As filed with the United States Securities and Exchange Commission on
September 22, 2003
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Church & Dwight Co., Inc.
(Exact name of Registrant as specified in its charter)
Delaware 13-4996950
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
469 North Harrison Street
Princeton, New Jersey 08543-5297
(609) 683-5900
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
--------------------------------------------
Susan E. Goldy, Esquire
Vice President, General Counsel and Corporate Secretary
Church & Dwight Co., Inc.
469 North Harrison Street
Princeton, New Jersey 08543-5297
(609) 683-5900
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code,
of Agent for Service)
Copies to:
Alan Singer, Esquire
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103-2921
(215) 963-5000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |X|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Title of Each Class of Amount To Be Offering Price Per Proposed Maximum Aggregate Amount of
Securities To Be Registered Registered Security (1) Offering Price Registration Fee
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5.25% Convertible Senior $100,000,000 100% (2) $100,000,000 $8,090
Debentures Due August 15, 2033
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Common Stock, $1.00 (4) (4) (5)
par value per share (3) 2,150,540 Shares
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933, as amended.
(2) Exclusive of accrued interest, if any.
(3) Associated with each share of common stock is the right to purchase one
one-hundredth of a share of preferred stock pursuant to a rights agreement.
Preferred stock purchase rights do not carry a separate price.
(4) Consists of 2,150,540 shares of common stock issuable upon conversion of the
debentures at the initial conversion price of approximately $46.50 per share of
common stock. Pursuant to Rule 416 under the Securities Act, such number of
shares of common stock registered hereby shall include an indeterminate number
of shares of common stock that may be issued in connection with a stock split,
stock dividend, recapitalization or similar event.
(5) Pursuant to Rule 457(i), there is no additional filing fee with respect to
the shares of common stock issuable upon conversion of the debentures because no
additional consideration will be received in connection with the exercise of the
conversion privilege.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed.
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 these securities and is not
soliciting an offer to buy these securities in any jurisdiction where
the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 2003
CHURCH & DWIGHT CO., INC.
$100,000,000
5.25% Convertible Senior Debentures Due August 15, 2033, and
the Common Stock Issuable Upon Conversion of the Debentures
-------------------------
We issued the debentures in a private placement on August 11, 2003.
Selling securityholders will use this prospectus to resell their debentures and
the shares of our common stock issuable upon the conversion of their debentures
at market prices prevailing at the time of sale, fixed or varying prices
determined at the time of sale, or at negotiated prices. The selling
securityholders may sell the debentures or the common stock directly to
purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts or commissions. We will not receive any
proceeds from the offering.
The debentures are our senior, unsecured obligations. The debentures
rank equal in right of payment with all of our senior unsecured indebtedness.
The debentures are effectively subordinated in right of payment to all of our
existing and future secured indebtedness and, to the extent of the value of the
assets securing that indebtedness, to all of the existing and future
indebtedness and other liabilities of our subsidiaries.
The debentures bear interest at the rate of 5.25% per annum from August
11, 2003, the date of original issuance. We will pay interest on the debentures
on February 15 and August 15 of each year. The first interest payment will be
made on February 15, 2004. The debentures will be issued only in denominations
of $1,000 and integral multiples of $1,000.
At any time on or after August 15, 2008, we may redeem all or part of
the debentures that have not previously been converted at the redemption prices
described in this prospectus.
On each of August 15, 2010, August 15, 2013, August 15, 2018, August
15, 2023 and August 15, 2028, or in the event of a "change in control" as
described in this prospectus, holders may require us to repurchase all or any
portion of the debentures at a purchase price equal to 100% of the principal
amount of the debentures, plus accrued and unpaid interest to the date of
repurchase. We will pay cash for any debentures repurchased on August 15, 2010.
We may choose to pay cash, shares of our common stock, or a combination of cash
or shares of our common stock for any debentures repurchased on August 15, 2013,
August 15, 2018, August 15, 2023 or August 15, 2028 or upon a "change in
control."
The debentures mature on August 15, 2033 unless earlier redeemed or
repurchased. Holders may convert their debentures into shares of our common
stock prior to the maturity or the redemption or repurchase by us of the
debentures initially at a conversion rate of 21.5054 shares of common stock per
each $1,000 principal amount of debentures, which is equivalent to a conversion
price of approximately $46.50 per share (subject to adjustment in certain
circumstances), under the following circumstances: the sale price of our common
stock issuable upon conversion of a debenture reaches specified thresholds; the
trading price of a debenture falls below a specified threshold; specified credit
rating events with respect to the debentures occur; we call the debentures for
redemption; or specified corporate transactions occur.
An investment in the securities offered under this prospectus involves
a high degree of risk. See "Risk Factors" beginning on page 6.
The debentures are not listed on any securities exchange or included in
any automated quotation system. The debentures are eligible for trading on The
PORTALSM Market. Our common stock trades on the New York Stock Exchange under
the symbol "CHD". On September 22, 2003, the closing sale price of our common
stock on the New York Stock Exchange was $34.40.
-------------------------
Neither the Securities and Exchange Commission 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 September 22, 2003.
You should rely only upon the information provided in this prospectus or
incorporated in this document by reference. We have not authorized anyone to
provide you with different information. You should not assume that the
information in this prospectus, including any information incorporated by
reference, is accurate as of any date other than the date of this prospectus.
Table of Contents
Page
INCORPORATION OF DOCUMENTS BY REFERENCE.................................1
SUMMARY.................................................................2
RISK FACTORS............................................................6
WHERE YOU CAN FIND ADDITIONAL INFORMATION..............................11
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS..........................12
USE OF PROCEEDS........................................................12
RATIO OF EARNINGS TO FIXED CHARGES.....................................13
DESCRIPTION OF THE DEBENTURES..........................................13
DESCRIPTION OF CAPITAL STOCK ..........................................33
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS................36
SELLING SECURITYHOLDERS................................................44
PLAN OF DISTRIBUTION...................................................46
LEGAL MATTERS..........................................................48
EXPERTS................................................................48
INCORPORATION OF DOCUMENTS BY REFERENCE
In this prospectus, we "incorporate by reference" the information we
file with the SEC, which means that we can disclose important business,
financial and other information to you in this prospectus by referring you to
the documents containing this information. All information incorporated by
reference is deemed to be a part of this prospectus, unless and until that
information is updated and superseded by the information contained in this
prospectus or any information we file with the SEC and incorporate later. We
incorporate by reference into this prospectus the documents listed below and any
documents we file subsequently with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act until this offering is terminated (excluding any
information furnished under either Item 9 or Item 12 of any Current Report on
Form 8-K):
o Annual Report on Form 10-K for the fiscal year ended December 31,
2002;
o Definitive Proxy Statement filed on April 1, 2003;
o Quarterly Reports on Form 10-Q for the fiscal quarter ended March 28,
2003 and for the fiscal quarter ended June 27, 2003;
o Current Reports on Form 8-K dated January 16, 2003, February 10, 2003,
August 5, 2003 and September 19, 2003;
o The description of our common stock set forth in our Current Report on
Form 8-K, filed with the SEC on September 19, 2003, including any
amendments or reports filed for the purpose of updating this
information; and
o The description of our Preferred Stock Purchase Rights set forth in
our Registration Statement on Form 8-A, filed with the SEC on August
31, 1999, including any amendments or reports filed for the purpose of
updating this information.
You may request a copy of these filings (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this prospectus incorporates) at no cost. Requests should
be directed to: Church & Dwight Co., Inc., 469 North Harrison Street, Princeton,
New Jersey 08543-5297; Telephone: (609) 683-5900; Attention: General Counsel.
1
SUMMARY
This summary provides an overview of selected information and does not
contain all the information you should consider. You should read the entire
prospectus, including the section entitled "Risk Factors" beginning on page 6,
and the documents incorporated by reference in this prospectus, carefully before
making an investment decision. When used in this prospectus, unless otherwise
indicated, the terms "we," "our," and "us" refer to Church & Dwight Co., Inc.
and its subsidiaries.
Church & Dwight Co., Inc.
We develop, manufacture and market a broad range of consumer and
specialty products under our well-recognized ARM & HAMMER brand name and other
familiar brand names such as ARRID, BRILLO and XTRA. We were founded in 1846 and
are the world's leading producer of sodium bicarbonate, popularly known as
baking soda. Baking soda is a versatile chemical which cleans, deodorizes,
leavens and buffers. Today, we have a broad portfolio of household, personal
care and specialty products which build on the reputation of Arm & Hammer baking
soda. Our Consumer Products include Deodorizing and Household Cleaning Products,
such as baking soda and cat litter; Laundry Products, such as detergent and
fabric softeners; and Personal Care Products, such as antiperspirants and
toothpaste. Our Specialty Products include, in addition to sodium bicarbonate,
sodium sesquicarbonate, ammonium bicarbonate, and a rumen bypass fat product,
which are used in a variety of industrial, animal nutrition and food products.
Armkel, LLC is our 50/50 joint venture established with Kelso &
Company, L.P., a private equity firm. Our position in the Personal Care Product
line is bolstered by Armkel's products. Armkel's domestic portfolio of products
includes TROJAN condoms, NAIR depilatories and waxes and FIRST RESPONSE and
ANSWER home pregnancy/ovulation test kits. Internationally, Armkel primarily
markets oral care products, depilatories, condoms, skin care products, home
pregnancy test kits and other regional niche products. We exert significant
influence over Armkel through our membership on Armkel's board of directors and
our various agreements with Armkel, but do not control its operating and
financial decisions. As a result, Armkel's operations are not consolidated on
our consolidated financial statements. Armkel has issued public debt and is
required to file reports with the SEC pursuant to the Exchange Act. However,
those reports are not part of this prospectus.
Our principal offices are located at 469 North Harrison Street,
Princeton, New Jersey 08543-5297. Our telephone number is (609) 683-5900 and our
web site address is http://www.churchdwight.com. The reference to our web site
address is intended to be an inactive textual reference only.
The Arm & Hammer logo is our registered trademark, and all trademarks
referenced in this prospectus are owned by Church & Dwight, one of our
wholly-owned subsidiaries or Armkel.
Recent Development
On September 9, 2003, we entered into a definitive agreement to
purchase Unilever N.V.'s oral care brands in the United States and Canada for
$104 million in cash at closing, plus additional cash performance-based payments
of between $5 million and $12 million. The transaction is expected to be
completed in the fourth quarter of 2003, subject to regulatory approvals. We
plan to finance the acquisition by increasing the amount of the term loan under
our existing bank credit agreement by approximately $100 million.
2
The Offering
The following is a brief summary of some of the terms of the debentures
offered for resale in this prospectus. For a more complete description of the
terms of the debentures, see the section entitled "Description of the
Debentures" in this prospectus.
Securities Offered.................... $100,000,000 aggregate principal amount of convertible senior
debentures due 2033.
Original Issue Date................... August 11, 2003
Maturity.............................. August 15, 2033, unless earlier redeemed, repurchased or converted.
Ranking............................... The debentures are our senior unsecured obligations and rank equal
in right of payment with all of our senior unsecured indebtedness. The
debentures will be effectively subordinated in right of payment to
all of our existing and future secured indebtedness to the extent of
the value of the assets securing that indebtedness and existing and future
indebtedness and other liabilities of our subsidiaries.
Interest.............................. 5.25% per year on the principal amount, payable semi-annually in
arrears on February 15 and August 15 of each year, beginning on February
15, 2004.
Conversion Rights..................... Holders may surrender their debentures for conversion into our
common stock at the applicable conversion rate under any of the
following circumstances:
(i) during any conversion period prior to August 15, 2032, if the
sale price of our common stock for at least 20 trading days in
the 30 consecutive trading day period ending on the first day
of such conversion period is more than 120% of the conversion
price on the first day of the conversion period;
(ii) at any time after the sale price of our common stock on any date
after August 15, 2032 is more than 120% of the then current
conversion price;
(iii) during the five consecutive business day period following
any five consecutive trading day period in which the average of
the trading prices for a debenture was less than 95% of
the average sale price of our common stock during such five
day trading day period multiplied by the applicable
conversion rate; provided, however, if on the day before
the conversion date, the sale price of our common stock is
greater than 100% of the conversion price but less than
or equal to 120% of the conversion price, then a holder
converting its debentures may receive, in lieu of our common
stock based on the applicable conversion rate, at our option,
cash, common stock or a combination of cash and common
stock with a value equal to the principal amount of the
debentures on the conversion date;
(iv) if the credit rating assigned to the debentures by either Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group
is reduced two notches below B1 and BB-, respectively;
(v) if we call the debentures for redemption; or
(vi) upon the occurrence of specified corporate transactions described
under "Description of the Debentures--Conversion Rights."
For each debenture surrendered for conversion, a holder will receive
21.5054 shares of our common stock. This is equivalent to an initial
conversion price of approximately $46.50 per share of our common stock.
The conversion rate may be adjusted under certain circumstances, but will
not be adjusted for accrued interest.
Redemption of Debentures at .......... On or after August 15, 2008, we may redeem for cash all or part of
Our Option the debentures at any time, upon not less than 30 nor more than 60
days' prior notice, at the redemption prices described in this prospectus,
plus accrued and unpaid interest to the date of redemption. For more
information about redemption of the debentures at our option, see
"Description of the Debentures--Redemption by Church & Dwight."
Purchase of Debentures at............. Each holder has the right to require us to repurchase all or any
Holder's Option portion of that holder's debentures on August 15, 2010, August 15,
2013, August 15, 2018, August 15, 2023 and August 15, 2028, at a
purchase price equal to 100% of the principal amount of the debentures to
be repurchased, plus accrued and unpaid interest to the date of
repurchase. We will pay the repurchase price for any debentures
repurchased on August 15, 2010 in cash. We may choose to pay the
repurchase price of any debentures repurchased on August 15, 2013,
August 15, 2018, August 15, 2023 or August 15, 2028 in cash, common
stock, or a combination of cash and common stock. If we elect to pay all
or a portion of the repurchase price in common stock, the common stock
will be valued at 95% of the average sale price for the five trading days
immediately preceding and including the third trading day prior to the
repurchase date. For more information about our purchase of the debentures
at the option of the holder, see "Description of the Debentures--Repurchase Rights."
Change in Control..................... If we undergo a Change in Control (as defined under the caption,
"Description of the Debentures--Repurchase at Option of Holders
Upon A Change in Control"), holders will have the right, at their
option, to require us to repurchase any or all of their debentures
at a repurchase price equal to the principal amount of the
debentures to be repurchased, plus accrued and unpaid interest to
the date of repurchase. We may choose to pay the repurchase price
of any debentures repurchased in cash, common stock, or a
combination of cash and common stock. If we elect to pay all or a
portion of the repurchase price in common stock, the common stock
will be valued at 95% of the average sale price for the five
trading days immediately preceding and including the third trading
day prior to the repurchase date. For more information about the
purchase of the debentures by us at the option of the holder
following a Change in Control, see "Description of the Debentures--
Repurchase at Option of Holders Upon A Change in Control."
Use of Proceeds....................... We will not receive any of the proceeds from the sale by any
selling securityholder of the debentures or the shares of common
stock issuable upon conversion of the debentures.
PORTAL Trading of.................... The debentures are eligible for trading in The PortalSM Market of
Debentures the National Association of Securities Dealers, Inc.
Listing of Common Stock............... Our common stock is listed on the New York Stock Exchange under
the symbol "CHD."
Global Debenture; Book Entry The debentures are evidenced by a global debenture deposited with
System............................. the trustee for the debentures, as custodian for The Depository
Trust Company, commonly known as DTC. Beneficial interests in the global
debenture are shown on, and transfers of those beneficial interests can be
made only through, records maintained by DTC and its participants. See
"Description of the Debentures - Form, Denomination, Transfer,
Exchange and Book-Entry Procedures."
Risk Factors
You should read the "Risk Factors" section, beginning on page 6 of this
prospectus, and all other information provided or incorporated by reference in
this prospectus in deciding whether to invest in the debentures.
RISK FACTORS
You should carefully consider the information set forth below before
making an investment decision. Any of these risks could materially and adversely
affect our business, results of operations and financial condition, which in
turn could materially and adversely affect the trading price of our securities.
Risks Related to Our Business
-----------------------------
We have recently developed and commenced sales of a number of new products
which, if they do not gain widespread customer acceptance or if they cause sales
of our existing products to decline, could harm our financial performance.
We have recently introduced a number of new consumer products. The
development and introduction of new products involves substantial research,
development and marketing expenditures, which we may be unable to recoup if the
new products do not gain widespread market acceptance. In addition, if the new
products merely cause sales of our existing products to decline, our financial
performance could be harmed.
We may discontinue products or product lines, which could result in returns,
asset write-offs and shut down costs. We may engage in product recalls, which
would reduce cash flow and earnings.
In the past, we have discontinued certain products and product lines,
which resulted in returns from customers, asset write-offs, and shut down costs.
We may suffer similar adverse consequences in the future to the extent we
discontinue products that do not meet expectations or no longer satisfy consumer
demand. Product returns, write-offs or shut down costs would reduce our cash
flow and earnings. Product efficacy or safety concerns could result in product
recalls or declining sales which would reduce cash flow and earnings.
We face intense competition in a mature industry that may require us to increase
expenditures and accept lower profit margins to preserve or maintain our market
share. Unless the markets in which we compete grow substantially, a loss of
market share will result in reduced sales levels and declining operating
results.
During 2002, 92% of our sales were generated in U.S. markets. U.S.
markets for consumer products are considered mature and commonly characterized
by high household penetration, particularly with respect to our most significant
product categories, such as laundry detergents and deodorizers and household
cleaning products. Our unit sales growth in domestic markets will depend on
increased use of our products by consumers, product innovation and our ability
to capture market share from competitors. We may not succeed in implementing our
strategies to increase domestic revenues.
The consumer products industry, particularly the laundry detergent,
personal care and air deodorizer categories, is intensely competitive. To
protect our existing market share or to capture increased market share, we may
need to increase expenditures for promotions and advertising and introduce and
establish new products. Increased expenditures may not prove successful in
maintaining or enhancing our market share and could result in lower sales and
profits. Many of our competitors, including The Procter & Gamble Company,
Unilever, Inc., The Clorox Company, Colgate-Palmolive Company and S.C. Johnson &
Son, Inc., are substantially larger companies that have greater financial
resources than we have. They have the capacity to outspend us should they
attempt to gain market share. In addition, if we lose market share and the
markets in which we compete do not grow, our sales levels and operating results
would decline.
Providing price concessions or trade terms that are acceptable to our trade
customers, or the failure to do so, could adversely affect our sales and
profitability.
Consumer products, particularly those that are value-priced like many
of our products, are subject to significant price competition and in recent
years have been characterized by price deflation. From time to time, we may need
to reduce the prices for some of our products to respond to competitive and
customer pressures and to maintain market share. Any reduction in prices to
respond to these pressures would harm profit margins. In addition, if our sales
volumes fail to grow sufficiently to offset any reduction in margins, our
results of operations would suffer.
Because of the competitive environment facing retailers, many of our
trade customers, particularly our high-volume retail store customers, have
increasingly sought to obtain pricing concessions or better trade terms. To the
extent we provide concessions or better trade terms, our margins are reduced.
Further, if we are unable to maintain terms that are acceptable to our trade
customers, these trade customers could reduce purchases of our products and
increase purchases of products from our competitors, which would harm our sales
and profitability.
Reductions in inventory by our trade customers, including as a result of
consolidations in the retail industry, could adversely affect our sales.
From time to time our retail customers have reduced inventory levels in
managing their working capital requirements. Any reduction in inventory levels
by our retail customers would harm our operating results. In particular,
continued consolidation within the retail industry could potentially reduce
inventory levels maintained by our retail customers, which could adversely
affect our results of operations.
A continued shift in the retail market from food and drug stores to club stores
and mass merchandisers could cause our sales to decline.
Our performance also depends upon the general health of the economy and
of the retail environment in particular and could be significantly harmed by
changes affecting retailing and by the financial difficulties of retailers.
Industry wide, consumer products such as those marketed by us are increasingly
being sold in club stores and mass merchandisers, while sales of consumer
products by food and drug stores are comprising a smaller proportion of the
total volume of consumer products sold. Sales of our products are stronger in
the food and drug channels of trade and not as strong with the club stores and
mass merchandisers. Although we have taken steps to improve our sales in club
stores and mass merchandisers, if we are not successful in improving sales to
these channels, and the current trend continues, our financial condition and
operating results could suffer.
Loss of any of our principal customers could significantly decrease our sales
and profitability.
Wal-Mart, including its affiliate Sam's Club, is our largest customer,
accounting for 16% of net sales in 2002, 14% of net sales in 2001 and 13% of net
sales in 2000. Our top three customers accounted for 23% of net sales in each of
2002 and 2001, and 21% in 2000. The loss of or a substantial decrease in the
volume of purchases by Wal-Mart or any of our other top customers would harm our
sales and profitability.
We may make acquisitions that could result in dilution to our current
stockholders or increase our indebtedness, or both. In addition, acquisitions
that are not properly integrated or are otherwise unsuccessful could strain or
divert our resources.
We have made several acquisitions in the past few years, including the
acquisition of USA Detergents, Inc., BioVance Technologies, Inc. and some of the
consumer products businesses of Carter-Wallace, Inc., and may make additional
acquisitions or substantial investments in complementary businesses or products
in the future, such as the pending acquisition of Unilever N.V.'s oral care
brands in the United States and Canada. Any future acquisitions or investments
would entail various risks, including the difficulty of assimilating the
operations and personnel of the acquired businesses or products, the potential
disruption of our ongoing business and, generally, our potential inability to
obtain the desired financial and strategic benefits from the acquisition or
investment. These factors could harm our financial condition and operating
results. Any future acquisitions or investments could result in substantial cash
expenditures, the issuance of new equity in us and the incurrence of additional
debt and contingent liabilities. In addition, any potential acquisitions or
investments, whether or not they are ultimately completed, could divert the
attention of management and divert other resources from other matters that are
critical to our operations.
The condom product line of our Armkel joint venture could suffer if the
spermicide N-9 is proved or perceived to be harmful.
Armkel's distribution of condoms under the TROJAN and other trademarks
is regulated by the U.S. Food and Drug Administration (FDA). Certain of Armkel's
condoms contain the spermicide nonoxynol-9 (N-9). The World Health Organization
and other interested groups have issued reports suggesting that N-9 should not
be used rectally or for multiple daily acts of vaginal intercourse, given the
ingredient's potential to cause irritation to human membranes. We expect the FDA
to issue non-binding draft guidance concerning the labeling of condoms with N-9,
although the timing of such draft guidance is uncertain. We believe that condoms
with N-9 provide an acceptable added means of contraceptive protection and we
are cooperating with the FDA concerning the appropriate labeling revisions, if
any. However, we cannot predict the outcome of the FDA review. While labeling
guidance from the FDA is pending, we have implemented an interim label statement
change cautioning against rectal use and multiple daily acts of vaginal
intercourse. We also disseminate this cautionary statement on our product web
site and in other consumer product vehicles.
In addition, in March 2003, a non-binding resolution was introduced in
the California State Assembly which, if passed, would urge the FDA to ban
condoms containing N-9, and encourage California manufacturers and retailers to
cease the production and sale of condoms containing N-9. As amended in August
2003, the resolution cites the reports noted in the preceding paragraph as well
as more recent information suggesting that N-9 may lead to an increase in
urinary tract infections among females. The passage of this resolution could
result in publicity that may add to activist pressure on retailers to cease
carrying condoms with N-9. While we do not consider the level of retailer
concern on this issue to be significant, we cannot predict the impact of the
introduction of this resolution.
If the FDA or state governments take action that prohibit or restrict
the use of N-9 in condoms (such as new labeling requirements), Armkel could
incur further costs from obsolete products, packaging or raw materials and sales
of condoms could decline, which, in turn, could decrease the value of our
interest in Armkel.
The pregnancy diagnostic products business of our Armkel joint venture could
suffer as a result of an unfavorable outcome in a pending proceeding.
In 2002, a purported class action suit, Sandra J. Wagner v. Church &
Dwight Co., Inc., et al., was filed against us and Armkel in the Superior Court
of New Jersey. The lawsuit alleged that Armkel's ovulation test kits are being
marketed in a misleading manner because they do not advise women with certain
ovarian conditions that test results may be inaccurate. The plaintiffs seek
monetary damages as well as injunctive relief against using certain marketing
materials for the kits. The products in question have been cleared for marketing
as medical devices under applicable FDA regulations. We intend to vigorously
defend this suit, but if we are not successful in defending against a claim,
both we and Armkel could be liable for substantial damages or Armkel may be
prevented from offering the kits. These events could harm our financial
condition and results of operations and decrease the value of our interest in
Armkel.
Price increases in raw materials or energy costs could erode our profit margins,
which could harm our operating results.
Increases in the prices of raw materials such as surfactants, which are
cleaning agents, paper products and bottles, or increases in energy costs, could
significantly affect our profit margins. If price increases were to occur, we
may not be able to increase the prices of our products to offset these
increases. This could harm our financial condition and operating results.
Risks Related to the Debentures and Our Common Stock
----------------------------------------------------
The debentures are unsecured and effectively subordinated to certain other
indebtedness, and there are no financial or other restrictive covenants in the
indenture.
The debentures are our general, unsecured obligations and are
effectively subordinated to our existing and future secured indebtedness, to the
extent of the value of the assets securing such indebtedness, and to existing
and future indebtedness and other liabilities of our subsidiaries. As of
September 15, 2003, we had approximately $208 million of secured indebtedness.
As of August 31, 2003, our subsidiaries had approximately $21 million of other
indebtedness and other liabilities as to which the debentures are effectively
subordinated, excluding intercompany liabilities. The indenture governing the
debentures does not contain any financial or operating covenants. Subject to
compliance with the financial covenants in our existing loan agreements, neither
we nor our subsidiaries are restricted from incurring additional debt, including
secured debt, or from providing guarantees of debt of others. If we incur
additional debt, our ability to repay our obligations on the debentures could be
adversely affected. We expect that we will from time to time incur additional
debt, including, but not limited to, debt to finance our pending acquisition of
Unilever N.V.'s oral care brands in the United States and Canada, which debt
will be secured. See "Summary - Recent Development." In addition, we are not
restricted under the indenture from paying dividends or issuing or repurchasing
our securities.
We have substantial debt and may be unable to service or repay our debt,
including the debentures, and other obligations.
Both we and Armkel have substantial debt. Our debt service obligations,
among other things, could make it difficult for us to make payments on or
refinance our indebtedness or to obtain additional financing in the future, or
could limit our future flexibility and make us more vulnerable in the event of a
downturn in our business. Unless we are able to generate sufficient cash flow
from operations to service our indebtedness, we will be required to raise
additional funds. Because the financing markets may be unwilling to provide
financing to us or may only be willing to provide financing on terms that we
would consider unacceptable, we may not have cash available to permit us to meet
our debt service or repayment obligations.
We may not have sufficient cash to purchase the debentures if holders exercise
their option to require us to purchase the debentures.
Holders of the debentures may require us to purchase all or any portion
of their debentures upon the occurrence of a change in control or on certain
specified dates. We are required to pay cash for any debentures that we are
required to purchase on August 15, 2010. We have the option to pay the purchase
price in cash, shares of our common stock or a combination of cash and common
stock, if holders require us to purchase the debentures on dates other than
August 15, 2010 or if we are required to purchase the debentures upon a change
in control, but our ability to pay in shares of our common stock is subject to
conditions, including registration under the Securities Act of 1933 (the
"Securities Act"), if required, and we may not be able to meet those conditions.
We may not have sufficient cash funds to purchase the debentures if we are
required to purchase the debentures on August 15, 2010. Although there are
currently no restrictions on our ability to pay the purchase price, future debt
agreements may prohibit us from repaying the purchase price. If we are
prohibited under any debt agreements from purchasing the debentures, we could
seek consent from our lenders to purchase the debentures, and if we are unable
to obtain their consent, we could attempt to refinance the debentures. However,
if we were unable to obtain a consent or refinance, we would be unable to
purchase the debentures. If we were unable to purchase the debentures on August
15, 2010, an event of default under the indenture would occur, which could
result in a further event of default under our other then-existing senior debt.
In addition, the occurrence of a change in control may be an event of default
under our senior debt. As a result, we could be prohibited from paying amounts
due on the debentures in cash.
The contingent conversion feature of the debentures could limit the ability of
holders to convert the debentures and may adversely affect the trading price of
the debentures.
The debentures are convertible into shares of our common stock only if
specified conditions are met. If the specified conditions for conversion are not
met, holders of debentures will not be able to convert their debentures. The
contingent conversion feature could also adversely affect the value and the
trading prices of the debentures.
Absence of public market for the debentures.
There is no established public trading market for the debentures. We
cannot assure you that a market for the debentures will develop and continue or
that the market price of the debentures will not decline. Various factors, such
as changes in prevailing interest rates or changes in perceptions of our
creditworthiness could cause the market price of the debentures to fluctuate
significantly. The trading price of the debentures will also be significantly
affected by the market price of our common stock. The debentures will not be
listed on any securities exchange or included for quotation in any automated
dealer system and will only be traded on the over-the-counter market.
Anti-takeover provisions may delay or prevent changes in control of our
management or deter a third party from acquiring us, limiting our stockholders'
ability to profit from such a transaction.
Our Board of Directors has the authority to issue up to 2.5 million
shares of preferred stock, of which 225,000 shares have been reserved for
issuance in connection with our stockholder rights plan, and to determine the
price, rights, preferences and privileges of those shares without any further
vote or action by our stockholders. In addition, we are subject to the
anti-takeover provisions of Section 203 of the Delaware General Corporation Law,
which prohibits us from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless the business
combination is approved in a prescribed manner. The Board of Directors'
authority to issue preferred stock, together with our stockholder rights plan
and other provisions of our certificate of incorporation, may have the effect of
deterring hostile takeovers or delaying or preventing changes in control of our
management, even if these events were deemed to be beneficial to our
stockholders.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the information and reporting requirements of the
Exchange Act, under which we file periodic reports, proxy and information
statements and other information with the Securities and Exchange Commission, or
SEC. Copies of the reports, proxy and information statements and other
information may be examined without charge at http://www.sec.gov. You may read
and copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C., 20549, or on the Internet at http://www.sec.gov.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Our SEC filings are also available to the public from our web
site at http://www.churchdwight.com. However, the information on our web site
does not constitute a part of this prospectus. The web site addresses of the SEC
and Church & Dwight are intended to be inactive textual references only.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the U.S. Securities Exchange Act of
1934, as amended (the "Exchange Act"). Any statements about our expectations,
beliefs, plans, objectives, assumptions or future events or performance are not
historical facts and are forward-looking. These statements are often, but not
always, made through the use of words or phrases such as "anticipate,"
"estimate," "plan," "project," "continuing," "ongoing," "expect," "will,"
"could," "may," "management believes," "we believe," "we intend" and similar
words or phrases. These statements involve estimates, assumptions and
uncertainties, and actual results may differ materially from those expressed in
these statements. Any forward-looking statements are qualified in their entirety
by reference to the factors discussed throughout this prospectus and
incorporated by reference in this prospectus. The key factors that could cause
actual results to differ materially from the forward-looking statements include:
o uncertainty as to market growth and consumer demand (including the
effect of political and economic events on consumer demand);
o intense competition in our industry;
o risks and uncertainty regarding raw material and energy prices;
o the financial condition of major customers;
o our determination and ability to exercise our option to acquire the
remaining 50% interest in Armkel, LLC;
o with regard to new product introductions, uncertainty relating to
trade, competitive and consumer reactions; and
o the outcome of contingencies, including litigation, pending regulatory
proceedings, environmental remediation and the acquisition or
divestiture of assets, including the pending acquisition of Unilever
N.V.'s oral care brands in the United States and Canada.
Because the factors referred to above, as well as those addressed under
the heading "Risk Factors" beginning on page 6 of this prospectus and in
documents incorporated by reference in this prospectus, could cause actual
results to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made, and we undertake no obligation to update or
revise any forward-looking statements.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale by any selling
securityholder of the debentures or the shares of our common stock issuable upon
conversion of the debentures.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the six months ended June
27, 2003 and each of the years ended December 31, 1998 through 2002 is as
follows:
Six Months Ended Years Ended
June 27, 2003 December 31,
----------------- --------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges(1) 5.11 4.05 6.91 9.72 17.89 12.44
(1) For the purpose of these computations, earnings have been calculated
by adding fixed charges less capitalized interest, income in
earnings of affiliates, and minority interest of subsidiaries that
have not incurred fixed charges, to income before taxes and minority
interest, plus amortization of capitalized interest and cash
distributions from equity investments. Fixed charges consist of
interest cost, whether expensed or capitalized, amortization of
deferred financing costs and the estimated interest portion of
rental expense charged to income.
DESCRIPTION OF THE DEBENTURES
The debentures were issued under an indenture between us and The Bank
of New York, as trustee. Because this section is a summary, it does not describe
every aspect of the indenture. The following summaries of certain provisions of
the indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the detailed provisions of the
indenture, including the definitions therein of certain terms. You may request
copies of the indenture from us at the address set forth under "Incorporation of
Documents by Reference."
General
The debentures are our senior unsecured obligations. The debentures are
limited to an aggregate principal amount of $100,000,000. We are required to
repay the principal amount of the debentures in full on August 15, 2033.
The debentures bear interest at the rate of 5.25% per annum from August
11, 2003, the date of original issuance. We will pay interest on the debentures
on February 15 and August 15 of each year, commencing on February 15, 2004.
Interest payable per $1,000 principal amount of debentures for the period from
the issue date to February 15, 2004 will be approximately $26.83. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
The debentures will mature on August 15, 2033 unless earlier redeemed
by us at our option or repurchased by us at a holder's option, on certain dates
as described under "--Repurchase Rights," or unless converted at a holder's
option as described below under "--Conversion Rights."
Subject to the conditions described under "--Conversion Rights", each
holder has the option to convert its debentures into our common stock at an
initial conversion rate of 21.5054 shares of our common stock per debenture.
This is equivalent to an initial conversion price of approximately $46.50 per
share. The conversion rate is subject to adjustment if certain events occur as
described under "--Conversion Rate Adjustments." Upon conversion, holders of
debentures will receive only our common stock. We will not adjust the conversion
rate to account for accrued interest.
Ranking
The debentures rank equal in right of payment with any of our existing
and future unsecured and unsubordinated indebtedness. The debentures are
effectively subordinated to any of our existing and future secured indebtedness
to the extent of the value of the assets securing such indebtedness. Our secured
creditors will be entitled to receive payment on their claims by realizing on
the collateral securing their claims prior to a debenture holder's right and
that of our other senior unsecured creditors in respect of that collateral. As
of September 15, 2003, we had approximately $150 million of secured indebtedness
outstanding under our bank credit agreement and the ability to borrow up to an
additional $100 million under our revolving credit facility included under the
bank credit agreement. At that date, we also had outstanding approximately $58
million accounted for as borrowings from the sale of trade accounts under a
separate $60 million receivables facility. The debentures are also "structurally
subordinated" to the indebtedness and other liabilities of our existing
subsidiaries and any future subsidiaries, including, without limitation, trade
payables. Such structural subordination is due to the fact that our right to
receive any assets of our subsidiaries upon their liquidation and
reorganization, and a debenture holder's right to participate in those assets,
will be effectively subordinated to claims of that subsidiary's creditors,
including, without limitation, trade creditors, except to the extent that we are
recognized as a creditor of such subsidiary. If we are recognized as a creditor
of that subsidiary, our claims would still be subordinate to claims holding a
security interest in the assets of the subsidiary and any indebtedness of the
subsidiary senior to indebtedness that we hold. As of August 31, 2003, our
subsidiaries had approximately $21 million of indebtedness and other liabilities
as to which the debentures would have been "structurally subordinated,"
excluding intercompany liabilities. Neither we nor our subsidiaries are limited
or restricted by the indenture from incurring additional indebtedness, including
secured debt, or providing guarantees of indebtedness. We expect to incur
additional debt to finance our pending acquisition of Unilever N.V.'s oral care
brands in the United States and Canada. See "Summary - Recent Development." The
indenture also does not impose any financial or similar covenants on us or our
subsidiaries.
Form, Denomination, Transfer, Exchange and Book-Entry Procedures
The debentures are issued:
o only in fully registered form;
o without interest coupons; and
o in denominations of $1,000 and greater multiples.
The debentures are evidenced by one or more global debentures, which
have been deposited with the trustee, as custodian for DTC, and registered in
the name of Cede & Co., as nominee of DTC. Except as set forth below, record
ownership of the global debenture may be transferred, in whole or in part, only
to another nominee of DTC or to a successor of DTC or its nominee.
The global debenture will not be registered in the name of any person,
or exchanged for debentures that are registered in the name of any person, other
than DTC or its nominee, unless either of the following occurs:
o DTC notifies us that it is unwilling, unable or no longer
qualified to continue acting as the depositary for the global
debenture or DTC ceases to be a registered clearing agency or
ceases doing business or announces an intention to cease doing
business; or
o an event of default with respect to the debentures represented by
the global debenture has occurred and is continuing.
In those circumstances, DTC will determine in whose names any
securities issued in exchange for the global debenture will be registered.
DTC or its nominee will be considered the sole owner and holder of the
global debenture for all purposes, and as a result, if you purchase debentures:
o you cannot receive debentures registered in your name if they are
represented by the global debenture;
o you cannot receive physical certificated debentures in exchange
for your beneficial interest in the global debentures;
o you will not be considered to be the holder of the global
debenture or any debenture it represents for any purpose; and
o all payments on the global debenture will be made to DTC or its
nominee.
The laws of some jurisdictions require that certain kinds of
purchasers, such as insurance companies, can only own securities in definitive
certificated form. These laws may limit a debenture holder's ability to transfer
its beneficial interests in the global debenture to these types of purchasers.
Only institutions, such as a securities broker or dealer, that have
accounts with DTC or its nominee (called participants) and persons that may hold
beneficial interests through participants can own a beneficial interest in the
global debenture. The only place where the ownership of beneficial interests in
the global debenture will appear and the only way the transfer of those
interests can be made will be on the records kept by DTC (for their
participants' interests) and the records kept by those participants (for
interests of persons held by participants on their behalf).
We will make payments of interest and principal of, and the redemption
or repurchase price of, the global debenture, as well as any payment of
liquidated damages, to Cede & Co., the nominee of DTC, as the registered owner
of the global debenture. We will make these payments by wire transfer of
immediately available funds on each payment date.
We have been informed that DTC's practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
respective beneficial interests in the debentures represented by the global
debenture as shown on DTC's records, unless DTC has reason to believe that it
will not receive payment on that payment date. Payments by participants to
owners of beneficial interests in debentures represented by the global debenture
held through participants will be the responsibility of those participants.
We will send any redemption notices to Cede & Co. We understand that if
less than all the debentures are being redeemed, DTC's practice is to determine
by lot the amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede & Co. will consent or vote
with respect to the debentures. We have been advised that under its usual
procedures, DTC will mail an omnibus proxy to us as soon as possible after the
record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights
to those participants to whose account the debentures are credited on the record
date and who are identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global debenture to pledge
the interest to persons or entities that do not participate in the DTC
book-entry system, or otherwise take actions in respect of that interest, may be
affected by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken
by a holder of debentures (including the presentation of debentures for
conversion) only at the direction of one or more participants to whose account
with DTC interests in the global debenture are credited and only in respect of
such portion of the principal amount of the debentures represented by the global
debenture as to which such participant or participants has or have given such
direction.
DTC has also advised us as follows:
o DTC is a limited-purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System,
a clearing corporation within the meaning of the New York Uniform
Commercial Code, as amended, and a clearing agency registered
pursuant to the provisions of Section 17A of the Exchange Act;
o DTC holds securities for its participants and facilitates the
settlement of securities transactions between participants
through electronic book-entry changes in accounts of its
participants;
o participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other
organizations;
o certain participants and the New York Stock Exchange, Inc., the
American Stock Exchange LLC and the National Association of
Securities Dealers, Inc. own DTC; and
o indirect access to the DTC system is available to other entities
such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant,
either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global debenture. We and the trustee have no responsibility or
liability for any aspect of DTC's or any participant's records relating to
beneficial interests in the global debenture, including for payments made on the
global debenture. Further, we and the trustee are not responsible for
maintaining, supervising or reviewing any of those records.
Conversion Rights
Subject to the conditions described below, holders may convert their
debentures into our common stock initially at a conversion rate of 21.5054
shares of our common stock per $1,000 principal amount of debentures (equivalent
to an initial conversion price of approximately $46.50 per share). The
conversion rate and the equivalent conversion price in effect at any given time
are referred to in this prospectus as the "conversion rate" and the "conversion
price," respectively, and will be subject to adjustment as described below.
We will not issue fractional shares of our common stock upon the
conversion of the debentures. Instead, we will pay the cash value of such
fractional shares based upon the sale price (as defined below) of our common
stock on the business day immediately preceding the conversion date.
If a debenture has been called for redemption, holders will be entitled
to convert that debenture from the date of notice of the redemption until the
close of business on the business day immediately preceding the date of
redemption. The right to convert will expire at that time, unless we default in
making the payment due upon redemption. A holder may convert fewer than all of
such holder's debentures so long as the debentures converted are an integral
multiple of $1,000 principal amount.
A holder may convert its debentures into our common stock at the
applicable conversion rate prior to the stated maturity of the debentures under
any of the following circumstances:
o during any conversion period (as defined below) prior to August
15, 2032, if the sale price of our common stock for at least 20
trading days in the 30 consecutive trading day period ending on
the first day of such conversion period is more than 120% of the
conversion price on the first day of the conversion period;
o at any time after the sale price of our common stock on any date
after August 15, 2032, is more than 120% of the then current
conversion price;
o during the five consecutive business day period following any
five consecutive trading-day period in which the average of the
trading prices (as defined below) for the debentures was less
than 95% of the average of the sale prices of our common stock
for such five trading-day period multiplied by the applicable
conversion rate; provided, however, if, on the day before the
conversion date, the sale price of our common stock is greater
than 100% of the conversion price but less than or equal to 120%
of the conversion price, then a holder converting its debentures
may receive, in lieu of our common stock based on the applicable
conversion rate, at our option, cash, our common stock or a
combination of cash and our common stock with a value equal to
100% of the principal amount of the holder's debentures on the
conversion date;
o if, and for so long as, the credit rating assigned to the
debentures by either Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Ratings Group ("S&P") is reduced at least
two notches below B1 and BB-, respectively;
o if we have called such holder's debentures for redemption; or
o upon the occurrence of specified corporate transactions discussed
below.
Conversion Upon Satisfaction of Sale Price Condition
----------------------------------------------------
A holder may convert any of its debentures into our common stock during
any conversion period prior to August 15, 2032, if the sale price of our common
stock, for at least 20 trading days in the period of 30 consecutive trading days
ending on the first day of such conversion period, is more than 120% of the
conversion price on the first day of such conversion period. If an event set
forth under "--Conversion Rate Adjustments" shall have occurred during the
period of 30 consecutive trading days ending on the first day of such conversion
period, the sale price of our common stock on the trading days prior to the
occurrence of the event shall be deemed for purposes of the calculation
described in the previous sentence to have been appropriately adjusted to
reflect the occurrence of the event.
A holder may also convert any of its debentures into our common stock
if, at any time after August 15, 2032, the sale price of our common stock is
more than 120% of the then current conversion price. In such event, the holder
may convert any of its debentures into our common stock at any time thereafter
prior to the close of business on the business day immediately prior to the
maturity of the debentures.
The "conversion price" per share of our common stock as of any day will
equal the principal amount of the debentures divided by the applicable
conversion rate.
A "conversion period" will be the period from and including the
eleventh trading day in a fiscal quarter up to but not including the eleventh
trading day of the following fiscal quarter.
The "sale price" of our common stock on any date means the last
reported per share sale price (or, if no last sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on such date as reported
in composite transactions for the principal U.S. securities exchange on which
our common stock then is listed, or if our common stock is not listed on a U.S.
national or regional exchange, as reported on the NASDAQ National Market, or if
our common stock is not quoted on the NASDAQ National Market, as reported on the
principal other market on which our common stock is then traded. In the absence
of such quotations, our board of directors will make a good faith determination
of the sale price.
The conversion agent will, on our behalf, determine daily if the
debentures are convertible as a result of the sale price of our common stock and
notify us and the trustee. The conversion agent initially will be The Bank of
New York.
Conversion Upon Satisfaction of Trading Price Condition
-------------------------------------------------------
A holder may convert any of its debentures into our common stock during
the five consecutive business day period following any five consecutive
trading-day period in which the average of the trading prices for the debentures
was less than 95% of the average sale price of our common stock during such five
trading-day period multiplied by the applicable conversion rate; provided,
however, if, on the day before the conversion date (as defined below), the sale
price of our common stock is greater than 100% of the conversion price but less
than or equal to 120% of the conversion price, then a holder converting its
debentures may receive, in lieu of our common stock based on the applicable
conversion rate, at our option, cash, our common stock or a combination of cash
and our common stock with a value equal to the principal amount of such holder's
surrendered debentures on the conversion date. Our common stock will be valued
at 100% of the average sale price for the five consecutive trading days ending
on the third trading day preceding the conversion date. If a holder converts its
debentures, we will notify such holder, with a copy to the trustee and the
conversion agent, by the second trading day following the date of conversion
whether we will pay such holder in cash, our common stock or a combination of
cash and our common stock, and in what percentage. We will pay such holder any
portion of the principal amount of such holder's debentures so converted to be
paid in cash on the third trading day after the conversion date. With respect to
any portion of the sum of the principal amount of such holder's debentures so
converted to be paid in our common stock, we will deliver our common stock to
such holder on the fourth trading day following the conversion date.
The "trading price" of the debentures on any date of determination
means the average of the secondary market bid quotations per debenture obtained
by the trustee for $5,000,000 principal amount of the debentures at
approximately 3:30 p.m., New York City time, on such determination date from two
independent nationally recognized securities dealers we select, provided that if
at least two such bids cannot reasonably be obtained by the trustee, but one
such bid can reasonably be obtained by the trustee, this one bid shall be used.
If the trustee cannot reasonably obtain at least one bid for $5,000,000
principal amount of the debentures from a nationally recognized securities
dealer or in our reasonable judgment, the bid quotations are not indicative of
the secondary market value of the debentures, then the trading price of the
debentures will equal (a) the applicable conversion rate of the debentures
multiplied by (b) the sale price of our common stock on such determination date.
The Bank of New York, as trustee, will determine the trading price
after being requested in writing to do so by us. We will have no obligation to
make that request unless a holder of debentures provides us with reasonable
evidence that the trading price of the debentures may be less than 95% of the
average sale price of our common stock multiplied by the applicable conversion
rate for a five consecutive trading-day period. If a holder provides such
evidence, we will instruct the trustee in writing to determine the trading price
of the debentures for the applicable period.
Conversion Upon Credit Ratings Event
------------------------------------
A holder may convert any of its debentures if, and for so long as, the
credit rating assigned to the debentures by either Moody's or S&P is reduced at
least two notches below B1 and BB-, respectively. The debentures, however, do
not become convertible if the credit rating assigned to the debentures has been
suspended or withdrawn by either of such rating agencies or if either of such
rating agencies is not rating the debentures. We have no obligation to cause the
debentures to continue to be rated.
Conversion Upon Notice of Redemption
------------------------------------
A holder may convert any of the debentures called for redemption at any
time prior to the close of business one business day prior to the redemption
date, even if the debentures are not otherwise convertible at that time. If a
holder has already delivered a purchase notice or a change in control purchase
notice as described below with respect to a debenture, however, the holder may
not convert that debenture until the holder has withdrawn the notice in
accordance with the indenture.
Conversion Upon Specified Corporate Transactions
------------------------------------------------
Even if none of the conditions described above have occurred, if we
elect to:
o distribute to all holders of our common stock rights entitling
them to purchase, for a period expiring within 60 days of the
declaration date for such distribution, our common stock at less
than the current market price (as defined in the indenture) at
the time, or
o distribute to all holders of our common stock our assets, debt
securities or rights to purchase our securities, which
distribution has a per share value exceeding 10.0% of the sale
price (as defined above) of our common stock on the day preceding
the declaration date for such distribution, then
we must notify the holders of debentures at least 20 days prior to the
ex-dividend date for such distribution. Once we have given that notice, holders
may convert their debentures at any time until the earlier of the close of
business on the business day prior to the ex-dividend date or our announcement
that such distribution will not take place. Notwithstanding the foregoing, no
adjustment to the ability of a holder to convert will be made if the holder will
otherwise participate in the distribution without conversion.
In addition, if we are party to a consolidation, merger or binding
share exchange pursuant to which all or substantially all of our common stock
would be converted into cash, securities or other property, a holder may convert
debentures at any time from and after the date that is 15 days prior to the
anticipated effective date of the transaction until 15 days after the actual
date of such transaction. If we are a party to a consolidation, merger or
binding share exchange pursuant to which all or substantially all of our common
stock is converted into cash, securities or other property, then at the
effective time of the transaction, the right to convert a debenture into our
common stock will be changed into a right to convert the debentures into the
kind and amount of cash, securities or other property that the holder would have
received if the holder had converted its debentures immediately prior to the
transaction. If the transaction also constitutes a "Change in Control," as
defined below, a holder can require us to purchase all or a portion of its
debentures as described under "--Change in Control."
Conversion Rate and Conversion Procedures
The initial conversion rate is 21.5054 shares of our common stock for
each $1,000 principal amount of debentures. This is equivalent to an initial
conversion price of approximately $46.50 per share of our common stock. We will
not issue fractional shares of our common stock upon conversion of the
debentures. Instead, we will pay cash for the fractional shares based on the
sale price of our common stock on the trading day immediately prior to the
conversion date. Delivery of our common stock will be deemed to satisfy our
obligation to pay the principal amount of the debentures, including any accrued
and unpaid interest. Accrued interest will be deemed paid in full rather than
canceled, extinguished or forfeited. We will not adjust the conversion rate to
account for accrued interest.
To convert interests in a global debenture, a holder must deliver to
DTC the appropriate instruction form for conversion pursuant to DTC's conversion
program. To convert all or part of any definitive debenture, if issued, a holder
must deliver the debenture at the corporate trust office of the conversion
agent, initially The Bank of New York, accompanied by a duly signed and
completed conversion notice, a copy of which may be obtained from the conversion
agent. The conversion date will be the date on which the debenture and the duly
signed and completed conversion notice are so delivered.
As promptly as practicable on or after the conversion date, we will
issue and deliver to the conversion agent a certificate or certificates for the
number of full shares of our common stock issuable upon conversion, together
with payment in lieu of any fraction of a share. The certificate(s) will then be
sent by the conversion agent for delivery to the holder of the debenture being
converted. The shares of our common stock issuable upon conversion of the
debentures will be fully paid and nonassessable and will rank equally with the
other shares of our common stock.
If a holder converts a debenture on a date that is not an interest
payment date, the holder will not be entitled to receive any interest for the
period from the preceding interest payment date to the date of conversion,
except as described below. However, if the holder is a holder of a debenture on
a regular record date, including a debenture converted after the regular record
date, the holder will receive the interest payable on such debenture on the next
succeeding interest payment date. Accordingly, any conversion notice given
during the period from the close of business on a regular record date to the
opening of business on the next succeeding interest payment date must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of debentures being converted.
However, a holder will not be required to make that payment if it is converting
a debenture, or a portion of a debenture, that we have called for redemption, or
that the holder is entitled to require us to repurchase from such holder, if the
conversion right would terminate because of the redemption or repurchase between
the regular record date and the close of business on the second business day
following the next succeeding interest payment date.
No other payment or adjustment for interest, or for any dividends in
respect of our common stock, will be made upon conversion. Holders of our common
stock issued upon conversion will not be entitled to receive any dividends
payable to holders of our common stock as of any record time or date before the
close of business on the conversion date. We will not issue fractional shares of
common stock upon conversion. Instead, we will pay cash in lieu of fractional
shares of common stock based upon the sale price of our common stock on the
business day immediately preceding the conversion date. For a summary of the
U.S. federal income tax considerations relating to conversion of a debenture,
see "Certain United States Federal Income Tax Considerations - Conversion of
Debentures."
A debenture holder will not be required to pay any taxes or duties
relating to the issue or delivery of our common stock on conversion but will be
required to pay any tax or duty relating to any transfer involved in the issue
or delivery of our common stock in a name other than that of the debenture
holder. Certificates representing shares of our common stock will not be issued
or delivered unless all taxes and duties, if any, payable by a debenture holder
have been paid.
Conversion Rate Adjustments
The conversion rate will be adjusted on the occurrence of, among other
things:
o the payment of dividends and other distributions payable
exclusively in our common stock on shares of our common stock to
all holders of our common stock;
o the issuance to all holders of our common stock of rights,
options or warrants entitling them to subscribe for or purchase
our common stock at less than the then current market price of
such common stock as of the date of approval by our board of
directors of the issuance of such rights, options or warrants;
provided that the conversion rate will be readjusted to the
extent that such rights, options or warrants are not exercised
prior to their expiration;
o subdivisions, combinations and reclassifications of our common
stock;
o the payment of distributions to all holders of our common stock
consisting of evidences of our indebtedness, shares of capital
stock, cash or assets, not including:
o those dividends, rights, options, warrants and distributions
referred to above;
o dividends and distributions paid exclusively in cash other than
those referred to in the next two succeeding bullet points; and
o distributions upon mergers or consolidations discussed below;
o the payment of distributions consisting exclusively of cash,
excluding cash distributed upon a merger or consolidation
discussed below, to all holders of our common stock in an
aggregate amount that, combined together with other all-cash
distributions made within the preceding 365-day period in respect
of which no adjustment has been made, exceeds $0.32 per share
(appropriately adjusted from time to time for any stock dividends
on or subdivisions or combinations of our common stock);
o the successful completion of a tender offer made by us or any of
our subsidiaries for shares of our common stock which involves an
aggregate consideration that, together with:
o any cash and the fair market value of other consideration
payable in a tender offer by us or any of our subsidiaries
for shares of our common stock consummated within the
365-day period preceding the expiration of that tender offer
in respect of which no adjustments have been made; and
o the aggregate amount of any cash distributions to all
holders of our common stock within the 365-day period
preceding the expiration of that tender offer in respect of
which no adjustments have been made,
exceeds 10% of our market capitalization, being the product of the sale
price per share of our common stock on the date of acceptance of shares
in such tender offer and the number of shares of common stock then
outstanding.
Notwithstanding the foregoing provisions, there will be no adjustment
of the conversion rate upon issuance of shares pursuant to a dividend
reinvestment plan or because of a tender or exchange offer to holders of less
than 100 shares of common stock.
We have issued rights to all of our holders of common stock pursuant to
our stockholder rights plan described under "Description of Capital Stock -
Stockholder Rights Plan." This plan may be amended or renewed or a replacement
rights plan may be adopted by us. There will be no adjustment upon the issuance
of rights pursuant to any such rights plan prior to such rights being separated
from the common stock. If any holder converts debentures prior to the rights
trading separately from the common stock, the holder will be entitled to receive
rights in addition to the common stock. Following the occurrence of a separation
event, holders will only receive common stock upon a conversion of any
debentures without the right. However, upon the occurrence of the separation
event, the conversion ratio will be adjusted. If such an adjustment is made and
the rights are later redeemed, invalidated or terminated, then a reversing
adjustment will be made.
We reserve the right to effect such increases in the conversion rate in
addition to those required by the foregoing provisions as we consider to be
advisable in order to avoid or diminish any income tax to holders of our common
stock resulting from certain dividends, distributions or issuances of rights or
warrants. We will not be required to make any adjustment to the conversion rate
until the cumulative adjustments amount to 1.0% or more of the conversion rate.
We will compute all adjustments to the conversion rate and will give notice by
mail to holders of the registered debentures, with a copy to the trustee and the
conversion agent, of any adjustments.
In the event that we consolidate or merge with or into another entity
or another entity is merged into us, or in case of any sale or transfer of all
or substantially all of our assets, each debenture then outstanding will become
convertible only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of common stock into which the debentures were convertible
immediately prior to the consolidation or merger or sale or transfer. The
preceding sentence will not apply to a merger or sale of all or substantially
all of our assets that does not result in any reclassification, conversion,
exchange or cancellation of our common stock.
We may increase the conversion rate for any period of at least 20 days
if our board of directors determines that the increase would be in our best
interest. The board of directors' determination in this regard will be
conclusive. We will give holders of debentures at least 15 days' notice, with a
copy to the trustee and the conversion agent, of such an increase in the
conversion rate. Any increase, however, will not be taken into account for
purposes of determining whether the closing price of our common stock equals or
exceeds 105% of the conversion price in connection with an event that otherwise
would be a change in control as defined below.
If at any time we make a distribution of property to our stockholders
that would be taxable to such stockholders as a dividend for United States
federal income tax purposes, such as distributions of evidences of indebtedness
or assets by us, but generally not stock dividends on common stock or rights to
subscribe for common stock, and, pursuant to the anti-dilution provisions of the
indenture, the number of shares of common stock into which debentures are
convertible is increased, that increase may be deemed for United States federal
income tax purposes to be the payment of a taxable dividend to holders of the
debentures. See "Certain United States Federal Income Tax Considerations-
Dividends."
Redemption by Church & Dwight
We may redeem any portion of the debentures at any time on or after
August 15, 2008 upon at least 30 and not more than 60 days' notice by mail to
the holders of the debentures, at the following prices expressed as a percentage
of the principal amount:
Redemption Period Price (%)
----------------- ---------
Beginning on August 15, 2008 and ending on August 14, 2009 101.50%
Beginning on August 15, 2009 and ending on August 14, 2010 100.75%
and 100% if redeemed on or after August 15, 2010. In each case, we will pay
accrued and unpaid interest, if any, to, but not including, the redemption date.
If we decide to redeem fewer than all of the outstanding debentures,
the trustee will select the debentures to be redeemed by lot, on a pro rata
basis or by another method the trustee considers appropriate.
If the trustee selects a portion of a holder's debenture for partial
redemption and such holder converts a portion of the same debenture, the
converted portion will be deemed to be from the portion selected for redemption.
In the event of any redemption, we will not be required to:
o issue, register the transfer of or exchange any debenture during
a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of such debentures for
redemption and ending at the close of business on the earliest
date on which the relevant notice of redemption is mailed to all
holders of debentures to be so redeemed, or
o register the transfer of or exchange any debenture so selected
for redemption, in whole or in part, except the unredeemed
portion of any debenture being redeemed in part.
No sinking fund is provided for the debentures, which means that the
indenture does not require us to redeem or retire the debentures periodically.
We or a third party may, to the extent permitted by applicable law, at
any time purchase debentures in the open market, by tender at any price or by
private agreement. Any debenture that we or a third party purchase may, to the
extent permitted by applicable law, be re-issued or resold or may, at our or
such third party's option, be surrendered to the trustee for cancellation. Any
debentures surrendered for cancellation may not be re-issued or resold and will
be canceled promptly.
Payment and Conversion
Payment of any interest on the debentures will be made to DTC or its
nominee or, if the debentures are definitive debentures, the person in whose
name the debenture, or any predecessor debenture, is registered at the close of
business on February 1 or August 1, whether or not a business day, immediately
preceding the relevant interest payment date (a "regular record date").
Payments on any global debenture registered in the name of DTC or its
nominee will be payable by the trustee to DTC or its nominee in its capacity as
the registered holder under the indenture. Under the terms of the indenture, we
and the trustee will treat the persons in whose names the debentures, including
any global debenture, are registered as the owners for the purpose of receiving
payments and for all other purposes. Consequently, neither we, the trustee nor
any of our agents or the trustee's agents has or will have any responsibility or
liability for:
o any aspect of DTC's records or any participant's or indirect
participant's records relating to or payments made on account of
beneficial ownership interests in the global debenture, or for
maintaining, supervising or reviewing any of DTC's records or any
participant's or indirect participant's records relating to the
beneficial ownership interests in the global debentures; or
o any other matter relating to the actions and practices of DTC or
any of its participants or indirect participants.
We will not be required to make any payment on the debentures due on
any day which is not a business day until the next succeeding business day. The
payment made on the next succeeding business day will be treated as though it
were paid on the original due date, and no interest will accrue on the payment
for the additional period of time.
In the event the debentures are registered in a holder's name as a
result of the occurrence of an event described under "- Form, Denomination,
Transfer, Exchange and Book-Entry Procedures," and the holder holds registered
debentures with a face value greater than $2,000,000, at the holder's request we
will make payments of principal or interest to the holder by wire transfer to an
account maintained by the holder at a bank in The City of New York if the holder
provides the trustee with wire transfer instructions at least 15 days prior to
the relevant payment date.
Debentures may be converted at the corporate trust office of the
conversion agent. A conversion request must be accompanied by appropriate
notices and any payments in respect of interest or taxes, as applicable, as
described above under "- Conversion Rights."
We have initially appointed the trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. However,
until the debentures have been received by the trustee for cancellation, or
moneys sufficient to pay the principal of, premium, if any, and interest on the
debentures have been made available for payment and either paid or returned to
us as provided in the indenture, we will maintain an office or agency in the
Borough of Manhattan, The City of New York for conversion of the debentures.
Notice of any termination or appointment and of any change in the office through
which any paying agent or conversion agent will act will be given in accordance
with "- Notices" below.
All monies deposited with the trustee or any paying agent, or then held
by us, in trust for the payment of principal of, premium, if any, or interest on
any debentures which remain unclaimed at the end of two years after the payment
has become due and payable will be repaid to us, and debenture holders will then
look only to us for payment.
Repurchase Rights
Holders have the right to require us to repurchase the debentures on
August 15, 2010, August 15, 2013, August 15, 2018, August 15, 2023 and August
15, 2028, each of which we refer to as a "repurchase date," at a repurchase
price equal to the principal amount of debentures to be repurchased, plus
accrued and unpaid interest, if any, to, but not including, the repurchase date.
We will be required to repurchase any outstanding debentures for which a holder
delivers a written repurchase notice to the paying agent. This notice must be
received by the paying agent during the period beginning at any time from the
opening of business on the date that is 20 business days prior to the relevant
repurchase date until the close of business on the last business day prior to
the repurchase date. If the repurchase notice is given and withdrawn during the
period, we will not be obligated to repurchase the related debentures. Our
repurchase obligation will be subject to some additional conditions as described
below.
We will pay the repurchase price for any debentures submitted for
repurchase by us on August 15, 2010 solely in cash. At our sole option, we may
elect to pay the repurchase price for any debentures submitted for repurchase by
us on August 15, 2013, August 15, 2018, August 15, 2023 or August 15, 2028, in
cash, in shares of our common stock or a combination of shares of our common
stock and cash. The number of shares of our common stock a holder will receive
will equal the relevant amount of the purchase price divided by 95% of the
average of the sale prices of our common stock for the five trading days
immediately preceding and including the third business day immediately preceding
the repurchase date. However, we may not pay the purchase price in shares of our
common stock or a combination of shares of our common stock and cash, unless we
satisfy certain conditions prior to the repurchase date as provided in the
indenture, including:
o registration of the shares of our common stock to be issued upon
repurchase under the Securities Act, if required;
o qualification of the shares of our common stock to be issued upon
repurchase under applicable state securities laws, if necessary,
or the availability of an exemption therefrom; and
o listing of our common stock on a U.S. national securities
exchange or quotation thereof in an inter-dealer quotation system
of any registered U.S. national securities association.
We are required to give notice at least 20 business days prior to each
repurchase date to all holders stating, among other things, the procedures that
holders must follow to require us to repurchase their debentures as described
below and with respect to debentures submitted for repurchase by us on August
15, 2013, August 15, 2018, August 15, 2023 or August 15, 2028, whether the
purchase price will be paid in cash or shares of our common stock, or a
combination with a portion payable in cash or shares of our common stock.
Because the sale price of our common stock will be determined prior to
the applicable repurchase date, holders of debentures bear the market risk that
our common stock will decline in value between the date the sale price is
calculated and the repurchase date.
The repurchase notice given by each holder electing to require us to
repurchase debentures must be given so as to be received by the paying agent no
later than the close of business on the business day immediately preceding the
repurchase date and must state:
o the portion of the principal amount of debentures to be
repurchased, which must be $1,000 or an integral multiple
thereof; and
o that the debentures are to be repurchased by us pursuant to the
applicable provisions of the debentures and the indenture.
A holder may withdraw any repurchase notice by delivering a written
notice of withdrawal to be received by the paying agent prior to the close of
business on the business day immediately preceding the repurchase date. The
notice of withdrawal must state:
o the principal amount of debentures being withdrawn; and
o the principal amount, if any, of the debentures that remain
subject to the repurchase notice.
A holder's withdrawal notice must comply with appropriate DTC
procedures.
In connection with any repurchase, we will, to the extent applicable:
o comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act which may then be
applicable; and
o file Schedule TO or any other required schedule under the
Exchange Act.
Our obligation to pay the purchase price for debentures for which a
repurchase notice has been delivered and not validly withdrawn is conditioned
upon the holder delivering the debentures, together with necessary endorsements,
to the paying agent at any time after delivery of the repurchase notice. We will
cause the purchase price for the debentures to be paid promptly following the
later of the repurchase date or the time of delivery of the debentures, together
with such endorsements.
If the paying agent holds money or shares of our common stock, as
applicable, sufficient to pay the purchase price of a debenture for which a
repurchase notice has been given on the business day immediately following the
repurchase date in accordance with the terms of the indenture, then, on the
repurchase date, such debenture will cease to be outstanding and interest on
such debenture will cease to accrue, whether or not such debenture is delivered
to the paying agent. Thereafter, all rights of the holder shall terminate, other
than the right to receive the purchase price upon delivery of such debenture.
Our ability to repurchase debentures for cash may be limited by
restrictions on our ability to obtain funds for such repurchase through
dividends from our subsidiaries and the terms of our then existing borrowing
agreements. We cannot assure that we would have the financial resources, or
would be able to arrange financing, to pay the purchase price in cash for all
the debentures that might be delivered by holders of debentures seeking to
exercise the repurchase right. See "Risk Factors -- We may not have sufficient
cash to purchase the debentures if holders exercise their option to require us
to purchase the debentures."
Repurchase at Option of Holders Upon A Change in Control
If a "change in control" as defined below occurs, holders will have the
right, at their option, to require us to repurchase all of their debentures not
previously called for redemption, or any portion of the principal amount
thereof, that is equal to $1,000 or an integral multiple of $1,000. The price we
are required to pay is 100% of the principal amount of the debentures to be
repurchased, together with accrued and unpaid interest to, but excluding, the
repurchase date.
At our sole option, we may elect to pay the repurchase price for any
debentures submitted for repurchase by us in cash, in shares of our common stock
or a combination of shares of our common stock and cash. The number of shares of
our common stock a holder will receive will equal the relevant amount of the
purchase price divided by 95% of the average of the sale prices of our common
stock for the five trading days immediately preceding and including the third
business day immediately preceding the repurchase date. We may only pay the
repurchase price in common stock if we satisfy conditions similar to those
described under "-- Repurchase Rights," with respect to the repurchase of
debentures by us on August 15, 2013, August 15, 2018, August 15, 2023 or August
15, 2028.
Within 30 days after the occurrence of a change in control, we are
obligated to give each holder of debentures notice of the change in control and
of the repurchase right arising as a result of the change in control. We must
also deliver a copy of this notice to the trustee. To exercise the repurchase
right, a holder must deliver, on or before the 30th day after the date of our
notice, irrevocable written notice to the trustee of such holder's exercise of
its repurchase right, and if the debenture is a definitive debenture, together
with the debentures with respect to which the right is being exercised. We are
required to repurchase the debentures on the date that is 45 days after the date
of our notice.
A change in control will be deemed to have occurred at any time that
any of the following occurs:
o any person acquires beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or
series of transactions, of shares of our capital stock entitling
the person to exercise 50% or more of the total voting power of
all shares of our capital stock that are entitled to vote
generally in elections of directors, other than an acquisition by
us, any of our subsidiaries or any of our employee benefit plans;
or
o we merge or consolidate with or into any other person, another
person merges into us or we convey, sell, transfer or lease all
or substantially all of our assets to another person, other than
any such transaction:
o that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of our capital
stock; or
o pursuant to which the holders of shares of our capital stock
entitled to vote generally in elections of directors immediately
prior to such transaction have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power of
all shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving corporation
immediately after such transaction; or
o which is effected solely to change our jurisdiction of
incorporation and results in a reclassification, conversion or
exchange of outstanding shares of our common stock solely into
shares of common stock of the surviving entity.
However, a change in control will not be deemed to have occurred if:
o the sale price of our common stock for any five trading days
within the period of 10 consecutive trading days ending
immediately after the later of the change in control or the
public announcement of the change in control, in the case of a
change in control relating to an acquisition of capital stock, or
the period of 10 consecutive trading days ending immediately
before the change in control, in the case of a change in control
relating to a merger, consolidation or asset sale, equals or
exceeds 105% of the conversion price of the debentures in effect
on each of those five trading days; or
o all of the consideration, excluding cash payments for fractional
shares of our common stock and cash payments made pursuant to
dissenters' appraisal rights, in a merger or consolidation
otherwise constituting a change in control under the first and
second bullet points in the preceding paragraph above consists of
shares of common stock, depository receipts or other certificates
representing common equity interests traded on a national
securities exchange or quoted on the Nasdaq National Market, or
will be so traded or quoted immediately following such merger or
consolidation, and as a result of such merger or consolidation
the debentures become convertible solely into such common stock,
depository receipts or other certificates representing common
equity interests.
For purposes of these provisions:
o the conversion price is equal to $1,000 divided by the conversion
rate;
o whether a person is a "beneficial owner" will be determined in
accordance with Rule 13d-3 under the Exchange Act; and
o a "person" includes any syndicate or group that would be deemed
to be a person under Section 13(d)(3) of the Exchange Act.
We may arrange for a third party to make an offer to repurchase the
debentures upon a change in control in the manner and otherwise in compliance
with the requirements set forth in the indenture applicable to the offer to
repurchase the debentures validly tendered and not withdrawn under the terms of
the offer to repurchase the debentures.
The rules and regulations promulgated under the Exchange Act require
the dissemination of prescribed information to security holders in the event of
an issuer tender offer and may apply in the event that the repurchase option
becomes available to debenture holders. We will comply with these rules to the
extent they apply at that time.
The definition of change in control includes a phrase relating to the
conveyance, sale, transfer or lease of all or substantially all of our assets.
There is no precise, established definition of the phrase "substantially all"
under applicable law. Accordingly, a holder's ability to require us to
repurchase its debentures as a result of the conveyance, sale, transfer or lease
of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide debenture
holders with protection if we are involved in a highly leveraged or other
transaction that may adversely affect them. For example, we could, in the
future, enter into transactions, including recapitalizations, that would not
constitute a change in control but that would increase the amount of our
indebtedness.
Although we have the right to repurchase the debentures with our common
stock, subject to certain conditions, we cannot assure that we would be able to
meet those conditions or would have the financial resources, or would be able to
arrange financing, to pay the repurchase price in cash for all the debentures
that might be delivered by holders of debentures seeking to exercise the
repurchase right. Moreover, a change in control could cause an event of default
under, or be prohibited or limited by, the terms of our other debt. If we were
to fail to repurchase the debentures when required following a change in
control, an event of default under the indenture would occur. Any such default
may, in turn, cause an event of default under our other debt.
Mergers and Sales of Assets by Church & Dwight
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any entity to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us unless:
o the surviving entity formed by such consolidation or into or with
which we are merged or the surviving entity to which our
properties and assets are so conveyed, transferred, sold or
leased, shall be a corporation, limited liability company,
partnership or trust organized and existing under the laws of the
U.S., any state within the U.S. or the District of Columbia and,
if we are not the surviving entity, the surviving entity executes
and files with the trustee a supplemental indenture assuming the
payment of the principal of, premium, if any, and interest on the
debentures and the performance of our other covenants under the
indenture; and
o immediately after giving effect to the transaction, no event of
default, and no event that, after notice or lapse of time or
both, would become an event of default, will have occurred and be
continuing.
Events of Default
The following will be events of default under the indenture:
o we fail to pay the principal of or premium, if any, on any
debenture at maturity, upon redemption, repurchase or following a
change in control, when the same becomes due and payable;
o we fail to pay any interest, including any liquidated damages
that may be payable to some holders in connection with a
registration rights agreement described under "Plan of
Distribution," on any debenture when due, which failure continues
for 30 days;
o we fail to provide notice of a change in control as required by
the indenture;
o we fail to satisfy our conversion obligation upon exercise of a
holder's conversion right, unless such default is cured within
five business days after written notice of default is given by us
to the trustee or the holder of such debenture;
o we fail to perform any other covenant in the indenture, which
failure continues for 60 days after written notice to us by the
trustee or to us and the trustee by the holders of at least 25%
in aggregate principal amount of outstanding debentures;
o any indebtedness under any bonds, debentures, notes or other
evidences of indebtedness for money borrowed, or any guarantee
thereof, by us or any of our Significant Subsidiaries, in an
aggregate principal amount in excess of $15 million is not paid
when due either at its stated maturity or upon acceleration
thereof, and such indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within a period of 30
days after notice as provided in the indenture; and
o certain events of bankruptcy, insolvency or reorganization
involving us or any of our Significant Subsidiaries.
The term "Significant Subsidiary" shall have the meaning set forth in
Rule 1-02(w) of Regulation S-X of the Securities and Exchange Commission.
Subject to the provisions of the indenture relating to the duties of
the trustee in case an event of default shall occur and be continuing, the
trustee will be under no obligation to exercise any of its rights or powers
under the indenture at the request or direction of any holder, unless the holder
shall have furnished indemnity reasonably satisfactory to the trustee. Subject
to providing indemnification to the trustee and other conditions provided for in
the indenture, the holders of a majority in aggregate principal amount of the
outstanding debentures will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the trustee or
exercising any trust or power conferred on the trustee.
If an event of default other than an event of default arising from
events of insolvency, bankruptcy or reorganization with respect to Church &
Dwight occurs and is continuing, either the trustee or the holders of at least
25% in principal amount of the outstanding debentures may accelerate the
maturity of all debentures. However, after such acceleration, but before a
judgment or decree based on acceleration, the holders of a majority in aggregate
principal amount of outstanding debentures may, under certain circumstances,
rescind and annul the acceleration if all events of default, other than the
nonpayment of principal of the debentures that have become due solely by such
declaration of acceleration, have been cured or waived as provided in the
indenture. If an event of default arising from events of insolvency, bankruptcy
or reorganization with respect to Church & Dwight occurs, then the principal of,
and accrued interest on, all the debentures will automatically become
immediately due and payable without any declaration or other act on the part of
the holders of the debentures or the trustee. For information as to waiver of
defaults, see "- Meetings, Modification and Waiver" below.
A holder will not have any right to institute any proceeding with
respect to the indenture, or for any remedy under the indenture, unless:
o the holder gives the trustee written notice of a continuing event
of default;
o the holders of at least 25% in aggregate principal amount of the
outstanding debentures have made written request and offered
indemnity reasonably satisfactory to the trustee to institute
proceedings;
o the trustee shall have failed to institute such a proceeding
within 60 days of the written request; and
o the trustee has not received during such 60 day period from the
holders of a majority in aggregate principal amount of the
outstanding debentures a direction inconsistent with the written
request.
However, these limitations do not apply to a suit instituted by a
holder for the enforcement of payment of the principal of, premium, if any, or
interest, including liquidated damages, on its debenture on or after the
respective due dates expressed in its debenture or its right to convert its
debenture in accordance with the indenture.
We will be required to furnish to the trustee annually a statement as
to our performance of our obligations under the indenture and as to any default
in that performance.
Meetings, Modification and Waiver
The indenture contains provisions for convening meetings of the holders
of debentures to consider matters affecting their interests.
Limited modifications of the indenture may be made without the
necessity of obtaining the consent of the holders of the debentures.
Other modifications and amendments of the indenture may be made,
compliance by us with certain restrictive provisions of the indenture may be
waived and any past defaults by us under the indenture (except a default in the
payment of principal, premium, if any, or interest) may be waived, either:
o with the written consent of the holders of not less than a
majority in aggregate principal amount of the debentures at the
time outstanding; or
o by the adoption of a resolution, at a meeting of holders of the
debentures at which a quorum is present, by the holders of at
least a majority in aggregate principal amount of the debentures
at the time outstanding represented at such meeting.
The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the
debentures at the time outstanding and, at any reconvened meeting adjourned for
lack of a quorum, 25% of such aggregate principal amount.
However, a modification or amendment requires the consent of the holder
of each outstanding debenture affected if it would:
o change the stated maturity of the principal of or interest on a
debenture;
o reduce the principal amount of, or any premium or interest on,
any debenture;
o reduce the amount payable upon a redemption or mandatory
repurchase;
o modify the provisions with respect to the repurchase rights of
holders of debentures in a manner adverse to the holders;
o modify the ranking of the debentures in a manner adverse to the
holders;
o modify our right to redeem the debentures in a manner adverse to
the holders;
o change the place or currency of payment on a debenture;
o impair the right to institute suit for the enforcement of any
payment on any debenture;
o adversely affect the right to convert the debentures, other than
a modification or amendment required by the terms of the
indenture;
o modify our obligation to deliver information required under Rule
144A to permit resales of the debentures and common stock issued
upon conversion of the debentures if we cease to be subject to
the reporting requirements under the Exchange Act;
o reduce the percentage of the principal amount of the holders
whose consent is needed to modify or amend the indenture;
o reduce the percentage of the principal amount of the holders
whose consent is needed to waive compliance with provisions of
the indenture or to waive defaults; or
o reduce the percentage required for the adoption of a resolution
or the quorum required at any meeting of holders of debentures at
which a resolution is adopted.
Notices
Notice to holders of the debentures will be given by mail to the
addresses as they appear in the security register. Notices will be deemed to
have been given on the date of mailing.
Notice of a redemption of debentures will be given not less than 30 nor
more than 60 days prior to the redemption date and will specify the redemption
date. A notice of redemption of the debentures will be irrevocable.
Satisfaction and Discharge
We may discharge our obligations under the indenture, except as to the
right of conversion and certain other rights of holders specified in the
indenture, while debentures remain outstanding if (1) all outstanding debentures
have or will become due and payable at their scheduled maturity within one year
or (2) all outstanding debentures are scheduled for redemption within one year,
and, in either case, we have deposited with the trustee an amount sufficient to
pay and discharge all outstanding debentures on the date of their scheduled
maturity or the scheduled date of redemption.
Payment of Stamp and Other Taxes
We will pay all stamp and other duties, if any, that may be imposed by
the U.S. or any political subdivision thereof or taxing authority thereof or
therein with respect to the issuance of shares of common stock upon conversion
of the debentures, unless the tax is due because the holder requests the shares
to be issued or delivered to a person other than the holder, in which case the
holder will pay the tax. We will not be required to make any payment with
respect to any other tax, assessment or governmental charge imposed by any
government or any political subdivision thereof or taxing authority thereof or
therein.
Governing Law
The indenture and the debentures are governed by, and are to be
construed in accordance with, the laws of the State of New York, United States
of America, without regard to conflicts of laws principles thereof.
The Trustee
If an event of default occurs and is continuing, the trustee will be
required to use the degree of care of a prudent person in the conduct of his own
affairs in the exercise of its powers. Subject to that provision, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any of the holders of debentures, unless they shall
have furnished to the trustee security or indemnity reasonably satisfactory to
the trustee.
DESCRIPTION OF CAPITAL STOCK
The following description does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the more complete
descriptions set forth in our restated certificate of incorporation and our
bylaws, each as amended to date.
We are authorized to issue 100 million shares of common stock, $1.00
par value per share, and 2.5 million shares of preferred stock, $1.00 par value
per share, in one or more series. As of September 17, 2003, there were
40,360,984 shares of common stock outstanding and no shares of preferred stock
outstanding. There are also outstanding 40,360,984 rights to purchase junior
participating cumulative preferred stock, $1.00 par value per share, in
connection with the stockholder rights plan described below.
Common Stock
The holders of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders and do not
have cumulative voting rights. Accordingly, holders of a majority of the shares
of common stock entitled to vote in any election of directors may elect all of
the directors standing for election. Subject to preferences that may be
applicable to any outstanding shares of preferred stock, the holders of common
stock are entitled to receive ratably such dividends as may be declared by the
board of directors out of funds legally available for distribution. Upon our
liquidation, dissolution or winding up, holders of our common stock are entitled
to share ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock. Holders of
common stock have no preemptive rights and no right to convert their common
stock into any other securities. There are no redemption or sinking fund
provisions applicable to our common stock. All outstanding shares of common
stock are, and all shares of common stock that may be issued upon conversion or
repurchase of the debentures will be, fully paid and non-assessable.
Preferred Stock
Under our restated certificate of incorporation, our board of directors
is authorized, by a two-thirds vote of the entire board, without further action
by the stockholders, to determine the powers, rights and preferences, and the
qualifications, limitations or restrictions of the shares of any series, and the
number of shares constituting any series.
The issuance of preferred stock could adversely affect the voting power
of holders of common stock, which, together with the likelihood that holders of
preferred stock will receive dividend payments and payments upon liquidation,
may have the effect of delaying, deferring or preventing a change in control of
our company, which could depress the trading price of the securities being
offered by this prospectus.
Anti-Takeover Effects of Provisions of Delaware Law and Our Charter Documents
Delaware Takeover Statute. We are subject to the provisions of Section
203 of the Delaware General Corporation Law. In general, the statute prohibits a
publicly held Delaware corporation from engaging in a business combination with
an interested stockholder for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of Section
203, a business combination includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder. Section 203
generally defines an interested stockholder as a person who, together with
affiliates and associates, owns (or within the prior three years, did own) 15%
or more of the corporation's outstanding voting stock.
Charter Documents. Our restated certificate of incorporation provides
that special meetings of stockholders may only be called by a majority of the
directors then in office or by the Chief Executive Officer. Our restated
certificate of incorporation also authorizes our board of directors to issue
preferred stock that may have voting rights and, if convertible into common
stock, could increase the number of shares of common stock outstanding.
In addition, our restated certificate of incorporation:
o provides that any action required or permitted to be taken by our
stockholders must be effected at a duly called annual or special
meeting of stockholders and may not be effected by a consent in
writing;
o provides for a classified board of directors;
o provides that directors may be removed only for cause and, if so
removed, may be replaced by stockholders at the meeting at which
such removal is effected by the affirmative vote of holders of at
least two-thirds of the shares of stock entitled to vote for the
election of directors; otherwise the board of directors will fill
the vacancy; and
o provides that the authorized number of directors may be changed
only by a resolution adopted by a majority of the "entire board
of directors," which is based on the total number of director
positions, including vacant positions, and that the board may
appoint new directors to fill any newly created directorships.
These additional provisions may be amended only with the affirmative vote of the
holders of two-thirds of the shares of our stock entitled to vote generally on
the election of directors.
In addition, our restated certificate of incorporation provides that
stockholders must give us advance notice of at least 120 days prior to the
anniversary of the mailing of last year's proxy materials, of a proposed nominee
for director or of any business to be brought by a stockholder before an annual
stockholders' meeting. The notice must contain specified information.
Our restated certificate of incorporation also provides that, unless
the transaction has been approved by two-thirds of the directors then in office
(in which case approval by holders of a majority of the votes cast by holders
entitled to vote on the matter is sufficient), the following transactions
require the affirmative vote of the holders of two-thirds of the shares of our
stock entitled to vote generally on the election of directors:
(i) the merger or consolidation with any other corporation, other than
a merger or consolidation with a wholly-owned direct or indirect subsidiary in
which we are the surviving corporation and all of our stockholders retain the
same proportional voting and equity interest which they had in us prior to the
consummation of the transaction; or
(ii) any sale, lease, exchange or other disposition other than in the
ordinary course of business to another entity or person of assets in excess of
25% of the value of our gross assets on a consolidated basis at the time of the
transaction.
These provisions were designed to help assure that all of our
stockholders will be treated similarly if certain kinds of business combinations
are effected. However, these provisions may make it more difficult to accomplish
certain transactions that are opposed by the incumbent board of directors and
that could be beneficial to stockholders.
Delaware law and these charter provisions may have the effect of
deterring hostile takeovers or delaying changes in control of our management,
which could depress the trading price of the securities offered by this
prospectus.
Stockholder Rights Plan
In 1999, we renewed the stockholder rights plan that we had adopted in
1989. The rights plan was designed to protect our stockholders in the event of
an unsolicited unfair offer to acquire us and to encourage a potential bidder to
negotiate with our board of directors. Under the rights plan, each outstanding
common share is entitled to one right which is evidenced by the common stock
certificate. Each right entitles the registered holder to purchase from us
one-hundredth of a share of junior participating cumulative preferred stock at a
purchase price of $200.00 per one-hundredth of a share. If certain circumstances
occur, including the acquisition by a person of 20% or more of the outstanding
shares of our common stock, each holder of a right (other than the acquiring
person or group) will be entitled to purchase a number of shares of our common
stock at a substantial discount. If we are involved in a merger or other
business combination at any time after the rights become exercisable, the rights
will entitle the holder to acquire a certain number of shares of common stock of
the acquiring company at a substantial discount. The rights are redeemable by us
under certain circumstances at a redemption price of $.01 per right. The rights
will expire on September 13, 2009, unless previously redeemed.
The ability of the stockholders other than the acquiring person or
group to purchase additional shares at a discount, among other provisions in the
rights plan, could cause an unapproved takeover to be much more expensive to a
potential acquirer, resulting in a strong incentive for the potential acquirer
to negotiate with our board of directors to redeem the rights or approve the
transaction, rather than pursue a hostile strategy.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section describes the material U.S. federal income tax
consequences relating to the purchase, ownership, and disposition of the
debentures and of common stock into which the debentures may be converted. This
description does not provide a complete analysis of all potential tax
consequences. The information provided below is based on the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue
Service ("IRS") published rulings and court decisions, all as currently in
effect. These authorities may change, possibly on a retroactive basis, or the
IRS might interpret the existing authorities differently. In either case, the
tax consequences of purchasing, owning or disposing of debentures or common
stock could differ from those described below. We do not intend to obtain a
ruling from the IRS with respect to the tax consequences of acquiring or holding
the debentures or common stock.
This description is general in nature and does not discuss all aspects
of U.S. federal income taxation that may be relevant to a particular investor in
light of the investor's particular circumstances, or to certain types of
investors subject to special treatment under U.S. federal income tax laws (such
as banks or financial institutions, life insurance companies, tax-exempt
organizations, dealers in securities or foreign currencies, traders in
securities that elect to apply a mark-to-market method of accounting, persons
holding debentures or common stock as part of a position in a "straddle" or as
part of a "hedging", "conversion" or "integrated" transaction for U.S. federal
income tax purposes, persons subject to the alternative minimum tax provisions
of the Code, and U.S. Holders (as defined below) that have a "functional
currency" other than the U.S. dollar). This description is limited to investors
who hold the debentures and common stock into which the debentures are
convertible as capital assets within the meaning of Section 1221 of the Code.
This description does not consider the effect of any foreign, state, local or
other tax laws that may be applicable to particular investors.
Investors considering the purchase of debentures should consult their own tax
advisors regarding the application of the U.S. federal income tax laws to their
particular situations and the consequences of U.S. federal estate or gift tax
laws, foreign, state, or local laws, and tax treaties.
U.S. Holders
As used herein, the term "U.S. Holder" means a beneficial owner of a
debenture or common stock that is (i) a citizen or resident of the U.S. or
someone treated as a U.S. citizen or resident for U.S. federal income tax
purposes; (ii) a corporation organized in or under the laws of the U.S. or any
political subdivision thereof; (iii) an estate the income of which is subject to
U.S. federal income taxation regardless of its source; or (iv) a trust, if (a)
such trust validly elects to be treated as a U.S. person for U.S. federal income
tax purposes, or (b) a court within the U.S. can exercise primary supervision
over the trust's administration and one or more U.S. persons have the authority
to control all of the substantial decisions of such trust. If you are not a U.S.
Holder, this subsection does not apply to you and you should refer to "Non-U.S.
Holders" below.
If a partnership (including for this purpose any entity treated as a
partnership for U.S. tax purposes) is a beneficial owner of the debentures or
common stock into which the debentures may be converted, the U.S. tax treatment
of a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. A holder of the debentures or
common stock into which the debentures may be converted that is a partnership
and partners in such partnership should consult their individual tax advisors
about the U.S. federal income tax consequences of holding and disposing of the
debentures and the common stock into which the debentures may be converted.
Taxation of Interest
--------------------
U.S. Holders will be required to recognize as ordinary income any
interest paid or accrued on the debentures, in accordance with their regular
method of accounting.
Under the terms of the debentures, if a holder converts a debenture
(other than a debenture which, under certain circumstances, is either previously
called for redemption or which such holder is entitled to require us to
repurchase from such holder) into our common stock after the record date but
prior to the interest payment date (and thus receives the interest payment
payable on the interest payment date, notwithstanding that as a result of the
conversion the holder is not entitled to retain such payment), the holder is
obligated to pay us an amount equal to the interest payable on the converted
principal amount. The tax consequences to the holder of the receipt and
repayment of this amount is uncertain. We believe that neither the receipt nor
the repayment should be taken into account in computing the holder's taxable
income. A taxing authority, however, may require the holder to recognize
ordinary income in an amount equal to the interest payment received. In that
case, we believe the holder should be allowed an offsetting deduction for the
repayment. However, the holder may be required to capitalize (rather than
deduct) the repaid interest payment as an addition to the adjusted tax basis in
the common stock received in the conversion, or may otherwise be subject to
certain limitations on the deductibility of the repaid interest payment.
Additional Payments
-------------------
If the amount or timing of any payments on a debenture is contingent,
the debenture could be subject to special rules that apply to contingent debt
instruments. These rules generally require a U.S. Holder to accrue interest
income at a rate higher than the stated interest rate on the debenture and to
treat as ordinary income (rather than capital gain) any gain recognized on a
sale, exchange or retirement of the debenture before the resolution of the
contingencies. If, upon a change in control, an investor requires us to
repurchase some or all of the investor's debentures and we elect to pay the
repurchase price in shares of our common stock, the value of the stock could be
greater or less than the sum of the principal amount of the debentures and
accrued and unpaid interest. Additionally, if we call the debentures for
redemption, under certain circumstances, on or after August 15, 2008, U.S.
Holders would be entitled to a premium payment in excess of stated principal and
interest. We do not believe that, because of these potential additional
payments, the debentures should be treated as contingent debt instruments.
Therefore, for purposes of filing tax or information returns with the IRS, we
will not treat the debentures as contingent debt instruments. Unless otherwise
noted, this discussion assumes that the debentures are not subject to the
contingent debt instrument rules.
Sale, Exchange or Redemption of the Debentures
----------------------------------------------
A U.S. Holder generally will recognize capital gain or loss if the U.S.
Holder disposes of a debenture in a sale, redemption or exchange other than a
conversion of the debenture into common stock. The U.S. Holder's gain or loss
will equal the difference between the amount realized by the U.S. Holder and the
U.S. Holder's adjusted tax basis in the debenture. The U.S. Holder's adjusted
tax basis in the debenture will generally equal the amount the U.S. Holder paid
for the debenture. The amount realized by the U.S. Holder will include the
amount of any cash and the fair market value of any other property received for
the debenture, except that the portion of any proceeds attributable to accrued
interest will not be taken into account in computing the U.S. Holder's capital
gain or loss. Instead, that portion will be recognized as ordinary interest
income to the extent that the U.S. Holder has not previously included the
accrued interest in income. The gain or loss recognized by a U.S. Holder on a
disposition of the debenture will be long-term capital gain or loss if the U.S.
Holder has a holding period with respect to the debenture of more than one year.
In general, the maximum U.S. federal income tax rate for non-corporate taxpayers
is currently 15% for long-term capital gain that is recognized before January 1,
2009 and 35% for short-term capital gain. For corporate taxpayers, both
long-term and short-term capital gain are subject to a maximum U.S. federal
income tax rate of 35%. For both corporate and non-corporate taxpayers, the
deductibility of capital losses is subject to certain limitations.
If, upon a change in control, a holder requires us to repurchase some
or all of the holder's debentures and we elect to pay the repurchase price in
shares of our common stock, the redemption would likely qualify as a
recapitalization for U.S. federal income tax purposes. If the redemption
qualifies as a recapitalization, a U.S. Holder would not recognize any income,
gain or loss on the holder's receipt of our common stock in exchange for
debentures (except to the extent the stock received is attributable to accrued
interest). If the holder receives cash in lieu of fractional shares of stock,
however, the holder would be treated as if he received the fractional share and
then had the fractional share redeemed for cash. The holder would recognize gain
or loss equal to the difference between the cash received and that portion of
his basis in the stock attributable to the fractional share. The holder's
aggregate basis in the stock (including any fractional share for which cash is
paid) would equal his adjusted basis in the debenture. The holder's holding
period for the stock would include the period during which he held the
debenture. If the redemption does not qualify as a recapitalization, a U.S.
Holder may recognize income, gain or loss on the holder's receipt of our common
stock in exchange for debentures, in which case the holder would have a tax
basis in such common stock equal to the fair market value of such common stock
at the time of the exchange.
Conversion of Debentures
------------------------
A U.S. Holder who converts his debenture into common stock generally
will not recognize any income, gain or loss. The U.S. Holder will recognize
gain, however, to the extent that the U.S. Holder receives cash in lieu of a
fractional share. The U.S. Holder's aggregate basis in the common stock
(including any fractional share for which cash is paid) will equal his adjusted
basis in the debenture, and the U.S. Holder's holding period for the stock will
include the period during which he held the debenture. If the holder receives
cash in lieu of a fractional share of stock, the holder would be treated as if
he received the fractional share and then had the fractional share redeemed for
cash. The holder would recognize gain or loss equal to the difference between
the cash received and that portion of his basis in the stock attributable to the
fractional share.
Market Discount
---------------
A purchaser who purchases debentures for less than their issue price
will be subject to the market discount rules, provided that the issue price
exceeds the purchase price by more than a de minimus amount. The market discount
on a debenture generally will equal the amount, if any, by which the stated
redemption price at maturity of the debenture immediately after its acquisition
exceeds the U.S. Holder's adjusted tax basis in the debenture. If applicable,
these provisions generally require a U.S. Holder who acquires a debenture at a
market discount to treat as ordinary income any gain recognized on the
disposition of that debenture to the extent of the accrued market discount
(determined as described below) on that debenture at the time of disposition,
unless the U.S. Holder elects to include market discount in income currently as
it accrues with a corresponding increase in adjusted tax basis in the debenture.
If you dispose of a debenture with market discount in certain otherwise
non-taxable transactions, you must include accrued market discount as ordinary
income as if you had sold the debenture at its then fair market value. The
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS.
In general, market discount will be treated as accruing on a
straight-line basis over the remaining term of the debenture at the time of
acquisition, or, at the election of the U.S. Holder, under a constant yield
method. A U.S. Holder who acquires a debenture at a market discount and who does
not elect to include accrued market discount in income currently may be required
to defer the deduction of a portion of the interest on any indebtedness incurred
or maintained to purchase or carry the debenture until the debenture matures or
is disposed of in a taxable transaction. If a debenture with accrued market
discount is converted into common stock pursuant to the conversion feature, the
amount of such accrued market discount not previously included in income
generally will be taxable as ordinary income on disposition of the common stock.
Amortizable Premium
-------------------
A U.S. Holder who purchases a debenture at a premium over its stated
principal amount generally may elect to amortize that premium (referred to as
Section 171 premium) with a corresponding decrease in adjusted tax basis from
the purchase date to the debenture's maturity date under a constant-yield method
that reflects semi-annual compounding based on the debenture's payment period,
but subject to special limitations if the debenture is subject to optional
redemption by the issuer at a premium. Amortizable premium will not include any
premium attributable to a debenture's conversion feature. The premium
attributable to the conversion feature generally is the excess, if any, of the
debenture's purchase price over what the debenture's fair market value would be
if there were no conversion feature. Amortized Section 171 premium is treated as
an offset to interest income on a debenture and not as a separate deduction.
Under Treasury Regulations, the amount of amortizable bond premium that a U.S.
Holder may deduct in any accrual period is limited to the amount by which the
holder's total amount of interest on the debenture included in income in prior
accrual periods exceeds the total amount treated by the holder as a bond premium
deduction in prior accrual periods. If any of the excess bond premium is not
deductible, that amount is carried forward to the next accrual period. The
election to amortize premium on a constant yield method, once made, applies to
all debt obligations held or subsequently acquired by the electing U.S. Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. If an election to
amortize Section 171 premium is not made, a U.S. Holder must include all amounts
of taxable interest without reduction for such premium, and may receive a tax
benefit from the premium only in computing such U.S. Holder's gain or loss on
disposition of the debenture.
Dividends
---------
If, after a U.S. Holder converts a debenture into common stock, we make
a distribution in respect of that stock, the distribution will be treated as a
dividend, taxable to the U.S. Holder as ordinary income, to the extent it is
paid from our current or accumulated earnings and profits. If the distribution
exceeds our current and accumulated profits, the excess will be treated first as
a nontaxable return of capital reducing the U.S. Holder's tax basis in the U.S.
Holder's stock. Any remaining excess will be treated as capital gain. We are
required to provide shareholders who receive dividends with an information
return on Form 1099-DIV that states the extent to which the dividend is paid
from our current or accumulated earnings and profits and is thus taxable. If the
U.S. Holder is a U.S. corporation, it generally would be able to claim a
deduction equal to a portion of any dividends received. In general, dividends
paid to a noncorporate U.S. Holder in taxable years beginning before January 1,
2009 are taxable at a maximum rate of 15% provided that such holder holds the
shares for more than 60 days during the 120-day period beginning 60 days before
the ex-dividend date and meets other holding period requirements.
The terms of the debentures allow for changes in the conversion price
of the debentures in certain circumstances. A change in conversion price that
allows U.S. Holders of debentures to receive more shares of common stock on
conversion may increase those debentureholders' proportionate interests in our
earnings and profits or assets. In that case, those debentureholders would be
treated as though they received a dividend in the form of our stock. Such a
constructive stock dividend could be taxable to those debentureholders, although
they would not actually receive any cash or other property. A taxable
constructive stock dividend would result to U.S. Holders of debentures, for
example, if the conversion price were adjusted to compensate debentureholders
for distributions of cash or property to our shareholders. Not all changes in
conversion price that allow debentureholders to receive more stock on
conversion, however, increase the debentureholders' proportionate interests in
the company. For instance, a change in conversion price could simply prevent the
dilution of the debentureholders' interests upon a stock split or other change
in capital structure. Changes of this type, if made under a bona fide,
reasonable adjustment formula, are not treated as constructive stock dividends.
On the other hand, if an event occurs that dilutes the debentureholders'
interests and the conversion price is not adjusted, the resulting increase in
the proportionate interests of our shareholders could be treated as a taxable
stock dividend to the shareholders. Any taxable constructive stock dividends
resulting from a change to, or failure to change, the conversion price would be
treated in the same manner as dividends paid in cash or other property. Such
dividends would result in ordinary income to the recipient, to the extent of our
current or accumulated earnings and profits, with any excess treated as a
nontaxable return of capital or as capital gain.
Sale of Common Stock
--------------------
A U.S. Holder will generally recognize capital gain or loss on a sale
or exchange of common stock. The U.S. Holder's gain or loss will equal the
difference between the amount realized by the U.S. Holder and the U.S. Holder's
adjusted tax basis in the stock. The amount realized by the U.S. Holder will
include the amount of any cash and the fair market value of any other property
received for the stock. Gain or loss recognized by a U.S. Holder on a sale or
exchange of stock will be long-term capital gain or loss if the holder has a
holding period with respect to the stock of more than one year. In general, the
maximum U.S. federal income tax rate for non-corporate taxpayers is currently
15% for long-term capital gain that is recognized before January 1, 2009 and 35%
for short-term capital gain. For corporate taxpayers, both long-term and
short-term capital gain are subject to a maximum U.S. federal income tax rate of
35%. For both corporate and non-corporate taxpayers, the deductibility of
capital losses is subject to certain limitations.
Deductibility of Interest
-------------------------
Under Section 163(l) of the Code, no deduction is permitted for
interest paid or accrued on any indebtedness of a corporation that is "payable
in equity" of the issuer or a related party. Debt is treated as debt payable in
equity of the issuer if the debt is part of an arrangement designed to result in
payment of the instrument with or by reference to the equity. Such arrangements
could include debt instruments that are convertible at the holder's option if it
is substantially certain that the option will be exercised. The legislative
history indicates that it is not expected that this provision will affect debt
with a conversion feature where the conversion price is significantly higher
than the market price of the stock on the date of the debt issuance.
Accordingly, we do not believe that our interest deduction with respect to
interest payments on the debentures will be adversely affected by these rules.
Backup Withholding and Information Reporting
--------------------------------------------
The Code and the Treasury Regulations require those who make specified
payments to report the payments to the IRS. Among the specified payments are
interest, dividends, and proceeds paid by brokers to their customers. This
reporting regime is reinforced by "backup withholding" rules. These rules
require the payors to withhold tax from payments subject to information
reporting if the payee fails to cooperate with the reporting regime by failing
to provide the payee's taxpayer identification number to the payor or by
furnishing an incorrect identification number, or if the payee has been notified
by the IRS that the payee has failed to report interest or dividends on the
payee's returns. The information reporting and backup withholding rules do not
apply to payments to corporations, tax-exempt organizations and certain foreign
persons, provided their exemptions from backup withholding are properly
established.
Payments of interest or dividends to individual U.S. Holders of
debentures or common stock generally will be subject to information reporting,
and generally will be subject to backup withholding unless the U.S. Holder
provides us or our paying agent with a correct taxpayer identification number.
Payments made to U.S. Holders by a broker upon a sale of debentures or
common stock generally will be subject to information reporting and backup
withholding. If, however, the sale is made through a foreign office of a U.S.
broker, the sale will be subject to information reporting but not backup
withholding. If the sale is made through a foreign office of a foreign broker,
the sale generally will not be subject to either information reporting or backup
withholding. This exception may not apply, however, if the foreign broker is
owned or controlled by U.S. persons, or is engaged in a U.S. trade or business.
Any amounts withheld from a payment to a U.S. Holder of debentures or
common stock under the backup withholding rules can be credited against any U.S.
federal income tax liability of such U.S. Holder.
Non-U.S. Holders
This subsection describes the tax consequences to a Non-U.S. Holder.
You are a Non-U.S. Holder if you are, for United States federal income tax
purposes (i) a nonresident alien individual, (ii) a foreign corporation, (iii) a
foreign partnership, or (iv) an estate or trust that in either case is not
subject to United States federal income tax on a net income basis on income or
gain from a debenture. If you are a U.S. Holder, this subsection does not apply
to you.
In general, subject to the discussion below concerning backup
withholding:
(a) Payments of principal or interest on the debentures by us or our
paying agent to a beneficial owner of a debenture that is a Non-U.S. Holder will
not be subject to U.S. federal income tax or U.S. withholding tax, provided
that, in the case of interest, (i) such Non-U.S. Holder does not own, actually
or constructively, 10% or more of the total combined voting power of all classes
of our stock entitled to vote within the meaning of Section 871(h)(3) of the
Code, (ii) such Non-U.S. Holder is not a "controlled foreign corporation" within
the meaning of Section 957(a) of the Code with respect to which we are a
"related person" within the meaning of Section 864(d)(4) of the Code, and (iii)
certain certification requirements (discussed below) are satisfied;
(b) A Non-U.S. Holder of a debenture or common stock will not be
subject to U.S. federal income tax on gains realized on the sale, exchange or
other disposition of such debenture or common stock unless (i) such Non-U.S.
Holder is an individual who holds the common stock as a capital asset and is
present in the U.S. for 183 days or more in the taxable year of sale, exchange
or other disposition, and certain conditions are met, (ii) such gain is
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business in the U.S. and, if certain U.S. income tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the Non-U.S.
Holder, (iii) the Non-U.S. Holder is subject to Code provisions applicable to
certain U.S. expatriates, or (iv) in the case of common stock held by a person
who holds more than 5% of such stock, we are or have been, at any time within
the shorter of (A) the five-year period preceding such sale or other disposition
or (B) the period such Non-U.S. Holder held the common stock, a U.S. real
property holding corporation (a "USRPHC") for U.S. federal income tax purposes.
We do not believe that we are currently a USRPHC or that we will become one in
the future; and
(c) Interest on the debentures not exempted from U.S. federal income
tax or U.S. withholding tax as described in (a) above and dividends on common
stock after conversion generally will be subject to U.S. withholding tax at a
30% rate, except where an applicable U.S. income tax treaty provides for the
reduction or elimination of such withholding tax.
Even if a Non-U.S. Holder is eligible for a lower treaty rate, we and
other payors will generally be required to withhold at a 30% rate (rather than
the lower treaty rate) on dividend payments to the Non-U.S. Holder, unless the
Non-U.S. Holder has furnished to us or another payor:
o a valid IRS Form W-8BEN or an acceptable substitute form upon
which the Non-U.S. Holder certifies, under penalties of perjury,
its status as a non-U.S. person and its entitlement to the lower
treaty rate with respect to such payments, or
o in the case of payments made outside the U.S. to an offshore
account (generally, an account maintained by such Non-U.S. Holder
at an office or branch of a bank or other financial institution
at any location outside the United States), other documentary
evidence establishing the Non-U.S. Holder's entitlement to the
lower treaty rate in accordance with U.S. Treasury regulations.
If a Non-U.S. Holder is eligible for a reduced rate of U.S. withholding
tax under an applicable tax treaty, such Non-U.S. Holder may obtain a refund of
any amounts withheld in excess of that rate by filing a refund claim with the
U.S. Internal Revenue Service.
To satisfy the certification requirements referred to in (a) (iii)
above, either (i) the beneficial owner of a debenture must certify, under
penalties of perjury, to us or our paying agent, as the case may be, that such
owner is a Non-U.S. Holder, or (ii) a securities clearing organization, bank or
other financial institution that holds customer securities in the ordinary
course of its trade or business (each a "Financial Institution") and holds the
debenture on behalf of the beneficial owner thereof must certify, under
penalties of perjury, to us or our paying agent, as the case may be, that such
certificate has been received from the beneficial owner and furnish the payor
with a copy thereof. Such requirement will be fulfilled if the beneficial owner
of a debenture certifies on IRS Form W-8BEN, under penalties of perjury, that it
is a Non-U.S. Holder or any Financial Institution holding the debenture on
behalf of the beneficial owner files a statement with the withholding agent to
the effect that it has received such a statement from the beneficial owner (and
furnishes the withholding agent with a copy thereof).
If a Non-U.S. Holder of a debenture or common stock is engaged in a
trade or business in the U.S. and if interest on the debenture, dividends on the
common stock, or gain realized on the sale, exchange or other disposition of the
debenture or common stock is effectively connected with the conduct of such
trade or business (and, if certain tax treaties apply, is attributable to a U.S.
permanent establishment maintained by the Non-U.S. Holder in the U.S.), the
Non-U.S. Holder, although exempt from U.S. withholding tax (provided that the
certification requirements discussed in the next sentence are met), will
generally be subject to U.S. federal income tax on such interest, dividends or
gain on a net income basis in the same manner as if it were a U.S. Holder. In
lieu of the certificate described above, such a Non-U.S. Holder will be
required, under currently effective Treasury Regulations, to provide us with a
properly executed IRS Form W-8ECI in order to claim an exemption from U.S.
withholding tax. In addition, if such Non-U.S. Holder is a foreign corporation,
it may be subject to a branch profits tax equal to 30% (or such lower rate
provided by an applicable U.S. income tax treaty) of a portion of its
effectively connected earnings and profits for the taxable year.
United States Federal Estate Tax
--------------------------------
A debenture held by an individual who at the time of death is not a
citizen or resident of the U.S. (as specially defined for U.S. federal estate
tax purposes) will not be subject to U.S. federal estate tax if the individual
did not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock and, at the time of the individual's death,
payments with respect to such debenture would not have been effectively
connected with the conduct by such individual of a trade or business in the U.S.
Common stock held by an individual who at the time of death is not a citizen or
resident of the U.S. (as specially defined for U.S. federal estate tax purposes)
will be included in such individual's estate for U.S. federal estate tax
purposes, unless an applicable U.S. estate tax treaty otherwise applies.
Non-U.S. Holders should consult with their tax advisors regarding U.S.
and foreign tax consequences with respect to the debentures and common stock.
Backup Withholding and Information Reporting
--------------------------------------------
In the case of payments of interest on a debenture to a Non-U.S.
Holder, backup withholding and information reporting will not apply to payments
with respect to which either requisite certification has been received or an
exemption has otherwise been established (provided that neither we nor a paying
agent has actual knowledge or reason to know that the holder is a U.S. Holder or
that the conditions of any other exemption are not in fact satisfied). However,
we and other payors are required to report payments of interest on such Non-U.S.
Holders' debentures on Internal Revenue Service Form 1042-S even if the payments
are not otherwise subject to information reporting requirements.
Dividends on the common stock paid to Non-U.S. Holders that are subject
to U.S. withholding tax, as described above, generally will be exempt from U.S.
backup withholding tax but will be subject to certain information reporting
requirements.
Payments of the proceeds of the sale of a debenture or common stock to
or through a foreign office of a broker that is a U.S. person or a U.S. related
person (either a "controlled foreign corporation" or a foreign person, 50% or
more of whose gross income from all sources for the three-year period ending
with the close of its taxable year preceding the payment was effectively
connected with the conduct of a trade or business within the U.S.), or a foreign
partnership, if at any time during its tax year, one or more of its partners are
U.S. persons who in the aggregate hold more than 50% of the income or capital
interests in the partnership, or such foreign partnership is engaged in a U.S.
trade or business, are subject to certain information reporting requirements,
unless the payee establishes that it is an exempt recipient or such broker has
evidence in its records that the payee is a Non-U.S. Holder and has no actual
knowledge or reason to know that such evidence is false and certain other
conditions are met. Such payments are not currently subject to backup
withholding.
Payments of the proceeds of a sale of a debenture or common stock to or
through the U.S. office of a broker will be subject to information reporting and
backup withholding unless the payee certifies under penalties of perjury as to
his or her status as a Non-U.S. Holder and satisfies certain other
qualifications (and no agent of the broker who is responsible for receiving or
reviewing such statement has actual knowledge or reason to know that it is
incorrect) and provides his or her name and address or the payee otherwise
establishes an exemption.
If a Non-U.S. Holder fails to establish an exemption and the broker
does not possess adequate documentation of the holder's status as a non-U.S.
person, the payments may be subject to information reporting and backup
withholding. However, backup withholding will not apply with respect to payments
made to an offshore account maintained by a Non-U.S. Holder unless the broker
has actual knowledge that the holder is a U.S. person.
Payments of the proceeds of the sale of a debenture or common stock to
or through a foreign office of a broker will not be subject to information
reporting or backup withholding. However, a sale effected at a foreign office of
a broker will be subject to information reporting and backup withholding if the
proceeds are transferred to an account maintained by the Non-U.S. Holder in the
United States, the payment of proceeds or the confirmation of the sale is mailed
to the Non-U.S. Holder at a U.S. address, or the sale has some other specified
connection with the U.S. as provided in U.S. Treasury regulations, unless the
broker does not have actual knowledge or reason to know that the holder is a
U.S. person and the documentation requirements described above (relating to a
sale of debentures effected at a U.S. office of a broker) are met or the holder
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules from a payment
to a holder of a debenture or common stock will be allowed as a refund or credit
against such holder's U.S. federal income tax provided that the required
information is furnished to the IRS in a timely manner.
A holder of a debenture or common stock should consult with its tax
advisor regarding the application of the backup withholding rules to its
particular situation, the availability of an exemption therefrom and the
procedure for obtaining such an exemption, if available.
The preceding discussion of certain U.S. federal income tax
consequences is for general information only. It is not tax advice. Each
prospective investor should consult its own tax advisor regarding the particular
U.S. federal, state, local and foreign tax consequences of purchasing, holding,
and disposing of our debentures or common stock, including the consequences of
any proposed change in applicable laws.
SELLING SECURITYHOLDERS
The debentures were originally issued by us and sold by Goldman, Sachs
& Co., J.P. Morgan Securities Inc., PNC Capital Markets, Inc., Fleet Securities,
Inc., NatCity Investments, Inc. and Scotia (USA) Capital Inc. (collectively, the
"initial purchasers") in a transaction exempt from the registration requirements
of the Securities Act to persons reasonably believed by the initial purchasers
to be qualified institutional buyers as defined by Rule 144A under the
Securities Act. The selling securityholders may from time to time offer and sell
pursuant to this prospectus any or all of the debentures listed below and shares
of our common stock issuable upon conversion of those debentures. When we refer
to the selling securityholders in this prospectus, we mean those persons listed
in the table below, as well as the permitted pledgees, donees, assignees,
transferees, successors and others who later hold any of the selling
securityholders' interests.
The table below, which we have prepared based on information provided
to us by the selling securityholders, sets forth the name of each selling
securityholder, the principal amount of debentures, as of September __, 2003,
that each selling securityholder may offer pursuant to this prospectus and the
number of shares of our common stock into which those debentures are
convertible. Unless set forth below, none of the selling securityholders has, or
within the past three years has had, any material relationship with us or any of
our predecessors or affiliates.
Principal Amount Number of
of Debentures Shares of
Beneficially Percentage of Common Stock Number of Shares
Owned Before Debentures Beneficially of Common Stock
Name of Selling Offering and Outstanding Owned Before That May be Sold
Securityholder That May Be Sold Before Offering Offering (1) (1)
--------------- -------------------------- --------------- ------------ ----------------
*
* Stockholder information to be provided by amendment.
(1) Assumes conversion of all of the holder's debentures at the initial
conversion rate of 21.5054 shares of common stock per $1,000 principal amount of
the debentures. However, the conversion rate is subject to further adjustment as
described under "Description of Debentures - Conversion Rate Adjustments." As a
result, the number of shares of our common stock issuable upon conversion of the
debentures may increase or decrease in the future.
We cannot advise you as to whether the selling securityholders will in
fact sell any or all of the debentures or shares of common stock listed in the
table above. Moreover, the selling securityholders may have sold, transferred or
otherwise disposed of, or may sell, transfer or otherwise dispose of, at any
time and from time to time, the debentures or shares of common stock in
transactions exempt from the registration requirements of the Securities Act,
after the date on which they provided the information set forth on the table
above.
PLAN OF DISTRIBUTION
We are registering the debentures and shares of our common stock
covered by this prospectus to permit holders to conduct public secondary trading
of these securities from time to time after the date of this prospectus. We will
not receive any of the proceeds from the offering of debentures or the shares of
our common stock by the selling securityholders.
We have been advised by the selling securityholders that the selling
securityholders may sell all or a portion of the debentures and the underlying
shares of our common stock beneficially owned by them and offered by this
prospectus from time to time:
o directly; or
o through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, commissions or concessions
from the selling securityholders or from the purchasers of the
debentures and shares of our common stock for whom they may act
as agent.
The debentures and the shares of our common stock may be sold from time
to time in one or more transactions at:
o fixed prices, which may be changed;
o prevailing market prices at the time of sale;
o varying prices determined at the time of sale; or
o negotiated prices.
The sales described in the preceding paragraph may be effected in
transactions:
o on any national securities exchange or quotation service on which
the debentures or underlying common stock may be listed or quoted
at the time of sale, including the New York Stock Exchange in the
case of the shares of our common stock;
o in the over-the-counter market;
o otherwise than on such exchanges or services or in the
over-the-counter market; or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the debentures and the underlying common
stock or otherwise, the selling securityholders may enter into hedging
transactions with broker-dealers. These broker-dealers may in turn engage in
short sales of the debentures and the underlying common stock in the course of
hedging their positions.
The selling securityholders may also sell the debentures and the
underlying common stock short and deliver debentures and the underlying common
stock to close out short positions, or loan or pledge debentures and the
underlying common stock to broker-dealers that in turn may sell the debentures
and the underlying common stock. The selling stockholders may pledge or grant a
security interest in some or all of the debentures or the underlying common
stock owned by them and, upon a default in performance of the secured
obligation, the pledgees or secured parties may offer and sell the debentures
and underlying common stock from time to time pursuant to the prospectus.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the debentures and the underlying
common stock by the selling securityholders. Selling securityholders may
determine not to sell any, or all, of the debentures and the underlying common
stock offered by them pursuant to this prospectus. In addition, we cannot assure
you that a selling securityholder will not transfer the debentures or the
underlying common stock by other means not described in this prospectus. In this
regard, any securities covered by this prospectus that qualify for sale pursuant
to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or
Rule 144A rather than pursuant to this prospectus.
To the extent required, upon being notified by a selling securityholder
that any arrangement has been entered into with any agent, underwriter or
broker-dealer for the sale of debentures or underlying common stock through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by any agent, underwriter or broker-dealer, the name of the
selling securityholder and of the participating agent, underwriter or
broker-dealer, specific debentures or underlying common stock to be sold, the
respective purchase prices and public offering prices, any applicable
commissions or discounts, and other facts material to the transaction will be
set forth in a supplement to this prospectus or a post-effective amendment to
the registration statement of which this prospectus is a part, as appropriate.
The outstanding shares of our common stock are listed for trading on
the New York Stock Exchange under the symbol, "CHD." We do not intend to list
the debentures for trading on the New York Stock Exchange or any other national
securities exchange and can give no assurance that any trading market for the
debentures will develop.
In order to comply with the securities laws of some states, if
applicable, the debentures and underlying common stock may be sold in these
jurisdictions only through registered or licensed brokers or dealers.
The selling securityholders and any broker-dealers, agents or
underwriters that participate with the selling securityholders in the
distribution of the debentures or the underlying common stock may be deemed to
be "underwriters" within the meaning of the Securities Act. In this case, any
commissions received by these broker-dealers, agents or underwriters and any
profit on the resale of the debentures or the underlying common stock purchased
by them may be deemed to be underwriting commissions or discounts under the
Securities Act. In addition, any profits realized by the selling securityholders
may be deemed to be underwriting commissions. If a selling securityholder is
deemed to be an underwriter, the selling securityholder may be subject to
certain statutory liabilities including, but not limited to, Sections 11, 12 and
17 of the Securities Act and Rule 10b-5 under the Exchange Act. Selling
securityholders who are deemed underwriters within the meaning of the Securities
Act will be subject to the prospectus delivery requirements of the Securities
Act.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the debentures and the underlying common stock by
the selling securityholders and any such other person. In addition, Regulation M
may restrict the ability of any person engaged in the distribution of the
debentures and the underlying common stock to engage in market-making activities
with respect to the particular debentures and underlying common stock being
distributed for a period of up to five business days prior to the commencement
of the distribution. This may affect the marketability of the debentures and the
underlying common stock and the ability of any person or entity to engage in
market-making activities with respect to the debentures and the underlying
common stock.
We entered into a registration rights agreement with the initial
purchasers for the benefit of the holders of the debentures to register their
debentures and underlying common stock under applicable federal and state
securities laws under specific circumstances and at specific times. The
registration rights agreement provides that the selling securityholders and we
will indemnify each other and our respective directors, officers and controlling
persons against specific liabilities in connection with the offer and sale of
the debentures and the underlying common stock, including liabilities under the
Securities Act, or will be entitled to contribution in connection with those
liabilities. We have agreed to pay substantially all expenses in connection with
the registration and sale of the debentures and underlying common stock, other
than underwriting discounts, selling commissions and transfer taxes.
We have agreed under the registration rights agreement to use our
reasonable best efforts to keep the registration statement of which this
prospectus is a part effective until the earliest of:
o such time as there are no "registrable securities" outstanding;
o two years after the date of original issuance of the debentures;
or
o the expiration of the period referred to in Rule 144(k) of the
Securities Act with respect to debentures held by non-affiliates
of Church & Dwight.
Under the registration rights agreement, a registrable security will
not be deemed to be outstanding at such time as it is no longer a "restricted
security" as defined in the registration rights agreement. Among other events, a
debenture or underlying common stock will no longer be restricted securities for
purposes of the registration rights agreement when they are sold pursuant to
this prospectus.
We may suspend the selling securityholders' use of this prospectus and
offers and sales of the debentures and underlying common stock pursuant to this
prospectus for a period not to exceed 45 days in any 90-day period, and not to
exceed an aggregate of 90 days in any 360-day period for reasons related to
pending corporate developments, pending filings with the SEC and other events.
If we do not maintain the effectiveness of the registration statement of which
this prospectus is a part in accordance with the registration rights agreement,
subject to the permitted suspension periods and other exceptions, we may be
required to pay additional cash interest as liquidated damages as specified in
the registration rights agreement. The registration rights agreement and
liquidated damages provisions will not be applicable to debentures or underlying
common stock that an investor purchases pursuant to this prospectus.
LEGAL MATTERS
The legality of the securities offered by this prospectus has been
passed upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements and related financial statement
schedule of Church & Dwight Co., Inc. as of December 31, 2002 and December 31,
2001 and for each of the three years in the period ended December 31, 2002,
incorporated by reference in this document from the Annual Report on Form 10-K
of Church & Dwight Co., Inc. have been audited by Deloitte & Touche LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports (expressing an unqualified
opinion and including an explanatory paragraph concerning Church & Dwight Co.,
Inc.'s change in its method of accounting for goodwill and intangible assets to
conform to Statement of Financial Accounting Standards No. 142).
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be incurred by the
Registrant in connection with this registration statement and the distribution
of debentures and shares of common stock registered hereby. All amounts are
estimated, other than the SEC registration fee:
SEC registration fee............................................................ $ 8,090
Legal fees and related expenses................................................. 30,000
Accounting fees and expenses.................................................... 10,000
Printing and engraving expenses................................................. 15,000
Trustee and transfer agent fees and expenses.................................... 10,000
Miscellaneous................................................................... 10,000
Total...................................................................... $83,090
ITEM 15. Indemnification of Officers and Directors.
The registrant is organized under the laws of the State of Delaware. The General
Corporation Law of the State of Delaware, as amended (the "GCL"), provides that
a Delaware corporation has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
in such capacity in another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person's conduct was
unlawful. In the case of an action or suit brought by or in the right of the
corporation, indemnification of any director, officer, employee and other agent
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit is permitted if such
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation; however, no
indemnification is permitted in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the Delaware Court of Chancery, or the court
in which such action or suit was brought, shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper. Article Seventh of the registrant's Restated Certificate of
Incorporation provides for the indemnification of directors, officers, employees
and agents of the registrant to the maximum extent permitted by the Delaware
General Corporation Law.
Under the GCL, a Delaware corporation has the power to purchase and maintain
insurance on behalf of any director, officer, employee or other agent of the
Registrant or, if serving in such capacity at the request of the Registrant, of
another enterprise, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the corporation has the power to indemnify such
person against such liability under the GCL. The registrant's Restated
Certificate of Incorporation permits it to purchase insurance on behalf of such
person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
registrant would have the power to indemnify him against such liability under
the GCL. Article Seventh of the Registrant's Restated Certificate of
Incorporation authorizes the purchase of such insurance, and the Registrant has
purchased directors and officers liability insurance. A Delaware corporation
also may, with certain limitations, set forth in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of a fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (1) for any breach of the
director's duty of loyalty to the registrant or its stockholders, (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law (3) under Section 174 of the GCL, or (4) for any
transaction from which the director derived an improper personal benefit.
Article Seventh of the Registrant's Restated Certificate of Incorporation
includes such a provision.
ITEM 16. Exhibits.
Exhibit Exhibit
Number Title
------- -----
3.1 Restated Certificate of Incorporation, as amended (Incorporated by
reference to Exhibit 3.5 to the Registrant's quarterly report on Form
10-Q for the quarter ended June 27, 2003)
3.2 By-laws (Incorporated by reference to Exhibit 3.1 to the Registrant's
current report on Form 8-K dated September 19, 2003)
4.1 Indenture dated August 11, 2003 between the Registrant and The Bank
of New York, as Trustee 4.2 Form of 5.25% Convertible Senior
Debentures (included in Exhibit 4.1) 4.3 Registration Rights
Agreement dated as of August 11, 2003 among the Registrant and the
Initial Purchasers named therein
5.1 Opinion of Morgan, Lewis & Bockius LLP *
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1) *
24.3 Power of Attorney (included on the signature page of this registration
statement)
25.1 Form T-1 Statement of Eligibility of Trustee for Indenture under the
Trust Indenture Act of 1939
* To be filed by amendment.
ITEM 17. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
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 (1)(i) and (1)(ii) is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for purposes 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.
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 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered in the registration statement, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 such indemnification is against public policy as expressed in the Act
and is, therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, 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 Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filings on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Princeton, State of New Jersey on September 22, 2003.
CHURCH & DWIGHT CO., INC.
By: /s/ ROBERT A. DAVIES, III
-------------------------
Robert A. Davies, III
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Each person in so signing also makes, constitutes and appoints Robert A. Davies,
III, Zvi Eiref and Susan E. Goldy, and each of them acting alone, his or her
true and lawful attorney-in-fact, with full power of substitution, to execute
and cause to be filed with the Securities and Exchange Commission pursuant to
the requirements of the Securities Act of 1933, as amended, any and all
amendments and post-effective amendments to this Registration Statement, and any
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act and any post-effective
amendments thereto, with exhibits to such registration statements and amendments
and other documents in connection therewith, and hereby ratifies and confirms
all that said attorney-in-fact or his or her substitute or substitutes may do or
cause to be done by virtue hereof.
Signature Title Date
/s/ ROBERT A. DAVIES, III Chairman and Chief Executive Officer September 22, 2003
--------------------------- (principal executive officer) and
Robert A. Davies, III Director
/s/ ZVI EIREF Vice President, Finance, and Chief September 22, 2003
------------------------------------ Financial Officer (principal
Zvi Eiref financial officer)
/s/ GARY P. HALKER Vice President, Finance and Treasurer September 22, 2003
------------------------------------ (principal accounting officer)
Gary P. Halker
/s/ ROBERT H. BEEBY Director September 22, 2003
---------------------------
Robert H. Beeby
/s/ ROSINA B. DIXON Director September 22, 2003
------------------------------------
Rosina B. Dixon
/s/ J. RICHARD LEAMAN, JR. Director September 22, 2003
---------------------------
J. Richard Leaman, Jr.
/s/ ROBERT D. LEBLANC Director September 22, 2003
---------------------------
Robert D. LeBlanc
/s/ JOHN D. LEGGETT III Director September 22, 2003
---------------------------
John D. Leggett III
/s/ JOHN F. MAYPOLE Director September 22, 2003
---------------------------
John F. Maypole
/s/ ROBERT A. MCCABE Director September 22, 2003
---------------------------
Robert A. McCabe
/s/ DWIGHT C. MINTON Director September 22, 2003
---------------------------
Dwight C. Minton
/s/ BURTON B. STANIAR Director September 22, 2003
---------------------------
Burton B. Staniar
/s/ JOHN O. WHITNEY Director September 22, 2003
---------------------------
John O. Whitney
INDEX TO EXHIBITS
Exhibit Exhibit
Nubmer Title
------- -------
3.1 Restated Certificate of Incorporation, as amended
(Incorporated by reference to Exhibit 3.5 to the Registrant's
quarterly report on Form 10-Q for the quarter ended June 27, 2003)
3.2 By-laws (Incorporated by reference to Exhibit 3.1 to the
Registrant's current report on Form 8-K dated September 19, 2003)
4.1 Indenture dated August 11, 2003 between the Registrant and
The Bank of New York, as Trustee 4.2 Form of 5.25%
Convertible Senior Debentures (included in Exhibit 4.1)
4.3 Registration Rights Agreement dated as of August 11, 2003
among the Registrant and the Initial Purchasers named therein
5.1 Opinion of Morgan, Lewis & Bockius LLP *
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1)*
24.3 Power of Attorney (included on the signature page of this
registration statement)
25.1 Form T-1 Statement of Eligibility of Trustee for Indenture under
the Trust Indenture Act of 1939
* To be filed by amendment.