==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
AGERE SYSTEMS INC.
-------------------------------------------
(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
00845V 10 0
---------------
(CUSIP Number)
-----------------------------------------------------------
SCOTT A. ARENARE
MANAGING DIRECTOR AND GENERAL COUNSEL
WARBURG PINCUS LLC
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 878-0600
-----------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
WITH A COPY TO:
ANDREW R. BROWNSTEIN
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
OCTOBER 16, 2002
----------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box: [_].
Page 1 of 9 Pages
==============================================================================
==============================================================================
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
I.R.S. IDENTIFICATION NO. 13-4161869
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
-------------------------------------------------------------------------------
3 SEC USE ONLY [ ]
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
-------------------------------------------------------------------------------
NUMBER OF 7
SOLE VOTING POWER
SHARES -0-
----------------------------------------------------------------
BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 69,386,961*
----------------------------------------------------------------
EACH
9
REPORTING SOLE DISPOSITIVE POWER
-0-
PERSON WITH ----------------------------------------------------------------
10
SHARED DISPOSITIVE POWER
69,386,961*
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
69,386,961*
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%**
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
--------------------------
* Assumes the full conversion of the Convertible Subordinated Notes beneficially
owned by the Investors in accordance with their terms.
**Represents the percentage of Class A Common Stock beneficially owned by
WP VIII as of October 17, 2002 assuming full conversion of the Convertible
Subordinated Notes beneficially owned by the Investors in accordance with
their terms. Based on the same assumption, as of October 17, 2002, WP VIII
beneficially owned 4.1% of the outstanding Class A Common Stock and Class B
Common Stock, taken as a whole.
Page 2
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARBURG, PINCUS & CO.
I.R.S. IDENTIFICATION NO. 13-6358475
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
-------------------------------------------------------------------------------
3 SEC USE ONLY [ ]
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
-------------------------------------------------------------------------------
NUMBER OF 7
SOLE VOTING POWER
SHARES -0-
----------------------------------------------------------------
BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 69,386,961*
----------------------------------------------------------------
EACH 9
SOLE DISPOSITIVE POWER
REPORTING -0-
----------------------------------------------------------------
PERSON WITH 10
SHARED DISPOSITIVE POWER
69,386,961*
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
69,386,961*
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%**
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
-----------------------------
* Assumes the full conversion of the Convertible Subordinated Notes beneficially
owned by the Investors in accordance with their terms.
**Represents the percentage of Class A Common Stock beneficially owned by WP
as of October 17, 2002 assuming full conversion of the Convertible
Subordinated Notes beneficially owned by the Investors in accordance with
their terms. Based on the same assumption, as of October 17, 2002, WP
beneficially owned 4.1% of the outstanding Class A Common Stock and Class B
Common Stock, taken as a whole.
Page 3
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARBURG PINCUS LLC
I.R.S. IDENTIFICATION NO. 13-3536050
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
-------------------------------------------------------------------------------
3 SEC USE ONLY [ ]
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
-------------------------------------------------------------------------------
NUMBER OF 7
SOLE VOTING POWER
SHARES -0-
-----------------------------------------------------------------
BENEFICIALLY 8
SHARED VOTING POWER
OWNED BY 69,386,961*
-----------------------------------------------------------------
EACH 9
SOLE DISPOSITIVE POWER
REPORTING -0-
-----------------------------------------------------------------
PERSON WITH 10
SHARED DISPOSITIVE POWER
69,386,961*
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
69,386,961*
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%**
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
-------------------------------------------------------------------------------
-------------------------
* Assumes the full conversion of the Convertible Subordinated Notes beneficially
owned by the Investors in accordance with their terms.
**Represents the percentage of Class A Common Stock beneficially owned by
WP LLC as of October 17, 2002 assuming full conversion of the Convertible
Subordinated Notes beneficially owned by the Investors in accordance with
their terms. Based on the same assumption, as of October 17, 2002, WP LLC
beneficially owned 4.1% of the outstanding Class A Common Stock and Class B
Common Stock, taken as a whole.
Page 4
AMENDMENT NO. 2 TO
SCHEDULE 13D
Reference is made to the statement on Schedule 13D filed on
June 21, 2002 and Amendment No. 1 thereto filed on July 29, 2002 (as so
amended, the "Schedule 13D") on behalf Warburg Pincus Private Equity VIII, L.P.,
a limited partnership organized under the laws of Delaware ("WP VIII"),
Warburg, Pincus & Co., a general partnership organized under the laws of New
York ("WP"), and Warburg Pincus LLC, a limited liability company organized under
the laws of New York ("WP LLC", and together with WP VIII and WP, the "Reporting
Persons"). All capitalized terms used without definition herein have the
meanings ascribed thereto in the Schedule 13D. This Amendment No. 2 to the
Schedule 13D amends the Schedule 13D as follows.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
--------------------------------------------------
Item 3 of the Schedule 13D is amended and supplemented by adding the following:
The total amount of funds required by the Investors to purchase the
Convertible Subordinated Notes (as defined below) on October 4, 7, 9 and 16,
2002 as described under Item 5(c) below was, and the total amount of funds
required by the Investors to purchase the Additional Convertible Subordinated
Notes as described under Item 5(c) will be, furnished from the committed capital
of the Investors. The total amount of funds used by the Investors to purchase
such Convertible Subordinated Notes on October 4, 7, 9 and 16, 2002 was
$14,882,825. The total amount of funds that will be used by the Investors to
purchase the Additional Convertible Subordinated Notes cannot be determined at
this time.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
-------------------------------------
Item 5 of the Schedule 13D is amended and restated to read as follows:
(a) The Reporting Persons beneficially own shares of Class A Common Stock by
virtue of the Investors' beneficial ownership of shares of Class A Common
Stock and of the Issuer's 6.5% Convertible Subordinated Notes due 2009 (the
"Convertible Subordinated Notes"), which are convertible at the option of
the holder into 302.34 shares of Class A Common Stock per $1,000 principal
amount of Convertible Subordinated Notes, subject to adjustment in certain
circumstances. As of October 17, 2002, the Reporting Persons beneficially
owned an aggregate of 69,386,961 shares of Class A Common Stock,
representing 33,650,000 shares of Class A Common Stock beneficially owned
by the Investors and 35,736,961 shares of Class A Common Stock that may be
acquired by the Investors upon full conversion of the Convertible
Subordinated Notes beneficially owned by the Investors. Of the aggregate of
69,386,961 shares of Class A Common Stock beneficially owned by WP and WP
LLC, 2,144,057 shares represent shares of Class A Common Stock owned of
record by WPNPE VIII I, WPNPE VIII II and WPGPE VIII. By reason of WP's and
WP LLC's respective relationships with the Investors, under Rule 13d-3 of
the Exchange Act, WP and WP LLC may be deemed to beneficially own all of
the shares of Class A Common Stock that are beneficially owned by the
Investors.
5
Assuming full conversion of the Convertible Subordinated Notes beneficially
owned by the Investors, as of October 17, 2002, the 69,386,961 shares of
Class A Common Stock beneficially owned by each Reporting Person
represented approximately 9.0% of the outstanding shares of Class A Common
Stock, and 4.1% of the Issuer's outstanding shares of Class A Common Stock
and Class B Common Stock, par value $0.01 per share (the "Class B Common
Stock"), taken as a whole, in each case, after giving effect to the
issuance of the Class A Common Stock upon full conversion of the
Convertible Subordinated Notes beneficially owned by the Investors (based
on 731,348,289 shares of Class A Common Stock and 907,955,677 shares of
Class B Common Stock outstanding as of July 31, 2002, as set forth in the
Issuer's Form 10-Q for the quarterly period ended June 30, 2002).
(b) As described in paragraph (a) above, the Group Members have beneficial
ownership over an aggregate of 69,386,961 shares of Class A Common Stock.
Of this aggregate of 69,386,961 shares of Class A Common Stock, 33,650,000
shares are represented by the shares of Class A Common Stock beneficially
owned by the Investors and 35,736,961 are represented by shares of Class A
Common Stock that are issuable to the Investors upon full conversion of the
Convertible Subordinated Notes beneficially owned by the Investors. Each of
the Investors shares voting power and dispositive power over the shares of
Class A Common Stock that such Investor beneficially owns with WP LLC and
WP.
(c) The Investors acquired shares of Class A Common Stock in the open
market transactions described below:
Total Cost (net of
Date # of Shares Per Share Price brokerage commissions)
------------ ------------ --------------- ----------------------
1/31/02 270,000 $5.08 $1,371,789
2/1/02 730,000 $5.10 $3,723,000
2/4/02 1,000,000 $5.06 $5,062,500
2/5/02 1,460,000 $4.10 $5,982,204
6/11/02 1,000,000 $2.65 $2,647,100
6/12/02 9,720,000 $2.37 $23,059,728
6/13/02 5,700,000 $2.40 $13,660,620
6/27/02 2,770,000 $1.50 $4,155,637
On June 13, 2002, the Investors agreed to purchase Convertible
Subordinated Notes with an aggregate principal amount of $75,000,000 in an
underwritten public offering.
On July 29, 2002, the Investors settled the Forward Contract by accepting
delivery from Citibank of 11,000,000 shares of Class A Common Stock for
aggregate consideration of $24,671,700, net of brokerage commissions and
other transaction costs.
The Investors acquired Convertible Subordinated Notes with an aggregate
principal amount of $30,700,000 in brokered transactions as described
below:
Price (% of
Date Aggregate Principal Amount) Total Cost
Principal (in each case plus (including accrued
Amount accrued interest) interest)
------------ --------------- ---------------- ------------------
10/4/02 $5,000,000 45.150% $2,356,806
10/7/02 $4,000,000 42.896% $1,796,007
10/8/02 $14,200,000 43.114% $6,409,370
10/16/02 $7,500,000 55.406% $4,320,643
6
On October 16, 2002, the Investors agreed to purchase additional
Convertible Subordinated Notes (the "Additional Convertible Notes") with
an aggregate principal value of $12,500,000 from Salomon Smith Barney (the
"Broker"). The prices to be paid by the Investors for these additional
Convertible Subordinated Notes cannot be determined at this time but will
be equal to a premium of 27% of the principal amount thereof plus the
Parity Amount (as defined below) thereof. The "Parity Amount" of the
Additional Convertible Subordinated Notes is an amount (expressed as a
percentage of the principal amount of the Additional Convertible
Subordinated Notes) equal to the product of (1) the number of shares of
Class A Common Stock into which the Additional Convertible Subordinated
Notes may be converted, times (2) the average per share cost to the Broker
of a number of shares of Class A Common Stock purchased by the Broker in
connection with the transaction, with the number of shares of Class A
Common Stock to be purchased to be determined by the Broker in
accordance with its risk management procedures. The closings of the
purchase of these Additional Convertible Subordinated Notes will occur
from time to time based on market conditions, as determined by
the Broker. The 3,779,289 shares of Class A Common Stock into which the
Additional Convertible Subordinated Notes may be converted are included
in the 69,386,961 shares of Class A Common Stock beneficially owned by
the Investors.
Except as described herein, during the last sixty days there were no
transactions in shares of Class A Common Stock effected by the Reporting
Persons or, to the best of their knowledge, by any of the persons set
forth on Schedule I.
(d) Except as set forth in this Item 5, no person other than each respective
record owner referred to herein of the shares of Class A Common Stock is
known to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, such shares of Class A
Common Stock.
(e) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
------------------------------------------------------------------------
SECURITIES OF THE ISSUER.
-------------------------
Item 6 of the Schedule 13D is amended and supplemented by adding the following:
See Item 5(c) for a description of an agreement between the
Investors and the Broker with respect to the purchase of the Additional
Convertible Subordinated Notes.
7
SIGNATURES
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
Dated: October 17, 2002
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Scott A. Arenare
----------------------------------------
Name: Scott A. Arenare
Title: Partner
WARBURG, PINCUS & CO.
By: /s/ Scott A. Arenare
--------------------------------------------
Name: Scott A. Arenare
Title: Partner
WARBURG PINCUS LLC
By: /s/ Scott A. Arenare
-------------------------------------------
Name: Scott A. Arenare
Title: Member
WARBURG PINCUS NETHERLANDS PRIVATE EQUITY VIII
C.V. I
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Scott A. Arenare
----------------------------------------
Name: Scott A. Arenare
Title: Partner
8
WARBURG PINCUS NETHERLANDS PRIVATE EQUITY VIII
C.V. II
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Scott A. Arenare
----------------------------------------
Name: Scott A. Arenare
Title: Partner
WARBURG PINCUS GERMANY PRIVATE EQUITY VIII KG
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Scott A. Arenare
----------------------------------------
Name: Scott A. Arenare
Title: Partner