As filed with the Securities and Exchange Commission on February 4, 2003
Registration No. 333-90370
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
GRAFTECH INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1385548
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
BRANDYWINE WEST, 1521 CONCORD PIKE, SUITE 301
WILMINGTON, DELAWARE 19803
(302) 778-8227
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
KAREN G. NARWOLD, ESQ.
VICE PRESIDENT, GENERAL COUNSEL, HUMAN RESOURCES & SECRETARY
GRAFTECH INTERNATIONAL LTD.
BRANDYWINE WEST, 1521 CONCORD PIKE, SUITE 301
WILMINGTON, DELAWARE 19803
(302) 778-8214
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
----------------------
With a copy to:
M. RIDGWAY BARKER, ESQ.
KELLEY DRYE & WARREN LLP
TWO STAMFORD PLAZA, 281 TRESSER BOULEVARD
STAMFORD, CONNECTICUT 06901
(203) 324-1400
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
============================== =================== ============================= ============================== ====================
TITLE OF SHARES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE (1) AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
------------------------------ ------------------- ----------------------------- ------------------------------ --------------------
Common Stock,
par value $.01 per share (2) 2,000,000 shares $3.88 $7,760,000 $998.33(3)
============================== =================== ============================ =============================== ====================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based on the
average of the high and low prices on February 3, 2003, as reported by
the New York Stock Exchange.
(2) The securities include certain rights associated with the shares of
Common Stock issued pursuant to the Rights Agreement dated August 7,
1998, as amended, between the Registrant and Computershare Investor
Services, LLC.
(3) Consists of $436.62 paid on June 12, 2002 in connection with the
original 426,400 shares initially registered and $561.71 paid in
connection with the additional 1,573,600 shares registered hereby.
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 4, 2003
PROSPECTUS
2,000,000 SHARES
GRAFTECH INTERNATIONAL LTD.
COMMON STOCK
We are offering 2,000,000 shares of our common stock. We intend to sell
these shares promptly and in an orderly fashion. We may sell the shares offered
hereby on any stock exchange, market or trading facility on which the shares are
traded, in block trades or in private transactions. These sales may be at fixed
or negotiated prices. We expect to contribute all net proceeds from the sale of
the shares offered hereby to a benefits protection trust which we adopted to
assist us in providing for payment of certain employee benefit plan obligations.
In turn, we expect the trust will use these funds to pay these obligations. We
previously issued and contributed these 2,000,000 shares of our common stock to
the trust. We will withdraw these shares from the trust concurrently with the
sale of these shares in this offering.
Our common stock is traded on the New York Stock Exchange, or NYSE,
under the symbol "GTI." On February 3, 2003, the closing sale price of our
common stock, as reported by the NYSE, was $3.84 per share.
-------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2003
WHERE YOU CAN FIND MORE INFORMATION
We are required to file periodic reports, proxy statements and other
information relating to our business, financial statements and other matters
with the SEC. Our SEC filings are available to the public over the Internet at
the SEC's web site at http://www.sec.gov. You may also read and copy any
document we file at the SEC's public reference room located at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room and its copy charges. Our reports and
proxy statements and other information relating to us can also be inspected at
the NYSE located at 20 Broad Street, New York, New York 10005.
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act of 1933 with respect to our common stock being offered by
this prospectus. The term "registration statement," of which this prospectus is
a part, means the original registration statement and all amendments, including
all schedules and exhibits. This prospectus does not contain all of the
information in the registration statement because we have omitted parts of the
registration statement in accordance with the rules of the SEC. Please refer to
the registration statement for any information in the registration statement
that is not included in this prospectus. The registration statement can be
inspected and copied at the locations described above. In addition, each
statement made in this prospectus concerning a document filed as an exhibit to
the registration statement is qualified in its entirety by reference to that
exhibit for a complete statement of its provisions.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made by us with
the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act
of 1934 until this offering is completed.
o Annual Report on Form 10-K for the year ended December 31, 2001
except for Items 6, 7 and 8 therein;
o Quarterly Report on Form 10-Q for the quarter ended March 31,
2002 except for Items 1, 2 and 3 therein;
o Quarterly Report on Form 10-Q for the quarter ended June 30,
2002;
o Quarterly Report on Form 10-Q for the quarter ended September 30,
2002;
o Proxy Statement on Schedule 14A, dated March 29, 2002;
o Current Report on Form 8-K, filed on January 28, 2002;
o Current Report on Form 8-K, filed on February 11, 2002;
o Current Report on Form 8-K, filed on February 19, 2002;
o Current Report on Form 8-K, filed on April 23, 2002;
o Current Report on Form 8-K, filed on May 1, 2002;
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o Current Report on Form 8-K, filed on May 1, 2002;
o Current Report on Form 8-K, filed on May 2, 2002;
o Current Report on Form 8-K, filed on May 7, 2002;
o Current Report on Form 8-K, filed on May 7, 2002;
o Current Report on Form 8-K, filed on May 9, 2002;
o Current Report on Form 8-K, filed on May 24, 2002;
o Current Report on Form 8-K, filed on February 4, 2002;
o Our registration statement on Form S-4, as amended (Registration
No. 333-87302), in connection with the exchange of $550 million
aggregate principal amount of 10 1/4% senior notes due 2012
issued by UCAR Finance Inc. our wholly owned special purpose
finance subsidiary (the "SENIOR NOTES")
o The description of our common stock contained in our registration
statement on Form 8-A (File No. 1-13888) dated July 28, 1995,
filed with the SEC under Section 12 of the Exchange Act; and
o The description of our preferred stock purchase rights contained
in our registration statement on Form 8-A (File No. 1-13888)
dated September 10, 1998, filed with the SEC under Section 12 of
the Exchange Act.
Any statement contained in a previously filed document incorporated by
reference in this prospectus is modified or superseded to the extent that a
statement contained in this prospectus modifies or supersedes such statement.
Any statement contained in this prospectus or in a document incorporated by
reference in this prospectus is modified or superseded to the extent that a
statement contained in any subsequently filed document which is or is deemed to
be incorporated by reference in this prospectus modifies or supersedes such
statement. Only the modified or superseded statement shall constitute a part of
this prospectus.
You may request a copy of these filings, other than their exhibits, at
no cost, by oral or written request to: GrafTech International Ltd., Brandywine
West, 1521 Concord Pike, Suite 301, Wilmington, Delaware 19803, Attention: Elise
A. Garofalo, Director of Investor Relations, Telephone (302) 778-8227.
FORWARD LOOKING STATEMENTS
This prospectus contains forward looking statements. In addition, from
time to time, our representatives or we have made or may make forward looking
statements orally or in writing. These include statements about such matters as:
future production and sales of steel, aluminum, fuel cells, electronic devices
and other products that incorporate our products or that are produced using our
products; future prices and sales of and demand for graphite electrodes and our
other products; future operational and financial performance of various
businesses; impacts of regional and global economic conditions; strategic
restructuring, realignment, strategic alliance, supply chain, technology
development and collaboration, investment, acquisition, joint venture,
operating, organizational, compensation, capacity, expansion, integration, tax
planning, rationalization, financial and capital plans and projects or the
impact thereof; legal matters and related costs; consulting fees and related
projects;
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potential offerings, sales and other actions regarding debt and equity
securities of us and our subsidiaries; and future costs, working capital,
revenue, business opportunities, values, debt levels, cash flows, cost savings
and reductions, margins, earnings and growth. The words "will," "may," "plan,"
"estimate," "project," "believe," "anticipate," "intend," "expect," "should,"
"target," "goal" and similar expressions identify some of these statements.
Actual future events and circumstances (including future performance,
results and trends) could differ materially from those set forth in these
statements due to various factors. These factors include:
o the possibility that global or regional economic conditions
affecting our products may not improve or may worsen;
o the possibility that anticipated additions to capacity for
producing steel in electric arc furnaces or for producing
aluminum may not occur or that additions to such capacity or
increases in production of steel in electric arc furnaces or of
aluminum may not result in stable or increased demand for or
prices or sales volume of graphite electrodes or cathodes;
o the possibility that announced or anticipated decreases or
increases in graphite electrode manufacturing capacity or
production by us or other producers may not occur or may or may
not offset each other, that any net decrease in such capacity or
production may not result in stable or increased demand for or
prices or sales volume of graphite electrodes and that any net
increase in such capacity or production may result in increased
competition and reduced prices or sales volumes of graphite
electrodes;
o the possibility that increases in graphite cathode manufacturing
capacity or production by us or other producers may result in
increased competition and reduced prices or sales volumes of
graphite cathodes;
o the possibility that economic or technological developments may
adversely affect growth in the use of graphite cathodes in lieu
of carbon cathodes in the aluminum smelting process;
o the possibility of delays in or failure to achieve widespread
commercialization of proton exchange membrane, or "PEM," fuel
cells which use natural graphite materials and components and
that manufacturers of PEM fuel cells may obtain those materials
or components from other sources;
o the possibility of delays in or failure to achieve successful
development and commercialization of new or improved electronic
thermal management or other products;
o the possibility of delays in meeting or failure to meet product
development milestones or delays in expanding or failure to
manufacturing capacity;
o the possibility that we may be unable to protect our intellectual
property or may infringe the intellectual property rights of
others;
o the possibility that the lawsuit against our former parents
initiated by us could be dismissed or settled, our theories of
liabilities or damages could be rejected, material counterclaims
could be asserted against us, legal expenses and distraction of
management could be greater than anticipated, or unanticipated
events or circumstances may occur;
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o the occurrence of unanticipated events or circumstances relating
to antitrust investigations, lawsuits or claims, including the
commencement of new investigations, lawsuits or claims relating
to the same subject matter as the pending investigations,
lawsuits or claims;
o the possibility that expected cost savings or reductions may not
be fully realized;
o the occurrence of unanticipated events or circumstances relating
to health, safety or environmental compliance or remediation
obligations or labor relations or the plans or projects mentioned
above;
o changes in interest or currency exchange rates, in competitive
conditions or in inflation affecting our raw material, energy,
euro-denominated antitrust liabilities or other costs;
o the possibility of our failure to satisfy conditions or
milestones to, or the occurrence of breach of the terms of, our
strategic alliances with Jilin, Pechiney, Ballard Power Systems,
Conoco or others;
o the possibility that changes in our financial performance may
affect our compliance with financial covenants or other
provisions, or the amount of funds available for borrowing, under
our senior secured bank credit facilities (the "SENIOR
FACILITIES"); and
o other risks and uncertainties, including those described
elsewhere or incorporated by reference in this prospectus.
Occurrence of any of the events or circumstances described above could
also have a material adverse effect on our business, financial condition,
results of operations or cash flows.
We can give you no assurance that any future transaction about which
forward looking statements may be made will be completed or as to the timing or
terms of any such transaction.
All subsequent written and oral forward looking statements by or
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by these factors. Except as otherwise required to be disclosed in
periodic reports required to be filed by public companies with the SEC pursuant
to the SEC's rules, we have no duty to update these statements.
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THE COMPANY
We are one of the world's largest manufacturers and providers of high
quality natural and synthetic graphite- and carbon-based products and services,
offering energy solutions to industry-leading customers worldwide. We
manufacture graphite and carbon electrodes and cathodes, used primarily in
electric arc furnace steel production and aluminum smelting. We also manufacture
other natural and synthetic graphite and carbon products used in, and provide
services to, the fuel cell power generation, electronics, semiconductor and
transportation markets. We believe that we have the leading market share in all
of our major product lines. We have over 100 years of experience in the research
and development of graphite and carbon technology, and currently hold numerous
patents related to this technology.
We are a global business, selling our products and engineering and
technical services in more than 70 countries. We have 13 manufacturing
facilities strategically located in Brazil, Mexico, South Africa, France, Spain,
Russia and the U.S. Our customers include industry leaders such as Nucor
Corporation and Arcelor in steel, Alcoa Inc. and Pechiney in aluminum, Ballard
Power Systems in fuel cells, Intel Corporation in electronics, MEMC Electronic
Materials, Inc. in semiconductors and The Boeing Company in transportation.
Our Graphite Power Systems Division manufactures and delivers high
quality graphite and carbon electrodes and cathodes and related services that
are key components of the conductive power systems used to produce steel,
aluminum and other non-ferrous metals. Graphite electrodes are consumed in the
production of steel in electric arc furnaces, the steel making technology used
by all "mini-mills." Graphite electrodes are also consumed in refining steel in
ladle furnaces and in other smelting processes. Carbon electrodes are used in
the production of silicon metal, a raw material primarily used in the
manufacture of aluminum. Graphite and carbon cathodes are used in aluminum
smelting.
Our Advanced Energy Technology Division develops, manufactures and
sells high quality, highly engineered natural and synthetic graphite- and
carbon-based energy technologies, products and services for both established and
high-growth-potential markets. We currently sell these products primarily to the
transportation, chemical, petrochemical, fuel cell power generation and
electronic thermal management markets. In addition, we provide cost effective
technical services for a broad range of markets and license our proprietary
technology in markets where we do not anticipate engaging in manufacturing
ourselves. This division also focuses unique emphasis on developing and
exploiting our patented and proprietary technologies related to graphite and
carbon materials science and processing and manufacturing technology.
In January 2003, we announced that we had refined the organization of
our businesses into three lines of business, a synthetic graphite line of
business called Graphite Power Systems, a natural graphite line of business
called Advanced Energy Technology and a carbon materials line of business called
Advanced Carbon Materials. We also announced the implementation of voluntary and
selective severance programs and the expected early retirement of several senior
managers. In connection therewith, we announced related charges which may be
recorded and additional funding of a non-qualified employee defined benefit
plan. Of the 2,000,000 shares of common stock offered hereby, 1,573,600
constitute shares contributed as part of this additional funding and the other
426,400 were contributed in 2001 to fund certain benefit plan obligations to
management.
We are a Delaware corporation. Our principal executive offices are
located at Brandywine West, 1521 Concord Pike, Suite 301, Wilmington, Delaware
19803, and our telephone number at that location is (302) 778-8227. We maintain
a web site at http://www.graftechinternational.com, one of our subsidiaries
maintains a web site at http://www.graftech.com and our High Tech High Temp
business
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unit maintains a web site at http: //www.HT2.com. The information contained on
these web sites is not part of this prospectus.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks and uncertainties described below, in
addition to the other information set forth in this prospectus, before
purchasing our common stock. The risks and uncertainties described below are not
the only ones facing us. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial may also impair our financial
condition, results of operations, cash flows or business. If any of the
following risks or uncertainties actually occur, our financial condition,
results of operations, cash flows or business could be harmed. In that case, the
trading price of our common stock could decline and you could lose all or part
of your investment.
WE ARE DEPENDENT ON THE GLOBAL STEEL AND OTHER METALS INDUSTRIES. OUR RESULTS OF
OPERATIONS MAY DETERIORATE DURING GLOBAL AND REGIONAL ECONOMIC DOWNTURNS.
Our principal product, graphite electrodes, which accounted for about
63% of our total net sales in 2001, is sold primarily to the electric arc
furnace steel production industry. Many of our other products are sold primarily
to other metals industries and the transportation industry. These are global
basic industries, and customers in these industries are located in every major
geographic market. As a result, our customers are affected by changes in global
and regional economic conditions. This, in turn, affects demand for, and prices
of, our products sold to these industries. Accordingly, we are directly affected
by changes in global and regional economic conditions.
In addition, demand for our products sold to these industries may be
adversely affected by improvements in those products as well as in the
manufacturing operations of customers, which reduce the rate of consumption or
use of our products for a given level of production by our customers. We
estimate that the average rate of consumption of graphite electrodes per metric
ton of steel produced (called "SPECIFIC CONSUMPTION") declined from about 4.3
kilograms of graphite electrodes per metric ton of steel produced in 1990 to
about 2.4 kilograms per metric ton in 2001. While we believe that the rate of
decline of specific consumption over the long term has become lower, we believe
that there was a slightly more significant decline in 2001 than would otherwise
have been the case due to the shutdown of older, less efficient electric arc
furnaces due to the severe downturn affecting the steel industry.
As a result of global and regional economic conditions, reductions in
rates of consumption and other factors, demand for our graphite electrodes and
some of our other products sold to these industries has fluctuated significantly
and prices have declined since 1998. Demand and prices for most of our other
products sold to other metals and the transportation industries were adversely
affected by the same global and regional economic conditions that affected
graphite electrodes. These circumstances reduced our net sales and net income.
We believe that business conditions for most of our products (other
than cathodes) will remain challenging well into 2003. We cannot assure you that
the electric arc furnace steel production industry will continue to be the
higher long term growth sector of the steel industry or that the other metals or
transportation industries served by us will experience stability, growth or
recovery from current economic conditions affecting them. Accordingly, we cannot
assure you that there will be stability or growth in demand for or prices of
graphite electrodes or our other products sold to these industries. An adverse
change in global or certain regional economic conditions could materially
adversely affect us.
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ANY SUBSTANTIAL GROWTH IN NET SALES, CASH FLOW FROM OPERATIONS OR NET INCOME OF
OUR TECHNOLOGY-ORIENTED BUSINESSES DEPENDS PRIMARILY ON SUCCESSFULLY DEVELOPING,
INTRODUCING AND SELLING GRAPHITE AND CARBON TECHNOLOGY AND PRODUCTS FOR EMERGING
APPLICATIONS ON A PROFITABLE BASIS. IF WE ARE NOT SUCCESSFUL, WE WILL NOT
ACHIEVE OUR PLANNED GROWTH.
Our planned growth depends on successful and profitable development
and sale of:
o materials and components for proton exchange membrane fuel cells
and fuel cell systems;
o electronic thermal management products, including thermal
interface products, heat spreaders, heat sinks and heat pipes,
for computer, communications, industrial, military, office
equipment and automotive electronic applications;
o fire retardant products for transportation applications and
building and construction materials applications;
o industrial thermal management products for high temperature
process applications; and
o conductive products for battery and supercapacitor power storage
applications.
Successful and profitable commercialization of technology and products
is subject to various risks, including risks beyond our control, such as:
o the possibility that we may not be able to develop viable
products or, even if we develop viable products, that our
products may not gain commercial acceptance;
o the possibility that our commercially accepted products could be
subsequently displaced by other technologies or products;
o the possibility that, even if our products are incorporated in
new products of our customers, our customers' new products may
not become viable or commercially accepted or may be subsequently
displaced;
o the possibility that a mass market for commercially accepted
products, or for our customers' products which incorporate our
products, may not develop;
o restrictions under our agreement with Ballard Power Systems on
sales of our fuel cell materials and components to, and
collaboration with, others; and
o failure of our customers, including Ballard Power Systems, to
purchase our products in the quantities that we expect.
These risks could be impacted by adoption of new laws and regulations,
changes in governmental programs, failure of necessary supporting systems (such
as a fuel delivery infrastructure for fuel cells) to be developed, and consumer
perceptions about costs, benefits and safety.
OUR FINANCIAL CONDITION COULD SUFFER IF WE EXPERIENCE UNANTICIPATED COSTS AS A
RESULT OF ANTITRUST INVESTIGATIONS, LAWSUITS AND CLAIMS.
Since 1997, we have been subject to antitrust investigations, lawsuits
and claims. We recorded a pre-tax charge of $340 million against results of
operations for 1997 and an additional pre-tax charge
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of $10 million against results of operations for the 2001 second quarter as a
reserve for estimated potential liabilities and expenses in connection with
antitrust investigations and related lawsuits and claims. We cannot assure you
that remaining liabilities and expenses in connection with antitrust
investigations, lawsuits and claims will not materially exceed the remaining
uncommitted balance of the reserve or that the timing of payment thereof will
not be sooner than anticipated. At September 30, 2002, $99 million remained in
this unfunded reserve. The balance of this reserve is available for the
remaining balance of the fine payable by us to the U.S. Department of Justice
that was imposed in 1998 (excluding imputed interest thereon), the fines
assessed against us by the antitrust authorities of the European Union and other
matters. The aggregate amount of remaining committed payments payable to the
U.S. Department of Justice for imputed interest at September 30, 2002 was about
$6 million. Our insurance has not and will not materially cover liabilities that
have or may become due in connection with antitrust investigations or related
lawsuits or claims.
If such liabilities or expenses materially exceed the remaining
uncommitted balance of this reserve or if the timing of payment thereof is
sooner than anticipated, we may not be able to comply with the financial
covenants under the Senior Facilities. A failure to so comply, unless waived by
the lenders thereunder, would be a default thereunder. This would permit the
lenders to accelerate the maturity of the Senior Facilities. It would also
permit the lenders to terminate their commitments to extend credit under our
revolving credit facility. This would have an immediate material adverse effect
on our liquidity. An acceleration of maturity of the Senior Facilities would
permit the holders of our Senior Notes to accelerate the maturity of the Senior
Notes. If we were unable to repay our debt to the lenders and holders or
otherwise obtain a waiver from the lenders and holders, we could experience the
consequences or be forced to take the actions described in the two following
risk factors and the lenders and holders could proceed against the collateral
securing the Senior Facilities and the Senior Notes, respectively, and exercise
all other rights available to them. We cannot assure you that we would be able
to obtain any such waiver on acceptable terms or at all.
WE ARE HIGHLY LEVERAGED AND OUR SUBSTANTIAL DEBT AND OTHER OBLIGATIONS COULD
LIMIT OUR FINANCIAL RESOURCES, OPERATIONS AND ABILITY TO COMPETE AND MAY MAKE US
MORE VULNERABLE TO ADVERSE ECONOMIC EVENTS.
We are highly leveraged, and we have substantial obligations in
connection with antitrust investigations, lawsuits and claims. At December 31,
2001, we had total debt of $638 million and a stockholders' deficit of $332
million. At September 30, 2002, we had a total debt of $721million and a
stockholders deficit of $363 million. A substantial portion of our debt has
variable interest rates. In addition, we typically discount or factor a
substantial portion of our accounts receivable. During 2001, certain of our
subsidiaries sold receivables totaling $223 million. During the 2002 first nine
months, certain of our subsidiaries sold receivables totaling $140 million. We
are dependent on our revolving credit facility, the availability of which
depends on continued compliance with the financial covenants under the Senior
Facilities, for liquidity.
Our high leverage and our antitrust related obligations could have
important consequences, including the following:
o our ability to restructure or refinance our debt or obtain
additional debt or equity financing for payment of these
obligations, or for working capital, capital expenditures,
acquisitions, strategic alliances or other general corporate
purposes, may be impaired in the future;
o a substantial portion of our cash flow from operations must be
dedicated to debt service and payment of these antitrust related
obligations, thereby reducing the funds available to us for other
purposes;
9
o an increase in interest rates could result in an increase in the
portion of our cash flow from operations dedicated to servicing
our debt, in lieu of other purposes;
o we may have substantially more leverage and antitrust related
obligations than certain of our competitors, which may place us
at a competitive disadvantage; and
o our leverage and our antitrust related obligations may hinder our
ability to adjust rapidly to changing market conditions or other
events and make us more vulnerable to insolvency, bankruptcy or
other adverse consequences in the event of a downturn in general
or certain regional economic conditions or in our business or in
the event that these obligations are greater, or the timing of
payment is sooner, than expected.
OUR ABILITY TO SERVICE OUR DEBT AND MEET OUR OTHER OBLIGATIONS DEPENDS ON
CERTAIN FACTORS BEYOND OUR CONTROL.
Our ability to service our debt and meet our other obligations as they
come due is dependent on our future financial and operating performance. This
performance is subject to various factors, including certain factors beyond our
control such as, among other things, changes in global and regional economic
conditions, developments in antitrust investigations, lawsuits and claims
involving us, changes in our industry, changes in interest or currency exchange
rates and inflation in raw materials, energy and other costs.
If our cash flow and capital resources are insufficient to enable us to
service our debt and meet these obligations as they become due, we could be
forced to:
o reduce or delay capital expenditures;
o sell assets or businesses;
o limit or discontinue, temporarily or permanently, business plans,
activities or operations;
o obtain additional debt or equity financing; or
o restructure or refinance debt.
We cannot assure you as to the timing of such actions or the amount of
proceeds that could be realized from such actions. Accordingly, we cannot assure
you that we will be able to meet our debt service and other obligations as they
become due or otherwise.
WE ARE SUBJECT TO RESTRICTIVE COVENANTS UNDER OUR SENIOR FACILITIES AND THE
INDENTURE RELATING TO OUR SENIOR NOTES (THE "INDENTURE"). THESE COVENANTS COULD
SIGNIFICANTLY AFFECT THE WAY IN WHICH WE CONDUCT OUR BUSINESS. OUR FAILURE TO
COMPLY WITH THESE COVENANTS COULD LEAD TO AN ACCELERATION OF OUR DEBT.
The Senior Facilities and the Indenture contain a number of covenants
that, among other things, significantly restrict our ability to:
o dispose of assets;
o incur additional indebtedness;
10
o repay or refinance other indebtedness or amend other debt
instruments;
o create liens on assets;
o enter into leases or sale/leaseback transactions;
o make investments or acquisitions;
o engage in mergers or consolidations;
o make certain payments and investments, including dividend
payments; and
o make capital expenditures or engage in certain transactions with
subsidiaries and affiliates.
The Senior Facilities also require us to comply with specified
financial covenants, including minimum interest coverage and maximum leverage
ratios. In addition, pursuant to the Senior Facilities, we cannot borrow under
our revolving credit facility:
o if the aggregate amount of our payments made (excluding certain
imputed interest) and additional reserves created in connection
with antitrust, securities and stockholder derivative
investigations, lawsuits and claims exceed $340 million by more
than $75 million (which $75 million is reduced by the amount of
certain debt, other than the Senior Notes, incurred by us that is
not incurred under the Senior Facilities, $16 million of which
debt was outstanding at September 30, 2002); or
o if the additional borrowings would cause us to breach the
financial covenants contained therein.
Further, substantially all of our assets in the U.S. are pledged to
secure guarantees of the Senior Facilities by our domestic subsidiaries. In
addition, our principal foreign operating subsidiaries are obligors under
intercompany term notes issued to UCAR Finance and guarantees of intercompany
term notes issued by the same or other operating subsidiaries to UCAR Finance,
all of which notes and guarantees are pledged to secure the Senior Notes. Our
Swiss subsidiary is an obligor under an intercompany revolving note and our
principal foreign subsidiaries are guarantors of that note. Such note and
guarantees are pledged to secure the Senior Facilities. Most of the assets of
the obligors under that intercompany revolving note and the related guarantees,
which constitute a majority of our assets outside the U.S., are pledged to
secure that note and those guarantees.
We are currently in compliance with the covenants contained in the
Senior Facilities and the Indenture. However, our ability to continue to comply
may be affected by events beyond our control. The breach of any of the covenants
contained in the Senior Facilities, unless waived by the lenders, would be a
default under the Senior Facilities. This would permit the lenders to accelerate
the maturity of the Senior Facilities. It would also permit the lenders to
terminate their commitments to extend credit under our revolving credit
facility. This would have an immediate material adverse effect on our liquidity.
An acceleration of maturity of the Senior Facilities would permit the holders of
the Senior Notes to accelerate the maturity of the Senior Notes. A breach of the
covenants contained in the Indenture would also permit the holders of the Senior
Notes to accelerate the maturity of the Senior Notes. Acceleration of maturity
of the Senior Notes would permit the lenders to accelerate the maturity of the
Senior Facilities and terminate their commitments to extend credit under our
revolving credit facility. If we were unable to repay our debt to the lenders
and holders or otherwise obtain a waiver from the lenders and holders, we could
be forced to take the actions described in the preceding risk
11
factor and the lenders and holders could proceed against the collateral securing
the Senior Facilities and the Senior Notes, respectively, and exercise all other
rights available to them. We cannot assure you that we would have sufficient
funds to make these accelerated payments or that we would be able to obtain any
such waiver on acceptable terms or at all.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OPERATIONS IN MULTIPLE COUNTRIES.
We have significant international operations. In 2001, about 70% of our
net sales was derived from sales outside of the U.S., and, at December 31, 2001,
about 74% of our total property, plant and equipment and other long-lived assets
was located outside the U.S. In addition, we have entered into and begun
performance under an agreement with Jilin Carbon Joint Stock Company, Ltd. to
form a graphite electrode production joint venture, subject to receipt of
Chinese governmental approval and satisfaction of other conditions. As a result,
we are subject to risks associated with operating in multiple countries,
including:
o currency devaluations and fluctuations in currency exchange
rates, including impacts of transactions in various currencies,
translation of various currencies into dollars for U.S. reporting
purposes, and impacts on results of operations due to the fact
that costs of our foreign subsidiaries for our principal raw
material, petroleum coke, are incurred in dollars even though
their products are primarily sold in other currencies;
o imposition of or increases in customs duties and other tariffs;
o imposition of or increases in currency exchange controls,
including imposition of or increases in limitations on conversion
of various currencies into dollars or euros, making of
intercompany loans by subsidiaries or remittance of dividends,
interest or principal payments or other payments by subsidiaries;
o imposition of or increases in revenue, income or earnings taxes
and withholding and other taxes on remittances and other payments
by subsidiaries;
o imposition or increases in investment restrictions and other
restrictions or requirements by non-U.S. governments;
o inability to definitively determine or satisfy legal
requirements, inability to effectively enforce contract or legal
rights and inability to obtain complete financial or other
information under local legal, judicial, regulatory, disclosure
and other systems; and
o nationalization and other risks which could result from a change
in government or other political, social or economic instability.
We cannot assure you that such risks will not have a material adverse
effect on us in the future.
In general, our results of operations and financial condition are
affected by inflation in each country in which we have a manufacturing facility.
We maintain operations in Brazil, Russia and Mexico, countries which have had in
the past, and may have now or in the future, highly inflationary economies,
defined as cumulative inflation of about 100% or more over a three calendar year
period. We cannot assure you that future increases in our costs will not exceed
the rate of inflation or the amounts, if any, by which we may be able to
increase prices for our products.
12
OUR ABILITY TO GROW AND COMPETE EFFECTIVELY DEPENDS ON PROTECTING OUR
INTELLECTUAL PROPERTY, INCLUDING THAT RELATING TO FUEL CELL POWER GENERATION,
ELECTRONIC THERMAL MANAGEMENT AND OTHER IDENTIFIED OPPORTUNITIES. FAILURE TO
PROTECT OUR INTELLECTUAL PROPERTY COULD ADVERSELY AFFECT OUR PLANNED GROWTH.
Failure to protect our intellectual property may result in the loss of
the exclusive right to use our technologies. We rely on patent, trademark and
trade secret law to protect our intellectual property. Our issued patents
relating to fuel cell power generation and electronic thermal management
applications, which we believe are particularly important to our planned growth,
will expire at various times between 2004 and 2018. Some of our intellectual
property is not covered by any patent or patent application. Our patents are
subject to complex factual and legal considerations, and there can be
uncertainty as to the validity, scope and enforceability of any particular
patent. Accordingly, we cannot assure you that:
o any of the U.S. or foreign patents now or hereafter owned by us,
or that third parties have licensed to us or may in the future
license to us, will not be circumvented, challenged or
invalidated;
o any of the U.S. or foreign patents that third parties have
licensed to us or may license to us in the future will not be
licensed to others; or
o any of our pending or future patent applications will be issued
at all or with the breadth of claim coverage sought by us.
In addition, effective patent, trademark and trade secret protection may be
unavailable, limited or not applied for in some foreign countries in which we
operate.
Our ability to maintain our proprietary intellectual property may be
achieved in part by prosecuting claims against others whom we believe are
infringing upon our rights and by defending against claims of intellectual
property infringement brought by others against us. Our involvement in
intellectual property litigation could result in significant expense to us,
adversely affecting development of sales of the related products and diverting
the efforts of our technical and management personnel, regardless of the outcome
of such litigation.
We also seek to protect our proprietary intellectual property,
including intellectual property that may not be patented or patentable, in part
by confidentiality agreements and, if applicable, inventors' rights agreements
with our strategic partners and employees. We cannot assure you that these
agreements will not be breached, that we will have adequate remedies for any
such breach or that such partners or employees will not assert rights to
intellectual property arising out of these relationships.
If necessary or desirable, we may seek licenses to intellectual
property of others. However, we can give no assurance that we will obtain such
licenses or that the terms of any such licenses will be acceptable to us.
The failure to obtain a license from a third party for its intellectual
property that is necessary to make or sell any of our products could cause us to
incur substantial liabilities and to suspend the manufacture or shipment of
products or our use of processes requiring the use of such intellectual
property.
13
OUR CURRENT AND FORMER MANUFACTURING OPERATIONS ARE SUBJECT TO INCREASINGLY
STRINGENT HEALTH, SAFETY AND ENVIRONMENTAL REQUIREMENTS.
We use and generate hazardous substances in our manufacturing
operations. In addition, both the properties on which we currently operate and
those on which we have ceased operations are and have been used for industrial
purposes. Further, our manufacturing operations involve risks of personal injury
or death. We are subject to increasingly stringent environmental, health and
safety laws and regulations relating to our current and former properties and
neighboring properties and our current operations. These laws and regulations
provide for substantial fines and criminal sanctions for violations and
sometimes require the installation of costly pollution control or safety
equipment or costly changes in operations to limit pollution and decrease the
likelihood of injuries. In addition, we may become subject to potentially
material liabilities for the investigation and cleanup of contaminated
properties and to claims alleging personal injury or property damage resulting
from exposure to or releases of hazardous substances or personal injury as a
result of an unsafe workplace. In addition, noncompliance with or stricter
enforcement of existing laws and regulations, adoption of more stringent new
laws and regulations, discovery of previously unknown contamination or
imposition of new or increased requirements could require us to incur costs or
become the basis of new or increased liabilities that could be material.
WE ARE DEPENDENT ON SUPPLIES OF RAW MATERIALS AND ENERGY AT AFFORDABLE PRICES.
OUR RESULTS OF OPERATIONS COULD DETERIORATE IF THAT SUPPLY IS SUBSTANTIALLY
DISRUPTED FOR AN EXTENDED PERIOD.
We purchase raw materials and energy from a variety of sources. In many
cases, we purchase them under short term contracts or on the spot market, in
each case at fluctuating prices. The availability and price of raw materials and
energy may be subject to curtailment or change due to:
o limitations which may be imposed under new legislation or
governmental regulations;
o suppliers' allocations to meet demand of other purchasers during
periods of shortage (or, in the case of energy suppliers,
extended cold weather);
o interruptions in production by suppliers; and
o market and other events and conditions.
Petroleum products, including petroleum coke, our principal raw
material, and energy, particularly natural gas, have been subject to significant
price fluctuations. Over the past several years, we have mitigated the effect of
price increases on our results of operations through our cost reduction efforts.
We cannot assure you that such efforts will successfully mitigate future
increases in the price of petroleum coke or other raw materials or energy. A
substantial increase in raw material or energy prices which cannot be mitigated
or passed on to customers or a continued interruption in supply, particularly in
the supply of petroleum coke or energy, would have a material adverse effect on
us.
OUR RESULTS OF OPERATIONS COULD DETERIORATE IF OUR MANUFACTURING OPERATIONS WERE
SUBSTANTIALLY DISRUPTED FOR AN EXTENDED PERIOD.
Our manufacturing operations are subject to disruption due to extreme
weather conditions, floods and similar events, major industrial accidents,
strikes and lockouts, and other events. We cannot assure you that no such events
will occur. If such an event occurs, it could have a material adverse effect on
us.
14
OUR RESULTS OF OPERATIONS FOR ANY QUARTER ARE NOT NECESSARILY INDICATIVE OF OUR
RESULTS OF OPERATIONS FOR A FULL YEAR.
Sales of graphite electrodes and other products fluctuate from quarter
to quarter due to such factors as changes in global and regional economic
conditions, changes in competitive conditions, scheduled plant shutdowns by
customers, national vacation practices, changes in customer production schedules
in response to seasonal changes in energy costs, weather conditions, strikes and
work stoppages at customer plants and changes in customer order patterns in
response to the announcement of price increases. We have experienced, and expect
to continue to experience, volatility with respect to demand for and prices of
graphite electrodes and other products, both globally and regionally.
We have also experienced volatility with respect to prices of raw
materials and energy, and it has frequently required several quarters of cost
reduction efforts to mitigate increases in those prices. We expect to experience
volatility in such prices in the future.
Accordingly, results of operations for any quarter are not necessarily
indicative of the results of operations for a full year.
THE GRAPHITE AND CARBON INDUSTRY IS HIGHLY COMPETITIVE. OUR MARKET SHARE, NET
SALES OR NET INCOME COULD DECLINE DUE TO VIGOROUS PRICE AND OTHER COMPETITION.
Competition in the graphite and carbon products industry (other than
with respect to new products) is based primarily on price, product quality and
customer service. Graphite electrodes, in particular, are subject to rigorous
price competition. Price increases by us or price reductions by our competitors,
decisions by us with respect to maintaining profit margins rather than market
share, technological developments, changes in the desirability or necessity of
entering into long term fixed price supply contracts with customers, or other
competitive or market factors or strategies could adversely affect our market
share, net sales or net income.
Competition with respect to new products is, and is expected to be,
based primarily on product innovation, performance and cost effectiveness as
well as customer service.
Competition could prevent implementation of price increases, require
price reductions or require increased spending on research and development,
marketing and sales that could adversely affect our results of operations, cash
flows or financial condition.
WE CANNOT ASSURE YOU THAT WE WILL SUCCESSFULLY IMPLEMENT ANY STRATEGIC ALLIANCES
FOR ANY OF OUR BUSINESSES.
One of our key strategies is establishment and expansion of strategic
alliances to reduce our average cost of sales, expand our share of various
geographic markets, expand our product lines or technology, or strengthen our
businesses. We cannot assure you that any alliance will be completed or as to
the timing, terms or benefits of any alliance that may be completed.
WE MAY NOT BE ABLE TO COMPLETE OUR PLANNED ASSET SALES.
We intend to sell real estate, non-strategic businesses and certain
other non-strategic assets over the next two years. We cannot assure you if or
when we will be able to complete these sales or that we will realize proceeds
therefrom that meet our current expectations.
15
WE MAY NOT ACHIEVE THE COST SAVINGS TARGETED UNDER THE NEW MAJOR COST SAVINGS
PLAN ANNOUNCED IN JANUARY 2002 (THE "2002 PLAN").
Our targeted cost savings under the 2002 plan are based on assumptions
regarding the costs and savings associated with the activities undertaken and to
be undertaken as part of the 2002 plan. We cannot assure you that these
assumptions are correct or that we will be able to implement these activities at
the anticipated costs, if at all. If the costs associated with these activities
are higher than anticipated or if we are unable to implement the activities as
and when we have assumed, we may not be able to meet our cost savings targets.
THERE ARE PROVISIONS IN SOME OF OUR IMPORTANT DOCUMENTS THAT COULD HAVE THE
EFFECT OF PREVENTING A CHANGE IN CONTROL OF US.
Our Certificate of Incorporation and By-Laws contain provisions
concerning voting, issuance of preferred stock, removal of officers and
directors and other matters that may have the effect of discouraging, delaying
or preventing a change in control of us. In addition, our board of directors has
adopted a stockholder rights plan that may have the same affect. Further, the
Senior Facilities restrict certain events that would constitute a change in
control and provide that certain events which would constitute a change in
control would also constitute an event of default. We cannot assure you that we
will have the financial resources necessary to repay the Senior Facilities upon
the occurrence of such an event of default.
OUR STOCK PRICE MAY BE VOLATILE DUE TO THE NATURE OF OUR BUSINESS, WHICH COULD
AFFECT THE SHORT-TERM VALUE OF YOUR INVESTMENT.
The stock market has from time to time experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline or fluctuate, perhaps substantially, following this offering,
including:
o failure to meet product development and commercialization goals;
o quarterly fluctuations in our results of operations;
o net sales and results of operations failing to meet the
expectations of securities analysts or investors;
o downward revisions in securities analysts' revenue or earnings
estimates or changes in general market conditions;
o technological innovations or strategic actions by our
competitors;
o speculation in the press or investor perception concerning our
industry or our prospects; or
o general economic factors unrelated to our performance.
The stock markets in general have experienced extreme volatility that
has often been unrelated to the operating performance of particular companies.
These broad market fluctuations may adversely affect the market price of our
common stock.
In the past, companies that have experienced volatility in the market
price of their stock have been the subject of securities class action
16
litigation. We could be involved in a securities class action litigation in the
future. Such litigation could result in substantial costs and a diversion of
management's attention and resources.
USE OF PROCEEDS
The net proceeds to us from this offering are estimated to be about
$7.5 million assuming the shares are sold at a price of $3.84 per share and
after deducting commissions and other expenses payable by us. We intend to
contribute all of the net proceeds to us from this offering to a benefits
protection trust which we adopted to assist us in providing for payment of
certain employee benefit plan obligations which are otherwise payable out of our
general assets. These obligations include accrued benefits under nonqualified
retirement plans and severance obligations under employment and other
agreements. The trust contains a benefits protection account which makes funds
available to assist plan participants and their beneficiaries in enforcing their
claims with respect to those obligations upon a change of control. We may from
time to time contribute assets to or withdraw assets from the trust (other than
from a benefits protection account established within the trust, to which
$250,000 has been contributed), except that no withdrawal can be made after a
change of control until all such obligations are paid or discharged.
We intend to direct the trust to allocate all of the net proceeds from
this offering contributed to it to an account within the trust maintained with
respect to our obligations under our nonqualified benefit plans. These proceeds
are expected to be used to discharge and pay these obligations; however, prior
to a change of control, we may withdraw a portion or all of these net proceeds
from the trust and use them for general corporate or other purposes. We
previously issued and contributed the 2,000,000 shares of common stock offered
hereby to this account within the trust. We intend to withdraw these shares from
the trust concurrently with the sale of these shares in this offering. In
addition, in the future we may contribute additional shares of our common stock
to the trust and subsequently register the sale of these additional shares in
the same manner as that described here.
Our board of directors may amend or terminate the trust at any time
prior to a change of control. Upon a change of control, the trust becomes
irrevocable, and we are required to make contributions to the trust sufficient
to discharge and pay such obligations. Upon a change of control, no amendment of
the trust may be adopted without the written consent of a majority of the
participants and the beneficiaries who are receiving benefits thereunder.
Consistent with the requirements of applicable law, the assets of the trust are
subject to the claims of our creditors in the event of our insolvency or
bankruptcy.
PLAN OF DISTRIBUTION
We intend to sell the shares offered hereby promptly and in an orderly
fashion. The shares offered hereby may be sold on any stock exchange, market or
trading facility on which the shares are traded, in block trades or in private
transactions. These sales may be at fixed or negotiated prices. We intend to
offer or sell the shares through J.P. Morgan Securities Inc., who will act as
our broker in facilitating sales of the shares. J.P. Morgan may use any one or
more of the following methods when selling shares:
o ordinary unsolicited brokerage transactions;
o block trades in which J.P. Morgan will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
17
o purchases by J.P. Morgan as principal and resale by J.P. Morgan
for its own account; or
o a combination of such methods of sale.
J.P. Morgan may arrange for other brokers-dealers to participate in
sales. These broker-dealers may receive commissions or discounts from us (or, if
any broker-dealer acts as agent for the purchaser of shares, from the purchaser)
in amounts to be negotiated. We do not expect these commissions and discounts to
exceed what is customary in the types of transactions involved.
J.P. Morgan and any other broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by J.P. Morgan or such other broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
J.P. Morgan and other persons participating in the sale or distribution
of the shares will be governed under applicable provisions of the Exchange Act
and the rules and regulations thereunder, including Regulation M. Regulation M
may limit the timing of purchases and sales of any of the shares by J.P. Morgan
and any other person. The anti-manipulation rules under the Exchange Act may
apply to sales of shares in the market and to the activities of J.P. Morgan and
its affiliates. Furthermore, Regulation M may restrict the ability of any person
engaged in the distribution of the shares to engage in market-making activities
with respect to the particular shares being distributed for a period of up to
five business days before the distribution. These restrictions may affect the
marketability of the shares and the ability of any person or entity to engage in
market-making activities with respect to the shares.
LEGAL MATTERS
The legality of our common stock offered hereby and certain other legal
matters will be passed upon for us by Kelley Drye & Warren LLP, New York, New
York, and Stamford, Connecticut.
EXPERTS
The consolidated financial statements of GrafTech International Ltd.
(formerly known as UCAR International Inc.) and subsidiaries as of and for the
year ended December 31, 2001 incorporated by reference in this registration
statement from our Registration Statement No. 333-87302 on Form S-4 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report incorporated by reference herein and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of GrafTech International Ltd.
(formerly known as UCAR International Inc.) and subsidiaries as of December 31,
2000, and for each of the years in the two-year period ended December 31, 2000,
have been incorporated by reference herein in reliance upon the report of KPMG
LLP, independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
18
YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE
IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION
THAT IS DIFFERENT. WE ARE
OFFERING TO SELL, AND
SEEKING OFFERS TO BUY, THESE
SECURITIES ONLY, AND THIS
PROSPECTUS MAY BE USED ONLY,
IN JURISDICTIONS WHERE
OFFERS AND SALES OF THESE
SECURITIES ARE PERMITTED. THE
INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN
THIS PROSPECTUS MAY BE
ACCURATE ONLY ON THE DATE OF
THE DOCUMENT CONTAINING THE
INFORMATION. GRAFTECH INTERNATIONAL LTD.
2,000,000 Shares
Common Stock
TABLE OF CONTENTS
Page
---- PROSPECTUS
Where You Can Find More Information..........2
Incorporation of Documents by Reference......2
Forward-Looking Statements...................3
The Company..................................6
Risk Factors.................................7
Use of Proceeds.............................17
Plan of Distribution........................17
Legal Matters...............................18
Experts.....................................18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered. The expenses shall be paid by the registrant.
SEC registration fee........................... $ 1,000
Legal fees and expenses........................ 10,000
Accounting fees and expenses................... 5,000
Miscellaneous.................................. 4,000
-------
Total................................. $25,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"Law") provides as follows:
"(a) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if 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 his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which 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 reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have 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 or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and
II-1
(b) of this section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because the person has
met the applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has
II-2
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)."
Section 102(b)(7) of the Law provides as follows:
"(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the certificate
of incorporation may also contain any or all of the following matters:
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director: (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under section 174 of this title; or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective.
All references in this paragraph to a director shall also be deemed to refer (x)
to a member of the governing body of a corporation which is not authorized to
issue capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in accordance with
Section 141(a) of this title, exercise or perform any of the powers or duties
otherwise conferred or imposed upon the board of directors by this title."
The registrant maintains a director's and officer's liability insurance
policy which indemnifies directors and officers for certain losses arising from
claims by reason of a wrongful act, as defined therein, under certain
circumstances.
In addition, in response to this Item 15, the following information is
incorporated by reference: the information included in the description of the
registrant's capital stock contained in the registrant's Registration Statement
on Form 8-A dated July 28, 1995, as updated by any amendment or report filed for
the purpose of updating such description; the description of the rights
contained in the registrant's Registration Statement on Form 8-A dated September
10, 1998, as updated by any amendment or report filed for the purpose of
updating such description; Articles Tenth and Eleventh of the Amended and
Restated Certificate of Incorporation of the registrant incorporated by
reference as Exhibit 4.1 to this registration statement; and Article V of the
Amended and Restated By-Laws of the registrant incorporated by reference as
Exhibit 4.2 to this registration statement.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits listed in the following table have been filed as part of
this registration statement.
Exhibit
Number Description of Exhibit
------ ----------------------
4.1(1) Amended and Restated Certificate of Incorporation of the
registrant.
4.1(a)(2) Certificate of Designations of Series A Junior Participating
Preferred Stock.
4.1(b)(3) Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the registrant. 4.2(1) Amended and Restated
By-Laws of the registrant. 4.2(a)(2) Amendment to By-Laws of
the registrant.
4.3(2) Rights Agreement dated as of August 7, 1998 between the
registrant and The Bank of New York, as Rights Agent.
4.3(a)(4) Amendment No. 1 to such Rights Agreement dated as of
November 1, 2000.
5.1* Opinion of Kelley Drye & Warren LLP regarding the validity of
the securities registered hereby.
23.1* Consent of Kelley Drye & Warren LLP (included in Exhibit 5.1).
23.2* Consent of KPMG LLP.
23.3* Consent of Deloitte & Touche LLP.
24.1* Powers of Attorney.
--------------
* Filed herewith
(1) Incorporated by reference to the registrant's Registration Statement on Form
S-1 (Registration No. 33-94698).
(2) Incorporated by reference to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1998 (File No. 1-13888).
(3) Incorporated by reference to the registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002 (File No. 1-13888).
(4) Incorporated by reference to the registrant's Annual Report on Form 10-K for
the year ended December 31, 2001 (File No. 1-13888).
(b) Financial Statement Schedules
All schedules are omitted as the required information is inapplicable or
the information is presented in the Consolidated Financial Statements or related
notes thereto.
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ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of the 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, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilmington, State of Delaware on this 4th day of
February 2003.
GRAFTECH INTERNATIONAL LTD.
By: /s/ Corrado F. De Gasperis
-----------------------------------------------
Name: Corrado F. De Gasperis
Title: Vice President, Chief Financial Officer
and Chief Information Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
* Chairman of the Board and Director February 4, 2003
--------------------------------------------------
Gilbert E. Playford
* President and Chief Executive Officer February 4, 2003
-------------------------------------------------- (Principal Executive Officer)
Craig S. Shular
/s/ Corrado F. De Gasperis Vice President, Chief Financial Officer February 4, 2003
-------------------------------------------------- and Chief Information Officer
Corrado F. De Gasperis (Principal Financial and Accounting
Officer)
*
-------------------------------------------------- Director February 4, 2003
R. Eugene Cartledge
*
-------------------------------------------------- Director February 4, 2003
Mary B. Cranston
*
-------------------------------------------------- Director February 4, 2003
John R. Hall
*
-------------------------------------------------- Director February 4, 2003
Thomas Marshall
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Signatures Title Date
---------- ----- ----
*
-------------------------------------------------- Director February 4, 2003
Ferrell P. McClean
*
-------------------------------------------------- Director February 4, 2003
Michael C. Nahl
*By /s/ Corrado F. De Gasperis
-----------------------------------------------
Corrado F. De Gasperis
Attorney-in-Fact
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------ ----------------------
4.1(1) Amended and Restated Certificate of Incorporation of the
registrant.
4.1(a)(2) Certificate of Designations of Series A Junior Participating
Preferred Stock.
4.1(b)(3) Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the registrant. 4.2(1) Amended and Restated
By-Laws of the registrant. 4.2(a)(2) Amendment to By-Laws of
the registrant.
4.3(2) Rights Agreement dated as of August 7, 1998 between the
registrant and The Bank of New York, as Rights Agent.
4.3(a)(4) Amendment No. 1 to such Rights Agreement dated as of
November 1, 2000.
5.1* Opinion of Kelley Drye & Warren LLP regarding the validity of
the securities registered hereby.
23.1* Consent of Kelley Drye & Warren LLP (included in Exhibit 5.1).
23.2* Consent of KPMG LLP.
23.3* Consent of Deloitte & Touche LLP.
24.1* Powers of Attorney.
--------------
* Filed herewith
(1) Incorporated by reference to the registrant's Registration Statement on Form
S-1 (Registration No. 33-94698).
(2) Incorporated by reference to the registrant's Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 1-13888).
(3) Incorporated by reference to the registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002 (File No. 1-13888).
(4) Incorporated by reference to the registrant's Annual Report on Form 10-K
for the year ended December 31, 2001 (File No. 1-13888).
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