As Filed with the Securities and Exchange Commission on July 2, 2001
Registration No. 333-62044
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
NEW YORK FLOWSERVE CORPORATION 31-0267900
(State or other (Exact name of Registrant (I.R.S. Employer
jurisdiction of as specified in its charter) Identification No.)
incorporation of
organization)
-----------------------------
DELAWARE FLOWSERVE US INC. 75-2778918
DELAWARE FLOWSERVE INTERNATIONAL, INC. 95-3887956
DELAWARE FLOWSERVE HOLDINGS, INC. 75-2737169
DELAWARE BW/IP-NEW MEXICO, INC. 85-0429772
DELAWARE INGERSOLL-DRESSER PUMP COMPANY 22-3191012
DELAWARE FLOWSERVE INTERNATIONAL L.L.C. NONE
DELAWARE FLOWSERVE MANAGEMENT COMPANY 75-2737324
DELAWARE CFM-V.R. TESCO INC. 75-2802692
UNITED KINGDOM FLOWSERVE INTERNATIONAL LIMITED NONE
THE NETHERLANDS FLOWSERVE FINANCE B.V. NONE
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation of
organization)
---------------------------
222 WEST LAS COLINAS BOULEVARD, SUITE 1500
IRVING, TEXAS 75039
972-443-6500
(Address, including zip code, and telephone number,
including area code, of Flowserve Corporation's
principal executive offices)
-----------------------------
RONALD F. SHUFF, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
FLOWSERVE CORPORATION
222 WEST LAS COLINAS BOULEVARD
SUITE 1500
IRVING, TEXAS 75039
972-443-6500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
STEPHEN L. BURNS
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement, as
determined by the Registrants.
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 this prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================================================================================================
AMOUNT PROPOSED
TO BE PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF REGISTERED (1) OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED (2) PER OFFERING PRICE REGISTRATION FEE
Unit (1) (2) (1) (3) (4)*
- --------------------------------------------------------------------------------------------------------------------
Common Stock, par value $1.25 per share(5)
- --------------------------------------------------------------------------------------------------------------------
Preferred Stock, par value $1.00 per
share (6)
- --------------------------------------------------------------------------------------------------------------------
Debt Securities
- --------------------------------------------------------------------------------------------------------------------
Guarantees of Debt Securities, of the
Guarantors
(as defined below) (7)
====================================================================================================================
TOTAL $500,000,000 $125,000
====================================================================================================================
* Previously paid on May 31, 2001.
(1) There are being registered under this Registration Statement such
indeterminate number of shares of common stock and preferred stock of
Flowserve Corporation, and such indeterminate principal amount of debt
securities and guarantees of debt securities of the Registrants, as shall
have an aggregate initial offering price not to exceed $500,000,000. If
any debt securities are issued at an original issue discount, then the
securities registered shall include such additional debt securities as
may be necessary such that the aggregate public offering price of all
securities issued pursuant to this Registration Statement will equal
$500,000,000. Any securities registered under this Registration Statement
may be sold separately or as units with other securities registered under
this Registration Statement. The proposed maximum offering prices per
unit will be determined, from time to time, by the Registrants in
connection with the issuance by the Registrants of the securities
registered under this Registration Statement.
(2) Not specified with respect to each class of securities to be registered
pursuant to General Instruction II.D of Form S-3 under the Securities
Act.
(3) The proposed maximum offering price has been estimated solely for
purposes of calculating the registration fee pursuant to Rule 457. Any
offering of debt securities denominated in any foreign currency or
currency unit will be treated as the equivalent in U.S. dollars based on
the exchange rate applicable to the purchase of such debt securities from
the Registrant. No separate consideration will be received for common
stock, preferred stock, or debt securities that are issued upon
conversion or exchange of debt securities or preferred stock registered
hereunder.
(4) Calculated pursuant to Rule 457 of the rules and regulations under the
Securities Act.
(5) Including such indeterminate number of shares of common stock as may from
time to time be issued (i) at indeterminate prices or (ii) upon
conversion or exchange of debt securities or preferred stock registered
hereunder, to the extent any of such debt securities or shares of
preferred stock are, by their terms, convertible into common stock.
(6) Including such indeterminate number of shares of preferred stock as may
from time to time be issued (i) at indeterminate prices or (ii) upon
conversion or exchange of debt securities registered hereunder, to the
extent any such debt securities are, by their terms, convertible into
preferred stock.
(7) Subject to Note (1) above, there is being registered hereunder an
indeterminate principal amount of guarantees of debt securities to be
issued by one or more of Flowserve US Inc., Flowserve International,
Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc., Ingersoll-Dresser
Pump Company, Flowserve International L.L.C., Flowserve Management
Company, CFM-V.R. Tesco Inc., Flowserve International Limited and
Flowserve Finance B.V. Pursuant to Rule 457(n), no separate fee is
required to be paid in respect of guarantees of debt securities which are
being registered concurrently.
- --------------------------------------------------------------------------------
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
===============================================================================
SUBJECT TO COMPLETION, DATED JULY 2, 2001
PROSPECTUS
$500,000,000
FLOWSERVE CORPORATION
We may sell, from time to time, any of the following securities:
--Common stock
--Preferred stock
--Debt securities
Our common stock is listed on the New York Stock Exchange under the
symbol "FLS."
The debt securities of Flowserve Corporation may be fully,
unconditionally and irrevocably guaranteed by one or more of Flowserve US
Inc., Flowserve International, Inc., Flowserve Holdings, Inc., BW/IP-New
Mexico, Inc., Ingersoll-Dresser Pump Company, Flowserve International L.L.C.,
Flowserve Management Company, CFM-V.R. Tesco Inc., Flowserve International
Limited and Flowserve Finance B.V.
We will provide the specific terms of these securities in one or more
prospectus supplements to this prospectus. You should read this prospectus and
any applicable prospectus supplement carefully before you invest.
The securities offered by this prospectus may be issued in one or more
series or issuances and will be limited to $500,000,000 in aggregate public
offering price (or its equivalent, based on the applicable exchange rate, to
the extent debt securities are issued for one or more foreign currencies or
currency units). The securities may be sold for U.S. dollars, or any foreign
currency or currencies or currency units, and the principal of, any premium
on, and any interest on, the debt securities may be payable in U.S. dollars,
or any foreign currency or currencies or currency units.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
We may offer these securities to or through underwriters, through dealers
or agents, directly to you or through a combination of these methods. You can
find additional information about our plan of distribution for the securities
under the heading "Plan of Distribution" in this prospectus. We also may
describe the plan of distribution for any particular offering of these
securities in any applicable prospectus supplement. This prospectus may not be
used to sell our securities unless it is accompanied by a prospectus
supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2001.
Red Herring Text
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell nor does it seek an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS.................................................. 1
WHERE YOU CAN FIND MORE INFORMATION .................................. 2
INCORPORATION OF INFORMATION WE FILE WITH THE SEC...................... 2
FORWARD-LOOKING STATEMENTS............................................. 3
ABOUT FLOWSERVE CORPORATION............................................ 4
RISK FACTORS........................................................... 5
USE OF PROCEEDS........................................................ 9
RATIO OF EARNINGS TO FIXED CHARGES..................................... 10
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES.......................... 10
DESCRIPTION OF CAPITAL STOCK........................................... 21
PLAN OF DISTRIBUTION................................................... 24
VALIDITY OF SECURITIES................................................. 26
EXPERTS................................................................ 26
---------------------
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC utilizing a "shelf" registration process, which allows us to offer and
sell any combination of the securities described in this prospectus in one or
more offerings. Using this prospectus, we may offer up to a total dollar
amount of $500,000,000 of securities.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will describe the specific terms of the securities we are
offering. Each supplement will also contain specific information about the
terms of the offering it describes. The prospectus supplement may also add to,
update or change the information contained in this prospectus. In addition, as
we describe in the section entitled "Where You Can Find More Information,"
Flowserve Corporation has filed and plans to continue to file other documents
with the SEC that contain information about it and the business conducted by
it and its subsidiaries. Before you decide whether to invest in any of the
securities offered by this prospectus, you should read this prospectus, the
prospectus supplement that further describes the offering of those securities
and the information Flowserve Corporation otherwise files with SEC.
---------------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to
provide you with different information. We will not make an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate only as of the date on the cover page.
In this prospectus, references to "Company," "we," "us" and "our," refer
to Flowserve Corporation and its subsidiaries, unless the context otherwise
requires. References to "Flowserve" refer to Flowserve Corporation. The phrase
"this prospectus" refers to this prospectus and any applicable prospectus
supplement, unless the context otherwise requires. References to "securities"
refer collectively to the common stock, preferred stock, debt securities and
guarantees of debt securities offered by this prospectus.
1
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with SEC under the Securities Exchange Act of 1934. You may read
and copy any document we file at the following SEC public reference rooms:
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Judiciary Plaza Suite 1300 500 West Madison Street
Room 1024 New York, NY 10048 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661
You may also inspect and copy our SEC filings, the complete registration
statement and other information at the offices of the New York Stock Exchange
located at 20 Broad Street, 16th Floor, New York, New York 10005.
You may obtain information on the operation of the public reference room
in Washington, D.C. by calling the SEC at 1-800-SEC-0330.
We file information electronically with the SEC. Our SEC filings also are
available from the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements, and other information regarding
issuers that file electronically.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we may disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file after the
date of this prospectus will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until all of the securities described in
this prospectus are sold:
o The audited financial statements of Ingersoll-Dresser Pump Company,
contained on pages F-70 through F-99 in our Registration Statement
on Form S-4, as amended (File No. 333-46760), filed on September 27,
2000;
o Our Annual Report on Form 10-K for the year ended December 31, 2000;
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001; and
o Our Current Report on Form 8-K, filed May 31, 2001.
You may request a copy of these filings (other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing) at no cost, by writing or telephoning us at the following address:
Flowserve Corporation
222 West Las Colinas Boulevard, Suite 1500
Irving, Texas 75039
Attention: Corporate Secretary
972-443-6543
2
This prospectus is part of a registration statement we filed with the
SEC. This prospectus does not contain all of the information contained in the
registration statement and all of the exhibits and schedules thereto. For
further information about Flowserve, please see the complete registration
statement. Any statement made in this prospectus concerning the contents of
any agreement or other document is only a summary of the actual document. If
we have filed any agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more complete
understanding of the document or the matter involved. Each statement regarding
an agreement or other document is qualified in its entirety by reference to
the actual document.
FORWARD-LOOKING STATEMENTS
This prospectus contains various forward-looking statements and includes
assumptions about future market conditions, operations and results. Any
statement that is not historical fact is a forward-looking statement. These
statements are based on current expectations and are subject to significant
risks and uncertainties. They are made pursuant to safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Among the many factors
that could cause actual results to differ materially from the forward-looking
statements are:
o changes in the already competitive environment for our products or
competitors' responses to our strategies;
o the health of the petroleum, chemical, water treatment and power
generation industries and general industrial markets;
o economic conditions and the extent of economic growth in areas outside
and inside the United States;
o political risks or trade embargoes affecting important country
markets;
o our ability to successfully complete the integration of the
acquisition of Ingersoll-Dresser Pump Company ("IDP") into our
management and operations and fully realize anticipated synergies
and cost savings;
o the recognition of remaining expenses associated with adjustments to
realign our combined Flowserve and IDP facilities and other
capabilities with our strategic objectives and business conditions
including, without limitation, expenses incurred in restructuring and
integrating our operations to incorporate IDP's facilities;
o our ability to meet the financial covenants and other requirements
of our financing agreements;
o technological developments in our products as compared to those of
our competitors;
o changes in prevailing interest rates and the effective interest cost
which we bear; and
o adverse changes in the regulatory climate and other legal
obligations imposed on Flowserve.
Accordingly, you should not rely on the accuracy of predictions contained
in forward-looking statements. Further, we undertake no obligation to publicly
update or revise any forward-looking statement as a result of new information,
future events or otherwise.
3
ABOUT FLOWSERVE CORPORATION
We are among the largest manufacturers and aftermarket service providers
of comprehensive flow control systems in the world. We have been in the flow
control industry for over 125 years. We develop and manufacture
precision-engineered flow control equipment for critical service applications
where high reliability is required. The flow control system components we
produce include pumps, valves and mechanical seals. Our products and services
are used in several industries, including petroleum, chemical, power
generation and water treatment.
We conduct our operations through three divisions that encompass our
primary product types: (1) Pump Division, (2) Flow Solutions Division and
(3) Flow Control Division. Our Pump Division supplies engineered and industrial
pumps. Through our Flow Solutions Division, we provide mechanical seals and
aftermarket services. Our Flow Control Division supplies valves and related
products. Through each of our segments, we provide aftermarket replacement
parts.
Through our Pump Division ("Pump"), we design, manufacture and distribute
engineered and industrial pumps and pump systems, replacement parts and related
equipment principally to industrial markets. Pump's products and services are
primarily used by companies that operate in the petroleum, chemical processing,
power generating, water treatment and general industrial markets. Following the
completion of the facilities rationalization in connection with the acquisition
of IDP, we will manufacture our pump systems and components at eight plants in
the United States, one in Canada, three in Latin America, ten in Europe and the
Middle East and one in Asia. We also manufacture a small portion of our pumps
through several foreign joint ventures. We market our pump products, which are
primarily sold to end users and engineering and construction companies, through
our worldwide sales force, regional service and repair centers, independent
distributors and sales representatives.
Through our Flow Solutions Division ("FSD"), we design, manufacture and
distribute mechanical seals and sealing systems and provide parts, repair and
services for flow control equipment used in process industries. Flow control
products require mechanical seals to be replaced throughout the products'
useful lives as the function of a seal is to prevent leakage of a fluid. The
replacement of mechanical seals is an integral part of aftermarket services.
Our mechanical seals are used on a variety of pumps, mixers, compressors,
steam turbines and specialty equipment, primarily in the petroleum, chemical
processing, power generation, water treatment industries and general
industrial end-markets. We manufacture mechanical seals through two plants in
the United States, three in Europe and the Middle East, two in Latin America
and three in Asia. Through FSD's global network of service and quick response
centers, we provide service, repair and diagnostic services for maintaining
flow control systems components.
Through our Flow Control Division ("FCD"), we design, manufacture and
distribute valves, actuators and related equipment. FCD's valve products are
an integral part of a flow control system and are used to control the flow of
liquids and gases. Substantially all of FCD's valves are specialized and
engineered to perform specific functions within a flow control system. FCD's
products are primarily used by companies that operate in the petroleum,
chemical and power generation industries. We manufacture valves and actuators
through four plants in the United States, six in Europe and three in other
regions. We also manufacture a small portion of our valves through a foreign
joint venture. Manual valve products and valve actuators are distributed
through our sales force personnel and a network of distributors. Automatic
control valves are marketed through sales engineers and service and repair
centers or, on a commission basis, through sales representatives in our
principal markets.
Our executive offices are located at 222 West Las Colinas Boulevard,
Suite 1500, Irving, Texas 75039 and our telephone number is (972) 443-6500.
4
RISK FACTORS
You should carefully consider the risks described below in addition to
the other information set forth or incorporated by reference in this
prospectus before making an investment in the securities.
ECONOMIC, POLITICAL AND OTHER RISKS ASSOCIATED WITH INTERNATIONAL SALES AND
OPERATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
Since we sell our products worldwide, our business is subject to risks
associated with doing business internationally. Our sales originating outside
the United States, as a percentage of our total sales, was 42% in 1999 and 38%
in 2000. On a pro forma basis, (which includes IDP for the full year) our sales
originating outside the United States, as a percentage of total sales, were 40%
in 2000. Accordingly, our future results could be harmed by a variety of
factors, including:
o changes in foreign currency exchange rates;
o changes in a specific country's or region's political or economic
conditions, particularly in emerging markets;
o trade protection measures and import or export licensing
requirements;
o potentially negative consequences from changes in tax laws;
o difficulty in staffing and managing widespread operations;
o differing labor regulations;
o differing protection of intellectual property; and
o unexpected changes in regulatory requirements.
OUR OPERATING RESULTS COULD BE HARMED DURING ECONOMIC DOWNTURNS.
The businesses of most of our industrial customers, particularly
refineries, chemical companies and power plants, are, to varying degrees,
cyclical and have historically experienced periodic downturns. Margins in
those industries are highly sensitive to demand cycles, and our customers in
those industries historically have tended to delay large capital projects,
including expensive maintenance and upgrades, during economic downturns. For
example, due to the simultaneous decline in oil and chemical prices in 1998
and 1999, many of our key customers significantly reduced their capital
spending, which resulted in declines in our revenues and net earnings during
those years. These industry downturns have been characterized by diminished
product demand, excess manufacturing capacity and subsequent accelerated
erosion of average selling prices in the flow control industry. Therefore, any
significant downturn in our customers' markets or in general economic
conditions could result in a reduction in demand for our products and services
and could harm our business.
WE FACE INTENSE COMPETITION.
We encounter intense competition in all areas of our business.
Additionally, customers for our products are attempting to reduce the number
of vendors from which they purchase in order to reduce the size and diversity
of their inventory. To remain competitive, we will need to invest continuously
in manufacturing, marketing, customer service and support and our distribution
networks. We anticipate that we may have to adjust the prices of some of our
products to stay competitive. We cannot assure you that
5
we will have sufficient resources to continue to make such investments or that
we will maintain our competitive position.
ENVIRONMENTAL COMPLIANCE COSTS AND LIABILITIES COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION.
Our operations and properties are subject to increasingly stringent laws
and regulations relating to environmental protection, including laws and
regulations governing air emissions, water discharges, waste management and
workplace safety. Such laws and regulations can impose substantial fines and
sanctions for violations and require the installation of costly pollution
control equipment or operational changes to limit pollution emissions and/or
decrease the likelihood of accidental hazardous substance releases. We must
conform our operations and properties to these laws, and adapt to regulatory
requirements in all countries as these requirements change. In connection with
the IDP acquisition, we believe that we may be required to incur costs to
bring the former IDP properties into compliance with applicable requirements.
We use and generate hazardous substances and wastes in our manufacturing
and foundry operations. In addition, many of our current and former properties
are or have been used for industrial purposes. Accordingly, we are conducting
investigation and remediation activities at several on-site and off-site
locations. We also may be subject to potentially material liabilities relating
to the investigation and clean-up of contaminated properties and to claims
alleging personal injury.
We have experienced, and expect to continue to experience, operating
costs to comply with environmental laws and regulations. In addition, 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 could require us to incur costs or become the basis for
new or increased liabilities that could have a material adverse effect on our
business, financial condition or results of operations.
OUR BUSINESS COULD SUFFER IF WE ARE UNSUCCESSFUL IN NEGOTIATING NEW COLLECTIVE
BARGAINING AGREEMENTS.
As of December 31, 2000, we had approximately 10,000 employees. Our
operations in the following countries are unionized: Argentina, Austria,
Belgium, Brazil, Canada, France, Germany, Italy, Mexico, The Netherlands,
Spain and the United Kingdom. We also have five unionized plants in the U.S.
Approximately 8% of our 6,000 U.S. employees are represented by unions.
Although we believe that our relations with our employees are good and we have
not experienced any recent strikes or work stoppages, we cannot assure you
that we will be successful in negotiating new collective bargaining
agreements, that such negotiations will not result in significant increases in
the cost of labor or that a breakdown in such negotiations will not result in
the disruption of our operations. In addition, our closures of certain
facilities may create the risk of strikes or work stoppages at those and other
facilities.
THIRD PARTIES MAY INFRINGE OUR INTELLECTUAL PROPERTY, AND WE MAY EXPEND
SIGNIFICANT RESOURCES ENFORCING OUR RIGHTS OR SUFFER COMPETITIVE INJURY.
Our success depends in part on our proprietary technology. We rely on a
combination of patents, copyrights, trademarks, trade secrets, confidentiality
provisions and licensing arrangements to establish and protect our proprietary
rights. If we fail to successfully enforce our intellectual property rights,
our competitive position could suffer, which could harm our operating results.
We may be required to spend significant resources to monitor and police our
intellectual property rights.
6
OUR SUCCESS WILL CONTINUE TO DEPEND TO A SIGNIFICANT EXTENT ON OUR EXECUTIVES
AND OTHER KEY PERSONNEL.
Our future success depends to a significant degree on the skills,
experience and efforts of our senior management and other key personnel. The
loss of the services of any of these individuals could adversely affect our
results of operations and our ability to implement our business strategy.
WE ARE DEPENDENT ON THE AVAILABILITY OF RAW MATERIALS AND ELECTRIC POWER.
We require substantial amounts of raw materials and electric power.
Substantially all raw materials and all electric power we require are purchased
from outside sources. The availability and prices of raw materials and electric
power may be subject to curtailment or change due to, among other things, new
laws or regulations, suppliers' allocations to other purchasers, interruptions
in production by suppliers, changes in exchange rates and prevailing price
levels. Any change in the supply of, or price for, these raw materials or
electric power could materially affect our operating results.
WE ARE SUBJECT TO THE EFFECTS OF FLUCTUATIONS IN FOREIGN EXCHANGE RATES.
We are exposed to fluctuations in foreign currencies as a significant
portion of our revenue, and certain of our costs, assets and liabilities, are
denominated in currencies other than U.S. dollars. Our ability to pay interest
and principal on dollar-denominated indebtedness when due is dependent on the
then current exchange rates between U.S. dollars, on the one hand, and the euro
and other European as well as Asian currencies, on the other hand, which rates
are and will be subject to fluctuation. During 2000, approximately 38% of our
actual revenue and 40% of our pro forma revenue (which includes IDP for the full
year) were from sales originating outside the United States. Our share of
revenue in non-dollar denominated currencies may continue to increase in future
periods. We can offer no assurance, however, that exchange rate fluctuations
will not have a material adverse effect on our results of operations and
financial condition and therefore on our ability to make principal and interest
payments on our indebtedness, including any dollar-denominated debt securities
we may issue, when due.
OUR LEVERAGE COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH, MAKE US VULNERABLE
TO ADVERSE ECONOMIC AND INDUSTRY CONDITIONS AND PREVENT US FROM FULFILLING OUR
OBLIGATIONS UNDER DEBT SECURITIES CURRENTLY OUTSTANDING OR ISSUED PURSUANT TO
THIS PROSPECTUS.
We have incurred significant indebtedness that is substantial in relation
to shareholder's equity. As of March 31, 2001, we had approximately $1,168.1
million outstanding consolidated debt. Total net debt (total debt less
cash and equivalents) was 81.9% of our capital structure as of March 31, 2001.
Our substantial indebtedness could have important consequences to you. For
example, it could:
o make it more difficult for us to satisfy our obligations with
respect to any additional debt securities;
o increase our vulnerability to general adverse economic and industry
conditions;
o require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general
corporate purposes;
o limit our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate;
7
o place us at a competitive disadvantage relative to our competitors
that have less debt; and
o limit, along with the financial and other restrictive covenants in
our indebtedness, our ability to borrow additional funds, among
other things.
Subject to the restrictions in our debt agreements, we may also borrow more
money from time to time, which could further exacerbate the effect of any of the
consequences described above. Furthermore, failing to comply with those
covenants could result in an event of default which, if not cured or waived,
could have a material adverse effect on our business, financial condition and
results of operations.
THE SENIOR CREDIT FACILITIES AND THE INDENTURES GOVERNING OUR OUTSTANDING DEBT
SECURITIES CONTAIN VARIOUS COVENANTS WHICH LIMIT MANAGEMENT'S DISCRETION IN
THE OPERATION OF OUR BUSINESS.
The senior credit facilities and the indentures governing our current
outstanding debt contain various provisions that limit management's discretion
in operating our businesses by restricting their ability, among other things,
to:
o incur additional debt;
o pay dividends and make other distributions;
o prepay subordinated debt, make investments and other restricted
payments;
o enter into sale and leaseback transactions;
o create liens;
o sell assets; and
o enter into transactions with affiliates.
WE MAY NOT BE ABLE TO FULLY INTEGRATE THE BUSINESS OF IDP TO ACHIEVE ALL
EXPECTED SYNERGIES.
Our future success will depend in part on our ability to successfully
complete the integration of the businesses of IDP into Flowserve's operations.
The combination of Flowserve and IDP involves the integration of companies that
had previously operated independently. The remaining integration process may be
disruptive to the businesses and may cause an interruption of, or a loss of
momentum in, the businesses as a result of a number of obstacles such as:
o loss of key employees or customers;
o failure to maintain the quality of customer service that such
companies have historically provided;
o the need to coordinate geographically diverse organizations;
o retooling and reprogramming of equipment; and
o the resulting diversion of management's attention from our
day-to-day business and the need to hire additional management
personnel to address integration obstacles.
8
If we are not able to successfully complete this combination, if the
combination takes longer than anticipated, or if our integrated product and
service offering fails to achieve market acceptance, our business could be
adversely affected.
WE MAY NOT BE ABLE TO FULLY REALIZE THE ANTICIPATED COST SAVINGS, SYNERGIES OR
REVENUE ENHANCEMENTS FROM COMBINING FLOWSERVE AND IDP, ALTHOUGH WE HAVE INCURRED
SIGNIFICANT CASH INTEGRATION COSTS TO ACHIEVE THESE COST SAVINGS AND WE
ANTICIPATE INCURRING ADDITIONAL COSTS.
Even if we are able to complete the integration of the operations of IDP
into Flowserve successfully, we cannot assure you that we will fully realize the
cost savings, synergies or revenue enhancements that we anticipate from such
integration or that we will fully realize such benefits within the time frame
that we currently expect.
o Whether we can effectively eliminate all redundant administrative
overhead and overlapping sales personnel, rationalize manufacturing
capacity and shift production to more economic facilities is
difficult to predict. Accordingly, the amount and timing of the
remaining available cost savings are inherently difficult to
estimate.
o Any remaining cost savings and other synergies from the transactions
may be offset by remaining costs incurred in integrating the
companies.
o The remaining cost savings, or any cost savings achieved to date,
and other synergies may also be offset by increases in other
expenses, by operating losses or by problems unrelated to the IDP
integration.
o Labor cost savings depend on the ability of the personnel at our
remaining plants to handle their increased workloads at planned
efficiency levels.
o We will still incur significant cash integration costs to fully
achieve these cost savings, in addition to our reported integration
costs to date.
In addition, the Company's existing senior credit facilities require us to
maintain certain financial performance ratios, which will become more
restrictive over time.
If we fail to comply with the restrictions contained in these senior credit
facilities or our existing indentures, the indentures governing any debt
securities issued under this prospectus or any other subsequent financing
agreements, a default may occur. This default may allow some creditors, if their
respective agreements so provide, to accelerate payments owed on such debt as
well as any other indebtedness as to which a cross-acceleration or cross-default
provision applies. In addition, our lenders may be able to terminate any
commitments they had made to supply us with further funds. See "Description of
the Debt Securities and Guarantees."
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities offered
by this prospectus for general corporate purposes, which may include repaying
indebtedness, funding future acquisitions or for any other purposes as may be
described in an accompanying prospectus supplement.
9
RATIO OF EARNINGS TO FIXED CHARGES
The Company was in compliance with all specified financial covenants as
defined in its Credit Agreements at March 31, 2001 and December 31, 2000. These
financial covenants include a fixed charge coverage ratio, an interest coverage
ratio and a leverage ratio.
The following table shows our ratio of earnings to fixed charges for the
periods indicated:
Three Months
Ended
Years Ended December 31, March 31,
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- -----
Ratio of Earnings to Fixed Charges... 7.3 5.9 5.2 1.8 1.3 -
We computed these ratios by dividing fixed charges into the sum of earnings
from continuing operations before income taxes and fixed charges. Fixed charges
consist of interest expense on all indebtedness, amortization of deferred
financing fees and the estimated interest portion of rental expense.
The Company's debt increased in 2000 primarily as the result of financing
the acquisitions of IDP and Innovative Valve Technologies, Inc. and related
integration costs. The ratio of earnings to fixed charges for the year ended
December 31, 2000, was 2.0 excluding integration and restructuring expenses
related to the acquisition of IDP.
The ratio of earnings to fixed charges was adversely impacted in the first
quarter of 2001 by the normal seasonal softness in the engineered pump business
and integration costs associated with the acquisition of IDP. For the three
months ended March 31, 2001, additional earnings of $13.3 million would have
been required to provide a one-to-one coverage ratio during the period. The
ratio of earnings to fixed charges was 1.2, excluding IDP integration expenses,
for the three months ended March 31, 2001.
Because we do not have any preferred stock outstanding, our ratio of
earnings to fixed charges and preferred stock dividends was the same as our
ratio of earnings to fixed charges.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following is a summary of certain general terms and provisions of the
indenture and is not complete. The particular terms of any series of debt
securities we may offer, including the extent to which the general terms and
provisions may apply to that series of debt securities, will be described in a
prospectus supplement relating to those debt securities.
We may issue debt securities from time to time in one or more series. Any
series of debt securities offered by us may be offered together with the
unconditional guarantee of one or more of Flowserve US Inc., Flowserve
International, Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc.,
Ingersoll-Dresser Pump Company, Flowserve International L.L.C., Flowserve
Management Company, CFM-V.R. Tesco Inc., Flowserve International Limited and
Flowserve Finance B.V. (collectively, the "guarantors").
Debt securities may be issued under one or more indentures between
Flowserve, the guarantors and one or more trustees named in the prospectus
supplement (collectively, the "Trustee"). A copy of the form of the indenture is
filed as an exhibit to the registration statement. You should read all of the
provisions of the indenture, including the definitions contained in the
indenture which are not otherwise defined in this prospectus, and the applicable
prospectus supplement. Wherever we refer to particular
10
provisions or defined terms of the indenture, these provisions or defined terms
are incorporated in this prospectus by reference.
General
The debt securities will be our general obligations and may be subordinated
to "senior indebtedness" we have or may incur. The prospectus supplement will
define senior indebtedness and describe the terms of any subordination. Any, or
all of, the guarantors may unconditionally guarantee the payment of the
principal, premium, if any, and interest on the debt securities when due and
payable, whether by acceleration, required repurchase, call for redemption or
otherwise. See "--Guarantees." The prospectus supplement will define the
relative priority of any guarantees. The indenture does not limit the aggregate
principal amount of debt securities which may be issued under it. Debt
securities may be issued under the indenture from time to time in one or more
series.
The applicable prospectus supplement will describe, among other things, the
following terms, to the extent they are applicable to that series of debt
securities:
o the title of the debt securities of the series;
o any limit upon the aggregate principal amount of the debt securities
of the series that may be authenticated and delivered under the
indenture;
o the date or dates on which the principal and premium of the debt
securities of the series are payable;
o the rate or rates (which may be fixed or variable) at which the debt
securities of the series shall bear interest, if any, or the method
of determining such rate or rates, the date or dates from which such
interest, if any, shall accrue, the interest payment dates on which
such interest, if any, shall be payable or the method by which such
dates will be determined, the record dates for the determination of
holders thereof to whom such interest is payable (in the case of
debt securities in registered form), and the basis upon which such
interest will be calculated if other than that of a 360-day year of
twelve 30-day months;
o the currency or currencies, including composite currencies in which
debt securities of the series shall be denominated, if other than
U.S. dollars, the place or places, if any, in addition to or instead
of the corporate trust office of the trustee (in the case of debt
securities in registered form) or the principal New York office of
the trustee (in the case of debt securities in bearer form), where
the principal, premium and interest with respect to debt securities
of such series shall be payable or the method of such payment, if by
wire transfer, mail or other means;
o the price or prices at which, the period or periods within which,
and the terms and conditions upon which, debt securities of the
series may be redeemed, in whole or in part at our option or
otherwise;
o whether debt securities of the series are to be issued in registered
form or bearer form or both and, if debt securities are to be issued
in bearer form, whether coupons will be attached to them, whether
debt securities of the series in bearer form may be exchanged for
debt securities of the series issued in registered form, and the
circumstances under which and the places at which any such
exchanges, if permitted, may be made;
11
o if any debt securities of the series are to be issued in bearer form
or as one or more global securities representing individual debt
securities of the series in bearer form, whether certain provisions
for the payment of additional interest or tax redemptions shall
apply; whether interest with respect to any portion of a temporary
debt security of the series in bearer form payable with respect to
any interest payment date prior to the exchange of such temporary
debt security in bearer form for definitive debt securities of the
series in bearer form shall be paid to any clearing organization
with respect to the portion of such temporary debt security in
bearer form held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be
credited to the persons entitled to interest payable on such
interest payment date; and the terms upon which a temporary debt
security in bearer form may be exchanged for one or more definitive
debt securities of the series in bearer form;
o our obligation, if any, to redeem, purchase or repay the debt
securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a holder of such debt securities and
the price or prices at which, the period or periods within which,
and the terms and conditions upon which, debt securities of the
series shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligations;
o the terms, if any, upon which the debt securities of the series may
be convertible into or exchanged for any of our common stock,
preferred stock, other debt securities or warrants for common stock,
preferred stock or other securities of any kind and the terms and
conditions upon which such conversion or exchange shall be effected,
including the initial conversion or exchange price or rate, the
conversion or exchange period and any other additional provisions;
o if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the debt securities of the
series shall be issuable;
o if the amount of principal, premium or interest with respect to the
debt securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts
will be determined;
o if the principal amount payable at the stated maturity of debt
securities of the series will not be determinable as of any one or
more dates prior to such stated maturity, the amount that will be
deemed to be such principal amount as of any such date for any
purpose, including the principal amount thereof which will be due
and payable upon any maturity other than the stated maturity and
which will be deemed to be outstanding as of any such date (or, in
any such case, the manner in which such deemed principal amount is
to be determined), and if necessary, the manner of determining the
equivalent thereof in U.S. currency;
o any changes or additions to the indenture dealing with defeasance;
o if other than the principal amount thereof, the portion of the
principal amount of the debt securities of the series that shall be
payable upon declaration of acceleration of the maturity thereof or
provable in bankruptcy;
o the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the debt securities of the series of any properties,
assets, moneys, proceeds, securities or other collateral, including
whether certain provisions of the Trust Indenture Act of 1939, as
12
o amended, are applicable and any corresponding changes to provisions
of the indenture as then in effect;
o any addition to or change in the events of default with respect to
the debt securities of the series and any change in the right of the
trustee or the holders to declare the principal amount of, premium,
if any, and interest, with respect to such debt securities due and
payable;
o if the debt securities of the series shall be issued in whole or in
part in the form of a global security, the terms and conditions, if
any, upon which such global security may be exchanged in whole or in
part for other individual debt securities in definitive registered
form, the depositary (as defined in the applicable prospectus
supplement) for such global security and the form of any legend or
legends to be borne by any such global security in addition to or in
lieu of the legend referred to in the indenture;
o any trustee, authenticating agent, paying agent, transfer agent,
service agent or registrar;
o the applicability of, and any addition to or change in, the
covenants (and the related definitions) set forth in the indenture
or in the terms then set forth in the indenture relating to
permitted consolidations, mergers, or sales of assets;
o the names, if any, of the subsidiary guarantors and the terms of the
subsidiary guarantees, including any provisions related to their
subordination;
o the subordination, if any, of the debt securities of the series
pursuant to the indenture and any corresponding changes to the
provisions of the indenture as then in effect;
o with regard to debt securities of the series that do not bear
interest, the dates for certain required reports to the trustee;
o any U.S. Federal income tax consequences applicable to the debt
securities of the series;
o the terms applicable to original issue discount securities,
including the rate or rates at which original issue discount will
accrue; and
o any other terms of debt securities of the series (which terms shall
not be prohibited by the provisions of the indenture).
Debt securities of a series may be issued in registered form or bearer
form or both as specified in the terms of the series, may be issued in whole
or in part in the form of one or more global securities and may be issued as
book-entry securities that will be deposited with, or on behalf of a
depositary named by us and identified in a prospectus supplement with respect
to such series. The prospectus supplement will specify whether the offered
debt securities will be registered, bearer, global or book-entry form.
GUARANTEES
In connection with an offering of a particular series of debt securities,
the prospectus supplement relating to such debt securities will specify
whether any guarantors are providing guarantees with respect
to such series of debt securities. In such event, each of the guarantors that
are providing guarantees, as primary obligors and not merely as sureties, will
fully, irrevocably and unconditionally guarantee to each holder of debt
securities of such series, and to the trustee on behalf of the holders, (i) the
due and punctual payment of principal of, premium, if any, on and interest on
the debt securities when due and payable,
13
whether by acceleration, required repurchase, redemption or otherwise, the due
and punctual payment of interest on the overdue principal of and interest, if
any, on the debt securities, to the extent lawful, and the due and punctual
performance of all other obligations of Flowserve to the holders and the
trustee, in accordance with the terms of the debt securities of such series
and the indenture and (ii) in the case of any extension of time of payment or
renewal of any debt security of such series or any of such other obligations,
that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, by acceleration,
required repurchase, redemption or otherwise.
The obligations of any guarantor under its guarantee may be limited as
necessary to prevent that guarantee from constituting a fraudulent conveyance
under applicable law.
Unless otherwise specified in the applicable prospectus supplement, the
guarantee of a guarantor will be released:
(1) upon the sale or other disposition (including by way of
consolidation or merger) of a guarantor; or
(2) upon the sale or disposition of all or substantially all the assets
of a guarantor;
other than to Flowserve or a subsidiary of Flowserve and as permitted by the
indenture.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities. A global security is a security,
typically held by a depositary, that represents and is denominated in an amount
equal to the aggregate principal amount of all outstanding debt securities of a
series or any portion thereof, in either case having the same original issue
date, date or dates on which principal and interest are due, and interest rate
or method of determining interest. Any global debt securities will be deposited
with, or on behalf of, a depositary or its nominee, which will be identified in
the applicable prospectus supplement. Global securities may be issued in either
registered or bearer form and in either temporary or definitive form.
Unless and until a global security is exchanged in whole or in part for the
individual debt securities represented thereby, a global security may not be
transferred except as a whole:
o by the depositary for the global security to a nominee for the
depository;
o by a nominee of the depositary to the depositary or to another
nominee of the depositary; or
o by the depositary or its nominee to a successor depositary or a
nominee of a successor depositary.
The prospectus supplement relating to a particular series of debt
securities which may be so issued hereunder, will describe the specific terms of
the depositary arrangement with respect to a series of debt securities. We
anticipate that the following provisions will generally apply to all depositary
arrangements for debt securities:
o ownership of beneficial interests in a global security will be
limited to persons that have accounts with the depositary for the
global security (each a "participant" and, collectively, the
"participants") or persons holding interests through the
participants;
14
o after the issuer of a series of debt securities issues the
registered global security for the series, the depositary will
credit, on its book-entry registration and transfer system, the
participants' accounts in an amount equal to the respective
principal amounts of the debt securities of that series represented
by the global security beneficially owned by the participants;
o the underwriters, agents or dealers participating in the
distribution of the debt securities will designate the accounts to
be credited unless such debt securities are offered by us or through
our agents, in which case we will designate the accounts to be
credited;
o only a participant or a person that may hold an interest through a
participant may be the beneficial owner of a global security; and
o ownership of beneficial interests in the global security will be
shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depositary for the
global security for interests of the participants, and on the
records of the participants for interests of persons holding through
the participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to own, transfer or pledge beneficial
interests in global securities.
So long as the depositary for a global security, or its nominee, is the
registered owner of the global security, the depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the indenture. Except
as stated below, owners of beneficial interests in a global security:
o will not be entitled to have the debt securities represented by a
registered global security registered in their names;
o will not receive or be entitled to receive physical delivery of the
debt securities in definitive form; and
o will not be considered the owners or holders of the debt securities
under the indenture.
Accordingly, each person owning a beneficial interest in a registered
global security must rely on the procedures of the depositary for the
registered global security and, if the person is not a participant, on the
procedures of the participant through which the person owns its interests, to
exercise any rights of a holder under the indenture applicable to the
registered global security.
We understand that, under existing industry practices, if we request any
action of holders, or if an owner of a beneficial interest in a registered
global security desires to give or take any action which a holder is entitled
to give or take under the indenture, the depositary for the registered global
security would authorize the participants holding the relevant beneficial
interests to give or take the action, and the participants would authorize
beneficial owners owning through the participants to give or take the action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Subject to the restrictions applicable to bearer securities described in
the applicable prospectus supplement (See "--Limitations on Issuance of Bearer
Securities"), principal, premium, if any, and interest payments on individual
debt securities represented by a global security will be made to the
depositary or its nominee, as the case may be, as the registered owner or
holder of such global security. Neither we, the trustee, or any registrar or
paying agent nor any other agent of any of us will be responsible or liable
for any aspect of the records relating to, or payments made on account of,
beneficial
15
ownership interests in the global security for the series or for maintaining,
supervising or reviewing any records relating to the beneficial ownership
interests.
We expect that the depositary for any such debt securities represented by
a global security, upon receipt of any payment of principal, premium, if any,
or interest in respect of the global security, will immediately credit
participants accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
as shown on the depositary's records. We also expect that payments by
participants to owners of beneficial interests in a global security held
through the participants will be governed by standing customer instructions
and customary practices, as is now the case with the securities held for the
accounts of customers and registered in "street name." Such payments will be
the responsibility of the participants. Receipt by owners of beneficial
interests in a temporary global security of payments of principal, premium or
interest with respect thereto will be subject to the restrictions described in
an applicable prospectus supplement (see "--Limitations on Issuance of Bearer
Securities" below).
If the depositary for any debt securities represented by a global
security is at any time unwilling or unable to continue as depositary or
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, we will appoint an eligible successor depositary. If we fail to appoint
an eligible successor depositary within 90 days, individual debt securities of
such series will be issued in exchange for the global security. In addition,
we may at any time and in our sole discretion determine not to have any debt
securities of a series represented by one or more global securities. In that
event, individual debt securities of such series will be issued in exchange
for the global security representing such series debt securities. Furthermore,
if we so specify with respect to the debt securities of a series, an owner of
a beneficial interest in a global security representing debt securities of
such series may, on terms acceptable to us, the trustee, and the depositary
for such global security, receive individual debt securities of such series in
exchange for such beneficial interests, subject to any limitations described
in the prospectus supplement relating to such debt securities. In any such
instance, an owner of a beneficial interest in a global security will be
entitled to physical delivery of individual debt securities of the series
represented by such global security equal in principal amount to such
beneficial interest and to have such debt securities registered in its name
(if the debt securities are issuable as registered securities). Individual
debt securities of such series so issued will be issued (a) as registered
securities in denominations, unless otherwise specified by us, of $1,000 and
integral multiples thereof if the debt securities are issuable as registered
securities, (b) as bearer securities in the denomination or denominations
specified by us if the debt securities are issuable as bearer securities or
(c) as either registered securities or bearer securities as described above if
the debt securities are issuable in either form.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
The debt securities of a series may be issued as registered securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such debt securities) or bearer securities
(which will be transferable only by delivery). If such debt securities are
issuable as bearer securities, the applicable prospectus supplement will
describe certain special limitations and considerations that will apply to
such debt securities.
COVENANTS
If debt securities are issued, the indenture, as supplemented for a
particular series of debt securities, will contain certain covenants for the
benefit of the holders of such series of debt securities, which will be
applicable (unless waived or amended) so long as any of the debt securities of
such series are outstanding, unless stated otherwise in the prospectus
supplement. The specific terms of the covenants, and summaries thereof, will
be set forth in the prospectus supplement relating to such series of debt
securities.
16
MERGERS AND SALES OF ASSETS
The indenture provides that Flowserve may not consolidate with or merge
into any other person or convey, transfer or lease all or substantially all of
its properties and assets to another person, unless among other items: (i) the
resulting, surviving or transferee person (if other than the relevant issuer)
is organized and existing under the laws of the United States, any state
thereof or the District of Columbia and such person expressly assumes, by
supplemental indenture, all obligations of the relevant issuer under the
indenture and either the debt securities or the guarantees, as the case may
be; (ii) Flowserve or such successor person shall not immediately thereafter
be in default under the indenture and either the debt securities or the
guarantees, as the case may be; and (iii) Flowserve shall have provided the
trustee with an opinion of counsel and officer's certificate confirming
compliance with the indenture. Upon the assumption of the obligations of
Flowserve by such a person in such circumstances, subject to certain
exceptions, Flowserve shall be discharged from all obligations under all debt
securities and the indenture (except in the case of a lease).
SUBORDINATION
Debt securities of a series, and any guarantees, may be subordinated
("subordinated debt securities") to senior indebtedness (as defined in the
applicable prospectus supplement) to the extent set forth in the prospectus
supplement relating thereto. We conduct substantially all of our operations
through subsidiaries, and the holders of debt securities (whether or not
subordinated debt securities) will be structurally subordinated to the
creditors of our subsidiaries except to the extent such subsidiary is a
guarantor of such series of debt securities.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the form of
indenture with respect to any series of debt securities which may be issued,
except as may be specified in the prospectus supplement:
1. default for 30 days in the payment of interest when due on the debt
securities;
2. default in the payment of principal or premium, if any, when due on
the debt securities;
3. our failure to comply with the obligations described under
"--Mergers and Sales of Assets" above;
4. our failure to comply for 30 days after notice with any of the
obligations in the covenants set forth in the prospectus supplement;
5. our failure or failure of any guarantor to comply for 60 days after
notice with other agreements contained in the indenture or any
supplemental indenture relating to that series of debt securities;
6. indebtedness (as defined) of us, a guarantor or any significant
subsidiary (as defined), is not paid within the applicable grace
period after final maturity or is accelerated by the holders of such
indebtedness because of a default and the total amount of such
indebtedness unpaid or accelerated exceeds $10.0 million;
7. certain events of bankruptcy, insolvency or reorganization affecting
us;
8. any judgment for the payment of money the uninsured amount of which
is in excess of $10.0 million is entered against us, a guarantor or
a significant subsidiary (as defined) and remains outstanding for a
period of 60 days;
17
9. a guarantee ceases to be in full force and effect in any material
respect (other than in accordance with the terms of the applicable
indenture) or a guarantor denies or disaffirms its obligations under
its guarantee; and
10. any other event of default provided with respect to that series of
debt securities.
A prospectus supplement may omit, modify or add to the foregoing events of
default.
However, a default under clauses (4), (5) and (8) will not constitute an
event of default until the trustee or the holders of 25% in principal amount of
the outstanding debt securities notify us of the default and we do not cure such
default within the time specified after receipt of such notice.
If an event of default (other than certain events of bankruptcy, insolvency
or reorganization) occurs and is continuing, the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding applicable series of
debt securities may declare the principal of and accrued but unpaid interest on
all the applicable debt securities to be due and payable. Upon such a
declaration, such principal of (or, in the case of original issue discount debt
securities, the portion thereby specified in the terms thereof), premium, if
any, and accrued interest shall be due and payable immediately. In the case that
certain events of bankruptcy, insolvency or reorganization occur and are
continuing, the principal of (or, in the case of original issue discount debt
securities, the portion thereby specified in the terms thereof), premium, if
any, and accrued interest on all the applicable debt securities will
automatically become and be immediately due and payable without any declaration
or other act on the part of the trustee or any holders of such debt securities.
Subject to the provisions of the indenture relating to the duties of the
trustee, in case an event of default occurs and be continuing, the trustee is
under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the holders of the applicable
debt securities unless such holders have offered to the trustee indemnity or
security satisfactory to it against any loss, liability or expense. Except to
enforce the right to receive payment of principal, premium, if any, or
interest when due, no holder of a debt security may pursue any remedy with
respect to the indenture or debt securities unless:
1. such holder has previously given the trustee written notice that an
event of default is continuing with respect to such series of debt
securities;
2. holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the applicable series have made a
written request to the trustee to pursue the remedy;
3. such holders have offered the trustee security or indemnity
satisfactory to it against any loss, liability or expense;
4. the trustee has not complied with such request within 60 days after
the receipt thereof and the offer of security or indemnity; and
5. holders of a majority in aggregate principal amount of the
outstanding debt securities of such series have not given the
trustee a direction inconsistent with such request within such
60-day period.
Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding debt securities of such series are given the right
under the indenture to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or of exercising any trust or
power conferred on the trustee. The trustee, however, may refuse to follow any
direction that conflicts with law
18
or the indenture or that the trustee determines is unduly prejudicial to the
rights of any other holder of such series of debt securities or that would
involve the trustee in personal liability.
If a default with respect to a series of debt securities occurs, is
continuing and is known to the trustee, such trustee must mail to each holder
of such debt securities notice of the default within 90 days after it occurs.
Except in the case of a default in the payment of principal, premium, if any,
or interest on any debt security, the trustee may withhold notice if and so
long as a committee of its trust officers in good faith determines that
withholding notice is in the interests of the holders of the debt securities.
In addition, we are required to deliver to each trustee, within 120 days after
the end of each fiscal year, a certificate indicating whether the signers
thereof know of any default under the related indenture that occurred during
the previous year.
Modification of the Indenture
We and the trustee may enter into supplemental indentures without the
consent of the holders of debt securities for one or more of the following
purposes:
(a) to evidence the succession of another person to us pursuant to the
provisions of the indenture relating to consolidations, mergers and
sales of assets and the assumption by such successor of our
covenants, agreements and obligations in the indenture and in the
debt securities;
(b) to surrender any right or power conferred upon us by the indenture,
to add to our covenants such further covenants, restrictions,
conditions or provisions for the protection of the holders of all or
any series of debt securities as our board of directors shall
consider to be for the protection of the holders of such debt
securities, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions, conditions or provisions a default or an event of
default under the indenture (provided, however, that with respect to
any such additional covenant, restriction, condition or provision,
such supplemental indenture may provide for a period of grace after
default, which may be shorter or longer than that allowed in the
case of other defaults, may provide for an immediate enforcement
upon such default, may limit the remedies available to the trustee
upon such default or may limit the right of holders of a majority in
aggregate principal amount of any or all series of debt securities
to waive such default);
(c) to cure any ambiguity or correct or supplement any provision
contained in the indenture, in any supplemental indenture or in any
debt securities that may be effective or inconsistent with any other
provision contained therein, to convey, transfer, assign, mortgage
or pledge any property to or with the trustee, or to make such other
provisions in regard to matters or questions arising under the
indenture as shall not adversely affect the interests of any holders
of debt securities of any series;
(d) to modify or amend the indenture in such a manner as to permit the
qualification of the indenture or any supplemental indenture under
the Trust Indenture Act as then in effect;
(e) to add or change any of the provisions of the indenture to provide
that bearer securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal or
premium with respect to registered securities or of principal,
premium or interest with respect to bearer securities, or to permit
registered securities to be exchanged for bearer securities, so as
to not adversely affect the interests of the holders of debt
securities or any coupons of any series in any material respect or
permit or facilitate the issuance of debt securities of any series
in uncertificated form;
(f) to comply with the provisions of the indenture relating to
consolidations, mergers and sales of assets;
19
(g) in the case of subordinated debt securities, to make any change in
the provisions of the indenture relating to subordination that would
limit or terminate the benefits available to any holder of senior
indebtedness under such provision (but only if each such holder of
senior indebtedness consents to such change);
(h) to add guarantees with respect to the debt securities or to secure
the debt securities;
(i) to make any change that does not adversely affect the rights of any
holder;
(j) to add to, change, or eliminate any of the provisions of the
indenture with respect to one or more series of debt securities, so
long as any such addition, change or elimination not otherwise
permitted under the indenture shall (1) neither apply to any debt
security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision
nor modify the rights of the holders of any such debt security with
respect to such provision or (2) become effective only when there is
no such debt security outstanding;
(k) to evidence and provide for the acceptance of appointment by a
successor or separate trustee with respect to the debt securities of
one or more series and to add to or change any of the provisions of
the indenture as shall be necessary to provide for or facilitate the
administration of the indenture by more than one trustee; and
(l) to establish the form or terms of debt securities and coupons of any
series, as described under "--General" above.
With the consent of the holders of a majority in aggregate principal
amount of the outstanding debt securities of each series affected thereby, we
and the trustee may from time to time and at any time enter into a
supplemental indenture for the purpose of adding any provisions to, changing
in any manner or eliminating any of the provisions of the indenture or of any
supplemental indenture or modifying in any manner the rights of the holder of
the debt securities of such series; provided, however, that without the
consent of the holders of each debt security so affected, no such supplemental
indenture shall (a) reduce the percentage in principal amount of debt
securities of any series whose holders must consent to an amendment, (b)
reduce the rate of or extend the time for payment of interest on any debt
security or coupon or reduce the amount of any payment to be made with respect
to any coupon, (c) reduce the principal of or extend the stated maturity of
any debt security, (d) reduce the premium payable upon the redemption of any
debt security or change the time at which any debt security may or shall be
redeemed, (e) make any debt security payable in a currency other than that
stated in the debt security, (f) in the case of any subordinated debt security
or coupons appertaining thereto, make any change in the provisions of the
indenture relating to subordination that adversely affects the rights of any
holder under such provision, (g) release any security that may have been
granted with respect to the debt securities, (h) make any change in the
provisions of the indenture relating to waivers of defaults or amendments that
require unanimous consent, (i) change any obligation of ours provided for in
the indenture to pay additional interest with respect to bearer securities or
(j) limit our obligation to maintain a paying agency outside the United States
for payment on bearer securities or limit our obligation to redeem certain
bearer securities.
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
Unless otherwise provided in the prospectus supplement, the indenture
shall cease to be of any further effect with respect to a series of debt
securities if (a) we have delivered to the trustee for cancellation all debt
securities of such series (with certain limited exceptions) or (b) all debt
securities of such series not theretofore delivered to the trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption
within one year, and we shall have deposited with the trustee as trust funds
the entire amount sufficient to pay at maturity or
20
upon redemption all such debt securities and coupons (and if, in either case,
we shall also pay or cause to be paid all other sums payable under the
indenture by us).
In addition, we shall have a "legal defeasance option" (pursuant to which
we may terminate, with respect to the debt securities of a particular series,
all of our obligations under such debt securities, the indenture and the
applicable indenture supplement with respect to such debt securities) and a
"covenant defeasance option" (pursuant to which we may terminate, with respect
to the debt securities of a particular series, our obligations with respect to
such debt securities under certain specified covenants contained in the
indenture). If we exercise our legal defeasance option with respect to a
series of debt securities, payment of such debt securities may not be
accelerated because of an event of default. If we exercise our covenant
defeasance option with respect to a series of debt securities, payment of such
debt securities may not be accelerated because of an event of default related
to the specified covenants.
The applicable prospectus supplement will describe the procedures we must
follow in order to exercise our defeasance options.
REGARDING THE TRUSTEE
The indenture provides that, except during the continuance of an event of
default, the trustee will perform only such duties as are specifically set forth
in the indenture. During the existence of an event of default, the trustee will
exercise such rights and powers vested in it under the indenture the use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
The indenture and provisions of the Trust Indenture Act that are
incorporated by reference therein contain limitations on the rights of the
trustee, should it become one of our creditors, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claim as security or otherwise. The trustee is permitted to engage in other
transactions with us or any of our affiliates; provided, however, that if it
acquires any conflicting interest (as defined in the indenture or in the Trust
Indenture Act), it must eliminate such conflict or resign.
GOVERNING LAW
The indenture, the debt securities and the guarantees will be governed by
the laws of the State of New York without reference to principles of conflicts
of law thereunder.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 120,000,000 shares of common
stock, par value $1.25 per share, and 1,000,000 shares of preferred stock, par
value $1.00 per share. As of May 1, 2001, we had outstanding 37,967,468 shares
of common stock and no shares of preferred stock. Our common stock is listed on
the New York Stock Exchange under the symbol "FLS."
COMMON STOCK
Subject to any special voting rights of any preferred stock that we may
issue in the future, each share of common stock has one vote on all matters
voted on by our stockholders, including election of our directors. No share of
common stock affords any cumulative voting or preemptive rights. Holders of
common stock will be entitled to dividends in the amounts and at the times
declared by our board of directors, after payment of any dividends on any
outstanding preferred stock and subject to limitations for dividends contained
in certain of Flowserve's outstanding debt instruments. No dividends are
currently paid to holders of the common stock.
21
Holders of common stock will share equally in our assets on liquidation
after payment or provision for all liabilities and any preferential liquidation
rights of any preferred stock then outstanding. All issued and outstanding
shares of common stock are fully paid and non-assessable and are not subject to
redemption or conversion and have no conversion rights.
The transfer agent for our common stock is National City Bank, in
Cleveland, Ohio.
PREFERRED STOCK
At the direction of our board of directors, we may issue shares of
preferred stock from time to time. Our board of directors may, without any
action by holders of the common stock, adopt resolutions to issue preferred
stock in one or more series and establish or change the rights of the holders of
any series of preferred stock.
The rights of any series of preferred stock may include:
o voting rights;
o liquidation preferences;
o dividend rights;
o redemption rights;
o conversion or exchange rights; and
o sinking funds.
The issuance of such preferred stock could, among other things:
o adversely affect the voting, dividend, and liquidation rights with
respect to the common stock;
o discourage an unsolicited proposal to acquire us; or
o facilitate a particular business combination involving us.
Any of these actions, plus those which follow in the remainder of this
"Description of Capital Stock" section, could discourage a transaction that
some or a majority of our stockholders might believe to be in their best
interests or in which our stockholders might receive a premium for their stock
over its then market price.
FLOWSERVE RIGHTS PLAN; SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
In August 1986, Flowserve's board of directors adopted a rights
agreement. Under this agreement, one preferred stock purchase right was
distributed in August 1986 with respect to each outstanding share of Flowserve
common stock. The rights agreement provides that, unless the rights have been
redeemed, one right will be granted for each additional share of Flowserve
common stock issued after August 1986 and prior to the earlier of the time the
rights become exercisable or August 13, 2006, the termination date of the
rights agreement.
The rights are not currently exercisable and trade in tandem with the
common stock. The rights become exercisable and trade separately from the
common stock ten days after a person or group acquires 20% or more of the
outstanding shares of common stock or commences a tender offer which would
result in the ownership of 30% or more of the outstanding shares of common
stock. Upon their becoming exercisable, each right entitles the registered
holder to purchase a fraction of a share of Series A Junior Participating
Preferred Stock. Generally, each share of Series A Junior Participating
Preferred Stock carries voting, dividend and liquidation rights equal to 100
shares of common stock. The rights provide that if Flowserve were to be
acquired in a merger or business combination after the rights become
exercisable, each right may be exercised to purchase common stock of the
acquiring company at a 50% discount. In addition, if a 20% shareholder
(determined as provided in the rights agreement) either
22
acquires by means of a reverse merger in which Flowserve survives or engages
in certain other transactions with Flowserve, each right (other than rights
held by the 20% shareholder) may be exercised to purchase shares of Series A
Junior Participating Preferred Stock at a price equal to 50% of the market
value of the shares. The rights are redeemable by Flowserve at any time prior
to becoming exercisable and will expire on August 13, 2006.
The summary description of the rights set forth above does not purport to
be complete and is qualified in its entirety by reference to the rights
agreement.
CERTAIN ANTI-TAKEOVER PROVISIONS
Under the Certificate of Incorporation of Flowserve, as amended, the
board of directors is divided into three classes of directors serving
staggered terms of three years each. Each class is to be as nearly equal in
number as possible, with one class being elected each year. The Certificate of
Incorporation, as amended, also provides that:
o directors may be removed from office only for cause and only with the
affirmative vote of two-thirds of the voting power of the voting
stock;
o any vacancy on the board of directors or any newly created
directorship will be filled by the remaining directors then in office,
though less than a quorum; and
o advance notice of not less than fifty days of shareholder nominations
for the elections of directors must be given in the manner provided by
the By-Laws of Flowserve.
Under the New York Business Corporation Law (NYBCL), the "merger
moratorium" statute would prohibit any business combination with an "interested
shareholder" (as defined in the statute) for a five year period, unless the
combination is approved by the Flowserve board of directors. In addition,
amendments which make changes relating to the capital stock by increasing or
decreasing the par value or the aggregate number of authorized shares of a
class, or otherwise adversely affecting the rights of such class, must be
approved by the majority vote of each class or series of stock affected, even if
such stock would not otherwise have such voting rights. The Flowserve
Certificate of Incorporation additionally requires (i) a four-fifths vote of the
outstanding stock of Flowserve entitled to vote thereon to amend certain
provisions in the Flowserve Certificate restricting transactions with a Related
Corporation (as defined therein) and (ii) a two-thirds vote to amend certain
provisions in the Flowserve Certificate and Flowserve Corporation By-laws
relating to the Flowserve Corporation board of directors.
The noted merger moratorium statute and the noted required supermajority
shareholder vote necessary to alter, amend or repeal these provisions of the
Flowserve Certificate of Incorporation, as amended, the related amendments to
the By-laws and all other provisions of the By-laws, or to adopt any provisions
relating to the classification of the board of directors and the other matters
described above may make it more difficult to change the composition of the
board of directors of Flowserve and may discourage or make difficult any attempt
by a person or group to obtain control of Flowserve.
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PLAN OF DISTRIBUTION
The securities may be distributed under this prospectus from time to time
in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to prevailing market prices; or
o at negotiated prices.
Each time we sell securities, we will describe the method of distribution
of the securities in the prospectus supplement relating to the transaction.
We may offer and sell securities to which this prospectus relates in any
one or more of the following ways:
o through underwriters or dealers;
o through agents;
o directly to purchasers; or
o through a combination of such methods of sale.
Each time we sell securities, we will provide a prospectus supplement that
will name any underwriter, dealer or agent involved in the offer and sale of the
securities. The prospectus supplement will also set forth the terms of the
offering, including the purchase price of the securities and the proceeds we
will receive from the sale of the securities, any underwriting discounts and
other items constituting underwriters' compensation, public offering or purchase
price and any discounts or commissions allowed or paid to dealers, any
commissions allowed or paid to agents and any securities exchanges on which the
securities may be listed. The maximum underwriting commission or discount to
be received by any member of the National Association of Securities Dealers
Inc. ("NASD") or independent broker-dealer will not be greater than 8% for any
sale of securities offered under this prospectus.
If underwriters or dealers are used in the sale, the securities will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions, at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, or at prices
related to such prevailing market prices, or at negotiated prices. The
securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more of
such firms. Unless otherwise set forth in the prospectus supplement, the
obligations of underwriters or dealers to purchase the securities offered will
be subject to certain conditions precedent and the underwriters or dealers will
be obligated to purchase all the offered securities if any are purchased. Any
public offering price and any discounts or concessions allowed or reallowed or
paid by underwriters or dealers to other dealers may be changed from time to
time.
The securities may be sold directly by us or through agents designated by
us from time to time. Any agent involved in the offer or sale of the securities
in respect of which this prospectus is delivered will be named, and any
commissions payable by us to such agent will be set forth in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
24
Offers to purchase the securities offered by this prospectus may be
solicited, and sales of the securities may be made, by us of those securities
directly to institutional investors or others, who may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any resales of the securities. The terms of any offer made in this manner will
be included in the prospectus supplement relating to the offer.
If indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers by certain institutional
investors to purchase securities from us pursuant to contracts providing for
payment and delivery at a future date. Institutional investors with which these
contracts may be made include, among others:
o commercial and savings banks;
o insurance companies;
o pension funds;
o investment companies; and
o educational and charitable institutions.
In all cases, these purchasers must be approved by us. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of any
purchaser under any of these contracts will not be subject to any conditions
except that (a) the purchase of the securities must not at the time of
delivery be prohibited under the laws of any jurisdiction to which that
purchaser is subject and (b) if the securities are also being sold to
underwriters, we must have sold to these underwriters the securities not
subject to delayed delivery. Underwriters and other agents will not have any
responsibility in respect of the validity or performance of these contracts.
Some of the underwriters, dealers or agents used by us in any offering of
securities under this prospectus may be customers of, engage in transactions
with, and perform services for us in the ordinary course of business.
Underwriters, dealers, agents and other persons may be entitled under
agreements which may be entered into with us to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act of 1933 and to be reimbursed by us for certain expenses.
Subject to any restrictions relating to debt securities in bearer form,
any securities initially sold outside the United States may be resold in the
United States through underwriters, dealers or otherwise.
Each series of securities other than common stock will be new issue of
securities with no established trading market. Any underwriters to whom
offered securities are sold by us for public offering and sale may make a
market in such securities, but such underwriters will not be obligated to do
so and may discontinue any market making at any time.
The anticipated date of delivery of the securities offered by this
prospectus will be described in the applicable prospectus supplement relating
to the offering. The securities offered by this prospectus may or may not be
listed on a national securities exchange or a foreign securities exchange. No
assurance can be given as to the liquidity or activity of any trading in the
offered securities.
If more than 10% of the net proceeds of any offering of securities made
under this prospectus will be received by NASD members participating in the
offering or affiliates or associated persons of such NASD members, the
offering will be conducted in accordance with NASD Conduct Rule 2710(c)(8).
25
VALIDITY OF SECURITIES
The validity of the common stock and the preferred stock offered by this
prospectus will be passed upon by Ronald F. Shuff, Vice President, Secretary
and General Counsel of Flowserve Corporation. The validity of the debt
securities offered by this prospectus will be passed upon by Cravath, Swaine &
Moore, New York, New York. Mr. Shuff owns beneficially approximately 63,991
shares of Flowserve's common stock. He holds options to purchase 69,740
additional shares of Flowserve's common stock that were granted to him
pursuant to Flowserve's 1989, 1997 and 1999 stock option plans.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
2000, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Ingersoll-Dresser Pump Company as of December
31, 1999 and for each of the two years in the period ended December 31, 1999,
incorporated in this Prospectus by reference to the Registration Statement on
Form S-4 (File No. 333-46760) have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated balance sheet of Flowserve Corporation and subsidiaries
as of December 31, 1999 and the related consolidated statements of income,
comprehensive (loss) income, shareholders' equity and cash flows for each of
the two years in the period then ended, incorporated by reference in Flowserve
Corporation's Annual Report (Form 10-K) for the year ended December 31, 2000,
and the related financial statement schedule included in the Annual Report
(Form 10-K) for the year ended December 31, 2000, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
included or incorporated by reference therein and incorporated herein by
reference. Such consolidated financial statements and schedule are
incorporated herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the sale and
distribution of the securities being registered (all of which are to be paid by
the registrant). All amounts shown are estimates except for the SEC registration
fee:
Securities and Exchange Commission registration fee .......... $125,000
Legal fees and expenses ..................................... 125,000
Accounting fees and expenses ................................ 30,000
Printing expenses ........................................... 7,500
Transfer Agent and registrant fees .......................... 3,000
Miscellaneous ............................................... 10,000
--------
TOTAL ............................................ $300,500
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 722 through 726 of the New York Business Corporation Law (the
"BCL") grant New York corporations broad powers to indemnify their present and
former directors and officers and those of affiliated corporations against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with threatened,
pending or completed actions, suits or proceedings to which they are parties or
are threatened to be made parties by reason of being or having been such
directors or officers, subject to specified conditions and exclusions; give a
director or officer who successfully defends an action the right to be so
indemnified; and permit a corporation to buy directors' and officers' liability
insurance. Such indemnification is not exclusive of any other rights to which
those indemnified may be entitled under any by-laws, agreement, vote of
shareholders or otherwise.
Section 402(b) of the BCL permits a New York corporation to include in its
certificate of incorporation a provision eliminating the potential monetary
liability of a director to the corporation or its stockholders for breach of
fiduciary duty as a director, provided that such provision shall not eliminate
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for improper payment of dividends, improper purchase of the shares of the
corporation, improper distribution of assets to shareholders after dissolution
of the corporation and improper making of any loan, or (iv) for any transaction
from which the director receives an improper personal benefit or other
advantage.
Flowserve's Restated Certificate of Incorporation includes the provision
permitted by Section 402(b) of the BCL.
Flowserve's By-laws provide that Flowserve shall indemnify its present or
future directors and officers from and against any and all liabilities and
expenses to the maximum extent permitted by the BCL as the same presently exists
or to the greater extent permitted by any amendment hereafter adopted.
II-1
ITEM 16. EXHIBITS
Exhibit No. Description
- ----------- -----------
1.1 Form of underwriting agreement.
4.1 Specimen common stock certificate.
4.2 Form of indenture.
4.3 Rights Agreement dated as of August 1, 1986 between the Company
and BankOne, N.A., as Rights Agent, which includes as Exhibit B
thereto the Form of Rights Certificate (incorporated herein by
reference to Exhibit 1 to Flowserve Corporation's Registration
Statement on Form 8-A on August 13, 1986).
4.4 Amendment dated August 1, 1996, to Rights Agreement (incorporated
herein by reference to Exhibit 4.5 to Flowserve Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996)
4.5 Amendment No. 2 dated as of June 1, 1998, to the Rights Agreement
dated as of August 13, 1986, and amended as of August 1, 1996
(incorporated by reference to Exhibit 1 to Flowserve
Corporation's Registration Statement on Form 8-A/A dated June 1,
1998)
5.1 Opinion of Ronald F. Shuff, Esq.
5.2 Opinion of Cravath, Swaine & Moore.
12.1* Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Ronald F. Shuff, Esq., included in Exhibit 5.1.
23.5 Consent of Cravath, Swaine & Moore, included in Exhibit 5.2.
24.1* Power of Attorney (included in signature page).
25.1 Form T-I Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939.
- ------------
* Previously filed.
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 of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this 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 a prospectus filed
with the Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate 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 this registration
statement or any material change to such information in this
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 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 this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission
II-3
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel 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 of 1933 and will be governed by the final adjudication of such issue.
(D) The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities Act,
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
undersigned registrants certify that they have reasonable grounds to believe
that they meet all of the requirements for filing on Form S-3 and have duly
caused this amendment to the registration statement to be signed on their
behalf by the undersigned respectively, thereunto duly authorized, in the City
of Irving, State of Texas on the 2nd day of July, 2001.
FLOWSERVE CORPORATION, as Registrant
By: *
-------------------------------------
Name: C. Scott Greer
Title: Chairman, President and
Chief Executive Officer
FLOWSERVE US INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE INTERNATIONAL, INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE HOLDINGS, INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
BW/IP-NEW MEXICO, INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
INGERSOLL-DRESSER PUMP COMPANY, as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Member, Management Committee
II-5
FLOWSERVE INTERNATIONAL L.L.C., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE MANAGEMENT COMPANY, as Registrant
By: /s/ JOHN M. NANOS
------------------------------------
Name: John M. Nanos
Title: Vice President
CFM-V.R. TESCO INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE INTERNATIONAL LIMITED, as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Managing Director
FLOWSERVE FINANCE B.V., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Managing Director
II-6
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the registration statement has been signed below by the
following persons in the capacities indicated on the 2nd day of July, 2001.
Signatures Title
* Chairman, President and Chief Executive
- ------------------------- Officer of Flowserve Corporation (Principal
C. Scott Greer Executive Officer)
* Vice President and Chief Financial Officer
- ------------------------- of Flowserve Corporation (Principal
Renee J. Hornbaker Financial Officer)
* Corporate Controller of Flowserve Corporation
- ------------------------- (Principal Accounting Officer)
Kathleen A. Giddings
* Director, Chairman of Audit/Finance
- ------------------------- Committee of Flowserve Corporation
Diane C. Harris
* Director, Member of Audit/Finance Committee
- ------------------------- of Flowserve Corporation
Charles M. Rampacek
* Director, Member of Audit/Finance Committee
- ------------------------- of Flowserve Corporation
James O. Rollans
* Director, Member of Audit/Finance Committee
- ------------------------- of Flowserve Corporation
William C. Rusnack
*By: /s/ Ronald F. Shuff
---------------------
Ronald F. Shuff
Vice President, Secretary and General Counsel
as Attorney-in-Fact
II-7