, mission operators, gunners and maintenance technicians for
virtually any platform, including military fixed and rotary wing
aircraft, air vehicles and various ground vehicles;
o communication software support, information services and a wide range of
engineering development services and integration support;
o high-end engineering and information support services used for command,
control, communications, computers and ISR architectures, as well as for
air warfare modeling and simulation tools for applications used by the
U.S. Department of Defense and U.S. Government intelligence agencies,
including missile and space systems, Unmanned Aerial Vehicles and
military aircraft;
o developing and managing extensive programs in the United States and
internationally, focusing on teaching, training and education, logistics,
strategic planning, organizational design, democracy transition and
leadership development; and
o design, prototype development and production of ballistic missile
targets for present and future threat scenarios.
Aviation Products & Aircraft Modernization. This segment provides aviation
products and aircraft modernization services, including:
o airborne traffic and collision avoidance systems;
o commercial, solid-state, crash-protected cockpit voice recorders and
flight data recorders (known as "black boxes") and cruise ship hardened
voyage recorders;
o ruggedized displays for military and high-end commercial applications;
o turnkey aviation life cycle management services that integrate custom
developed and commercial off-the-shelf products for various military and
commercial wide-body and rotary wing aircraft, including heavy
maintenance and structural modifications and Head-of-State and commercial
interior completions; and
o engineering, modification, maintenance, logistics and upgrade for U.S.
Special Operations Command aircraft, vehicles and personal equipment.
Specialized Products. This segment supplies products to military and
commercial customers in several niche markets. The products include:
o ocean products, including acoustic undersea warfare products for mine
hunting, dipping sonars and anti-submarine and naval power distribution,
conditioning, switching and protection equipment for surface and undersea
platforms;
S-2
o telemetry, instrumentation, space and guidance products including
tracking and flight termination;
o premium fuzing products;
o microwave components;
o explosive detection systems for checked baggage at airports;
o high performance antennas and ground based radomes; and
o training devices and motion simulators which produce advanced virtual
reality simulation and high-fidelity representations of cockpits and
mission stations for aircraft and land vehicles.
DEVELOPING COMMERCIAL OPPORTUNITIES
An integral part of our growth strategy is to identify and exploit
commercial applications for select products and technologies currently sold to
defense customers. We have currently identified two vertical markets where we
believe there are significant opportunities to expand our existing commercial
sales: Transportation Products and Broadband Wireless Communications Products.
We believe that these vertical markets, together with our existing commercial
products, provide us with the opportunity for substantial commercial growth in
future years.
Within the transportation market, we have developed and are offering an
explosive detection system for checked baggage at airports, cruise ship voyage
recorders, power propulsion systems and power switches and displays for rail
transportation and internet service providers. We are developing additional
products, including an enhanced collision avoidance product that incorporates
ground proximity warning.
Within the communications product market, we are offering local fixed
wireless access equipment for voice, DSL and internet access, transceivers for
LMDS (Local Multipoint Distribution Service) and a broad range of commercial
components and digital test equipment for broadband communications providers.
We have developed the majority of our commercial products employing
technology used in our defense businesses. Sales generated from our developing
commercial opportunities have not yet been material to us.
THE AIS ACQUISITION
On March 8, 2002, we acquired the Aircraft Integration Systems business
("AIS") from Raytheon Company for $1,152.7 million in cash, subject to
adjustment. The acquisition was financed using cash on hand, borrowings under
our senior credit facilities and a $500.0 million senior subordinated interim
loan.
AIS is a long-standing, sole-source provider of critical communications
intelligence, signals intelligence and unique systems for special customers
within the U.S. Government and has become an integral part of the U.S.
military's ISR infrastructure. These systems collect, decode and transmit data,
providing the war fighter with real-time battlefield situational awareness.
AIS' major customers are increasingly focusing on these methods of intelligence
gathering and information distribution, suggesting excellent operating
prospects for the foreseeable future. This acquisition provides us with
platforms to capitalize on significant pull-through prospects related to the
sale of our secure communications and aviation products, including
communication links, signal processing, antennas, data recorders, displays and
traffic control and collision avoidance systems.
OUR STRATEGY
We intend to grow our sales, enhance our profitability and build on our
position as a leading merchant supplier of communication systems and products
to the major aerospace and defense
S-3
contractors as well as the U.S. Government. We also intend to leverage our
expertise and products into selected new commercial business areas where we can
adapt our existing products and technologies. Our strategy to achieve our
objectives includes:
EXPAND MERCHANT SUPPLIER RELATIONSHIPS. As an independent merchant
supplier, we intend to identify opportunities where we are able to use our
strong relationships to increase our business presence and allow customers to
reduce their costs.
SUPPORT CUSTOMER REQUIREMENTS. We intend to continue to align our
research and development, manufacturing and new business efforts to complement
our customers' requirements and provide state-of-the-art products.
ENHANCE OPERATING MARGINS. We intend to continue to enhance our operating
performance by reducing overhead expenses, continuing consolidation and
increasing productivity.
LEVERAGE TECHNICAL AND MARKET LEADERSHIP POSITIONS. We are applying our
technical expertise and capabilities to several closely aligned commercial
business markets and applications such as transportation and broadband wireless
communications and we expect to continue to explore other similar commercial
opportunities.
MAINTAIN DIVERSIFIED BUSINESS MIX. We have a diverse and broad business
mix with limited reliance on any particular program, a balance of
cost-reimbursable and fixed-price contracts, a significant follow-on business
and an attractive customer profile.
CAPITALIZE ON STRATEGIC ACQUISITION OPPORTUNITIES. We intend to enhance
our existing product base through internal research and development efforts and
selective acquisitions that will add new products in areas that complement our
present technologies. Since January 1, 2001, we acquired 13 businesses for an
aggregate adjusted purchase price of $1,636.0 million. We regularly evaluate
opportunities for future acquisitions. See "Risk Factors -- Our acquisition
strategy involves risks, and we may not successfully implement our strategy" on
page 5 of the accompanying prospectus.
RECENT DEVELOPMENTS
PerkinElmer's Detection Systems Business. On January 2, 2002, we agreed to
acquire the detection systems business of PerkinElmer for $100.0 million in
cash plus acquisition costs. PerkinElmer's detection systems business offers
X-ray screening for three major security applications: aviation systems for
checked and oversized baggage, break bulk cargo and air freight; port and
border applications including pallets, break bulk and air freight; and facility
protection, such as parcels, mail and cargo. PerkinElmer's detection systems
has a broad range of systems and technology, with an installed base of over
16,000 units. PerkinElmer's detection systems business customer base includes
major airlines and airports, a number of domestic agencies, such as the U.S.
Customs Service, U.S. Marshals Service, U.S. Department of Agriculture and U.S.
Department of State, and international authorities throughout Europe, Asia and
South America. The acquisition is subject to customary closing conditions,
including clearance under the Hart-Scott-Rodino Antitrust Improvements Act. We
expect to complete this acquisition during the second quarter of 2002.
----------------
We are incorporated in Delaware, and the address of our principal
executive offices is 600 Third Avenue, New York, New York 10016. Our telephone
number is (212) 697-1111.
S-4
THE OFFERING
Common stock offered by us. shares.
Common stock to be outstanding
after this offering....... shares.
The number of shares of common stock to be outstanding after this
offering:
o includes shares outstanding as of , 2002;
o excludes an aggregate of shares of common stock reserved for
issuance under our stock option plans for key employees and
non-employee directors of L-3;
o excludes 7,361,964 shares of common stock issuable upon conversion of
our outstanding 5.25% Convertible Senior Subordinated Notes due 2009;
o excludes 7,804,878 shares of common stock issuable upon conversion of
our outstanding 4% Senior Subordinated Convertible Contingent Notes due
2011 (CODES); and
o assumes no exercise of the underwriters' over-allotment option in
connection with this offering to purchase up to an additional
shares of common stock from L-3.
Over-allotment option..... shares.
Use of proceeds............. We intend to use the net proceeds from this
offering to repay existing indebtedness and for
general corporate purposes, including potential
acquisitions. See "Use of Proceeds."
NYSE symbol................. "LLL."
Risk factors................ You should carefully read and consider the
information set forth in "Risks Related to Our
Common Stock" beginning on page S-8 of this
prospectus supplement and "Risk Factors"
beginning on page 5 of the accompanying
prospectus before investing in our common stock.
Unless otherwise stated in this prospectus supplement, all share and per
share data contained in this prospectus supplement reflect a two-for-one stock
split declared by L-3 Communications Holdings' board of directors on April 23,
2002. In addition, except as otherwise noted, all information in this
prospectus supplement assumes no exercise by the underwriters of its
over-allotment option.
S-5
SUMMARY FINANCIAL DATA
We derived the summary financial data presented below from our financial
statements. The financial statement data for the years ended December 31, 2001,
2000 and 1999 are derived from our audited consolidated financial statements
incorporated by reference in this prospectus supplement. We derived the balance
sheet data presented below at December 31, 2001 and 2000 from our audited
consolidated financial statements incorporated by reference in this prospectus
supplelment. We derived the balance sheet data at December 31, 1999 from our
audited consolidated financial statements not included or incorporated by
reference in this prospectus supplement. We derived the financial statement
data for the three months ended March 31, 2002 and the balance sheet data at
March 31, 2002 from our unaudited condensed consolidated financial statements
incorporated by reference in this prospectus supplement. Our unaudited
condensed consolidated financial statements for the three months ended March
31, 2002 include, in our opinion, all adjustments consisting of normal
recurring adjustments, necessary for a fair presentation of the results for the
period.
The supplemental data for the three months ended March 31, 2002 and for
the year ended December 31, 2001 was derived from our Unaudited Pro Forma
Condensed Consolidated Financial Information included elsewhere herein, and
gives effect to our material acquisitions, this offering and the concurrent
private placement of $500,000,000 of senior subordinated notes by our wholly
owned subsidiary, L-3 Communications Corporation. The supplemental data is
presented for illustrative purposes only, and is not necessarily indicative of
the operating results or financial position that would have occurred had the
related transactions been completed at earlier dates, nor is it necessarily
indicative of our future operating results.
SUPPLEMENTAL
DATA FOR SUPPLEMENTAL
THREE THREE DATA FOR
MONTHS MONTHS YEAR
ENDED ENDED ENDED YEARS ENDED DECEMBER 31,(1)(2)
MARCH 31, MARCH 31, DECEMBER 31, -----------------------------------------
2002(3) 2002(2) 2001(3) 2001 2000 1999
------------- ----------- ------------- ------------- ------------- -------------
(in millions, except per share data)
STATEMENT OF OPERATIONS DATA:
Sales .............................. $ 910.2 $ 696.8 $ 3,557.3 $ 2,347.4 $ 1,910.1 $ 1,405.5
Operating income ................... 75.6 71.3 367.2 275.3 222.7 150.5
Interest expense, net .............. 32.6 25.1 151.5 84.5 88.6 55.1
Minority interest .................. 0.9 0.9 4.5 4.5 -- --
Provision for income taxes ......... 15.5 16.0 87.1 70.8 51.4 36.7
Net income ......................... 26.6 29.3 124.1 115.5 82.7 58.7
Earnings per common share:
Basic ............................. $ 0.37 $ 1.54 $ 1.24 $ 0.91
Diluted ........................... $ 0.36 $ 1.47 $ 1.18 $ 0.88
Weighted average common
shares outstanding:
Basic ............................. 78.9 74.9 66.7 64.2
Diluted ........................... 82.4 85.4 69.9 67.0
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents .......... $ 46.0 $ 361.0 $ 32.7 $ 42.8
Working capital .................... 807.3 714.3 360.9 255.5
Total assets ....................... 4,357.8 3,335.4 2,463.5 1,628.7
Total debt ......................... 2,175.0 1,325.0 1,095.0 605.0
Stockholders' equity ............... 1,266.5 1,213.9 692.6 583.2
PRO FORMA FOR OUR ACQUISITIONS AND THIS OFFERING:
Excluding the concurrent private placement of $500,000,000 of senior
subordinated notes by L-3 Communications Corporation, pro forma net income is
$31.8 million, pro forma basic earnings per share is $ and pro forma
diluted earnings per common share is $ for the three months ended March 31,
2002. For the year ended December 31, 2001, pro forma net income is $143.4
million, pro forma basic earnings per share is $ and pro forma diluted
earnings per common share is $ .
S-6
- ----------
(1) The table below presents net income for the years ended December 31,
2001, 2000 and 1999, adjusted to exclude goodwill amortization expense,
net of any income tax effects, recognized in those years related to
goodwill that is no longer being amortized.
2001 2000 1999
----------- ----------- ----------
Net income .................. $ 149.4 $ 112.3 $ 76.2
Basic EPS ................... $ 1.99 $ 1.68 $ 1.19
Diluted EPS ................. $ 1.87 $ 1.61 $ 1.14
(2) Our results of operations are impacted significantly by our acquisitions,
which are described elsewhere in this prospectus supplement and in the
documents incorporated herein by reference.
(3) The supplemental data for the three months ended March 31, 2002 gives
effect to our acquisition of Aircraft Integration Systems as if it had
occurred on January 1, 2002 and the related financings. The supplemental
data for the year ended December 31, 2001 gives effect to all of our
acquisitions since January 1, 2001 as if they had occurred on January 1,
2001 and the related financings. In addition, the supplemental data gives
effect to this offering and the concurrent private placement by our
wholly owned subsidiary, L-3 Communications Corporation, of $500.0
million of senior subordinated notes. This offering is not conditioned
upon the consummation of the issuance of the senior subordinated notes.
See "Unaudited Pro Forma Condensed Consolidated Financial Information"
beginning on page S-13.
The senior subordinated notes have not been registered under the
Securities Act and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
S-7
RISKS RELATED TO OUR COMMON STOCK
Investing in our common stock involves risks. You should carefully
consider the following risk factors relating to our common stock and the risk
factors beginning on page 5 of the accompanying prospectus relating to our
business, in addition to the other information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus, and in
any other documents to which we refer you in this prospectus supplement or the
accompanying prospectus, in deciding whether to invest in our common stock.
FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD LOWER THE STOCK
PRICE.
We may, in the future, sell additional shares of our common stock in
subsequent public offerings. We may also issue additional shares of our common
stock to finance future acquisitions, including acquisitions larger than those
we have done in the past through the use of equity. Additionally, a substantial
number of shares of our common stock is available for future sale pursuant to
stock options, registration rights agreements and upon conversion of our
convertible notes due 2009 and of our CODES due 2011. We cannot predict the
size of future issuances of our common stock or the effect, if any, that future
sales and issuances of shares of our common stock will have on the market price
of our common stock. Sales of substantial amounts of our common stock
(including shares issued upon the exercise of stock options, acquisition
financing or the conversion of our outstanding convertible notes), or the
perception that such sales could occur, may adversely affect prevailing market
prices for our common stock.
DELAWARE LAW AND THE CHARTER DOCUMENTS OF L-3 COMMUNICATIONS HOLDINGS MAY
IMPEDE OR DISCOURAGE A TAKEOVER, WHICH COULD CAUSE THE MARKET PRICE OF ITS
SHARES TO DECLINE.
We are a Delaware corporation and the anti-takeover provisions of Delaware
law impose various impediments to the ability of a third party to acquire
control of us, even if a change in control would be beneficial to our existing
stockholders. In addition, our board of directors has the power, without
stockholders' approval, to designate the terms of one or more series of
preferred stock and issue shares of preferred stock, which could be used
defensively if a takeover is threatened. Our certificate of incorporation and
by-laws provide for a classified board of directors serving staggered
three-year terms, restrictions on who may call a special meeting of
stockholders and a prohibition on stockholder action by written consent. All
options issued under our stock option plans automatically vest upon a change in
control of L-3 Communications Holdings. Our incorporation under Delaware law,
the ability of our board of directors to create and issue a new series of
preferred stock, the acceleration of the vesting of the outstanding stock
options that we have granted upon a change in control of L-3 Communications
Holdings, and certain provisions of our certificate of incorporation and
by-laws could impede a merger, takeover or other business combination involving
L-3 Communications Holdings or discourage a potential acquiror from making a
tender offer for the common stock of L-3 Communications Holdings, which, under
certain circumstances, could reduce the market value of our common stock.
THE PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY.
A number of factors could cause the market price of our common stock to
fluctuate significantly, including:
o our quarterly operating results or those of other aerospace and defense
companies;
o the public's reaction to our press releases, announcements and our
filings with the SEC;
o changes in earnings estimates or recommendations by research analysts;
o changes in general conditions in the U.S. economy, financial markets or
defense industry;
o natural disasters; and
o other developments affecting us or our competitors.
S-8
In recent years, the stock market has experienced extreme price and volume
fluctuations. This volatility has had a significant effect on the market price
of securities issued by many companies for reasons unrelated to the operating
performance of these companies. See "Price Range of Common Stock."
OUR MANAGEMENT HAS DISCRETION OVER THE USE OF PROCEEDS FROM THIS OFFERING.
As described in "Use of Proceeds," we intend to use some or all of the net
proceeds of this offering to repay indebtedness under our existing 364-day and
five-year revolving credit facilities and for general corporate purposes,
including potential acquisitions. We regularly evaluate potential acquisitions
and joint venture transactions, but, except as disclosed herein or in the
documents incorporated or deemed incorporated by reference in this prospectus
supplement, we have not entered into any agreements with respect to any
material transactions at this time. Upon repayment of the debt outstanding
under the senior credit facilities, our borrowing capacity will be restored and
we will have wide discretion over the use of any funds subsequently borrowed
under the senior credit facilities.
S-9
USE OF PROCEEDS
We have assumed that we will receive net proceeds of approximately $726.5
million through this offering, after deducting the discounts, commissions and
estimated expenses payable by us. We have also assumed that this amount will be
approximately $835.6 million if the underwriters fully exercise the
over-allotment option we have granted them to purchase an additional
newly issued shares of our common stock. Concurrently with this offering, our
wholly owned subsidiary, L-3 Communications Corporation, intends to consummate
a private placement of senior subordinated notes from which it assumes that it
will receive net proceeds of approximately $487.7 million, after deducting
discounts, commissions and estimated expenses.
We intend to use the net proceeds from this offering to repay our
outstanding $500.0 million senior subordinated interim loan, $150.0 million of
existing indebtedness outstanding under our 364-day revolving credit facility
and $76.5 million of indebtedness under our five-year revolving credit
facility, all of which was incurred in connection with our acquisition of AIS.
Assuming the successful completion by L-3 Communications Corporation of its
concurrent private placement of senior subordinated notes, L-3 Communications
Corporation intends to use the net proceeds of that private placement to repay
an additional $123.5 million of existing indebtedness outstanding under the
five-year revolving credit facility (the remaining balance outstanding), and
$364.2 million for general corporate purposes, including potential
acquisitions. The weighted average interest rate as of May 23, 2002 under each
of the revolving credit facilities was 4.84%. The 364-day revolving facility
matures on February 25, 2003 and the five-year revolving credit facility
matures on May 15, 2006. Amounts paid under each of the revolving credit
facilities will be available to be reborrowed from time to time for, among
other reasons, general corporate purposes, including potential acquisitions. As
of May 23, 2002, our senior subordinated interim loan had an interest rate of
5.34% and the loan matures on May 15, 2009. However, if the loans under the
interim loan agreement are not repaid by March 8, 2003, each lender's loan will
be automatically converted into exchange notes maturing on May 15, 2009.
DIVIDEND POLICY
Since its inception, L-3 Communications Holdings has never paid a cash
dividend on its common stock. L-3 Communications Holdings currently intends to
retain its earnings to finance future growth and, therefore, does not
anticipate paying any cash dividends on its common stock in the foreseeable
future. Any determination as to the payment of dividends will depend upon the
future results of operations, capital requirements and financial condition of
L-3 Communications Holdings and its subsidiaries and such other facts as the
board of directors of L-3 Communications Holdings may consider, including any
contractual or statutory restrictions on L-3 Communications Holdings' ability
to pay dividends. Moreover, L-3 Communications Holdings is a holding company
and its ability to pay dividends is dependent upon receipt of dividends,
distributions, advances, loans or other cash transfers from L-3 Communications
Corporation. Certain outstanding debt instruments of L-3 Communications
Corporation limit its ability to pay dividends or other distributions on its
common stock or to make advances, loans or other cash transfers to L-3
Communications Holdings.
S-10
PRICE RANGE OF COMMON STOCK
The common stock of L-3 Communications Holdings trades on the New York
Stock Exchange under the symbol "LLL." The last reported sale price for our
common stock on May 23, 2002 was $63.74 per share, as reported on the NYSE. The
table below sets forth closing information on the high and low closing prices
for our common stock during the periods indicated, as adjusted for the
two-for-one stock split.
PRICE RANGE
OF COMMON STOCK
-------------------------
HIGH LOW
----------- -----------
FISCAL YEAR ENDED DECEMBER 31, 2000:
Quarter Ended:
March 31, 2000 ............................... $ 25.97 $ 17.85
June 30, 2000 ................................ 29.32 22.63
September 30, 2000 ........................... 31.88 26.28
December 31, 2000 ............................ 38.78 28.60
FISCAL YEAR ENDED DECEMBER 31, 2001:
Quarter Ended:
March 31, 2001 ............................... $ 45.00 $ 32.50
June 30, 2001 ................................ 44.45 38.04
September 30, 2001 ........................... 43.73 31.24
December 31, 2001 ............................ 48.24 39.70
FISCAL YEAR ENDED DECEMBER 31, 2002:
Quarter Ended:
March 31, 2002 ............................... $ 58.23 $ 44.09
June 30, 2002 (through May 23, 2002) ......... 65.99 58.85
S-11
CAPITALIZATION
The following table sets forth our capitalization: (1) on an actual basis
as of March 31, 2002, (2) on an as adjusted basis, giving effect to the
estimated net proceeds from the sale of common stock pursuant to this offering,
and (3) on an as adjusted basis, giving effect to this offering and L-3
Communications Corporation's concurrent private placement of senior
subordinated notes.
AS OF MARCH 31, 2002
---------------------------------------------------
AS ADJUSTED
FOR THIS OFFERING
AND L-3
COMMUNICATIONS
CORPORATION'S
AS ADJUSTED CONCURRENT DEBT
ACTUAL FOR THIS OFFERING ISSUANCE(1)
------------ ------------------- ------------------
(IN MILLIONS)
Cash and cash equivalents ..................................... $ 46.0 $ 46.0 $ 410.2
========= ========= =========
Long-term debt:
Senior credit facilities(2) .................................. $ 350.0 $ 123.5 $ --
Senior Subordinated Interim Loan ............................. 500.0 -- --
103/8% Senior Subordinated Notes due 2007 .................... 225.0 225.0 225.0
81/2% Senior Subordinated Notes due 2008 ..................... 180.0 180.0 180.0
8% Senior Subordinated Notes due 2008 ........................ 200.0 200.0 200.0
% Senior Subordinated Notes due ........................ -- -- 500.0
51/4% Convertible Senior Subordinated Notes due 2009 ......... 300.0 300.0 300.0
4% Senior Subordinated Convertible Contingent Debt
Securities due 2011 ........................................ 420.0 420.0 420.0
--------- --------- ---------
Total debt ................................................. $ 2,175.0 $ 1,448.5 $ 1,825.0
Minority interest ............................................. $ 70.6 $ 70.6 $ 70.6
Shareholders' equity:
Common stock ................................................. $ 964.4 $ 1,690.9 $ 1,690.9
Retained earnings ............................................ 331.0 331.0 331.0
Unearned compensation ........................................ ( 5.1) ( 5.1) ( 5.1)
Accumulated other comprehensive loss ......................... ( 23.8) ( 23.8) ( 23.8)
--------- --------- ---------
Total shareholders' equity ................................. $ 1,266.5 $ 1,993.0 $ 1,993.0
--------- --------- ---------
Total capitalization ....................................... $ 3,512.1 $ 3,512.1 $ 3,888.6
========= ========= =========
- ----------
(1) Concurrently with this offering, our wholly owned subsidiary, L-3
Communications Corporation, intends to issue $500.0 million in principal
amount of senior subordinated notes in a private placement. Assuming the
successful completion of that offering, L-3 Communications Corporation
intends to use the net proceeds of that offering to repay $123.5 million
of indebtedness outstanding under our senior credit facilities and $364.2
million for general corporate purposes, including acquisitions. This
offering is not conditioned upon the consummation of the issuance of the
senior subordinated notes.
(2) At March 31, 2002, our availability under the senior credit facilities at
any given time was $750.0 million (subject to compliance with covenants),
less the amount of outstanding borrowings and outstanding letters of
credit, which amounted to $166.6 million at March 31, 2002.
S-12
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statements of
operations ("pro forma statement of operations") data gives effect to the
following transactions as if they had occurred on January 1, 2001: (1) our
acquisition of AIS which was completed on March 8, 2002 and the acquisitions of
KDI Precision Products, Inc., EER Systems, Inc., Spar Aerospace Limited,
Emergent Government Services Group, Bulova Technologies, and SY Technology,
Inc., which we completed during the year ended December 31, 2001, and their
related financings (collectively, the "Acquisitions") and (2) this offering and
the application of the net proceeds of this offering (assuming that the
concurrent private placement by L-3 Communications Corporation of senior
subordinated notes is not consummated) to repay $500.0 million of indebtedness
outstanding under our senior subordinated interim loan agreement and $226.5
million of borrowings outstanding under our senior credit facilities, both
incurred in connection with our acquisition of AIS. All of the Acquisitions
described above are included in our consolidated balance sheet as of March 31,
2002, and therefore, an unaudited pro forma condensed consolidated balance
sheet is not provided.
The pro forma adjustments related to our Acquisitions are based on
preliminary purchase prices and purchase price allocations. Actual adjustments
will be based on final purchase prices, audited historical net assets for the
Acquisitions, and final appraisals and other analyses of fair values of
contracts in process, inventories, estimated costs in excess of billings to
complete contracts in process, identifiable intangibles, pension and
postretirement benefit obligations and deferred tax assets and liabilities,
which will be completed after we obtain and review all of the data required for
the acquired assets and liabilities and complete our valuations of them.
Differences between the preliminary and final purchase price allocations could
have a material impact on our results of operations and financial position. The
unaudited pro forma condensed consolidated statement of operations does not
reflect any cost savings that we believe would have resulted had the
Acquisitions occurred on January 1, 2001.
The supplemental pro forma data is provided as additional information and
gives effect to this offering and the concurrent private placement of $500.0
million of senior subordinated notes by L-3 Communications Corporation and the
application of the net proceeds from them to (1) repay $500.0 million of
indebtedness outstanding under our senior subordinated interim loan agreement,
(2) repay all of the borrowings outstanding under our senior credit facilities
and (3) increase our cash and cash equivalents, which will be used for general
corporate purposes, including acquisitions.
The unaudited pro forma condensed consolidated financial information
should be read in conjunction with (1) our unaudited condensed consolidated
financial statements for the three months ended March 31, 2002 and 2001, and
our audited consolidated financial statements for the year ended December 31,
2001 incorporated by reference herein; and (2) the audited combined financial
statements of AIS for the year ended December 31, 2001 included in our Current
Report on Form 8-K dated March 22, 2002, which is incorporated herein by
reference. The other historical statement of operations data for the
Acquisitions are based on unaudited financial statement data not included or
incorporated by reference herein. The unaudited pro forma condensed
consolidated financial information may not be indicative of the results of
operations that actually would have occurred had the Acquisitions, this
offering and the concurrent private placement of senior subordinated notes by
L-3 Communications Corporation been completed on January 1, 2001 or the results
of our operations that may be obtained in the future.
S-13
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA
L-3 ADJUSTMENTS PRO FORMA
AS ACQUISITION FOR OUR FOR OUR
REPORTED HISTORICAL(2) ACQUISITIONS ACQUISITIONS
----------- --------------- -------------- --------------
Sales ....................... $ 696.8 $ 213.4 $ -- $ 910.2
Costs and expenses .......... 625.5 209.1 -- 834.6
------- -------- -------- -------
Operating income .......... 71.3 4.3 -- 75.6
Interest and other income
(expense) .................. 1.0 -- (1.0)(7) --
Interest expense ............ 26.1 -- 7.3 (6) 33.4
Minority interest ........... 0.9 -- -- 0.9
------- -------- -------- --------
Income (loss) before
income taxes ............. 45.3 4.3 (8.3) 41.3
Provision (benefit) for
income taxes(11) ........... 16.0 2.4 (3.3) 15.1
------- -------- -------- --------
Net income (loss) ......... $ 29.3 $ 1.9 $ (5.0) $ 26.2
======= ======== ======== ========
Earnings per share:(12)
Basic ..................... $ 0.37 $ 0.33
======== ========
Diluted ................... $ 0.36 $ 0.32
======== ========
Weighted average common
shares outstanding:(12)
Basic ..................... 78.9 78.9
======== ========
Diluted ................... 82.4 82.4
======== ========
PRO FORMA
SUPPLEMENTAL DATA
------------------------------------
PRO FORMA
FOR OUR
ADDITIONAL ACQUISITIONS
ADJUSTMENTS AND THIS
FOR L-3 OFFERING AND
PRO FORMA COMMUNICATIONS L-3 COMMUNICATIONS
FOR OUR CORPORATION'S CORPORATION'S
ADJUSTMENTS ACQUISITIONS CONCURRENT CONCURRENT
FOR THIS AND THIS DEBT DEBT
OFFERING OFFERING ISSUANCE ISSUANCE
--------------- -------------- ---------------- -------------------
Sales ....................... $ -- $ 910.2 -- $ 910.2
Costs and expenses .......... -- 834.6 -- 834.6
-------- -------- -- --------
Operating income .......... -- 75.6 -- 75.6
Interest and other income
(expense) .................. -- -- -- --
Interest expense ............ (9.4)(9) 24.0 8.6 (10) 32.6
Minority interest ........... -- 0.9 -- 0.9
-------- -------- ---- --------
Income (loss) before
income taxes ............. 9.4 50.7 (8.6) 42.1
Provision (benefit) for
income taxes(11) ........... 3.8 18.9 (3.4) 15.5
-------- -------- ---- --------
Net income (loss) ......... $ 5.6 $ 31.8 $ (5.2) $ 26.6
======== ======== ======== ========
Earnings per share:(12)
Basic .....................
Diluted ...................
Weighted average common
shares outstanding:(12)
Basic .....................
Diluted ...................
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
S-14
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA
L-3 ADJUSTMENTS PRO FORMA
AS ACQUISITIONS FOR OUR FOR OUR
REPORTED HISTORICAL(3) ACQUISITIONS ACQUISITIONS
------------ --------------- ---------------- ----------------
Sales ........................ $ 461.9 $ 327.9 -- $ 789.8
Costs and expenses ........... 415.0 312.6 (7.1)(5) 720.5
--------- -------- ----- --------
Operating income ........... 46.9 15.3 7.1 69.3
Interest and other income
(expense) ................... 0.5 3.0 (0.5)(7) 3.0
Interest expense ............. 24.4 0.3 22.4 (6) 47.1
Minority interest ............ -- -- -- --
---------- -------- ----- --------
Income (loss) before
income taxes .............. 23.0 18.0 (15.8) 25.2
Provision (benefit) for
income taxes(11) ............ 8.8 6.8 (5.5) 10.1
---------- -------- ----- --------
Net income (loss)(1) ....... $ 14.2 $ 11.2 (10.3) $ 15.1
========== ======== ===== ========
Earnings per share:(a)(12)
Basic ...................... $ 0.21 $ 0.20
========== ========
Diluted .................... $ 0.20 $ 0.19
========== ========
Weighted average common
shares outstanding:(12)
Basic ...................... 68.2 9.2 (8) 77.3
========== ===== ========
Diluted .................... 71.5 9.2 (8) 80.7
========== ===== ========
PRO FORMA
SUPPLEMENTAL DATA
---------------------------------------
PRO FORMA
FOR OUR
ADDITIONAL ACQUISITIONS
ADJUSTMENTS AND THIS
FOR L-3 OFFERING AND
PRO FORMA COMMUNICATIONS L-3 COMMUNICATIONS
FOR OUR CORPORATION'S CORPORATION'S
ADJUSTMENTS ACQUISITIONS CONCURRENT CONCURRENT
FOR THIS AND THIS DEBT DEBT
OFFERING OFFERING ISSUANCE ISSUANCE
---------------- ---------------- ---------------- ----------------------
Sales ........................ $ -- $ 789.8 $ -- $ 789.8
Costs and expenses ........... -- 720.5 -- 720.5
--------- ------- -------- -------
Operating income ........... -- 69.3 -- 69.3
Interest and other income
(expense) ................... -- 3.0 -- 3.0
Interest expense ............. (15.9)(9) 31.2 7.8 (10) 39.0
Minority interest ............ -- -- -- --
--------- ------- -------- -------
Income (loss) before
income taxes .............. 15.9 41.1 (7.8) 33.3
Provision (benefit) for
income taxes(11) ............ 6.4 16.5 (3.1) 13.4
--------- ------- -------- -------
Net income (loss)(1) ....... $ 9.5 $ 24.6 $ (4.7) $ 19.9
========= ======= ======== =======
Earnings per share:(a)(12)
Basic ......................
Diluted ....................
Weighted average common
shares outstanding:(12)
Basic ......................
Diluted ....................
(a) The table below presents net income for the three months ended March 31,
2001, adjusted to exclude goodwill amortization expense, net of any tax
effects, recognized in 2001 related to goodwill that is no longer being
amortized.
L-3 Pro Forma
As For Our
Reported Acquisitions
---------- -------
Net Income ................... $ 21.5 $ 22.4
========== ========
Basic EPS .................... $ 0.32 $ 0.29
========== ========
Diluted EPS .................. $ 0.30 $ 0.28
========== ========
Pro Forma
For Our
Acquisitions
and This
Offering and
Pro Forma L-3 Communications
For Our Corporation's
Acquisitions Concurrent
and This Debt
Offering Issuance
-------- -----
Net Income ................... $ 31.9 $ 27.2
======= =======
Basic EPS ....................
Diluted EPS ..................
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
S-15
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001
(IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA
L-3 ADJUSTMENTS PRO FORMA
AS ACQUISITIONS FOR OUR FOR OUR
REPORTED HISTORICAL(4) ACQUISITIONS ACQUISITIONS
------------- --------------- ---------------- ----------------
Sales ........................ $ 2,347.4 $ 1,209.9 $ -- $ 3,557.3
Costs and expenses ........... 2,072.1 1,146.9 (28.9)(5) 3,190.1
--------- ---------- --------- ----------
Operating income ........... 275.3 63.0 28.9 367.2
Interest and other income
(expense) ................... 1.8 (8.0) (3.8)(7) (10.0)
Interest expense ............. 86.3 0.5 75.4 (6) 162.2
Minority interest ............ 4.5 -- -- 4.5
--------- ---------- --------- ----------
Income (loss) before
income taxes .............. 186.3 54.5 (50.3) 190.5
Provision (benefit) for
income taxes(11) ............ 70.8 27.0 (19.0) 78.8
--------- ---------- --------- ----------
Net income (loss)(1) ....... $ 115.5 $ 27.5 $ (31.3) $ 111.7
========= ========== ========= ==========
Earnings per share:(a)(12)
Basic ...................... $ 1.54 $ 1.43
==========
Diluted .................... $ 1.47 $ 1.38
==========
Weighted average common
shares outstanding:(12)
Basic ...................... 74.9 3.0 (8) 77.9
========== ========= ==========
Diluted .................... 85.4 3.0 (8) 88.5
========== ========= ==========
PRO FORMA
SUPPLEMENTAL DATA
---------------------------------------
PRO FORMA
FOR OUR
ADDITIONAL ACQUISITIONS
ADJUSTMENTS AND THIS
FOR L-3 OFFERING AND
PRO FORMA COMMUNICATIONS L-3 COMMUNICATIONS
FOR OUR CORPORATION'S CORPORATION'S
ADJUSTMENTS ACQUISITIONS CONCURRENT CONCURRENT
FOR THIS AND THIS DEBT DEBT
OFFERING OFFERING ISSUANCE ISSUANCE
---------------- ---------------- ---------------- ----------------------
Sales ........................ $ -- $ 3,557.3 $ -- $ 3,557.3
Costs and expenses ........... -- 3,190.1 -- 3,190.1
--------- --------- --------- ---------
Operating income ........... -- 367.2 -- 367.2
Interest and other income
(expense) ................... -- ( 10.0) -- (10.0)
Interest expense ............. (52.9)(9) 109.3 32.2 (10) 141.5
Minority interest ............ -- 4.5 -- 4.5
--------- --------- --------- ---------
Income (loss) before
income taxes .............. 52.9 243.4 (32.2) 211.2
Provision (benefit) for
income taxes(11) ............ 21.2 100.0 (12.9) 87.1
--------- --------- --------- ---------
Net income (loss)(1) ....... $ 31.7 $ 143.4 $ (19.3) $ 124.1
========= ========= ========= =========
Earnings per share:(a)(12)
Basic ......................
Diluted ....................
Weighted average common
shares outstanding:(12)
Basic ......................
Diluted ....................
(a) The table below presents net income for the year ended December 31, 2001,
adjusted to exclude goodwill amortization expense, net of any tax effects,
recognized in 2001 related to goodwill that is no longer being amortized.
L-3 Pro Forma
As For Our
Reported Acquisitions
---------- ---------
Net Income ................... $ 149.4 $ 145.7
Basic EPS .................... $ 2.00 $ 1.87
Diluted EPS .................. $ 1.87 $ 1.76
Pro Forma
For Our
Acquisitions
and This
Offering and
Pro Forma L-3 Communications
For Our Corporation's
Acquisitions Concurrent
and This Debt
Offering Issuance
-------- -------
Net Income ................... $ 177.4 $ 158.1
Basic EPS ....................
Diluted EPS ..................
S-16
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. On March 8, 2002, we acquired AIS for $1,152.7 million in cash which
includes $1,130.0 million for the original contract purchase price, $4.0
million for estimated acquisition costs and an increase to the contract
purchase price of $18.7 million related to additional assets contributed by
Raytheon to AIS. The purchase price is subject to adjustment based on the
AIS closing date net tangible book value, as defined. The AIS acquisition
was financed using cash on hand as well as available borrowings under our
senior credit facilities and a $500.0 million senior subordinated interim
loan. During the year ended December 31, 2001, we also made the following
acquisitions:
o in May 2001, all the outstanding common stock of KDI Precision Products,
Inc. ("KDI") for $79.4 million in cash including acquisition costs.
o in May 2001, all the outstanding common stock of EER Systems, Inc.
("EER") for $119.5 million in cash including acquisition costs, and
subject to an additional purchase price not to exceed $10.0 million which
is contingent upon the financial performance of EER for the year ended
December 31, 2001 and the year ending December 31, 2002.
o in November and December 2001, 70.3% of the outstanding common stock of
Spar Aerospace Limited ("Spar") for $105.1 million in cash including
acquisition costs. We acquired and paid for the remaining outstanding
common stock of Spar in January 2002 for $43.6 million.
o in November 2001, all the outstanding common stock of Emergent
Government Services Group ("EMG") for $39.8 million, subject to
adjustment based on closing date net working capital. Following the
acquisition, we changed Emergent Government Services Group's name to L-3
Communications Analytics.
o in December 2001, the net assets of Bulova Technologies for $49.5
million, subject to adjustment based on closing date net assets.
Following the acquisition, we changed Bulova Technologies name to BT Fuze
Products ("BT Fuze").
o in December 2001, the net assets of SY Technology Inc. ("SY") for $49.8
million, subject to adjustment based on closing date net assets, and
additional purchase price not to exceed $4.8 million, which is contingent
upon the financial performance of SY for the years ending December 31,
2002 and 2003.
The aggregate purchase price of these acquisitions, including acquisition
costs, is $1,639.4.
2. The pro forma statement of operations for the three months ended March 31,
2002 includes the unaudited historical financial data for AIS for the two
months ended February 28, 2002.
All of the other acquisitions are included in our results of operations for
the entire three months ended March 31, 2002.
S-17
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. The pro forma statement of operations for the three months ended March 31,
2001 includes the following unaudited historical financial data for our
Acquisitions.
BT SY
KDI EER SPAR EMG FUZE TECHNOLOGY AIS(A) ACQUISITIONS
--------- ---------- ------------- ---------- --------- ------------ ----------- -------------
(IN MILLIONS)
Sales ........................... $ 8.7 $ 37.0 23.5 $ 16.5 $ 8.0 $ 15.0 $ 219.2 $ 327.9
Costs and expenses .............. 9.3 35.9 20.0 15.8 8.0 14.0 209.6 312.6
------ ------- ---- ------- ------ ------- -------- --------
Operating income (loss) ........ (0.6) 1.1 3.5 0.7 -- 1.0 9.6 15.3
Interest and other income
(expense) .................... 0.1 0.1 2.8(a) -- -- -- -- 3.0
Interest expense ............... 0.2 -- -- -- -- 0.1 -- 0.3
------ ------- ----- ------- ------ ------- -------- --------
Income (loss) before
income taxes ................. (0.7) 1.2 6.3 0.7 -- 0.9 9.6 18.0
Income tax provision ............ -- -- 1.6 -- -- -- 5.2 6.8
------ ------- ----- ------- ------ ------- -------- --------
Net income (loss) .............. $ (0.7) $ 1.2 4.7 $ 0.7 $ -- $ 0.9 $ 4.4 $ 11.2
====== ======= ===== ======= ====== ======= ======== ========
- ----------
(a) Includes a $3.3 million gain on the sale of discontinued operations
and a $1.4 million restructuring charge.
4. The pro forma statement of operations for the year ended December 31, 2001
includes the following unaudited historical financial data for our
Acquisitions.
BT SY
KDI(A) EER(A) SPAR(B) EMG(B) FUZE(C) TECHNOLOGY(C) AIS ACQUISITIONS
--------------- ------------ --------- ------------ --------- --------------- -------- ------------
(IN MILLIONS)
Sales ........................ $ 16.2 $ 49.3 76.9 $ 52.2 $ 34.7 $ 62.0 $ 918.6 $1,209.9
Costs and expenses ........... 16.6 47.4 67.8 49.1 32.8 56.5 876.7 1,146.9
-------- -------- ---- -------- ------- ------- -------- ---------
Operating income (loss) ..... (0.4) 1.9 9.1 3.1 1.9 5.5 41.9 63.0
Interest and other income
(expense) ................. (1.6)(d) (4.0)(e) 2.8(f) (3.8)(g) -- -- (1.4) (8.0)
Interest expense ............ 0.3 -- -- -- -- 0.2 -- 0.5
-------- -------- ----- -------- ------- ------- -------- ---------
Income (loss) before
income taxes .............. (2.3) (2.1) 11.9 (0.7) 1.9 5.3 40.5 54.5
Income tax provision ......... -- -- 4.6 0.3 -- -- 22.1 27.0
-------- -------- ----- -------- ------- ------- -------- --------
Net income (loss) ........... $ (2.3) $ (2.1) 7.3 $ (1.0) $ 1.9 $ 5.3 $ 18.4 $ 27.5
======== ======== ===== ======== ======= ======= ======== ========
- ----------
(a) Represents historical results of operations for the four-month
period ended April 30, 2001.
(b) Represents historical results of operations for the ten-month
period ended October 31, 2001.
(c) Represents historical results of operations for the eleven-month
period ended November 30, 2001.
(d) Includes a charge to write-down excess inventory of $1.7
million.
(e) Includes a charge of $4.2 million for investment banking fees
and other non-recurring charges.
(f) Includes a $3.3 million gain on the sale of discontinued
operations and a $1.4 million restructuring charge.
(g) Includes a $3.8 million restructuring charge.
S-18
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The historical results of operations for KDI, EER, BT Fuze and SY do not
include a provision for income taxes because they each were either an S
Corporation or a Limited Liability Company and the income taxes on their
income were paid by their individual stockholders rather than the entities.
5. Adjustments to costs and expenses relating to the Acquisitions are presented
in the table below:
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, 2001 DECEMBER 31, 2001
---------------- ------------------
($ IN MILLIONS)
Elimination of historical goodwill amortization
for AIS, EMG and Spar(a) .................................... $ (7.6) $ (29.6)
Increase to goodwill amortization for KDI and EER for
higher goodwill recorded by L-3 than their historical
amounts of goodwill(a) ...................................... $ 0.5 $ 0.7
Total pro forma adjustments to costs and expenses ......... $ (7.1) $ (28.9)
----------
(a) In accordance with SFAS No. 142, no goodwill amortization expenses
would have been recorded by us in 2001 for the acquisitions of EMG,
Spar, BT Fuze, SY and AIS because these acquisitions were completed
after June 30, 2001. Additionally, in accordance with SFAS No. 142,
effective January 1, 2002 goodwill amortization is no longer being
recorded for any of the Acquisitions.
A review of the contracts in process and identifiable intangible assets
included in the AIS acquisition is being performed. All of the data
required to prepare this review and the related valuations is not currently
available and at this time it is not practicable to reasonably estimate
these valuations. Any allocation of purchase price to identifiable
intangible assets with finite lives will result in additional amortization
expense and a reduction to the estimated goodwill for AIS. In addition, no
adjustment has been made to contracts in process which will be valued at
their estimated contract prices less the estimated costs to complete and an
allowance for a normal profit on the effort to complete such contracts. All
of the data required to prepare these valuations is not currently available
and at this time it is not practicable to reasonably estimate these
valuations.
6. The aggregate purchase prices, including acquisition costs, for the
Acquisitions of $1,639.4 million were assumed to be financed at January 1,
2001 using (1) borrowings under our senior credit facilities of $345.6
million, (2) borrowings of $500.0 million under the senior subordinated
interim loan, (3) cash on hand of $32.7 million, (4) the net proceeds from
our sale of $420.0 million of 4% Senior Subordinated Convertible Contingent
Debt Securities due September 15, 2011 ("CODES") in October and November of
2001 which amounted to $407.5 million, and (5) the net proceeds from L-3
Holdings' public offering of 9,150,000 shares of its common stock in May
2001 (the "May 2001 Common Stock Offering") which amounted to $353.6
million. The borrowings under the senior credit facilities and the senior
subordinated interim loan that we made to finance the AIS acquisition were
included in our historical results of operations effective March 1, 2002.
The adjustments to our historical interest expense for the three months
ended March 31, 2002 and
2001 and the year ended December 31, 2001 to give effect to the financing
of the Acquisitions are presented below.
S-19
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
------------------- DECEMBER 31,
2002 2001 2001
--------- --------- -------------
($ in millions)
Interest on borrowings under the senior credit
facilities (on $345.6 million) for the periods prior
to March 1, 2002(a) ................................ $ 2.8 $ 6.5 $ 22.7
Interest on senior subordinated interim loan (on
$500.0 million) for the periods prior to March 1,
2002(a) ............................................ 4.5 11.6 38.0
Interest on the CODES offering for the periods
prior to October 31, 2001 (4% on $420.0 million
for 10 months). .................................... -- 4.2 14.0
Amortization of deferred debt issue costs incurred
on the CODES for periods prior to October 31,
2001 ............................................... -- 0.4 1.2
Elimination of historical interest expense for the
KDI and SY Technology Acquisitions ................. -- ( 0.3) ( 0.5)
------ ------ -------
Total pro forma adjustments to interest
expense ......................................... $ 7.3 $ 22.4 $ 75.4
====== ====== =======
- ----------
(a) The adjustments to pro forma interest for the pro forma adjustments
for borrowings under the senior credit facilities and senior
subordinated interim loan are based on the average prevailing interest
rates that L-3 would have paid on those borrowings for the periods
presented had such borrowings been outstanding at the beginning of
each of the periods presented. The average prevailing interest rates
on the senior credit facilities would have been 4.85% for the three
months ended March 31, 2002, 7.55% for the three months ended March
31, 2001 and 6.57% for the year ended December 31, 2001. The average
prevailing interest rates on the senior subordinated interim loan
would have been 5.38% for the three months ended March 31, 2002, 9.30%
for the three months ended March 31, 2001, and 7.59% for the year
ended December 31, 2001.
7. Our historical interest income has been eliminated because the cash and cash
equivalents which earned the interest income were obtained from the net
proceeds from the CODES offering and the May 2001 Common Stock Offering
that were assumed entirely to be used to finance the Acqusitions. Such
eliminations amounted to $1.0 million for the three months ended March 31,
2002, $0.5 million for the three months ended March 31, 2001, and $3.8
million for the year ended December 31, 2001.
8. Our basic and diluted weighted average shares outstanding for the three
months ended March 31, 2001 were increased by 9.2 million shares, and for
the year ended December 31, 2001 were each increased by 3.0 million shares
of common stock to give effect to the assumed completion of our May 2001
Common Stock Offering as of January 1, 2001.
9. Assuming this offering was completed on January 1, 2001, the net proceeds
from this offering of $726.5 million, after deductions for underwriting
commissions and discounts and other offering expenses of $23.5 million,
would have been applied to repay all of the borrowings under the senior
subordinated interim loan of $500.0 million and $226.5 million of the
borrowings under the senior credit facilities. Total interest expense after
the pro forma adjustments for our acquisitions but prior to this offering
amounted to $33.4 million for the three months ended March 31, 2002, $47.1
million for the three months ended March 31, 2001, and $162.2 million for
the year ended December 31, 2001. As a result of this offering, total pro
forma interest expense would have
S-20
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
decreased by $9.4 million for the three months ended March 31, 2002, $15.9
million for the three months ended March 31, 2001 and $52.9 million for the
year ended December 31, 2001. The details of reductions to the interest
expense are described in the table below.
THREE MONTHS ENDED
----------------------------------- YEAR ENDED
MARCH 31, 2002 MARCH 31, 2001 DECEMBER 31, 2001
---------------- ---------------- ------------------
($ in millions)
Elimination of interest on the senior
subordinated interim loan(a) ............. $ (6.7) $ (11.6) $ (38.0)
Elimination of interest on the
$226.5 million of the borrowings under
the senior credit facilities(a) .......... (2.7) ( 4.3) (14.9)
------ ------- -------
Total pro forma interest expense ......... $ (9.4) $ (15.9) $ (52.9)
====== ======= =======
- ----------
(a) The adjustments to pro forma interest expense for the pro forma
adjustments for borrowings under the senior credit facilities and
senior subordinated interim loan are based on the average prevailing
interest rates that L-3 would have paid on those borrowings for the
periods presented had such borrowings been outstanding at the
beginning of each of the periods presented. The average prevailing
interest rates on the senior credit facilities would have been 4.85%
for the three months ended March 31, 2002, 7.55% for the three months
ended March 31, 2001 and 6.57% for the year ended December 31, 2001.
The average prevailing interest rates on the senior subordinated
interim loan would have been 5.38% for the three months ended March
31, 2002, 9.30% for the three months ended March 31, 2001, and 7.59%
for the year ended December 31, 2001.
10. Assuming the concurrent private placement by L-3 Communications Corporation
of $500.0 million of 7.75% senior subordinated notes was completed on
January 1, 2001, its net proceeds of $487.7 million, after deductions for
underwriting discounts and commissions and other offering expenses of $12.3
million, would have been applied to repay the remaining $123.5 million of
borrowings outstanding under the senior credit facilities, and the
remaining net proceeds of $364.2 million would have been invested in cash
and cash equivalents. Total interest expense after the pro forma
adjustments for our acquisitions and this offering, but prior to the
concurrent private placement of the senior subordinated notes amounted to
$124.0 million for the three months ended March 31, 2002, $31.2 million for
the three months ended March 31, 2001, and $109.3 million for the year
ended December 31, 2001. As a result of the private placement by L-3
Communications Corporation of the senior subordinated notes, total pro
forma interest expense would have each increased by $8.6 million for the
three months ended March 31, 2002, $7.8 million for the three months ended
March 31, 2001 and $32.2 million for the year ended December 31, 2001. The
details of increases to the interest expense are described in the table
below.
S-21
L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE MONTHS ENDED
----------------------------------- YEAR ENDED
MARCH 31, 2002 MARCH 31, 2001 DECEMBER 31, 2001
---------------- ---------------- ------------------
$ in millions
Estimated interest on the concurrent
private placement of senior
subordinated notes (7.75% on
$500.0 million)............................ $ 9.7 $ 9.7 $ 38.8
Amortization of debt issue costs incurred
on the concurrent private placement of
senior subordinated notes ................. 0.3 0.3 1.2
Eliminate interest on the $123.5 million
of the borrowings under the senior
credit facilities(a) ...................... (1.4) (2.2) ( 7.8)
------ ------ -------
Total pro forma interest expense ......... $ 8.6 $ 7.8 $ 32.2
====== ====== =======
- ----------
(a) The adjustments to pro forma interest expense for the pro forma
adjustments for borrowings under the senior credit facilities and
senior subordinated interim loan are based on the average prevailing
interest rates that L-3 would have paid on those borrowings for the
periods presented had such borrowings been outstanding at the
beginning of each of the periods presented. The average prevailing
interest rates on the senior credit facilities would have been 4.85%
for the three months ended March 31, 2002, 7.55% for the three months
ended March 31, 2001 and 6.57% for the year ended December 31, 2001.
The average prevailing interest rates on the senior subordinated
interim loan would have been 5.38% for the three months ended March
31, 2002, 9.30% for the three months ended March 31, 2001, and 7.59%
for the year ended December 31, 2001.
An increase of 100 basis points or 1.0% to the assumed rate of interest
paid on the $500.0 million of senior subordinated notes would increase the
pro forma interest expense by $1.3 million for the three months ended March
31, 2002 and 2001, and $5.0 million for the year ended December 31, 2001.
The pro forma statements of operations do not reflect interest income on
the $368.6 million pro
forma cash balance at January 1, 2001 that we would have had after the
concurrent private placement of senior subordinated notes.
11. The pro forma adjustments for our Acquisitions, this offering, and the
concurrent private placement of senior subordinated notes were all
tax-effected, as appropriate, using an estimated statutory (federal and
state) tax rate of 40.0%. The pro forma adjustments also include an income
tax provision of $1.1 million to record the aggregate income tax expense
for the historical results of operations of KDI, EER, BT Fuze and SY to the
statutory income tax rate of 40.0% that they would have incurred had we
acquired them on January 1, 2001, but did not because they were not subject
to income tax prior to their acquisition by us.
12. Our diluted weighted average shares outstanding and diluted earnings per
share give effect to the assumed conversion of the 7,361,964 shares
issuable upon the conversion of $300.0 million of our 51/4% Convertible
Senior Subordinated Notes due 2009 (the "Convertible Notes"). The assumed
conversion results in the addition of $2.6 million of after-tax interest
expense savings to reported net income for the three months ended March 31,
2002 and the three months ended March 31, 2001 and $10.5 million for the
year ended December 31, 2001 for the purposes of calculating diluted
earnings per share. The assumed conversion of the Convertible Notes for the
three months ended March 31, 2002 and 2001 were anti-dilutive, and
therefore, their conversion was not assumed.
S-22
CERTAIN U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following summary describes the material U.S. federal income and
estate tax consequences of the ownership of common stock by a Non-U.S. Holder
(as defined below) as of the date hereof. This discussion does not address all
aspects of U.S. federal income and estate taxes and does not deal with foreign,
state and local consequences that may be relevant to such Non-U.S. Holders in
light of their personal circumstances. Special Rules may apply to certain
Non-U.S. Holders, such as certain United States expatriates, "controlled
foreign corporations", "passive foreign investment companies", "foreign
personal holding companies" and corporations that accumulate earnings to avoid
U.S. federal income tax, that are subject to special treatment under the
Internal Revenue Code of 1986, as amended (the "Code"). Such entities should
consult their own tax advisors to determine the U.S. federal, state, local and
other tax consequences that may be relevant to them. Furthermore, the
discussion below is based upon the provisions of the Code, and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified so as to result in U.S.
federal income tax consequences different from those discussed below.
If a partnership holds common stock, the tax treatment of a partner will
generally depend on the status of the partner and the activities of the
partnership. Persons who are partners of partnerships holding common stock
should consult their tax advisors.
As used herein, a "U.S. Holder" of common stock means a holder that for
U.S. federal income tax purposes is (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate
the income of which is subject to U.S. federal income taxation regardless of
its source or (iv) a trust (X) if a court within the United States is able to
exercise primary supervision over its administration and one or more United
States persons have the authority to control all of its substantial decisions
or (Y) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person. A "Non-U.S. Holder" is a
holder that is not a U.S. Holder.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF COMMON STOCK
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. However, dividends
that are effectively connected with the conduct of a trade or business by the
Non-U.S. Holder within the United States, and, where a tax treaty applies, are
attributable to a U.S. permanent establishment of the Non-U.S. Holder, are not
subject to the withholding tax, but instead are subject to U.S. federal income
tax on a net income basis at applicable graduated individual or corporate
rates. Certain certification and disclosure requirements must be satisfied in
order for effectively connected income to be exempt from withholding. Any such
effectively connected dividends received by a foreign corporation may be
subject to an additional "branch profits tax" at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty.
A Non-U.S. Holder of common stock who wishes to claim the benefit of an
applicable treaty rate (and avoid backup withholding as discussed below) for
dividends paid will be required (a) to complete Internal Revenue Service
("IRS") Form W-8BEN (or other applicable form) and certify under penalties of
perjury that such holder is not a United States person or (b) if the common
stock is held through certain foreign intermediaries, to satisfy the relevant
certification requirements of applicable U.S. Treasury regulations. Special
certification and other requirements apply to certain Non-U.S. Holders that are
entities rather than individuals.
A Non-U.S. Holder of common stock eligible for a reduced rate of U.S.
withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the IRS.
S-23
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of common stock
unless (i) the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the United States, and, where a tax treaty applies, is
attributable to a U.S. permanent establishment of the Non-U.S. Holder, (ii) in
the case of a Non-U.S. Holder who is an individual and holds the common stock
as a capital asset, such holder is present in the United States for 183 or more
days in the taxable year of the sale or other disposition and certain other
conditions are met, or (iii) we are or have been a "U.S. real property holding
corporation" for U.S. federal income tax purposes.
A Non-U.S. Holder described in clause (i) above will be subject to tax on
the net gain derived from the sale under regular graduated U.S. federal income
tax rates, and, if it is a corporation, may be subject to the branch profits
tax at a rate equal to 30% of its effectively connected earnings and profits or
at such lower rate as may be specified by an applicable income tax treaty. An
individual Non-U.S. Holder described in clause (ii) above will be subject to a
flat 30% tax on the gain derived from the sale, which tax may be offset by U.S.
source capital losses (even though the individual is not considered a resident
of the United States).
We believe we are not and do not anticipate becoming a "U.S. real property
holding corporation" for U.S. federal income tax purposes.
FEDERAL ESTATE TAX
Common stock held by an individual Non-U.S. Holder at the time of death
will be included in such holder's gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We must report annually to the IRS and to each Non-U.S. Holder the amount
of dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
A Non-U.S. Holder will be subject to backup withholding unless applicable
certification requirements are met.
Payment of the proceeds of a sale of common stock within the United States
or conducted through certain U.S.-related financial intermediaries is subject
to both backup withholding and information reporting unless the beneficial
owner certifies under penalties of perjury that it is a Non-U.S. Holder (and
the payor does not have actual knowledge or reason to know that the beneficial
owner is a United States person) or the holder otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules may be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
S-24
UNDERWRITING
Under the terms of an underwriting agreement, each of the underwriters
named below, for whom Lehman Brothers Inc. and , are acting as
representatives, has severally agreed to purchase from us the respective number
of shares of common stock opposite its name below:
UNDERWRITERS NUMBER OF SHARES
- --------------------------------------- -----------------
Lehman Brothers Inc. ................
Total ...............................
The underwriting agreement provides that the underwriters are obligated to
purchase, subject to certain conditions, all of the shares of common stock in
the offering if any are purchased, other than those covered by the
over-allotment options described below.
The conditions contained in the underwriting agreement include the
requirements that:
o the representations made by us and the selling stockholder to the
underwriters are true;
o there is no material change in the financial markets; and
o we and the selling stockholder deliver to the underwriters customary
closing documents.
OVER-ALLOTMENT OPTION
We have granted to the underwriters a 30-day option after the date of this
prospectus supplement to purchase, from time to time, in whole or in part, up
to an aggregate of an additional shares at the public offering price less
underwriting discounts and commissions. This option may be exercised to cover
over-allotments, if any, made in connection with the offering. To the extent
this option is exercised, each underwriter will be obligated, subject to
certain conditions, to purchase its pro-rata portion of these additional shares
based on the underwriter's percentage underwriting commitment in the offering
as indicated on the preceding table. The foregoing limitations do not apply to
stabilizing transactions, syndicate covering transactions and penalty bids for
the purpose of pegging, fixing or maintaining the price of the common stock, in
accordance with Regulation M under the Exchange Act.
COMMISSIONS AND EXPENSES
The representatives of the underwriters have advised us and the selling
stockholder that the underwriters propose to offer shares of common stock
directly to the public at the public offering price on the cover of this
prospectus supplement and to selected dealers, who may include the
underwriters, at such offering price less a selling concession not in excess of
$ per share. The underwriters may allow, and the selected dealers may
re-allow, a discount from the concession not in excess of $ per share to
other dealers. After the offering, the underwriters may change the public
offering price and other offering terms.
The following table summarizes the underwriting discounts and commissions
we will pay to the underwriters. This amount is shown assuming both no exercise
and full exercise of the underwriters' over-allotment option to purchase up to
additional shares. The underwriting fee is the difference between the
initial price to the public and the amount the underwriters pay us for the
shares.
S-25
PER SHARE NO EXERCISE FULL EXERCISE
- ----------------------------- ------------- ---------------
Paid by the Company ......... $ $
Total ....................... $ $
The expenses of this offering, excluding underwriting discounts and cash
expenses summarized in the table above, that are payable by us, are estimated
to be $ .
SHORT POSITIONS AND PENALTY BIDS
The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids or purchases for the purpose
of pegging, fixing or maintaining the price of the common stock, in accordance
with Regulation M of the Exchange Act.
o Over-allotment involves sales by the underwriters of shares in excess of
the number of shares the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not
greater than the number of shares that they may purchase in the
over-allotment options. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
options. The underwriters may close out any short position by either
exercising their over-allotment options and/or purchasing shares in the
open market.
o Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
o Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to
close out the short position, the underwriters will consider, among other
things, the price at which they may purchase shares through the
over-allotment option. If the underwriters sell more shares than could be
covered by the over-allotment option, which is called a naked short
position, the position can only be closed out by buying shares in the
open market. A naked short position is more likely to be created if the
underwriters are concerned that there could be downward pressure on the
price of the shares in the open market after pricing that could adversely
affect investors who purchase the offering.
o Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and
penalty bids may have the effect of raising or maintaining the market price of
our common stock or preventing or retarding a decline in the market price of
our common stock. As a result, the price of the common stock may be higher than
the price that might otherwise exist in the open market. These transactions may
be effected on the NYSE or otherwise and, if commenced, may be discontinued at
any time.
Neither we, the selling stockholder nor any of the underwriters make any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the common
stock. In addition, neither we, the selling stockholder nor any of the
underwriters make a representation that the underwriters will engage in these
stabilizing transactions or that any transaction, once commenced, will not be
discontinued without notice.
S-26
LOCK-UP AGREEMENTS
In connection with the offering, we and certain of our executive officers
and directors have agreed that they will not, subject to certain limited
exceptions, directly or indirectly, offer, sell, pledge or otherwise dispose of
any shares of common stock or any securities convertible into or exchangeable
or exercisable for common stock or enter into any swap or other derivative
transaction with similar effect as a sale of common stock, for a period of 90
days from the date of this prospectus without the prior written consent of
Lehman Brothers Inc. The restrictions in this paragraph do not apply to:
o the sale of common stock to the underwriters in this offering, including
shares sold pursuant to the over-allotment option,
o the issuance by us of options under any of our currently effective stock
option or incentive plans or of shares of common stock upon the exercise
of a currently outstanding option, warrant or right or the conversion of
a security outstanding on the date of this prospectus supplement,
o the issuance by us of shares of common stock to our employees or
directors or as dividends on our common stock, or
o the issuance by us of common stock as consideration for the purchase of
any business or assets.
INDEMNIFICATION
We and the selling stockholder have agreed to indemnify, under certain
circumstances, the underwriters against liabilities relating to the offering,
including liabilities under the Securities Act and liabilities arising from
breaches of the representations and warranties contained in the underwriting
agreement, and to contribute, under certain circumstances, to payments that the
underwriters may be required to make for these liabilities.
OFFERS AND SALES IN CANADA
This prospectus supplement and the accompanying prospectus are not, and
under no circumstances are to be construed as, an advertisement or a public
offering of shares in Canada or any province or territory thereof. Any offer or
sale of shares in Canada will be made only under an exemption from the
requirements to file a prospectus supplement or prospectus WITH THE RELEVANT
CANADIAN SECURITIES REGULATORS AND ONLY BY A DEALER REGISTERED IN ACCORDANCE
WITH LOCAL PROVINCIAL SECURITIES LAWS OR, ALTERNATIVELY, PURSUANT TO AN
exemption from the dealer registration requirement in the relevant province or
territory of Canada in which such offer or sale is made.
STAMP TAXES
Purchasers of the shares of common stock may be required to pay stamp
taxes and other charges under the laws and practices of the country of
purchase, in addition to the offering price on the cover of this prospectus
supplement.
ELECTRONIC DISTRIBUTION
A prospectus in electronic format may be made available on the Internet
sites or through other online services maintained by one or more of the
underwriters and/or selling group members participating in this offering, or by
their affiliates. In those cases, prospective investors may view offering terms
online and, depending upon the particular underwriter or selling group member,
prospective investors may be allowed to place orders online. The underwriters
may agree with us to allocate a specific number of shares for sale to online
brokerage account holders. Any such allocation for online distributions will be
made by the representatives on the same basis as other allocations.
Other than the prospectus in electronic format, the information on any
underwriter's or selling group member's web site and any information contained
in any other web site maintained by an
S-27
underwriter or selling group member is not part of the prospectus or the
registration statement of which this prospectus forms a part, has not been
approved and/or endorsed by us or any underwriter or selling group member in
its capacity as underwriter or selling group member and should not be relied
upon by investors.
RELATIONSHIPS
From time to time, Lehman Brothers Inc. and its affiliates have provided,
and may continue to provide, investment banking services to us for which we
have paid customary fees and expense reimbursements. In addition, Lehman
Brothers Inc. and its affiliates are documentation agent, syndication agent and
arranger under our senior credit facilities, which include our 364-day and
five-year revolving credit facilities and will receive approximately $28.3
million of the net proceeds of this offering and the concurrent private
placement of notes by L-3 Communications Corporation as repayment of principal
on those loans. Affiliates of Lehman Brothers Inc. are also administrative
agent, book-running managers, arrangers and lenders under our interim loan, and
will receive approximately $250.0 million of the net proceeds of this offering
as repayment of the interim loan.
Under Rule 2710 of the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), Lehman Brothers Inc. and its affiliates
are considered to have a "conflict of interest" with respect to this offering.
Because the net proceeds to us from this offering may be paid to affiliates of
certain of the underwriters to repay existing loans, this offering is being
conducted in accordance with Rule 2710(c)(8) and Rule 2720 of the NASD.
DISCRETIONARY SALES
The underwriters have informed us and selling stockholder that they will
not confirm sales to accounts over which they exercise discretionary authority
without the prior written approval of the customer.
LEGAL MATTERS
The validity of the common stock offered by this prospectus supplement
will be passed upon for us by Simpson Thacher & Bartlett, New York, New York
and for the underwriters by Latham & Watkins, New York, New York.
EXPERTS
The following financial statements have been incorporated by reference in
this prospectus in reliance of the reports of PricewaterhouseCoopers LLP,
independent accountants, given on their authority as experts in accounting and
auditing:
o Our consolidated financial statements as of December 31, 2001 and 2000
and for the three years ended December 31, 2001 included and incorporated
by reference in this registration statement from our Annual Report on
Form 10-K for the year ended December 31, 2001; and
o The combined financial statements of Aircraft Integration Systems
Business as of December 31, 2001 and 2000 and for the three years ended
December 31, 2001 incorporated by reference in this registration
statement from our Current Report on Form 8-K dated March 22, 2002.
S-28
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the SEC. Such reports and other information can be inspected
and copied at the Public Reference Section of the SEC located at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at a
regional public reference facility maintained by the SEC located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the SEC at
prescribed rates. Such material may also be accessed electronically by means of
the SEC's home page on the Internet (http://www.sec.gov).
So long as we are subject to the periodic reporting requirements of the
Securities Exchange Act, we are required to furnish the information required to
be filed with the SEC to the trustee and the holders of the notes. We have
agreed that, even if we are not required under the Securities Exchange Act to
furnish such information to the SEC, we will nonetheless continue to furnish
information that would be required to be furnished by us by Section 13 of the
Securities Exchange Act to the trustee and the holders of the notes as if it
were subject to such periodic reporting requirements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information contained
in documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
2001;
o Our Quarterly Report on Form 10-Q for the three month period ended March
31, 2002;
o Our Current Report on Form 8-K dated March 22, 2002; and
o Our Current Report on Form 8-K dated April 24, 2002.
You can request a copy of these filings at no cost, by writing or calling
us at the following address:
L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
(212) 697-1111
Attention: Corporate Secretary.
You should only rely on the information incorporated by reference or
provided in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone else to provide you with different information. We are
not making an offer of shares of common stock in any state where the offer is
not permitted. You should not assume that the information in this prospectus
supplement or the accompanying prospectus is accurate as of any date other than
the date on the front of this document.
S-29
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 24, 2002
PROSPECTUS
$1,000,000,000
[L-3 COMMUNICATIONS LOGO OMITTED]
L-3 COMMUNICATIONS HOLDINGS, INC.
COMMON STOCK
DEBT SECURITIES
PREFERRED STOCK
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
L-3 COMMUNICATIONS HOLDINGS, INC.
1,000,000 SHARES OF COMMON STOCK
L-3 COMMUNICATIONS CORPORATION
GUARANTEED DEBT SECURITIES
- --------------------------------------------------------------------------------
L-3 Communications Holdings, Inc. may offer and sell from time to time, in one
or more series, any one of the following securities:
o common stock,
o unsecured debt securities consisting of notes, debentures or other
evidences of indebtedness which may be senior debt securities, senior
subordinated debt securities or subordinated debt securities,
o preferred stock,
o warrants to purchase preferred stock, common stock or debt securities
of L-3 Communications Holdings,
o stock purchase contracts, and
o stock purchase units,
or any combination of these securities. L-3 Communications Holdings' debt
securities may be guaranteed by substantially all of its wholly-owned domestic
subsidiaries.
L-3 Communications Holdings' wholly-owned subsidiary, L-3 Communications
Corporation, may offer and sell from time to time, in one or more series of its
unsecured debt securities consisting of notes, debentures or other evidence of
indebtedness which may be senior debt securities, senior subordinated debt
securities or subordinated debt securities of L-3 Communications Corporation.
The debt securities issued by L-3 Communications Corporation will be fully and
unconditionally guaranteed by L-3 Communications Holdings and may be further
guaranteed by substantially all of L-3 Communications Corporation's
wholly-owned domestic subsidiaries.
The selling stockholders identified on page 25 may sell from time to time
up to 1,000,000 shares of common stock of L-3 Communications Holdings owned by
them. The common stock of L-3 Communications Holdings trades on the New York
Stock Exchange under the symbol "LLL."
We will provide more specific information about the terms of an offering
of any of these securities in supplements to this prospectus.
YOU SHOULD READ THIS PROSPECTUS, PARTICULARLY THE RISK FACTORS BEGINNING ON
PAGE 5, AND ANY SUPPLEMENT CAREFULLY BEFORE INVESTING.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
-----
Prospectus Summary ...................... 3
Risk Factors ............................ 5
The Company ............................. 12
Ratio of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and
Preferred Stock Dividends ............ 12
Use of Proceeds ......................... 12
Dividend Policy ......................... 13
Description of Debt Securities .......... 14
Description of Capital Stock ............ 20
PAGE
-----
Description of Stock Purchase Contracts
and Stock Purchase Units ............. 24
Description of Warrants ................. 24
Selling Stockholders .................... 25
Plan of Distribution .................... 26
Legal Matters ........................... 26
Experts ................................. 26
Available Information ................... 26
Incorporation of Certain Documents by
Reference ............................ 27
----------------
ABOUT THIS PROSPECTUS
This prospectus describes the general terms of the securities to be
offered hereby. A prospectus supplement that will describe the specific
amounts, prices and other terms of the securities being offered will be
provided to you in connection with each sale of securities offered pursuant to
this prospectus. The prospectus supplement may also add, update or change
information contained in this prospectus. To understand the terms of securities
offered pursuant to this prospectus, you should carefully read this document
with the applicable prospectus supplement. Together, these documents will give
the specific terms of the offered securities. You should also read the
documents we have incorporated by reference in this prospectus described below
under "Incorporation of Certain Documents By Reference."
2
PROSPECTUS SUMMARY
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
the shelf registration process, L-3 Communications Holdings may offer and sell
from time to time up to an aggregate of $1,000,000,000 of any of the following
securities:
o common stock;
o debt securities;
o preferred stock;
o stock purchase contracts;
o stock purchase units; and
o warrants.
In addition, L-3 Communications Corporation may offer and sell from time to
time its debt securities that will be guaranteed by L-3 Communications Holdings
and may be further guaranteed by certain of L-3 Communications Corporation's
subsidiaries. Additionally, certain selling stockholders named herein may offer
and sell from time to time up to an aggregate of 1,000,000 shares of L-3
Communications Holdings' common stock owned by them. See "Selling
Stockholders". We will not receive any proceeds from the sale of common stock
by the selling stockholders.
COMMON STOCK
L-3 Communications Holdings may issue shares of its common stock, par
value $.01 per share. Holders of shares of L-3 Communications Holdings' common
stock are entitled to receive dividends when declared by the board of directors
of L-3 Communications Holdings, subject to the rights of holders of L-3
Communications Holdings' outstanding preferred stock, if any. Each holder of
L-3 Communications Holdings' common stock is entitled to one vote per share.
The holders of L-3 Communications Holdings' common stock have no preemptive
rights or cumulative voting rights.
In addition, certain selling stockholders named herein may offer and sell
from time to time up to an aggregate of 1,000,000 shares of L-3 Communications
Holdings' common stock owned by them.
On April 23, 2002, the board of directors of L-3 Communications Holdings
declared a two-for-one stock split to shareholders of record on May 6, 2002.
All share numbers contained in this prospectus give effect to the consummation
of the stock split.
DEBT SECURITIES
L-3 Communications Holdings may offer debt securities, which may be either
senior, senior subordinated or subordinated, and may be guaranteed by
substantially all of its wholly-owned domestic subsidiaries. L-3 Communications
Holdings may issue debt securities either separately, or together with, upon
conversion of or in exchange for other securities. L-3 Communications
Corporation may offer its debt securities, which may be either senior, senior
subordinated or subordinated and will be guaranteed by L-3 Communications
Holdings and may be further guaranteed by substantially all of L-3
Communications Corporation's wholly-owned domestic subsidiaries.
The debt securities issued by L-3 Communications Holdings will be issued
under an indenture between L-3 Communications Holdings and The Bank of New
York, as trustee. The debt securities issued by L-3 Communications Corporation
will be issued under an indenture among L-3 Communications Corporation, L-3
Communications Holdings, as guarantor, and The Bank of New
3
York, as trustee. We have summarized general features of the debt securities to
be issued by L-3 Communications Holdings and L-3 Communications Corporation
under "Description of Debt Securities." We encourage you to read the
indentures, forms of which are included as exhibits to the registration
statement of which this prospectus forms a part.
PREFERRED STOCK
L-3 Communications Holdings may issue shares of its preferred stock, $.01
par value per share, in one or more series. L-3 Communications Holdings' board
of directors will determine the dividend, voting, conversion and other rights
of the series of preferred stock being offered.
STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
L-3 Communications Holdings may issue stock purchase contracts
representing contracts obligating holders to purchase from L-3 Communications
Holdings and L-3 Communications Holdings to sell to the holders a specified
number of shares of common stock or preferred stock of L-3 Communications
Holdings at a future date or dates. The price per share of common stock or
preferred stock may be fixed at the time the stock purchase contracts are
issued or may be determined by reference to a specific formula set forth in the
stock purchase contracts.
The stock purchase contracts may be issued separately or as a part of
units, often known as stock purchase units, consisting of a stock purchase
contract and either of the following:
o Debt securities of L-3 Communications Holdings, or
o Debt obligations of third parties, including U.S. Treasury securities,
securing the holder's obligations to purchase the common stock or preferred
stock of L-3 Communications Holdings under the stock purchase contracts.
WARRANTS
L-3 Communications Holdings may issue warrants for the purchase of its
debt securities, preferred stock or common stock. L-3 Communications Holdings
may issue warrants independently or together with other securities. Each
warrant will entitle the holder to purchase the principal amount of its debt
securities, or the number of shares of its preferred stock or common stock at
the exercise price set forth in, or calculable as set forth in, the prospectus
supplement.
----------------
L-3 Communications Holdings is incorporated in Delaware, and the address
of its principal executive offices is 600 Third Avenue, New York, New York
10016. L-3 Communications Holdings' telephone number is (212) 697-1111.
L-3 Communications Corporation is incorporated in Delaware, and the
address of its principal executive offices is 600 Third Avenue, New York, New
York 10016. L-3 Communications Corporation's telephone number is (212)
697-1111.
4
RISK FACTORS
Investing in the securities offered pursuant to this prospectus involves
risks, including the risks described in this prospectus and in the other
documents which are incorporated herein by reference. Additional risks,
including those that relate to any particular securities that L-3
Communications Holdings or L-3 Communications Corporation will offer, will be
included in the applicable prospectus supplement. You should carefully consider
the risk factors before investing in any of the securities offered pursuant to
this prospectus.
OUR SIGNIFICANT LEVEL OF DEBT MAY ADVERSELY AFFECT OUR FINANCIAL AND OPERATING
ACTIVITY.
We have incurred substantial indebtedness to finance our acquisitions. As
of March 31, 2002, we had $2,175.0 million of outstanding debt, excluding
outstanding letters of credit (which aggregated approximately $166.6 million)
under our senior credit facilities. In addition, available borrowings under our
senior credit facilities after reductions for outstanding letters of credit
were approximately $233.4 million as of March 31, 2002. Our ratios of earnings
to fixed charges and earnings to combined fixed charges and preferred stock
dividends were both 2.5 to 1.0 for the three months ended March 31, 2002. In
the future we may borrow more money, subject to limitations imposed on us by
our debt agreements.
Our ability to make scheduled payments of principal and interest on our
indebtedness and to refinance our indebtedness depends on our future
performance. We do not have complete control over our future performance
because it is subject to economic, political, financial, competitive,
regulatory and other factors affecting the aerospace and defense industry. It
is possible that in the future our business may not generate sufficient cash
flow from operations to allow us to service our debt and make necessary capital
expenditures. If this situation occurs, we may have to sell assets, restructure
debt or obtain additional equity capital. We may not be able to do so or do so
without additional expense.
Our level of indebtedness has important consequences to you and your
investment in the securities offered pursuant to this prospectus. These
consequences may include:
o requiring a substantial portion of our cash flow from operations to be
used to pay interest and principal on our debt and therefore be
unavailable for other purposes including capital expenditures, research
and development and other investments;
o limiting our ability to obtain additional financing for acquisitions or
working capital to make investments or other expenditures, which may
limit our ability to carry out our acquisition strategy;
o higher interest expenses due to increases in interest rates on our
borrowings that have variable interest rates;
o heightening our vulnerability to downturns in our business or in the
general economy and restricting us from making acquisitions, introducing
new technologies and products or exploiting business opportunities; and
o covenants that limit our ability to borrow additional funds, dispose of
assets or pay cash dividends. Failure to comply with such covenants could
result in an event of default which, if not cured or waived, could result
in the acceleration of our outstanding indebtedness.
Additionally, on December 31, 2001, we had contractual obligations,
including outstanding indebtedness, of $1,680.2 million and contingent
commitments, including outstanding letters of credit under our senior credit
facilities, of $261.1 million. These contractual obligations and contingent
commitments are described in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2001, which is incorporated herein by reference.
OUR ACQUISITION STRATEGY INVOLVES RISKS, AND WE MAY NOT SUCCESSFULLY IMPLEMENT
OUR STRATEGY.
We seek to acquire companies that complement our business. We may not be
able to continue to identify acquisition candidates on commercially reasonable
terms or at all. If we make additional
5
acquisitions, we may not realize the benefits anticipated from the
acquisitions. Likewise, we may not be able to obtain additional financing for
acquisitions. Such additional financing could be restricted by the terms of our
debt agreements.
The process of integrating acquired operations, including our recent
acquisitions, into our existing operations may result in unforeseen operating
difficulties and may require significant financial and managerial resources
that would otherwise be available for the ongoing development or expansion of
our existing operations. Possible future acquisitions could result in the
incurrence of additional debt and related interest expense, contingent
liabilities and amortization expenses related to certain purchased intangible
assets, all of which could result in an increase to our already significant
level of outstanding debt. We consider and execute strategic acquisitions on an
ongoing basis and may be evaluating acquisitions or engaged in acquisition
negotiations at any given time. We regularly evaluate potential acquisitions
and joint venture transactions, and, except as disclosed herein or in the
documents incorporated herein by reference, we have not entered into any
agreements with respect to any material transactions.
WE RELY ON SALES TO U.S. GOVERNMENT ENTITIES, AND THE LOSS OF SUCH CONTRACTS
WOULD RESULT IN A SIGNIFICANT DECREASE TO OUR REVENUE AND PROFITS.
Our government sales are predominantly derived from contracts with
agencies of, and prime contractors to, the U.S. Government. Approximately
64.7%, or $1,519 million, of our sales for the year ended December 31, 2001
were made directly or indirectly to the U.S. Department of Defense. At December
31, 2001, the number of contracts with a value exceeding $1.0 million was
approximately 575. Our largest program is a long-term, fixed-price contract for
secure terminal equipment that we sell to the U.S. Armed Services, intelligence
and securities agencies that provided approximately 3.9% of our sales for the
year ended December 31, 2001. No other program provided more than 3.2% of our
sales for the year ended December 31, 2001. The loss of all or a substantial
portion of our sales to the U.S. Government would result in a significant
decrease to our revenue and profits.
OUR GOVERNMENT CONTRACTS ENTAIL CERTAIN RISKS.
o Government contracts are dependent upon the U.S. defense budget.
The reduction in the U.S. defense budget in the early 1990s caused most
defense-related government contractors to experience decreased sales, increased
downward pressure on operating margins and, in certain cases, net losses. Our
predecessor company experienced a substantial decline in sales during that
period. A significant decline in U.S. military expenditures in the future could
result in a material decrease to our sales, earnings and cash flow. The loss or
significant reduction in government funding of a large program in which we
participate could also result in a material decrease to our future sales,
earnings and cash flows and thus limit our ability to satisfy our financial
obligations, including those relating to the securities offered by this
prospectus. U.S. Government contracts are also conditioned upon the continuing
approval by Congress of the amount of necessary spending. Congress usually
appropriates funds for a given program each fiscal year even though contract
periods of performance may exceed one year. Consequently, at the beginning of a
major program, the contract is usually partially funded, and additional monies
are normally committed to the contract only if appropriations are made by
Congress for future fiscal years.
o Government contracts contain unfavorable termination provisions and are
subject to audit and modification.
Companies engaged primarily in supplying defense-related equipment and
services to U.S. Government agencies are subject to certain business risks
peculiar to the defense industry. These risks include the ability of the U.S.
Government to unilaterally:
o suspend us from receiving new contracts pending resolution of alleged
violations of procurement laws or regulations;
o terminate existing contracts;
6
o reduce the value of existing contracts;
o audit our contract-related costs and fees, including allocated indirect
costs; and
o control and potentially prohibit the export of our products.
All of our U.S. Government contracts can be terminated by the U.S.
Government either for its convenience or if we default by failing to perform
under the contract. Termination for convenience provisions provide only for our
recovery of costs incurred or committed, settlement expenses and profit on the
work completed prior to termination. Termination for default provisions provide
for the contractor to be liable for excess costs incurred by the U.S.
Government in procuring undelivered items from another source. Our contracts
with foreign governments generally contain similar provisions relating to
termination at the convenience of the customer.
The U.S. Government may review our costs and performance on their
contracts, as well as our accounting and general business practices. Based on
the results of such audits, the U.S. Government may adjust our contract-related
costs and fees, including allocated indirect costs. In addition, under U.S.
Government purchasing regulations, some of our costs, including most financing
costs, amortization of goodwill, portions of research and development costs,
and certain marketing expenses may not be reimbursable under U.S. Government
contracts. Further, as a U.S. Government contractor, we are subject to
investigation, legal action and/or liability that would not apply to a
commercial company.
o Government contracts are subject to competitive bidding and we are
required to obtain licenses for non-U.S. sales.
We obtain many of our U.S. Government contracts through a competitive
bidding process. We may not be able to continue to win competitively awarded
contracts. In addition, awarded contracts may not generate sales sufficient to
result in our profitability. We are also subject to risks associated with the
following:
o the frequent need to bid on programs in advance of the completion of
their design, which may result in unforeseen technological difficulties
and/or cost overruns;
o the substantial time and effort including the relatively unproductive
design and development required to prepare bids and proposals for
competitively awarded contracts that may not be awarded to us;
o design complexity and rapid technological obsolescence; and
o the constant need for design improvement.
In addition to these U.S. Government contract risks, we are required to
obtain licenses from U.S. Government agencies to export many of our products
and systems. Additionally, we are not permitted to export some of our products.
Failure to receive required licenses would eliminate our ability to sell our
products outside the United States.
OUR FIXED-PRICE AND COST-REIMBURSABLE CONTRACTS MAY COMMIT US TO UNFAVORABLE
TERMS.
We provide our products and services primarily through fixed-price or
cost-reimbursable contracts. Fixed-price contracts provided 68.3% of our sales
for the year ended December 31, 2001. Under a fixed-price contract we agree to
perform the scope of work required by the contract for a predetermined contract
price. Although a fixed-price contract generally permits us to retain profits
if the total actual contract costs are less than the estimated contract costs,
we bear the risk that increased or unexpected costs may reduce our profit or
cause us to sustain losses on the contract. Therefore, we fully absorb cost
overruns on fixed-price contracts and this reduces our profit margin on the
contract. Those cost overruns may result in a loss. A further risk associated
with fixed-price contracts is the difficulty of estimating sales and costs that
are related to performance in accordance with contract specifications and the
possibility of obsolescence in connection with long-term procurements. Failure
to anticipate technical problems, estimate costs accurately or control costs
during performance of a fixed-price contract may reduce our profitability or
cause a loss.
7
Cost-reimbursable contracts provided 31.7% of our sales for the year ended
December 31, 2001. On a cost-reimbursable contract we are paid up to
predetermined funding levels determined by our customers, our allowable
incurred costs and generally a fee representing a profit on those costs, which
can be fixed or variable depending on the contract's pricing arrangement.
Therefore, unless costs exceed specified funding limitations, on a
cost-reimbursable contract we usually do not bear the risks of unexpected cost
overruns. However, U.S. Government regulations require that we notify our
customer of any cost overruns or underruns on a cost-reimbursable contract on a
timely basis. If we incur costs in excess of the funding limitation specified
in a cost-reimbursable contract, we may not be able to recover those cost
overruns.
We record sales and profits on substantially all of our contracts using
percentage-of-completion methods of accounting. As a result, revisions made to
our estimates of sales and profits are recorded in the period in which the
conditions that require such revisions become known and can be estimated;
accordingly, the revisions may have a material impact in any one period. Our
provisions for losses for our fixed-price contracts are based on estimates. To
the extent our actual contract losses exceed our estimates, our contract loss
provisions will not be adequate to cover all actual future losses.
OUR OPERATIONS INVOLVE RAPIDLY EVOLVING PRODUCTS AND TECHNOLOGICAL CHANGE.
The rapid change of technology is a key feature of all of the industries
in which our businesses operate, including the commercial communications
industry in particular. To succeed in the future, we will need to continue to
design, develop, manufacture, assemble, test, market and support new products
and enhancements on a timely and cost-effective basis. Historically, our
technology has been developed through both customer-funded and internally
funded research and development. We may not be able to continue to maintain
comparable levels of research and development. In the past we have allocated
substantial funds to capital expenditures, programs and other investments. This
practice will continue to be required in the future. Even so, we may not be
able to successfully identify new opportunities and may not have the needed
financial resources to develop new products in a timely or cost-effective
manner. At the same time, products and technologies developed by others may
render our products and systems obsolete or non-competitive.
WE MAY NOT SUCCESSFULLY IMPLEMENT OUR PLAN TO EXPAND INTO COMMERCIAL MARKETS.
Our revenues have primarily come from business with the U.S. Department of
Defense and other U.S. Government agencies. In addition to continuing to pursue
these market areas, we will continue applying our technical capabilities and
expertise to related commercial markets. Some of our commercial products, such
as airport security equipment, voyage recorders and Prime Wave fixed wireless
loop products, have only recently been introduced.
These new commercial products are subject to certain risks and may require
us to:
o develop and maintain marketing, sales and customer support capabilities;
o secure sales and customer support capabilities;
o obtain customer and/or regulatory certification;
o respond to rapidly changing technologies including those developed by
others that may render our products and systems obsolete or
non-competitive; and
o obtain customer acceptance of these products and product performance.
Our efforts to expand our presence in commercial markets require
significant resources, including additional working capital and capital
expenditures, as well as the use of our management's time. Our ability to sell
certain commercial products, particularly our broadband wireless communications
products, depends to a significant degree on the efforts of independent
distributors or communications service providers and on the financial viability
of our existing and target customers for the commercial products. Certain of
our existing and target customers are agencies or affiliates of governments of
emerging and under-developed countries or private business enterprises
operating in those countries.
8
In addition, we have made equity investments in entities that plan to commence
operations as communications service providers using some of our commercial
products. These distributors and service providers may not be able to market
our products or their services successfully and we may not be able to realize a
return of investment in them. We also may not be successful in addressing these
risks or in developing these commercial business opportunities.
CONSOLIDATION AND INTENSE COMPETITION IN THE INDUSTRIES IN WHICH OUR BUSINESSES
OPERATE COULD LIMIT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.
The communications equipment industry and the other industries in which
our businesses operate, and the market for defense applications, is highly
competitive. The defense industry has experienced substantial consolidation due
to declining defense budgets and increasing pressures for cost reductions. We
expect that the U.S. Department of Defense's increased use of commercial
off-the-shelf products and components in military equipment will continue to
encourage new competitors to enter the market. We also expect that competition
for original equipment manufacturing business will increase due to the
continued emergence of merchant suppliers. Our ability to compete for defense
contracts largely depends on the following factors:
o the effectiveness and innovations of our research and development
programs;
o our ability to offer better performance than our competitors at a lower
cost to the U.S. Government; and
o the readiness of our facilities, equipment and personnel to undertake
the programs for which we compete.
In some instances, the U.S. Government directs all work for a particular
project to a single supplier, commonly known as a sole-source project. In such
cases, other suppliers who may otherwise be able to compete for the programs
involved can only do so if the U.S. Government chooses to reopen the particular
program to competition. Additionally, many of our competitors are larger than
us and have substantially greater financial and other resources than we have.
OUR DEBT AGREEMENTS RESTRICT OUR ABILITY TO FINANCE OUR FUTURE OPERATIONS AND,
IF WE ARE UNABLE TO MEET OUR FINANCIAL RATIOS, COULD CAUSE OUR EXISTING DEBT TO
BE ACCELERATED.
Our debt agreements contain a number of significant provisions that, among
other things, restrict our ability to:
o sell assets;
o incur more indebtedness;
o repay certain indebtedness;
o pay dividends;
o make certain investments or acquisitions;
o repurchase or redeem capital stock;
o engage in mergers or consolidations; and
o engage in certain transactions with subsidiaries and affiliates.
These restrictions could hurt our ability to finance our future operations
or capital needs or engage in other business activities that may be in our
interest. In addition, some of our debt agreements also require us to maintain
compliance with certain financial ratios, including total consolidated earnings
before interest, taxes, depreciation and amortization to total consolidated
cash interest expense and total consolidated debt to total consolidated
earnings before interest, taxes, depreciation and amortization, and to limit
our capital expenditures. Our ability to comply with these ratios and limits
may be affected by events beyond our control. A breach of any of these
agreements
9
or our inability to comply with the required financial ratios or limits could
result in a default under those debt agreements. In the event of any such
default, the lenders under those debt agreements could elect to:
o declare all outstanding debt, accrued interest and fees to be due and
immediately payable;
o require us to apply all of our available cash to repay our outstanding
senior debt; and
o prevent us from making debt service payments on our other debt.
If we were unable to repay any of these borrowings when due, the lenders
under our senior credit facilities could proceed against their collateral,
which consists of a first priority security interest in the capital stock of
our material subsidiaries, including L-3 Communications Corporation. If the
indebtedness under the existing debt agreements were to be accelerated, our
assets may not be sufficient to repay such indebtedness in full.
IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY MANAGEMENT AND PERSONNEL, WE MAY
BECOME UNABLE TO OPERATE OUR BUSINESS EFFECTIVELY.
Our future success depends to a significant degree upon the continued
contributions of our management, including Messrs. Lanza and LaPenta, and our
ability to attract and retain other highly qualified management and technical
personnel. We do not maintain any key person life insurance policies for
members of our management. As of May 15, 2002, Messrs. Lanza and LaPenta
beneficially owned, in the aggregate 12.2% of the outstanding common stock of
L-3 Communications Holdings. We have entered into employment agreements with
Messrs. Lanza and LaPenta. We face competition for management and technical
personnel from other companies and organizations. Failure to attract and retain
such personnel would damage our prospects.
ENVIRONMENTAL LAWS AND REGULATION MAY SUBJECT US TO SIGNIFICANT LIABILITY.
Our operations are subject to various U.S. federal, state and local as
well as certain foreign environmental laws and regulations within the countries
in which we operate relating to the discharge, storage, treatment, handling,
disposal and remediation of certain materials, substances and wastes used in
our operations.
New laws and regulations, stricter enforcement of existing laws and
regulations, the discovery of previously unknown contamination or the
imposition of new clean-up requirements may require us to incur a significant
amount of additional costs in the future and could decrease the amount of free
cash flow available to us for other purposes, including capital expenditures,
research and development and other investments.
TERMINATION OF OUR BACKLOG OF ORDERS COULD NEGATIVELY IMPACT OUR SALES.
We currently have a backlog of orders, primarily under contracts with the
U.S. Government. The U.S. Government may unilaterally modify or terminate these
contracts. Accordingly, most of our backlog could be modified or terminated by
the U.S. Government. Therefore, existing backlog may not result in sales.
Further, any margin we record on sales from any contract included in backlog
may not be profitable.
OUR PENSION PLAN LIABILITIES MAY RESULT IN SIGNIFICANT EXPENSES.
We have assumed certain liabilities relating to defined benefit pension
plans for present and former employees and retirees of certain businesses which
we acquired. Prior to our formation, Lockheed Martin received a letter from the
Pension Benefit Guaranty Corporation (the "PBGC") which requested information
regarding the transfer of these pension plans and indicated that the PBGC
believed certain of these pension plans were underfunded using its actuarial
assumptions. These assumptions resulted in a larger liability for accrued
benefits than the assumptions used for financial reporting under Statement of
Financial Accounting Standards No. 87.
10
With respect to these plans, Lockheed Martin entered into an agreement
with us and the PBGC dated as of April 30, 1997. Under that agreement, Lockheed
Martin agreed, upon the occurrence of certain circumstances, either to:
o assume sponsorship of the subject plans; or
o provide another form of financial support.
If Lockheed Martin did assume sponsorship of these plans, it would be
primarily liable for the costs associated with funding these plans or any costs
associated with the termination of them, but we would be required to reimburse
Lockheed Martin for its obligations. Should Lockheed Martin assume sponsorship
of the subject plans, or if these plans were terminated, the impact of any
increased pension expenses or funding requirements could reduce the amount of
free cash flow available to us.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS, WHICH MAY NOT BE CORRECT.
Certain of the matters discussed concerning our operations, economic
performance and financial condition, including in particular, the likelihood of
our success in developing and expanding our business and the realization of
sales from backlog, include forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934 ("Exchange Act"). Statements that are predictive in nature, that
depend upon or refer to future events or conditions or that include words such
as "expects," "anticipates," "intends," "plans," "believes," "estimates" and
similar expressions are forward-looking statements. Although we believe that
these statements are based upon reasonable assumptions, we can give no
assurance that their goals will be achieved.
11
THE COMPANY
We are a leading merchant supplier of secure communications and
intelligence, surveillance and reconaissance (ISR) systems, training,
simulation and support services, aviation products and aircraft modernization,
as well as, specialized products. Our business areas employ proprietary
technologies and capabilities, and we believe they have leading positions in
their respective primary markets. Our customers include the U.S. Department of
Defense and prime contractors thereof, certain U.S. Government intelligence
agencies, major aerospace and defense contractors, foreign governments,
commercial customers and certain other U.S. federal, state and local government
agencies.
L-3 Communications Holdings is a holding company and, except for its
outstanding 5.25% Convertible Senior Subordinated Notes due 2009 and for its
outstanding 4.00% Senior Subordinated Convertible Contingent debt securities
(CODES) due 2011, has no assets or liabilities and conducts no operations other
than through L-3 Communications Corporation. L-3 Communications Holdings has
guaranteed the bank credit facilities of L-3 Communications Corporation.
RATIO OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges, deficiency of earnings to cover
fixed charges and earnings to combined fixed charges and preferred stock
dividends presented below should be read together with the financial statements
and the notes accompanying them and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in our Annual Report on
Form 10-K for the year ended December 31, 2001 and our Quarterly Report on Form
10-Q for the three months ended March 31, 2002, each incorporated by reference
into this prospectus. In calculating the ratio of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends, earnings
consist of income (loss) before income taxes plus fixed charges. Fixed charges
consist of interest on indebtedness plus the amortization of deferred debt
issuance costs and that portion of lease rental expense representative of the
interest element. Preferred stock dividends are the pre-tax equivalent, at our
effective tax rate, of dividends earned on outstanding preferred stock.
L-3 PREDECESSOR COMPANY(1)
---------------------------------------------------------------------- -----------------------
YEAR ENDED DECEMBER 31,(2)
--------------------------------------- NINE MONTHS
THREE MONTHS ENDED THREE MONTHS
ENDED DECEMBER 31, ENDED
MARCH 31, 2002 2001 2000 1999 1998 1997(3) MARCH 31, 1997
---------------- --------- --------- --------- --------- ------------- -----------------------
Ratio of Earnings to Fixed
Charges: 2.5x 2.8x 2.3x 2.4x 2.0x 1.7x --(4)
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends: 2.5x 2.8x 2.3x 2.4x 2.0x 1.7x --(4)
- ----------
(1) The predecessor company refers to the ten initial business units we
purchased from Lockhead Martin Corporation in 1997.
(2) Our results of operations are impacted significantly by our
acquisitions, which are described in this prospectus or in documents
incorporated herein by reference.
(3) Reflects the acquisition of our predecessor company and the
commencement of our operations effective April 1, 1997.
(4) Earnings were insufficient to cover fixed charges and combined fixed
charges and preferred stock dividends by $0.5 million for the three
months ended March 31, 1997.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, L-3 Communications
Holdings and L-3 Communications Corporation, as the case may be, will use all
or a portion of the net proceeds from
12
the sale of the offered securities for general working capital purposes,
including acquisitions. General working capital purposes may include repayment
of other debt, capital expenditures, possible acquisitions and any other
purposes that may be stated in any prospectus supplement. The net proceeds may
be invested temporarily or applied to repay short-term or revolving debt until
they are used for their stated purposes.
We will not receive any proceeds from the sale of any shares of common
stock offered by the selling stockholders.
DIVIDEND POLICY
L-3 Communications Holdings currently intends to retain its earnings to
finance future growth and, therefore, does not anticipate paying any cash
dividends on its common stock in the foreseeable future. Any determination as
to the payment of dividends will depend upon the future results of operations,
capital requirements and financial condition of L-3 Communications Holdings and
its subsidiaries and such other facts as the board of directors of L-3
Communications Holdings may consider, including any contractual or statutory
restrictions on L-3 Communications Holdings' ability to pay dividends.
Moreover, L-3 Communications Holdings is a holding company and its ability to
pay dividends is dependent upon receipt of dividends, distributions, advances,
loans or other cash transfers from L-3 Communications Corporation. Certain
outstanding debt instruments of L-3 Communications Corporation limit its
ability to pay dividends or other distributions on L-3 Communications
Corporation's common stock or to make advances, loans or other cash transfers
to L-3 Communications Holdings.
13
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities summarizes
certain general terms that will apply to the debt securities offered by L-3
Communications Holdings or by L-3 Communications Corporation, as the case may
be. The description is not complete, and we refer you to the indentures, forms
of which are included as exhibits to the registration statement of which this
prospectus is a part. In addition, the terms described below may be amended,
supplemented or otherwise modified pursuant to one or more supplemental
indentures. Any such amendments, supplements or modifications will be set forth
in the applicable prospectus supplement. For your reference, in several cases
below we have noted the section in the indentures that the paragraph
summarizes. Capitalized items have the meanings assigned to them in the
indentures. The referenced sections of the indentures and the definitions of
capitalized terms are incorporated by reference in the following summary.
The debt securities issued by L-3 Communications Corporation will be
senior, senior subordinated or subordinated debt of L-3 Communications
Corporation and will be guaranteed by L-3 Communications Holdings and may be
further guaranteed by substantially all of L-3 Communications Corporation's
wholly-owned domestic subsidiaries. The debt securities issued by L-3
Communications Holdings will be senior, senior subordinated or subordinated
debt of L-3 Communications Holdings and may be guaranteed by substantially all
of its wholly-owned domestic subsidiaries. L-3 Communications Holdings may
issue debt securities either separately, or together with, upon conversion of
or in exchange for other securities.
The debt securities issued by L-3 Communications Holdings will be issued
under an indenture between L-3 Communications Holdings and The Bank of New
York, as Trustee (the "Holdings Indenture"). The debt securities to be issued
by L-3 Communications Corporation will be issued under an indenture among L-3
Communications Corporation, L-3 Communications Holdings, as guarantor, and The
Bank of New York, as trustee (the "Communications Indenture," and together with
the Holdings Indenture referred to herein as the "Indentures"). The Indentures
are substantially identical, except for the provisions relating to L-3
Communications Holdings' guarantee of the debt securities that may be issued by
L-3 Communications Corporation. For purposes of the summary set forth below,
obligors refers to L-3 Communications Holdings in the case of debt securities
issued by L-3 Communications Holdings pursuant to the Holdings Indenture and
L-3 Communications Corporation and L-3 Communications Holdings, as guarantor,
in the case of debt securities issued by L-3 Communications Corporation
pursuant to the Communications Indenture. This summary of the Indentures is
qualified by reference to the Indentures. You should refer to the Indentures in
addition to reading this summary. The summary is not complete and is subject to
the specific terms of the Indentures.
GENERAL
Under the Holdings Indenture and the Communications Indenture, L-3
Communications Holdings and L-3 Communications Corporation, respectively, will
be able to issue from time to time in one or more series an unlimited amount of
debt securities. Each time that L-3 Communications Holdings or L-3
Communications Corporation issues a new series of debt securities, the
supplement to the prospectus relating to that new series will specify the terms
of those debt securities, including:
o Designation, amount and denominations;
o Percentage of principal amount at which debt securities will be issued;
o Maturity date;
o Interest rate and payment dates;
o Terms and conditions of exchanging or converting debt securities for
other securities;
o Currency of issue;
o Redemption terms;
o Whether the debt securities will be guaranteed by subsidiaries of L-3
Communications Holdings or L-3 Communications Corporation, as the case
may be;
14
o Whether the debt securities and/or any guarantees will be senior, senior
subordinated or subordinated; and
o Any other specific terms of the debt securities, including any deleted,
modified or additional events of default or remedies or additional
covenants provided with respect to the debt securities, and any terms
that may be required by or advisable under applicable laws or
regulations.
Unless otherwise specified in any prospectus supplement, the debt
securities will be issuable in registered form without coupons and in
denominations of $1,000 and any integral multiple thereof. No service charge
will be made for any transfer or exchange of any debt securities, but the
issuer may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Debt securities may bear interest at a fixed rate or a floating rate. Debt
securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to discounted debt securities or to some debt
securities issued at par that are treated as having been issued at a discount
for United States federal income tax purposes will be described in the
applicable prospectus supplement.
In determining whether the holders of the requisite aggregate principal
amount of outstanding debt securities of any series have given any request,
demand, authorization, direction, notice, consent or waiver under the
Indentures, the principal amount of any series of debt securities originally
issued at a discount from their stated principal amount that will be deemed to
be outstanding for such purposes will be the amount of the principal thereof
that would be due and payable as of the date of the determination upon a
declaration of acceleration of the maturity thereof.
Payments relating to the debt securities generally will be paid by L-3
Communications Holdings or L-3 Communications Corporation, as the case may be,
at The Bank of New York's corporate trust office. However, L-3 Communications
Holdings or L-3 Communications Corporation, as the case may be, may elect to
pay interest by mailing checks directly to the registered holders of the debt
securities. You can transfer your debt securities at The Bank of New York's
corporate trust office.
RANKING
Unless otherwise described in the prospectus supplement for any series,
the debt securities issued by L-3 Communications Holdings or L-3 Communications
Corporation, as the case may be, will be unsecured and will rank on a parity
with all of the other unsecured and unsubordinated indebtedness issued by L-3
Communications Holdings or L-3 Communications Corporation, as the case may be.
L-3 Communications Holdings is a holding company and conducts all of its
operations through subsidiaries. L-3 Communications Corporation, L-3
Communications Holdings' wholly-owned subsidiary, conducts a material amount of
operations through its subsidiaries. L-3 Communications Holdings' and L-3
Communications Corporation's right to participate as a shareholder in any
distribution of assets of any subsidiary (and thus the ability of holders of
the debt securities issued by L-3 Communications Holdings or L-3 Communications
Corporation, as the case may be, to benefit as creditors of L-3 Communications
Holdings or L-3 Communications Corporation, as the case may be, from such
distribution) is junior to creditors of that subsidiary. As a result, claims of
holders of the debt securities issued by L-3 Communications Holdings or L-3
Communications Corporation will generally have a junior position to claims of
creditors of L-3 Communications Holdings' or L-3 Communications Corporation's
subsidiaries, except to the extent that L-3 Communications Holdings or L-3
Communications Corporation, as the case may be, may be recognized as a creditor
of those subsidiaries or those subsidiaries guarantee the debt securities.
REOPENING OF ISSUE
L-3 Communications Holdings and L-3 Communications Corporation, as the
case may be, may, from time to time, reopen an issue of debt securities without
the consent of the holders of the debt
15
securities and issue additional debt securities with the same terms (including
maturity and interest payment terms) as debt securities issued on an earlier
date. After such additional debt securities are issued they will be fungible
with the previously issued debt securities to the extent specified in the
applicable prospectus supplement.
DEBT GUARANTEES
L-3 Communications Holdings will fully and unconditionally guarantee,
pursuant to the Communications Indenture, the due and prompt payment of the
principal of and premium, if any, and interest on the debt securities issued by
L-3 Communications Corporation when and as the same shall become due and
payable, whether at the stated maturity, by declaration of acceleration, call
for redemption or otherwise. Debt securities of L-3 Communications Holdings may
be guaranteed by, and debt securities of L-3 Communications Corporation may be
further guaranteed by, additional subsidiaries of L-3 Communications Holdings,
the "subsidiary guarantors". If debt securities are guaranteed by subsidiary
guarantors, that guarantee will be set forth in the applicable Indenture or a
supplemental indenture.
Payments with respect to the guarantee by L-3 Communications Holdings of
the senior subordinated debt securities and subordinated debt securities issued
by L-3 Communications Corporation will be subordinated in right of payment to
the prior payment in full of all senior indebtedness of L-3 Communications
Holdings to the same extent and manner that payments with respect to the senior
subordinated debt securities and subordinated debt securities issued by L-3
Communications Corporation are subordinated in right of payment to the prior
payment in full of all senior indebtedness of L-3 Communications Corporation.
Likewise, payments with respect to subsidiary guarantees of senior subordinated
debt securities and subordinated debt securities of L-3 Communications Holdings
and L-3 Communications Corporation, as the case may be, will be subordinated in
right of payment to the prior payment in full of all senior indebtedness of
each such subsidiary guarantor to the same extent and manner that payments with
respect to the senior subordinated debt securities and subordinated debt
securities of L-3 Communications Holdings and L-3 Communications Corporation,
as the case may be, are subordinated in right of payment to the prior payment
in full of all senior indebtedness of the issuer of such debt securities.
MERGER AND CONSOLIDATION
Unless otherwise described in the prospectus supplement of any series,
each of L-3 Communications Holdings and L-3 Communications Corporation may
under the applicable Indenture, without the consent of the holders of debt
securities, consolidate with, merge with or into or transfer all or
substantially all of its assets to any other corporation organized under the
laws of the United States or any of its political subdivisions provided that:
o the surviving corporation assumes all the obligations of L-3
Communications Holdings and L-3 Communications Corporation, as the case
may be, under the applicable Indenture;
o at the time of such transaction, no event of default, and no event
which, after notice or lapse of time, would become an event of default,
shall have happened and be continuing; and
o certain other conditions are met.
MODIFICATION
Generally, the rights and obligations of L-3 Communications Holdings and
L-3 Communications Corporation, as the case may be, and the holders' rights may
be modified with the consent of holders of a majority of the outstanding debt
securities of each series affected by such modification. However, unless
otherwise described in the prospectus supplement of any series, no modification
or amendment may occur without the consent of the affected holder of a debt
security if that modification or amendment would do any of the following:
o Change the stated maturity date of the principal of, or any installment
of interest on, any of the holder's debt securities.
16
o Reduce the principal amount of, or the interest (or premium, if any) on,
the debt security (including in the case of a discounted debt security,
the amount payable upon acceleration of maturity or provable in
bankruptcy).
o Change the currency of payment of the debt security.
o Impair the right to institute suit for the enforcement of any payment on
the debt security or adversely affect the right of repayment, if any, at
the option of the holder.
o Reduce the percentage of holders of debt securities necessary to modify
or amend the Indentures or to waive any past default.
o Release a guarantor from its obligations under its guarantee, other than
in accordance with the terms thereof.
o Modify the obligations of L-3 Communications Holdings or L-3
Communications Corporation, as the case may be, to maintain an office or
agency in New York City.
A modification which changes a covenant or provision expressly included
solely for the benefit of holders of one or more particular series will not
affect the rights of holders of debt securities of any other series. (Section
9.02)
Each Indenture provides that the obligors and The Bank of New York, as
trustee, may make modifications without the consent of the debt security
holders in order to do the following: (Section 9.01)
o Evidence the assumption by a successor entity of the obligations of any
of the obligors under that Indenture.
o Convey security for the debt securities to The Bank of New York.
o Add covenants, restrictions or conditions for the protection of the debt
security holders.
o Provide for the issuance of debt securities in coupon or fully
registered form.
o Establish the form or terms of debt securities of any series.
o Cure any ambiguity or correct any defect in the applicable Indenture
which does not adversely affect the interests of a holder.
o Evidence the appointment of a successor trustee or more than one
trustee.
o Surrendering any right or power conferred upon L-3 Communications
Holdings or L-3 Communications Corporation, as the case may be.
o Complying with the requirements of the Securities and Exchange
Commission in order to maintain the qualification of the Indentures under
the Trust Indenture Act of 1939, as amended.
o Adding or modifying any other provisions with respect to matters or
questions arising under the Indentures which L-3 Communications Holdings
or L-3 Communications Corporation, as the case may be, and The Bank of
New York may deem necessary or desirable and which will not adversely
affect the interests of holders of debt securities.
o Modify the existing covenants and events of default solely in respect
of, or add new covenants or events of default that apply solely to, debt
securities not yet issued and outstanding.
o To provide for guarantees of the debt securities and to specify the
ranking of the obligations of the guarantors under their respective
guarantees.
EVENTS OF DEFAULT
In the Indentures, an event of default means, unless otherwise described
in the prospectus supplement of any series, any one of the following:
17
o Failure to pay interest on a debt security for 30 days;
o Failure to pay principal and premium, if any, when due;
o Failure to pay or satisfy a sinking fund installment when due;
o Failure by L-3 Communications Holdings or L-3 Communications
Corporation, as the case may be, or by a guarantor of the debt securities
to perform any other covenant in the Indenture that continues for 60 days
after receipt of notice;
o Certain events in bankruptcy, insolvency or reorganization; or
o A guarantee being held in any judicial proceeding to be unenforceable or
invalid.
An event of default relating to one series of debt securities does not
necessarily constitute an event of default with respect to any other series
issued under the applicable Indenture. If an event of default exists with
respect to a series of debt securities, The Bank of New York or the holders of
at least 25% of the outstanding debt securities of that series may declare the
principal of that series due and payable.
Any event of default with respect to a particular series of debt
securities may be waived by the holders of a majority of the outstanding debt
securities of that series, except for a failure to pay principal premium or
interest on the debt security. (Sections 5.01, 5.02 and 5.08)
The Bank of New York may withhold notice to the holder of the debt
securities of any default (except in payment of principal, premium, interest or
sinking fund payment) if The Bank of New York thinks it is in the interest of
the holders. (Section 6.02)
Subject to the specific duties that arise under the applicable Indenture
if an event of default exists, The Bank of New York is not obligated to
exercise any of its rights or powers under the applicable Indenture at the
request of the holders of the debt securities unless they provide reasonable
indemnity satisfactory to it. (Sections 6.01 and 6.03) Generally, the holders
of a majority of the outstanding debt securities can direct the proceeding for
a remedy available to The Bank of New York or for exercising any power
conferred on The Bank of New York as the trustee. (Section 5.08)
TRUSTEE'S RELATIONSHIP
The Bank of New York or its affiliates may from time to time in the future
provide banking and other services to L-3 Communications Holdings and L-3
Communications Corporation in the ordinary course of their business. The
Indentures provide that L-3 Communications Holdings or L-3 Communications
Corporation, as the case may be, will indemnify The Bank of New York against
any and all loss, liability claim, damage or expense incurred that arises from
the trust created by the applicable Indenture unless the loss, liability or
expense results from The Bank of New York's negligence or willful misconduct.
(Sections 6.01 and 6.07)
GLOBAL SECURITIES
L-3 Communications Holdings and L-3 Communications Corporation may issue
some of the debt securities as global securities that will be deposited with a
depository identified in a prospectus supplement. Global securities may be
issued in registered form and may be either temporary or permanent. A
prospectus supplement will contain additional information about depository
arrangements.
Registered global securities will be registered in the depository's name
or in the name of its nominee. When L-3 Communications Holdings or L-3
Communications Corporation issues a global security, the depository will credit
that amount of debt securities to the investors that have accounts with the
depository or its nominee. The underwriters or the debt security holders' agent
will designate the accounts to be credited, unless the debt securities are
offered and sold directly by L-3 Communications Holdings or L-3 Communications
Corporation, in which case, L-3 Communications Holdings or L-3 Communications
Corporation, as the case may be, will designate the appropriate account to be
credited.
18
Investors who have accounts with a depository, and people who have an
interest in those institutions, are the beneficial owners of global securities
held by that particular depository.
Neither L-3 Communications Holdings nor L-3 Communications Corporation
will maintain records regarding ownership or the transfer of global securities
held by a depository or to nominee. If you are the beneficial owner of global
securities held by a depository, you must get information directly from the
depository.
As long as a depository is the registered owner of a global security, that
depository will be considered the sole owner of the debt securities represented
by that global security. Except as set forth below, beneficial owners of global
securities held by a depository will not be entitled to:
o Register the represented debt securities in their names;
o Receive physical delivery of the debt securities; or
o Be considered the owners or holders of the global security under the
applicable Indenture.
Payments on debt securities registered in the name of a depository or its
nominee will be made to the depositary or its nominee. (Section 2.03)
When a depository receives a payment, it must immediately credit the
accounts in amounts proportionate to the account holders' interests in the
global security. The beneficial owners of a global security should, and are
expected to, establish standing instructions and customary practices with their
investor that has an account with the depository, so that payments can be made
with regard to securities beneficially held for them, much like securities held
for the accounts of customers in bearer form or registered in "street name."
A global security can only be transferred in whole by the depository to a
nominee of such depository, or to another nominee of a depository. If a
depository is unwilling or unable to continue as a depository and L-3
Communications Holdings or L-3 Communications Corporation, as the case may be,
does not appoint a successor depository within ninety (90) days, L-3
Communications Holdings or L-3 Communications Corporation, as the case may be,
will issue debt securities in exchange for all of the global securities held by
that depository. In addition, L-3 Communications Holdings and L-3
Communications Corporation may eliminate all global securities at any time and
issue debt securities in exchange for them. Further, L-3 Communications
Holdings and L-3 Communications Corporation may allow a depository to surrender
a global security in exchange for debt securities on any terms that are
acceptable to them and the depository. Finally, an interest in the global
security is exchangeable for a definitive debt security if an event of default
has occurred as described above under "Events of Default." (Section 3.07)
If any of these events occur, L-3 Communications Holdings and L-3
Communications Corporation, as the case may be, will execute and The Bank of
New York will authenticate and deliver to the beneficial owners of the global
security in question a new registered security in an amount equal to and in
exchange for that person's beneficial interest in the exchange global security.
The depository will receive a new global security in an amount equal to the
difference, if any, between the amount of the surrendered global security and
the amount of debt securities delivered to the beneficial owners. Debt
securities issued in exchange for global securities will be registered in the
same names and in the same denominations as indicated by the depository's
records and in accordance with the instructions from its direct and indirect
participants. (Section 3.07)
The laws of certain jurisdictions require some people who purchase
securities to actually take physical possession of those securities. The
limitations imposed by these laws may impair your ability to transfer your
beneficial interests in a global security.
19
DESCRIPTION OF CAPITAL STOCK
GENERAL
The current certificate of incorporation of L-3 Communications Holdings
authorizes 300,000,000 shares of common stock with a par value of $.01 per
share and 50,000,000 shares of preferred stock. As of May 15, 2002, the
outstanding capital stock of L-3 Communications Holdings consisted of
79,425,730 shares of common stock. The following summaries of certain
provisions of L-3 Communications Holdings' capital stock do not purport to be
complete and are subject to, and qualified in their entirety by (1) the
provisions of the certificate of incorporation, including the certificate of
designations pursuant to which any series of preferred stock may be issued, (2)
the bylaws of L-3 Communications Holdings and (3) by applicable law.
COMMON STOCK
Voting Rights. Holders of L-3 Communications Holdings' common stock are
entitled to one vote per share on all matters to be voted upon by stockholders
of L-3 Communications Holdings, and do not have cumulative voting rights.
Dividend Rights. The holders of L-3 Communications Holdings' common stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the board of directors of L-3 Communications Holdings out of
funds legally available for that purpose, subject to preferences that may be
applicable to any outstanding preferred stock and any other provisions of L-3
Communications Holdings' certificate of incorporation. L-3 Communications
Holdings does not, however, anticipate paying any cash dividends in the
foreseeable future.
Rights Upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of L-3 Communications Holdings, after
payment of the debts and other liabilities of L-3 Communications Holdings, and
subject to the rights of holders of shares of preferred stock, holders of
common stock are entitled to share in any distribution to the stockholders on a
pro rata basis.
Miscellaneous. All of the outstanding shares of common stock of L-3
Communications Holdings are, and the shares of common stock offered hereby will
be, fully paid and non-assessable. Holders of common stock have no preemptive
or other rights to subscribe for additional shares. No shares of common stock
are subject to redemption or a sinking fund.
PREFERRED STOCK
General. L-3 Communications Holdings' certificate of incorporation
authorizes its board of directors to cause preferred stock to be issued in one
or more series, without stockholder action. The board of directors of L-3
Communications Holdings is authorized to issue up to 50,000,000 shares of
preferred stock, par value $.01 per share, and can determine the number of
shares of each series, and the rights, preference and limitations of each
series. L-3 Communications Holdings may amend its certificate of incorporation
to increase the number of authorized shares of preferred stock in a manner
permitted by its certificate of incorporation and the Delaware General
Corporation Law.
The particular terms of any series of preferred stock being offered by L-3
Communications Holdings under this shelf registration will be described in the
prospectus supplement relating to that series of preferred stock. Those terms
may include:
o The number of shares of the series of preferred stock being offered;
o The title and liquidation preference per share of that series of the
preferred stock;
o The purchase price of the preferred stock;
o The dividend rate or method for determining such rate;
o The dates on which dividends will be paid;
20
o Whether dividends on that series of preferred stock will be cumulative
or noncumulative and, if cumulative, the dates from which dividends shall
commence to accumulate;
o Any redemption or sinking fund provisions applicable to that series of
preferred stock;
o Any conversion or exchange provisions applicable to that series of
preferred stock;
o Whether L-3 Communications Holdings has elected to offer depositary
shares with respect to that series of preferred stock; and
o Any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of preferred stock.
If the terms of any series of preferred stock being offered differ from
the terms set forth herein, those terms will also be disclosed in the
prospectus supplement relating to that series of preferred stock. The following
summary is not complete. You should refer to the certificate of designations
relating to the series of the preferred stock for the complete terms of that
preferred stock. That certificate of designations will be filed with the
Securities and Exchange Commission promptly after the offering of the preferred
stock.
The preferred stock will, when issued, be fully paid and nonassessable.
Voting Rights. Except as indicated in the prospectus supplement, or
except as expressly required by applicable law, the holders of preferred stock
will not be entitled to vote.
Dividend Rights. Holders of preferred stock of each series will be
entitled to receive, when, as and if declared by the board of directors of L-3
Communications Holdings, cash dividends at the rates and on the dates set forth
in the prospectus supplement. Dividend rates may be fixed or variable or both.
Different series of preferred stock may be entitled to dividends at different
dividend rates or based upon different methods of determination. Each dividend
will be payable to the holders of record as they appear on L-3 Communications
Holdings' stock books on record dates determined by the board of directors of
L-3 Communications Holdings. Dividends on any series of the preferred stock may
be cumulative or noncumulative, as specified in the prospectus supplement. If
the board of directors of L-3 Communications Holdings fails to declare a
dividend on any series of preferred stock for which dividends are
noncumulative, then the right to receive that dividend will be lost, and L-3
Communications Holdings will have no obligation to pay the dividend for that
dividend period, whether or not dividends are declared for any future dividend
period.
No full dividends will be declared or paid on any series of preferred
stock, unless full dividends for the dividend period commencing after the
immediately preceding dividend payment date (and cumulative dividends still
owing, if any) have been or contemporaneously are declared and paid on all
other series of preferred stock that have the same rank as, or rank senior to,
that preferred stock. When those dividends are not paid in full, dividends will
be declared pro rata, so that the amount of dividends declared per share on
that series of preferred stock and on each other series of preferred stock
having the same rank as, or ranking senior to, that series of preferred stock
will in all cases bear to each other the same ratio that accrued dividends per
share on that series of preferred stock and the other preferred stock bear to
each other. In addition, generally, unless full dividends, including cumulative
dividends still owing, if any, on all outstanding shares of any series of
preferred stock have been paid, no dividends will be declared or paid on the
common stock and generally L-3 Communications Holdings may not redeem or
purchase any common stock. No interest, or sum of money in lieu of interest,
will be paid in connection with any dividend payment or payments which may be
in arrears.
Unless otherwise described in the prospectus supplement, the amount of
dividends payable for each dividend period will be computed by annualizing the
applicable dividend rate and dividing by the number of dividend periods in a
year, except that the amount of dividends payable for the initial dividend
period or any period shorter than a full dividend period shall be computed on
the basis of a 360-day year consisting of twelve 30-day months and, for any
period less than a full month, the actual number of days elapsed in the period.
21
Rights Upon Liquidation. In the event L-3 Communications Holdings
liquidates, dissolves or winds-up its affairs, either voluntarily or
involuntarily, the holders of each series of preferred stock will be entitled
to receive liquidating distributions in the amount set forth in the prospectus
supplement relating to each series of preferred stock, plus an amount equal to
accrued and unpaid dividends, if any, before any distribution of assets is made
to the holders of L-3 Communications Holdings' common stock. If the amounts
payable with respect to preferred stock of any series and any stock having the
same rank as that series of preferred stock are not paid in full, the holders
of preferred stock and of such other stock will share ratably in any such
distribution of assets in proportion to the full respective preferential
amounts to which they are entitled. After the holders of each series of
preferred stock and any stock having the same rank as the preferred stock are
paid in full, they will have no right or claim to any of L-3 Communications
Holdings' remaining assets unless otherwise specified in the applicable
prospectus supplement. Neither the sale of all or substantially all of L-3
Communications Holdings' property or business nor a merger or consolidation by
L-3 Communications Holdings with any other corporation will be considered a
dissolution, liquidation or winding up by L-3 Communications Holdings of its
business affairs.
Redemption. Any series of preferred stock may be redeemable, in whole or
in part, at the option of L-3 Communications Holdings. In addition, any series
of preferred stock may be subject to mandatory redemption, including pursuant
to a sinking fund. The redemption provisions that may apply to a series of
preferred stock, including the redemption dates and the redemption prices for
that series, will be set forth in the prospectus supplement.
If a series of preferred stock is subject to mandatory redemption, the
prospectus supplement will specify (1) the year L-3 Communications Holdings can
begin to redeem shares of the preferred stock, (2) the number of shares of the
preferred stock that L-3 Communications Holdings can redeem each year, and (3)
the redemption price per share. L-3 Communications Holdings may pay the
redemption price in cash, stock or in cash that it has received specifically
from the sale of its capital stock, as specified in the prospectus supplement.
If the redemption price is to be paid only from the proceeds of the sale of its
capital stock, the terms of the series of preferred stock may also provide
that, if no such capital stock is sold or if the amount of cash received is
insufficient to pay in full the redemption price then due, the series of
preferred stock will automatically be converted into shares of the applicable
capital stock pursuant to conversion provisions specified in the prospectus
supplement.
If fewer than all the outstanding shares of any series of preferred stock
are to be redeemed, whether by mandatory or optional redemption, the board of
directors of L-3 Communications Holdings will determine the method for
selecting the shares to be redeemed, which may be by lot or pro rata or by any
other method determined to be equitable. From and after the redemption date,
dividends will cease to accrue on the shares of preferred stock called for
redemption and all rights of the holders of those shares other than the right
to receive the redemption price will cease.
In the event that full dividends, including accrued but unpaid dividends,
if any, have not been paid on any series of preferred stock, L-3 Communications
Holdings may not redeem that series in part and may not purchase or acquire any
shares of that series of preferred stock, except by any offer made on the same
terms to all holders of that series of preferred stock.
Miscellaneous. The preferred stock will, when issued, be fully paid and
nonassessable. The preferred stock will have no preemptive rights.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for L-3 Communications Holdings' common
stock is EquiServe Trust Company, N.A. The transfer agent and registrar for L-3
Communications Holdings' preferred stock will be set forth in the applicable
prospectus supplement.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF L-3 COMMUNICATIONS HOLDINGS' CHARTER AND
BYLAWS
The certificate of incorporation of L-3 Communications Holdings provides
for its board of directors to be divided into three classes, with staggered
three-year terms. As a result, only one class
22
of directors will be elected at each annual meeting of stockholders, with the
other classes continuing for the remainder of their respective three-year
terms. Stockholders have no cumulative voting rights, and the stockholders
representing a majority of the shares of common stock outstanding are able to
elect all of the directors.
The certificate of incorporation of L-3 Communications Holdings also
requires that any action required or permitted to be taken by its stockholders
must be effected at a duly called annual or special meeting of the stockholders
and may not be effected by a consent in writing. The stockholders of L-3
Communications Holdings may amend the bylaws of L-3 Communications Holdings or
adopt new bylaws, by the affirmative vote of 66 2/3% of the outstanding voting
securities. A special meeting of the stockholders may be called by L-3
Communications Holdings' Chairman, Chief Executive Officer or stockholders
owning 10% or more of the outstanding voting capital stock. These provisions
may have the effect of delaying, deferring or preventing a change in control.
The classification of the board of directors and lack of cumulative voting
will make it more difficult not only for another party to obtain control of L-3
Communications Holdings by replacing its board of directors, but also for its
existing stockholders to replace the board of directors. Since the board of
directors has the power to retain and discharge its officers, these provisions
could also make it more difficult for existing stockholders or another party to
effect a change in management.
L-3 Communications Holdings' anti-takeover and other provisions may have
the effect of deterring hostile takeovers or delaying changes in control or
management. They are intended to enhance the likelihood of continued stability
in the composition of its board of directors and in the policies of its board
of directors and to discourage certain types of transactions that may involve
an actual or threatened change in control. Additionally, these provisions are
designed to reduce L-3 Communications Holdings' vulnerability to an unsolicited
acquisition proposal. The provisions also are intended to discourage certain
tactics that may be used in proxy fights. However, such provisions could have
the effect of discouraging others from making tender offers for L-3
Communications Holdings' shares and, as a consequence, they also may inhibit
fluctuations in the market price of L-3 Communications Holdings' shares that
could result from actual or rumored takeover attempts. Such provisions also may
have the effect of preventing changes in L-3 Communications Holdings'
management.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
L-3 Communications Holdings, as a Delaware corporation, is subject to
Section 203 of the Delaware General Corporation Law, which, subject to certain
exceptions, prohibits it from engaging in any business combination with any
interested stockholder for a period of three years following the time that such
stockholder became an interested stockholder, unless:
o prior to such time, the board of directors of L-3 Communications
Holdings approved either the business combination or the transaction that
resulted in the stockholder becoming an interested holder;
o upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85.0% of the outstanding voting stock of L-3 Communications
Holdings at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (a) by
persons who are directors and also officers and (b) by employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered
in a tender or exchange offer; or
o at or subsequent to such time, the business combination is approved by
the board of directors of L-3 Communications Holdings and authorized at
an annual or special meeting of stockholders, and not by written consent,
by the affirmative vote of at least 66 2/3% of the outstanding voting
stock of L-3 Communications Holdings that is not owned by the interested
stockholder.
23
In general, Section 203 defines "business combination" to include the
following:
o any merger or consolidation involving the interested stockholder and L-3
Communications Holdings;
o any sale, transfer, pledge or other disposition of 10% or more of assets
involving the interested stockholder;
o subject to certain exceptions, any transaction that results in the
issuance or transfer of any of L-3 Communications Holdings' stock to the
interested stockholder;
o any transaction involving L-3 Communications Holdings that has the
effect of increasing the proportionate share of the stock or any class or
series of L-3 Communications Holdings' stock beneficially owned by the
interested stockholder; or
o the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits by or through
L-3 Communications Holdings.
In general, Section 203 defines "interested stockholder" as an entity or
person beneficially owning 15% or more of the outstanding voting stock of L-3
Communications Holdings and any entity or person affiliated with or controlling
or controlled by such entity or person.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
L-3 Communications Holdings may issue stock purchase contracts
representing contracts obligating holders to purchase from L-3 Communications
Holdings and obligating L-3 Communications Holdings to sell to the holders a
specified number of shares of common stock or preferred stock at a future date
or dates. The price per share of common stock or preferred stock may be fixed
at the time the stock purchase contracts are issued or may be determined by
reference to a specific formula set forth in the stock purchase contracts.
The stock purchase contracts may be issued separately or as a part of
units, often known as stock purchase units, consisting of a stock purchase
contract and either of the following:
o Debt securities of L-3 Communications Holdings, or
o Debt obligations of third parties, including U.S. Treasury securities,
securing the holder's obligations to purchase the common stock or preferred
stock under the stock purchase contracts. The stock purchase contracts may
require L-3 Communications Holdings to make periodic payments to the holders of
the stock purchase units or vice versa, and such payments may be unsecured or
prefunded on some basis. The stock purchase contracts may require holders to
secure their obligations in a specified manner and in certain circumstances L-3
Communications Holdings may deliver newly issued prepaid stock purchase
contracts, often known as prepaid securities, upon release to a holder of any
collateral securing each holder's obligations under the original stock purchase
contract.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units and, if applicable, prepaid
securities. The description in the prospectus supplement will not contain all
of the information that you may find useful. For more information, you should
review the stock purchase contracts, the collateral arrangements and depositary
arrangements, if applicable, relating to such stock purchase contracts or stock
purchase units and, if applicable, the prepaid securities and the document
pursuant to which the prepaid securities will be issued, which will be filed
with the Securities and Exchange Commission promptly after the offering of such
stock purchase contracts or stock purchase units and, if applicable, prepaid
securities.
DESCRIPTION OF WARRANTS
L-3 Communications Holdings may issue warrants for the purchase of debt
securities, preferred stock or common stock of L-3 Communications Holdings. L-3
Communications Holdings may issue
24
warrants independently or together with other securities. Each series of
warrants will be issued under a separate warrant agreement to be entered into
between L-3 Communications Holdings and a bank or trust company, as warrant
agent. You should refer to the warrant agreement relating to the specific
warrants being offered for the complete terms of the warrant agreement and the
warrants.
Each warrant will entitle the holder to purchase the principal amount of
debt securities of L-3 Communications Holdings, or the number of shares of
preferred stock or common stock of L-3 Communications Holdings at the exercise
price set forth in, or calculable as set forth in, the prospectus supplement.
The exercise price may be subject to adjustment upon the occurrence of certain
events, as set forth in the prospectus supplement. After the close of business
on the expiration date of the warrant, unexercised warrants will become void.
The place or places where, and the manner in which, warrants may be exercised
shall be specified in the prospectus supplement.
The applicable prospectus supplement will describe the following terms,
where applicable, of the warrants in respect of which this prospectus is being
delivered:
o the title of the warrants;
o the aggregate number of the warrants;
o the price or prices at which the warrants will be issued;
o the designation, aggregate principal amount and terms of the securities
purchasable upon exercise of the warrants;
o the designation and terms of the securities with which the warrants are
issued and the number of the warrants issued with each such security;
o if applicable, the date on and after which the warrants and the related
securities will be separately transferable;
o the price at which the securities purchasable upon exercise of the
warrants may be purchased;
o the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
o the minimum or maximum amount of the warrants that may be exercised at
any one time;
o information with respect to book-entry procedures, if any;
o a discussion of certain United States federal income tax considerations;
and
o any other terms of the warrants, including terms, procedures and
limitations relating to the exercise of the warrants.
SELLING STOCKHOLDERS
The table below presents certain information regarding the beneficial
ownership of the common stock of L-3 Communications Holdings outstanding as of
May 15, 2002 by Frank C. Lanza, our Chairman, Chief Executive Officer and
Director, and Robert V. LaPenta, our President, Chief Financial Officer and
Director.
NUMBER OF SHARES OF COMMON
STOCK BENEFICIALLY OWNED
AFTER THE
SHARES OF COMMON STOCK MAXIMUM NUMBER OF SALE OF MAXIMUM NUMBER OF
BENEFICIALLY OWNED SHARES OF COMMON SHARES OF COMMON STOCK
------------------------ STOCK TO BE SOLD -----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE HEREUNDER NUMBER PERCENTAGE
- --------------------------- ----------- ------------ ------------------ ----------- -----------
Frank C. Lanza ............ 4,779,914 5.9% 500,000 4,279,914 5.3%
Robert V. LaPenta ......... 5,135,198 6.3% 500,000 4,635,198 5.7%
25
PLAN OF DISTRIBUTION
L-3 Communications Holdings, L-3 Communications Corporation and the
selling stockholders may sell the securities offered by this prospectus through
underwriters, dealers or agents or directly to one or more purchasers including
through a dividend reinvestment program. The applicable prospectus supplement
will list the names of any underwriters or agents involved in the sale of the
offered securities and any applicable commissions or discounts. In addition,
the applicable prospectus supplement will list any securities exchanges on
which the offered securities may be listed.
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the offered securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The offered securities may be offered through an
underwriting syndicate represented by many underwriters. The obligations of the
underwriters to purchase the offered securities will be subject to certain
conditions. The underwriters will be obligated to purchase all the offered
securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
The offered securities may be sold directly by L-3 Communications
Holdings, L-3 Communications Corporation and the selling stockholders or
through agents. Any agent will be named, and any commissions payable to that
agent will be set forth in the prospectus supplement. Unless otherwise
indicated in the prospectus supplement, any agent will be acting on a best
efforts basis.
L-3 Communications Holdings, L-3 Communications Corporation and the
selling stockholders may authorize agents, underwriters or dealers to solicit
offers by specified institutions to purchase securities offered by this
prospectus pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. These contracts will be subject
only to those conditions set forth in the prospectus supplement. The prospectus
supplement will set forth the commission payable for soliciting such contracts.
L-3 Communications Holdings, L-3 Communications Corporation and the
selling stockholders may agree to indemnify underwriters, dealers or agents
against certain civil liabilities, including liabilities under the Securities
Act of 1933, and may also agree to contribute to payments which the
underwriters, dealers or agents may be required to make.
LEGAL MATTERS
The validity of each of the securities offered by this prospectus will be
passed upon for us by Simpson Thacher & Bartlett, New York, New York.
EXPERTS
The following financial statements have been incorporated by reference in
this registration statement in reliance of the reports of
PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in accounting and auditing:
o Our consolidated financial statements as of December 31, 2001 and 2000
and for the three years ended December 31, 2001 incorporated by reference
in this registration statement from our Annual Report on Form 10-K for
the year ended December 31, 2001; and
o The combined financial statements of Aircraft Integration Systems
Business as of December 31, 2001 and 2000 and for the three years ended
December 31, 2001 incorporated by reference in this registration
statement from our Current Report on Form 8-K dated March 22, 2002.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, file reports and other
information with the SEC. Such reports and other
26
information can be inspected and copied at the Public Reference Section of the
SEC located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington
D.C. 20549 and at a regional public reference facility maintained by the SEC
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the SEC at prescribed rates. Such material may also be
accessed electronically by means of the SEC's home page on the Internet
(http://www.sec.gov).
So long as we are subject to the periodic reporting requirements of the
Securities Exchange Act, we are required to furnish the information required to
be filed with the SEC to the trustee and the holders of the notes. We have
agreed that, even if we are not required under the Securities Exchange Act to
furnish such information to the SEC, we will nonetheless continue to furnish
information that would be required to be furnished by us by Section 13 of the
Securities Exchange Act to the trustee and the holders of the notes as if it
were subject to such periodic reporting requirements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information contained
in documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
2001;
o Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002;
o Our Current Report on Form 8-K dated March 22, 2002; and
o Our Current Report on Form 8-K dated April 24, 2002.
You can request a copy of these filings at no cost, by writing or calling
us at the following address:
L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
(212) 697-1111
Attention: Corporate Secretary.
YOU SHOULD ONLY RELY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY SUPPLEMENT TO THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY
SUPPLEMENT TO THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THOSE DOCUMENTS. YOU SHOULD READ ALL INFORMATION SUPPLEMENTING
THIS PROSPECTUS.
27
SHARES
[L-3 COMMUNICATIONS GRAPHIC OMITTED]
COMMON STOCK
---------------------
PROSPECTUS SUPPLEMENT
MAY , 2002
---------------------
LEHMAN BROTHERS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all fees and expenses, other than
underwriting discounts and commissions, incurred or expected to be incurred by
L-3 Communications Holdings, Inc. in connection with the issuance and
distribution of the securities being registered hereby. All but the Securities
and Exchange Commission registration fee are estimates and remain subject to
future contingencies.
Securities and Exchange Commission registration fee ......... $ 97,118
Legal fees and expenses ..................................... 250,000
Accounting fees and expenses ................................ 100,000
Trustees' fees and expenses ................................. 2,500
Printing and engraving fees ................................. 100,000
Miscellaneous expenses ...................................... 50,000
--------
Total .................................................... $599,618
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things:
(i) permissive indemnification for expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by designated persons, including
directors and officers of a corporation, in the event such
persons are parties to litigation other than stockholder
derivative actions if certain conditions are met;
(ii) permissive indemnification for expenses (including attorneys'
fees) actually and reasonably incurred by designated persons,
including directors and officers of a corporation, in the event
such persons are parties to stockholder derivative actions if
certain conditions are met;
(iii) mandatory indemnification for expenses (including attorneys'
fees) actually and reasonably incurred by designated persons,
including directors and officers of a corporation, in the event
such persons are successful on the merits or otherwise in defense
of litigation covered by (i) and (ii) above; and
(iv) that the indemnification provided for by Section 145 is not
deemed exclusive of any other rights which may be provided under
any by-law, agreement, stockholder or disinterested director
vote, or otherwise.
In addition to the indemnification provisions of the DGCL described above,
our Certificate of Incorporation (the "Certificate of Incorporation") provides
that we shall, to the fullest extent permitted by the DGCL, (i) indemnify our
officers and directors and (ii) advance expenses incurred by such officers or
directors in relation to any action, suit or proceeding.
Our Bylaws (the "Bylaws") require the advancement of expenses to an
officer or director (without a determination as to his conduct) in advance of
the final disposition of a proceeding if such person furnishes a written
affirmation of his good faith belief that he has met the applicable standard of
conduct and furnishes a written undertaking to repay any advances if it is
ultimately determined that he is not entitled to indemnification. In connection
with proceedings by or in the right of the Registrant, the Bylaws provide that
indemnification shall include not only reasonable expenses, but also judgments,
fines, penalties and amounts paid in settlement. The Bylaws provide that the
Registrant may, subject to authorization on a case by case basis, indemnify and
advance expenses to employees or agents to the same extent as a director or to
a lesser extent (or greater, as permitted by law) as determined by the board of
directors.
The Bylaws purport to confer upon officers and directors contractual
rights to indemnification and advancement of expenses as provided therein.
II-1
Our Certificate of Incorporation limits the personal liability of our
directors to us or our stockholders for monetary damages for breach of the
fiduciary duty as a director, other than liability as a director (i) for breach
of duty of loyalty to us or our stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL (certain illegal distributions) or
(iv) for any transaction for which the director derived an improper personal
benefit.
We maintain officers' and directors' insurance covering certain
liabilities that may be incurred by officers and directors in the performance
of their duties.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrants have 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.
ITEM 16. EXHIBITS
The following exhibits are filed as part of this registration statement:
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------
1.1 Form of Debt Underwriting Agreement*
1.2 Form of Equity Underwriting Agreement*
1.3 Form of Preferred Stock Underwriting Agreement*
1.4 Form of Warrants Underwriting Agreement*
1.5 Form of Stock Purchase Units Underwriting Agreement*
1.6 Form of Stock Purchase Contracts Underwriting Agreement*
4.1 Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 of L-3
Communications Holdings, Inc.'s Registration Statement on Form S-1, as filed with the
Commission on February 27, 1998 (File No. 333-46975))
4.2 By-laws (incorporated herein by reference to Exhibit 3.2 of L-3 Communications Holdings,
Inc.'s Registration Statement on Form S-1, as filed with the Commission on February 27,
1998 (File No. 333-46975))
4.3 Form of stock certificate (incorporated herein by reference to Exhibit 4.1 of L-3
Communications Holdings, Inc.'s Registration Statement on Form S-1 (File No. 333-46975))
4.4 Stockholders Agreement dated as of April 30, 1997 among L-3 Communications Holdings,
Inc. and the stockholders parties thereto (incorporated by reference to Exhibit 10.3 to L-3
Communications Holdings, Inc.'s Registration Statement on Form S-1 No. 333-46975)
4.5 Form of L-3 Communications Holdings Indenture**
4.6 Form of L-3 Communications Corporation Indenture**
4.7 Form of L-3 Communications Holdings Debt Security*
4.8 Form of L-3 Communications Corporation Debt Security*
4.9 Form of Guarantee under Holdings Indenture*
4.10 Form of Guarantee under Communications Indenture*
4.11 Form of preferred stock share certificate.*
4.12 Form of Purchase Contract Agreement relating to stock purchase contracts and stock
purchase units*
4.13 Form of Pledge Agreement for stock purchase contracts and stock purchase units.*
4.14 Form of Warrant Agreement*
5.1 Opinion of Simpson Thacher & Bartlett**
12 Statements re: Computation of Ratios***
23.1 Consent of PricewaterhouseCoopers LLP with respect to the combined financial statements
of Aircraft Integration Systems Business****
23.2 Consent of Simpson Thacher & Bartlett (contained in their opinion filed as Exhibit 5.1)
24 Power of Attorney of L-3 Communications Holdings, Inc., L-3 Communications Corporation
and the Additional Registrants (included on the signature pages to the initial registration
statement)
25.1 Statement of Eligibility of Trustee on Form T-1 under the Holdings Indenture**
25.2 Statement of Eligibility of Trustee on Form T-1 under the Communications Indenture**
- ----------
* To be filed with a subsequent 8-K
** Filed with the initial registration statement
*** Filed with Amendment No. 1 to the registration statement
**** Filed herewith
II-2
ITEM 17. UNDERTAKINGS
(a) 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;
(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 that a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by a registrant of expenses
incurred or paid by a director, officer or controlling person of
such registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel 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 Securities Act
and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the
registrant's Annual Report on Form 10-K pursuant to section 13(a) or
section 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.
(d) 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 in
accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Trust Indenture Act.
II-3
(e) That for purposes of determining any liability under the Securities
Act, 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 registrants 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.
(f) That for the purpose of determining any liability under the
Securities Act, 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and duly caused this Amendment No. 2 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of New York, state of New York, on May 24, 2002.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: /s/ Christopher C. Cambria
------------------------------------
Christopher C. Cambria, Senior Vice President --
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- -------------------------- ---------------------------------------- -------------
* Chairman, Chief Executive Officer and May 24, 2002
----------------------- Director
Frank C. Lanza
* President, Chief Financial Officer and May 24, 2002
----------------------- Director
Robert V. LaPenta
* Senior Vice President -- Finance May 24, 2002
-----------------------
Michael T. Strianese
* Director May 24, 2002
-----------------------
Thomas A. Corcoran
* Director May 24, 2002
-----------------------
Robert B. Millard
* Director May 24, 2002
-----------------------
John E. Montague
* Director May 24, 2002
-----------------------
John M. Shalikashvili
* Director May 24, 2002
-----------------------
Arthur L. Simon
* Director May 24, 2002
-----------------------
Alan H. Washkowitz
* By: /s/ Christopher C. Cambria
----------------------
Christopher C. Cambria
Attorney-In-Fact
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and duly caused this Amendment No. 2 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of New York, state of New York, on May 24, 2002.
L-3 COMMUNICATIONS CORPORATION
By: /s/ Christopher C. Cambria
------------------------------------
Christopher C. Cambria, Senior Vice President --
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------- ---------------------------------------- -------------
* Chairman, Chief Executive Officer and May 24, 2002
- ----------------------- Director
Frank C. Lanza
* President, Chief Financial Officer and May 24, 2002
- ----------------------- Director
Robert V. LaPenta
* Senior Vice President -- Finance May 24, 2002
- -----------------------
Michael T. Strianese
* Director May 24, 2002
- -----------------------
Thomas A. Corcoran
* Director May 24, 2002
- -----------------------
Robert B. Millard
* Director May 24, 2002
- -----------------------
John E. Montague
* Director May 24, 2002
- -----------------------
John M. Shalikashvili
* Director May 24, 2002
- -----------------------
Arthur L. Simon
* Director May 24, 2002
- -----------------------
Alan H. Washkowitz
* By: /s/ Christopher C. Cambria
----------------------
Christopher C. Cambria
Attorney-In-Fact
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
registrants certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York, state of New
York, on May 24, 2002.
ELECTRODYNAMICS, INC.
L-3 COMMUNICATIONS DBS MICROWAVE, INC.
L-3 COMMUNICATIONS STORM CONTROL
SYSTEMS, INC.
MICRODYNE CORPORATION
By: /s/ Christopher C. Cambria
------------------------------------
Christopher C. Cambria, Vice President
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ ---------------------------------------- -------------
* Chief Executive Officer and Director May 24, 2002
-----------------------
Frank C. Lanza
* Chief Financial Officer and Director May 24, 2002
-----------------------
Robert V. LaPenta
/s/ Christopher C. Cambria Vice President, Secretary and Director May 24, 2002
-----------------------
Christopher C. Cambria
* By: /s/ Christopher C. Cambria
----------------------
Christopher C. Cambria
Attorney-In-Fact
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
registrants certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York, state of New
York, on May 24, 2002.
AMI INSTRUMENTS, INC.
APCOM, INC.
CELERITY SYSTEMS INCORPORATED
COLEMAN RESEARCH CORPORATION
EER SYSTEMS, INC.
HENSCHEL INC.
HYGIENETICS ENVIRONMENTAL
SERVICES, INC.
INTERSTATE ELECTRONICS CORPORATION
KDI PRECISION PRODUCTS, INC.
L-3 COMMUNICATIONS AIS GP CORPORATION
L-3 COMMUNICATIONS ANALYTICS CORPORATION
L-3 COMMUNICATIONS ATLANTIC SCIENCE AND
TECHNOLOGY CORPORATION
L-3 COMMUNICATIONS AYDIN CORPORATION
L-3 COMMUNICATIONS ESSCO, INC.
L-3 COMMUNICATIONS ILEX SYSTEMS, INC.
L-3 COMMUNICATIONS INVESTMENTS, INC.
L-3 COMMUNICATIONS SPD
TECHNOLOGIES, INC.
MICRODYNE COMMUNICATIONS TECHNOLOGIES
INCORPORATED
MICRODYNE OUTSOURCING INCORPORATED
MPRI, INC.
PAC ORD INC.
POWER PARAGON, INC.
SPD ELECTRICAL SYSTEMS, INC.
SPD HOLDINGS, INC.
SPD SWITCHGEAR INC.
SOUTHERN CALIFORNIA MICROWAVE, INC.
By: /s/ Christopher C. Cambria
--------------------------------------
Christopher C. Cambria, Vice President
and Secretary
II-8
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ ----------------------------- -------------
* Chief Executive Officer May 24, 2002
-----------------------
Frank C. Lanza
* Chief Financial Officer May 24, 2002
-----------------------
Robert V. LaPenta
/s/ Christopher C. Cambria Vice President and Director May 24, 2002
-----------------------
Christopher C. Cambria
* By: /s/ Christopher C. Cambria
----------------------
Christopher C. Cambria
Attorney-In-Fact
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
registrants certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York, state of New
York, on May 24, 2002.
L-3 COMMUNICATIONS INTEGRATED SYSTEMS L.P.
By: L-3 COMMUNICATIONS AIS GP CORPORATION,
as General Partner
By: /s/ Christopher C. Cambria
------------------------------------------
Name: Christopher C. Cambria
Title: Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ ----------------------------- -------------
* Chief Executive Officer May 24, 2002
-----------------------
Frank C. Lanza
* Chief Financial Officer May 24, 2002
-----------------------
Robert V. LaPenta
/s/ Christopher C. Cambria Vice President and Director May 24, 2002
-----------------------
Christopher C. Cambria
* By: /s/ Christopher C. Cambria
----------------------
Christopher C. Cambria
Attorney-In-Fact
II-10
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- -------- ---------------------------------------------------------------------------------------------
1.1 Form of Debt Underwriting Agreement*
1.2 Form of Equity Underwriting Agreement*
1.3 Form of Preferred Stock Underwriting Agreement*
1.4 Form of Warrants Underwriting Agreement*
1.5 Form of Stock Purchase Units Underwriting Agreement*
1.6 Form of Stock Purchase Contracts Underwriting Agreement*
4.1 Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 of L-3
Communications Holdings, Inc.'s Registration Statement on Form S-1, as filed with the
Commission on February 27, 1998 (File No. 333-46975))
4.2 By-laws (incorporated herein by reference to Exhibit 3.2 of L-3 Communications Holdings,
Inc.'s Registration Statement on Form S-1, as filed with the Commission on February 27, 1998
(File No. 333-46975))
4.3 Form of stock certificate (incorporated herein by reference to Exhibit 4.1 of L-3
Communications Holdings, Inc.'s Registration Statement on Form S-1 (File No. 333-46975))
4.4 Stockholders Agreement dated as of April 30, 1997 among L-3 Communications Holdings, Inc.
and the stockholders parties thereto (incorporated by reference to Exhibit 10.3 to L-3
Communications Holdings, Inc.'s Registration Statement on Form S-1 No. 333-46975)
4.5 Form of L-3 Communications Holdings Indenture**
4.6 Form of L-3 Communications Corporation Indenture**
4.7 Form of L-3 Communications Holdings Debt Security*
4.8 Form of L-3 Communications Corporation Debt Security*
4.9 Form of Guarantee under Holdings Indenture*
4.10 Form of Guarantee under Communications Indenture*
4.11 Form of Preferred Stock share certificate*
4.12 Form of Purchase Contract Agreement relating to stock purchase contracts and stock purchase
units*
4.13 Form of Pledge Agreement for stock purchase contracts and stock purchase units*
4.14 Form of Warrant Agreement*
5.1 Opinion of Simpson Thacher & Bartlett**
12 Statements re: Computation of Ratios***
23.1 Consent of PricewaterhouseCoopers LLP with respect to the combined financial statements of
Aircraft Integration Systems Business****
23.2 Consent of Simpson Thacher & Bartlett (contained in their opinion filed as Exhibit 5.1)
24 Power of Attorney of L-3 Communications Holdings, Inc., L-3 Communications Corporation
and the Additional Registrants (included on the signature pages to the initial registration
statement)
25.1 Statement of Eligibility of Trustee on Form T-1 under the Holdings Indenture**
25.2 Statement of Eligibility of Trustee on Form T-1 under the Communications Indenture**
- ----------
* To be filed with a subsequent 8-K
** Filed with the initial registration statement
*** Filed with Amendment No. 1 to the registration statement
**** Filed herewith