AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 2002
REGISTRATION NO. 333-89802
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CONSECO, INC.
(Exact Name of Registrant as Specified in Its Charter)
INDIANA 6321 35-1468632
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
11825 N. PENNSYLVANIA STREET
CARMEL, INDIANA 46032
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
DAVID K. HERZOG, ESQ.
CONSECO, INC.
11825 N. PENNSYLVANIA STREET
CARMEL, INDIANA 46032
(317) 817-6000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------------
INFORMATION REGARDING THE ADDITIONAL REGISTRANT APPEARS IN A SEPARATE TABLE
BELOW
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WITH COPIES TO:
JEREMY W. DICKENS, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119
(212) 310-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
THE REGISTRANTS HEREBY AMEND 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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--------------------------------------------------------------------------------
ADDITIONAL REGISTRANT
PRIMARY
STANDARD ADDRESS, INCLUDING ZIP CODE
STATE OR OTHER INDUSTRIAL AND TELEPHONE NUMBER,
JURISDICTION OF CLASSIFICATION I.R.S. EMPLOYER INCLUDING AREA CODE,
EXACT NAME OF REGISTRANT INCORPORATION CODE IDENTIFICATION OF REGISTRANT'S PRINCIPAL
AS SPECIFIED IN ITS CHARTER OR ORGANIZATION NUMBER NUMBER EXECUTIVE OFFICE* REGISTRATION NO.
--------------------------- --------------- -------------- --------------- --------------------------- ----------------
CIHC, Incorporated Delaware 6321 51-0356511 1201 Orange Street 333-89802
Suite 789
Wilmington, DE 19801
Gary C. Wendt
(302) 884-6703
---------------
* Name, address, including zip code and telephone number, including area code,
for agent of service of process for Additional Registrant.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL OR OFFER 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 WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JULY 25, 2002
PROSPECTUS
[CONSECO LOGO]
$1,292,637,000
CONSECO, INC.
We are offering to exchange, upon the terms and subject to the conditions
set forth in this prospectus, each series of our outstanding, unregistered
guaranteed notes for identical, newly-issued, registered notes listed below.
OUTSTANDING
AGGREGATE
FOR EACH $1,000 PRINCIPAL AMOUNT OF PRINCIPAL THE EXCHANGING HOLDERS WILL RECEIVE $1,000 PRINCIPAL
THE FOLLOWING UNREGISTERED GUARANTEED NOTES: AMOUNT AMOUNT OF THE CORRESPONDING REGISTERED NOTES:
-------------------------------------------- ------------ ----------------------------------------------------
8.5% Guaranteed Senior Notes due 2003 $ 991,000 8.5% Guaranteed Senior Notes due 2003
6.4% Guaranteed Senior Notes due 2004 14,936,000 6.4% Guaranteed Senior Notes due 2004
8.75% Guaranteed Senior Notes due 2006 364,294,000 8.75% Guaranteed Senior Notes due 2006
6.8% Guaranteed Senior Notes due 2007 150,783,000 6.8% Guaranteed Senior Notes due 2007
9% Guaranteed Senior Notes due 2008 399,200,000 9% Guaranteed Senior Notes due 2008
10.75% Guaranteed Senior Notes due 2009 362,433,000 10.75% Guaranteed Senior Notes due 2009
After giving effect to the consummation of the private exchange offer we
completed on April 24, 2002, which we refer to as the April exchange offer, and
this exchange offer, as if each had occurred on March 31, 2002, CIHC would have
had outstanding up to $2,288.5 million of guarantees senior to the registered
note guarantees (including $545.2 million of guarantees that Conseco, Inc. has
also made), $1,823.5 million of debt and guarantees ranking equally with the
registered note guarantees and $710.8 million of debt ranking junior to the
registered note guarantees. The registered notes and any unregistered guaranteed
notes remaining outstanding after the conclusion of this exchange offer will
also be effectively junior to all the indebtedness, policy reserves and other
liabilities of CIHC's subsidiaries, which totaled $50.2 billion at March 31,
2002.
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THE EXCHANGE OFFER
- THE EXCHANGE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON
, 2002, UNLESS EXTENDED.
- As more fully described in this prospectus, the exchange offer is subject
to certain conditions, which we may waive in our sole discretion.
- All unregistered guaranteed notes that are validly tendered and not
validly withdrawn will be exchanged for registered notes.
- Tenders of unregistered guaranteed notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on , 2002, the
withdrawal deadline.
- We will not receive any cash proceeds from the exchange offer.
---------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 11 OF THIS
PROSPECTUS
BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
, 2002
TABLE OF CONTENTS
PAGE
----
Prospectus Summary.................... 1
Risk Factors.......................... 11
Forward-Looking Statements............ 21
Use of Proceeds....................... 22
Selected Consolidated Financial
Data................................ 23
The Exchange Offer.................... 28
Description of the Registered Notes... 37
PAGE
----
Certain Material United States Federal
Income Tax Considerations........... 42
Plan of Distribution.................. 43
Legal Matters......................... 44
Experts............................... 44
Where You Can Find More Information
and Incorporation of Certain
Documents by Reference.............. 45
Unless otherwise stated, in this prospectus, "Conseco," the "Company,"
"we," "us" and "our" refer to Conseco, Inc. and its subsidiaries, unless the
context requires otherwise. "CIHC" or the "guarantor" refers to CIHC,
Incorporated, the guarantor of the registered notes and the unregistered
guaranteed notes and the holding company of our principal operating
subsidiaries. We also refer to the unregistered guaranteed notes issued in
connection with the April exchange offer as the unregistered or existing
guaranteed notes, and to the registered guaranteed notes to be issued in
connection with this exchange offer as the registered notes. We refer to the
unregistered guaranteed notes and the registered notes together as the
guaranteed notes. We refer to the original notes for which the unregistered
guaranteed notes were exchanged in the April exchange offer as the senior notes.
We also refer to the Securities and Exchange Commission as the SEC or the
Commission.
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, any of the notes offered hereby by any person in any
jurisdiction in which it is unlawful for such person to make such an offering or
solicitation.
i
PROSPECTUS SUMMARY
This summary may not contain all of the information that may be important
to you. You should carefully read the entire prospectus, including the other
documents to which it refers, and the financial data and related notes
incorporated by reference in the prospectus, before making an investment
decision.
CONSECO
We are a financial services holding company with subsidiaries operating in
the insurance and finance businesses, predominantly in the United States. Our
insurance subsidiaries develop, market and administer supplemental health
insurance, annuities, individual life insurance, and other insurance products.
Our finance subsidiaries originate, securitize and service manufactured housing,
home equity, retail credit, and floor plan loans.
We were organized in 1979 as an Indiana corporation and commenced
operations in 1982. Our executive offices are located at 11825 N. Pennsylvania
Street, Carmel, Indiana 46032, and our telephone number is (317) 817-6100. Our
common stock trades on the New York Stock Exchange under the ticker symbol
"CNC."
CREDIT RATINGS
We have a recent history of net losses. For the three months ended March
31, 2002, on a consolidated basis, we had a net loss of $95.9 million, cash
flows from operations of $263.0 million and interest expense of $368.7 million.
For 2001, on a consolidated basis, we had a net loss of $405.9 million, cash
flows from operations of $1,324.7 million and interest expense of $1,609.2
million. Our earnings before fixed charges were inadequate to cover our fixed
charges by $148.5 million and $623.1 million for the three months ended March
31, 2002 and fiscal year 2001, respectively.
Rating agencies have recently downgraded our credit rating for our debt,
including the senior notes, and our company-obligated mandatorily redeemable
preferred securities of subsidiary trusts. On May 28, 2002, Moody's Investor
Services downgraded our credit rating for the senior notes two notches to "Caa1"
from "B2," and said its ratings outlook for us is negative. Moody's employs a
system of nine national ratings, ranging from Aaa to C, with modifiers 1, 2 and
3 to indicate the relative strength or weakness within each rating. B and Caa
are the sixth and seventh best ratings, respectively, out of nine. B2 would
therefore be a "middle B" and Caa1 would be a "high Caa." The ratings are based
on research by analysts at Moody's who have evaluated our overall financial and
liquidity positions and generally measure our ability to make long-term interest
and principal payments on the securities rated when due and payable. Moody's
believes that our slower than anticipated progress in generating cash from
reinsurance and other transactions and our continued weak net income performance
from our finance and insurance subsidiaries means that the possible risks of
bankruptcy for us are more problematic. Prior to May 28, 2002, Moody's had last
lowered our credit rating for the senior notes on January 9, 2002 from "B1" to
"B2," as a result of Moody's concern for the impact on our liquidity of the
fragile nature of the general economic environment and the execution of our
plans to generate cash through asset sales.
Our senior debt remains on credit watch for further downgrade at Standard &
Poor's, which currently rates our senior unsecured debt at "B." On January 16,
2002, Standard & Poor's lowered our senior debt rating from "B+" to "B."
Standard & Poor's based its ratings action on (i) the expectation that the
current weakness in the economy would reduce our flexibility in making further
planned debt reductions, (ii) an increased reliance on dividends from insurance
operations to support our liquidity and (iii) the necessity of asset sales to
meet our debt-reduction objectives. Standard & Poor's maintains a system of 11
credit ratings categories, ranging from "AAA (Extremely strong)" to "D
(Defaulted)," with pluses and minuses used to show the relative standing within
the categories. "B" is the is the sixth highest rating out of 11 and the lowest,
or third, rating within Standard & Poor's second tier of ratings. Ratings are
based on likelihood of payment, willingness to meet financial commitments, the
nature and terms of the debt, and the protection and ranking available to the
debt holders in the event of a bankruptcy. Standard & Poor's assigns a "B"
rating to an obligation if it is vulnerable to nonpayment because of adverse
business, financial, or economic conditions which are expected to impair the
issuer's capacity or willingness to meet its financial commitment on the
obligation in the future,
1
despite having current ability to meet the financial obligation. Ratings receive
special surveillance, or credit watch, when identifiable events and short-term
trends or deviations from expected trends occur and additional information is
necessary to evaluate the current rating. A "negative" credit watch means a
rating may be lowered. Standard & Poor's assigned our "B" rating after an
analysis of our insurance operations as well as our progress in reducing debt
and increasing financial flexibility. Standard & Poor's expects that we will be
increasingly dependent on dividends from insurance operations to support our
cash flow and liquidity needs and to meet debt repayment objectives.
On June 7, 2002, our senior debt, including the unregistered guaranteed
notes, was rated and affirmed as "B-" and removed from Ratings Watch Negative by
Fitch IBCA. However, our senior debt ratings retain a long-term Negative Outlook
by Fitch IBCA. On the same date, Fitch IBCA rated our senior notes for which the
unregistered guaranteed notes were exchanged in the April exchange offer "CCC+."
Fitch IBCA employs a system of 12 national ratings, ranging from AAA to D, with
pluses and minuses used to indicate the relative position of a credit within a
ratings category. B and CCC are the sixth and seventh best ratings,
respectively, out of 12. B- would therefore be a "low B" and CCC+ would be a
"high CCC." The ratings are based on research by analysts at Fitch IBCA who have
evaluated our overall financial and liquidity positions and generally measure
our ability to make long-term interest and principal payments on the securities
rated when due and payable. Fitch remains concerned about our ability to meet
2003 debt maturities. Fitch believes we will require additional asset sales or
other cash raising transactions in order to fund our 2003 debt maturities. Fitch
believes these efforts will be challenging given the difficult economic
environment and our limited financial flexibility. Fitch will continue to
monitor our progress on these issues.
INSURANCE
We are the 28th largest life and health insurance company based on total
admitted assets. Our investment portfolio included more than $24 billion of
insurance-related investments at March 31, 2002. Our career agency force sells
primarily Medicare Supplement and long-term care insurance policies, senior life
insurance and annuities. These agents sell only Conseco policies and typically
visit the customer's home which permits one-on-one contacts with potential
policyholders and promotes strong personal relationships with existing
policyholders. Our independent producer distribution channel consists of a
general agency and insurance brokerage distribution system comprised of
independent licensed agents doing business in all fifty states, the District of
Columbia, and certain protectorates of the United States. Independent producers
are a diverse network of independent agents, insurance brokers and marketing
organizations. Our direct marketing distribution channel is engaged primarily in
the sale of "graded benefit life" insurance policies which are sold directly
from the Company to the policyholder.
Supplemental health products include Medicare supplement, long-term care
and specified-disease insurance products. During 2001, we collected Medicare
supplement premiums of $975.1 million, long-term care premiums of $888.3
million, specified-disease premiums of $371.8 million, and other supplemental
health premiums of $109.3 million. During the three months ended March 31, 2002,
proceeds from Medicare supplement premiums were $261.9 million, long-term care
premiums were $225.7 million, specified-disease premiums were $93.1 million, and
other supplemental health premiums were $29.4 million. Supplemental health
premiums represented 48% and 50% of our total premiums collected from continuing
lines of business in 2001 and the first three months of 2002, respectively.
Annuity products include equity-indexed annuity, variable annuity,
traditional fixed rate annuity and market value-adjusted annuity products.
During 2001 and the three months ended March 31, 2002, we collected annuity
premiums of $1,637.9 million (or 34% of our total premiums collected from
continuing lines of business) and $391.1 million (or 32% of our premiums
collected from continuing lines of business), respectively.
Life products include traditional, universal life and other life insurance
products. During 2001, we collected life product premiums of $872.2 million, or
18% of our total premiums collected from continuing lines of business. During
the three months ended March 31, 2002, we collected life product premiums of
$214.2 million, or 18% of our total premiums collected from continuing lines of
business.
2
CONSECO FINANCE
Conseco Finance Corp., or "Conseco Finance," our subsidiary, is a large
consumer finance company, with over $41.5 billion of managed finance receivables
at March 31, 2002. We are the largest originator of manufactured housing loans
(based on total securitizations of manufactured housing loans) and we also
originate home equity mortgages, home improvement loans, and private label
credit cards. At March 31, 2002, we had managed receivables of $41.5 billion.
Conseco Finance provides financing for consumer purchases of manufactured
housing and floor plan loans to manufactured housing dealers. A manufactured
home is a structure, transportable in one or more sections, designed to be a
dwelling with or without a permanent foundation. During 2001, we originated $2.5
billion of consumer contracts for manufactured housing purchases, or 22% of our
total originations. At March 31, 2002, our managed receivables included $25.1
billion of contracts for manufactured housing purchases, or 60% of total managed
receivables, and $.7 billion of floor plan loans. Conseco Finance offers its
manufactured housing financing products through 33 regional offices and
approximately 3,200 dealers.
Mortgage services products include home equity and home improvement loans.
During 2001, we originated $3.0 billion of contracts for these products, or 27
percent of our total originations. At March 31, 2002, our managed receivables
included $11.4 billion of contracts for home equity and home improvement loans,
or 27% of total managed receivables. During 2001, we originated $3.6 billion of
private label credit card receivables, primarily through our bank subsidiaries,
or 32% of our total originations. At March 31, 2002, our managed receivables
included $2.6 billion of contracts for credit card loans, or 6% of total managed
receivables. Private label credit card programs are offered to select retailers
with a core focus on the home improvement industry. We offer consumer finance
products through 123 home equity offices, approximately 1,300 home improvement
dealers and approximately 3,500 private label retail outlets.
CIHC
CIHC is our direct subsidiary and the holding company of our principal
operating subsidiaries, including the subsidiaries that engage in our insurance
and finance businesses. CIHC has no direct operations. As permitted by SEC
Regulation S-X, we consolidate CIHC's financial statements and reports in our
annual and quarterly reports filed with the SEC. Separate financial information
relating to CIHC is included in a note to our 2001 audited condensed financial
information in Schedule II to our annual report on Form 10-K for the period
ended December 31, 2001, filed with the SEC on April 1, 2002, and in a note to
our quarterly report on Form 10-Q for the period ended March 31, 2002, filed
with the SEC on May 15, 2002, which are incorporated by reference in this
prospectus.
PURPOSE OF THE EXCHANGE OFFER
On April 24, 2002, we exchanged $1,292,637,000 aggregate principal amount
of our then outstanding senior notes for a corresponding aggregate principal
amount of our unregistered guaranteed notes, which we refer to as the April
exchange offer. The April exchange offer was only made, and the unregistered
guaranteed notes were only offered and issued, (i) in the United States, to
"qualified institutional buyers," as that term is defined in Rule 144A under the
Securities Act, and institutional "Accredited Investors" as that term is defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, in a private
transaction in reliance upon an exemption from the registration requirements of
the Securities Act, and (ii) outside the United States, to persons other than
"U.S. persons," as that term is defined in Rule 902 under the Securities Act, in
offshore transactions in reliance upon Regulation S under the Securities Act.
The April exchange offer was not registered under the Securities Act.
The terms of the unregistered guaranteed notes are substantially identical
to those of the senior notes, except that the unregistered guaranteed notes have
longer maturities and are guaranteed by CIHC, Incorporated, our direct
subsidiary and the holding company of our principal operating subsidiaries. The
purpose of the April exchange offer was to extend the maturity profile of our
senior notes in order to improve our financial flexibility and to enhance our
future ability to refinance public debt. Following the April exchange offer,
$1,247,662,000 in aggregate principal amount of senior notes remained
outstanding (and without the benefit of the CIHC guarantee).
3
Simultaneously with the April exchange offer, we and the guarantor entered
into a registration rights agreement with Banc of America Securities LLC, J.P.
Morgan Securities Inc. and Lehman Brothers Inc., the dealer managers for the
April exchange offer. Pursuant to that agreement, we have filed the registration
statement of which this prospectus is a part. You should read the discussion
under the headings " -- Summary of the Terms of the Registered Notes," "The
Exchange Offer" and "Description of the Registered Notes" for further
information regarding the registered notes.
Because we did not register the unregistered guaranteed notes under the
Securities Act, those notes may only be transferred in limited circumstances
under the federal securities laws. If the holders of the unregistered guaranteed
notes do not exchange their notes in the exchange offer, they will not have the
right to have their unregistered guaranteed notes registered under the
Securities Act. Any holder who does not participate in this exchange offer will
be unable to publicly offer or sell the unregistered guaranteed notes and,
therefore, may only offer and sell such notes in transactions exempt from
registration under the Securities Act.
In exchange for tendering $1,000 principal amount of your unregistered
guaranteed notes, you will receive a corresponding principal amount of
registered notes, which have identical terms and conditions to the unregistered
guaranteed notes. The only difference between the unregistered guaranteed notes
and the registered notes is that the offer and sale of the registered notes have
been registered under the Securities Act and the registered notes will not bear
legends restricting their transfer. Unless you are a broker-dealer, we believe
that the registered notes to be issued in the exchange offer may be resold by
you without compliance with the registration and prospectus delivery
requirements of the Securities Act. You should read the discussions under the
headings "The Exchange Offer" and "Description of the Registered Notes" for
further information regarding the registered notes.
The Exchange Offer............ We are offering to exchange the registered
notes described below for any and up to all of
the unregistered guaranteed notes described
below:
FOR EACH $1,000 PRINCIPAL AMOUNT OF THE
FOLLOWING UNREGISTERED GUARANTEED NOTES:
8.5% Guaranteed Senior Notes due 2003
6.4% Guaranteed Senior Notes due 2004
8.75% Guaranteed Senior Notes due 2006
6.8% Guaranteed Senior Notes due 2007
9% Guaranteed Senior Notes due 2008
10.75% Guaranteed Senior Notes due 2009
THE EXCHANGING HOLDERS WILL RECEIVE $1,000
PRINCIPAL AMOUNT OF THE CORRESPONDING REGISTERED
NOTES:
8.5% Guaranteed Senior Notes due 2003
6.4% Guaranteed Senior Notes due 2004
8.75% Guaranteed Senior Notes due 2006
6.8% Guaranteed Senior Notes due 2007
9% Guaranteed Senior Notes due 2008
10.75% Guaranteed Senior Notes due 2009
For further information relating to the terms
of the registered notes, see "Description of
the Registered Notes" below.
Outstanding unregistered guaranteed notes may
be exchanged only in minimum denominations of
$1,000 principal amount and integral multiples
of $1,000.
Subject to the satisfaction or waiver of
specified conditions, we will exchange the
registered notes for any and up to all of the
unregistered guaranteed notes that are validly
tendered and not withdrawn prior to the
withdrawal deadline.
4
We will issue the registered notes promptly
after the expiration of the exchange offer.
Resales of the Registered
Notes; Letter
of Transmittal................ We believe that the registered notes to be
issued in the exchange offer may be offered for
resale, resold and otherwise transferred (other
than by broker-dealers participating in the
exchange offer) without compliance with the
registration and prospectus delivery provisions
of the Securities Act if you meet the following
conditions:
(1) the registered notes to be issued to you in
the exchange offer are acquired by you in
the ordinary course of your business;
(2) you have no arrangement or understanding
with any person to participate in the
distribution of the unregistered guaranteed
notes or the registered notes to be issued
to you in the exchange offer; and
(3) you are not an affiliate of Conseco's or
CIHC's.
Our belief is based on interpretations by the
staff of the Commission, as set forth in
no-action letters issued to third parties
unrelated to us. The staff has not considered
the exchange offer in the context of a
no-action letter, and we cannot assure you that
the staff would make a similar determination
with respect to the exchange offer.
If you do not meet the above conditions, you
may incur liability under the Securities Act if
you transfer any registered note without
delivering a prospectus meeting the
requirements of the Securities Act. We do not
assume or indemnify you against that liability.
Each broker-dealer that receives registered
notes in the exchange offer for its own account
in exchange for unregistered guaranteed notes
must deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such registered
notes. By signing the letter of transmittal (or
agreeing to its terms through the Depository
Trust Company's, procedures for book-entry
tenders), each broker-dealer participating in
the exchange offer will agree to comply with
its prospectus delivery obligations. See "Plan
of Distribution."
Expiration Date............... The exchange offer will expire at 5;00 p.m.,
New York City time, on , 2002, unless
extended. We do not presently intend to extend
the exchange offer, although we reserve the
right to do so.
The exchange offer is subject to certain
general conditions, which we may assert or
waive in our sole discretion. These conditions
include the absence of:
- any initiation or worsening of a material
suit or proceeding;
- any governmental or regulatory pronouncement
or enactment which might have a material
adverse effect on the exchange offer or our
business;
- anything that, in our sole judgment, would or
might prohibit or delay the exchange offer or
impair us from realizing the anticipated
benefits of the exchange offer; and
5
- any event that would have a material adverse
effect on the United States financial or
securities markets, the trading prices of the
registered notes or our business, operations,
condition, properties or prospects.
We also may postpone or terminate the offer if
(i) the exchange offer is found to violate
applicable law or applicable interpretations of
the staff of the Commission and (ii) any
injunction, order or decree has been issued
which would prohibit, prevent or materially
impair our ability to proceed with the exchange
offer. See "The Exchange Offer -- Conditions
Offer to the Exchange Offer."
Withdrawal.................... You may withdraw the tender of your
unregistered guaranteed notes at any time prior
to 5:00 p.m., New York City time, on
, 2002, the withdrawal deadline. Note
that we may extend the expiration date of the
offering without correspondingly extending the
withdrawal deadline.
Certain Material United States
Federal Income Tax
Considerations................ The exchange of unregistered guaranteed notes
for registered notes should not be a taxable
event for United States federal income tax
purposes. See "Certain Material United States
Federal Income Tax Considerations."
Procedures for Tendering...... The unregistered guaranteed notes were issued
as global securities in fully registered form
without coupons. Beneficial interests in the
unregistered guaranteed notes which are held by
direct or indirect participants in the
Depository Trust Company, as shown on, and
transfers of the unregistered guaranteed notes
can be made only through, records maintained in
book-entry form by the Depository Trust Company
with respect to its participants.
If you are a holder of unregistered guaranteed
notes held in the form of a book-entry interest
and you wish to tender your notes pursuant to
the exchange offer, you must transmit to State
Street Bank and Trust Company, as exchange
agent, on or prior to the expiration of the
exchange offer either:
- a written or facsimile copy of a properly
completed and executed letter of transmittal
and all other required documents to the
address set forth on the cover page of the
letter of transmittal; or
- a computer-generated message transmitted by
means of the Depository Trust Company's
Automated Tender Offer Program system, and
forming a part of a confirmation of
book-entry transfer in which you acknowledge
and agree to be bound by the terms of the
letter of transmittal.
The exchange agent must also receive on or
prior to the expiration of the exchange offer a
timely confirmation of the book-entry transfer
of your notes into the exchange agent's account
at the Depository Trust Company, in accordance
with the procedure for book-entry transfers
described in this prospectus under the heading
"The Exchange Offer -- Procedures for
Tendering."
Special Procedures for
Beneficial Owners............. If you are the beneficial owner of unregistered
guaranteed notes and they are registered in the
name of a broker, dealer, commercial bank,
trust company or other nominee, and you wish to
tender your
6
notes, you should promptly contact the person
in whose name your notes are registered and
instruct that person to tender on your behalf.
If you wish to tender on your own behalf, you
must, prior to completing and executing the
letter of transmittal and delivering your
notes, either make appropriate arrangements to
register ownership of the notes in your name or
obtain a properly completed bond power from the
person in whose name your notes are registered.
The transfer of registered ownership may take
considerable time. See "The Exchange
Offer -- Procedures for Tendering."
Acceptance of Notes and
Delivery of Registered
Notes......................... Except under the circumstances described above
under "Exchange Offer -- Conditions to the
Exchange Offer," we will accept for exchange
any and all unregistered guaranteed notes which
are properly tendered prior to 5:00 p.m., New
York City time, on the expiration date and not
validly withdrawn. The registered notes to be
issued to you will be delivered promptly
following the expiration date for the exchange
offer. See "The Exchange Offer -- Terms of the
Exchange Offer."
For a description of the consequences of a
failure to exchange the unregistered guaranteed
notes, see "Risk Factors -- Risks Related to
Continuing Ownership of the Unregistered
Guaranteed Notes."
Exchange Agent................ State Street Bank and Trust Company is serving
as the exchange agent in connection with the
exchange offer.
Information Agent............. Georgeson Shareholder Communications Inc. is
the information agent for the exchange offer.
The address and telephone number of the
information agent are on the back cover page of
this prospectus.
7
SUMMARY OF THE TERMS OF THE REGISTERED NOTES
ISSUER........................ Conseco, Inc.
Maturity...................... The maturity dates of the registered notes are
as follows:
- for the 8.5% Guaranteed Senior Notes due
2003, October 15, 2003;
- for the 6.4% Guaranteed Senior Notes due
2004, February 10, 2004;
- for the 8.75% Guaranteed Senior Notes due
2006, August 9, 2006;
- for the 6.8% Guaranteed Senior Notes due
2007, June 15, 2007;
- for the 9% Guaranteed Senior Notes due 2008,
April 15, 2008; and
- for the 10.75% Guaranteed Senior Notes due
2009, June 15, 2009.
Interest...................... For each series of registered notes, interest
will be payable at the same annual rate, on the
same interest payment dates and upon the same
terms as the corresponding series of
unregistered guaranteed notes. Interest on each
registered note will accrue from the last
interest payment date on which interest was
paid on the corresponding unregistered
guaranteed note tendered or such other date, if
any, from which interest was stated to accrue
for each series of unregistered guaranteed
notes.
Indentures.................... We have entered into two new indentures, which
are sometimes referred to as the "exchange
offer indentures," under which we issued the
unregistered guaranteed notes in the April
exchange offer. The registered notes will also
be issued pursuant to, and entitled to the
benefits of, the exchange offer indentures. One
of the exchange offer indentures governs the
issuance of the registered 10.75% Guaranteed
Senior Notes due 2009, which we refer to as the
registered 10.75% notes and the other indenture
will govern the issuance of the remaining
registered notes.
Guarantees.................... The registered notes will be guaranteed by
CIHC, Incorporated, our domestic subsidiary and
the holding company for our principal operating
subsidiaries. If we cannot make interest or
principal payments on the registered notes when
they are due, CIHC, as the guarantor of the
registered notes, must make them instead,
subject to the rights of holders of senior
debt. The guarantees will be full and
unconditional, except that they will be
subordinated and will be limited as necessary
to prevent the guarantees from constituting a
fraudulent conveyance.
Ranking....................... The registered notes will be our general,
unsecured senior debt and will rank equally
with our other unsecured senior obligations,
including our credit facility and any
unregistered guaranteed notes not tendered in
the exchange offer. The registered notes and
any unregistered guaranteed notes remaining
outstanding after the exchange offer will be
structurally senior to our other senior notes
because those senior notes are not guaranteed
by CIHC.
8
The registered note guarantees will be general,
unsecured senior subordinated debt of CIHC and
will rank:
- junior to all of CIHC's senior debt,
including its guarantee of our credit
facility, bank loans to certain of our
current and former directors, officers and
key employees, which we refer to as the D&O
loans, and certain of the obligations of
Conseco Finance;
- on parity with all of CIHC's senior
subordinated, unsecured debt, including
intercompany notes in favor of Conseco
Finance and CFIHC, Inc., a CIHC subsidiary,
and its guarantee of any remaining
unregistered guaranteed notes; and
- senior to any of CIHC's debt that expressly
provides that it is subordinate to the
registered note guarantees.
Because we are a holding company, all of our
debt is effectively junior to the liabilities
of our subsidiaries. Accordingly, in the event
of a bankruptcy of us and our subsidiaries, the
guaranteed notes (whether or not registered)
will be effectively senior to our other senior
notes and will be effectively junior to all of
the liabilities of all of our subsidiaries and
the senior debt of CIHC.
After giving effect to the consummation of the
April exchange offer and this exchange offer,
as if each had occurred on March 31, 2002:
- Conseco, Inc., the parent company, would have
had outstanding approximately $6.6 billion of
debt and guarantees, of which $235.1 million
would have been secured, and therefore
effectively senior to the guaranteed and
senior notes, $1,894.7 million of debt and
guarantees ranking equally with the
guaranteed and senior notes and $4,470.3
million of debt ranking junior to the
guaranteed and senior notes;
- CIHC would have had outstanding up to
$2,288.5 million of guarantees senior to the
guaranteed note guarantees (including $545.2
million of guarantees that Conseco, Inc. has
also made), $1,823.5 million of debt and
guarantees ranking equally with the
registered note guarantees and $710.8 million
of debt ranking junior to the registered note
guarantees; and
- CIHC's subsidiaries would have had $50.2
billion of indebtedness, policy reserves and
other liabilities, (including capitalized
lease obligations but excluding indebtedness
to affiliates) all of which would rank
structurally senior to the notes and the
guarantees.
Separate financial information relating to CIHC
is included in a note to our 2001 audited
condensed financial information in Schedule II
to our annual report on Form 10-K and in the
notes to our quarterly report on Form 10-Q for
the period ended March 31, 2002, which we
incorporate by reference in this prospectus.
Restrictive Covenants and
Event of Default.............. The exchange offer indentures governing the
registered notes will contain the same
restrictive covenants and events of default
that are in effect for the corresponding series
of unregistered guaranteed notes.
9
Use of Proceeds............... We will not receive any cash proceeds upon the
completion of the exchange offer.
Form of Registered Notes...... The registered notes to be issued in the
exchange offer will be represented by one or
more global securities. Beneficial interests in
the registered notes will be shown on, and
transfer of these interests will be effected
only through, records maintained in book-entry
form by the Depository Trust Company with
respect to its participants. See "Description
of the Registered Notes -- Book-Entry, Delivery
and Form." Each global note will be deposited
with the trustee for the registered notes for
the benefit of the Depository Trust Company, in
each case for credit to the account of a direct
or indirect participant of the Depository Trust
Company. Investors in the global notes who are
participants in the Depository Trust Company
may hold their interests in the global notes
directly through the Depository Trust Company.
Investors in the global notes who are not
participants in the Depository Trust Company
may hold their interests indirectly through
organizations that are participants in the
Depository Trust Company. Interests in the
global notes will be shown on, and transfers
thereof will be effected only through, records
maintained by the Depository Trust Company and
its participants, including Euroclear and
Clearstream.
Except as set forth under "Description of the
Registered Notes -- Exchange of Global Notes
for Certificated Notes," participants and
indirect participants will not be entitled to
receive physical delivery of definitive
registered notes or to have registered notes
issued and registered in their names and will
not be considered the owners or holders of the
registered notes under their governing
indentures.
Interests in the global notes and the
definitive registered notes, if any, will be
issued in minimum denominations of $1,000
principal amount and integral multiples of
$1,000.
Risk Factors.................. You should refer to the section entitled "Risk
Factors" beginning on page 11 for an
explanation of the material risks of
participating in the exchange offer and
investing in the registered notes.
10
RISK FACTORS
You should carefully consider all information included or incorporated by
reference in this prospectus, including the information in our annual report on
Form 10-K for the fiscal year ended December 31, 2001, which we filed with the
SEC on April 1, 2002 and our quarterly report on Form 10-Q for the period ended
March 31, 2002, which we filed with the SEC on May 15, 2002. These are not the
only risks and uncertainties we face. Additional risks and uncertainties
described elsewhere herein or in the documents incorporated by reference may
also impair our financial condition, results of operations or prospects.
RISKS RELATED TO OUR CREDIT, LIQUIDITY AND FINANCIAL CONDITION
A NEGATIVE CHANGE IN THE CLAIMS-PAYING ABILITY RATINGS OF OUR INSURANCE
CORPORATIONS COULD NEGATIVELY IMPACT OUR INSURANCE SUBSIDIARIES.
An important competitive factor for life insurance companies is the ratings
they receive from nationally recognized rating organizations. Agents, insurance
brokers and marketing companies who market our products and prospective
purchasers of our products use the ratings of our insurance subsidiaries as one
factor in determining which insurer's products to market or purchase. Ratings
have the most impact on our annuity and interest-sensitive life insurance
products. Insurance claims-paying ability ratings are opinions of an insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. They are not directed toward the protection of
investors. Such ratings are not recommendations to buy, sell or hold securities.
On July 12, 2002, A.M. Best lowered the financial strength ratings of our
primary insurance subsidiaries to "B++ (very good)." A.M. Best ratings for the
industry currently range from "A++ (Superior)" to "F (In Liquidation)" and some
companies are not rated. An "A++" ranking indicates superior overall performance
and a strong ability to meet obligations to policyholders over a long period of
time. "B++" is the fifth best rating out of 15, demonstrating very good
financial strength, operating performance and market profile. The rating
reflects A.M. Bests' concern that we will not be able to meet our obligations on
our 8.5% guaranteed and senior notes. Standard & Poor's has given our insurance
subsidiaries a claims paying ability rating of "BB+ (Marginal)." Rating
categories from "BB" to "CCC" are classified as "vulnerable" claims-paying
ability ratings, and pluses and minuses share the relative standing within a
category. An insurer rated "BB" has marginal financial security characteristics.
In Standard & Poor's view, we have positive attributes, but adverse business
conditions could lead to insufficient ability to meet financial commitments.
A.M. Best and Standard & Poor's each reviews its ratings from time to time.
As a result of the A.M. Best downgrade, or a decision by Standard and Poor's to
downgrade our claims-paying ability, sales of our insurance products could fall
significantly and existing policyholders may redeem or lapse their policies,
causing a material and adverse impact on our financial results and liquidity.
WE MAY EXPERIENCE FURTHER DOWNGRADES IN OUR CREDIT RATING, WHICH COULD AFFECT
OUR ABILITY TO REPAY OR REFINANCE THE REGISTERED NOTES.
We have most recently experienced two consecutive years of net losses.
Rating agencies have recently downgraded our credit rating for our debt,
including the senior notes, and our Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts. On May 28, 2002, our credit rating
for the senior notes was downgraded two notches to "Caa1" from "B2" by Moody's,
which said its ratings outlook for us is negative. Our senior debt remains on
credit watch for further downgrade at Standard & Poor's, which currently rates
our senior unsecured debt at "B." On January 16, 2002, Standard & Poor's lowered
our senior debt rating from "B+" to "B." Standard & Poor's based its ratings
action on (i) the expectation that the current weakness in the economy would
reduce our flexibility in making further planned debt reductions, (ii) an
increased reliance on dividends from insurance operations to support our
liquidity and (iii) the necessity of asset sales to meet our debt-reduction
objectives. Standard & Poor's maintains 11 ratings categories, ranging from "AAA
(Extremely strong)" to "D (Defaulted)." "B" is the sixth highest rating out of
Standard & Poor's 11 credit ratings and the lowest, or third, rating within
Standard & Poor's second tier of ratings. Standard & Poor's assigned our "B"
rating after an analysis of our insurance operations as well as our progress in
reducing debt and increasing financial flexibility. Standard & Poor's expects
that we will be
11
increasingly dependent on dividends from insurance operations to support our
cash flow and liquidity needs and to meet debt repayment objectives, although it
expects our earnings to improve.
On June 7, 2002, our senior debt, including the unregistered guaranteed
notes, was rated and affirmed as "B-" and removed from Ratings Watch Negative by
Fitch IBCA. However, our senior debt retains a long-term "Negative Outlook" by
Fitch IBCA, which carries a longer-term possible ratings change than Ratings
Watch. On the same date, Fitch IBCA rated our senior notes for which the
unregistered guaranteed notes were exchanged in the April exchange offer "CCC+."
A downgrade in our credit rating affects our cost of borrowing and our ability
to borrow from lenders. Accordingly, for future periods beyond 2002, we can make
no assurances that we will have, or will be able to obtain, sufficient funds to
repay the registered notes when they become due.
Moody's employs a system of nine national ratings, ranging from "Aaa" to
"C," with modifiers 1, 2 and 3 to indicate the relative strength or weakness
within each rating. "B" and "Caa" are the sixth and seventh best ratings,
respectively, out of nine. Moody's believes that our slower than anticipated
progress in generating cash from reinsurance and other transactions and our
continued weak net income performance from our finance and insurance
subsidiaries means that the possible risks of bankruptcy for us are more
problematic. Prior to May 28, 2002, Moody's had last lowered our credit rating
for the senior notes on January 9, 2002 from "B1" to "B2," as a result of
Moody's concern for the impact on our liquidity of the fragile nature of the
general economic environment and the execution of our plans to generate cash
through asset sales.
Fitch IBCA employs a system of 12 national ratings, ranging from "AAA" to
"D," with pluses and minuses used to indicate the relative position of a credit
within a ratings category. "B" and "CCC" are the sixth and seventh best ratings,
respectively, out of 12. Fitch believes we will require additional asset sales
or other cash raising transactions in order to fund our 2003 debt maturities.
Fitch believes these efforts will be challenging given the difficult economic
environment and our limited financial flexibility. Fitch will continue to
monitor our progress on these issues.
OUR DEGREE OF LEVERAGE MAY LIMIT OUR FINANCIAL AND OPERATING ACTIVITIES.
As of March 31, 2002 we had substantial outstanding indebtedness. See
"Prospectus Summary -- Summary of the Terms of the Registered Notes -- Ranking."
With respect to the ratio of earnings to fixed charges, preferred stock
dividends and distributions on company-obligated mandatorily redeemable
preferred securities of subsidiary trusts for the three months ended March 31,
2002, adjusted earnings were $148.5 million less than fixed charges. For the
year 2001, adjusted earnings were $623.1 million less than fixed charges.
Consummation of the exchange offer will have no effect on our financial
leverage.
This degree of leverage could have material adverse consequences to us and
the holders of the guaranteed notes (whether or not registered), including the
following: (i) our ability to obtain additional financing in the future for
working capital, capital expenditures or other purposes may be impaired; (ii) a
substantial portion of our cash flow from operations will be required to be
dedicated to the payment of interest expense and principal repayment
obligations; (iii) higher interest rates will cause the interest expense on our
variable rate debt to be higher; (iv) we may be more highly leveraged than other
companies with which we compete, and this may place us at a competitive
disadvantage; (v) our degree of leverage will make us more vulnerable to a
downturn in our business or in the general economy; and (vi) our degree of
leverage may adversely affect the ratings of our insurance company subsidiaries,
which in turn may adversely affect their competitive position and ability to
sell products.
Our cash flow may be affected by a variety of factors, many of which are
outside of our control, including insurance regulatory issues, competition,
financial markets and other general business conditions. Although we believe
that amounts required for us to meet our financial and operating obligations
will be available from our subsidiaries, our results for future periods beyond
2002 are subject to numerous uncertainties. Consequently, we cannot assure you
that we will possess sufficient cash flow and liquidity to meet all of our
long-term debt service requirements beyond 2002, including with respect to the
guaranteed notes (whether or not registered) and our other obligations.
Though we expect to have sufficient cash from operating cash flow, asset
sales and divestitures and other capital-raising activities, there can
nevertheless be no assurances that we will have sufficient cash to extend the
12
maturity of our credit facility from December 31, 2003 to March 31, 2005 by
making an optional principal prepayment of $193.3 million by September 30, 2002.
WE FACE SIGNIFICANT CONTINGENT OBLIGATIONS ASSOCIATED WITH THE D&O LOANS.
We have guaranteed bank loans totaling $545.2 million as of March 31, 2002
to approximately 155 current and former directors, officers and key employees,
which we refer to as the D&O loans. The funds were used by the participants to
purchase approximately 18.0 million shares of our common stock in open market or
negotiated transactions with independent parties. Such shares are held by the
banks as collateral for the loans. In addition, we have provided loans to
participants for interest on the bank loans totaling $151.3 million. The bank
loans which we and CIHC have each guaranteed mature on December 31, 2003. We
have established a non-cash reserve for the exposure we have in connection with
such guarantees. At March 31, 2002, our reserve for losses on the loan
guarantees totaled $460.0 million based upon the value of the collateral and the
creditworthiness of the participants. If we are required to pay on the
guarantees, it could have a material adverse impact on our liquidity position.
THE COVENANTS IN OUR CREDIT FACILITY ALSO RESTRICT OUR ACTIVITIES.
In the first quarter of 2002, we amended the credit agreements related to
our bank debt, which we refer to as our credit facility. We agreed to a number
of covenants and other provisions that restrict our ability to borrow money and
pursue some operating activities without the prior consent of the lenders under
the credit facility. Those provisions restrict our ability to use the proceeds
of asset sales. We agreed to meet or maintain various financial ratios and
balances. Our ability to meet these financial tests and maintain ratings may be
affected by events beyond our control including the following:
- Debt to Capitalization: The debt to capitalization ratio consists of:
(1) the sum of (i) the principal amount of all our indebtedness, (ii)
accrued, unpaid interest and (iii) accrued, unpaid dividends on Trust
Preferred Securities, and (2) our total capitalization. This ratio must
not exceed the ratios which correspond to the end of each fiscal quarter
listed below: for September 30, 2002 to December 31, 2002, 0.375 to 1.0;
for March 31, 2003 to December 31, 2003, 0.350 to 1.0; for March 31, 2004
to maturity, 0.300 to 1.0.
- Interest Coverage Ratio: The interest coverage ratio consists of (1)
Conseco's available cash flow and (2) fixed interest charges. This ratio
must equal or exceed the ratios which correspond to the end of each
fiscal quarter specified below: for September 30, 2002 to December 31,
2002, 1.10 to 1.0; for March 31, 2003, 1.30 to 1.0; for June 30, 2003,
1.75 to 1.0; for September 30, 2003, 1.90 to 1.0; for December 31, 2003,
2.15 to 1.0; for March 31, 2004, 2.25 to 1.0; for June 30, 2004 to
maturity, 2.50 to 1.0.
- Conseco Adjusted Earnings: Conseco's adjusted earnings for the
four-quarter periods ending as of any date below must equal or exceed the
corresponding amounts listed below: for September 30, 2002,
$1,200,000,000; for December 31, 2002 to March 31, 2003, $1,300,000,000;
for June 30, 2003, $1,350,000,000; for September 30, 2003 to for December
31, 2003, $1,400,000,000; for March 31, 2004 to June 30, 2004,
$1,500,000,000; for September 30, 2004 to maturity, $1,700,000,000.
- Conseco Finance Tangible Net Worth. Conseco Finance's tangible net worth
must equal or exceed the amounts which correspond to each fiscal quarter
listed below: for September 30, 2002 to September 30, 2003,
$1,200,000,000; for December 31, 2003 to December 31, 2004,
$1,300,000,000; for March 31, 2005 to maturity, $1,600,000,000.
- Risk-Based Capital Ratio. The risk-based capital ratio consists of (1)
the aggregate total adjusted capital (as defined by the National
Association of Insurance Commissioners) for such insurance subsidiaries
to (2) the aggregate authorized control level risk-based capital (as
defined by the National Association of Insurance Commissioners). For
Conseco's insurance subsidiaries (other than Conseco Direct Life
Insurance Company) taken as a whole, this ratio must not be less than
250% as at the end of any fiscal quarter during the term of the credit
facility.
The credit facility also limits our ability to issue additional debt, incur
additional contingent obligations, grant liens, dispose of assets, enter into
transactions with affiliates, make certain investments, including in existing
and new businesses, change our businesses, and modify our outstanding debt and
preferred stock.
13
Although we were in compliance with these provisions as of March 31, 2002, these
provisions represent significant restrictions on the manner in which we may
operate our business. If we default under any of these provisions, the lenders
could declare all outstanding borrowings, accrued interest and fees to be due
and payable. If that were to occur, no assurance can be given that we would have
sufficient liquidity to repay our bank indebtedness in full or any of our other
debts. The $1.5 billion facility is due December 31, 2003; however, subject to
the absence of any default, we may further extend its maturity to March 31,
2005, provided that: (i) we pay an extension fee of 3.5% of the amount
outstanding; (ii) cumulative principal payments of at least $200.0 million have
been paid by September 30, 2002 and at least $500.0 million have been paid by
September 30, 2003 and (iii) our interest coverage ratio for the four quarters
ending September 30, 2003 is greater than or equal to 2.25 to 1.
The notes in this exchange offer do not contain significant restrictive
covenants, except for the 10.75% notes. Those notes and our credit facility
contain restrictive covenants limiting our ability and our restricted
subsidiaries' ability to, among other things, incur additional indebtedness; pay
dividends on our capital stock or redeem, repurchase or retire our capital stock
or subordinated indebtedness; make certain investments; create restrictions on
the payment of dividends or other amounts to us from our restricted
subsidiaries; incur liens; engage in transactions with affiliates; sell assets;
and consolidate, merge or transfer assets. If we retire, redeem or repurchase or
obtain waivers from holders of our 10.75% guaranteed and senior notes and our
senior lenders under our credit facility, we will no longer be subject to these
restrictive covenants. In that case, we may enter into transactions in the
future which are permitted by the terms of the remaining notes but which may
restrict or adversely affect our ability to pay interest or principal on the
remaining notes.
THE GUARANTEED NOTES ARE UNSECURED AND STRUCTURALLY SUBORDINATED TO THE
OBLIGATIONS OF OUR SUBSIDIARIES.
Because our operations are conducted through subsidiaries, claims of the
creditors of those subsidiaries (including policyholders) will rank senior to
claims to distributions from the subsidiaries, which we depend on to make
payments on the guaranteed notes (whether or not registered). CIHC's
subsidiaries had indebtedness for borrowed money (including capitalized lease
obligations but excluding indebtedness to affiliates), policy reserves and other
liabilities of $50.2 billion at March 31, 2002. The guaranteed notes will rank
effectively junior to these liabilities. If an insurance company subsidiary were
to be liquidated, that liquidation would be conducted under the insurance law of
its state of domicile by such state's insurance regulator as the receiver with
respect to such insurer's property and business. In the event of a default on
our debt or our insolvency, liquidation or other reorganization, our creditors
and stockholders will not have the right to proceed against the assets of our
subsidiaries or to cause their liquidation under federal and state bankruptcy
laws. In addition, Conseco, Inc. is the holder of $750.0 million aggregate
liquidation preference of preferred stock of Conseco Finance, restricting
Conseco Finance's ability to make distributions to CIHC, its sole common
stockholder and the guarantor of the guaranteed notes.
WE ARE A HOLDING COMPANY AND DEPEND ON OUR SUBSIDIARIES FOR CASH.
We are a holding company with no business operations of our own; we depend
on our operating subsidiaries for cash to make principal and interest payments
on our debt (including payments to subsidiary trusts to be used for
distributions on company-obligated mandatorily redeemable preferred securities),
and to pay administrative expenses and income taxes. The cash we receive from
our subsidiaries consists of fees for services, tax sharing payments, dividends
and surplus debenture interest and principal payments. A deterioration in any of
our material subsidiaries' financial condition, earnings or cash flow for any
reason could limit such subsidiary's ability to pay cash dividends or other
payments to us, which, in turn, would limit our ability to meet our debt service
requirements and satisfy our other financial obligations.
The ability of our insurance subsidiaries to pay dividends is subject to
state insurance department regulations. These regulations generally permit
dividends to be paid from earned surplus of the insurance company for any
12-month period in amounts equal to the greater of (or in a few states, the
lesser of): (i) net gain from operations for the prior year; or (ii) 10% of
surplus as of the end of the preceding year. Any dividends in excess of these
levels require the approval of the director or commissioner of the applicable
state
14
insurance department. In March 2002, we received approval from various insurance
regulatory authorities to pay dividends to Conseco of $225.0 million, of which
$100.0 million was paid in April 2002. In addition, during the first quarter of
2002, we requested permission to pay dividends to Conseco of $15.0 million which
request was approved by regulatory authorities in early April 2002. During the
remainder of 2002, we expect to request permission from the regulatory
authorities to pay additional extraordinary dividends, substantially all of
which are related to anticipated reinsurance transactions. Although we believe
that amounts required for us to meet our financial and operating obligations
will be available from our subsidiaries, our results for future periods beyond
2002 are subject to numerous uncertainties. We may encounter liquidity problems,
which could affect our ability to meet our obligations while attempting to meet
competitive pressures or adverse economic conditions. In that event, the value
of the notes could be materially adversely affected.
WE WILL LIKELY NOT BE ABLE TO SATISFY ALL OF OUR OBLIGATIONS FOLLOWING AN
UNCURED EVENT OF DEFAULT.
Events of default under the indentures include customary events of default.
If an uncured event of default occurs with respect to a series of notes, it
could result in the acceleration of and immediate maturity of all our notes and
our credit facility through cross-acceleration and cross-default provisions
contained in the indentures governing our senior debt and in our credit
facility, which, as of March 31, 2002, totaled $4.1 billion. If this occurs, we
will likely not be able to satisfy all of our obligations then due and payable
under the credit facility and the guaranteed and senior notes.
In addition, the indenture governing the 10.75% guaranteed and senior notes
requires that upon the occurrence of a change of control (as defined in the
indenture), the holders of the notes have the right to require us to repurchase
the notes at a price equal to 101% of the principal amount, together with
accrued and unpaid interest. In such a situation, we may not have sufficient
funds to pay for all of the notes that are tendered under the offer to purchase.
If we do not comply with this repurchase obligation, an event of default would
occur under those notes and, through their cross-default and cross-acceleration
provisions, the total amounts due under our credit facility and other series of
senior debt would become immediately due and payable. If this occurs, we will
most likely not be able to satisfy our obligations and we would most likely seek
bankruptcy protection and relief.
WE DEPEND UPON SECURITIZATION PROGRAMS TO FUND OUR FINANCE OPERATIONS.
The most significant source of liquidity for our finance operations has
been our ability to finance the receivables we originate through loan
securitizations. Accordingly, adverse changes in the securitization market could
impair our ability to originate, purchase and sell loans or other assets on a
favorable or timely basis. Any such impairment could have a material adverse
effect upon our business and results of operations. The securitization market is
sensitive to the credit ratings of Conseco Finance in connection with our
securitization program. A negative change in the credit ratings of Conseco
Finance could have a material adverse effect on our ability to access capital
through the securitization market. In addition, the securitization market for
many types of assets is relatively undeveloped and may be more susceptible to
market fluctuations or other adverse changes than more developed capital
markets. Although we have alternative sources of funding, principally warehouse
and bank credit facilities as well as loan sales, these alternatives may not be
sufficient for us to continue to originate loans at our current origination
levels.
At May 28, 2002, we had $1.9 billion of committed (and an additional $1.9
billion of uncommitted) capacity under our warehouse and bank credit facilities
to fund our finance operations, subject to certain conditions. At March 31,
2002, we had borrowed $2.0 billion under these agreements, leaving $1.8 billion
available to borrow (of which approximately $0.3 billion is committed). If we
are unable to securitize our asset portfolios, our loan originations will
significantly decrease and our liquidity will be negatively affected.
Although we expect to be able to obtain replacement financing when our
current securitization facilities expire, there can be no assurance that
financing will be obtainable on favorable terms, if at all. To the extent that
we are unable to arrange any third party or other financing, our loan
origination activities would be adversely affected, which could have a material
adverse effect on our operations, financial results and cash position.
15
OUR FINANCIAL PERFORMANCE MAY BE SUBJECT TO VOLATILITY DUE TO POSSIBLE
IMPAIRMENT CHARGES RELATING TO THE VALUATION OF INTEREST-ONLY SECURITIES.
Conseco Finance holds substantial residual interests in securitization
transactions executed prior to September 1999, which we refer to as
interest-only securities. We carry these securities at estimated fair value,
which we determine by discounting the projected cash flows over the expected
life of the loan receivables sold using prepayment, default, loss and interest
rate assumptions. Since September 1999, we have securitized our loan receivables
using the portfolio method resulting in balance sheet financing treatment. As a
result, we are no longer creating interests in interest-only securities.
We are required to recognize declines in the value of our interest-only
securities, and resulting charges to earnings, when: (i) their fair value is
less than their carrying value, and (ii) the timing and/or amount of cash
expected to be received from these securities has changed adversely from the
previous valuation that determined the carrying value. The assumptions we use to
determine new values are based on our internal evaluations and consultation with
external advisors having significant experience in valuing these securities.
Although we believe our methodology is reasonable, many of the assumptions and
expectations underlying our determinations may prove wrong, in which case there
may be an adverse effect on our financial results. Largely as a result of
adverse changes in the underlying assumptions, we recognized impairment charges
of $386.9 million in 2001, $515.7 million in 2000, $554.3 million in 1999 and
$549.4 million in 1998 to reduce the book value of our interest-only securities
and servicing rights. At March 31, 2002, the carrying value of our interest-only
securities, net of servicing liabilities was $148.3 million (including
unrealized gains of $25.1 million).
No assurances can be given that our current valuation of interest-only
securities will prove accurate in future periods. In addition, in the
securitizations to which these interest-only securities relate, we have retained
certain contingent risks in the form of guarantees of residual interests. At
March 31, 2002, the total amount of these guarantees by Conseco Finance was $1.5
billion. If we have to make more payments on these guarantees than anticipated,
or we experience higher than anticipated rates of loan repayment, including due
to foreclosures or charge-offs, or any adverse changes in our other assumptions
used for valuation (such as interest rates), we could be forced to recognize
additional impairment charges which could have a material adverse effect on our
financial condition or results of operations.
RISKS RELATED TO OUR BUSINESSES AND OPERATIONS
DELINQUENCIES AND COLLATERAL RECOVERY RATES EXPERIENCED BY OUR CONSUMER
FINANCE SUBSIDIARY CAN BE ADVERSELY IMPACTED BY A VARIETY OF FACTORS, MANY OF
WHICH ARE OUTSIDE OUR CONTROL.
Conseco Finance provided approximately 34% of our revenues for the three
months ended March 31, 2002. Delinquencies on loans held in our loan portfolio
and our ability to recover collateral and mitigate loan losses can be adversely
impacted by a variety of factors, many of which are outside our control. For
example, proposed changes to the federal bankruptcy laws applicable to
individuals would make it more difficult for borrowers to seek bankruptcy
protection, and the prospect of these changes may encourage certain borrowers to
seek bankruptcy protection before the law changes, thereby increasing
delinquencies. When loans are delinquent and Conseco Finance forecloses on the
loan, its ability to sell collateral to recover or mitigate its losses is
subject to the market value of such collateral. In manufactured housing, those
values may be affected by the available inventory of manufactured homes on the
market, a factor over which we have no control. It is also dependent upon demand
for new homes, which is tied to economic factors in the general economy. In
addition, repossessed collateral is generally in poor condition, which reduces
its value.
Recently, many consumer lenders have stopped or significantly scaled back
their consumer finance operations in the manufactured housing sector. These
lenders began to foreclose on collateral pledged to secure loans at a more
aggressive rate. Conseco Finance may face increased competition from such
lenders in disposing of collateral pledged to secure its loans. Often collateral
is in similar forms. There is a limited number of collateral buyers and the
exiting consumer lenders may be willing to sell their foreclosed collateral at
prices significantly below fair market value. As a result, collateral recovery
rates for Conseco Finance may fall, which could have a material adverse effect
on the financial position and results of Conseco Finance, and reduces the funds
available for distribution to CIHC and us for the benefit of its and our
creditors.
16
AN ECONOMIC DOWNTURN MAY LEAD TO A DETERIORATION IN OUR ASSET QUALITY AND
ADVERSELY AFFECT OUR FINANCE BUSINESS EARNINGS AND CASH FLOW.
The risks associated with our finance business become more acute in any
economic slowdown or recession. Periods of economic slowdown or recession may be
accompanied by decreased demand for consumer credit and declining asset values.
In the home equity mortgage and manufactured housing businesses, any material
decline in real estate values reduces the ability of borrowers to use home
equity to support borrowing and increases the loan-to-value ratios of loans
previously made, thereby weakening collateral coverage and increasing the
possibility of a loss in the event of a default. Delinquencies, foreclosures and
losses generally increase during economic slowdowns or recessions. For our
finance customers, loss of employment, increases in cost-of-living or other
adverse economic conditions would impair their ability to meet their payment
obligations. In addition, in an economic slowdown or recession, our servicing
and litigation costs increase. Any sustained period of increased delinquencies,
foreclosures, losses or increased costs would adversely affect our financial
condition and results of operations.
OUR NET INTEREST INCOME AND SERVICING FEES FROM OUR FINANCE OPERATIONS ARE
SUBJECT TO PREPAYMENT RISK.
At March 31, 2002, we had $41.5 billion of managed receivables on which we
earn net interest income and servicing fees. Prepayments of our managed
receivables, whether due to refinancing, repayments or foreclosures, in excess
of management's estimates could adversely affect our future cash flow at our
finance subsidiary due to the resulting loss of servicing fee revenue and net
interest income on such prepaid receivables. Prepayments can result from a
variety of factors, many of which are beyond our control, including changes in
interest rates and general economic conditions.
OUR INSURANCE BUSINESS PERFORMANCE MAY DECLINE IF OUR PREMIUM RATES ARE NOT
ADEQUATE.
We set the premium rates on our health insurance policies based on facts
and circumstances known at the time we issue the policies and on assumptions
about numerous variables, including the actuarial probability of a policyholder
incurring a claim, the severity, and the interest rate earned on our investment
of premiums. In setting premium rates, we consider historical claims
information, industry statistics, the rates of our competitors and other
factors. If our actual claims experience proves to be less favorable than we
assumed and we are unable to raise our premium rates, our financial results may
be adversely affected. We generally cannot raise our premiums in any state
unless we first obtain the approval of the insurance regulator in that state. We
review the adequacy of our premium rates regularly and file rate increases on
our products when we believe existing premium rates are too low. It is possible
that we will not be able to obtain approval for premium rate increases from
currently pending requests or requests filed in the future. If we are unable to
raise our premium rates because we fail to obtain approval for a rate increase
in one or more states, our net income may decrease. If we are successful in
obtaining regulatory approval to raise premium rates due to unfavorable actual
claims experience, the increased premium rates may reduce the volume of our new
sales and cause existing policyholders to allow their policies to lapse. This
would reduce our premium income in future periods. Increased lapse rates also
could require us to expense all or a portion of the deferred policy costs
relating to lapsed policies in the period in which those policies lapse,
adversely affecting our financial results in that period.
OUR RESERVES FOR FUTURE INSURANCE POLICY BENEFITS AND CLAIMS MAY PROVE TO BE
INADEQUATE, REQUIRING US TO INCREASE LIABILITIES AND RESULTING IN REDUCED NET
INCOME AND SHAREHOLDERS' EQUITY.
We calculate and maintain reserves for the estimated future payment of
claims to our policyholders using the same actuarial assumptions that we use to
set our premiums. For our health insurance business, we establish an active life
reserve plus a liability for due and unpaid claims, claims in the course of
settlement, and incurred but not reported claims, as well as a reserve for the
present value of amounts not yet due on claims. Many factors can affect these
reserves and liabilities, such as economic and social conditions, inflation,
hospital and pharmaceutical costs, changes in doctrines of legal liability, and
extracontractual damage awards. Therefore, the reserves and liabilities we
establish are necessarily based on extensive estimates, assumptions and prior
years' statistics. Establishing reserves is an uncertain process, and it is
possible that actual claims will
17
materially exceed our reserves and have a material adverse effect on our results
of operations and financial condition. Our financial performance depends
significantly upon the extent to which our actual claims experience is
consistent with the assumptions we used in setting our reserves and pricing our
policies. If our assumptions with respect to future claims are incorrect, and
our reserves are insufficient to cover our actual losses and expenses, we would
be required to increase our liabilities resulting in an adverse effect to our
financial results and financial position.
WE ARE SUBJECT TO EXTENSIVE REGULATION.
Our finance and insurance businesses are subject to extensive regulation
and supervision in the jurisdictions in which we operate, which is primarily for
the benefit and protection of our customers, and not for the benefit of our
investors or creditors. Our finance operations are subject to regulation by
federal, state and local government authorities, as well as to various laws and
judicial and administrative decisions, that impose requirements and restrictions
affecting, among other things, our loan originations, credit activities, maximum
interest rates, finance and other charges, disclosure to customers, the terms of
secured transactions, collection, repossession and claims-handling procedures,
multiple qualification and licensing requirements for doing business in various
jurisdictions, and other trade practices. Although we believe that we are in
compliance in all material respects with applicable local, state and federal
laws, rules and regulations, it is possible that more restrictive laws, rules or
regulations will be adopted in the future that could make compliance more
difficult or expensive, restrict our ability to originate or sell loans, further
limit or restrict the amount of interest and other charges earned on loans
originated by us, further limit or restrict the terms of loan agreements, or
otherwise adversely affect our business or prospects.
Our insurance subsidiaries are subject to state insurance laws that
establish supervisory agencies with broad administrative powers relative to
granting and revoking licenses to transact business, regulating sales and other
practices, licensing agents, approving policy forms, setting reserve and
solvency requirements, determining the form and content of required statutory
financial statements, limiting dividends and prescribing the type and amount of
investments.
RECENTLY ENACTED AND PENDING OR FUTURE LEGISLATION COULD ALSO AFFECT THE
FINANCIAL PERFORMANCE OF OUR INSURANCE OPERATIONS.
During recent years, the health insurance industry has experienced
substantial changes, primarily caused by healthcare legislation. Recent federal
and state legislation and legislative proposals relating to healthcare reform
contain features that could severely limit or eliminate our ability to vary our
pricing terms or apply medical underwriting standards with respect to
individuals which could have the effect of increasing our loss ratios and have
an adverse effect on our financial results. In particular, Medicare reform and
legislation concerning prescription drugs could affect our ability to price or
sell our products.
In addition, proposals currently pending in Congress and some state
legislatures may also affect our financial results. These proposals include the
implementation of minimum consumer protection standards for inclusion in all
long term care policies, including: guaranteed premium rates; protection against
inflation; limitations on waiting periods for pre-existing conditions; setting
standards for sales practices for long term care insurance; and guaranteed
consumer access to information about insurers, including lapse and replacement
rates for policies and the percentage of claims denied. Enactment of any of
these proposals could adversely affect our financial results.
CHANGING INTEREST RATES MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
We finance our loans held pending securitization through funds obtained
through master repurchase agreements, commercial paper conduit facilities,
facilities with various banking and investment banking firms and other
borrowings. Such borrowings were $2.2 billion on March 31, 2002, of which $2.0
billion was borrowed at variable interest rates. Our direct corporate
obligations were $4.1 billion at March 31, 2002, of which $1.5 billion was
borrowed at variable interest rates. In addition, the D&O loans which we
guarantee had a total balance of $0.5 billion at March 31, 2002, all of which
was borrowed at variable interest rates. Our profitability may be directly
affected by the level of and fluctuations in interest rates which affect our
ability to earn a spread between interest received on loans and the costs of
liabilities in our finance operations. While we
18
monitor the interest rate environment and employ hedging strategies designed to
mitigate the impact of changes in interest rates, our financial results could be
adversely affected by changes in interest rates. During periods of increasing
interest rates, we generally experience market pressure to reduce servicing
spreads in our financing operations. In addition, an increase in interest rates
may decrease the demand for consumer credit. A substantial and sustained
increase in interest rates could, among other things: (i) adversely affect our
ability to purchase or originate loans or other assets; (ii) reduce the average
size of loans underwritten; and (iii) increase securitization funding costs. A
significant decline in interest rates could decrease the size of our loan
servicing portfolio by increasing the level of loan prepayments, thereby
shortening the life and impairing the value of our interest-only securities.
Fluctuating interest rates also may affect our net interest income earned
resulting from the difference between the yield to us on loans held pending
securitization and the cost of funds obtained by us to finance such loans.
Our spread-based insurance business is subject to several inherent risks
arising from movements in interest rates, especially if we fail to anticipate or
respond to such movements. First, interest rate changes can cause compression of
our net spread between interest earned on investments and interest credited on
customer deposits, thereby adversely affecting our results. Second, if interest
rate changes produce an unanticipated increase in surrenders of our spread-based
products, we may be forced to sell investment assets at a loss in order to fund
such surrenders. At December 31, 2001, approximately 19% of our total insurance
liabilities (or approximately $4.8 billion) could be surrendered by the
policyholder without penalty. Finally, changes in interest rates can have
significant effects on the performance of our mortgage-backed securities
portfolio, including collateralized mortgage obligations, as a result of changes
in the prepayment rate of the loans underlying such securities. We follow
asset/liability strategies that are designed to mitigate the effect of interest
rate changes on our profitability. However, there can be no assurance that
management will be successful in implementing such strategies and achieving
adequate investment spreads.
WE ARE SUBJECT TO LITIGATION CLAIMS WHICH COULD BE MATERIAL.
We and our subsidiaries are involved on an ongoing basis in lawsuits
relating to our operations, including with respect to sales practices, and we
and current and former officers and directors are defendants in pending class
action lawsuits asserting claims under the securities laws and derivative
claims. The ultimate outcome of these lawsuits cannot be predicted with
certainty. Director and officer liability insurance against certain liabilities,
including liabilities under the securities laws, was in force at the time the
securities and derivative litigation was commenced. The outcome of these
lawsuits may have a material adverse effect on our financial performance and
liquidity.
THE MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE.
Each of the markets in which we operate is highly competitive. Competitors
include, in the finance segment, finance companies, commercial banks, thrifts,
other financial institutions, credit unions and manufacturers and vendors, and
in the insurance segment, other life insurers, commercial banks, thrifts, mutual
funds and broker-dealers. Competitors include, in the insurance segment, GE
Financial Assurance Holdings, Inc., John Hancock Life Insurance Company, Mutual
of Omaha Insurance Company, American Family Life Assurance Company (AFLAC), CNA
Financial Corporation, Colonial Life & Accident Insurance Company (UnumProvident
Corporation), Fidelity & Guaranty Life Insurance Company, Allianz Life Insurance
Company of North America and Jackson National Life Insurance Company. Many of
our competitors in different segments and regions are larger companies that have
greater capital, technological and marketing resources, and have access to
capital at a lower cost. Because the actual cost of products is unknown when
they are sold, we are subject to competitors who may sell a product at a price
that does not cover its actual cost. In the insurance business, claims paying
ability ratings can be a key competitive factor in marketing products and in
attracting and retaining agents. Should the claims paying ability rating of one
or more of our insurance subsidiaries decline, we may not be able to compete
successfully.
19
TAX LAW CHANGES COULD ADVERSELY AFFECT OUR INSURANCE PRODUCT SALES AND
PROFITABILITY.
We sell deferred annuities and some forms of life insurance products which
are attractive to purchasers, in part, because policyholders generally are not
subject to United States federal income tax on increases in policy values until
some form of distribution is made. Recently, Congress enacted legislation to
lower marginal tax rates, reduce the federal estate tax gradually over a
ten-year period, with total elimination of the federal estate tax in 2010 and
increase contributions which may be made to individual retirement accounts and
401(k) accounts. While these tax law changes will sunset at the beginning of
2011 absent future congressional action, they could in the interim diminish the
appeal of our annuity and life insurance products. Additionally, Congress has
considered, from time to time, other possible changes to the U.S. tax laws,
including elimination of the tax deferral on the accretion of value within
certain annuities and life insurance products. There can be no assurance that
further tax legislation will not be enacted which would contain provisions with
possible adverse effects on our annuity and life insurance products.
RISKS RELATED TO CONTINUING OWNERSHIP OF THE UNREGISTERED GUARANTEED NOTES
THE UNREGISTERED GUARANTEED NOTES ARE NOT REGISTERED FOR PUBLIC RESALE UNDER
THE SECURITIES ACT.
We expect that a substantial majority of holders of unregistered guaranteed
notes issued in the April exchange offer will tender their notes for registered
notes. Following the completion of the exchange offer, the registered notes
generally may be resold without compliance with the registration and prospectus
delivery requirements of the Securities Act, except as described elsewhere in
this prospectus with respect to broker-dealers participating in the exchange
offer. The unregistered guaranteed notes, in contrast, are not and will not be
registered under the Securities Act. Consequently, you may not be able to
publicly sell your unregistered guaranteed notes and may therefore only sell
such notes to persons in transactions exempt from registration under the
Securities Act. This means you may only be able to sell your notes to qualified
institutional buyers, certain sophisticated, accredited investors or in other
negotiated transactions and you may not be able to obtain the prevailing public
trading price of the registered notes in your transactions.
THERE WILL BE NO ACTIVE TRADING MARKET FOR THE UNREGISTERED GUARANTEED NOTES.
We expect that a substantial majority of holders of unregistered guaranteed
notes issued in the April exchange offer will tender their notes for registered
notes. As a result, we believe there will be far fewer holders of unregistered
guaranteed notes, whom we believe have a greater appetite for unregistered
guaranteed notes than the general investing community, to whom you can sell your
unregistered guaranteed notes following the exchange offer. You may be forced to
sell your unregistered guaranteed notes for a lower price than the prevailing
market price of the registered notes. Furthermore, under the registration rights
agreement we executed in connection with the April exchange offer, we are under
no obligation following the exchange offer to register the untendered
unregistered guaranteed notes. Therefore, failure to exchange your unregistered
guaranteed notes in the exchange offer is likely to leave you with an illiquid
security with no active trading market.
20
FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus (including the information
incorporated by reference) may constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. When used in this prospectus or in documents incorporated by reference in
this prospectus, the words "believe," "anticipate," "estimate," "project,"
"intend," "expect," "may," "will," "plan," "should," "would," "contemplate,"
"possible," "attempts," "seeks" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by our forward-looking
statements. Assumptions and other important factors that could cause our actual
results to differ materially from those anticipated in our forward-looking
statements include, but are not limited to:
- the factors described in this prospectus under "Risk Factors";
- general economic conditions and other factors, including prevailing
interest rate levels, stock and credit market performance, and health
care inflation, which may affect (among other things) our ability to sell
our products, our ability to make loans and access capital resources and
the costs associated therewith, the market value of our investments, the
lapse rate and profitability of policies, and the level of defaults and
prepayments of loans we made;
- our ability to achieve anticipated synergies and levels of operational
efficiencies, including from our "Process Excellence" initiatives;
- customer response to new products, distribution channels, and marketing
initiatives;
- mortality, morbidity, usage of health care services and other factors
that may affect the profitability of our insurance products;
- the performance of our investments;
- changes in tax laws and regulations that may affect the relative tax
advantages of some of our products;
- increasing competition in the sale of insurance and annuities and in the
finance business;
- regulatory changes or actions, including those relating to regulation of
financial services affecting (among other things) bank sales and
underwriting of insurance products, regulation of the sale, underwriting
and pricing of products, and health care regulation affecting health
insurance products;
- the outcome of our efforts to sell assets and reduce, refinance or modify
indebtedness and the availability and cost of capital in connection with
this process;
- actions by rating agencies and the effects of past or future actions by
these agencies on our business; and
- the risk factors or uncertainties listed from time to time in our filings
with the SEC.
Other factors not currently known to us or not currently considered
material by us may also be relevant to our forward-looking statements and could
also cause actual results to differ materially from those projected.
All written or oral forward-looking statements attributable to us are
expressly qualified in their entirety by the foregoing cautionary statement. Our
forward-looking statements speak only as of the date made. Except as required by
law, we assume no obligation to update or to publicly announce the results of
any revisions to any of our forward-looking statements to reflect actual
results, future events or developments, changes in assumptions or changes in
other factors affecting the forward-looking statements.
21
USE OF PROCEEDS
This exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement entered into in connection with the April
exchange offer. We will not receive any cash proceeds from the issuance of the
registered notes. We have agreed to bear the expenses of the exchange offer.
22
SELECTED CONSOLIDATED FINANCIAL DATA
Our selected consolidated financial data are based on and derived from, and
should be read in conjunction with, our quarterly report on Form 10-Q for the
quarter ended March 31, 2002, and our annual report on Form 10-K for the year
ended December 31, 2001, and the related notes thereto. Our consolidated balance
sheets at December 31, 2001 and 2000, and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
ended December 31, 2001, 2000 and 1999, and notes thereto were audited by
PricewaterhouseCoopers LLP, independent accountants. Our consolidated financial
statements as of December 31, 2001 and 2000, and for each of the three years
ended December 31, 2001, are included in our annual report on Form 10-K for the
year ended December 31, 2001, which is incorporated by reference herein. The
selected consolidated financial data set forth for the three months ended March
31, 2002 and 2001 are unaudited; however, in the opinion of our management, the
accompanying selected financial data contain all adjustments, consisting only of
normal recurring items, necessary to present fairly the selected financial data
for such periods. The results of operations for the three months ended March 31,
2002, may not be indicative of the results of operations to be expected for a
full year. See "Incorporation of Certain Documents by Reference" on page i of
this prospectus.
The comparison of selected consolidated financial data is significantly
affected by the following business combinations accounted for as purchases:
Washington National Corporation (effective December 1, 1997); Colonial Penn Life
Insurance Company and Providential Life Insurance Company (September 30, 1997);
Pioneer Financial Services, Inc. (April 1, 1997); and Capitol American Financial
Corporation (January 1, 1997). All financial data have been restated to give
retroactive effect to the merger (completed on June 30, 1998) with Conseco
Finance accounted for as a pooling of interests.
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
--------- --------- --------- --------- --------- --------- ---------
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Insurance policy income......... $ 957.2 $ 1,029.2 $ 4,065.7 $ 4,220.3 $ 4,040.5 $ 3,948.8 $ 3,410.8
Gain on sale of finance
receivables(a)................ 7.2 8.9 26.9 7.5 550.6 745.0 779.0
Net investment income........... 856.7 897.8 3,778.1 3,914.3 3,411.4 2,506.5 2,171.5
Net realized investment gains
(losses)...................... (52.2) (113.3) (413.7) (358.3) (156.2) 208.2 266.5
Impairment charge related to
retained interests in
securitization transactions... -- (7.9) (386.9) (515.7) (554.3) (549.4) (190.0)
Total revenues.................. 1,859.3 2,123.0 7,695.2 7,771.2 7,781.4 7,210.8 6,682.2
Interest expense:
Corporate..................... 74.4 105.1 369.6 438.4 249.1 182.2 109.4
Finance and investment
borrowings.................. 294.3 313.9 1,239.6 1,014.7 312.6 258.3 202.9
Total benefits and expenses..... 1,961.4 1,948.7 8,114.6 9,133.0 6,630.5 6,165.1 5,196.5
Income (loss) before
extraordinary gain (loss) and
cumulative effect of
accounting change............. (99.9) 83.8 (423.1) (1,130.9) 595.0 509.7 873.3
Adjusted income (loss) before
extraordinary gain (loss) and
cumulative effect of
accounting change(h).......... (99.9) 111.3 (313.5) (1,018.4) 705.1 619.9 957.8
Extraordinary gain (loss) on
extinguishment of debt, net of
income tax.................... 4.0 .3 17.2 (5.0) -- (42.6) (6.9)
Cumulative effect of accounting
change, net of income tax..... -- -- -- 55.3 -- -- --
23
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
--------- --------- --------- --------- --------- --------- ---------
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
Net income (loss)(b)............ (95.9) 84.1 (405.9) (1,191.2) 595.0 467.1 866.4
Adjusted net income (loss)(h)... (95.9) 111.6 (296.3) (1,078.7) 705.1 577.3 950.9
Preferred stock dividends....... 1.0 3.9 12.8 11.0 1.5 7.8 21.9
Net income (loss) applicable to
common stock.................. (96.9) 80.2 (418.7) (1,202.2) 593.5 459.3 844.5
Adjusted net income (loss)
applicable to common
stock(h)...................... (96.9) 107.7 (309.1) (1,089.7) 703.6 569.5 929.0
PER SHARE DATA(C)
Net income (loss), basic........ $ (.28) $ .24 $ (1.24) $ (3.69) $ 1.83 $ 1.47 $ 2.72
Adjusted net income (loss),
basic(h)...................... (.28) .32 (.92) (3.34) 2.17 1.82 2.99
Net income (loss), diluted...... (.28) .23 (1.24) (3.69) 1.79 1.40 2.52
Adjusted net income (loss),
diluted(h).................... (.28) .30 (.92) (3.34) 2.12 1.73 2.77
Dividends declared per common
share......................... -- -- -- .100 .580 .530 .313
Book value per common share
outstanding................... 11.88 14.00 12.34 11.95 15.50 16.37 16.45
Shares outstanding at
period-end.................... 346.0 337.6 344.7 325.7 327.7 315.8 310.0
Weighted average shares
outstanding for diluted
earnings...................... 345.2 372.7 338.1 326.0 332.9 332.7 338.7
BALANCE SHEET DATA -- PERIOD END
Total investments............... $24,999.7 $25,581.1 $25,027.2 $25,017.6 $26,431.6 $26,073.0 $26,699.2
Goodwill........................ 3,695.4 3,744.7 3,695.4 3,800.8 3,927.8 3,960.2 3,693.4
Total assets.................... 61,490.8 58,459.4 61,392.3 58,589.2 52,185.9 43,599.9 40,679.8
Notes payable and commercial
paper:
Corporate..................... 4,092.8 4,925.0 4,087.6 5,055.0 4,624.2 3,809.9 2,354.9
Finance....................... 2,202.8 2,000.2 2,527.9 2,810.9 2,540.1 1,511.6 1,863.0
Related to securitized finance
receivables structured as
collateralized borrowings... 15,048.7 12,396.1 14,484.5 12,100.6 4,641.8 -- --
Total liabilities............... 54,962.3 51,334.0 54,724.8 51,810.9 43,990.6 36,229.4 34,082.0
Company-obligated mandatorily
redeemable preferred
securities of subsidiary
trusts........................ 1,916.2 1,909.4 1,914.5 2,403.9 2,639.1 2,096.9 1,383.9
Shareholders' equity............ 4,612.3 5,216.0 4,753.0 4,374.4 5,556.2 5,273.6 5,213.9
OTHER FINANCIAL DATA(C)(D)
Premium and asset accumulation
product collections(e)........ $ 1,520.5 $ 1,620.6 $ 6,247.1 $ 7,158.6 $ 6,986.0 $ 6,051.3 $ 5,075.6
Operating earnings(f)........... 39.9 54.0 218.0 151.8 749.2 841.1 991.8
Managed finance receivables..... 41,532.2 44,776.9 43,002.3 46,585.9 45,791.4 37,199.8 27,957.1
Total managed assets (at fair
value)(g)..................... 93,112.0 93,603.2 94,567.7 95,471.7 98,561.8 87,247.4 70,259.8
Shareholders' equity, excluding
accumulated other
comprehensive income (loss)... 5,108.0 5,612.9 5,192.0 5,025.4 6,327.8 5,302.0 5,013.3
Book value per common share
outstanding, excluding
accumulated other
comprehensive income (loss)... 13.32 15.17 13.61 13.95 17.85 16.46 15.80
24
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
--------- --------- --------- --------- --------- --------- ---------
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
Delinquencies greater than 60
days as a percentage of
managed finance receivables... 1.99% 1.72% 2.10% 1.76% 1.42% 1.19% 1.08%
---------------
(a) Subsequent to September 8, 1999, we no longer structure the securitizations
of the loans we originate in a manner that results in gain-on-sale revenues.
After that date, the gains we recognize are generally related to the sale of
the entire loan (with no interests retained by the Company). For more
information on this change, refer to our annual report on Form 10-K for the
fiscal year ended December 31, 2001 and our quarterly report on Form 10-Q
for the period ended March 31, 2002, both of which are incorporated by
reference herein.
(b) Net income (loss) includes the following:
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------- -----------------------------------------------
2002 2001 2001 2000 1999 1998 1997
------ ------ ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
Net investment gains
(losses), net of income
tax and other items....... $(34.1) $(59.1) $(242.8) $(198.1) $(111.9) $ (32.8) $ 44.1
Impairment charge, net of
income tax................ -- (5.0) (250.4) (324.9) (349.2) (355.8) (117.8)
Special charges and
additional amortization,
net of income tax......... (45.2) (10.0) (123.5) (534.9) -- (148.0) --
Gain on sale of interest in
riverboat, net of income
tax....................... -- 122.6 122.6 -- -- -- --
Provision for losses related
to loan guarantees, net of
income tax................ (26.0) -- (110.2) (150.0) (11.9) -- --
Venture capital income
(loss), net of expenses
and taxes................. (35.5) (17.5) (15.2) (99.4) 170.0 -- --
Amounts related to
discontinued businesses
and other non-recurring
items, net of income
tax....................... -- (5.1) (34.4) 13.6 147.3 205.2 (44.8)
Cumulative effect of
accounting change, net of
income tax................ -- -- -- (55.3) -- -- --
Extraordinary gain (loss) on
extinguishment of debt,
net of income tax......... 4.0 .3 17.2 (5.0) -- (42.6) (6.9)
---------------
For additional discussion of the above items refer to our annual report on Form
10-K for the fiscal year ended December 31, 2001 and our quarterly report on
Form 10-Q for the period ended March 31, 2002, both of which are incorporated by
reference herein.
(c) All share and per-share amounts have been restated to reflect the
two-for-one stock split paid on February 11, 1997.
(d) Amounts under this heading are included to assist the reader in analyzing
the Company's financial position and results of operations. Such amounts are
not intended to, and do not, represent insurance
25
policy income, net income, shareholders' equity or book value per share
prepared in accordance with generally accepted accounting principles.
(e) Includes premiums received from universal life products and products without
mortality or morbidity risk. Such premiums are not reported as revenues
under generally accepted accounting principles and were $585.5 million and
$610.5 million for the three months ended March 31, 2002 and 2001,
respectively; $2,267.2 million in 2001; $2,731.1 million in 2000; $3,023.3
million in 1999; $2,585.7 million in 1998; and $2,099.4 million in 1997.
Also includes deposits in mutual funds totaling $88.5 million and $111.3
million for the three months ended March 31, 2002 and 2001, respectively;
$468.7 million in 2001; $794.2 million in 2000; $479.3 million in 1999;
$87.1 million in 1998; and $19.9 million in 1997. Also includes premiums
related to our discontinued major medical business, totaling $134.8 million
and $209.5 million for the three months ended March 31, 2002 and 2001,
respectively; $737.1 million in 2001; $910.6 million in 2000; $855.7 million
in 1999; $878.2 million in 1998; and $744.0 million in 1997.
(f) Represents net income excluding the items described in note (b) above. For
additional discussion of the criteria we use to identify the items excluded
from operating earnings refer to our annual report on Form 10-K for the
fiscal year ended December 31, 2001 and our quarterly report on Form 10-Q
for the period ended March 31, 2002, both of which are incorporated by
reference herein.
(g) Includes: (i) all of the Company's assets; (ii) the total finance
receivables managed by Conseco Finance applicable to the holders of
asset-backed securities sold by Conseco Finance in securitizations
structured in a manner that resulted in gain-on-sale revenue (adjusted for
the interests retained by the Company); and (iii) the total market value of
the investment portfolios managed by the Company for others of $8.3 billion
and $6.9 billion at March 31, 2002 and 2001, respectively, $8.3 billion,
$7.2 billion, $11.4 billion, 11.2 billion and $5.1 billion at December 31,
2001, 2000, 1999, 1998 and 1997, respectively.
(h) The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142") in June 2001. Under the new rules, intangible assets with an
indefinite life are no longer amortized in periods subsequent to December
31, 2001, but are subject to annual impairment tests (or more frequent under
certain circumstances), effective January 1, 2002. Conseco has determined
that all of its goodwill has an indefinite life and is therefore subject to
the new rules. For additional discussion of our adoption of SFAS 142 refer
to our annual report on Form 10-K for the fiscal year ended December 31,
2001 and our quarterly report on Form 10-Q for the period ended March 31,
2002, both of which are incorporated by reference herein. A reconciliation
of reported net income (loss) to adjusted net income (loss) before the
extraordinary gain (loss) on extinguishment of debt and cumulative effect of
accounting change is as follows assuming that the nonamortization provisions
of SFAS 142 were applied in all periods presented:
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------- ----------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
------ ------ ------- --------- ---- ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net income (loss), as reported...... $(95.9) $ 84.1 $(405.9) $(1,191.2) $595.0 $467.1 $866.4
Add: amortization of goodwill, net
of income taxes................... -- 27.5 109.6 112.5 110.1 110.2 84.5
------ ------ ------- --------- ------ ------ ------
Adjusted net income (loss).......... (95.9) 111.6 (296.3) (1,078.7) 705.1 577.3 950.9
Less: extraordinary (gain) loss on
extinguishment of debt, net of
income taxes...................... (4.0) (.3) (17.2) 5.0 -- 42.6 6.9
Add: cumulative effect of accounting
change, net of income taxes....... -- -- -- 55.3 -- -- --
------ ------ ------- --------- ------ ------ ------
Adjusted net income (loss) before
extraordinary (gain) loss on
extinguishment of debt and
cumulative effect of accounting
change.......................... $(99.9) $111.3 $(313.5) $(1,018.4) $705.1 $619.9 $957.8
====== ====== ======= ========= ====== ====== ======
26
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------- ----------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
------ ------ ------- --------- ---- ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Income (loss) per common share:
Basic:
Net income (loss) as reported... $ (.28) $ .24 $ (1.24) $ (3.69) $ 1.83 $ 1.47 $ 2.72
Add: amortization of goodwill,
net of income taxes.......... -- .08 .32 .35 .34 .35 .27
------ ------ ------- --------- ------ ------ ------
Adjusted net income (loss)...... (.28) .32 (.92) (3.34) 2.17 1.82 2.99
Less: extraordinary (gain) loss
on extinguishment of debt,
net of income taxes.......... (.01) -- (.05) .01 -- .14 .02
Add: cumulative effect of
accounting change, net of
income taxes................. -- -- -- .17 -- -- --
------ ------ ------- --------- ------ ------ ------
Adjusted net income (loss)
before extraordinary (gain)
loss on extinguishment of
debt and cumulative effect
of accounting change....... $ (.29) $ .32 $ (.97) $ (3.16) $ 2.17 $ 1.96 $ 3.01
====== ====== ======= ========= ====== ====== ======
Diluted:
Net income (loss) as reported... $ (.28) $ .23 $ (1.24) $ (3.69) $ 1.79 $ 1.40 $ 2.52
Add: amortization of goodwill,
net of income taxes.......... -- .07 .32 .35 .33 .33 .25
------ ------ ------- --------- ------ ------ ------
Adjusted net income (loss)...... (.28) .30 (.92) (3.34) 2.12 1.73 2.77
Less: extraordinary (gain) loss
on extinguishment of debt,
net of income taxes.......... (.01) -- (.05) .01 -- .13 .02
Add: cumulative effect of
accounting change, net of
income taxes................. -- -- -- .17 -- -- --
------ ------ ------- --------- ------ ------ ------
Adjusted net income (loss)
before extraordinary (gain)
loss on extinguishment of
debt and cumulative effect
of accounting change....... $ (.29) $ .30 $ (.97) $ (3.16) $ 2.12 $ 1.86 $ 2.79
====== ====== ======= ========= ====== ====== ======
27
THE EXCHANGE OFFER
PURPOSE AND EFFECT
On April 24, 2002, we exchanged $1,292,637,000 aggregate principal amount
of our senior notes for a corresponding amount of our unregistered guaranteed
notes. The April exchange offer was only made, and the unregistered guaranteed
notes were only offered and issued (i) in the United States, to "qualified
institutional buyers," as that term is defined in Rule 144A under the Securities
Act, and institutional "Accredited Investors" as that term is defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act, in a private transaction in
reliance upon an exemption from the registration requirements of the Securities
Act, and (ii) outside the United States, to persons other than "U.S. persons,"
as that term is defined in Rule 902 under the Securities Act, in offshore
transactions in reliance upon Regulation S under the Securities Act. The April
exchange offer was not registered under the Securities Act.
The terms of the unregistered guaranteed notes are substantially identical
to those of the tendered senior notes, except that the unregistered guaranteed
notes have longer maturities and are guaranteed by CIHC, Incorporated, our
direct subsidiary and the holding company of our principal operating
subsidiaries. The purpose of the April exchange offer was to extend the maturity
profile of our debt in order to improve our financial flexibility and to enhance
our future ability to refinance public debt. Following the April exchange offer,
an aggregate of $1,247,662,000 principal amount of senior notes remained
outstanding (and without the benefit of the CIHC guarantee).
Simultaneously with the April exchange offer, we and the guarantor entered
into a registration rights agreement with the Banc of America Securities LLC,
J.P. Morgan Securities Inc. and Lehman Brothers Inc., the dealer managers for
the April exchange offer. Under the agreement, we have filed the registration
statement of which this prospectus is a part and we are making this exchange
offer. You should read the discussion under the headings "Prospectus
Summary -- Summary of the Terms of the Registered Notes," "The Exchange Offer"
and "Description of the Registered Notes" for further information regarding the
registered notes.
Because we did not register the unregistered guaranteed notes issued in the
April exchange offer under the Securities Act, they may only be transferred in
limited circumstances under the federal securities laws. If the holders of the
unregistered guaranteed notes do not exchange their notes in the exchange offer,
they will not have the further right to have their unregistered guaranteed notes
registered under the Securities Act. Anyone who still holds unregistered
guaranteed notes after the exchange offer therefore may not be able to publicly
sell his or her unregistered guaranteed notes and may therefore only sell such
notes to persons in transactions exempt from registration under the Securities
Act.
The registered notes will be issued without a restrictive legend under the
Securities Act. Based on an interpretation by the staff of the Commission set
forth in no-action letters issued to third parties, if you are not our
"affiliate" within the meaning of Rule 405 under the Securities Act or a
broker-dealer referred to in the next paragraph, we believe that the registered
notes to be issued to you in the exchange offer may be offered for resale,
resold and otherwise transferred by you without compliance with the registration
and prospectus delivery provisions of the Securities Act. This interpretation,
however, is based on your representation to us (which you will be deemed to make
by delivering a completed letter of transmittal or agent's message if you tender
through the Depository Trust Company) that:
(1) you are acquiring the registered notes to be issued to you in the
exchange offer in the ordinary course of your business;
(2) you have no arrangement or understanding with any person to
participate in the distribution of the unregistered guaranteed notes or the
registered notes to be issued to you in the exchange offer; and
(3) you are not an affiliate of Conseco's or CIHC's.
If you tender your notes in the exchange offer for the purpose of
participating in a distribution of the registered notes, you cannot rely on this
interpretation by the staff of the Commission. Under those
28
circumstances, you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Each broker-dealer that receives registered notes in the exchange
offer for its own account must acknowledge (by delivering a completed letter of
transmittal or agent's message) that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of those
registered notes. We have agreed that, during a period starting on the
expiration date of this exchange offer and ending on the close of business one
year after the expiration date, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Consummation of the exchange offer may have adverse consequences to holders
of unregistered guaranteed notes who elect not to tender their notes in the
exchange offer. After we complete the exchange offer, if you have not tendered
your unregistered guaranteed notes, you will not have any further registration
rights. Your unregistered guaranteed notes will continue to be subject to
restrictions on transfer. Therefore, the liquidity of the market for untendered
unregistered guaranteed notes likely will be adversely affected upon completion
of the exchange offer. See "Risk Factors -- Risks Related to Continuing
Ownership of the Unregistered Guaranteed Notes."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
letter of transmittal, we are offering to exchange:
FOR EACH $1,000 PRINCIPAL AMOUNT OF
THE FOLLOWING UNREGISTERED OUTSTANDING AGGREGATE THE EXCHANGING HOLDERS WILL RECEIVE $1,000 PRINCIPAL
GUARANTEED NOTES: PRINCIPAL AMOUNT AMOUNT OF THE CORRESPONDING REGISTERED NOTES:
----------------------------------- --------------------- ----------------------------------------------------
8.5% Guaranteed Senior Notes due
2003......................... $ 991,000 8.5% Guaranteed Senior Notes due 2003
6.4% Guaranteed Senior Notes due
2004......................... 14,936,000 6.4% Guaranteed Senior Notes due 2004
8.75% Guaranteed Senior Notes due
2006......................... 364,294,000 8.75% Guaranteed Senior Notes due 2006
6.8% Guaranteed Senior Notes due
2007......................... 150,783,000 6.8% Guaranteed Senior Notes due 2007
9% Guaranteed Senior Notes due
2008......................... 399,200,000 9% Guaranteed Senior Notes due 2008
10.75% Guaranteed Senior Notes due
2009......................... 362,433,000 10.75% Guaranteed Senior Notes due 2009
The registered notes will be issued in exchange for unregistered guaranteed
notes validly tendered and not withdrawn in the exchange offer, if consummated,
on the settlement date, which will be approximately three business days
following the expiration date of the exchange offer, or as soon as practicable
thereafter. Interest on each registered note will accrue from the last interest
payment date on which interest was paid on the corresponding unregistered
guaranteed note tendered or from such earlier date from which interest is stated
to accrue on such notes.
Outstanding unregistered guaranteed notes may be exchanged only in minimum
denominations of $1,000 principal amount and integral multiples of $1,000.
The form and terms of the registered notes are substantially the same as
the form and terms of the unregistered guaranteed notes, except that the
registered notes will not bear legends restricting their transfer. See
"Description of the Registered Notes." The registered notes will be issued
pursuant to, and entitled to the benefits of, the exchange offer indentures. One
of the exchange offer indentures will govern the issuance of the registered
10.75% notes and the other indenture will govern the issuance of the remaining
registered notes.
29
This prospectus, together with the letter of transmittal, is being sent to
all registered holders of the unregistered guaranteed notes. We will conduct the
exchange offer in accordance with the applicable requirements of the Securities
Act and the Exchange Act and the related rules and regulations of the
Commission.
We will be deemed to have accepted validly tendered unregistered guaranteed
notes when, as, and if we have given oral or written notice of our acceptance to
the exchange agent. The exchange agent will act as our agent for the tendering
holders for the purpose of receiving the registered notes from us. If we do not
accept any tendered unregistered guaranteed notes because of an invalid tender,
the occurrence of certain other events set forth in this prospectus or
otherwise, we will return certificates for any unaccepted unregistered
guaranteed notes, without expense, to the tendering holder as promptly as
practicable after the expiration date.
You will not be required to pay brokerage commissions or fees or, except as
set forth below under "-- Transfer Taxes," transfer taxes with respect to the
exchange of your notes in the exchange offer. We will pay all charges and
expenses, if any, other than certain applicable taxes, in connection with the
exchange offer. See "-- Fees and Expenses" below.
EXPIRATION DATE; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on
, 2002, unless we determine, in our sole discretion, to extend the
exchange offer in respect of any series of unregistered guaranteed notes, in
which case, it will expire at the later date and time to which it is extended
with respect to such series. We do not intend to extend the exchange offer,
although we reserve the right, in our absolute discretion, to do so. If the
exchange offer is amended in a manner we determine constitutes a material
change, we will extend the exchange offer with respect to the applicable series
for a period of five to ten business days, depending upon the significance of
the amendment and the manner of disclosure to the holders, if the exchange offer
would otherwise have expired during the five to ten business day period.
We also reserve the right, in our sole discretion,
(1) to delay accepting any unregistered guaranteed notes or, if any
of the conditions set forth below under "-- Conditions to the Exchange
Offer" have not been satisfied or waived at the expiration date, to
terminate the exchange offer by giving oral or written notice of such delay
or termination to the exchange agent, or
(2) to amend the terms of the exchange offer in respect of any series
of unregistered guaranteed notes, in any manner, by filing an amendment to
this prospectus with the Commission.
We will promptly file a post-effective amendment to the registration
statement of which this prospectus is a part upon any extension, amendment or
termination of the exchange offer. We will also promptly announce any such
extension, amendment or termination of the exchange offer by issuing a press
release to the Dow Jones News Service or other similar media outlet. We will
announce any extension of the expiration date no later than 9:00 a.m., New York
City time, on the first business day after the previously scheduled expiration
date. We have no other obligation to publish, advertise or otherwise communicate
any information about any extension, amendment or termination. All acceptances
delivered and accepted prior to any amendment will constitute acceptances of the
amended exchange offer and will be binding upon a tendering noteholder.
LETTER OF TRANSMITTAL; REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDERS OF
UNREGISTERED GUARANTEED NOTES
Upon the submission of the letter of transmittal, or agreement to the terms
of the letter of transmittal pursuant to an agent's message, as to a series of
unregistered guaranteed notes, a holder, or the beneficial holder of such notes
on behalf of which the holder has tendered, will, subject to the terms and
conditions of the exchange offer generally, be deemed, among other things, to:
(1) irrevocably exchange, assign and transfer to or upon our order or
the order of our nominee, all right, title and interest in and to, and any
and all claims in respect of or arising or having arisen as a result
30
of such holder's status as a holder of, all unregistered guaranteed notes
tendered thereby, such that thereafter it shall have no contractual or
other rights or claims in law or equity against us or any fiduciary,
trustee, fiscal agent or other person connected with the unregistered
guaranteed notes arising under, from or in connection with such notes;
(2) to the extent permitted by law, waive any and all rights with
respect to the unregistered guaranteed notes tendered thereby (including,
without limitation, any existing or past defaults and their consequences in
respect of such notes); and
(3) to the extent permitted by law, release and discharge us and the
trustee from any and all claims such holder may have, now or in the future,
arising out of or related to the unregistered guaranteed notes tendered
thereby, including, without limitation, any claims that such holder is
entitled to receive additional principal or interest payments with respect
to the unregistered guaranteed notes tendered thereby (other than as
expressly provided in this prospectus and in the letter of transmittal) or
to participate in any redemption or defeasance of the unregistered
guaranteed notes tendered thereby.
In addition to those representations, warranties and agreements described
under "--Purpose and Effect" above, the tendering holder will be deemed to
represent, warrant and agree that:
(1) it has received and has had the opportunity to review this
prospectus;
(2) it is the beneficial owner (as defined below) of, or a duly
authorized representative of one or more such beneficial owners of, the
unregistered guaranteed notes tendered thereby and it has full power and
authority to execute the letter of transmittal;
(3) the unregistered guaranteed notes being tendered thereby were
owned as of the date of tender, free and clear of any liens, charges,
claims, encumbrances, interests and restrictions of any kind, and
acknowledges that we will acquire good, indefeasible and unencumbered title
to such notes, free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind, when we accept the same;
(4) it will not sell, pledge, hypothecate or otherwise encumber or
transfer any unregistered guaranteed notes tendered thereby from the date
of the letter of transmittal and agrees that any purported sale, pledge,
hypothecation or other encumbrance or transfer will be void and of no
effect;
(5) the execution and delivery of the letter of transmittal shall
constitute an undertaking to execute any further documents and give any
further assurances that may be required in connection with any of the
foregoing, in each case on and subject to the terms and conditions set out
or referred to in this prospectus;
(6) the submission of the letter of transmittal to the exchange agent
shall, subject to a holder's ability to withdraw its tender and subject to
the terms and conditions of the exchange offer generally, constitute the
irrevocable appointment of the exchange agent as its attorney and agent,
and an irrevocable instruction to such attorney and agent to complete and
execute all or any form(s) of transfer and other document(s) at the
discretion of such attorney and agent in relation to the unregistered
guaranteed notes tendered thereby in favor of us or such other person or
persons as we may direct and to deliver such form(s) of transfer and other
document(s) in the attorney's and agent's discretion and/or the
certificate(s) and other document(s) of title relating to such senior
notes' registration and to execute all such other documents and to do all
such other acts and things as may be in the opinion of such attorney or
agent necessary or expedient for the purpose of, or in connection with, the
acceptance of the exchange offer, and to vest in us or our nominees such
notes; and
(7) that the terms and conditions of the exchange offer shall be
deemed to be incorporated in, and form a part of, the letter of
transmittal, which shall be read and construed accordingly.
The representations and warranties and agreements of a holder tendering
unregistered guaranteed notes shall be deemed to be repeated and reconfirmed on
and as of the expiration date and the settlement date. For purposes of this
prospectus, the "beneficial owner" of any unregistered guaranteed notes shall
mean any holder that exercises investment discretion with respect to such notes.
31
PROCEDURES FOR TENDERING
A holder of unregistered guaranteed notes who wishes to accept the exchange
offer, and whose notes are held by a custodial entity such as a bank, broker,
dealer, trust company or other nominee, must instruct that custodial entity to
tender with respect to such holder's notes on the holder's behalf pursuant to
the procedures of the custodial entity.
To tender in the exchange offer, a holder of unregistered guaranteed notes
must either (i) complete, sign and date the letter of transmittal (or a
facsimile thereof) in accordance with its instructions (including guaranteeing
the signature(s) to the letter of transmittal, if required), and mail or
otherwise deliver such letter of transmittal or such facsimile, together with
the certificates representing the unregistered guaranteed notes specified
therein, to the exchange agent at the address set forth in the letter of
transmittal for receipt on or prior to the expiration date, or (ii) comply with
the Automated Tender Offer Program system procedures for book-entry transfer
described below on or prior to the expiration date.
The exchange agent and the Depository Trust Company have confirmed that the
exchange offer is eligible for Automated Tender Offer Program system. The letter
of transmittal (or facsimile thereof), with any required signature guarantees,
or (in the case of book entry transfer) an agent's message in lieu of the letter
of transmittal, and any other required documents, must be transmitted to and
received by the exchange agent on or prior to the expiration date of the
exchange offer at one of its addresses set forth on the back cover page of this
prospectus. Unregistered guaranteed notes will not be deemed surrendered until
the letter of transmittal and signature guarantees, if any, or agent's message,
are received by the exchange agent.
The method of delivery of unregistered guaranteed notes, the letter of
transmittal, and all other required documents to the exchange agent is at the
election and risk of the holder. Instead of delivery by mail, holders should use
an overnight or hand delivery service, properly insured. In all cases,
sufficient time should be allowed to assure delivery to and receipt by the
exchange agent on or before the expiration date. You must not send the letter of
transmittal or any unregistered guaranteed notes to anyone other than the
exchange agent.
All registered notes will be delivered only in book-entry form through the
Depository Trust Company. Accordingly, if you anticipate tendering other than
through the Depository Trust Company, you are urged to contact promptly a bank,
broker or other intermediary (that has the capability to hold securities
custodially through the Depository Trust Company) to arrange for receipt of any
registered notes to be delivered to you pursuant to the exchange offer and to
obtain the information necessary to provide the required Depository Trust
Company participant with account information for the letter of transmittal.
BOOK-ENTRY DELIVERY PROCEDURES FOR TENDERING UNREGISTERED GUARANTEED NOTES
HELD WITH THE DEPOSITORY TRUST COMPANY
If you wish to tender unregistered guaranteed notes held on your behalf by
a nominee with the Depository Trust Company, you must (i) inform your nominee of
your interest in tendering such notes pursuant to the exchange offer, and (ii)
instruct your nominee to tender all notes you wish to be tendered in the
exchange offer into the exchange agent's account at the Depository Trust Company
on or prior to the expiration date. Any financial institution that is a nominee
in the Depository Trust Company, including Euroclear and Clearstream, must
tender unregistered guaranteed notes by effecting a book-entry transfer of the
unregistered guaranteed notes to be tendered in the exchange offer into the
account of the exchange agent at the Depository Trust Company by electronically
transmitting its acceptance of the exchange offer through the Automated Tender
Offer Program system procedures for transfer. The Depository Trust Company will
then verify the acceptance, execute a book-entry delivery to the exchange
agent's account at the Depository Trust Company, and send an agent's message to
the exchange agent. An "agent's message" is a message, transmitted by the
Depository Trust Company to and received by the exchange agent and forming part
of a book-entry confirmation, which states that the Depository Trust Company has
received an express acknowledgement from an organization that participates in
the Depository Trust Company (a "participant") tendering unregistered guaranteed
notes that the participant has received and agrees to be bound by the terms of
the letter of transmittal and that we may enforce the agreement against the
participant. A letter of transmittal need not accompany tenders effected through
the Automated Tender Offer Program system.
32
PROPER EXECUTION AND DELIVERY OF LETTER OF TRANSMITTAL
Signatures on a letter of transmittal or notice of withdrawal described
below (see "-- Withdrawal Rights"), as the case may be, must be guaranteed by an
eligible institution unless the notes tendered pursuant to the letter of
transmittal are tendered (i) by a holder who has not completed the box entitled
"Special Delivery Instructions" on the letter of transmittal or (ii) for the
account of an eligible institution. If signatures on a letter of transmittal, or
notice of withdrawal are required to be guaranteed, such guarantee must be made
by an eligible institution.
If the letter of transmittal is signed by the holder(s) of unregistered
guaranteed notes tendered thereby, the signature(s) must correspond with the
name(s) as written on the face of the unregistered guaranteed notes without
alteration, enlargement or any change whatsoever. If any of the unregistered
guaranteed notes tendered thereby are held by two or more holders, all such
holders must sign the letter of transmittal. If any of the unregistered
guaranteed notes tendered thereby are registered in different names on different
unregistered guaranteed notes, it will be necessary to complete, sign and submit
as many separate letters of transmittal, and any accompanying documents, as
there are different registrations of certificates.
If unregistered guaranteed notes that are not tendered for exchange
pursuant to the exchange offer are to be returned to a person other than the
holder thereof, certificates for such notes must be endorsed or accompanied by
an appropriate instrument of transfer, signed exactly as the name of the
registered owner appears on the certificates, with the signatures on the
certificates or instruments of transfer guaranteed by an eligible institution.
If the letter of transmittal is signed by a person other than the holder of
any unregistered guaranteed notes listed therein, such unregistered guaranteed
notes must be properly endorsed or accompanied by a properly completed bond
power, signed by such holder exactly as such holder's name appears on such
unregistered guaranteed notes. If the letter of transmittal or any unregistered
guaranteed notes, bond powers or other instruments of transfer are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.
No alternative, conditional, irregular or contingent tenders will be
accepted. By executing the letter of transmittal (or facsimile thereof), the
tendering holders of unregistered guaranteed notes waive any right to receive
any notice of the acceptance for exchange of their unregistered guaranteed
notes. Tendering holders should indicate in the applicable box in the letter of
transmittal the name and address to which substitute certificates evidencing
unregistered guaranteed notes for amounts not tendered or not exchanged are to
be issued or sent, if different from the name and address of the person signing
the letter of transmittal. If no such instructions are given, unregistered
guaranteed notes not tendered or exchanged will be returned to such tendering
holder.
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance and withdrawal of tendered unregistered guaranteed
notes will be determined by us in our absolute discretion, which determination
will be final and binding. We reserve the absolute right to reject any and all
tendered unregistered guaranteed notes determined by us not to be in proper form
or not to be properly tendered or any tendered unregistered guaranteed notes our
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive, in our absolute discretion, any defects,
irregularities or conditions of tender as to particular unregistered guaranteed
notes, whether or not waived in the case of other unregistered guaranteed notes.
Our interpretation of the terms and conditions of the exchange offer (including
the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of unregistered guaranteed notes must be cured within such time as we shall
determine.
Although we intend to notify holders of defects or irregularities with
respect to tenders of unregistered guaranteed notes, neither we, the exchange
agent, nor the information agent, nor any other person will be under any duty to
give such notification or shall incur any liability for failure to give any such
notification.
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Tenders of unregistered guaranteed notes will not be deemed to have been made
until such defects or irregularities have been cured or waived.
Any holder whose unregistered guaranteed notes have been mutilated, lost,
stolen or destroyed will be responsible for obtaining replacement securities or
for arranging for indemnification with the trustee of the unregistered
guaranteed notes. Holders may contact the information agent for assistance with
such matters.
WITHDRAWAL RIGHTS
You may withdraw tenders of unregistered guaranteed notes of any series at
any time prior to the withdrawal deadline, 5:00 p.m., New York City time on
, 2002. You may not withdraw your tenders of unregistered guaranteed
notes subsequent to that time, even if we extend the expiration date of the
exchange offer.
For a withdrawal of a tender to be effective, a written or facsimile
transmission notice of withdrawal must be received by the exchange agent prior
to the withdrawal deadline at one of its addresses set forth on the back cover
page of this prospectus. The withdrawal notice must specify the name of the
person who tendered the unregistered guaranteed notes to be withdrawn; must
contain a description of the unregistered guaranteed notes to be withdrawn, the
certificate numbers shown on the particular certificates evidencing such
unregistered guaranteed notes and the aggregate principal amount represented by
such unregistered guaranteed notes; and must be signed by the holder of such
unregistered guaranteed notes in the same manner as the original signature on
the letter of transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to us that the person withdrawing the
tender has succeeded to the beneficial ownership of the unregistered guaranteed
notes. In addition, the notice of withdrawal must specify, in the case of
unregistered guaranteed notes tendered by delivery of certificates for such
notes, the name of the registered holder (if different from that of the
tendering holder) or, in the case of unregistered guaranteed notes tendered by
book-entry transfer, the name and number of the account at the Depository Trust
Company to be credited with the withdrawn unregistered guaranteed notes. The
signature on the notice of withdrawal must be guaranteed by an eligible
institution unless the unregistered guaranteed notes have been tendered for the
account of an eligible institution.
Withdrawal of tenders of unregistered guaranteed notes may not be
rescinded, and any unregistered guaranteed notes properly withdrawn will
thereafter be deemed not validly tendered for purposes of the exchange offer.
Properly withdrawn unregistered guaranteed notes may, however, be retendered by
again following one of the procedures described in "-- Procedures for Tendering"
prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
The completion of the exchange offer is subject to certain conditions
including (1) that the exchange offer not violate applicable law or applicable
interpretations of the staff of the Commission or (2) that no injunction, order
or decree has been issued which would prohibit, prevent or materially impair our
ability to proceed with the exchange offer. Notwithstanding any other provisions
of the exchange offer, or any extension of the exchange offer, we will not be
required to issue registered notes, and we may terminate the exchange offer or,
at our option, modify, extend or otherwise amend the exchange offer, if any of
the following conditions has not been satisfied or waived, prior to or
concurrently with the expiration of the exchange offer, as extended:
(1) nothing shall have occurred or been threatened, no action shall
have been taken, and no statute, rule, regulation, judgment, order, stay,
decree or injunction shall have been promulgated, enacted, entered,
enforced or deemed applicable to the exchange offer, or the exchange of
registered notes for unregistered guaranteed notes under the exchange
offer, by or before any court or governmental regulatory or administrative
agency, authority or tribunal, that either:
(a) challenges the making of the exchange offer or the exchange of
registered notes for unregistered guaranteed notes under the exchange
offer, or might, directly or indirectly, prohibit, prevent, restrict or
delay consummation of, or might otherwise adversely affect in any
material
34
manner, the exchange offer or the exchange of registered notes for
unregistered guaranteed notes under the exchange offer; or
(b) in our reasonable judgment, could materially adversely affect
our business, condition (financial or otherwise), income, operations,
properties, assets, liabilities or prospects and those of our
subsidiaries, individually or taken as a whole, or materially impair the
contemplated benefits to us of the exchange offer or the exchange of
registered notes for unregistered guaranteed notes under the exchange
offer;
(2) there shall not have occurred any of the following: (a) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of
the Company on any exchange or in the over-the-counter market, shall have
been suspended or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (b) a
banking moratorium shall have been declared by Federal or state
authorities, (c) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States, (d) there shall have occurred such a
material adverse change in general economic, political or financial
conditions, including, without limitation, as a result of terrorist
activities after the date hereof (or the effect of international conditions
on the financial markets in the United States shall be such) as to make it,
in the judgment of our board of directors, impracticable or inadvisable to
proceed with the exchange offer on the terms and in the manner contemplated
in this prospectus or (e) in the case of any of the foregoing existing at
the time of the commencement of the exchange offer, a material acceleration
or worsening thereof; and
(3) one or more of the trustees with respect to the indentures for
the registered notes shall not have objected in any respect, or taken any
action that could, in our reasonable judgment, adversely affect the
consummation of, the exchange offer or the exchange of registered notes for
unregistered guaranteed notes under the exchange offer, nor shall any
trustee have taken any action that challenges the validity or effectiveness
of the procedures used by us in making the exchange offer or the exchange
of the unregistered guaranteed notes under the exchange offer.
The foregoing conditions are for our sole benefit and may be waived by us
in whole or in part, and with respect to any or all series of unregistered
guaranteed notes, at our absolute discretion. Any determination made by us
concerning an event, development or circumstance described or referred to above
shall be conclusive and binding.
If any of the foregoing conditions are not satisfied with respect to any
series of unregistered guaranteed notes, we may, at any time before or
concurrently with the expiration date for the exchange offer:
(1) terminate the exchange offer with respect to that series of
unregistered guaranteed notes and return all tendered unregistered
guaranteed notes of that series to the holders thereof;
(2) modify, extend or otherwise amend the exchange offer with respect
to that series of unregistered guaranteed notes and retain all unregistered
guaranteed notes of that series tendered and not withdrawn until the
expiration date of the modified, extended or amended exchange offer with
respect to such series (see "-- Withdrawal Rights" and "-- Letter of
Transmittal; Representations, Warranties and Covenants of Holders of
Unregistered Guaranteed Notes"); or
(3) waive the unsatisfied conditions with respect to the exchange
offer and accept all unregistered guaranteed notes of that series tendered
and not previously withdrawn.
We reserve the right, in our absolute discretion, to purchase or make
offers to purchase any senior notes, to the extent permitted by applicable law,
in the open market, in privately negotiated transactions or otherwise. The terms
of any such purchases or offers could differ from the terms of the exchange
offer. Any purchase or offer to purchase will not be made except in accordance
with applicable law.
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EXCHANGE AGENT
State Street Bank and Trust Company has been appointed the exchange agent
for the exchange offer. Letters of transmittal and all correspondence in
connection with the exchange offer should be sent or delivered by each holder of
unregistered guaranteed notes, or by a beneficial owner's commercial bank,
broker, dealer, trust company or other nominee, to the exchange agent at the
addresses and telephone numbers set forth on the back cover page of this
prospectus. We will pay the exchange agent reasonable and customary fees for its
services and will reimburse it for its reasonable, out-of-pocket expenses in
connection therewith.
The exchange agent also acts as trustee under the exchange offer
indentures.
INFORMATION AGENT
Georgeson Shareholder Communications Inc. has been appointed as the
information agent for the exchange offer and will receive customary compensation
for its services. Questions concerning tender procedures and requests for
additional copies of this prospectus or the letter of transmittal should be
directed to the information agent at the address and telephone numbers set forth
on the back cover page of this prospectus. Holders of senior notes may also
contact their commercial bank, broker, dealer, trust company or other nominee
for assistance concerning the exchange offer.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders of the unregistered
guaranteed notes. The principal solicitation is being made by mail; additional
solicitations may, however, be made by telegraph, facsimile transmission,
telephone, electronic mail or in person by the information agent, as well as by
our officers and other employees and those of our affiliates.
If a tendering holder handles the transaction through its broker, dealer,
commercial bank, trust company or other institution, such holder may be required
to pay brokerage fees or commissions.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection with a
tender of your unregistered guaranteed notes for exchange unless you instruct us
to register registered notes in the name of, or request that unregistered
guaranteed notes not tendered or not accepted in the exchange offer be returned
to, a person other than the registered tendering holder, in which event the
registered tendering holder will be responsible for the payment of any
applicable transfer tax.
ACCOUNTING TREATMENT
We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer and the costs associated with the exchange
offer will be expensed as incurred.
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DESCRIPTION OF THE REGISTERED NOTES
We issued the unregistered guaranteed notes and will issue the registered
notes under two new indentures by and among us, CIHC and State Street Bank and
Trust Company, as trustee. We sometimes refer to these new indentures as the
"exchange offer indentures". The terms of the registered notes include those
stated in the exchange offer indentures and those made part of the exchange
offer indentures by reference to the Trust Indenture Act of 1939, as amended.
One of the exchange offer indentures governs the issuance of the registered
10.75% notes, under which we issued the 10.75% unregistered guaranteed notes in
the April exchange offer and the other exchange offer indenture governs the
issuance of the remaining registered notes, under which we issued the remaining
unregistered guaranteed notes in the April exchange offer. The terms of an
exchange offer indenture will only apply to the registered notes issued by that
indenture.
The terms and conditions of the registered notes are identical to the terms
and conditions of the unregistered guaranteed notes, with the exception of any
restrictive legends applicable to the unregistered guaranteed notes.
We incorporate by reference in this prospectus the description of our
senior notes in the various prospectuses and prospectus supplements used in
connection with the original issuance and sale of the senior notes, in exchange
for which the unregistered guaranteed notes were issued in the April exchange
offer. We urge you to read the exchange offer indentures because they, and not
this description, define your rights as holders of the registered notes.
Georgeson Shareholder Communications Inc., the information agent for the
exchange offer, will provide a copy of the exchange offer indentures governing
the registered notes, at no cost, to any holder requesting a copy. To request a
copy of any or all of these documents, you should call Georgeson at the
telephone number on the back cover of this prospectus.
GUARANTEES AND RELATED PROVISIONS
The registered notes will be guaranteed by CIHC on an unsecured senior
subordinated basis. The guarantees will be subordinated to the prior payment in
full of all obligations under our credit facility and all other senior debt of
CIHC and equal in right of payment to the unregistered guaranteed notes. The
guarantees will be full and unconditional, except that they will be subordinated
and will be limited as necessary to prevent the guarantees from constituting a
fraudulent conveyance.
CHANGE OF CONTROL
Under the terms of the indentures governing our 10.75% guaranteed and
senior notes, if a Change of Control occurs, each holder of the issued and
outstanding 10.75% guaranteed and senior notes will have the right to require us
to repurchase all or any part of such holder's 10.75% guaranteed and senior
notes. In such event, we will offer a payment in cash equal to 101% of the
aggregate principal amount of the notes repurchased plus accrued and unpaid
interest and liquidated damages, if any, to the purchase date. Within 10 days
following any Change of Control, we will mail an offer to purchase to each
holder of 10.75% notes describing the transaction or transactions that
constitute the Change of Control and offering to repurchase the 10.75% notes on
the date specified in the offer, which will be no earlier than 30 days and no
later than 60 days from the date such notice is mailed, pursuant to the
procedures required by the respective indentures and described in the offer to
purchase. The Board of Directors does not have the right to waive our obligation
to repurchase the 10.75% notes upon a change of control.
We cannot assure you that we will have sufficient funds available at the
time of any Change of Control to make any payments required by the 10.75% notes
or other indebtedness that we have outstanding at the time of the Change of
Control, which may have similar provisions.
"Change of Control" means the occurrence of any of the following:
(a) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
37
properties or assets of us and our Restricted Subsidiaries (as defined in
the indentures) taken as a whole to any "person" (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended);
(b) the adoption of a plan relating to our liquidation or dissolution;
(c) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the beneficial owner, directly or
indirectly, of more than 50% of our common stock; or
(d) the first day on which a majority of our directors on June 29,
2001, do not remain our directors.
Although there is a developing body of case law interpreting the phrase
"all or substantially all," there is no precise established definition under
applicable law. Accordingly, the ability of a holder of the 10.75% notes to
require us to repurchase such notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of our assets may be uncertain.
We have no present intention to engage in a transaction involving a Change of
Control, although we could decide to do so in the future.
LIMITATIONS ON INDEBTEDNESS
The indentures governing the 10.75% guaranteed and senior notes restrict us
from creating, assuming, guaranteeing or otherwise indirectly or directly
incurring debt or assuming debt (as defined in the indenture). We equally cannot
permit CIHC, Conseco Finance and other subsidiaries which have been designated
as "restricted subsidiaries" under the indentures to do so. This limitation on
indebtedness also prohibits us from issuing stock or from permitting our
restricted subsidiaries from issuing preferred stock. However, we, and our
restricted subsidiaries, may generally undertake the above-mentioned
transactions if:
- In the case of indebtedness, the debt is among those permitted by the
indentures governing the 10.75% notes. The indentures permit us to: carry
pre-existing debt, including the credit facility and the notes; debt in
order to refinance existing loans, notes and guarantees; incur
intercompany debt between us and our restricted subsidiaries; incur debt
in the ordinary course of business or debt secured by assets, so long as
it does not exceed 10% of our total shareholder's equity; incur
non-recourse debt incurred by non-restricted subsidiaries; incur debt
representing collateralized loans or mortgage-backed loans or
securitizations entered into by our subsidiaries; have debt incurred by
our insurance operating subsidiaries in respect of surplus debentures;
incur limited-recourse debt representing securitizations of assets; and
incur additional debt in an amount not to exceed $200 million (including
refinancing debt).
- In the case of indebtedness incurred by Conseco Finance, the debt does
not exceed 50% of Conseco Finance's total shareholder's equity, provided
that, at the time of incurrence, the ratio of Conseco Finance's total
shareholder's equity to total managed receivables is at least 4%.
- In the case of stock, the stock, by its terms, is not mandatorily
redeemable or does not mature prior to 91 days after the date on which
the 10.75% notes mature, and is not convertible or exchangeable into such
stock.
- On the date we are contemplating such transactions, our fixed charges
coverage ratio, which reflects our level of cash flows to fixed interest
and other periodic charges, such as dividends, for the four quarters
immediately preceding the reference date, is at least two to one
(2.0:1.0). This ratio would be calculated as if the debt or issuance had
already occurred. As of March 31, 2002, our fixed charge coverage rates,
before the incurrence of any additional debt, was 2.0:1.0.
This description of certain indenture covenants is merely a summary.
Holders may want to receive the actual indenture which is an exhibit to the
registration statement of which this prospectus is a part.
38
BOOK-ENTRY, DELIVERY AND FORM
GLOBAL NOTES
The unregistered guaranteed notes were, and the registered notes will be,
issued in the form of one or more registered notes in global form, without
interest coupons. The Global Notes will be deposited on the date of issuance
with, or on behalf of, the Depository Trust Company and registered in the name
of Cede & Co., as nominee of the Depository Trust Company, or will remain in the
custody of the trustee pursuant to the Fast Automated Securities Program Balance
Certificate Agreement between the Depository Trust Company and the trustee.
DEPOSITORY PROCEDURES
The following description of the operations of the Depository Trust
Company, Euroclear and Clearstream are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to changes by them. We take no
responsibility for these operations and procedures and urge you to contact the
system or their participants directly to discuss these matters.
The Depository Trust Company has advised us that it is (i) a limited
purpose trust company organized under the laws of the State of New York, (ii) a
"banking organization" within the meaning of the New York Banking Law, (iii) a
member of the Federal Reserve System, (iv) a "clearing corporation" within the
meaning of the Uniform Commercial Code, as amended, and (v) a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. The Depository Trust
Company was created to hold securities for its participants and facilitates the
clearance and settlement of securities transactions between participants through
electronic book-entry changes to the accounts of its participants, thereby
eliminating the need for physical transfer and delivery of certificates. The
Depository Trust Company's participants include securities brokers and dealers
(including the initial purchasers), banks and trust companies, clearing
corporations and certain other organizations. Indirect access to the Depository
Trust Company's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect Participants")
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly. Investors who are not participants may
beneficially own securities held by or on behalf of the Depository Trust Company
only through participants or Indirect Participants.
We expect that pursuant to procedures established by the Depository Trust
Company (i) upon deposit of each Global Note, the Depository Trust Company will
credit the accounts of participants designated by the holders of unregistered
guaranteed notes who exchange their unregistered guaranteed notes in the
exchanger offer with an interest in the Global Note and (ii) ownership of the
notes will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by the Depository Trust Company (with respect
to the interests of participants) and the records of participants and the
Indirect Participants (with respect to the interests of persons other than
participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the notes represented by a
Global Note to such persons may be limited. In addition, because the Depository
Trust Company can act only on behalf of its participants, who in turn act on
behalf of persons who hold interests through participants, the ability of a
person having an interest in notes represented by a Global Note to pledge or
transfer such interest to persons or entities that do not participate in the
Depository Trust Company's system, or to otherwise take actions in respect of
such interest, may be affected by the lack of a physical definitive security in
respect of such interest.
So long as the Depository Trust Company or its nominee is the registered
owner of a Global Note, the Depository Trust Company or such nominee, as the
case may be, will be considered the sole owner or holder of the notes
represented by the Global Note for all purposes under the indenture. Except as
provided below, owners of beneficial interests in a Global Note will not be
entitled to have notes represented by such Global Note registered in their
names, will not receive or be entitled to receive physical delivery of
Certificated Notes,
39
and will not be considered the owners or holders thereof under the indenture for
any purpose, including with respect to the giving of any direction, instruction
or approval to the trustee thereunder. Accordingly, each holder owning a
beneficial interest in a Global Note must rely on the procedures of the
Depository Trust Company and, if such holder is not a participant or an Indirect
Participant, on the procedures of the participant through which such holder owns
its interest, to exercise any rights of a holder of notes under the indenture or
such Global Note. We understand that under existing industry practice, in the
event that we request any action of holders of registered notes, or a holder
that is an owner of a beneficial interest in a Global Note desires to take any
action that the Depository Trust Company, as the holder of such Global Note, is
entitled to take, the Depository Trust Company would authorize the participants
to take such action and the participants would authorize holders owning through
such participants to take such action or would otherwise act upon the
instruction of such holders. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of registered notes by the Depository Trust Company, or
for maintaining, supervising or reviewing any records of the Depository Trust
Company relating to such registered notes.
Payments with respect to the principal of, and premium, if any, additional
interest, if any, and interest on, any registered notes represented by a Global
Note registered in the name of the Depository Trust Company or its nominee on
the applicable record date will be payable by the trustee to or at the direction
of the Depository Trust Company or its nominee in its capacity as the registered
holder of the Global Note representing such registered notes under the
indenture. Under the terms of the Indenture, we and the trustee may treat the
persons in whose names the registered notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving payment thereon
and for any and all other purposes whatsoever. Accordingly, neither we nor the
trustee has or will have any responsibility or liability for the payment of such
amounts to owners of beneficial interests in a Global Note (including principal,
premium, if any, additional interest, if any, and interest). Payments by the
participants and the Indirect Participants to the owners of beneficial interests
in a Global Note will be governed by standing instructions and customary
industry practice and will be the responsibility of the participants or the
Indirect Participants and the Depository Trust Company.
Transfers between participants in the Depository Trust Company will be
effected in accordance with the Depository Trust Company's procedures, and will
be settled in same-day funds. Transfers between participants in Euroclear or
Clearstream will be effected in the ordinary way in accordance with their
respective rules and operating procedures.
Cross-market transfers between the participants in the Depository Trust
Company, on the one hand, and Euroclear or Clearstream participants, on the
other hand, will be effected through the Depository Trust Company in accordance
with the Depository Trust Company's rules on behalf of Euroclear or Clearstream,
as the case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or Clearstream,
as the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Notes in the Depository
Trust Company, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to the Depository Trust
Company. Euroclear participants and Clearstream participants may not deliver
instructions directly to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a Global Note from a
participant in the Depository Trust Company will be credited, and any such
crediting will be reported to the relevant Euroclear or Clearstream participant,
during the securities settlement processing day (which must be a business day
for Euroclear and Clearstream) immediately following the settlement date of the
Depository Trust Company. Cash received in Euroclear or Clearstream as a result
of sales of interest in a Global Note by or through a Euroclear or Clearstream
participant to a participant in the Depository Trust Company will be received
with value on the settlement date of the Depository Trust Company but will be
available in the relevant Euroclear or Clearstream cash
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account only as of the business day for Euroclear or Clearstream following the
Depository Trust Company's settlement date.
Although the Depository Trust Company, Euroclear and Clearstream have
agreed to the foregoing procedures to facilitate transfers of interests in the
Global Notes among participants in the Depository Trust Company, Euroclear and
Clearstream, they are under no obligation to perform or to continue to perform
such procedures, and such procedures may be discontinued at any time. Neither we
nor the trustee will have any responsibility for the performance by the
Depository Trust Company, Euroclear or Clearstream or their respective
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT HAVE
REGISTERED NOTES REGISTERED IN THEIR NAME, WILL NOT RECEIVE PHYSICAL DELIVERY OF
REGISTERED NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR "HOLDERS" THEREOF UNDER THE EXCHANGE OFFER INDENTURES FOR ANY PURPOSE.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive registered notes in registered
certificated form ("Certificated Notes") if:
(1) the Depository Trust Company (a) notifies us that it is unwilling
or unable to continue as depositary for the Global Notes, and we fail to
appoint a successor depositary, or (b) has ceased to be a clearing agency
registered under the Exchange Act;
(2) at our option, we notify the trustee in writing that we elect to
cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a default or event of default
with respect to the registered notes.
In all cases, Certificated Notes delivered in exchange for any Global Note
or beneficial interests in Global Notes will be registered in the names, and
issued in any approved denominations, requested by or on behalf of the
depositary (in accordance with its customary procedures).
SAME DAY SETTLEMENT AND PAYMENT
We will make payments in respect of the notes represented by the Global
Notes (including principal, premium, if any, interest and liquidated damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Global Note holder. We will make all payments of principal, interest and
premium and liquidated damages, if any, with respect to Certificated Notes by
wire transfer of immediately available funds to the accounts specified by the
holders thereof or, if no account is specified, by mailing a check to that
holder's registered address. The registered notes represented by the Global
Notes are expected to trade in the Depository Trust Company's Same Day Funds
Settlement System, and any permitted secondary market trading activity in the
registered notes will, therefore, be required by the Depository Trust Company to
be settled in immediately available funds. We expect that secondary trading in
any Certificated Notes will also be settled in immediately available funds.
41
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax
considerations relating to the exchange of unregistered guaranteed notes for
registered notes in the exchange offer. It does not contain a complete analysis
of all the potential tax considerations relating to the exchange. This summary
is limited to holders of unregistered guaranteed notes who hold the unregistered
guaranteed notes as "capital assets" (in general, assets held for investment).
Special situations, such as the following, are not addressed:
- tax consequences to holders who may be subject to special tax treatment,
such as tax-exempt entities, dealers in securities or currencies, banks,
other financial institutions, insurance companies, regulated investment
companies, and traders in securities that elect to use a mark-to-market
method of accounting for their securities holdings;
- tax consequences to persons holding notes as part of a hedging,
integrated, constructive sale or conversion transaction or a straddle or
other risk reduction transaction;
- tax consequences to holders whose "functional currency" is not the U.S.
dollar;
- tax consequences to persons who hold notes through a partnership or
similar pass-through entity;
- any U.S. federal gift, estate or alternative minimum tax consequences; or
- any state, local or foreign tax consequences.
The discussion below is based upon the provisions of the Internal Revenue
Code of 1986, as amended, existing and proposed Treasury regulations promulgated
thereunder, and rulings, judicial decisions and administrative interpretations
thereunder, as of the date hereof. Those authorities may be changed, perhaps
retroactively, so as to result in U.S. federal income tax consequences different
from those discussed below.
CONSEQUENCES OF TENDERING NOTES
The exchange of your unregistered guaranteed notes for registered notes in
the exchange offer should not constitute an exchange for U.S. federal income tax
purposes. Accordingly, the exchange offer should have no U.S. federal income tax
consequences to you and you should not recognize gain or loss if you exchange
your unregistered guaranteed notes for registered notes. For example, there
should be no change in your tax basis and your holding period should carry over
to the registered notes. In addition, the U.S. federal income tax consequences
of holding and disposing of your registered notes should be the same as those
applicable to your unregistered guaranteed notes.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
OF THE EXCHANGE OFFER IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR
TAX CONSEQUENCES TO IT OF EXCHANGING UNREGISTERED GUARANTEED NOTES FOR
REGISTERED NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS.
42
PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such registered notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by all persons subject to the prospectus delivery requirements of the Securities
Act, including broker-dealers, in connection with resales of registered notes.
We have agreed that, starting on the expiration date and ending on the close of
business one year after the expiration date, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
We reserve the right in our sole discretion to purchase or make offers for,
or to offer registered notes for, any unregistered guaranteed notes that remain
outstanding subsequent to the expiration of the exchange offer pursuant to this
prospectus or otherwise and, to the extent permitted by applicable law, purchase
unregistered guaranteed notes in the open market, in privately negotiated
transactions or otherwise.
We will not receive any proceeds from any sale of registered notes by
broker-dealers. Registered notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the registered notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such registered notes. Any
broker-dealer that resells registered notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such registered notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of registered notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the registered notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
43
LEGAL MATTERS
Certain legal maters on behalf of the Company will be passed upon for us by
David K. Herzog, our Executive Vice President, General Counsel and Secretary.
Mr. Herzog is a full-time employee and officer of ours and holds shares and
options to purchase shares of our common stock. Certain legal matters relating
to the registered notes offered hereby will be passed upon for us by Weil,
Gotshal & Manges LLP.
EXPERTS
The consolidated financial statements of Conseco, Inc. and subsidiaries as
of December 31, 2001 and 2000, and for the three years ended December 31, 2001,
incorporated in this prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 2001, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
44
WHERE YOU CAN FIND MORE INFORMATION AND INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
Conseco files annual, quarterly and current reports, proxy statements and
other information with the Commission. You can inspect and copy these reports,
proxy statements and other information at the public reference facilities of the
Commission, in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You
can also obtain copies of these materials from the public reference section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Please call the Commission at 1-800-SEC-0330 for further information on
its public reference room. The Commission also maintains a web site that
contains reports, proxy statements and other information regarding registrants
that file electronically with the Commission (http://www.sec.gov). You can
inspect reports and other information we file at the office of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
We are "incorporating by reference" certain documents we file with the
Commission, which means that by referring you to those documents, we are
disclosing to you important business and financial information about us that is
not included in or delivered with this prospectus. The information in the
documents incorporated by reference is considered to be part of this prospectus.
We incorporate by reference the documents listed below and any future filings we
may make with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (other than current reports filed
under item 9 of Form 8-K), which we refer to as the Exchange Act, prior to the
termination or completion of this offering:
- Our annual report on Form 10-K for the fiscal year ended December 31,
2001, filed with the Commission on April 1, 2002;
- Our quarterly report on Form 10-Q for the period ended March 31, 2002,
filed with the Commission on May 15, 2002;
- Our current reports on Form 8-K filed with the Commission on February 8,
2002, February 21, 2002 and March 18, 2002;
- The sections entitled "Description of the Notes" contained in each of our
prospectus supplements or pricing supplements relating to our senior
notes (but not the unregistered guaranteed notes) filed with the
Commission on February 6, 1998 (with respect to the 6.4% notes), June 5,
1998 (with respect to the 6.8% notes), October 19, 1999 (with respect to
the 8.5% and 9% notes), February 3, 2000 (with respect to the 8.75%
notes) and June 27, 2001 (with respect to the 10.75% notes); and
- The sections entitled "Securities Ownership," "Election of Directors,"
"Executive Compensation, Related Party Transactions and Other
Information," "Board Meetings and Committees," and "Section 16(a)
Beneficial Ownership Reporting Compliance" contained in our definitive
proxy statement filed with the SEC on April 30, 2002, relating to our
2002 annual meeting of stockholders.
We filed a registration statement on Form S-4 to register with the
Commission the securities described in this prospectus. This prospectus is part
of that registration statement. As permitted by the Commission rules, this
prospectus does not contain all the information contained in the registration
statement or the exhibits to the registration statement. You may refer to the
registration statement and accompanying exhibits for more information about us
and our securities.
Information contained in this prospectus modifies or supersedes, as
applicable, the information contained in the earlier-dated documents
incorporated by reference. Information in documents that we file with the
Commission after the date of this prospectus will automatically update and
supersede information in this prospectus or in earlier-dated documents
incorporated by reference.
We will provide you with copies of the documents we incorporate by
reference in this prospectus, including the indentures governing the registered
notes and other material agreements that we summarize in this prospectus, at no
cost. To request a copy of any or all of these documents, you should write or
telephone us at: 11825 North Pennsylvania Street, Carmel, Indiana 46032, (317)
817-2893, Attention: Tammy H. Hill, Senior Vice President, Investor Relations NO
LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
45
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--------------------------------------------------------------------------------
The exchange agent for the exchange offer is:
[STATE STREET BANK LOGO]
By Mail: By Hand or Overnight Express Delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
P.O. Box 778 Two Avenue de Lafayette
Boston, MA 02102-0078 5th Floor, Corporate Trust Window
Attn: Ralph Jones Boston, MA 02111-1724
Attn: Ralph Jones
By Facsimile (for Eligible Institutions only):
(617) 662-1452
Confirm by Telephone:
(617) 662-1548
Questions, requests for assistance and requests for additional copies of the
offering memorandum
and
related letter of transmittal may be directed to the information agent at the
address set forth below.
The information agent for the exchange offer is:
[GEORGESON SHAREHOLDER LOGO]
17 State Street, 10th Floor
New York, NY 10004
Banks and Brokers call: (212) 440-9800
All Others Call Toll Free: (866) 867-0999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Indiana Business Corporation Law grants authorization to Indiana
corporations to indemnify officers and directors for their conduct provided such
conduct was in good faith and was for a purpose the person reasonably believed
to be in or not opposed to the best interests of the corporation, and permits
the purchase of insurance in this regard. In addition, the shareholders of a
corporation may approve the inclusion of other or additional indemnification
provisions in the articles of incorporation and by-laws.
The By-laws of Conseco, Inc. (the "Company") provide for the
indemnification of any person made a party to any action, suit or proceeding by
reason of the fact that he is a director, officer or employee of the Company, if
(a) such person is wholly successful with respect to such action, suit or
proceeding or (b) if such person is determined to have acted in good faith, in
what he or she reasonably believed to be the best interests of the Company or at
least not opposed to its best interests and, in addition, with respect to any
criminal claim, is determined to have had reasonable cause to believe that his
or her conduct was lawful or had no reasonable cause to believe that his or her
conduct was unlawful. Such indemnification shall be against the reasonable
expenses, including attorneys' fees, incurred by such person in connection with
the defense of such action, suit or proceeding and amounts paid in settlement.
If such person was not wholly successful, the determination of entitlement to
indemnification shall be made by one of the following methods, such method to be
selected by the board of directors: (a) by the board of directors by a majority
vote of a quorum consisting of directors who are not and have not been parties
to the claim; (b) by the majority vote of a committee duly designated by the
board of directors, consisting solely of two or more directors who are not and
have not been parties to the claim; and (c) by special legal counsel.
The above discussion of Company's By-laws and the Indiana Business
Corporation law is not intended to be exhaustive and is qualified in its
entirety by such By-laws and the Indiana Business Corporation Law.
We have purchased director and officer liability insurance which would
provide coverage against certain liabilities, including liabilities under the
securities laws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
3.1 Amended and Restated Certificate of Incorporation of
Conseco, Inc.(2)
3.2 By-Laws of Conseco, Inc.(3)
3.3*** Certificate of Incorporation of CIHC, Incorporated.
3.4* By-Laws of CIHC, Incorporated.
4.1*** First Senior Supplemental Indenture, dated as of April 24,
2002 to Second Senior Indenture for the 10.75% Guaranteed
Senior Notes dated as of April 24, 2002 between Conseco,
Inc., CIHC, Incorporated and State Street Bank and Trust
Company.
4.2*** Second Senior Indenture, dated as of April 24, 2002 for
10.75% Guaranteed Senior Notes, between Conseco, Inc., CIHC,
Incorporated and State Street Bank and Trust Company.
4.3*** First Senior Indenture, dated as of April 24, 2002 among
Conseco, Inc., CIHC, Incorporated and State Street Bank and
Trust Company.
4.4*** Terms Resolution, dated as of April 24, 2002 with respect to
the 6.4% Guaranteed Senior Notes, due February 10, 2004.
4.5*** Terms Resolution, dated as of April 24, 2002 with respect to
the 8.5% Guaranteed Senior Notes due October 15, 2003.
4.6*** Terms Resolution, dated as of April 24, 2002 with respect to
the 6.8% Guaranteed Senior Notes due June 15, 2007.
II-i
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
4.7*** Terms Resolution, dated as of April 24, 2002 with respect to
the 9% Guaranteed Senior Notes due April 15, 2008.
4.8*** Terms Resolution, dated as of April 24, 2002 with respect to
the 8.75% Guaranteed Senior Notes due August 9, 2006.
4.9*** Registration Rights Agreement, dated as of April 24, 2002
among Conseco, Inc., CIHC, Incorporated and Banc of America
Securities LLC, J.P. Morgan Securities Inc. and Lehman
Brothers Inc., as Dealer Managers.
4.10 Senior Indenture, dated November 13, 1997, by and between
the Registrant and Bank of New York as successor in interest
to LTCB Trust Company, as Trustee.(6)
4.11* Five-Year Credit Agreement, dated as of September 25, 1998,
among Conseco, Inc., Bank of America National Trust and
Savings Association, as Agent, First Union National Bank and
JPMorgan Chase Bank, as Syndication Agents, Morgan Guaranty
Company of New York, as Documentation Agent, and the other
financial institutions party thereto.
4.12 First Amendment to the Five-Year Credit Agreement, dated as
of September 22, 2000, among Conseco, Inc., the various
financial institutions parties thereto and Bank of America,
N.A.(7)
4.13 Second Amendment to Five-Year Credit Agreement, dated as of
May 30, 2001, by and among Conseco, Inc., the various
financial institutions signatory thereto and Bank of
America, N.A.(1)
4.14 Third Amendment to Five-Year Credit Agreement, dated as of
March 20, 2002, by and among Conseco, Inc., the various
financial institutions signatory thereto and Bank of
America, N.A.(1)
5.1** Opinion of Weil, Gotshal & Manges LLP.
5.2** Opinion of David K. Herzog.
10.1.13 Employment Agreement, dated February 9, 1996 between Green
Tree and Lawrence Coss and related Noncompetition agreement
dated February 9, 1996, as amended by the Amendment
Agreement dated April 6, 1998.(8)
10.1.14 Employment Agreement, amended and restated as of December
15, 1999, between the Conseco, Inc. and Maxwell E.
Bublitz.(9)
10.1.15 Employment Agreement, amended and restated as of December
15, 1999, between Conseco, Inc. and James S. Adams.(9)
10.1.16 Description of incentive compensation and severance
arrangement with Edward M. Berube.(10)
10.1.24 Second Amendment Agreement , dated as of November 1, 1999,
between Conseco Finance Corp. and Lawrence M. Coss.(11)
10.1.27 Employment Agreement by and between Gary C. Wendt and
Conseco, Inc., dated as of June 28, 2000.(12)
10.1.28 Nonqualified Stock Option Agreement by and between Gary C.
Wendt and Conseco, Inc. dated as of June 28, 2000.(12)
10.1.29 Restricted Stock Agreement by and between Gary C. Wendt and
Conseco, Inc., dated as of June 28, 2000.(12)
10.1.30 Employment Agreement by and between David K. Herzog and
Conseco, Inc., dated as of August 11, 2000.(13)
10.1.31 Supplemental Retirement Agreement dated as of August 16,
2000, between Conseco, Inc. and Gary C. Wendt.(13)
10.1.32 Guaranty dated as of August 16, 2000, between Bankers Life
and Casualty Company as Guarantor, and Gary C. Wendt.(13)
II-ii
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
10.1.34 Employment Agreement by and between David Gubbay and
Conseco, Inc., dated as of February 21, 2001.(14)
10.1.35 Restricted Stock Agreement by and between David Gubbay and
Conseco, Inc., dated as of March 13, 2001.(14)
10.1.36 Employment Agreement by and between Charles B. Chokel and
Conseco, Inc., dated as of March 16, 2001.(14)
10.1.37 Restricted Stock Agreement by and between Charles B. Chokel
and Conseco, Inc., dated as of March 16, 2001.(14)
10.1.38 Employment Agreement between William J. Shea and Conseco,
Inc., dated as of September 10, 2001.(15)
10.1.39 Restricted Stock Agreement dated as of September 17, 2001
between Conseco, Inc. and William J. Shea.(15)
10.8 Conseco, Inc.'s Stock Option Plan(16); Amendment No. 1
thereto(17); Amendment No. 2 thereto(18); Amendment No. 3
thereto(19); Amendment No. 4 thereto(20); Amendment No. 5
thereto(21)
10.8.3 Conseco, Inc.'s Cash Bonus Plan.(22)
10.8.4 Amended and Restated Conseco Stock Bonus and Deferred
Compensation Program.(23)
10.8.6 Conseco Performance-Based Compensation Plan for Executive
Officers.(24)
10.8.7 Conseco, Inc. Amended and Restated Deferred Compensation
Plan.(25)
10.8.8 Amendment to the Amended and Restated Conseco Stock Bonus
and Deferred Compensation Program.(26)
10.8.9 Conseco Amended and Restated 1994 Stock and Incentive
Plan.(1)
10.8.10 Amendment No. 2 to the Amended and Restated Conseco Stock
Bonus and Deferred Compensation Program.(27)
10.8.11 Amended and Restated Director, Officer and Key Employee
Stock Purchase Plan of Conseco, Inc.(28)
10.8.13 Form of Promissory Note payable to Conseco, Inc. relating to
Conseco, Inc.'s Director, Officer and Key Employee Stock
Purchase Plan.(29)
10.8.14 Conseco, Inc. Amended and Restated 1997 Non-qualified Stock
Option Plan.(1)
10.8.21 Amended and Restated 1999 Director and Executive Officer
Stock Purchase Plan of Conseco, Inc.(28)
10.8.22 Guaranty regarding 1999 Director and Executive Officer Stock
Purchase Plan.(28)
10.8.23 Form of Borrower Pledge Agreement dated as of September 15,
1999 with The Chase Manhattan Bank relating to the 1999
Director and Executive Officer Stock Purchase Plan.(28)
10.8.24 Form of note payable to Conseco, Inc. relating to the 1999
Director and Executive Officer Stock Purchase Plan.(28)
10.8.25 Conseco, Inc. 2000 Employee Stock Purchase Program Work-Down
Plan.(10)
10.8.26 Conseco, Inc. 2000 Non-Employee Stock Purchase Program
Work-Down Plan.(10)
II-iii
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
10.8.27 Guaranty, dated as of November 22, 2000 between Conseco,
Inc. as Guarantor, and Bank of America, National
Association, as Administrative Agent; Guaranty and
Subordination Agreement, dated as of November 22, 2000, made
by CIHC, Incorporated, as Guarantor and Subordinated
Borrower, and Conseco, Inc., as Obligor and Subordinated
Lender, in favor of Bank of America, National Association,
as Administrative Agent under the Credit Agreement dated as
of November 22, 2000; and Form of Credit Agreement, dated as
of November 22, 2000 among the Borrowers, the other
financial institutions party thereto and Bank of America,
National Association, as Administrative Agent (Relating to
Refinancing of certain Loans under that certain Credit
Agreement, dated as of August 21, 1998).(10)
10.8.28 Guaranty, dated as of November 22, 2000 between Conseco,
Inc. as Guarantor, and Bank of America, National
Association, as Administrative Agent; Guaranty and
Subordination Agreement, dated as of November 22, 2000, made
by CIHC, Incorporated, as Guarantor and Subordinated
Borrower, and Conseco, Inc., as Obligor and Subordinated
Lender, in favor of Bank of America, National Association,
as Administrative Agent under the Credit Agreement dated as
of November 22, 2000; and Form of Credit Agreement, dated as
of November 22, 2000 among the Borrowers, the other
financial institutions party thereto and Bank of America,
National Association, as Administrative Agent (Relating to
the Refinancing of Certain Loans under that certain Amended
and Restated Credit Agreement, dated as of August 26,
1997).(10)
10.8.29 Guaranty, dated as of November 22, 2000, between Conseco,
Inc., as Guarantor, and The Chase Manhattan Bank, as
Administrative Agent; Guaranty and Subordination Agreement,
dated as of November 22, 2000 made by CIHC, Incorporated, as
Guarantor and Subordinated Borrower, and Conseco, Inc., as
Obligor and Subordinated Lender, in favor of The Chase
Manhattan Bank, as Administrative Agent under the Credit
Agreement dated as of November 22, 2000; and the Form of
Credit Agreement, dated as of November 22, 2000, among the
Borrowers, the other financial institutions party thereto
and the Chase Manhattan Bank, as Administrative Agent
(Relating to the Refinancing of Certain Loans under that
certain Credit Agreement, dated as of September 15, 1999, as
terminated an replaced by that certain Termination and
Replacement Agreement, dated as of May 30, 2000).(10)
10.8.30 Forms of note payable to Conseco Services, LLC regarding the
2000 Work-Down Plans, Form of Unconditional Guarantee and
Form of Indemnification Agreement.(10)
10.8.31 First Stage Amendment and Agreement re: Non-Refinanced 1998
D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
CDOC, Inc., CIHC, Incorporated, Bank of America, N.A. and
the various financial institutions parties thereto.(1)
10.8.32 First Stage Amendment and Agreement re: Non-Refinanced 1997
D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
CDOC, Inc., CIHC, Incorporated, Bank of America, N.A. and
the various financial institutions parties thereto.(1)
10.8.33 Cash Collateral Pledge Agreement among CDOC, Inc. and JP
Morgan Chase Bank, dated as of March 20, 2002.(1)
10.8.34 First Stage Amendment and Agreement Re: 1998 D&O Loans,
dated as of March 20, 2002, among Conseco, Inc., CDOC, Inc.,
CIHC Incorporated, Bank of America, N.A. and various
financial institutions parties thereto.(1)
10.8.35 Amended and Restated Collateral Agreement made by Conseco,
Inc. and CIHC, Incorporated in form of JP Morgan Chase Bank,
dated as of March 20, 2002.(1)
10.8.36 First Stage Amendment and Agreement re: 1999 D&O Loans,
dated as of March 20, 2002, among Conseco, Inc., CDOC, Inc.,
CIHC, Incorporated, JPMorgan Chase Bank and the various
financial institutions parties thereto.(1)
II-iv
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
10.43 Amended and Restated Securities Purchase Agreement dated as
of December 15, 1999 between Conseco, Inc. and the
purchasers named therein.(30)
10.45.1 Warrant to Purchase Common Stock of Conseco Finance Corp.,
dated May 11, 2000, by and between Conseco Finance Corp. and
Lehman Brothers Holdings Inc.(31)
10.45.2 Exchange Agreement by and between Lehman Brothers Holdings
Inc. and Conseco, Inc., dated January 30, 2002.(1)
10.46.1 Amended and Restated Agreement dated January 30, 2002, by
and among Conseco Finance Corp., Conseco, Inc., CIHC,
Incorporated, Green Tree Residual Finance Corp. I, Green
Tree Finance Corp. -- Five and Lehman Brothers Holdings
Inc.(1)
10.46.2 Amended and Restated Master Repurchase Agreement dated as of
April 5, 2001 between Merrill Lynch Mortgage Capital Inc.
and Green Tree Finance Corp. -- Three.(32)
10.46.3 Second Amended and Restated Master Repurchase Agreement
dated January 30, 2002 between Lehman Commercial Paper Inc.
and Green Tree Finance Corp. -- Five.(32)
10.46.4** Asset Assignment Agreement dated as of February 13, 1998
between Green Tree Residual Finance Corp. I and Lehman
Commercial Paper, Inc.(33); Amendment to the First Residual
Facility, dated as of September 22, 2000, by and among
Lehman ALI Inc. and Green Tree Residual Finance Corp. I(34);
Amendment, dated January 30, 2002, by and between Lehman ALI
Inc. and Green Tree Residual Finance Corp.
10.46.5 Insurance Agreement by and between Conseco, Inc. and Gary C.
Wendt 2000 Irrevocable Insurance Trust dated 11/22/00
("Wendt Trust"), dated December 1, 2000 and Collateral
Assignment by Wendt Trust in favor of Conseco, Inc. dated
December 1, 2000.(10)
10.48 Insurance Agreement by and between Conseco, Inc. and Wendt
Trust, dated January 16, 2001 and Collateral Assignment by
Wendt Trust in favor of Registrant dated January 16,
2001.(10)
10.49 Insurance Agreement by and between Registrant and Wendt
Trust, dated January 16, 2001 and Collateral Assignment by
Wendt Trust in favor of Registrant dated January 16,
2001.(10)
10.50 Agreement and Plan of Merger dated as of July 27, 2001 by
and among Conseco, Inc., Noida Acquisition Corp. and
ExlService.com, Inc.(35)
10.51 Restricted Stock Agreement dated as of July 31, 2001,
between Conseco, Inc., Gary Wendt and Rosemarie Wendt.(35)
12.1 Computation of Ratio of Earnings to Fixed Charges, Preferred
Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts.(1)(41)
21 Subsidiaries of Conseco, Inc.(1)
23.1** Consent of PricewaterhouseCoopers LLP.
23.2** Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1 hereto).
23.3** Consent of David K. Herzog (included in Exhibit 5.2 hereto).
24.1*** Power of Attorney (included on signature page).
25.1*** Form T-1 statement of eligibility under the Trust Indenture
Act of 1939, as amended, of State Street Bank and Trust, as
trustee.
99.1*** Form of Letter of Transmittal.
99.2 Prospectus Supplement dated February 4, 1998 to Prospectus
dated June 24, 1997.(36)
99.3 Pricing Supplement dated June 4, 1998 to Prospectus dated
June 24, 1997 and Prospectus Supplement dated February 23,
1998.(37)
99.4 Prospectus Supplement dated October 18, 1999 to Prospectus
dated October 1, 1999.(38)
99.5 Prospectus Supplement dated February 2, 2000 to Prospectus
dated October 1, 1999.(39)
II-v
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
99.6 Prospectus Supplement dated June 27, 2001 to Prospectus
dated October 1, 1999.(40)
---------------
* Filed herewith.
** To be filed by amendment.
*** Previously filed with the initial filing of this Registration Statement.
(1) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250) for the period ended December 31, 2001.
(2) Incorporated by reference to Conseco, Inc.'s Registration Statement on Form
S-3 (No. 333-94683), dated January 14, 2000.
(3) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250), dated April 1, 2002.
(4) Incorporated by reference to Conseco, Inc.'s Current Report on Form 8-K
(No. 001-09250), dated October 21, 1999.
(5) Incorporated by reference to Conseco, Inc.'s Current Report on Form 8-K
(No. 001-09250), dated June 10, 1998.
(6) Incorporated by reference to Conseco, Inc.'s Post-Effective Amendment No. 1
to the Registrant's Registration Statement on Form S-3 (No. 333-27803),
dated November 18, 1997.
(7) Incorporated by reference to Conseco, Inc.'s Current Report on Form 8-K/A
(No. 001-09250), dated September 28, 2000.
(8) Incorporated by reference to Conseco Finance Corp's (f/h/a Green Tree
Financial Corp) Registration Statement Amendment on Form S-3/A (No.
333-52233), dated June 16, 1998.
(9) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250) for the period ended December 31, 1999.
(10) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250) for the period ended December 31, 2000.
(11) Incorporated by reference to Conseco, Inc.'s Amended Annual Report on Form
10-K/A (No. 001-09250) for the period ended December 31, 1999.
(12) Incorporated by reference to Conseco, Inc.'s Current Report on Form 8-K
(No. 001-09250), dated July 10, 2000.
(13) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250), for the period ended September 30, 2000.
(14) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250), for the period ended March 31, 2001.
(15) Incorporated by reference to Conseco, Inc.'s Quarterly report on Form 10-Q
(No. 001-09250), for the period ended September 30, 2001.
(16) Incorporated by reference to Exhibit B of Conseco, Inc.'s definitive proxy
statement dated December 10, 1983 relating to the Conseco, Inc.'s 1983
annual meeting of stockholders.
(17) Incorporated by reference to Exhibit 10.8.1 to Conseco, Inc.'s Quarterly
Report on Form 10-Q for the period ended June 30, 1985.
(18) Incorporated by reference to Exhibit 10.8.2 to Conseco, Inc.'s registration
statement on Form S-1 (No. 33-4367).
(19) Incorporated by reference to Exhibit 10.8.3 to Conseco, Inc.'s Annual
Report on Form 10-K for the period ended December 31, 1986.
(20) Incorporated by reference to Exhibit 10.8 to Conseco, Inc.'s Annual Report
on Form 10-K for the period ended December 31, 1987.
II-vi
(21) Incorporated by reference to Exhibit 10.8 to Conseco, Inc.'s Quarterly
Report on Form 10-Q for the period ended September 30, 1991.
(22) Incorporated by reference to Exhibit 10.8.3 to Conseco, Inc.'s Quarterly
Report on Form 10-Q for the period ended March 31, 1989.
(23) Incorporated by reference to Exhibit 10.8.4 to Conseco, Inc.'s Annual
Report on Form 10-K for the period ended December 31, 1992.
(24) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250), for the period ended March 31, 1998.
(25) Incorporated by reference to Exhibit A to Conseco, Inc.'s definitive proxy
statement dated April 26, 1995 relating to Conseco, Inc.'s 1995 annual
meeting of stockholders.
(26) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250), for the period ended December 31, 1994.
(27) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250), for the period ended December 31, 1995.
(28) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250) for the period ended September 30, 1999.
(29) Incorporated by reference to Conseco, Inc.'s Annual Report on Form 10-K
(No. 001-09250) for the period ended December 31, 1998.
(30) Incorporated by reference to Conseco, Inc.'s Current Report on Form 8-K
(No. 001-09250), dated December 15, 1999.
(31) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250), for the period ended June 30, 2000.
(32) Incorporated by reference to Conseco Finance Corp.'s Annual Report on Form
10-K (No. 001-08916), for the period ended December 31, 2001.
(33) Incorporated by reference to Conseco Finance Corp.'s Quarterly Report on
From 10-Q (No. 001-08916), for the period ended March 31, 1998.
(34) Incorporated by reference to Conseco Finance Corp.'s Annual Report on Form
10-K (No. 001-08916), for the period ended December 31, 2000.
(35) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250), for the period ended June 30, 2001.
(36) Previously filed pursuant to Rule 424(b)(2) on February 4, 1998 (No.
333-27803).
(37) Previously filed pursuant to Rule 424(b)(5) on June 6, 1998 (No.
333-27803).
(38) Previously filed pursuant to Rule 424(b)(5) on October 19, 1999 (No.
333-83465)
(39) Previously filed pursuant to Rule 424(b)(2) on February 3, 2000 (No.
333-83465).
(40) Previously filed pursuant to Rule 424(b)(2) on June 27, 2001 (No.
333-83465).
(41) Incorporated by reference to Conseco, Inc.'s Quarterly Report on Form 10-Q
(No. 001-09250) for the period ended March 31, 2002.
ITEM 22. UNDERTAKINGS.
(a) 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 a 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
II-vii
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.
(b) The Registrant hereby undertakes to respond to requests for information
that is incorporated by reference into the Prospectus pursuant to Items 4,
10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
(c) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(d) The Registrant hereby undertakes that every prospectus: (i) that is
filed pursuant to paragraph (c) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and 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.
(e) The Registrant hereby undertakes to supply by means of post- effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-viii
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Carmel, state of Indiana, on this 25th day of July,
2002.
CONSECO, INC.
By: /s/ WILLIAM J. SHEA
------------------------------------
William J. Shea,
President, Chief Operating Officer
and Acting Chief Financial Officer
CIHC, INCORPORATED
By: /s/ GARY C. WENDT
------------------------------------
Gary C. Wendt,
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on July 25, 2002
in the capacities indicated.
FOR CONSECO, INC.:
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ GARY C. WENDT Chairman of the Board, Chief July 25, 2002
------------------------------------------------ Executive Officer and Director
Gary C. Wendt (Principal Executive Officer)
/s/ WILLIAM J. SHEA President, Chief Operating Officer July 25, 2002
------------------------------------------------ and Acting Chief Financial Officer
William J. Shea (Principal Financial Officer)
/s/ JOHN R. KLINE Senior Vice President July 25, 2002
------------------------------------------------ and Chief Accounting Officer
John R. Kline (Principal Accounting Officer)
* Director July 25, 2002
------------------------------------------------
Lawrence M. Coss
* Director July 25, 2002
------------------------------------------------
Thomas M. Hagerty
II-ix
SIGNATURE CAPACITY DATE
--------- -------- ----
'
* Director July 25, 2002
------------------------------------------------
M. Phil Hathaway
* Director July 25, 2002
------------------------------------------------
John M. Mutz
* Director July 25, 2002
------------------------------------------------
Robert S. Nickoloff
* Director July 25, 2002
------------------------------------------------
David V. Harkins
* Director July 25, 2002
------------------------------------------------
Julio A. Barea
* Director July 25, 2002
------------------------------------------------
Carol Bellamy
* Director July 25, 2002
------------------------------------------------
Samme Thompson
/s/ WILLIAM J. SHEA*
------------------------------------------------
William J. Shea
Attorney-in-fact
FOR CIHC, INCORPORATED:
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ GARY C. WENDT Chairman of the Board July 25, 2002
------------------------------------------------ and Chief Executive Officer
Gary C. Wendt (Principal Executive, Financial
and Accounting Officer)
/s/ WILLIAM J. SHEA Director July 25, 2002
------------------------------------------------
William J. Shea
/s/ DOMENIC A. BORRIELLA Director July 25, 2002
------------------------------------------------
Domenic A. Borriella
II-x
EXHIBIT INDEX
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
3.1 Amended and Restated Certificate of Incorporation of
Conseco, Inc.(2)
3.2 By-Laws of Conseco, Inc.(3)
3.3*** Certificate of Incorporation of CIHC, Incorporated.
3.4* By-Laws of CIHC, Incorporated.
4.1*** First Senior Supplemental Indenture, dated as of April 24,
2002 to Second Senior Indenture for the 10.75% Guaranteed
Senior Notes dated as of April 24, 2002 between Conseco,
Inc., CIHC, Incorporated and State Street Bank and Trust
Company.
4.2*** Second Senior Indenture, dated as of April 24, 2002 for
10.75% Guaranteed Senior Notes, between Conseco, Inc., CIHC,
Incorporated and State Street Bank and Trust Company.
4.3*** First Senior Indenture, dated as of April 24, 2002 among
Conseco, Inc., CIHC, Incorporated and State Street Bank and
Trust Company.
4.4*** Terms Resolution, dated as of April 24, 2002 with respect to
the 6.4% Guaranteed Senior Notes, due February 10, 2004.
4.5*** Terms Resolution, dated as of April 24, 2002 with respect to
the 8.5% Guaranteed Senior Notes due October 15, 2003.
4.6*** Terms Resolution, dated as of April 24, 2002 with respect to
the 6.8% Guaranteed Senior Notes due June 15, 2007.
4.7*** Terms Resolution, dated as of April 24, 2002 with respect to
the 9% Guaranteed Senior Notes due April 15, 2008.
4.8*** Terms Resolution, dated as of April 24, 2002 with respect to
the 8.75% Guaranteed Senior Notes due August 9, 2006.
4.9*** Registration Rights Agreement, dated as of April 24, 2002
among Conseco, Inc., CIHC, Incorporated and Banc of America
Securities LLC, J.P. Morgan Securities Inc. and Lehman
Brothers Inc., as Dealer Managers. Senior Indenture, dated
November 13, 1997, by and between the Registrant 4.10* and
Bank of New York as successor in interest to LTCB Trust
Company, as Trustee (the "Senior Indenture").(6)
4.10 Senior Indenture, dated November 13, 1997, by and between
the Registrant and Bank of New York as successor in interest
to LTCB Trust Company, as Trustee.(6)
4.11* Five-Year Credit Agreement, dated as of September 25, 1998,
among Conseco, Inc., Bank of America National Trust and
Savings Association, as Agent, First Union National Bank and
JPMorgan Chase Bank, as Syndication Agents, Morgan Guaranty
Company of New York, as Documentation Agent, and the other
financial institutions party thereto.
4.12 First Amendment to the Five-Year Credit Agreement, dated as
of September 22, 2000, among Conseco, Inc., the various
financial institutions parties thereto and Bank of America,
N.A..(7)
4.13 Second Amendment to Five-Year Credit Agreement, dated as of
May 30, 2001, by and among Conseco, Inc., the various
financial institutions signatory thereto and Bank of
America, N.A.(1)
4.14 Third Amendment to Five-Year Credit Agreement, dated as of
March 20, 2002, by and among Conseco, Inc., the various
financial institutions signatory thereto and Bank of
America, N.A.(1)
5.1** Opinion of Weil, Gotshal & Manges LLP.
5.2** Opinion of David K. Herzog.
II-xi
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
10.1.13 Employment Agreement, dated February 9, 1996 between Green
Tree and Lawrence Coss and related Noncompetition agreement
dated February 9, 1996, as amended by the Amendment
Agreement dated April 6, 1998.(8)
10.1.14 Employment Agreement, amended and restated as of December
15, 1999, between the Conseco, Inc. and Maxwell E.
Bublitz.(9)
10.1.15 Employment Agreement, amended and restated as of December
15, 1999, between Conseco, Inc. and James S. Adams.(9)
10.1.16 Description of incentive compensation and severance
arrangement with Edward M. Berube.(10)
10.1.24 Second Amendment Agreement , dated as of November 1, 1999,
between Conseco Finance Corp. and Lawrence M. Coss.(11)
10.1.27 Employment Agreement by and between Gary C. Wendt and
Conseco, Inc., dated as of June 28, 2000.(12)
10.1.28 Nonqualified Stock Option Agreement by and between Gary C.
Wendt and Conseco, Inc. dated as of June 28, 2000.(12)
10.1.29 Restricted Stock Agreement by and between Gary C. Wendt and
Conseco, Inc., dated as of June 28, 2000.(12)
10.1.30 Employment Agreement by and between David K. Herzog and
Conseco, Inc., dated as of August 11, 2000.(13)
10.1.31 Supplemental Retirement Agreement dated as of August 16,
2000, between Conseco, Inc. and Gary C. Wendt.(13)
10.1.32 Guaranty dated as of August 16, 2000, between Bankers Life
and Casualty Company as Guarantor, and Gary C. Wendt.(13)
10.1.34 Employment Agreement by and between David Gubbay and
Conseco, Inc., dated as of February 21, 2001.(14)
10.1.35 Restricted Stock Agreement by and between David Gubbay and
Conseco, Inc., dated as of March 13, 2001.(14)
10.1.36 Employment Agreement by and between Charles B. Chokel and
Conseco, Inc., dated as of March 16, 2001.(14)
10.1.37 Restricted Stock Agreement by and between Charles B. Chokel
and Conseco, Inc., dated as of March 16, 2001.(14)
10.1.38 Employment Agreement between William J. Shea and Conseco,
Inc., dated as of September 10, 2001.(15)
10.1.39 Restricted Stock Agreement dated as of September 17, 2001
between Conseco, Inc. and William J. Shea.(15)
10.8 Conseco, Inc.'s Stock Option Plan(16); Amendment No. 1
thereto(17); Amendment No. 2 thereto(18); Amendment No. 3
thereto(19); Amendment No. 4 thereto(20); Amendment No. 5
thereto(21)
10.8.3 Conseco, Inc.'s Cash Bonus Plan.(22)
10.8.4 Amended and Restated Conseco Stock Bonus and Deferred
Compensation Program.(23)
10.8.6 Conseco Performance-Based Compensation Plan for Executive
Officers.(24)
10.8.7 Conseco, Inc. Amended and Restated Deferred Compensation
Plan.(25)
10.8.8 Amendment to the Amended and Restated Conseco Stock Bonus
and Deferred Compensation Program.(26)
10.8.9 Conseco Amended and Restated 1994 Stock and Incentive
Plan.(1)
II-xii
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
10.8.10 Amendment No. 2 to the Amended and Restated Conseco Stock
Bonus and Deferred Compensation Program.(27)
10.8.11 Amended and Restated Director, Officer and Key Employee
Stock Purchase Plan of Conseco, Inc.(28)
10.8.13 Form of Promissory Note payable to Conseco, Inc. relating to
Conseco, Inc.'s Director, Officer and Key Employee Stock
Purchase Plan.(29)
10.8.14 Conseco, Inc. Amended and Restated 1997 Non-qualified Stock
Option Plan.(1)
10.8.21 Amended and Restated 1999 Director and Executive Officer
Stock Purchase Plan of Conseco, Inc.(28)
10.8.22 Guaranty regarding 1999 Director and Executive Officer Stock
Purchase Plan.(28)
10.8.23 Form of Borrower Pledge Agreement dated as of September 15,
1999 with The Chase Manhattan Bank relating to the 1999
Director and Executive Officer Stock Purchase Plan.(28)
10.8.24 Form of note payable to Conseco, Inc. relating to the 1999
Director and Executive Officer Stock Purchase Plan.(28)
10.8.25 Conseco, Inc. 2000 Employee Stock Purchase Program Work-Down
Plan.(10)
10.8.26 Conseco, Inc. 2000 Non-Employee Stock Purchase Program
Work-Down Plan.(10)
10.8.27 Guaranty, dated as of November 22, 2000 between Conseco,
Inc. as Guarantor, and Bank of America, National
Association, as Administrative Agent; Guaranty and
Subordination Agreement, dated as of November 22, 2000, made
by CIHC, Incorporated, as Guarantor and Subordinated
Borrower, and Conseco, Inc., as Obligor and Subordinated
Lender, in favor of Bank of America, National Association,
as Administrative Agent under the Credit Agreement dated as
of November 22, 2000; and Form of Credit Agreement, dated as
of November 22, 2000 among the Borrowers, the other
financial institutions party thereto and Bank of America,
National Association, as Administrative Agent (Relating to
Refinancing of certain Loans under that certain Credit
Agreement, dated as of August 21, 1998).(10)
10.8.28 Guaranty, dated as of November 22, 2000 between Conseco,
Inc. as Guarantor, and Bank of America, National
Association, as Administrative Agent; Guaranty and
Subordination Agreement, dated as of November 22, 2000, made
by CIHC, Incorporated, as Guarantor and Subordinated
Borrower, and Conseco, Inc., as Obligor and Subordinated
Lender, in favor of Bank of America, National Association,
as Administrative Agent under the Credit Agreement dated as
of November 22, 2000; and Form of Credit Agreement, dated as
of November 22, 2000 among the Borrowers, the other
financial institutions party thereto and Bank of America,
National Association, as Administrative Agent (Relating to
the Refinancing of Certain Loans under that certain Amended
and Restated Credit Agreement, dated as of August 26,
1997).(10)
10.8.29 Guaranty, dated as of November 22, 2000, between Conseco,
Inc., as Guarantor, and The Chase Manhattan Bank, as
Administrative Agent; Guaranty and Subordination Agreement,
dated as of November 22, 2000 made by CIHC, Incorporated, as
Guarantor and Subordinated Borrower, and Conseco, Inc., as
Obligor and Subordinated Lender, in favor of The Chase
Manhattan Bank, as Administrative Agent under the Credit
Agreement dated as of November 22, 2000; and the Form of
Credit Agreement, dated as of November 22, 2000, among the
Borrowers, the other financial institutions party thereto
and the Chase Manhattan Bank, as Administrative Agent
(Relating to the Refinancing of Certain Loans under that
certain Credit Agreement, dated as of September 15, 1999, as
terminated an replaced by that certain Termination and
Replacement Agreement, dated as of May 30, 2000).(10)
10.8.30 Forms of note payable to Conseco Services, LLC regarding the
2000 Work-Down Plans, Form of Unconditional Guarantee and
Form of Indemnification Agreement.(10)
II-xiii
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
10.8.31 First Stage Amendment and Agreement re: Non-Refinanced 1998
D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
CDOC, Inc., CIHC, Incorporated, Bank of America, N.A. and
the various financial institutions parties thereto.(1)
10.8.32 First Stage Amendment and Agreement re: Non-Refinanced 1997
D&O Loans, dated as of March 20, 2002, among Conseco, Inc.,
CDOC, Inc., CIHC, Incorporated, Bank of America, N.A. and
the various financial institutions parties thereto.(1)
10.8.33 Cash Collateral Pledge Agreement among CDOC, Inc. and JP
Morgan Chase Bank, dated as of March 20, 2002.(1)
10.8.34 First Stage Amendment and Agreement Re: 1998 D&O Loans,
dated as of March 20, 2002, among Conseco, Inc., CDOC, Inc.,
CIHC Incorporated, Bank of America, N.A. and various
financial institutions parties thereto.(1)
10.8.35 Amended and Restated Collateral Agreement made by Conseco,
Inc. and CIHC, Incorporated in form of JP Morgan Chase Bank,
dated as of March 20, 2002.(1)
10.8.36 First Stage Amendment and Agreement re: 1999 D&O Loans,
dated as of March 20, 2002, among Conseco, Inc., CDOC, Inc.,
CIHC, Incorporated, JPMorgan Chase Bank and the various
financial institutions parties thereto.(1)
10.43 Amended and Restated Securities Purchase Agreement dated as
of December 15, 1999 between Conseco, Inc. and the
purchasers named therein.(30)
10.45.1 Warrant to Purchase Common Stock of Conseco Finance Corp.,
dated May 11, 2000, by and between Conseco Finance Corp. and
Lehman Brothers Holdings Inc.(31)
10.45.2 Exchange Agreement by and between Lehman Brothers Holdings
Inc. and Conseco, Inc., dated January 30, 2002.(1)
10.46.1 Amended and Restated Agreement dated January 30, 2002, by
and among Conseco Finance Corp., Conseco, Inc., CIHC,
Incorporated, Green Tree Residual Finance Corp. I, Green
Tree Finance Corp. -- Five and Lehman Brothers Holdings
Inc.(1)
10.46.2 Amended and Restated Master Repurchase Agreement dated as of
April 5, 2001 between Merrill Lynch Mortgage Capital Inc.
and Green Tree Finance Corp. -- Three.(32)
10.46.3 Second Amended and Restated Master Repurchase Agreement
dated January 30, 2002 between Lehman Commercial Paper Inc.
and Green Tree Finance Corp.-Five.(32)
10.46.4** Asset Assignment Agreement dated as of February 13, 1998
between Green Tree Residual Finance Corp. I and Lehman
Commercial Paper, Inc.(33); Amendment to the First Residual
Facility, dated as of September 22, 2000, by and among
Lehman ALI Inc. and Green Tree Residual Finance Corp. I(34);
Amendment, dated January 30, 2002, by and between Lehman ALI
Inc. and Green Tree Residual Finance Corp.(33)
10.46.5 Insurance Agreement by and between Conseco, Inc. and Gary C.
Wendt 2000 Irrevocable Insurance Trust dated 11/22/00
("Wendt Trust"), dated December 1, 2000 and Collateral
Assignment by Wendt Trust in favor of Conseco, Inc. dated
December 1, 2000.(10)
10.48 Insurance Agreement by and between Conseco, Inc. and Wendt
Trust, dated January 16, 2001 and Collateral Assignment by
Wendt Trust in favor of Registrant dated January 16,
2001.(10)
10.49 Insurance Agreement by and between Registrant and Wendt
Trust, dated January 16, 2001 and Collateral Assignment by
Wendt Trust in favor of Registrant dated January 16,
2001.(10)
10.50 Agreement and Plan of Merger dated as of July 27, 2001 by
and among Conseco, Inc., Noida Acquisition Corp. and
ExlService.com, Inc.(35)
10.51 Restricted Stock Agreement dated as of July 31, 2001,
between Conseco, Inc., Gary Wendt and Rosemarie Wendt.(35)
II-xiv
EXHIBIT
NO. EXHIBIT DESCRIPTION
------- -------------------
12.1 Computation of Ratio of Earnings to Fixed Charges, Preferred
Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts.(1)(41)
21 Subsidiaries of Conseco, Inc.(1)
23.1** Consent of PricewaterhouseCoopers LLP.
23.2** Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1 hereto).
23.3** Consent of David K. Herzog (included in Exhibit 5.2 hereto).
24.1*** Power of Attorney (included on signature page).
25.1*** Form T-1 statement of eligibility under the Trust Indenture
Act of 1939, as amended, of State Street Bank and Trust, as
trustee.
99.1*** Form of Letter of Transmittal.
99.2 Prospectus Supplement dated February 4, 1998 to Prospectus
dated June 24, 1997.(36)
99.3 Pricing Supplement dated June 4, 1998 to Prospectus dated
June 24, 1997 and Prospectus Supplement dated February 23,
1998.(37)
99.4 Prospectus Supplement dated October 18, 1999 to Prospectus
dated October 1, 1999.(38)
99.5 Prospectus Supplement dated February 2, 2000 to Prospectus
dated October 1, 1999.(39)
99.6 Prospectus Supplement dated June 27, 2001 to Prospectus
dated October 1, 1999.(40)
---------------
* Filed herewith.
** To be filed by amendment.
*** Previously filed with the initial filing of this
Registration Statement.
(1) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250) for the period ended December
31, 2001.
(2) Incorporated by reference to Conseco, Inc.'s Registration
Statement on Form S-3 (No. 333-94683), dated January 14,
2000.
(3) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250), dated April 1, 2002.
(4) Incorporated by reference to Conseco, Inc.'s Current Report
on Form 8-K (No. 001-09250), dated October 21, 1999.
(5) Incorporated by reference to Conseco, Inc.'s Current Report
on Form 8-K (No. 001-09250), dated June 10, 1998.
(6) Incorporated by reference to Conseco, Inc.'s Post-Effective
Amendment No. 1 to the Registrant's Registration Statement
on Form S-3 (No. 333-27803), dated
(7) Incorporated by reference to Conseco, Inc.'s Current Report
on Form 8-K/A (No. 001-09250), dated September 28, 2000.
(8) Incorporated by reference to Conseco Finance Corp's (f/h/a
Green Tree Financial Corp) Registration Statement Amendment
on Form S-3/A (No. 333-52233), dated June 16, 1998.
(9) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250) for the period ended December
31, 1999.
(10) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250) for the period ended December
31, 2000.
(11) Incorporated by reference to Conseco, Inc.'s Amended Annual
Report on Form 10-K/A (No. 001-09250) for the period ended
December 31, 1999.
(12) Incorporated by reference to Conseco, Inc.'s Current Report
on Form 8-K (No. 001-09250), dated July 10, 2000.
II-xv
(13) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250), for the period ended
September 30, 2000.
(14) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250), for the period ended
March 31, 2001.
(15) Incorporated by reference to Conseco, Inc.'s Quarterly
report on Form 10-Q (No. 001-09250), for the period ended
September 30, 2001.
(16) Incorporated by reference to Exhibit B of Conseco, Inc.'s
definitive proxy statement dated December 10, 1983 relating
to the Conseco, Inc.'s 1983 annual meeting of stockholders.
(17) Incorporated by reference to Exhibit 10.8.1 to Conseco,
Inc.'s Quarterly Report on Form 10-Q for the period ended
June 30, 1985.
(18) Incorporated by reference to Exhibit 10.8.2 to Conseco,
Inc.'s registration statement on Form S-1 (No. 33-4367).
(19) Incorporated by reference to Exhibit 10.8.3 to Conseco,
Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1986.
(20) Incorporated by reference to Exhibit 10.8 to Conseco, Inc.'s
Annual Report on Form 10-K for the period ended December 31,
1987.
(21) Incorporated by reference to Exhibit 10.8 to Conseco, Inc.'s
Quarterly Report on Form 10-Q for the period ended September
30, 1991.
(22) Incorporated by reference to Exhibit 10.8.3 to Conseco,
Inc.'s Quarterly Report on Form 10-Q for the period ended
March 31, 1989.
(23) Incorporated by reference to Exhibit 10.8.4 to Conseco,
Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1992.
(24) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250), for the period ended
March 31, 1998.
(25) Incorporated by reference to Exhibit A to Conseco, Inc.'s
definitive proxy statement dated April 26, 1995 relating to
Conseco, Inc.'s 1995 annual meeting of stockholders.
(26) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250), for the period ended December
31, 1994.
(27) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250), for the period ended December
31, 1995.
(28) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250) for the period ended
September 30, 1999.
(29) Incorporated by reference to Conseco, Inc.'s Annual Report
on Form 10-K (No. 001-09250) for the period ended December
31, 1998.
(30) Incorporated by reference to Conseco, Inc.'s Current Report
on Form 8-K (No. 001-09250), dated December 15, 1999.
(31) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250), for the period ended
June 30, 2000.
(32) Incorporated by reference to Conseco Finance Corp.'s Annual
Report on Form 10-K (No. 001-08916), for the period ended
December 31, 2001.
(33) Incorporated by reference to Conseco Finance Corp.'s
Quarterly Report on From 10-Q (No. 001-08916), for the
period ended March 31, 1998.
(34) Incorporated by reference to Conseco Finance Corp's Annual
Report on Form 10-K (No. 001-08916), for the period ended
December 31, 2000.
(35) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250), for the period ended
June 30, 2001.
(36) Previously filed pursuant to Rule 424(b)(2) on February 4,
1998 (No. 333-27803).
II-xvi
(37) Previously filed pursuant to Rule 424(b)(5) on June 6, 1998
(No. 333-27803).
(38) Previously filed pursuant to Rule 424(b)(5) on October 19,
1999 (No. 333-83465)
(39) Previously filed pursuant to Rule 424(b)(2) on February 3,
2000 (No 333-83465).
(40) Previously filed pursuant to Rule 424(b)(2) on June 27, 2001
(No. 333-83465).
(41) Incorporated by reference to Conseco, Inc.'s Quarterly
Report on Form 10-Q (No. 001-09250) for the period ended
March 31, 2002.
II-xvii